wto_whose_trade.pdf

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December 6 1999 TheNation. 11

I

I

nce not so long ago trade was the province of policy

wonks and special interests-and the experts and lobby-ists liked it that way. No longer. Now it’s a hot political

issue. One reason is the growth of trade; just 4 percent

of GDP in the early fifties it’s more than 13 percent today.

Another is that international capital flows ranging from pro-ductive pursuits like building factories to speculative ones

like betting against national currencies have grown even morestrongly. And still another is that the areas covered by trade

agreements have widened from traditional concerns with

tariffs and quotas to cover labor environmental and health

regulations as well.

NAFTA was the first major trade fight occurring at a

time in the early nineties when downsizings were plentiful

and new jobs were scarce. To many it looked like a scheme

for greasing the departure of US manufacturing to cheaper

friendlierclimes-Ross Perot’s famous “giant sucking sound.”

A year after NAFTA took effect a whole new trade regimecame into being with the birth of the World Trade Organi-

zation in January 1995 replacing the much looser set of

agreements that had regulated world trade since the late

forties. The WTO has vast powers to adjudicate trade dis-

putes and invalidate regulations it deems impediments to

trade through “expert” tribunals meeting secretly in Geneva.

In effect it’s a form of world government with almost no

popular accountability.

So far so outrageous. But the WTO-and “globaliza-

tion”-should be kept in some kind of perspective: Much

of today’s economic stress is the result of national eco-

nomic policies not global ones and much of that stress is

the effect of fairly ancient features of capitalism among

WHOSE

TRADEwhich “globalization” is merely one important part.

Since the WTO’s birth life has gotten a lot more difficult

for free-traders. In 1997 President Clinton was denied so-

called fast-track authority to negotiate trade deals; it’s hard

to imagine any new trade agreement getting approved in the

near future. More globally a new international movementhas grown up over the past few years to frustrate the designs

of those who’d hrther liberalize trade and capital flows. Its

first major victory was the defeat of the Multilateral Agree-

ment on Investment a kind of bill of rights for capital that

was being negotiated quietly. The movement has creative-

ly used the Internet to organize and inform a fact that has

caused great distress among elites around the world.

An important milestone in this new era of trade politics

will be the WTO’s summit meeting opening on November 30

in Seattle. As host the Clinton Administration had hoped

the summit would mark the opening of a Millennia1 Round

of trade negotiations further expanding the liberalizationagenda. But thousands of activists decided to crash the party.

There will be demonstrations teach-ins and street theater:

designed both to spoil the summiteers’mood and to educate

people about the WTO.

What follows is a sampling of progressive opinion about

the WTO and “globalization” in general. All the partici-

pants agree that the WTO as presently constituted has

some serious problems; the disagreements flare up over what

to do about it and over whether “globalization” is funda-

mentally a good or a bad thing. We hope this encourages

discussion in an area where the depth of knowledge isn’t

always as profound as the depth of feeling.DOUGHENWOOD



12 The Nation. December 6 1999

How Big Is ‘Globalization ’ Really?How much does 6klobalization”matter? Are there otherfactors

that get ignored when so much stress is pla ced on ‘it?

Dani Rod rik Certain aspects of globalization fall far short of,the am ount of globalization that we ob served at the tail end ofthe pretiious century. I think we often exagge rate the degree towhich national governments are constrained by global forces.

Often governm ents find it too easy to say, “We can’t do this orthat because corpo rations will flee or we’ll lose exports:)’Na-tion al~ overnmen ts still have a lot of autonomy, a nd politicalforces, NGOs and others who want improvement in local con-ditions could still get those improvements by getting nationalgovernments to see that there is considerable room for acting.

Kim Moody: Oh, I think people do focus on globalization at theexpense of much else. To conceive of globalization as an in-dependent force that has nothing to do w ith the [neoliberal] poli-tics that conquered he world in the past two decades is com pletelywrong. It’s not that there isn’t something to the idea that inter-national markets,have a certain objective force, but the fact is

that they can’t exist without the political will and o rganizationthat allow corporations o close plants and restructure freely.

NomenclatureThe debate sfrequently cast as being between ‘pee-trad ers”and “protectionists.”Is that a helpful way offraming things?

Rodrik I think it’s very misleading. Some of the most arden tsupporters of free trade are no less mercantilist than the m ost ar-dent prom oters of protection. In both instances, we’re really see-ing the pu rsuit of self-interest. Some financial-services firms in.

the United States press for opening he financial-servicesmarketsabroad. That’s driven by the same me rcantilist concerns as those

of segments of ind ustry that try to stop imports. So, what mightappear contradictory-promoters of free trade like financial-service s firm s versus pro tectionis ts like the ste el industry-isreally very mu ch the sam e thing, the pursu it of self-interest..

Lori Wallach: The notion that the decision is between somethingcalled freetrade and something called protectionism is total horse-feathers,That isa construct set up by the proponents of one set ofrules for organ izing the global economy. The propo nents of thiscurrent version of it call it “free trade” and say that anythmg dif-ferent is protectionism.The WTO is not anything hat Adam S mithor David Ricardo had in mind when they w rote about free trade.

