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Ladies and Gentlemen,
I am very honoured, on the third day of my visit to China with several French CEOs to have the opportunity to speak to the students of one of the world's most prestigious universities. This university has produced great leaders for China throughout the 20th century, including your Premier Zhu Rongji. In a way, you represent your country's future, and I believe that I can say, on behalf of the French people and our youth, that we are interested in this future. It is about the future that I wish to speak to you . Today we are facing a phenomenon we call globalisation, which calls for us all to think together about how we are going to manage our futures, futures that will be more closely linked tomorrow than they ever have been before. Obviously, as Finance Minister, I am going to talk about economics. However, I believe, as doez the Indian Nobel prize-winner Amartya Sen, that economics is also a moral science.I would therefore like to adopt this point of view and open our session by looking at three questions :
Who are we : what defines France and Europe's identity in a globalised world ?
What do we want : how do we see the organisation of a globalised world ?
What can we, France and China, do to help control globalisation in a fair way ?
1. Who are we ? I am aware of the interest the Chinese show in France, our history and our culture, from the French Revolution to our football players. Speaking of football, I am delighted to see that China has qualified for the next World Cup. I also know that you, like us, are attached to the idea of a multi-polar world and that this is why you pay so much attention when France speaks out on the major debates of the world today. I also believe that this voice, and perhaps the influence of France as well, flows from two realities : our history and our commitment to Europe.
Let's first look at our history. As you know, many modern, universal values were born in France in the 18th century, called the Age of Enlightenment. The French Revolution embodied the emergence of these new ideas. Our history has shaped us to view societies as organised around a social contract, a government pact that one of our great philosophers, Jean-Jacques Rousseau , described as " a form of association that defends and protects the person and goods of each member with all its common force, and by means of which each person, uniting with all, nevertheless obeys only himself and remains as free as before ". This means three things to my country :
- common values that unite the nation. For France, these values are human rights ;
- institutions that embody these values : the institutions of representative and democratic government ;
- the goal of a fair society, that is to say a society whose purpose is for everyone to have the real and formal ability to fully execice his or her freedom.
These foundations underlie our identity, as summed up by France's national motto : " Liberty, Equality, Fraternity ".
Today, this project is inextricably linked with Europe's. The dynamics of European construction are now just as impotant to us as our own country's history. Let's take a brief look at the major choices that have affected this construction.
For centuries, Europe was a war-torn continent. France found itself in the middle of many bloody conflicts. The last two of these, in the 20th century, were among the most devastating in history. At the end of the Second World War, our predecesors set out to unify the European powers, particularly France and Germany, to keep peace and promote economic prosperity. They conceived of a historically new way of doing this, based on real solidarity resulting from economic integration.
This ambitious project advanced step by step.The first step came in the form of the Coal and Steel community, followed by the common market and the dismantling of customs borders.
Today, there is a single market with rules and a common border within which men and women, goods, services and capital move freely. The European Union has hence attained an extremely high level of economic integration, even greater in many areas than that attained by a unified couuntry like the United States. In 1992, we decided to give ourselves a common currency. We have taken a very concrete approach to this. The euro's parity was fixed in 1998, and euro coins and notes will come into circulation in less than 60 days, on 1 january 2002. Twelve out of fifteen countries of the European Union will share the same currency. Yet this project is also highly ambitious politically. I meet with my fourteen fellow finance ministers at least once a month. We discuss the way we coordinate our national economic policies. At the moment, we are concentrating heavily on the budget, because we see that the world economy is slowing down. We also draw up common reponses to international issues. For example, we have just adopted significant measures to combat the financing of terrorism.
As you can see, the construction of this economic entity has gradually melded with political construction. In 1992, we created the European Union, which is currently made up of fifteen Member States that have committed their sovereignty to common policies in the fields of justice, security, diplomacy and defence. We are now preparing to enlarge Europe to form a union of between 25 and 27 Member States.
European construction has thus become a model of regional integration that should be capable of taking on the new challenges of globalisation. When France looks at this model it has helped to build, it sees itself, for it sees in Europe the three basic constituents of its own identity : a community of values, legitimate institutions and the goal of social justice.
2. What do we want from globalisation ?
First, let's look back a second. The world has seen at least two major phenomena over the last twenty years. The first is the reduction in transport and telecommunication costs, which redically changed the relationship between economic production and geographic distance. The second is the fall of the Berlin wall. Some people saw the confluence of these two events as heralding the final victory of free-market capitalism. They thought this would lead all contries to accept a single economic development model based on maximum market freedom and minimal government intervention There was talk of the " end of history ".
