Global Business and Global Poverty Conference Stanford Graduate School of Business

Introduction by John McMillan

It's my great pleasure to have the opportunity to introduce Raymond Offenheiser, who is president of Oxfam America, which is the US affiliate of Oxfam International. I think, as everybody in this room knows, Oxfam is one of the leading worldwide organizations for addressing issues of poverty and injustice.

Raymond joined Oxfam in 1995 as its president after 20 years of work in development internationally. One of the things that he has done with Oxfam America is to develop an expertise in development issues and global trade. For instance, you may have noticed in the press recently, they issued a report of sugar subsidies in Europe and its affect on developing countries.

Raymond is also a member, of course, of the board of Oxfam International, and to give you an idea of the scope of the organization, it now operates in some 120 countries and has an annual budget of $500 million. Raymond is active in civic organizations and he is also active in university activities as an advisor at Harvard and Notre Dame, where he is a graduate, and Columbia University as well.

We are very pleased that he's able to come to Stanford today and we are looking forward to his address.

Remarks by Raymond Offenheiser

Thank you very much David, for that kind introduction.

I am delighted to be able to join you this morning and would like to thank Mr. John McMillan and John Roberts for inviting me to celebrate with you the inauguration of the Center For Global Business and the Economy.

Global Business and Global Poverty, the topic of today's conference, are increasingly central to Oxfam America and Oxfam International's agenda. Every day it is becoming clearer to us that the world clearly needs a new and bold vision. A vision that harnesses the resources and imaginations of both the public and private sectors to find solutions to poverty and social injustice. We will therefore congratulate and welcome the establishment of this center at Stanford University that tries to link these diverse worlds and diverse stakeholders.

My remarks this morning will address the role that Oxfam America sees for global business in this quest, and to do so I am going to try three things.

One, sketch the context that shapes the intersection of global business and global poverty. Second, describe what this context has meant for Oxfam's work and how it's shaping our evolution as an organization. And finally, offer a vision, a modest vision of what global business might do to alleviate global poverty.

First, let me set the context somewhat. The role of business, of course, exists in a broader context. As we heard from Daniel, we're witnessing a growing debate about globalization, equity, and equality around the world. On the one side there is a pro-globalization and free trade camp, which holds that free market principles will bring prosperity to all; all we need are open markets, lower tariffs, unimpeded flow of capital, less corruption, more fiscal discipline, and increased respect for private property.

On the other side, an anti-globalization camp uses the same data, the same evidence, but comes to very different conclusions. This group holds that globalization so far has contributed to growing poverty and suffering, that markets are manipulated by private interests to their own advantage, and that developing countries are made to open their markets without rich countries having to do the same. At the extreme end of this opposition, critics see trade as antithetical to development. To be fair, arguments have become more nuanced recently than they were at the outset of this debate some years back, but the polarization is still quite pronounced. Members of the community of NGOs concerned with the development in human rights have different views on many of these matters, but they tend to share some common perspectives about the causes of poverty. Some of the common understandings in the NGO community might be that number one, poverty is a consequence of social exclusion. Number two, sustainable development starts with people and it's not solely about economic growth and efficiency. And third, that the solution to poverty is to help the poor remove the structural barriers that impede their ability to shape their own lives. These include, for example, lack of access to credit or clear title to land, and a variety of other structural and systemic mechanisms that basically impede their access to opportunity.

So this brings us to my second headline. What does this mean for Oxfam and our work and our evolution as an organization? Social exclusion, structural barriers, and similar terminologies sound very exciting and very seductive, but we believe this is not simply a matter of changing our vocabulary, there are really some new challenges that we face. First we've discovered that not all barriers facing the poor are local. In the early 1990s we joined with other Oxfam affiliates to build support for achieving the UN goals of putting all children in school by the year 2015. In the course of this work our partner organizations in the south repeatedly reminded us that their governments were collapsing under mountains of debt. These governments could not possibly provide even the most basic social services of education and health to their populations. Thus we linked our educational initiative to a broader, Jubilee Campaign movement that asked for debt relief for the highly indebted poor countries.

The G7, the club of seven wealthiest countries, adopted the debt relief program. This program acknowledges the injustice of massive debt burdens of poor countries and sets in motion a process of relieving it; it's not the perfect solution, but it's real progress.

