A Call to Action:

A Citizen's Agenda for Reform of the Global Economic System

The Call to Action (attached below) outlines a progressive agenda
for change in the international economy that would allow sovereign
nations to pursue human development goals.  By May 14, we ask that
you and/or your organization endorse this Call to Action , which is
to be submitted to the leaders of the G-7 countries at their
meeting in Cologne, Germany scheduled for June 1999.  Also, please
circulate the Call to Action among your own networks.  The list of
endorsements as of April 29, 1999, attached below, exceeds 80
organizations with a total mebership of over 26 million.

********
Dear Colleague,                             February 18, 1999


We ask that you and your organizaation endorse this Call to Action, 
which is to be submitted to the leaders of the G-7 countries at their
meeting in Cologne, Germany scheduled for June 1999. Also, please
circulate the Call to Action among your own networks.

This document was first drafted at a working conference, sponsored by Friends
of the Earth-US, the International Forum on Globalization and the
Third World Network, held in Washington, DC December 9-10, 1998. 
This conference included over 70 participants representing labor
unions, environmental organizations, parliamentarians, academia,
faith-based and indigenous peoples groups, and grassroot advocacy
coalitions.  This Call to Action includes the principles
articulated by over 80 representatives of non-governmental
organizations (NGOs) in the "Declaration on the New Global
Financial Architecture," Washington, DC October 9-10, 1998.  In
addition, the principles and policy proposals contained in the
attached document were presented to parliamentarians
from around the world who attended the Heinrich Boll/Friends of the
Earth-US conference held in Washington, DC on December 14-15, 1998.The
next stop will be in Bangkok, March 1999, at an NGO
conference, sponsored by Focus on the Global South, to
consider the effects of the financial crisis in Asia
and reform of the global economic system.

To register endorsement please send your name, title,
organizational endorsement and your total membership (to calculate
total endorsement only) along with contact information to Friends
of the Earth-US (fax: +1(202)783-0444; e-mail: msiegel@foe.org),
re: A Call to Action.


Signed,


Andrea Durbin              John Cavanagh             Martin Khor
Friends of the Earth-US    International Forum on    Third World Network
                           Globalization/Institute
                           for Policy Studies




                            A Call to Action:
       A Citizen's Agenda for Reform of the Global Economic System


I. INTRODUCTION: Open the Debate


The global financial crisis presents an opportunity to rethink and
reshape the rules of the international economy so that they benefit
people and the environment.  We welcome the discussion and debate
among governments and multilateral organizations about
international financial regulation and the global economy. It is
time to ensure that the international economy is built on a solid
foundation of sustainable development, not unlimited profit.

The social and environmental damage caused by the international
financial crisis underscores the fact that the global economy is
too important to leave to central bankers and financiers.  Most of
the world's people live and work in countries that are
interdependent in the global economy, but these people are excluded
from decision-making. If there is to be a "new financial
architecture" (as some leaders have called for) that serves the
interests of the world's people, participation in building that
architecture must be broadened, not limited to the richest nations
and multilateral financial institutions.We call on governments to open 
the forums in which finance and investment regulations are discussed
-- at the international and national levels -- to include public 
participation and consideration of the principles and proposals made
in this statement.


The Current Situation


Today international financial markets resemble a global casino
where traders gamble on minute market fluctuations that have no
grounding in real economic activities. In 1980, the daily average
of foreign exchange trading was $80 billion.[i]  Today, more than
$1.5 trillion flows daily across international borders.[ii] 
Private financial flows to developing countries grew from $44
billion in 1990 to $256 billion in 1997.[iii] Today, nine-tenths of
capital flows are speculative, rather than productive in nature.

This explosive growth results in large part from global financial 
deregulation. According to many economists and world leaders, this
market "liberalization" was supposed to deliver progress and
well-being for all.  Some surely benefited.  447 billionaires now
have wealth greater than the income of one half of humanity.[iv] A
mere 100 multinational corporations control one-fifth of all
foreign-owned assets in the world. And, due to record mergers and
acquisitions, this concentration of wealth and power is increasing. 
Meanwhile, globalization has distorted national and local
economies, reduced self-sufficiency, expanded unsustainable
extraction and use of natural resources, displaced families and
communities, and made billions of people dependent on fickle
foreign markets.

