International News
International News
Volume 3, Issue 1
January 2000
World Trade Organization
meeting swamped in controversy
(Reuters)
|
Around the world, the WTO has been the focus of demonstrations, as at WTO headquarters in Geneva and the site of its Seattle meeting |
Seattle Washington ended with little progress and much distress
as thousands of protesters demonstrated in opposition to the agency's mandate. The aim of the
meetings was to set an agenda for what would be a 'round' of negotiations. But that
in itself is proving to be trying task.
The organization is home to over a hundred and thirty member countries; each of
which has its own views about the priorities to be included in the agenda.
The only subjects on which there is consensus are issues of agriculture and services.
Much of the food exporting world has two markets in
its sights - the European Union and Japan. The EU's subsidies and import levies make it harder for farmers in the rest of
the world to compete in what should be a very lucrative market.
Japan's farmers are also heavily protected against competition from imports. In
addition a few of the smaller countries also give extensive protection to their
farmers, including Norway, Switzerland and South Korea. These countries all know that there is no escape from further
liberalization of
agriculture. But they will face serious political problems with their own farmers if they
make further concessions.
Services will also be on the post-Seattle agenda. The word entails an array of activities;
from banking, insurance and telecommunications as well as transport.
Many developing countries were reluctant to give the much easier access in these
sectors that the rich countries wanted. And it is a hugely important area. Services account for sixty per cent of global
economic output, and that proportion is sure to grow. But only a fifth of world
trade is in services. Recently services trade has been growing slightly
faster than goods trade. That process would get a real boost from a new trade liberalization
agreement.
Many developing countries, especially but not only in Asia, want better access
to the clothing and textile markets of the rich countries. They face quotas on
how much they can export. True, these are being phased out, but over a painfully
long period. And there are high tariffs on some of these goods.
The United States would like an agreement on labor rights. That presumably
could lead to trade sanctions against countries with poor labor rights. The
poor countries want none of this. They see it as an attack on the main
competitive advantage they have in world trade - low labor costs.
The case for the latter is this: if there are extensive enough restrictive
business practices in a country, it can still be hard to import, no matter how
few government barriers there may be. But there is little support for either of
these.
Trade negotiations always require governments to accept
political pain. Most economists will tell you that removing your own trade
restrictions is good for you, even if others don't reciprocate.
But there are losers within countries who can see very clearly that their
problems are due to the removal of trade barriers. The gains are often spread
more thinly among many people who don't necessarily know that trade may be
raising their standard of living.
And as these issues are on the debate table, one
must wonder whether all parties will benefit from the negotiations, or
whether it's a case of the big boys ganging up against the little ones.
If trade liberalization has brought huge advantages to billions of people, it is has done so through the tools of trade, companies - manufacturers,
bankers, traders of all kinds. Without them there would be no significant trade,
liberal or otherwise.
If you are a heavyweight boxer, boxing rules require you to fight against
another heavyweight. You wouldn't expect to fight against a bantamweight.
Many small companies, and companies in the developing world which do not have
the resources available to the big multinationals, feel that they are the
bantamweights in the trade liberalization contest. So are their governments, who
fear being thrashed if they allow the rules to change.
Yet all the evidence is that trade liberalization so far has fostered world
growth on a scale that post-War reconstructionist politicians hardly could have
dreamed of.
It is no accident either that so much big business is
America. The huge American market offers legendary economies of scale. The US
internal market is also unusually unfettered, fostered by the free capitalist
spirit and practice for which American investors are famous.
But American corporations are inclined, as are most big multinationals of
whatever nationality, to look back to home when not on domestic soil, and this
can make them appear arrogant and even conquistadorial.
All would undoubtedly benefit from any
enhanced chance to compete in farm and food markets not their own.
Nobody expects these negotiations to breeze by.
The previous Tokyo Round lasted seven years. Both rounds brought benefits for
many, but inevitably, not all. There may be much wrong with the aims of the
Seattle Round, not that those are settled yet, but the WTO has one huge
advantage that will not always be available to the armies of protestors expected
in Seattle - whatever else, it has time on its side.
And, like the demonstrators, big business may just have to wait for results as
well.