A second initiative that we undertook was to launch a campaign entitled "Make Trade Fair." We've been doing this for the last three or four years. If globalization is the defining historical challenge facing our generation, then it falls to us to demystify, dissect, and improve the rules of the global trading system. Within the small black print of today's trade arrangements the future of whole nations and peoples are being shaped and defined far from their view and way beyond their reach. Oxfam has chosen to engage in a number of trade issues that go to the heart of the link between global business and global poverty.

One of the issues that is buried under the innocent sounding and politically laden language is the whole field of intellectual property, an issue that is very, very important in this part of the world. Uruguay Round trade talks that led to the creation of the World Trade Organization also incorporated new rules on intellectual property into the international trade regime. This became the first trade issue we chose to table, particularly because patents affect access of the poor to essential medicines. This is the case where trade rules are literally killing poor people.

A few facts that, I am sure, many of you know well: One-third of the world population lacks regular access to medicines. Fourteen million people die yearly of infectious diseases, many of which are curable, but medicines are priced out of reach because of the pricing system of the patent system.

Before the new rules on intellectual property, many developing companies allowed their pharmaceutical industries to produce generic versions of drugs developed by foreign corporations, or to import such generics from other developing countries. In some instances, some medicines were produced under compulsory licensing agreements. This old practice made essential medicines affordable to poor people since prices were based largely on manufacturing costs, not on what the market would bear in the countries. The WTO outlawed this old practice and also extended the live of patents for 20 years. The new rules were due to pressure from big multinational pharmaceutical corporations. Now to be fair, Oxfam is not against patents, per se, we recognize they are absolutely essential to induce corporations to invest in research and development in new drugs. But the patent-protective markets of rich companies are sufficiently large to recoup much of these costs, so this becomes a case where the multinational corporation must begin to reassess the ethical contradictions in their business model when these business models are applied without adjustment within some of the worlds poorest countries.

To tackle this issue, Oxfam joined forces with a coalition of other NGOs including Doctors Without Borders in a campaign built on the growing concerns about the global HIV-AIDS epidemic. This effort culminated in an agreement reached last year by the WTO members at Cancun. The new agreement allows developing countries either to manufacture generics or to import generics from other developing countries when health emergencies exist. But the new agreement still leaves serious doubts about whether the poor countries will be able to exercise the rights that they appear to have gained. The new rules require a complex procedure that can be easily manipulated by special interests. Past experience suggests that the potential of such manipulation is considerable, so from our point of view at Oxfam we are referring to this as a deal gift-wrapped in red tape and we feel the need to remain vigilant in order to help to assure that these arrangements can actually be implemented.

In our second effort to improve trade we attempted to tackle the age old problem of commodity pricing. Both the short-term volatility and the probable long-term decline of the pricing of raw commodities are of serious concern for the poorest countries. These countries rely on the export of just a handful of such commodities to finance all the imports they need, but according to the free-trade ideology that drives the WTO, unstable and declining prices are not a problem; they are simply the result of the market at work.

We wanted to ameliorate the problems associated with the low and fluctuating commodity prices; that issue represents one of the biggest trade challenges facing the poorest countries and yet remarkably it's nowhere to be found on the WTO agenda. Oxfam chose coffee as a vanguard issue to force the commodity price issue onto the world agenda. The price of coffee, as many of you may know, has literally collapsed; it's dropped by 50 percent in the past three years. Over-production of the coffee market is resulted from a variety of different factors. These include the entry of Vietnam to the market, the shifting of Brazilian production to frost-free zones and the fact that major roasters have turned a lower quality and thus cheaper coffee to make first the instant coffees and more recently, flavored coffees.

Twenty-five million rural families around the world draw their livelihood in part from coffee. Just imagine if you were asked to take a 50 percent pay cut. But for coffee farmers this pay cut was even more dramatic because the people I'm talking about had incomes that were already dismal to start with. I think I am not overstating it to say the coffee crisis is destroying entire communities from Colombia to Ethiopia and is being referred to in Central America as "the silent Mitch," after Hurricane Mitch, the hurricane that devastated the region in 1998. Now the economic textbooks would tell us that farmers acting rationally should simply shift to other crops. In fact some do, they start growing cocoa—better price margins, more reliable markets. Others lose their land because they cannot repay debt before they can diversify and they end up in urban shanty towns. Still others, out of pure desperation increase their production of coffee even when the price declines.

