Themes > Current Issues
24.12.1999
Lessons from Seattle
C.P.
Chandrasekhar
Last
fortnight confusion ruled Seattle, the site for the third ministerial meet
of the World Trade Organisation, which began without a formal opening and
ended without a formal declaration. Confusion prevailed both within and outside
the convention centre which was the venue for the ministerial deliberations.
Outside, on the streets and at the intersections, an odd combination of protestors, with widely varying and even contradictory motives, jostled with each other and the police, to demand an end to the process of liberalising trade overseen by the WTO. Dominating the demonstrations, which resulted in a cancellation of the opening ceremony, were American trade unions and western environmental groups. The unions are against freer trade because it ostensibly pits US jobs against imports, that are believed to be cheap because of poor labour standards in the developing world. The 'greens' were concerned that freer trade would only benefit the big multinationals, which, in search of profits, were not merely threatening health by genetically modifying food products, but also relocating in countries with inadequate environmental safeguards, putting at risk everything from rainforests to dolphins, sea turtles and butterflies.
At the fringes of the protest, however, where those who felt that WTO governance of trade was diluting national sovereignty, worsening unemployment and adding to poverty in the Third World. Unlike many of their comrades at Seattle, they believed that an emphasis on labour standards and environmental protection could be turned by the "Quad" group (US, Canada, the EU and Japan) into protectionist levers that would further widen the North-South divide.
Confusion, both organisational and ideological, permeated the conference venue as well. Many developing country negotiators arrived unsure of why they were there. They had started on the long road to Seattle more than a year back, with the idea that the principal task of the ministerial meet was to implement the mandate of the Uruguay Round to complete its unfinished liberalising agenda in the areas of trade in agriculture and services. Further, given the inequities arising from the experience of implementing the decisions of that Round, they wanted the WTO to start a process of reviewing, reforming and, if necessary, partially rolling-back some of the liberalisation already underway. Along the way however they were confronted by an EU suggestion, picked up and promoted by the US and other developed countries, that Seattle should serve as the launch-pad for a new round of negotiations aimed at substantially advancing the "opening up" agenda, with talk of investment agreements, competition policy, coherence and labour and environmental standards. The power of this group is such that by the time the Seattle meet began, the New York Times, for example, declared that the meet "is intended to open a new round of negotiations".
The EU, in fact, was completely against review and reform in the contested agricultural trade arena, standing much to lose if it was forced to cut back on agricultural support and put and end to covert and overt subsidies. Japan and South Korea had also for long held that given its "multifunctional" character, touching even on lifestyles and cultures, agriculture cannot be treated on the same footing as manufacturing and services when trade liberalisation is discussed. They felt that focusing on a new round and new areas would get the heat off their back. The European Union's Trade Commissioner Pascal Lamy, joined Clinton in using the protestors as backing for his cause, arguing that their demonstrations rendered it "even less possible" to given in to US demands to wipe out EU agricultural subsides in order to help American farmers.
The EU's intransigence was indeed reflective of what trade liberalisation has come to mean. It was willing to ignore the original in-built agenda of the Seattle meet to start in year 2000 negotiations in the contested areas of agriculture and services, even though these negotiations were mandated by the Uruguay Round, since they were the two areas in which the least progress towards reducing trade barriers had been made at that time. Of the two, some progress has been made in the services area in 1997. Despite this unfinished agenda and pressure from the US to open up its agricultural product markets, the EU managed to hold out because of the implicit support from Japan and South Korea and differences within the developing country camp. While there were some developing-country members of the Cairns group of agricultural exporters and some pro-market ideologues who were for agricultural trade liberalisation, there were other nations and sections worried, for valid reasons, about the impact such multilateral liberalisation can have on their farming community and their food security in the long run.
These developing countries, including India, were for greater attention to be given to the iniquitous market access benefits that have flowed from the Uruguay Round in the area of manufactures. In practice, not only have developing countries lifted non-tariff barriers to trade and bound their tariffs at relatively low levels, but they have unilaterally reduced tariffs to levels way below the promised ceilings. However, the developed countries have failed to respond similarly in crucial areas like textiles and leather, where liberalisation has been tardy and restricted to products where developing country competitive advantages were minimal. Further, they were joined by countries like Japan, in questioning the use of clauses relating to "dumping" of goods in export markets, which allowed the US, in particular, to impose high tariffs on not-so-substantial grounds of unfair competition. In response to this experience the developing countries wanted the summit to pay attention to what were cumbersomely titled "implementation issues".
