New Internationalist

Junk the WTO!

Issue 388
Effigy of the WTO on its first outing. At the end of the week it was ceremonially beaten and ripped apart.

It’s hard to tell, at first, what the young women are up to. It seems to involve something inflatable. Something with tentacles. Then it emerges from within the crowd and is hoisted high above their heads.

A grotesque creature spewing a red trail of vomit, WTO-SAURUS painted, helpfully, on its back. Accompanying it as it moves forward is the chant that will be heard repeatedly during the week: ‘Junk, junk, junk the WTO!’

Few organizations are hated with such passion all around the world. Anger directed at the World Trade Organization and its activities spilled out most memorably on to the streets of Seattle in 1999 and Cancún in 2003.

Today in Hong Kong’s Victoria Park thousands of farmers, fishers, migrants, trade unionists and campaigners from all continents have gathered to protest the sixth summit of the reviled organization. A quick survey of the stands, tents and banners provides a graphic guide to all that the WTO stands accused of. The charges are emphatic and diverse. Everything, it seems, is laid at its door.

The WTO kills farmers; causes hunger; forces migration; ruins environments; denies poor people life-saving drugs; destroys health services and puts essential utilities like water out of the reach of the poor.

It steals jobs, pushes down wages, abuses human rights, deepens poverty, threatens biodiversity; depletes fishstocks… the charge list goes on.

I can’t help thinking: isn’t there a bit of fetishizing going on? Can one organization really be responsible for so many of the ills of today’s world? Isn’t it being invested with far greater power than it actually has?

And what exactly is this organization that provokes such global fury?

Born in 1995, it emerged from an earlier system, the General Agreement on Tariffs and Trade (GATT). Since 1948 this had presided over a succession of international trade negotiations focusing mainly on tariffs and quotas.

The main function of the WTO is to ensure that member governments keep their trade policies within agreed limits. Once signed, the agreements provide the legal ground rules for international trade within a multilateral framework.

According to the agreement that set up the WTO, its purpose is to facilitate trade and foster the sustainable long term economic development and improvement of living standards in rich and poor countries alike.

One of its core principles is that national rules should not discriminate between a country’s trading partners but grant all of them equally ‘most favoured nation’ status. A country cannot favour its own products and must give foreign suppliers and companies exactly the same treatment.

Another key principle is that trade should become progressively ‘freer’, with a lowering of trade barriers over time through negotiations. And trade arrangements should be predictable so that foreign companies, investors and governments can be confident that trade barriers will not be raised arbitrarily.

Interestingly, given the actions of rich countries in recent years, another principle is that the WTO should discourage ‘unfair’ practices such as export subsidies and dumping products at below their cost of production to gain market share.

Last, but by no means least, rules should be more beneficial for less developed countries, giving them more time to adjust, greater flexibility and special privileges.

That’s the theory.

Critics, including most aid agencies, say that on balance the WTO has done little that could be described as ‘beneficial’ to developing countries. Instead it has presided over a system that has forced open poor world markets to the advantage of the rich world and its corporations. The result has been deepening poverty and inequality.

The organization exerts extraordinary power in a world where international trade agreements can override not only national economic policies but even multilateral agreements that relate to labour, human rights or environmental protection.

Defenders of the WTO argue that it is a membership organization which can only do what its members – now comprising 149 national governments – agree. It is also more democratic than many international bodies as it operates on a one member one vote system.

On the face of it, this is so. But that does not mean its procedures are democratic, transparent or fair.

When he took over as the Director General of the WTO recently, Pascal Lamy formally abandoned the notorious ‘Green Room’ process. But in spirit it remains: small negotiating groups still set the agenda behind closed doors. At such informal meetings attendance is by invitation only and minutes are not kept. The countries that are frozen out are usually the poorer members who have little clout in the WTO.

The formal meetings, meanwhile, are ‘just a ritual’, according to trade watcher John Hilary of War on Want.