Developing countries have suffered from the rigors of commodity price volatility for generations, and trade rules worsen the problem. If the rich countries do not produce raw materials for themselves, these materials mostly enter the US and European markets duty free. On the other hand, processed materials and manufactured goods face tariff barriers. Processed goods imported into the US from Bangladesh, for example, are taxed at a rate of 14 times that of goods from France, so developing countries are forced to sell their products at rock bottom prices as they compete against other countries trapped in the same box. They have to export more and more quantities of, say, coffee in order to buy the same goods from the industrialized countries. This of course limits their ability to diversify their economy by importing capital equipment and creates a vicious circle that few developing countries have been able to escape.

Oxfam is advocating a global coffee rescue plan that would monitor supply chains with signals of likely oversupply and institute a global system of supply management through the international coffee organization. This system would supply incentives and means for farmers to diversify into other agricultural commodities, for which there would be assurance of reason pricing and access to key agricultural markets in Europe and the United States.

We are not naïve. We know that a functioning commodity agreement will not emerge immediately. As a very partial solution, we have also been promoting the purchase of fair trade coffee by the large coffee roasters like Proctor & Gamble, Nestles, and Kraft. Fair trade coffee bypasses middlemen so as to give a substantially higher share of profits directly to the producer; it also guarantees producers a floor price. We have also been funding and supporting cooperatives of small producers that can supply this kind of fair trade coffee, high-quality fair trade coffee from Central America and Ethiopia. As a direct result of this work, Proctor & Gamble recently started selling fair trade coffee to its specialty coffee division Millstone. Dunkin Donuts has made a deal with us and it is now on board, selling fair trade coffee to anyone who buys its new lines of espressos and lattes. All their espressos and lattes today are made with fair trade coffee—that's 6,300 retail outlets. Starbucks has carried fair trade coffee for awhile in the United States, and numerous other roasters in the specialty coffee industry are embracing this concept. Our British sister Oxfam has announced this week that it will be opening a chain of fair trade coffee shops in Britain, marketing just fair trade coffee.

So fair trade, I think, provides an excellent business proposition for corporations and can contribute very directly to global poverty alleviation. 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. The Financial Times reported this week that fair trade in Europe represents 4 percent market share of processed food products in the European market, and it's a growing share.

This leads me to the next issue of our Make Trade Fair Campaign, agricultural subsidies and dumping. Millions are impoverished because rich countries restrict the access of developing country farmers to their markets. On top of that, farmers in the poor countries have to compete at home with subsidized products from rich countries. We all know the story, governments of the industrialized countries pressure developing countries to open their markets, but they reserve the right to maintain trade barriers and subsidies at home precisely in those industries that may face stiff competition from developing countries, and this is a clear case of double standards.

Agriculture is the most striking case: farming is precisely one activity for which developing countries are quite competitive, but they cannot fully benefit because of unfair trade rules. More outrageously, thanks to generous subsidies, US and European farmers can sell their production in developing countries at prices that are lower than production cost, a practice that is usually called dumping. Dumping destroys the livelihoods of small farmers in poor countries and prevents them from diversifying their agriculture. At the WTO meeting in Cancun last year Oxfam worked with Southern governments and other nongovernmental allies to pressure the US government about subsidizing cotton production here in the United States.

Let me offer you a few facts about cotton production here in America. Every year the United States government pays 25,000, just 25,000 American cotton farmers between $3 and $4 billion dollars in subsidies. This is more than the value of their crops in the international markets. The subsidies allow them to export nearly half their production at prices that are much lower than production costs, thus dumping depresses world prices by about 25 percent and severely depresses the income of poor farmers in developing countries—including 10 to 11 million farmers in West Africa alone.