In response, the public in many countries has begun to question the
current model of globalization and liberalization and to question
who benefits from this model.  Some high profile examples of the
growing strength and momentum of the popular movement against the
current model of globalization include the following: public
rejection of the Multilateral Agreement on Investment (MAI); the
unprecedented level of criticism of the role and performance of the
International Monetary Fund in responding to the global financial
crisis; and reproach of the environmental, social and economic
impacts of the World Trade Organization by civil society.

The economic events of the past year have validated these concerns.
The  world has learned that "hot money" can flow out of a country 
instantaneously.  The result has been a ricocheting financial
crisis that has devastated lives around the world. Financial
volatility is bringing massive economic breakdown, insecurity,
increased poverty, unemployment and dislocation, assaults on
environmental and labor conditions, loss of wilderness and
biodiversity, massive population shifts, increased ethnic and
racial tensions, and international conflict. 

According to U.S. President Bill Clinton, "the world faces perhaps
its most serious financial crisis in half a century."

The effects of free market financial deregulation are even
threatening global elites. U.S. Treasury Secretary Robert Rubin
states that "the global economy cannot live with the kind of vast
and systemic disruptions that have occurred over the last year." 
Rubin  -- as well as many economists and world leaders who helped
to design the current system -- are now calling for a "new
architecture" for the global financial system.  Any new
architecture must be based on certain principles that ensure the
current instability and inequality are not repeated.


II. PRINCIPLES[v]: Responding to the Global Financial Crisis


The new regulation of the international economy should be based on
the  following principles:

1.  Public Participation: All people should have full and
meaningful participation in national and international economic
decision-making. Participation that does not recognize the public as 
an equal stakeholder in the deliberative and final decision-making 
processes is categorically  rejected.  Full and meaningful Participation 
is fundamentally comprised of access to information, access to
decision-making and access to justice.

- Access to information means that the public should have access to
information with only limited, explicit exceptions.

- Access to decision-making means that the public has the right to 
participate in the decision-making process and that this
participation is taken into account in the final decision.

- Access to justice means that the public should ultimately have
access to an independent and binding review process for
infringement of its rights or to challenge a wrongful substantive
decision.

2. Democracy: The global economy must strengthen rather than
undermine the capacity of democratic governments at every level,
from local to  multilateral, to meet the needs of the public.
International institutions and negotiations must operate
transparently with full and fair public participation.

3.  Human Rights: Fifty years ago governments adopted the Universal
Declaration of Human Rights. At a minimum, international economic
rules and institutions must not undercut the basic rights set forth
in this treaty.

4.  Sustainability: The protection of human health and preservation
of natural resources and biodiversity requires the integration of
economic and social objectives, within environmental limits.  In
general, the more local the source and control of capital the more
likely development will be sustainable.

5.  Development, not Austerity: International and national policies
should alleviate poverty, create and sustain livelihoods and enable
sustainable human development to improve the quality of life for
all.

6. Equity: The current gap between the global rich and poor,
exacerbated by the high debt burden of many developing countries,
is unacceptable. It is unconscionable to act as if it can be a
permanent feature of the  international economy. Within countries,
policies should be designed to  reduce inequalities, thus improving
health and social cohesion.

7.  Financial Stability: Equitable, sustainable development
requires economic stability. Destabilizing speculative investments
should be regulated to limit boom and bust cycles and the severe
social and environmental consequences of financial crises.

8.  Good Governance and Transparency: Governments and
intergovernmental organizations are only accountable to the public
if they operate in a transparent manner. Corporations and markets
also require effective regulation and transparent procedures if
they are to function in society's interests.

III. A CITIZEN'S AGENDA: First Steps to Reform of the Global
Economic System

A. Regulate International Capital

GOALS:

- Reorient finance from speculation to long-term investment:  The
rules and institutions of global finance should discourage all
speculation and encourage long-term investment in the real economy
in a form that supports local economic activity, sustainability,
equity, and reduces poverty.

- Reduce instability and volatility:  The rules and institutions of
global finance should seek to reduce instability in global
financial markets.

- Enhance local and national political space:  The rules and
institutions of global finance should allow maximum space for
national governments to set exchange rate policy, regulate capital
movements, and eliminate speculative activity.

