CUED

The Evolving Supra-National Policy Arena

Job loss and income redistribution are, in part, the consequence of transnational corporations becoming supra-national by moving capital around the world and avoiding policy interventions from nation states that might benefit its peoples. For this reason, this report focuses on institutions that facilitate capital mobility.

The report begins with a discussion of the growing importance of supra-national corporations in the global economy. We define the nature of the global economy as including both trade among nations but also trade among affiliates of the same global corporation. In addition we examine the practice of corporations based in one nation establishing majority owned affiliates in another. Finally we discuss the trend toward a variety of collaborative arrangements such as outsourcing, cross-licensing of new technologies, and joint ventures among the supra-national corporations based in different nations.

This report goes on to contend that these forms of globalization are not the natural workings of the market; nor do they inevitably or universally lead to prosperity for all or even most people of the world. Rather, we argue, that globalization represents a strategic response to global economic crisis on the part of supra-national corporations. This response is termed by the author an "evolving supra-national policy agenda." While it is presently not a completely cohesive strategy, it involves four interrelated elements: a) cheapening production costs; b) unrestricted capital mobility; c) technological developments that facilitate capital mobility; and d) institutional arrangements that are capable of implementing the supra-national policy agenda.

Much of this report focuses on the evolution of a supra-national policy arena -- a set of institutions that are in the process of implementing the above policy agenda. We trace the origins of this evolution to the formation of the Trilateral Commission. Commission reports since its founding are analyzed in terms of the policy agenda they articulate and specific recommendations for institutional development or reform. We then show the relationship between the policy agenda and the changing role of the Bretton Woods institutions -- the International Monetary Fund (IMF), the World Bank, and the General Agreement on Tariffs and Trade (GATT). Finally, we discuss the proposal for a North American Free Trade Agreement and the evolving role of the Group of Seven Industrial Nations (G-7) as a further development of a supra-national policy arena.

We conclude that the emerging supra-national policy agenda and arena are of considerable concern to everyone who does not want to see global standards driven down to their lowest common denominator. Thus there is a need to consider the implications of these developments in terms of principles on which to base a continental accord among the peoples of various nations. It is also important to see implications in terms of needed governmental policies -- policies that govern intergovernmental relations and national policies that place controls on the private sector. Most importantly there is a need to consider the needed organizing framework that can press demands for social justice in a global economy. Principles, government policy and organizing will be the subject of a future report.

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UIC-Center for Urban Economic Development