For those left out in the cold, it is infuriating.

Fresh out of the final stages of the Hong Kong Ministerial meeting Margaret Ateng Otim, a trade delegate and MP from Uganda, says: ‘It’s like George Orwell’s Animal Farm. All animals are equal, but some are more equal than others.’

The British agency Action Aid does not mince its words: ‘The WTO’s policy-making process is anti-democratic, non-transparent and systematically skewed in favour of rich countries.

Developing countries have been repeatedly pushed into accepting agreements that damage their interests.’1

Systematic skewing can happen in many ways (see The Great Tradomino, this issue). Something as basic as the size of the delegation you can afford can make all the difference.

At the Hong Kong summit the EU has 832 people in its delegation, the US has 356 and Japan has 229. Compare this with Bolivia 7, Rwanda 7, Chad 8, Burundi 3, Gambia 2 and the poverty-stricken Central African Republic which has none at all.2

‘It’s almost impossible to get an outcome that favours developing countries from negotiations so heavily stacked against them,’ says Peter Hardstaff of the World Development Movement, which took the count. ‘Rich countries field vast teams of lawyers, experts and negotiators to make sure they get the result they want. A small country with two or three delegates cannot hope to compete.’

Transnational corporations dominate global trade. Corporations carried out two-thirds of international trade in 2000 and their worldwide sales more than quadrupled from $3 trillion to $14 trillion between 1980 and 2000. 1

Equally distorting is the power and access given to transnational corporations by the WTO. This is effected through corporate lobby groups, a vast and booming business in itself.

A recent report reveals that 93 per cent of the 742 official external advisers to the US trade department represented business groups and corporations, including Burger King, Haliburton and Monsanto. Furthermore they had access to confidential WTO negotiating documents denied to others.1

It’s a similar story in Europe. The corporate lobby group European Services Forum – which represents transnationals such as British Telecom, Lloyds Bank, Suez and Vodafone – enjoys privileged access to senior policymakers in EU commissioner Peter Mandelson’s department.

It also enjoys easy access to the ‘133 Committee’, a powerful but secretive body made up of EU officials and trade experts which formulates important EU policies for WTO negotiations. Details of its meetings are kept secret even from EU parliamentarians. ‘I’ve been trying to get to see them for years,’ says Euro MP Caroline Lucas of Britain’s Green Party.

The impact that trade polices have on developing countries is tremendous. And one of the reasons for this is the way in which WTO policies dovetail with those of the International Monetary Fund (IMF) and the World Bank. In the jargon it’s called ‘coherence’; on the ground it can look more like a concerted pincer movement.

This is how it works. Take a country like Ghana, short of cash and with a substantial foreign debt. As a condition of its loans, it has to follow IMF rules for structural adjustment. What this usually means is removing subsidies from local agriculture or industry, and opening up its market and privatizing.

‘A country is “liberalized” by the World Bank and IMF; then the WTO comes in as a kind of police officer,’ is how Clare Melamed, trade expert at Christian Aid, puts it.

And this is what it does to people.

‘I used to have a one-acre tomato farm but I couldn’t afford to feed my family,’ says Kofi Eliasa. Under an IMF programme the Ghanaian Government removed support for a nearby tomato-processing factory and opened up the local market to imports. A glut of cheap tomato paste from Europe, where the industry is supported by subsidies, has since put Ghanaian farmers out of work. Now Eliasa labours for 12 hours a day breaking rocks in a quarry.3

Memorial to Lee Kyeong-hae, the Korean farmer who committed suicide in Cancún in 2003.

