Last September 14, world trade talks broke down in Cancun, Mexico. Everybody blamed everyone else. Before the conference, British delegate Patricia Hewitt had predicted, "if we fail, it will be a disaster for world economy." And this is true, for the collapse could stun the already fragile prospects of economy recovery.
What is the World Trade Organisation? Why is it so important? The WTO is the successor to the General Agreement on Tariffs and Trade (GATT). Unlike the GATT, which met for rounds of negotiations intended to reduce tariffs on imports and other restraints on international trade, the WTO is a permanent free trade cop. Indeed, it sees itself as a Judge Dredd empowered with handing down justice in case of disputes between nation states.
Its defenders declare this marks it out as a rules-based organization. The alternative, they say, would be the law of the jungle where the rich countries bully the poor. In actual fact that is precisely what the WTO is - a forum for the rich nations to bully the poor more effectively.
Readers may recall the Seattle Conference of the WTO in 1999, which collapsed in chaos, while hundreds of thousands of "turtles to teamsters" protestors outside were tear gassed and batoned into insensibility by the authorities. A coalition of "anti-capitalists" had formed in recognition that the unfettered rule of free trade really meant the unlimited power of big business to loot, pollute and exploit all over the world.
Let’s look at what sort of court decisions the WTO dishes out. It struck down the "US Clean Air Act". You see, the Act restricted the right of companies to poison the planet. It was important for the WTO to defend the "freedom" of irresponsible corporations to make as much money as possible by cutting corners as part of the ideological battle for free trade.
The WTO did not allow legislation ensuring that shrimp nets had escape vents for endangered turtles, who asphyxiate by the thousand in these things. Such laws would discriminate against foreign capitalists and so must be protectionist!
You think minimum labour standards are a good idea? But you’ll be preventing some other country "specialising" in cheap wage products. Take Colombia as an example. Hundreds of trade unionists are murdered each year by right wing death squads. That helps keep wages low and gives Colombia a "comparative advantage" in labour intensive products. It would be against the free market god to interfere with that!
Anything that stands in the way of capitalist profit, the WTO holds, is a restraint to the sacred right to trade. And if the people of a country vote for this, then the WTO will not hesitate to strike down democratic reforms. Yet none of us voted for the WTO.
How does the WTO get away with this? It claims to be a "democratic" organisation, where all the 146 nations have one vote. In theory, the poor countries could outvote the rich on the floor of the WTO. (This is quite unlike the other economic bodies, the International Monetary Fund and the World Bank, where nations are perceived as shareholders – so imperialist countries can always win, since they can afford more shares).
So to get round that they don’t have votes! The right wing economist Bergston explains, the WTO "does not work by voting. It works by consensus arrangement which, to tell the truth, is managed by four - the Quads. The US, Japan, the European Union and Canada. Those countries have to agree if any major steps are going to be made, that is true. But no votes."
This means in practice that the Quads cut deals in the green room and present the results as scraps to the others. The WTO can’t get away with it from now on! After the revolt at Cancun, the Malaysian delegate for one declared, "No more are we sitting outside corridors being given sweeteners. No more!"
The Mexico rebellion is historic. The WTO mincing machine has been stopped in its tracks. The immediate issue that provoked the Cancun revolt was agricultural protectionism. Whereas farmers in less developed countries are, if not in a majority, still a sizeable minority of the population, in the West they are statistically insignificant. Workers in British agriculture make up 1 per cent of the population. While "third world" farmers are super-exploited, those in advanced capitalist countries are cosseted.
For instance, the USA pays out $4 billion in subsidies to 25,000 cotton farmers. Work it out for yourself. We are not talking about sharecroppers in dungarees and straw hats wielding hoes. These people are getting $160,000 a head from the American government. $4 billion is actually more than the entire crop is worth! As a result – because nobody actually wants to buy this cotton – it is sold at a loss ("dumped") on the world market. Peasants in countries such as Mali are literally driven to starvation by US cotton displacing what ought to be their export crop.
But let’s go back to Europe. The European Union subsidises sugar beet producers to the tune of £1 billion. "Our boys" manage to produce the goods at £430 per tonne, while cane sugar can be bought in the underdeveloped countries for £175. Nothing for it but to slap a tariff of 140 % on imported sugar to enable the likes of the beet barons in East Anglia to survive. This is a crop that would not be cultivated in Britain if there were a genuine free world market! Again the surplus is dumped on the world market, impoverishing the poor farmers of the underdeveloped countries.
The European Union negotiates as a bloc. But don’t you feel insulted when negotiator Pascal Lamy assures you he is putting forward "our" interests in keeping "third world" farm products out of Europe? "We" have never been asked, and the Common Agricultural Policy is costing us plenty. In reality the EU trade mission has been captured by the interests of a handful of well-to-do farmers from France and Ireland.