We knew that these interpratations were somewhat superficial even before the 11 September attacks on American soil demonstrated it. It is true that the market has its advantages, as your country well knows. After twenty years of economic reform, you have tripled your country's average per capita income . China's annual growth rate is around 8 %, and the Chinese economy is now the sixth leading economic power and the ninth trading power worlwide. At the same time, the nations who did not make this choice fell victim to economic marginalisation, which is now threatening their identity.
I believe that our two countries share the same or a very similar view of the benefits and challenges of internationalisation or globalisation.
China knows that its population has not shared equally in the remarkable economic progress brought about by its international outlook, and some inequalities have grown. Nevertheless, your country has affirmed its determination to pursue economic reform and to fully assume its responsabilities in the world.
France is well aware when the prophets of globalisation and their followers proclaimed too strong a faith in the virtues of the market, they thought they could neglect the human aspiration for justice . Ten years down the road, this disregard has laid us open to at least two challenges :
- Increased opposition to globalisation in our own societies, which could lead to the outright rejection of this economic model. The sometimes violent demonstrations in Seattle, Göteborg and then Genoa have raised many relevant questions about how to repond to the excesses of globalisation.
- Another challenge is the " North-South " divide, even though globalisation is making it increasingly difficult to know exactly who is in the North and who is in the South. When the time comes for questions, I would be interested in knowing where you place China in this scheme.
What I do know is that these issues call for responses from France an Europe. And their responses are, in particular, more economic regulation and more solidarity.
More regulation, because it is needed so that market forces work for the common good. Producer an consumer can associate freely only if market conditions are governed by fair and equitable principles. The production factors, capital, labour and intelligence can only work together if there are rules that allow this to happen. For example, the Peruvian economist Hernando de Soto recently reminded that development more often than not calls for modernising the system of property ownership, since ownership directly affects the capacity for action of economic agents. This concerns in particular the ability to project income, obtain credit and invest. There are currently two areas in which these rules are especially important, to ensure that globalisation produces more wealth and less injustice : finance and trade.
The first area concerns internatiional financial markets :
The boom in capital flows is indicative of one trend in the global economy over the last ten years. In 1998, the daily volume on the exchange market stood at 1,600 billion US dollars, three times more than in 1989. Worldwide direct investment flows came to nearly 1,300 billion US dollars in 2000, twenty times greater than in 1982. This growth has positive effects and helps finance growth in the developing countries. Yet it has its limits : the proportion of investment flows into the developing countries remains low, at less than 25 % of all world flows. We have also observed some negative structural effects, which we have to correct.There are shadowy areas in capital flows. These include money laundering, the financial channels of terrorism and the activity of offshore centres.
This produces economic and financial instability in certain countries. This can trigger devastating crises that affect all the emerging countries, which are often the victims of contagion effects. The effects of these crises are very real : a fall of 7 to 13 percentage points in growth for Asian countries hit by the 1998 crisis.
France and Europe have proposed ways to ward off these effects without destroying the integrity of the market. Let's take a quick look at the main courses of action :
- Step up the IMF's surveillance of its members. The IMF shoud analyse macroeconomic and exchange policies in addition to structural policies such as the management of the banking system, which is so important to the stability and growth of the emerging countries.
- Guarantee financial transparency. This concerns primarily the offshore centres, which handle colossal sums of meney and jeopardise the stability of the international financial system. France plays a decisive role in the work to develop and implement standards applicable to these activities under the aegis of the Forum for Financial stability. This effort is crucial and I would be delighted to have the Chinese authorities join us in this work.
- Combat money laundering. A whole host of criminal activities thrive on money laundering : corruption, organised crime and trafficking, to name but a few. This fight is at the heart of the work of the Financial Action Task Force (FATF), set up on France's initiative in 1989. This action will be extended to combating the financing of terrorism. I know that China is following this work very closely. Allow me to take this opportunity to say that France would like to co-operate with China to step up international action against terrorism.
As you can see, there are many areas in which financial globalisation can be regulated. I would also like to point out the usefulness of regional monetary co-operatiion The French have a pragmatic approach centred on reconciling stability with flexibility. The European example could be of interest to a region such a Asia. The Chiang Mai initiative was a first step in this direction.
A second area concerns markets for goods and services
I do not need to emphasize how much the economic take-off in Asia and especially in China owes to the active integration of the Asian countries into world trade. We are meeting in Doha, Quatar, at the end of the week : China's forthcoming accession to WTO, which is the regulating system for international trade, constitutes a major advance for us because it will enable your country to base its integration into world trade on rules that have been discussed and accepted, and are therefore stable.