Our work built on a formal complaint introduced at the WTO by Brazil as well as on a request by four West African countries for immediate financial compensation for harm caused them by the US cotton subsidies. A New York Times editorial last year put the issue in very provocative terms and I quote: "US subsidies are literally killing African farmers." In the interest of protecting 25,000 American farmers, whose net worth averages $1 million per farmer, and at the cost to US taxpayers of $4 billion per year, the United States government is undermining the possibilities of 10 million West African farmers just basically making a living. What we're talking about here is not help for the small American family farm, but corporate welfare. To think Ronald Reagan used to castigate some imaginary woman ripping off the taxpayer by getting food stamps. This pilfering of the welfare system is a minor misdemeanor when seen alongside California cotton growers, documented in the recent book King of California, who receive both federal agricultural subsidies and water subsidies to grow cotton non-competitively at taxpayer expense.

But cotton is only one egregious case. European dumping of sugar and milk and restrictions on access to the US market for these and other products are equally pernicious and damaging. Altogether, the rich world spends $320 billion dollars a year on farm subsidies. This is six times the amount spent on foreign aid for all the countries and about the same as the entire gross domestic product of sub-Saharan Africa. In effect, subsistence peasant farmers in poor countries must compete against US and European treasuries in order to survive—not exactly an even fight. The collective efforts of NGOs to end subsidies have met with some success. The WTO recently issued a preliminary ruling in Brazil's favor on cotton, and just last week the European Union announced that it is willing to eliminate all agricultural export subsidies. Will this really happen? Oxfam will remain committed to shaming both the US and European governments on these issues until they abandon their current policies. Pressure would appear to be building to get some kind of agreement by July that would enable the Doha Round of the WTO to stay on track. At a recent meeting I attended in St. Louis of the World Agricultural Forum, trade representatives from developing countries, as well as representatives from the United States, were giving this fifty-fifty odds.

The fourth target of our Make Trade Fair Campaign is foreign investment. This is a whole new agenda that the Europeans in particular want to bring to the floor of the WTO negotiations: rules to protect multinational corporations' overseas investment, or what some commentators have glibly referred to as "the corporate human rights agenda." The World Bank and the IMF also put pressure on developing countries to liberalize their regulations in order to attract foreign investment. In contrast, measures that would stimulate domestic investment and transfer technology from rich to poor countries are discouraged. Investment rules requiring foreign investors to procure minimum of input locally or to participate in joint ventures with local entrepreneurs are disparaged. Import tariffs and cheap credit from state-owned banks, measures that would boost profits of local entrepreneurs, are deemed impediments to free-trade. Many of these policy tools are already outlawed by WTO agreements. Adding more protection for foreign investment to the WTO Accords would put most of the remaining industrial development policy tools on the chopping block for developing companies.

Examples of the harm that could be done abound. Let me take as an example the Volkswagen factory in Pueblo, Mexico, that produces all the VW Beetles sold through the world. The facility is a great place for Mexican workers, whose salaries are among the highest in the country's industrial sector, and they work in assembly lines identical to those in Germany. These factories, and indeed the entire car industry in Mexico, would never have been built without earlier protection of the industry. In the past, Mexico pushed foreign investors to develop local suppliers. On the other hand, more recent regulations have limited the ability of poor countries to insist on technology transfer and on backward linkages. The risk is that Mexico and other developing countries would only assemble parts that are imported or which are made by other foreign companies in the country.

Oxfam has joined a large number of groups that simply say no to the proposed WTO agenda on foreign investment. Among all the issues I am talking about today, this is probably the one where our attitude could appear at first sight as not constructive because we do not propose an alternative. But the alternative perhaps is a status quo, which in this case is not all that bad. Every poor country should be able to design a mix of policies that are best suited to its own industrial development path. Many economists, least of whom is Danny Roderick of Harvard University, are saying that this is the most sensible thing to do. The end goal is not the creation of a world market for multinational corporations, the end goal is poverty alleviation.

So finally, let me turn to the issue of what global business can go to address some of these poverty issues proactively. For some time there has been a very stable and somewhat scripted conversation about how the corporate sector can help to reduce poverty, but today, that conversation is changing and evolving in dramatically new ways. In the new conversation, contributing to solutions to hunger and poverty means more than making philanthropic donations to an NGO or other worthy causes. It means that contributing to solutions of hunger and poverty goes beyond caring for one's own employees, or for the natural environment immediately around one's sight of production. Rather, contributing to solutions means taking a fresh look at one's business model, means managing the totality of corporate impacts on society by asking, "Who are my suppliers? What are their practices? How does my business affect poor people in distant places? What are the social and economic impacts of my total business activity?" Finally it means asking, "How do corporations use their political access and influence? Should I really lobby for this or that trade rule that is going to be good for my bottom line, but which might be bad for the poor?" Overall, "Should my corporation step up and support rules for international economic transactions that generate relief from poverty and more equity?"

