New Internationalist

Shrink Or Sink?

Issue 334

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THIS MONTH'S THEME
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WTO / INTRODUCTION

shrink or sink: If the WTO means to stay afloat it will have to lose some excess baggage. David Ransom explains

Day by day a very peculiar kind of exchange intrudes more deeply into all our lives. We notice it every time our employers, our teachers, our neighbours, our landlords, our nearest TV pundits or political celebrities assert a ‘realism’ that dictates this, that or the other course of action. Sooner or later – if not sooner and sooner – it comes down to the imperative to ‘compete on world markets’. And whenever you hear this phrase employed by way of explanation for anything, chances are the World Trade Organization (WTO) is mixed up in it somewhere.

It now presides over a looming catastrophe of almost unimaginable proportions. Never before in human history have quite such grotesque inequalities of power, material wealth and human dignity cut quite so deeply, or quite so fast, into the fabric of the earth. Never before have we faced such a clear and present danger of self-inflicted environmental calamity. Never before have ‘world markets’ been accorded quite such a defining role in human affairs. One has to keep asking: where in the name of creation can all this conceivably lead?

No-one seems to know. No-one is responsible. The WTO, as if possessed of some obscure religious belief, advocates the universal application of an ideology so narrow, so utterly orthodox, so partial, so devoid of rational justification, so totally deranged, that it imagines nothing else. It pursues the ‘liberalization’ of everything because it can think of no other reason for its own existence. It makes rules that must, by definition, eventually apply to all peoples, regardless of their outlook. Those who disagree must be deluded, deviant, disobedient, diverse, or perhaps just democratic. It glorifies all forms of ‘growth’ in feigned ignorance of any cancerous mutations, including its own.

The origins of this cancer can be traced back to the chaos of the Great War of 1914, the Great Depression of the 1930s and World War Two. This provoked in the mid-1940s a brief outbreak of relative sanity and the birth of the United Nations. Among its functions was to be the oversight of an International Trade Organization (ITO). This was to regulate the mafioso practices of international finance and commerce, the ruinous collapse of commodity prices, the beggar-thy-neighbour protection rackets of big business and the inertia of governments. The unrestrained imperial ambition of ‘free-market’ capitalism had brought the world to its knees in a blood-bath during the better part of two generations.

the WTO’s tomorrow is rapidly becoming its today

Fifty founding members of the UN proposed a Charter for the ITO, to be ratified by a conference in Havana in 1947. A matter of months beforehand, 23 of the richest and most powerful countries decided they didn’t like the look of it after all. As the Cold War intensified, they styled the UN – with its Communist members and impoverished majority – unreliable. So they conspired together to found their own club, the General Agreement on Tariffs and Trade (GATT). Its function would be to ensure that no-one else would ever get their hands on the treasure of international trade. GATT would confine itself to cutting border tariffs on the trade in physical goods, and have nothing whatever to do with the UN. The US Government announced that it would not seek Congressional approval for the Charter of the ITO, which was duly pronounced dead at birth.

So GATT trundled on for years, a hideaway where corporate executives, lawyers, their chums among official experts and tame politicians could engage in a series of infernal negotiating ‘rounds’ designed to reduce tariffs, promote unrestrained trade, increase the profitability of big business and bore everyone else to death. The UN was left to organize a Conference on Trade and Development (UNCTAD) and sweep up the pieces without a broom.

A handful of Asian ‘Tigers’ – first Japan, then Hong Kong, Singapore, South Korea and Taiwan – meanwhile managed to establish a toehold in world trade with massive government support and Cold War foreign aid. By the mid-1970s they were ready to export onto world markets – which they naturally now wanted as ‘open’ as possible. A model of ‘export-oriented development’, reliant on the notion that democratic governments should not ‘restrain’ or ‘distort’ international trade in any way, was rapidly glued together from ill-fitting parts and touted around the world as the only answer to everything.

Meanwhile, huge transnational corporations had come to control two-thirds of all international trade. They wanted more of it – to ‘globalize’ – because they could control it far more effectively than local trade. Their further enrichment began to rely on all sorts of things – political stability, investment, cheap labour, new technology, services – in addition to the cross-border trade in physical goods. At least two of the new negotiations designed to protect their interests – Trade-Related Investment Measures (TRIMs) and Trade-Related Intellectual Property Rights (TRIPs) – would require massive changes to national laws around the world, and subsequent enforcement. Trade rules were not enforceable even on GATT’s own members, while a motley bunch of freeloader states lurked on its fringes. The collapse of the Soviet Union in 1989 threatened to swell their ranks still further.

