Top Stories: News: Stanford GSB

FOR FURTHER INFORMATION: Helen K. Chang, 650-723-3358, Fax: 650-725-6750

Oxfam Leader Calls for Global Effort to Alleviate Poverty, Transfer Technology

June 2004

Raymond Offenheiser, President, Oxfam America
Offenheiser

STANFORD GRADUATE SCHOOL OF BUSINESS
—Foreign investment policies of the World Trade Organization should focus on alleviating world poverty, not on creating a market for multinationals, Raymond Offenheiser, president of Oxfam America, told the Global Business and Global Poverty Conference held at the Stanford Graduate School of Business.

The ethical challenge of a global business model, Offenheiser told the May 19 conference, is to manage the company's broader impact by taking into account its suppliers and practices as well as its social and economic effects on "poor people in distant places." The ethical challenge also requires business people to reconsider their political influence by asking themselves: "Should my corporation step up and support rules for international economic transactions that generate relief from poverty and more equity?" Offenheiser's answer is a clear "yes." According to him, markets do not assure justice, and therefore, business managers have to "bend the rules in such a way that they will help the poor." The direction to go, he said, is "fair trade."

In the case of the World Trade Organization, Offenheiser argued that along with the World Bank and the International Monetary Fund, the WTO puts "pressure on the developing countries to liberalize their regulations in order to attract foreign investment." Instead, he argued, global businesses should support joint ventures with local companies, promote the transfer of technology to developing countries, and defend human rights worldwide.

He also called for the private sector to reject the WTO's "free trade ideology," for which "unstable and declining prices are not a problem, but simply the result of the market at work." He cited coffee as an example of the harm that volatile and decreasing prices of raw commodities can generate in developing countries. A 50 percent decline in the price of this crop, associated with a considerable overproduction, has affected the livelihood of 25 million rural families around the world. Oxfam's ambitious "global coffee rescue plan" would help farmers diversify their production according to market needs by creating an international coffee organization. But Offenheiser's agency is also attacking the problem with more modest solutions, such as convincing large coffee roasters to buy fair trade coffee. "Fair trade products have so far remained very much at the margins of the economy, but if more corporations were to bring it to the mainstream, it could work wonders," Offenheiser said.

Two of Oxfam's most emblematic enemies of fair trade are agricultural subsidies and dumping. Because of them, farmers in poor areas have to compete in their own countries against cheaper products from the First World and to fight enormous trade barriers to reach wealthier markets. Subsidies to North American cotton and European milk and sugar, for example, put prices for those products far below production costs.

"Altogether, the rich world spends $320 billion a year on farm subsidies. This is six times the amount spent on foreign aid for all the countries," he said.

Pharmaceutical patents, another obstacle for fair trade, can have an even more dramatic effect. These patents are life threatening, Offenheiser said, because they restrict poor people's access to medicines. For Oxfam, the solution is not to oppose patents per se, but to recognize that business models cannot be applied blindly to the poorest markets. The ethical thing to do, Offenheiser argued, is to adjust these models to the social conditions of those markets.

"Poverty is a consequence of social exclusion" and is rooted in structural inequalities that prevent some people's access to opportunities, Offenheiser said. Governments collapsing under mountains of debt cannot "possibly provide even the most basic social services of education and health to their populations." Thus, an important step toward the inclusion of all in the benefits of a global economy is debt relief, he argued, calling for business leaders to publicly support this type of initiative.

Globalization poses an additional challenge for companies in terms of their brand reputation, Offenheiser warned. Because anti-globalization critics have access to worldwide mass media, a global company has to consider its standing in the local and in the global community. Aware of this, some companies have developed the idea of a "social license," giving them a high level of legitimacy on their home turf and the opportunity to more easily gain respect of global customers.

Offenheiser was among the speakers from four continents invited to address the conference, sponsored by the new Center for Global Business and the Economy at the Stanford Graduate School of Business. The Center hopes to open new areas of research into issues faced by business, governments, and organizations like Oxfam operating around the world. It is codirected by professors John McMillan and John Roberts of the Stanford Graduate School of Business.

—Isabel Awad

Stanford GSB News

Oxfam Leader Calls for Global Effort to Alleviate Poverty, Transfer Technology

Related Links