Framed in these terms, debates about global business and global poverty are not for the faint of heart. But for those of us with the privilege of debating these questions in the halls of America's great universities comes an obligation to try and see the world from the perspective of the poor. If we have any semblance of a commitment to justice, it's incumbent upon us to reach beyond the pronouncements of narrow-thinking economists and politically motivated policymakers. We need to apply our own tough-minded moral and ethical tests. We must constantly remind ourselves that markets seldom assure justice, they are morally neutral and do not naturally produce just outcomes. Moreover, despite the protestations of many economists, the truth is that markets are imperfect and manipulated throughout the world and at every level of society by those who have the power and audacity to bend them to their will. Business managers have that power, and the issue is whether they will bend the rules in such a way that they will help the poor. For business to engage the nonprofit sector around poverty issues a common language will need to be developed and compromises will be needed on both sides.

At Oxfam and many other not-for-profits, constructive engagement with the private sector is already underway. The fact of this engagement is prompting considerable internal reflection on mission, on roles, and on strategies. Currently Oxfam is engaged with major corporations in the pharmaceutical sector, food processing sector, and extractive sector. We are also engaging with corporate leaders at the World Economic Forum, the UN Global Compact, and other standard-setting bodies. Our assumption is that this work is only going to increase, and we have to prepare ourselves to manage the opportunities that these openings afford us.

A brief aside. Some years back, shortly after 9/11, I became very interested in the whole debate around the Marshall Plan that emerged after World War II to help developing countries, in the response of the United States to the plight of not only Europe but the developing world's newly independent states, and someone gave me a book written by a political scientist at Harvard, who had been a professor of John Kennedy. The first page of that book has a very interesting quotation which goes on to talk about the necessity of alleviating poverty around the world and supporting human rights as the basis for establishing a safe and secure world for America and also for business. But what was really interesting about this was the quote was from the president of Standard Oil at that particular point in time, and what the book went on to talk about was the fact that the private sector was critical politically in the emergence of the Marshall Plan after the Second World War and played very statesmanlike roles in the American political system to make that happen, something I think we tend to forget.

I offer that anecdote only as a way of saying that if business considers ways that it might assume more of a leadership role in the global fight to alleviate poverty, I'd like to offer some general ideas about areas where the private sector might engage, and these might be ideas that you could put on your agenda for reflection here in the new program being set up at Stanford.

First, the business sector might publicly support UN efforts to achieve the millennium development goals. Get behind the Secretary General's initiative to alleviate poverty, in a public way. The business sector might publicly support the UN rights norm for corporate conduct and the global compact that was mentioned earlier by Daniel [Litvin, founder and principal consultant, Percept Risk & Strategy Ltd]. This is an effort by, again, the United Nations to bring the business sector into the debate on global poverty in a formal way and to look at whether in fact human rights standards can be applied to the way business is being conducted around the world. I think it is important for business schools to begin to talk about human rights and figure out what it is going to mean if we in fact become business leaders and we adopt human rights standards for the way we do our business.

Publicly support relief with deserving countries, but the issue of debt relief persists. It's been somewhat resolved, but there is some ways to go. During the entire campaign on debt relief, those of us who worked very hard on the issue never had a business leader stand beside us in public hearings on this issue and support that initiative. It would be really a profound statement if that were to happen.

Publicly support trade policy reform in areas where trade distortions are clear and egregious.

Publicly support important initiatives to combat corruption, like the question that was asked earlier. The Soros Foundation has initiated a Publish What You Pay initiative which encourages corporations to actually make public what they have to pay to do business in a particular country to make the whole issue of monetary transfers developing countries much more transparent. That would go a long way toward disciplining the whole area of corruption in the developing world.