The best thing you could call its 800 pages of regulations ismanaged trade. O nly it’s corporate-mahage d trade, and we wantpeople-mana ged trade. They don’t have free trade an d we don’twant no trade, so the real issue is what the rules of the road willbe.

Nostalgic Wall-Builders?Free-traders like to condemn their critics a s protectionists who

are trying to build walls around countries, prison ers of nostalgia;and some argue they ’re hurting workers inp oo r countries whose

only avenue out ofpov erty s exporting to rich countries like the

United States. How do you respond to that?

Thea Lee: Workers around the world need to have their basicrights protected, whatever coun try they’re in rich or poor. Theinternational rading system undermines those rights by loweringtrade barriers and increasing the rights and mobility of capital,putting workers in com petition with one another. This is some-thing that we’ve worked very closely on with labor unions in de-veloping countries and Europe. We’ve been very clear that we a retrying to take control of the globalization debate, not hide f rom it,and that our vision of the future is one inwhich rich and poor coun-tries trade with one another, in which workers’ rights are protect-ed, in which the developingcountries are given the right incentivesto build strong democracies, strengthen heir middle classes onthebasis o f strong trade unions and prote ct the environment. That’s avision of the global economy that is very positive and differentfrom one in w hich we build a w all around the United States.

Wallach:’Wh at clearly is the backward pers.pective is o ne thatlooks at a p re-Keynesian, turn-of-the-century standard of livingand labor treatment as the sought-after global norm .

Walden Bello: Often the issues that have created discontent n theNorth come across to people in the South as protectionist,in that

they seem aimed at keeping goods from the South out of North-ern m arkets.This is one of the a reas where we need civil societyorganizations on both sides to sort out these issues. But if youlook at the way that countries in the Sou th have made advancesin this century, it’s been through protectionism . During the G reatDepression, Latin America made tremendous advances, in termsof development, through import-substitutionstrategies. More re-cently, the so-called tiger econ omies in East Asia w ere able tomove up the ladder with protectionism . Free trade, deregulation-this has been mainly aUS agenda. Since the 1997Asian financialcrisis, the Uhited States has used these policies to push the inter-ests of US corporations n that part of the world.



December6 1999 The Nation. 13

Wallach: What’s happened has more to do with where the public

is than where the prominent figures of the left or the right are.On a handful of issues, like globalization, carhpaign finance andcorporate welfare, I see that people you would think of a s reallyright wing and people you’d think of a s the left of the left arecloser to one an other than to moderates or centrists. Obviouslypeople agree a lot more on what they’re against than on wh atthey are for, and what they are fo r is very different, dependingon whether you are Pat Buchanan or R alph Nader.

Dana F rank: We have to be wary o f nationalism, particularlyeconomic nationalism, as the alternative to global free trade be-cause I think that sets us up with a partnership with nation-basedcapital that overlooks the fac t that business is still going to followthe sam e logic of profit-making domestically. Som e idea of anationalist team with domestic capital sends us right into he sameproblems that we’re trying to solve. It sets us up w ith partner-ships with domestic unionbusters and the kind of “us” versus“them” policies that Buchanan is all about-it’s terrifying.

Coping With ConsequencesIt’s argued thatfieeing up trade has benefited main the rich

and has resulted in lower incomes and less securityfor every-one else.

Rodrik Through much of th e postwar period we let markets ex-

pand gradually at the same time that we made sure there weresafety nets’in place. Since the early eighties, that implicit bar-gain has d issolved. It’s problematic to follow a trade-expand ingagenda without acknowledging h at the flip side of trade is eco-

nomic dislocation-and offering constructive ways of dealin gwith those dislocations.Too often, we hear that ‘’trade is a wonder-ful thing, everybody gains and nobody hurts.” Every economistknows that’s not tru e.

Reich: Undoubtedly trade creates winners and losers. A goodcase can be made that th e winners y i n more than the losers lose,so the overall effects of trade are positive. But the distributionalimpacts can’t be ignored. The political reality is that winners don’t

compensate losers. The only way those who lose from free tradecan hope to be compensated is if they actively oppose it. I think

a lot of v e y poor people around the world would suffer a greatdeal were we to put up trade barriers. But I don’t see any betterway to get the winners to compensate the losers than for the losersto threaten to block trade as a bargaining chip.

We could afford to give our people far better education, jo bskills, healthcare, accessto capital, public transit and the rest, andmake poorer Americans-not jus t poor Am ericans, but people in

the bottom two-thirds of the distribution-far more productive.That wouldn’t make people at the top less productive, and itwouldn’t make peop le in other areas of the world less productive.It would enable the bottom two thirds f Americans to live betterlives. We o ught to be promoting the same policies around theworld. The gap between the richest 20 percent and the poorest20percent in the world has do ubled over the past three d ecades.It is now sev enty-five to one. That’s not a fo rmula fo r a stableworld. Protection ism won’t reverse that trend. Investments-genuine investments in people-will. The real question is howyou motivate the richest to make those investments.