Maria Marcos Rivera and her family used to grow rice in Honduras. When the local market was opened to cheap imports of US rice she could no longer compete. As a result, the family stopped growing rice and lost its income. They now cannot afford to buy clothes and struggle even to meet the cost of daily staples.3

Vishambar, a 35-year-old former silk weaver in Varanasi, India, used to weave saris mainly for the local market. But in accordance with liberalization policies, over the past 15 years India’s silk tariffs have been reduced, allowing imports of silk fabric to more than double. As a result Vishambar lost his looms and became destitute. In April 2005 his wife died from hunger-related illness and days later his daughter also passed away. In May 2005 his two-month-old son died from malnutrition. ‘I feel sad about the future filled with more deaths and everyone suffering,’ he says. ‘There is no work. I am just sitting and begging…’1

These personal stories speak volumes. And their message is supported by more systematic research. The United Nations Conference on Trade and Development (UNCTAD) recently studied the impact of trade liberalization in 36 poor countries during the 1990s and concluded that: ‘The incidence of poverty increased unambiguously in those economies that adopted the most open trade regimes’.4

‘A country is “liberalized”, by the World Bank and IMF; then the WTO comes in as a kind of police officer’

But if the WTO is so bad for developing countries why don’t they leave it? The sad truth is that then they would have no say at all in the making of the rules for trade in the globalized world in which we currently live. A multilateral system – such as the WTO – is in theory preferable to bilateral deals, where the richer party will always have the upper hand.

But that discussion is for later. For now in Hong Kong’s Victoria Park the WTO-SAURUS is joining the line of people preparing to march towards the Convention Centre where the trade summit is being held.

During the coming few days protesters, including hundreds of Korean farmers, will try to find ways of getting through 9,000-strong police barricades to get their message to delegates at the Convention Centre. Some will throw themselves into the chilly, polluted waters of Victoria Harbour and try to swim across to the Centre. There will be teargas and pepper spray and 900 arrests. There will be round-the-clock TV coverage and a fair bit of sympathy expressed by local Hong Kong people.

But whether the protesters’ trade justice message will reach the eyes and ears of those with power within the WTO is another matter.

  1. Action Aid, Under the Influence, January 2006.
  2. World Development Movement, press release 14 December 2005.
  3. Christian Aid, ‘Taking Liberties: Poor people, free trade and trade justice’, 2004.
  4. UNCTAD, The least developed countries report 2004, New York and Geneva, 2004.

African T-shirt

‘In my youth every farm grew cotton, but now we are one of the poorest districts of Kenya,’ says Ongaria Peter Johnson of Nambale, Western Province.

Government support and preferential trade agreements helped keep the local textile factories going. But support was cut at the dictate of the IMF while preferential access to rich world markets was removed. By the end of the 1990s cotton production in Kenya had fallen to less than 5 per cent of its value in the 1980s.1

On the other side of Africa is Senegal, where Moussa Faye lives. ‘When I was a child all my school uniform, all my clothes were made in Senegal. Now we have almost no textile industry left.’

The African cotton garment is rapidly becoming a thing of past – and with it goes an important industrial sector in the world’s least industrialized continent. Cheap imports from richer countries (where cotton production is heavily subsidized) have decimated local production in one country after another. US subsidies, for example, have enabled American cotton to be exported at up to 40 per cent less than it cost to produce.

In a landmark ruling, the WTO upheld a complaint from Brazil, backed by a number of African countries, about US cotton subsidies. After much wrangling, US negotiators at the Hong Kong summit, finally gave a 2007 date for ending export subsidies.

This was a high-profile, but piffling gesture. Only a fraction of the four billion dollars a year given to US cotton producers takes the form of ‘export’ subsidies anyway; most are classed as domestic.

Besides, the richer countries now have a more important target in sight – access to non-agricultural markets (NAMA) in the South.

This will require developing countries to slash import tariffs, with serious consequences for local industry and employment. ‘In Senegal more than 30 per cent of industrial jobs have already gone because of tariff disarmament,’ says Moussa Faye. ‘Tariffs are the only instrument left to protect or rebuild our industry. I think that Europe and the US are preparing a new colonization. They need markets and are targeting the middle classes who have purchasing power in emerging countries.’

Source: Christian Aid, ‘Taking Liberties’, 2004.

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