LONDON – Three months after the failure of the World Trade Organisation meeting in Seattle the dust is finally settling. The press behaved as if it hadn’t had a good demo to report since the Vietnam war and the diplomats and politicians became uncharacteristically skittish after a march or two and the unerring capacity of the American police to over do it.
Look no further than the statements produced by the UN Trade and Development (Unctad) meeting in Bangkok two weeks ago. This body which now exists as a sort of Third World counterweight to the mighty World Trade Organisation (WTO) enables developing countries both to chew the cud and gain a modicum of diplomatic and media attention for their own concerns without being drowned out by the agenda of the industrialised countries. Nevertheless, they used their only-once-in-four years opportunity not to denounce the WTO and all its works but to assert they still prize the value of global trade talks. Jacob Zuma, South Africa’s deputy president, was forceful, “A delay in the WTO negotiations is a delay in solving the problems of [our]economies”. In its final statement Unctad went on the record as “strongly commending open trade and economic integrity as the path for future development and ways of bridging the north-south divide”, reported the Financial Times. And Mike Moore, the director-general of the WTO who was in Bangkok for the meeting, observed after, “We know now that in Seattle some countries wanted to shake the place up, not destroy the next [trade round]”.
Free trade is not, by any disinterested reckoning, in retreat. The truth is tariffs are declining and trade is expanding almost everywhere. Despite all the great public rows last year about bananas, genetic modification of seeds, mad cow disease, child labour and starvation wages and the need to put the breaks on globalization, the volume of world trade continues to expand at a quite rapid rate. This year it could be at over 6%.
The last round of tariff cuts- the Uruguay Round- led to tariffs being sliced across the board on 87% of all merchandise trade. “Voluntary” export constraints – a devilish system whereby low cost competition is bludgeoned by the richer trading partners to cap their exports – that over the years has severely hindered exporters of goods from textiles to cars, have now almost disappeared.
The U.S. used to be notorious for its double-speak, sniping at countries for not cutting tariffs while erecting all manner of restraints on items as diverse as steel, autos, machine tools and motorcycles. Yet now the U.S. is more honest and Europe too is following suit if less fast. (Europe still penalizes the importing of Russian steel, to give one awful example.) Both in North America and Europe importers at last are becoming as an effective lobby as exporters.
Of course, once the present economic boom starts to pale, the pressure will be on western governments to be more receptive to protectionist pressure. But this time round the developed countries to a large extent have locked themselves in with the new authority they have bequeathed to the WTO. Only last week it flexed its muscles with its ruling that billions of dollars of tax breaks for U.S. corporations gained by channeling exports through Caribbean off-shore subsidiaries were illegal. The more you look at it the harder it is to pick holes in the benefits of over 50 years of hard won freer trade. Countries that have opened their economies have enjoyed annual growth of several percentage points more than those that have remained closed. And multilateral trade liberalization schemes usually benefit poorer members more than richer- as can be see with Portugal and Eire in the European Union and with Mexico in the North Atlantic Free Trade Area.
It is one of the peculiarities of the use of language that, having re-named trade liberalization globalization, a process that has been in fact gathering speed for two centuries, it should now be seen in many quarters as a threat. It is not. Nor should it become one, despite the often legitimate concerns of the “new protectionists”.
There is in fact no reason to quarrel with those that tell us to worry about consumer, labour and environmental concerns. Rather than being regarded as some impediment they should, as Bruce Stokes argued in a recent issue of Foreign Policy, be seen “as a sign of the success of globalization. If rich country environmentalists now worry whether shrimp traps in less developed countries inadvertently kill sea turtles it is not a sign of rising protectionism. It simply reflects the emergence of a global market for shrimps caught by less developed countries.”
If free traders can’t realize that history is on their side and cannot see that it is their very success that throws up the complexities, they don’t really deserve to be winners. Diminishing the concerns of turtle lovers or child labour protectors is to feed public frustration without dealing with very real, but solvable issues. As the Overseas Development Council, a Washington think-tank, has observed, “poor labour standards distort labour markets, weakening rather than promoting export competitiveness”.
Seattle was the scene of an exaggerated polarization. It is time for the free traders, the globalizers, the proved winners, to step down from their pedestal and stop stereotyping every union or environmentalist group as out to undermine open markets and economic growth. Otherwise there is a grave danger that their own dire prophecies will become self-fulfilling. With a more open mind they could use their intellectual and financial capital to answer and redress the complaints of the activists. Then a U.S. president would probably find his “fast track” negotiating authority on new trade deals restored and a new round of tariff cuts could give the West’s present boom even longer life and countries as diverse as Russia, India, Nigeria and Brazil the breaks they deserve. That is the way to lift all boats.