Better WorldWe hear lots of critiques of the WTO and globalization.Is there

apo sitive vision of what a better world would look like?

Walden Bello: In the critique lies a positive agenda. First, theerosion of the capacity of governm ents to be able to disciplinecapital-that has to be stopped . Second, the market has to be re-embedded, has to become a subordinate part of the societyagain. Values like social solidarity haveprece dence over the freemarket. Third corporations have really becom e much too power-ful, and a combination of government and civil society, nationaland international, needs to act as a check. Finally, a few yearsago people said, “Globalization is inevitable, but what kind of

globalization? s it a positive kind of globalization or is it a neg-ative kind?” I think peop le are beginning to realize that someaspects of globalization must be reversed. Where commoditiescan be produ ced locally, they should be produced locally, even



December 6 1999 The Nation. \ 1

and enviroimental protections into WTO rules. But we can’t start

with that. In the short term we hope to force the WTO to acknowl-edge that its actions have a bearing on labor standards and begin a .

were living in a world of autarky. It means that savings can flowto poorer nations to put people to work.

conversation hat will one day lead to a change in the rules.

Moody: I think there are problems with standards. The wholepurpose of these multilateral agreements is to break down bar-riers to trade and investment. There’s also a problem of enforce-ment. Can you imagine the US government using the WTO tosanction Indonesia because Indonesia is being nasty to its tradeunions? I think labor is taking this tack because it’s the easyone to take. Why aren’t they a little bolder? Labor should be

taking on the multinational corporations on a worldwide scale.

There are some examples of that happening recently-but weneed a lot more and not the ceremonial approach of the past. Agood example of what could be done was the recent oil workers’strikein Indonesia. The US oil workers?union [now merged intoPACE] and the international trade union secretariat launched apressure campaign on the corporations.And the Indonesian strike

was won. There are networks being built between workers in the

United States and Mexico and Europe. We need more cross-border exchanges at the rank:and-file level. There are high-levelorganizations like the secretariats which sometimes do goodthings but have the problem of being federations of federations.

Bello: People in the South have been saying that putting the de-termination of whether goods are being produced in socially ac-

ceptable ways in the hands of the WTO is putting it in the handsof the wrong organization. Instead let’s strengthen the ILOlet’s strengthenmultilateral environmental agreements.Northem

NGOs have been too quick to try to use the WTO as an enforce-ment mechanism. Clearly environmental groups in theNorth areon the right track in examining how commodities are made or

how fish are caught. But often there’s little sensitivity that jobsare at stake in the South. There should be ways that green tech-

nologies from the North could be made available to Southerncountries at low cost to facilitate cleaner methods of production.With labor too the issues are quite complex. It often seems thatwe’re not just talking about extreme sweatshop conditionsin theSouth but about a demand that labor standards overafi be radi-cally upgraded. And this does not take into account historical

’ social conditions that exert influence beyond the desire of multi-

nationals for cheaper labor.

61 balizat on Over?t sometimes said that ree trade is like a bicycle: Ify ou don ’t

keep moving orward you fa ll over: Has the orward mom entum

been lost

Reich:A backlash [against globalization] is certainly coming.The challenge for those of us who believe that free trade andglobal capital are essentially good things if managed correctlyis to avoid the backlash by developing progressive strategiesto overcome the widening inequalities and the environmentaldepredations while preserving what’s good about globalization.

And what’s good about globalization needs to be on the table aswell. Since the Second World War globalization has dramati-

cally improved the lives of most of the world’s people. It has

meant that poor people even in hch nations have access to goodsand services that are much cheaper than they would be if we

Reform It or Junk It

So would you reform the WTO or un k it entirely?

Lee: Reform it in every aspect. Reform its rules reform it

processes. We do peed a system of international trade rulesbut we don’t like the rules or the process that exists now. Ouprimary concern is that the WTO has no provisions protectin

workers’ rights. The only labor right that is .written into WTO

rules right now is that countries may restrict imports of good

produced with prison labor. But the other core labor standard

are not covered by WTO rules. If a country wants to ban th

import of goods made with child labor or place trade sanction

on a country that is violently repressing independent labo

unions the WTO could strike it down as a trade restriction.

Bello: I would abolish the WTO. It institutionalizes the histori

cal accumulated advantage of the North and specifically o

the United States. Because of tightened intellectual-propertrestrictions industrializationby imitation-the traditional wathat countries have industrialized-is no longer an option. A

the ways by which trade policies like barriers and quotas hav

been creatively used for economic development in the past hav

now been eliminated. The agreement on agriculture is nothinbut an effort to consolidate the monopoly over global agricul

ma l rade enjoyed by the European Union and the United State

Yes we now have a rule-based system and a very strong dispute

settlement system. But basically what this does is reduce polic

ing costs. I think less structure and more fuzziness would serv

the interests of the poorer countries. The current set of rules i

skewed to the advantage of the rich countries particularly thUnited States.

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