Publicly support innovative joint-venturing with national firms, governments, and not-for-profits in areas like fair trade, and publicly support the promotion of sound competition policies globally and nationally. We're seeing a lot of the emergence of monopoly practices, particularly for example in the agriculture sector, where five major global corporations control all food retailing around the world now. A small handful of companies control all the intellectual property for agricultural technology. There are real questions about what the impacts are going to be of increased concentration of control in certain sectors where the poor have a major stake.

We as Americans have a special obligation to focus on these larger questions. Our government and our economy are the largest and most powerful in the world. It is our corporations that relentlessly lobby our government for or against the rules that will govern the international economy. Because of their choices, multinational corporations can be key players for poverty alleviation.

I'd like to close by calling on each of you, particularly the students among the audience, to take seriously your role as global citizens. Spend your days here at Stanford evaluating what that may mean for you in your role as a future leader, how you can carry forward the insight you acquire through your reflections here so you will make a real difference in the future.

In the meantime, I would like to invite you to support us at Oxfam as we are attempting to create lasting solutions to poverty and hunger and social injustice.

Thank you very, very much.

Question: Giving your good description of what Oxfam is doing to reach out to the business community and its ideas of what we could do more of, I am curious about your opinion about your colleagues and other governmental agencies or non-profit or NGOs. To what extent are they asking themselves how they can better understand business, or align business in what it's doing? Or more specifically, when you look across this large number of agencies working in developing countries, to what extent do the administrators or managers have business backgrounds, or to what extent should they?

A: Very good question. I think what's happening in the field, and to some degree it's reflective of Daniel's excellent presentation, is that for many years, the not-for-profit community particularly was very much on the outside of the business world and campaigning on generally a narrow set of issues, in a very passionate way, without necessarily knowing a lot of about what the internal workings of the corporation were about. Over the last 10, 12, 15 years, there has been an emergence of a lot of work on corporate social responsibility, so suddenly not-for-profits are finding themselves coming to more and more meetings about codes of conduct, standards, and so on and so forth to broad principles. That's why I think they're very good and it's enabled the not-for-profit sector to get more of a human sense of what the corporate world is about and what some of the constraints of business are in addressing some of these problems; I think it has humanized the conversation.

However, I think that we're at a watershed moment now because I think some major not-for-profits have actually been engaged in these corporate social responsibility conversations for some time and have realized that some corporations are coming to them and saying… okay we buy a lot of the ethical and codes of conduct arguments that you're putting forward, what do you want us to do? And when the company turns to you and asks you what do you want us to do, you have to be able to talk to them about how does their business operate and how do they make their money and what do the supply chains look like. Our view is that the next generation of this work, if we do it responsibly, is really going to be about our hiring people who do have MBAs, do have a background in business, who actually can evaluate the supply chains, business practices, and profit-making strategies of corporations and talk intelligently with corporate leadership about where there are ethical contradictions or challenges in those supply chains or business models that could be addressed in an constructive way in which there are win-win outcomes. So we're trying to, in some sense, have a conversation that is much more balanced, much more intelligent, and much more about harnessing the capacity of business to contribute to development in the long term. I think we are at a very interesting moment for students in universities like Stanford and business schools to contribute to this in interesting ways, and I think there will be a variety of new professional opportunities opening in the not-for-profit sector in the UN and government agencies to facilitate these kind of conversations.

Question: The World Bank and the United Nations have been at this problem for more than 50 years, and they recognize that they have had only had partial success, actual failure in removing poverty. Who keeps the multinational corporations honest in reaching their objective? And is it not going away from their basic objectives, which is new business?

A: I don't know that we can ever claim that the business of corporations in the private sector is poverty alleviation, but at the same time, I think that there is a challenge to any business to ask itself whether and to what extent it can match its corporate interest with the public interest, and view itself more as a public trust than perhaps has been the case in the last however many decades.

The issue is, as we look at the whole issue of poverty alleviation going forward, many of the major shifts that I think are driving the not-for-profits to look at the private sector more closely is foreign aid is drying up, foreign investment is increasing more exponentially (it probably dwarfs foreign aid basically by a factor of ten to one), and the private sector is reshaping the landscape of opportunity in the developing world in dramatic ways, Now we're not saying that necessarily businesses have to become poverty alleviation agencies, but I think the principle that we would operate with is: they should be doing no harm.