- Keep private losses private:  Governments should not absorb the
losses caused by private actors' bad decisions.

- It is unreasonable to assume that development needs will be met
by private capital flows alone.  The rules and institutions of the
global economy should seek to decrease private speculative flows
while increasing those public flows that support sustainable and
equitable development activities.

THE AGENDA:

Mechanisms to control short-term capital and prevent capital flow
crises are needed.  If and when crises do occur, mechanisms are
needed to mitigate the impact of destructive capital outflows, and
ensure that the poor and the environment are protected from the
effects of financial volatility.

Governments should be allowed, and indeed encouraged, to pursue
regulations and measures that restrict short term capital mobility,
including implementing taxes, establishing capital controls, and
setting exchange rate regimes. International regulations should not
hamper the flexibility of national governments to pursue the
policies that are bestsuited to national needs and situations.

At the International Level Governments should:

1. Establish An International Bankruptcy Mechanism
An international debt arbitration panel should be established to
ensure that financial crises and sovereign debt obligations do not
place undue burdens on countries and to prevent a liquidity crisis
from becoming a solvency crisis.  When sovereign debt service
threatens the welfare of a country's people, the panel would
restructure and/or cancel debts so as to ensure that important
social services are not compromised in an effort to meet debt
obligations.  In a financial crisis, the panel would
prevent a liquidity crisis from becoming a solvency crisis by
arbitrating an agreement that meets the needs of sovereign debtor
and creditor thereby helping reduce the need for bailouts by the
international community.

2. Provide Substantial Debt Reduction Detached from IMF and World
Bank Conditions 
Currently, debt payments cripple the ability of many developing
countries to invest in development.  Any resolution of this crisis
must include an expansion of the resources available and the
countries eligible for bilateral and multilateral debt relief. 
This relief should not be conditioned on IMF and World Bank
structural adjustment programs and it should allow countries to
dedicate sufficient resources to health care, education, social
services, and environmental protection.

3. Reform the IMF
Member governments should insist that the IMF enforce Article 6 of
its own charter, namely that the IMF should oversee capital
controls, not capital account liberalization.  With the
establishment of the bankruptcy mechanism above, the IMF need only
retain minimal capability as lender of last resort and
gather/publish international and global economic data. 
Decision-making by the IMF board needs greater transparency and
accountability by introducing greater democracy in voting and
publicly releasing as much information about its operations
as feasible.
        
4. Establish Speculation Tax
The governments of the world's major currencies should levy a tax
on certain international transactions so as to discourage
speculative and herd behavior in international capital flows.
        
At a regional level governments should:

1. Establish Regional Crisis Funds
We support the creation of regional funds outside IMF control that
can  respond quickly to crises while maintaining regional
sensibilities and interests.

At a national level governments should:

1. Retain the Right to Apply Speed Bumps and Capital Controls
The rules and institutions of the global economy should allow
maximum space for national government policy-making to regulate the
amount, pace and direction of capital movements.

2. Eliminate Short-term Manipulative Instruments
National governments should set regulations and incentives on
cross-border transactions so as to eliminate capital flows that are
entirely speculative (i.e. gambling on market fluctuations as
differentiated from hedging risk) and that can undermine the real
economy.

3. Maintain Stable Exchange Rate Regimes
National governments should strive to reduce the volatility that
has  characterized exchange rates since the collapse of the Bretton
Woods arrangements in the early 1970s.  Any international regime
should reinforce the ability of national governments to maintain
this stability.

At the local level governments should:

1. Democratize Mutual Funds and Pension Funds
Local and national regulations and taxes should be structured in
such a way so as to encourage local investment and control of local
capital. Local education initiatives should also inform citizens about 
the power of using their assets.

