If a word can summarize the spirit of the New International Economic Order (NIEO) and the Charter of Economic Rights and Duties of States (CERDS), I would argue that word is solidarity. In the CERDS project, solidarity was not only rhetoric to convince the Global North, or narrative to ensure the cohesion of the Global South — it was the keystone of a different international economic order. This idea was at the center of an alternative legal imagination, and the resulting obligations of Global North countries, affluent Global South countries, and multinational corporations (MNCs) would have been the basics of a new grammar for the international economy. Solidarity is the source of duties; the basis for sacrifices we all must make to live in a better community.
That international investment and trade benefit every person and country is a debatable proposition; flows of capital and goods have been closely intertwined with colonialism, the development project and globalization. The NIEO and the CERDS can be understood as interventions in this long history. These projects posited that the existing system of trade and investment benefitted rich countries at the expense of the rest, and aimed to create the conditions for an alternative — a system under which international trade and investment would be worthwhile for all. Under these visions, trade agreements would no longer be reciprocal commitments to cooperation among purportedly equal countries. Rather, in the CERDS project, cooperation required that those in a better position uphold duties towards those in a less affluent situation.
Duties and cooperation, crucially, are not about charity; they are about binding and enforceable obligations towards those in need. These obligations are sometimes regarded as costs, seen from a short-term perspective only. However, in the long-term duties towards those socially disadvantaged would create new opportunities for everybody, including in rich countries.
This thinking can be traced to one of the intellectual minds of the CERDS: The Mexican diplomat Jorge Castañeda. Writing in 1956, Castañeda observed that a significant limitation of the UN Charter was the lack of political principles and duties that would specify the relations between its members. He added: “Especially for small powers, it is essential that the Charter specifies the obligations and, above all, the prohibitions to which the States are subject.” Mexico unsuccessfully proposed an annexure to the UN Charter consisting of states’ rights and duties. In the following years, Castañeda and other fellow Global South lawyers did not give up, however, and continued campaigning to reconsider international law’s grammar. They criticized the principle of formal equality that dominates international law, focusing mainly on its international trade manifestations: the principles of reciprocity and the most favored nation (MFN).
International law is a liberal regime in that all states are represented as equal, and considered to enjoy the same level of independence or freedom. This starting point preconfigures the international trade arena; it assumes that all countries and peoples start from the same place, engaging in a fair game of comparative and competitive advantages. Trade and investment negotiations are therefore governed by reciprocity; every concession requires something in exchange. Countries are also concerned that their treaty partners may later give more privileges to a competitor. For this reason, they demand to be treated in the same way as “the most-favored nation.” This treatment—embodied in the World Trade Organization—would guarantee a level playing field.
This starting point is historically inaccurate and biased against the Global South. The false notion of formal equality obscures the legacy of colonial exploitation and its contemporary imperial and neocolonial manifestations. For Europeans, the so-called ‘New World,’ the Americas, was ‘the extraordinary ecological bounty’ that made possible the industrial revolution: providing natural resources for their factories and markets for their manufactures. Likewise, African slave labor to developed the natural resources of the Americas. After decolonization, Global South countries found themselves trapped in loops of repetition experiencing the impossibility of change — processes of continuity where transnational capital, capital-exporting countries, and local elites reproduced the political economy of extractivism and dependency. The Global South remained dependent on exports of commodities, imports of technology and manufactures, and flows of international capital by the rules of a game they did not make or approve.
Understandably, the Global South and its people, like Castañeda, wanted to define ‘new rules to meet the current and future needs of international society’. Commenting on the state of things, in 1969, Castañeda affirmed that there was ‘a radical incompatibility between the MFN clause and an international policy for development and assistance to underdeveloped countries’. The Economic Commission for Latin America and the Caribbean similarly called for a reconsideration of the reciprocity principle so that concessions would only be enforced when the less developed country effectively benefited from trade agreements.
During the NIEO and CERDS negotiations, the discussion was about distribution as much as it was about rewriting the rules of the game. These programs dealt with the details of international investment law, such as applicable law and dispute resolution, and the dynamics of international trade. Foreign investment was perceived as a means to control natural resources in the South, while the structure of international trade implied that these countries would continue to specialize in natural resources. The NIEO and the CERDS aimed at changing this situation through the national ownership of natural resources, the regulation of MNCs, and mechanisms to reconfigure trade relations, notably regional integration, international commodities agreements, and special and differential treatment.
In the minds of Castañeda and others, however, there was another dimension to the NIEO and CERDS — a crucial dimension that is often overlooked. The NIEO and CERDS were only initial platforms from which to reimagine international economic governance, rather than finalize programs themselves; after all, with few exceptions, their provisions remained quite vague. The key was to create and consolidate conditions of possibility for future reforms, especially bonds of solidarity across the Global South and between the North and the South. Castañeda and others believed that regional integration or special and differential treatment would only work if countries and people accepted to discuss international trade and investment using the language of solidarity — a language different to formal equality and reciprocity. Solidarity would be the basis for thinking in terms of substantive equality — instead of formal equality — and the emotional and sentimental foundation of duties — duties of care for those living elsewhere, far from your town or country; duties that would redefine the world we live in.
As the perceptive Marcos Kaplan observed, already in 1976, the NIEO, CERDS and UNCTAD failed in this regard. Solidarity was missing between the North and the South, as well as among the South. MNCs fiercely opposed the establishment of international corporate obligations; they strongly criticized the Charter of the International Trade Organization in the late 1940s and closed ranks in the 1960s and 1970s, advancing voluntary guidelines and corporate social responsibility instead. Capital exporting countries supported these initiatives which materialized in the 1976 OECD Guidelines for MNCs. Among the Global South, there was also suspicion. African, Caribbean and Pacific states accepted preferential treatment from Europe in the 1975 Lomé Convention, while Latin America insisted that these preferences should be multilateral only. There were also tensions between Global South oil-exporting and importing countries, which were exploited by the United States and Europe to divide the Third World. Lastly, the situation was not different within regions. Less prosperous countries such as Paraguay and Ecuador complained that regional integration was a means for the already wealthy, such as Argentina, Brazil and Mexico, to become richer.
Fifty years later, I believe that the most important lesson that the NIEO and the CERDS can offer us is that reimagining the global economy requires us to evaluate first the conditions of possibility for any form of meaningful change. The challenge is not only to come up with ideas to reform the WTO or reimagine investor-state dispute settlement (known as ISDS). Castañeda, Kaplan, and many others were aware that people are unwilling to make sacrifices without the selfless bonds of solidarity. Perhaps neoliberal reforms were possible, where NIEO and CERDS failed, because neoliberalism calls to be blind to what occurs to others. It is an excuse not to have obligations towards our neighbors or nature. The mantra is to believe it will be fine as long as we pursue our individual projects. Yet, fifty years later, we are far from fine.
The question is how we continue from here. Solidarity is neither esoteric nor implies yielding to the unknown. It is a practice we can nurture every day through conversations, through actions, by privileging the long over the short-term. It is something that needs to happen to us. Solidarity requires making the histories of those who are vulnerable and disadvantaged more visible. The fact that we often return to the NIEO as a source of inspiration for an alternative order perhaps speaks less to specific tools or mechanisms, such as commodity agreements, than to a shared belief that the old is dying but yet a new solidarity-based global vision cannot be born.
Nicolás M. Perrone is Professor of Economic Law, Escuela de Derecho, Universidad de Valparaíso (Chile)