France believes that trade should be equitable and benefit all partners. This is the goal we work for at the World Trade Organisation. It is also our belief that these increasingly complex agreements touch on many aspects that are important to market regulation, since behind the producers and consumers in the classic economy stand men an women. We are determined to see the current rules enhanced so as to make free trade a vehicle for a more equitably shared prosperity.
The aim of the WTO ministerial conference, which opens tomorrow in Doha, is to launch a new round of negociations. France will subscribe to this goal if it genuinely improves the regulation of international trade . We would like to refine the rules governing market operations (supervision of all types of export aid, protection of intellectual property and antidumping measures). However, we would also like to address new subject such a competition and environmental protection. We have no hidden agenda, and our aim is not protectionist. We simply feel that, without these rules, the global market will not be able to generate greater justice on its own.
By joining the WTO, China will become, alongside the European Union, one of the major players in this regulation. We will have a better dialogue. However, I already know that it will be constructive because we share the same conviction : societies need rules and international society needs a contract.
More solidarity
Indeed, the second area where globalisation calls for a reponse sterns from the threat that poverty poses to global stability.You are economic specialists, so I will simply remind you of a few figures. Nearly 1,5 billion human beings worldwide live on less than a dollar a day, and three billion live on less than two dollars a day. Pandemics still kill millions of people every year.
This situation is unbearable. France will not tolerate it. To deal with this, the policy objectives are clear. They were set by the United Nations millennium general assembly in September 2000. By the year 2015, the goal is to halve the percentage of people living in extreme poverty, to provide primary education for all in every country, and to reduce the death rate for children under five by two-thirds and the maternal mortality rate by three quarters.
I can see at least three priorities needed to meet these targets :
- The first is action to help the planet's poorest people. I am thinking in particular of Africa, with which France has close ties. This continent deserves an exceptional response from us. France has made a priority of dealing with the poorest countries debt. We have therefore promoted the so-called " enhanced Highly Indebted Poor Countries " initiative, which is now helping 23 countries to cut their total outstanding debt by 60 %. The cost of this effort to France is 10 billion euros. The European Union has also adopted the " everything but weapons " initiative, which provides for an end to quotas and taxes on all products, except weapons, from the least developed countries. I would like to see the prompt adoption of this initiative by other countries, obviously our G7 partners, but also the leading emerging courntries.
- A second priority is to modernise the development assistance approach. We believe that the future of development assistance will be based on the principle of the mutual accountability of partners and on contracts.This means that developing countries have to be fully accountable for the implementation of development strategies. It is up to them to make the necessary reforms and define policies to promote their economic development : to attract private investment, make their government spending efficient, manage social spending and public investment, and make their management transparent. From this point of view, France, Europe and the world are looking to the Chinese experience. China is the leading recipient of credit from the World Bank and the Asian Development Bank, and its success rate with projects is over 90 %. Its experience is interesting because it shows us that it is possible for a reform effort to reconcile modernity with identity.
- The third priority is the search for new resources for the developing courntries. We also need to look into new tools to fund development that are consistent with the global trade framework and that help overcome the limitations and inadequacy of the traditional instruments that are private investment and official development assistance. We have only just started doing this, but we can already see that these instruments could take the form of an international levy, the revenue from which would be allocated to the relevant multilateral institutions, such as the World Bank. Three ideas have been put forward in particular : a tax on volatile capital movements on the exchange market, a levy on carbon emissions, otherwise known as the green tax, and a levy on weapons exports. I believe that leading countries, including France and China, should assume their responsabilities and join in this effort.
3. What can we, France and China, do to help control globalisation in a fair way ?
The main areas for action to fairly control globalisation are combating poverty, regulating the international financial structure and fair trade.
I have told you about some of France's and Europe's responses to the questions of knowing why and how to take this action. One basic question remains : who should make the decisions about problems concerning the entire international community ? The answer is all of us, the states of the world, by means of co-operation and dialogue between our civil societies. On this point especially, I believe that the dialogue between France and China will broaden the scope of possibilities for the whole world.
- Our co-operation should be focused primarily on the objectives we assign the international organisations
Throughout the 20th century, international society improved the institutional means it uses for discussion and action : we call this multilateralism. Yet all too often states thought that they could delegate the responsibility for political choices to technical institutions. The results have not been impressive. The world is now guided by institutions that are sometimes too highly potiticised to act effectively or often too technical to have sufficient legitimacy. The truth of the matter is that the states sometimes hide behind smokescreens.
This is why the main principle underlying action is to insist that the political arena be responsible for fairly controlling globalisation . I would like to give you a few examples of the way we are applying this principle.