B.   Regulate Investments and Promote Corporate Accountability

Liberalized investment rules and the downward spiral of corporate
standards can cause significant harm to communities, workers and
the environment.  As the world's economies become more
interconnected it is becoming more important to have clear rules of
operation for corporations.  In February 1999 at the World Economic
Summit in Davos, Switzerland, UN Secretary-General Kofi Annan
called on corporations to abide by core values, including
protection of human rights, labor standards and environmental
protection.[vi]  We call on world leaders to regulate investment
and take firm steps toward holding corporations accountable to the
respect of human rights, workers rights and protection of the
environment.  Foreign Direct Investment (FDI) and the operations of
Transnational Corporations (TNC) should serve the needs of
people by contributing to locally and nationally determined
sustainable human development strategies.  Specifically, we call on
governments to: 

1. Recognize Clear Rights for Governments to Regulate Investment

2. Establish Measures to Redirect and Improve the Quality of FDI
Flows 
Competitive deregulation and the "race to the bottom" as
strategies to attract investment should be replaced with source and
destination country regulations, taxation measures, use of export
credit financing, and radical reform of International Financial
Institutions' (IFIs') support for FDI.

3. Conduct Consequential Review and Re-negotiation of International
Institutions and Agreements 
Those agreements and institutions that constrain governments'
rights to pursue these measures -- for example, bilateral
investment treaties (BITs), trade related investment measures
(TRIMs), the North American Free Trade Agreement (NAFTA) and the
structural adjustment programs (SAPs) of IFIs should be
renegotiated.

4. Establish Core Standards of Behavior for TNCs
These standards, which would provide a floor, not a ceiling,
include community disclosure, respect for human rights, labor
standards, working conditions, equality, environmental and consumer
protection, taxation, indigenous and local community rights,
business practices and competition and sovereignty over development
strategy. At a minimum, corporations should be bound by existing
standards in international treaties and declarations, including the
International Labor Organization (ILO), the body of United Nations
human rights treaties and the Rio Declaration. Corporations must be
held accountable to these standards through effective binding
mechanisms for monitoring and enforcement, such as international
courts with citizen standing, access to local courts, standing to
pursue justice in the home country courts of TNCs, and financial
sanctions for non-observance. 

5. Re-examine Corporate Structure and Corporate Activities
The emergence of the global corporation reposes key questions on
thevrole of corporations in society and the structure of
corporations. Corporations are creations of the law with interests
that should be subordinated to social priorities.  Thus, the issues
listed below demand re-consideration:
- Corporate obligations to stakeholders other that shareholders;
- Chartering of corporations;
- The political influence of corporations;
- Oversight of mergers and acquisitions;
- Corporations' limited liability status.

Footnotes:

[i]  Matthew Siegel, "Control of International Capital: A Survey of
Policy Options," Conference Preparatory Paper, November 1998.
[ii]  Roger Cohen, "Argentine Economy Reborn but Still Ailing," The
New York Times, February 6, 1998 p. A1.
[iii]  John Cavanagh and Sarah Anderson, "The Impact of Capital
Flows on Workers in the Global Economy," March 1, 1998, Institute
for Policy Studies; "Toward a New Financial System," The Economist,
April 11, 1998.
[iv]  Calculated by the Institute for Policy Studies based on data
from Forbes magazine and the United Nations Development Program.
[v]  These principles are inclusive of those presented in
"Declaration on the New Global Financial Architecture: Letter to
Global Leaders from Civil Society Representatives," which was
crafted by over eighty non-governmental organizations from around
the world at the Bank Information Strategy Meeting, Washington, DC,
October 9-10, 1998.
[vi]  "The Secretary-General Address to the World Economic Forum,"
Davos, Switzerland, January 31, 1999.



Endorsements to the "Call to Action" as of April 28, 1999


ORGANIZATIONS:


Amici della Terra, Italy (26,000)
Amigu di Tera, Netherlands Antilles (430)
APEC Monitor NGO Network, Japan (148)
The Arctic to Amazonia Alliance, USA (7,500)
Armenia "Sustainable Development" NGO, Armenia
Association of World Citizens and World Citizens Foundation, USA
Berne Declaration, Switzerland (16,000)
Both ENDS, The Netherlands
Citizen's Alliance of Santa Barbara, USA
Congregation of the Sisters of Good Shepherd (6,000)
Council of Canadians -- Canada (100,000)
CUSO Asia/Pacific, Indonesia
Danish Association for International Cooperation, Denmark (4,800
+ 110 organizations)
Domincan Sisters of Hope (400)
Down to Earth, UK
Dream Lab, USA
The Edmonds Institute, USA
Environmental Investigation Agency, UK (12,000)
Equipo Pueblo, Mexico
Euronature, Germany
Fair Trade Federation, USA
FERN, UK
Focus on the Global South, Thailand
Forest People's Program, UK
Forum of Progressive Artists, USA
Friends of the Earth-Costa Rica (30 groups)
Friends of the Earth-Australia (4,500)
Friends of the Earth-Czech Republic (500)
Friends of the Earth-England, Wales, Northern Ireland (200,000)
Friends of the Earth-Ireland (300)
Friends of the Earth-Netherlands (38,000)
Friends of the Earth-Norway (22,000)
Friends of the Earth-US (12,000)
Georgia Strait Alliance, Canada
Global 2000 * Friends of the Earth Austria (60,000)
Global Response Environmental Action Network, USA (3,000)
Globalization Challenge Initiative, USA
Grassroots International, USA
Guideposts for a Sustainable Future, Canada
IPS, Global Economy Program, USA
Indigenous Peoples' Biodiversity Network, Peru
Institute for Popular Democracy, Philippines
Integrated Rural Development Foundation of the Philippines (500)
Interhemispheric Resource Center, USA
International Labor Rights Fund, USA
Inter Peres, Canada (10,000)
International Forum on Globalization, USA
International Human Rights Association, Germany
International Innovative Revenue Project, USA
Jubilee 2000-Japan
JustAct (Youth Action for Global Justice), USA
Kairos Europe, Germany (500)
National Community Capital Association, USA
The National Direction (26,000)
PACT, USA
Pacific Asia Resource Center, Japan
Pesticide Action Network North America, USA
Philippine Rural Reconstruction Movement, Philippines
Project Underground, USA
Public Interest Research Group (PIRG), India
Public Services International, France (20,000,000)
Rainforest Information Centre, Australia (300)
Reform the World Bank Campaign, Italy
Resource Center for People's Development Philippines
Rethinking Tourism Project, USA
San Fernando Valley Alliance for Democracy, USA
Society for Sustainable Living in Slovakia (90)
The Stakeholder Alliance, USA (5,500,000, via allied orgs.)
Sustainability Project, Canada
Sustainable America, USA (191)
Swiss Coalition of Development Organizations, Switzerland
Third World Network, Malaysia-based
TRANET
Transnational Institute, The Netherlands
Transnational Resource & Action Center, USA
Transperencia, S.C., Mexico
United for a Fair Economy, USA (2400)
Ursuline Sisters of Tidonk, USA
World Rainforest Movement, UK
World Development Movement, UK (20,000)
Worldview, Ltd., USA (100)


INDIVIDUALS:
(affiliations for identification purposes only)


Dr. Peggy Antrobus, DAWN
Timothy Canova, University of New Mexico Law School, USA
Michael McEvoy, UK
Dr. Marcia Ishii-Eiteman, Pesticide Action Network North America,
USA
Gigi Francisco, DAWN
Thomas Henfrey, The University, UK
Gary Hesser, Augsburg College, USA
Marianne Hochuli, Switzerland
David Jaber, USA
Natalie Keiser, United Way of Metropolitan Atlanta, USA
Bernard Kervyn, Vietnam
Maryellen J. Lewis, MSU Center for Urban Affairs, USA
Thomas Lunde, USA
Janice McDougall, Canada
Fiona Roberts, New Zealand
Joel Rodriguez, MODE, Philippines
Robert A. Rutkowski, Esq., USA
The Honorable Bernard Sanders, U.S. Representative from Vermont,
USA
Prof. Gita Sen, DAWN
Claire Slatter, DAWN
Darryn Snell, PhD, University of the South Pacific, Fiji
Dr. Hari Srinivas, Tokyo Institute of Technology, Japan
Prof. Takuyoshi Takada, Chuo University, Japan
Prof. Masayuki Tokushige, Chuo University, Japan
Prof. Mitsuhiko Tsuruta, Chuo University, Japan
Stephen Viederman, Jessie Smith Noyes Foundation
Chris Watkins, Australia
Dr. Vivienne Wee, DAWN
Prof. Shiro Yoshizawa, Chuo University, Japan

To register endorsement please send your name, title,
organizational endorsement and your total membership (to calculate
total endorsement only) along with contact information to Friends
of the Earth-US (fax: +1(202)783-0444; e-mail: msiegel@foe.org),
re: A Call to Action.