Question: What has Oxfam's strategy been in achieving its objectives? Has it been to lobby governments and corporations or to try galvanizing general public interest in consumers? For example, in convincing Dunkin Donuts, did you go straight to the top, or did you try to prove that there was consumer demand for these issues?

Offenheiser: We basically realized we had to link local problems to a global campaigning strategy. We actually are trying to do public education on issues like the coffee crisis, so we're building a light campaigning architecture that allows us to push an issue out into the media and try to sustain it over a period of time. One of the things I was intrigued by in Daniel's comments about the advocates' inability to get all the issues on the table in the public domain, one of the things we know as not-for-profits, is for the media, poverty is not an issue, it's not news. It's news only when you have a good fight and a good conflict is it newsworthy. In other words, people have to be revolting or shooting or you know, cutting the pipeline, then it's news. So it's very hard actually to get the kind of major issues of poverty and equality into the press and frame a debate under those circumstances.

In terms of strategy, we basically feel like it is important that some of these major issues, like the volatility and the commodity markets, become something that the general public understands, and I guess we have a fundamental belief that there is in average citizens a commitment or a civic value of fairness if they understand some of the facts. But we are actually going to the tops of corporations like Duncan Donuts. We don't go to the PR department; we ask to see the vice president for policy and some of the VPs for the major business areas that we're interested in because we know they have the power to actually adjust the business model and we want to talk about the business model. We don't want to talk about their branding problems or their reputation issues. We know that it's only when we can get to those people that we will get results.

On some of the issues we have worked on, like pharmaceuticals, we're actually not as active during the public campaigning as we were before, but we shifted our focus to the US Trade Representative's office where the pharmaceutical companies are putting a lot of pressure on to roll back the Doha Agreements, the Cancun Agreement, and we know that there is a real need to actually be in some strategic places on some of those questions. It doesn't require a lot of people, but you need to know where to be and where that business debate is actually occurring at that particular time, so it's a strategy that we are operating on multiple fronts simultaneously and shifting from the public domain to behind the scenes depending on where the issues are at a given moment.

Question: I would like to ask your opinion about the AGOA, the Africa Growth and Opportunity Act. It has a lot of good things, but it also has a lot of limitations—limitation in terms of time, limitation in terms of importing agricultural products, which Africa is more known for. I would like to see what Oxfam is doing to help alleviate those kinds of restrictions.

Offenheiser: We were actually opposed to the original AGOA Bill precisely because we thought it was extremely limited and did not offer Africa opportunity where Africa needed opportunity, in the agricultural sector, because nobody wanted to deal with the subsidy issues. We are now looking at a third version of the AGOA Bill which is opening a bit more opportunity for Africa, so we're supporting the third bill as a platform for creating more opportunity. However, I think the limitations of the bill continue to be that it's mainly focused on textile exports and Africa has limited capacity to export. African can export cotton, but it's having American cotton dumped into the market, so therefore it's affecting Africa's ability to effectively participate in the cotton markets, but it doesn't necessarily address all of the commodity issues where Africa would have an advantage. Ironically in the textile area, where the bill perhaps offers the best opportunity to African countries, if AGOA is not renewed, those textile opportunities will dry up. And in another year the Multi-Fiber Agreement will run out, and it is presumed that China will start to then dominate the textile market and Africa will really feel the affects of that. So the one major opportunity in AGOA is textile exports, and that may disappear in the next two years if the bills are not renewed or when the Multi-Fiber Agreement ends. So we need more for Africa than what AGOA currently provides.

Question: So is there any extent to which agricultural subsidies are justified strategically because they help support basic production capabilities in essential commodities?

Offenheiser: Our view on subsidies is that we are not against the use of subsidies per se for providing incentive in internal markets; what we're against is the use of subsidies to generate over-production that results in dumping.

Just to give you the price differential in the cotton case, American producers produce cotton at a real price of 73 cents per pound, the African producers produce it at a price of 21 cents per pound. When we sell our US cotton with all the subsidies we sell at 18 cents per pound; we undersell them by 03 cents. I mean, does that make any sense, and it's your tax dollars.

Question: You talked about a bunch of actions that you'd like to see the business community take. Have you considered beyond the sort of intangible benefits of that accrued at companies if they are perceived to be good corporate citizens? Are there any economic benefits, short or long-term, that you have identified associated with those initiatives? And secondly, can you identify any CEOs or executives or companies that you think are particularly progressive or innovative in this area?

