XYZ Incorporated, one of the world’s 3 largest multinational corporations, has emerged from humble and modest beginnings to become one of the most financially successful operations on the planet. Founded in 19xx, in Hamilton Ontario, Canada, XYZ Inc. employs over 400, 000 people worldwide and sells industrial products to over 200 nations. Operational revenues are estimated in the hundreds of billions, with profits in excess of several billion US dollars.
XYZ Inc has operational assembly plants in over 30 countries. XYZ Inc. is prospering in an era of unprecedented technological improvement, efficiency has increased dramatically and we have achieved economies of scale throughout our operations. Aggressive investment in digital technology and e-commerce has positioned XYZ as a leader for decades to come. As part of our global growth strategy, we anticipate expanding into every corner of the globe and establishing dominance with our goods and brands.
Already, our brand is recognized by citizens the world over. The World Trade Organization (WTO), in our opinion, is the most effective, democratic and progressive international institution for continuing the impressive strides made in human progress during the past century. The WTO stimulates and encourages foreign trade and investment, thereby reducing the costs of goods and services for citizens in countries across the globe.
The WTO, through the co-operation of nation states, lowers trade barriers, opens the doors to progress for undeveloped countries and increases our collective quality of life. XYZ Inc. strongly supports the mandate of the WTO, having directly benefited from the organization’s work. Continued progress in the following three areas, namely investment liberalization, labour and environmental standards, and intellectual property, can only further spread the positive impacts of globalization to nations and corporations alike. Investment Liberalization
Economic integration is a force of good, and by freeing the ties of investment liberalization, we can further allow global markets to improve the quality of life throughout the world. Liberalization of investment provides an extremely effective and important tool to encourage the continued rapid expansion of foreign direct investment, freer trade, as well as technology and skill sharing. XYZ Inc. has invested billions of dollars into our operations worldwide, creating jobs, teaching state-of-the-art skills and transferring sophisticated technology.
An increase in the standard of living in developing countries is resultant from not only our activities, but those of other multinational corporations. For these countries, the increased liberalization of investment and freer trade will necessitate a significant transfer of technology and know-how. This is critical, for these developing and emerging markets, which can acquire state-of-the-art skills relatively quickly and inexpensively – at least in comparison with the time and expense that would be required to develop them internally. As a result of increased foreign direct investment, the latter years of the 20th century and the early 21st have seen the closer integration of national economies into the global economy.
This effective integration of national economies holds the promise to continue to reduce income and other disparities among developed and developing countries. Globally, foreign direct investment has increased from approximately $60 billion USD in 1985 to $315 billion USD in 1995. The sheer amount of foreign investment would not have been possible without the current reduction of trade barriers, the integration of economies and the efforts of the WTO and its predecessor the General Agreement on Trade and Tariffs (GATT). As is illustrated by the outstanding economic performance of the United States over the past decade3, increased investment propels efficiency and stimulates economic growth. Hand in hand with increased investment liberalization comes freer trade, which enables countries to better enjoy the benefits of globalization and improves economic efficiency.
For example, the American economy, which has entered into numerous trade agreements such as the North American Free Trade Agreement (NAFTA), as well as negotiated and adhered to trade barrier reductions resultant from the Uruguay Round Agreements, has demonstrated the combined effectiveness of freer trade and the continued liberalization of investments. For Americans, this has resulted in job creation, higher incomes, more consumer choice, downward pressure on inflation, and a better quality of life.
This is true not only for the US, but for all of the developed countries in the world today. Trade and foreign investment encourage competition, thereby providing a stimulus to improve the efficiency of domestic industries. They add to the overall availability of services and to the variety from which individual and corporate consumers can choose. As well, they contribute to technological advancement. In short, increased investment liberalization can only lead to more economic integration and, consequently, higher standards of living. Labour and Environmental Standards
The Cold War was predicated on the belief of mutual destruction if either the United States or the Soviet Union were to use nuclear weapons on the other. It was through this fear that nuclear war was averted. The same principle in many respects applies to labour and environmental standards. Corporations, in particular multinationals, will not maintain consumer loyalty and remain profitable if they conduct or engage themselves in a manner that is harmful to the environment in which they reside or operate. It is through this fear that corporations are forced to respect employees and the environment.
While we at XYZ Inc. support the discussion of all new initiatives to better protect employees and the environment, we object to any measures that could constrain our ability to conduct our operations efficiently and profitably. Scientifically analyzing our environment is a challenge unto itself, as the earth is continually evolving and changing. Although science has posed very intriguing questions regarding the impact humans have on the planet, there is no concrete evidence or empirically verifiable data that conclusively validates the claims of some ‘doom and gloom’ prognosticators.
We at XYZ Inc. back the stance of the United States government in rejecting the Kyoto Protocol regarding climate change. The proposals contained in the Kyoto Protocol would have unnecessarily slowed economic growth, while providing few tangible benefits. Without the undue restrictions of new regulations, XYZ Inc. , like many multinational corporations, has voluntarily donated over $1 million US dollars to local citizens groups to improve the green space where we operate. XYZ Inc. is ISO 9000 certified and will be completing the new ISO 14000 certification in the near future.