So the ‘major players’ did it again. At the conclusion of the Uruguay Round of negotiations in 1994 the rich and powerful nations, propelled by corporate interests, pulled the plug on GATT, just as they had on the ITO. They set up the World Trade Organization instead. It would be given a legal status similar to the UN, so that its rules could be made legally binding on member states and almost impossible to unbind. What’s more, they would be enforced by a new Disputes Settlement Body – composed of just three appointed experts – with the power to impose escalating fines and crippling sanctions. Above all, the WTO would reflect the shift from cross-border trade in physical goods to trade-related issues. This meant intervening within member states, in their domestic law. In return, they would be granted ‘full board membership’ of the WTO, with one vote each. Take it or leave it.

On New Year’s Day 1995 the existing members of GATT took it – and the WTO moved into GATT’s grand palazzo on the shores of Lake Geneva. Non-members were left to plead, one by one, for accession.

Here, then, was the corporate manifesto made manifest – a public body that resembled in almost every respect the transnational corporations whose interests it was designed to promote.

All too soon, it is true, came a blow to its Mission Statement. The ageing Tiger economic model went the way of its namesake during the Asian crisis of 1997 – a virulent financial virus that actually hit hardest at the most ‘open’, least-protected economies around the world.

But so what? The new dispensation had worked: it had kept the vast majority of the world’s people politically weak, relatively even poorer, absolutely powerless. In truth, they had no choice. If they wanted just the promise of any hard cash from the rich-man’s table, they would have to beg, to perform like dancing dogs. Most of them were, in any event, already subject to the liberalizing zeal of structural-adjustment policies imposed by the WTO’s ugly sisters, the International Monetary Fund and World Bank. In the ruthless, self-seeking deals that are the only known currency of international trade, these countries would, as the saying goes, sit naked at the negotiating table.

So no-one in the know can have been entirely surprised when, at a routine WTO Ministerial meeting in Seattle in November 1999, members of the self-styled Quad group (the US, the European Union, Japan and Canada), following established practice, took a selection of key members aside into a Green Room and tried to inflate the WTO’s mandate still further.

What did take the old hands by surprise – what truly astonished them – was the presence on the streets outside of an unruly bunch of protesters challenging the politics, the very legitimacy, of the WTO itself; and, inside the conference, of a large number of member countries who had simply had enough.

The UN was left to sweep up the pieces without a broom

Almost everyone involved with international trade now seems anxious to agree that they had a point. An overdue ‘wake-up call’ had been issued. Reforms would be necessary.

The question is, are they serious? More to the point, are they actually doing anything about it?

Are they hell! The WTO’s objectives, you understand, are long-term and ‘built-in’. It’s the direction that counts, not the speed or the stormy waters that may from time to time make for choppy sailing for the unsinkable free-trade juggernaut. Negotiations on the ‘built-in’ agenda inherited from GATT – notably services and agriculture – are going on right now. Quite when, or by whom, they might ever be stopped is not clear. There has been no further ‘round’ of trade negotiations since 1994. When, or if, a new one will begin, or what it should be about, remains to be agreed. The next big Ministerial meeting takes place this November in Qatar – after Seattle, the only place they could find to host it.

But no matter. Trade negotiations have always been like this – complex, abstruse, interminable, ruthless, unstoppable, incomprehensible to the general public and, frankly, none of our business.

This is the hard heart of the matter. The more ‘transparent’ the WTO becomes, the more the democratic vacuum at its core is exposed. The richest and most powerful countries control the WTO on behalf of ‘their’ corporate lobbies – no-one even bothers to deny this. Unlike the World Bank and International Monetary Fund – where votes have to be bought with hard cash – every WTO member has just one vote. But on matters of ‘substance’ they never actually vote – and the WTO has created no demonstrable, positive advantage of any kind for the vast majority of its own members. What democratic legitimacy can possibly be claimed by such a set-up?

A preliminary reading of the WTO’s own material offers few clues. One device is to deny any connection at all between increasingly liberalized trade and growing inequality. But this won’t do. For what, then, is the WTO to tell the majority of its members who suffer such inequalities? That there is no point whatever in their belonging? Another is to promise for tomorrow the Nirvana that awaits all faithful free-traders in the end. But the WTO’s tomorrow is rapidly becoming its today. Yet another is to ignore the evidence of impending catastrophe altogether. But that implies complicity in the crime.

There was, it seemed to me when I took my first look at it, one way to put the WTO’s democratic credentials to the test – to try them out on the people I’m permitted to vote for myself. Do they know anything about it? Does it have any influence over them? Do they have any influence over it? Does my vote count?

What follows is the story of my voyage of discovery. It’s not often that I reproduce verbatim or at any length the words of men in dark suits and large offices, as most of the people I met turned out to be. But they are, as you might say, the horse’s mouth. What comes out is quite another matter. ‘Even chief executives are human when they go home,’ one of them told me. The question is, what are they when they go to work?

In the end these questions are not the sole preserve of the WTO but for all of us to resolve. Are we to rest content with democracy as an empty shell? Can its only promise be to deliver more food to the overweight? Are there no gains so ill-gotten that they are not worth having? If so, then the WTO – and the big business it truly resembles – has the might to be right. And that, I’m afraid, is our troubling point of departure.


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