New Internationalist

The Glass Menagerie

Issue 334

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WTO / EUROPE
The glass menagerie
The pursuit of democracy takes the
train to Euroland in Brussels.
Democratic: Probably misguided. [Supposedly accountable].

I board a eurostar train that trundles around London on privatized rails for quite as long as it takes to glide at breakneck speed all the way from the French side of the Channel Tunnel to Brussels. Oh well, that’s the publicly owned European railway system for you: twice as fast, three times as cheap, maybe even on time. You’d have to be crazy to argue for that, now, wouldn’t you?

For the first time, as I talk to Caroline Lucas, I feel the hint of a breeze in the corridors of power. She’s prominent in the Green Party in Britain and became a Member of the European Parliament (MEP) for Southeast England a couple of years ago.

‘A sadness, a scandal if you like,’ she says, ‘is the fact that it’s multinational companies or the corporate sector who have the ear of trade negotiators, and they are the ones who are driving this process.’

Does the WTO have any direct influence over her decisions?

‘Yes it does,’ she says, ‘but in an entirely negative way, I have to say. And one example is the Cosmetics Directive. We’re trying to revise this Directive, to bring forward its aim to prohibit the sale in the EU of cosmetics tested on animals. The Commission had originally pledged itself to having a complete sales ban. They have now backed away from that, for fear of a WTO challenge.

‘To this we replied very strongly: “Well, if they do, let them! What better test case could we possibly have?” It’s a very clear demonstration of why there’s so much anger with the WTO, if their rules prohibit such a key piece of legislation, which has massive support in the EU. Over 80 per cent of people are against testing on animals. What’s more, we’re seeing a freezing effect, legislation that doesn’t come forward, isn’t improved, for fear of a WTO challenge.’

That’s where the real power of the WTO rests; not so much in what it does, as in what people can be led to believe it might do. Of its first 20 decisions on disputes, 17 went in favour of the country bringing the challenge, invariably seeking more ‘liberalization’. There has, as yet, been no decision favouring the democratic regulation of international trade.

Does Caroline Lucas feel that, in exchange, she gets any influence over the WTO?

‘Well, very little. As MEPs we have few powers over trade. We can either say “yes” or “no” to an agreement. It’s a blunt instrument and it’s pretty unlikely that most of my colleagues are going to say “no”...’

Caroline Lucas went to Seattle as part of a parliamentary delegation. In the immediate aftermath there was a strong sense that reform was necessary. For the time being, however, it seems to be stalled.

‘Post-Seattle there was some genuine feeling that something had gone badly wrong: “Oh my God! We’ve got to do something about this!” was the refrain. But I think that feeling has evaporated. There is no real sense of urgency.

‘What’s more, behind the scenes and in individual agreements, the EU is going much further than even the WTO can manage. For example, I’ve just been following the EU-Mexico Agreement, which is about to come to Assent in the European Parliament. I did the report for the Trade Committee on that. And it’s even worse than the North American Free Trade Agreement (NAFTA). There’s absolutely nothing on trade and labour. Nothing on trade and the environment. It goes far further than the WTO has ever dreamt of in terms of services and intellectual property rights. I mean it is a hideous and horrendous document.’

This is the first time in 20 years I’ve been in Brussels – the metropolis of ‘regulation’ and much reviled in the name of national sovereignty by the right-wing nationalist press in Britain. This has tended to endear the place to me, since the British press is in truth more preoccupied with the deregulating ambitions of its cosmopolitan, absentee media proprietors than with national sovereignty.

No, the problems with ‘Brussels’ are more evident in the city itself – in the unruly communities that are being flattened by monumental bureaucratic palaces mushrooming everywhere with astonishing speed. Great walls of glass and chocolate-coloured marble advance on the bedraggled remnants of an older, friendlier city. Even the public parks are occupied by the likes of Gaston, a very small but extremely aggressive dog-like creature that is taking its owners for a walk and seems intent on savaging my suit when I retreat to a bench for a few moments of reflection. Rather like Washington DC, the imperial city doesn’t feel as if it belongs to the people who still live there.

‘“We’ve got to do something about this!” was the refrain. But that feeling has evaporated’

Entering the monument where Anthony Gouch works is rather like crossing a frontier. At the reception desk an electronic sign announces the exchange rates for the euro, the Union’s brand-new single currency. I have to surrender my passport. The lift opens onto a corridor that shrinks into the distance.

Anthony Gouch is a very smart, quite young Englishman who is not lacking in self-confidence. He speaks for Pascal Lamy, the Commissioner for Trade. Commissioners are very powerful people in the EU, heading up the bureaucracy in each area of its work. Lamy and his staff are the people who do most of the negotiating with the WTO on behalf of all its members, including Britain.

I tell Anthony Gouch what Caroline Lucas had to say about the EU trade agreement with Mexico. This turns out not to be a good opening move. He seems a little stunned. ‘I’d love to talk to her about it,’ he says eventually. He spent four years of his life negotiating this very deal. I’d hazard a guess that he thinks of it as even better than NAFTA.

‘Maybe the world’s trading system isn’t as equitable as it might be,’ he says, ‘but we have found from our own experience that the way to make it more equitable is by making common rules, which favour the weak over the strong...’

So here is someone else who favours the weak over the strong. Even if the experience of Europe actually proves his point – which is questionable, to say the least – extending it so casually to the rest of the world simply won’t wash. Otherwise, why not allow the free movement of workers into well-guarded Fortress Europe, rather than just the free movement of goods and services, mostly outward-bound?

‘India practised a policy of autarchy for a long time,’ he continues. ‘Effectively what that means is that India’s still in the Dark Ages for many things...’