The resulting increased efficiency in operations has improved environmental performance in all of our factories in the Americas. We believe that until there is conclusive, undeniable proof that there is an environmental crisis, there is no need to impose regulations on corporations that will only harm productivity, efficiency, and the global economy. Corporate motives of continued growth and maximized profits inherently insure that the newest, most efficient technology will prosper in the long run; a reassuring notion that should quell unnecessary criticism of our position.
With respect to labour standards, it is undeniable that increased trade and investment liberalization has displaced workers in industrialized countries. Free trade and foreign direct investment may take jobs from workers in developed industrial economies and give them to cheaper workers in poor countries. 5 All other things being equal, this has been noted to have a depressing effect on the wages of other workers in developed countries. As most already know, however, pay and conditions in developing country factories are almost assuredly worse than in developed countries.
Profits are the motive for moving production to a lower-wage area. But the laws of economics ensure that no corporation can continue to exploit this situation for long, as cost advantages are competed away as other corporations do the same thing and cut their prices. It is through the lowering of cost advantages that a greater understanding of the broader benefits of globalization can be attained. As we are still experiencing growing pains associated with globalization, short term inequalities in labour standards seem very pronounced.
But over time, as the global playing field levels, these inequalities will disappear. In the end, labourers, even poor ones, will be better off, as real incomes increase in the aggregate. 6 The increase in demand for labour in developing countries should begin to increase wages, even if workers are not employed for multinationals. The more thoroughly and effectively XYZ Inc. and other multinational corporations are able to penetrate the markets of developing countries, the faster we can begin to introduce our capital and knowledge, the sooner poverty and labour abuses will disappear.
This is not to deny that the core function of XYZ Inc. is to generate profit – we strive to keep all variable and fixed costs to the smallest possible amount. XYZ Inc. , like other corporations, has been faced in the past with the unenviable task of trimming our workforce to maintain efficiency and productivity in light of volatile market conditions. But the wages we offer do not appear to be a problem for the workers who compete to take our jobs.
Individuals who chose to apply for work at XYZ Inc. o so because they prefer it to their possible list of alternatives. By their own judgment, a job working for XYZ Inc. makes them better off. Intellectual Property The protection of intellectual property rights is an issue of great importance to all businesses. The amount of research and development that is devoted to a particular product in our industry can sometimes run into the hundreds of millions of dollars. Like most other large corporations, XYZ Inc. invests significant funds into research and development.
These very substantial investments are made with the hope of recouping these costs and eventually generating a profit during the product(s) lifetime. The threat of another nation or corporation not respecting the copyright and trademark protections awarded undermines the spirit of innovation and ingenuity. The current inclusion of China into the World Trade Organization is greeted with cautious enthusiasm.
China ranks 52nd in the corruption perception index7 and its well documented infringement on intellectual property rights stands in contrast to the tandards of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) all members must agree to. The TRIPS agreement sets the standards for worldwide intellectual property matters. China, however, by all indications is going to struggle mightily to comply with this agreement. Many sources indicate that a significant portion of China’s economy is based upon counterfeiting and, though acceptance into the WTO is forthcoming, there is continued violation of virtually every intellectual property law known to XYZ Inc.
Some have argued that it is basically ingrained in China’s economy, and it is supported by the government in many of its various regions. 8 It is the belief of XYZ Inc. , one that is surely held by most other corporations and nations, that willful trademark counterfeiting or copyright piracy on a commercial scale must be criminal offences. As corporate entities, we rely upon governments and ruling institutions to ensure sure that intellectual property rights owners can receive the proper assistance to prevent the import and distribution of counterfeit and pirated goods. With specific reference to the Chinese state, it is imperative that they conform to the TRIPS agreement under their negotiated terms of entry into the WTO.
While increased access into the Chinese market presents exciting opportunities for multinational corporations, worry remains that our valuable trademarks, patents and copyrights may be exploited by Chinese firms. 10 Conclusion As stated at the outset, the WTO, in the opinion of XYZ Inc. is the most effective, democratic and progressive international institution for continuing the impressive strides made in human progress during the past century. Through the liberalization of investment, economic integration becomes a force of good, allowing global markets to improve the quality of life throughout the world. XYZ strongly supports increased trade liberalization. We noted that with increased trade liberalization, labour and environment standards are raised and the standard of living increases throughout globally integrated economies.
While we encourage and support increased protection of worker rights, we object to any constraining regulations imposed on multinational corporations that inhibit our ability to operate efficiently and profitably. The same is true in regards to increased environmental standards. Finally, increased protection of intellectual property, with specific reference to China, is necessary to ensure innovation and ingenuity are properly rewarded. XYZ Inc. strongly supports efforts to increase protection of intellectual property through the WTO.