Offenheiser: This is probably a question that Daniel should answer, but I think a lot of what was at the heart of Daniel's presentation, and I think is at the heart of his business, is the whole issue of reputation risk or brand risk for corporations. And I think that in the era of global communications, not-for-profit critics of corporations have as much control and access as a means to global communications as the corporations do. So it heightens the potential brand risk to the companies if there is some kind of question about their behavior in the same way that the human rights movement can publicize the case of an individual prisoner who's being tortured somewhere in the world and make it a cause celeb for the international community. If you have a mining company in Peru, let's say, where there's been a mercury spill and there's been no treatment of the victims of that mercury spill, or there's a massive public health problem that's emerged as a consequence of that, that can be broadcast to the world community, to the business community, to mining analysts at investment houses around the world in literally seconds. So I think companies are feeling that it's much, much more important for them to manage the social and political environment around their production activities so that in fact they can manage that brand risk more effectively

Now in the cases of many of these businesses, the local community needs the jobs, they need the investments, they need the return on investment essentially in the community, so they don't necessarily want to expel the business but they are actually looking for ways to come to terms with the presence of that business in that community.

We are involved in two interesting cases in Peru right now, one with the New Mount Mining Company that's got its largest gold mine investment in the world at 15,000 feet elevation in Northern Peru, where there had been a series of previous owners who created a whole series of problems with local community groups that New Mount has inherited. It is in some ways a reflector of what Daniel is describing, where the community environment is hostile and the new company ownership is trying to work its way through that and obtain social license. Meanwhile, there is a building project in Southern Peru where there has been a real interesting effort on the part of the senior management of the company to promote a really active dialogue with the community around issues of compensation, management of mining affluence, and a series of other sorts of environmental questions. That has resulted in a memorandum of understanding between the community and the mining company that's been developed in a collaborative way and then endorsed in public meetings. This sort of work is hard work for companies. It's new kind of work, but I think it leads to longer term stability for their operations. We're learning as we work more with business, particularly when we work within industries, that if you get an industry leader moving forward, making significant changes in reforms and taking risks to live up to standards, to pursue the local license concept, to talk about human rights, or to really stand out within their field, it may be putting them in a more competitive position. So as we work within industries, rather than with companies, we're looking for what we call first movers, industry leaders with whom we can work.

Then going to your question about interesting examples of companies, we participated as a humanitarian organization in the Conflict Diamonds Campaign a few years back that was an attempt to get certification of diamonds coming out of conflict zones in Africa in order to basically dry up the supply that was being traded for arms and driving conflict in countries like Sierra Leone. We had this very interesting interaction with Tiffany in which Tiffany was subjected to some criticism as a company that was trading in these conflict diamonds. Internal to the company there was a lot of stress over "what is this doing to our corporate reputation?" and "Why are these people coming after us?" Initially it was being managed by the public relations department, but ultimately it became a moral problem for the employees in the company. After they got over their anger and their denial that they were all involved in this kind of trade, the head of the company said to the employees, "Well why don't you investigate what's actually going on?" So they started looking at their supply chains and they actually found that there were cases where they could be accused of buying these conflict diamonds and they brought this information to the CEO and he said, "Well, if that's the case, let's see what we can do to clean up the supply chain." So Tiffany moved from being a purchaser of these diamonds to actually cleaning up their supply chains and it became a motivator for the employees. The employees went back to management and said, "Well, you know what, we were vulnerable on diamonds, we're probably also vulnerable on gold, lead, platinum, silver. Why don't we clean up those supply chains?" The management said, "If you want to take that on as a project, let's see what we can do in that area." So they've gone ahead and done that. Now those supply chains aren't perfect, but they've moved a long way as a company. At the end of the day they actually joined the non-governmental organizations in lobbying with us to get the Diamond Certification Bill through the US Congress and they have joined with us in conversations about setting up what we are probably going to call a Responsible Buyer's Group for Gold, which is basically to look at the whole supply chain for gold and see if there are ways that we can get gold production to move toward a more environmentally sound production system. So this is a case where a company is going to move from one end of the spectrum to the other in really dramatic ways, and is trying to become an industry leader.