Overall the USA and the EU featherbed rich farmers at home with $400 billion per annum. Most of this money destroys the livelihoods of the wretched of the earth. This costs us eight times as much as the aid we fund them with.
Previous rounds of GATT and the WTO have been dedicated to convincing the developing nations of the wonders of free trade. They have had their arms twisted to unilaterally abandon tariffs on farm goods. The advanced countries, of course, have not been so stupid.
The poorest country in the western hemisphere is Haiti. It was persuaded by WTO free trade rules to open its markets to foreign, mainly US, grain. The mighty United States did not reciprocate. As a result, Haitian farmers were devastated by subsidised food imports dumped from the States. This wasn’t just happening in Haiti, of course. All over the world WTO rules led to poor countries unilaterally abandoning tariff protection for their farm products. This was the direct cause of the impoverishment of "third world" peasants, some of the poorest people in the world.
Half the world’s people live on $2 a day or less. By coincidence, $2 is the amount in subsidy each cow in the EU gets in subsidy from the Common Agricultural Policy. European cows probably regard themselves as hard done by compared with their Japanese cousins. Japanese cattle are subsidised by $7 each and can expect regular rations of beer (and I did not make that last bit up).
An example of what this impoverishment of mere humans means was given in The Observer on September 14. The terms of trade for coffee have collapsed. As a result Niassia, farming in Kenya, used to get £70 for her coffee crop. Now she gets £10 for a whole year’s work. As she says, "We might as well have been growing grass for the cows." These days the producers get 2 pence of what we spend on a cup of coffee. As a result of this catastrophe Niassia has had to withdraw her ten-year-old boy from school. She can no longer afford the school fees - £3.72 a year!
But all this wasn’t enough for the Quads. Two years ago the "Doha development round" had been launched at the Qatar conference. That meant "new" issues were to be forced on to the agenda. Pascal Lamy, negotiator for the European Union, pressed for concessions on the free movement of capital – even though the EU has failed to deliver on its promises to withdraw subsidies to European farmers.
The proposals for the liberalisation of capital movement are basically a revival of a favourite neo-liberal project that used to be called the Multilateral Agreement on Investment. The programme allows for big business to roam the world tendering for public projects – schools, hospitals, nothing is safe – on the basis that lowest bid wins. The inevitable result would be that everyone would have to pay for services we regard as essential to a civilised life, and that we quite naturally think ought to be free. After all, if we don’t pay, where are these corporations going to raise their profits from?
The MAI proposals were thrown out by the Organisation for Economic Co-operation and Development (the OECD, the rich countries’ club) a few years ago. Here they are being sneaked in by the back door at the WTO.
As the talks at Cancun drew to a conclusion, the West was confronted by something new – a coherent body of opposition to their ever-increasing demands. This came from the G21, a group of "third world" nations whose spine was formed by India, China and Brazil. Really, nearly all poor countries were sick of being treated like dirt.
The American representative Zoellick tried his usual combination of carrot and stick. Bribes of special treatment are offered to small countries to break down their solidarity with the others. Meanwhile Zoellick gets the knuckledusters out for the awkward squad. He apparently tried to bribe Costa Rica, Guatemala and El Salvador over the course of the talks. It was made clear that import quotas from these countries into the USA would be increased if they "co-operated" but would fall if they stood out.
This is an old story. In a recent book, Behind the scenes at the WTO, sources who prefer to remain anonymous point the finger, "There were some nasty personal attacks and outrageous threats made to countries in Doha." And, "It was also made emphatically clear that any US support in other areas of mutual interest will be subject to our support in Geneva."
Though small countries may feel themselves bound by WTO decisions, America is not. A member of the Clinton administration declared, "We do not believe anything the WTO says or does can force the US to change its laws."
In the end the West didn’t get its way. That is, at least, one in the eye for imperialism. But it leaves the framework for world trade policy in tatters.
Now the US has made it clear it will begin negotiating a series of bilateral deals with small countries. Naturally, in these negotiations, the States will hold all the cards. America already has signed free trade agreements with Chile and Singapore. The trouble with a deal between two countries is this. If the USA lets in Chilean goods, that means it is locking out the other 144 countries in the WTO. That is the argument for multilateral negotiation.
The problem is, the WTO is not a genuinely open multilateral body. It is a forum for imperialist domination. As a committee of the United Nations concluded, "The assumption which the rules of the WTO are based on are grossly unfair and even prejudiced. Those rules reflect an agenda that serves only to promote the dominant corporate interests that already monopolise the arena of international trade." Maybe the Mayans had the right idea. When they founded Cancun, they named it in their language "the nest of vipers."