I anticipate that what I’m about to hear is all too familiar. It could well have been lifted from the pages of The Economist, the pro-business free-trade lobby dressed up as sharp analysis.

‘We went there a few months ago and they’re very worried about China. Everybody wants to put their money into China. So you say: “OK guys! How about taking your reforms a little bit further, and more quickly? That way you’ll be able to attract more people to come here.” But then the problem they have is – well, it’s that they have a... democratic system. And in a democratic system you have people who say: “No! We’re not opening our markets. No! We’re not opening this, we’re protecting that.” Are they penalized slightly by that? Well, that’s a moot point.’

Moot indeed. It’s one thing to assert that the democratic majority, or the venal politicians who claim to represent it, are not always right. It’s quite another to develop the conviction that they are invariably wrong and democracy is simply an obstacle to globalization – particularly if you need democratic legitimacy to justify your job.

‘But China,’ he continues. ‘You know, China is a country which has undergone many changes in the last few years... The WTO is not about political reform in China, but experience and history show that the two tend to go hand-in-hand.’

China is applying for membership of the WTO. It’s a contentious issue, not least because China scarcely has the best of democratic or human-rights credentials. But then, neither does the WTO. Denying China membership for those reasons might prove a trifle... awkward. Anthony Gouch, I have no doubt, is thinking of the benign impact of trade, its legendary ‘opening up’ of repressive societies. I’m thinking of the malign opening up that followed General Pinochet’s military coup in Chile in 1973 – and the savage military dictatorships that trampled all over Latin America thereafter.

‘I’m a believer in trade and investment to increase development,’ he says.

I suggest to him that it is just that, a matter of belief.

‘The statistics and realities are the sort of thing that make me believe it,’ he says. ‘I know Mexico inside out. I know enough about it to argue on this one.’

I too have looked quite hard at Mexico. I must have seen another country altogether. I head off to retrieve my passport.

In the park outside, after evading the attentions of another Gaston, I reflect on where this odyssey has taken me so far. I have reached the end of the line of such directly elected representation as I possess. It’s clear to me that the nearer I am to my local community the more likely it is that my voice will be heard. The further I travel away from it – the grander the offices, the larger the salaries – the less likely this becomes; yet the more political power has accumulated.

One might ponder for ever on how to bring the money-grabbing, empire-building, unaccountable instincts of ‘free’ international trade under some kind of democratic control. Or one might reverse the process and conclude that trade, like democratic control, is for the most part best conducted locally. In a more restricted role, international trade might then become an agent for equitable, sustainable development, rather than its enemy.

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TRIMs – Trade-Related Investment Measures

WTO definition:* ‘Prohibits measures, such as local-content requirements, that are inconsistent with basic provisions of GATT 1994.’

WTO explanation:* ‘An indication of how closely trade is linked with investment is the fact that about one-third of the $6.1 trillion total for world trade in goods and services in 1995 was trade within companies – for example between subsidiaries in different countries or between a subsidiary and its headquarters.’

NI assessment: Designed to prevent governments, or democratic decisions, exercising control over economic policy.

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Source: Human Development
Report 2000, UNDP.

*From WTO website: www.wto.org

Room at the Top
The dark blue Opel Vectra looked curiously unremarkable to journalists lining up for the pre-launch test-drive in New Delhi. More than its specifications, what will count with the increasingly choosy Indian buyer is the ‘Made in Germany’ tag it will carry when it eventually goes on sale. For that will be the first time in half a century that a car built entirely outside the country will be available from local showrooms.

India, as signatory to the WTO, is due to lift restrictions that have prevented global car manufacturers from exporting their wares to what is considered the last of the world’s big untapped markets. When India first opened up the automotive sector in 1996, big names like Fiat, Daimler-Benz, General Motors, Ford, Toyota, Honda and Hyundai rushed in to establish joint-venture manufacturing units with Indian partners. But, in spite of making profits, they complained of a tight investment regime which carried conditions on local content and maintenance of foreign-exchange balances through exports.

Last June, the US challenged India’s policy as a violation of the WTO guidelines on TRIMs. And before long the European Union followed suit. What has irked Indian officials is the eagerness with which both of them sought the intervention of the WTO. According to S Narayanan, India’s ambassador to the WTO, the measures that were being challenged did not in fact fall under TRIMs. Furthermore, he argued, transition issues were being ignored in order to accommodate automobile giants anxious to get at the Indian market.

According to India’s Industry Minister Murasoli Maran: ‘Third World countries are worried that what they keep out of the front door may find its way into the WTO through the back door.’ He said there were many instances of WTO’s dispute-settlement mechanism overstepping its mandate: ‘Seattle after Seattle can only endanger the existence of the multilateral trading system itself.’

The phenomenal growth of the automobile industry in India is easily the most visible sign of a policy of liberalization begun in 1991. Till then, car buyers could choose between India’s version of a 1958 British Morris Cowley, which is still rolling off assembly lines in Calcutta, and the equivalent of a 1964 Italian Fiat, production of which was stopped last year.

The real worry for imported models like the Vectra is that they may have to contend with a glut in the market. India now has capacity to build 1.2 million cars a year. But last year only half that number were actually sold.

The sudden rush of cars has choked roads in India’s crowded, poorly regulated urban centres, several of which rate among the top-ten most-polluted cities in the world.

But there is always room at the top. When Mercedes Benz launched its S320-L model last year, at around $150,000 apiece, the buzz was that it was too expensive for a poor country. But even before the launch Mercedes had bagged orders for 84 cars – a year’s production. By the end of this year names like BMW, Jaguar and Alfa Romeo will also be opening up shop in India.

Ranjit Devraj in New Delhi / InterPress Service

 
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