When we decided in Europe to create a single currency and a central bank for the European Member States, France proposed and secured the creation of a structure for political dialogue with the European Central Bank. The structure is called the Eurogroup.
- At the IMF, at the suggestion of its members and of France in particular, we decided to create a standing body superior to the Executive Board, which took the form of the International Monetary and Financial Committee. This body is comprised of the finance ministers, and its role is to give the institution political impetus.
- In recent years, meetings of the G7 countries and the leading emerging countries, including China, in the form of the so-called G20 group have made progress in creating conditions for broader political exchanges on the main international economic and financiel issues of the day. The G20 will meet next week in Ottawa, Canada. This group is not yet totally representative. I recently proposed that we look into a system of representation for the world's main geographic and cultural zones. This system could operate on the basis of a rota of terms of office so that each country in turn could speak on behalf of its people and partners with a stronger voice than its own. I also support the idea of creating an Economic Security Council within the United Nations framework.
- Our co-operation should also encompass the development of common policies where globalisation intensifies protential problems
Take health, for instance. Trade growth and technological change go hand in hand with greater health risks. For example, you have probably heard of mad cow disease, which recentyl infected Western Europe's cattle and triggered fears of serious human repercussions. The handling of this crisis clearly illustrated the advandages of a coordinated approach. In Europe, the solidarity of the Member States led to compensation for affected cattle breeders. We introduced embargos on Member States that reported cases of the disease. All European beef production was made subject to common rules on prevention and risk management.
I will give another example of exceptional gravity : that of the major epidemics, such as AIDS, which is fastly and tragically ravaging a large part of the human (and productive) potential of poor countries. For all ourcountries, risk prevention calls for both international surveillance and the pooling of means of resistance. A particularly massive effort should be made to combat AIDS. France has decided to allocate 10 % of the resources freed up by the debt it cancels to fighting this disease. The international community has decided to invest 10 billion US dollars in this fight. China is certainly aware of the need to become more involved in fithting AIDS.
Another crucial issue I want to talk about is the use of natural resources and environmental protection. We know that the continued, uncontrolled use of raw materials and natural resources can threaten future generations. The international community has understood this ans has drafted a number of agreements, among them the Kyoto Protocol, which aims to control the production of greenhouse gas emissions to curb global warming. We are convinced that there is no other way to protect our common heritage.We will pursue this approach wherever it is needed. Tomorrow, at the WTO conference in Doba, we would like this reality to be factored into the trade agreements, so as to bring about an equitable distribution of wealth and ensure sustainable development.
I am happy that both China and the European Union have opted to come out in favour of the Kyoto Protocol. And since, this evening, I feel that you represent the future of China, I would like to say that your country's involvement in these efforts is crucial to the planet's future. Your industrial power, which makes you the second largest carbon emitter in the world, and your consumer potential, which influences the behaviour of other nations, make Chine a crucial player in safeguarding the world's environment.
- Lastly, I would like to say that I feel our co-operation in helping to control globalisation fairly is primarily the fruit of our people's efforts to better understand one another, to help each other and to build our futures together.
I was in Shanghai yesterday, where I met several French businessmen working in China : generating electricity, trating municipal water, training Chinese managers, providing health care, and providing construction services.
This evening, I find myself here with you in the presence of your university's authorities, who have just signed a co-operation agreement with the prestigious French School fo Advanced Business Studies, the " HEC ". This has already led to exchanges of MBA students and teachers.
I don't need to give other examples. I know that France and China are convinced that this dialogue between our people is the most secure path to successful globalisation. We have at least three major points of common interest : France and China are in favour of a multi-polar world and a regulated globalisation (cultural diversity, rejection of unilateralism). France and Europe back an increased international and regional role for China (WTO, IMF) France is an independant technological power, in several key sectors for the future and for China (nuclear power, aeronautics, satellite, railways, telecommunications, smartcards), and its willingness to really transfer technoilogies is proved. These shared interests are assets for the future.
In conclusion, I would like to say that France is well aware that the internationalisation fo trade is an ancient phenomenon for China. It dates back to when Emperor Han Wudi, in the second century BC, sent his envoy Zhang Qian to explore the western boundaries of the Empire and opened what was later called the Silk Road, the trading route that carried men, goods and ideas between East and West. I have talked about trade, finance and sustainable development. The world will discuss these subjects throughout the coming weeks. We will see them raised in Doba at the WTO ministerial conference, in Monterrey at the United Nations Conference on Financing for Development, and in Johannesburg at the Earth Summit, ten years after the Rio Conference. France and China are close on many points ; They must continue to work together for a better future. Because a better future depends on excellent international cooperation.
(Source http://www.minefi.gouv.fr, le 15 novembre 2001)