With an eye to exploiting these divisions among the 135-members of the WTO to advance its own domestic political and international trading interests, the US, led by President Clinton, chose to play the role of a bully in a chaotic school yard. It had a wide agenda for a new round, including concessions on agriculture from the EU and Japan, further cuts in tariffs on manufactures, an extension of the moratorium on taxes on e-commerce, and linkages between trade and labour and environmental standards. Its first tactic was to use the demands made by some of the protestors to advance this agenda, signalled by the President's gratuitous welcome to demonstrators pouring into Seattle. Later, while regretting the violence resorted to by a small group, Clinton said that it is important to (selectively) heed the voice of peaceful demonstrators and put the question of worker rights and environmental protection on the agenda. This was not only meant to appease powerful democratic constituencies that matter in the run up to the next Presidential election, but also served US trading interests.
Clinton then went on to advocate a working group on labour under the WTO, so as to start the process of making the lack of core labour standards in particular countries a basis for imposing protectionist tariffs and quotas on them. Outside the convention, in an interview to the Seattle Post-Intelligencer, he argued that the WTO should frame rules which allow for sanctions against countries violating core labour standards. Finally, in a symbolic gesture he signed in America's support for the treaty on child labour, which calls for a ban on what it treats as the worst forms of child abuse, including the use of child labour. The treaty, Clinton said, should serve as a model for enforcing other labour rights.
Given the clout of the US, it was not surprising that WTO chief Mike Moore, chose to follow Clinton's strategy and pick on divisions within the developing-country camp to make a case for freeing trade further. Progress on this front in his view, expressed in different ways, was crucial for the poorest of the developing countries. What he failed to note was the fact the poorer and smaller developing countries were not being heard on the matter. According to the South-North Development Monitor (SUNS), the 67 strong ACP (Africa, Pacific and Caribbean) group of countries complained that their joint views (formally adopted at a meeting in the Dominican Republic) presented at a working group were not reflected in the summary of the chairman. Others were disappointed over the lack of transparency, and said that while the reports of the working group chairs claimed it was the result of consultations, it was not clear who had been consulted and where. As Victor Manuel, the trade representative of El Salvador reportedly put it: "They have continued with the old GATT way of doing business. They think they can meet in small gatherings and then announce that the two or three most important countries have already come to a consensus. It is very hard for small countries to have any influence on this process."
The "big bully" attributes of the US also came through in the way the convention was conducted by US trade representative Charlene Barshevsky, who by virtue of being from the host country, shared the responsibility with WTO Director General Mike Moore. Choosing to go above the heads of most member country representatives, she worked through secret dialogues with negotiators from the most powerful and recalcitrant countries, results of which, if any, she expected the rest to go along with. One such result was a committee which was not authorised by the general council of the WTO, to consider the possible linkage of trade and labour standards, which popped up midway through the meeting and received a hostile response from most developing countries.
The tenor of the US strategy appeared to be that in return for minor concessions on what were the original items up for negotiations in the current stage of the WTO's history, the developing countries could be steam-rolled into accepting a new round with a wide and damaging agenda.
In resorting to this strategy the US was clear that one fundamental "convention" adopted earlier in GATT and more recently in WTO proceedings would not be violated. This was that decisions would be based on consensus, allowing the developed countries to use their economic clout, stemming from their dominance over international trade and capital movements, to force some degree of compliance from the developing countries in trade negotiations. If that convention is dropped, and a vote taken based on the one-nation-one-vote principle provided for in the WTO's constitution, the issues of links between trade and labour and environmental standards would have gone out of the window, given the fact that the majority were against them.
Fortunately, partly because unity between the developed countries, especially on questions relating to agriculture and bio-engineered food products, could not be arrived at, and their combined pressure could not be wielded to try and enforce developing country compliance for a one-sided declaration heralding new trade talks, the Seattle negotiations collapse and ended with no result.
Needless to say, every section involved would claim success or refuse to accept failure. The protestors would say that they have been able to stall a new round, though not having such a round which covers labour and environmental standards could actually be a setback for US trade unions and some environmental groups which seek to advance the environmental cause at the expense of everything else. The developing countries would return home saying that they have stalled inclusion of these issues in future negotiations, even though no progress has been made on the demand to review and reform the trading framework created by the Uruguay Round agreement. The EU would be glad that it has, as yet, not had to retract on the question of agricultural support. And finally the US would argue that it has put "implementation issues" on the back-burner and brought to the front its principal concerns, especially the new ones relating to labour and environment, making them an informal part of any agenda for all future trade talks.
In fact, Ms. Barshevsky, even made the collapse of the meeting an American 'decision', when she declared to weary negotiators that: "My judgement and in turn the judgement shared by the director general ... was that it would be best to take a time out, consult with one another and find a creative means to finish the job.'' US officials were still holding that their unfinished agenda would be revived at Geneva in six months' time. In the meanwhile, Barshevsky held, talks on agriculture and services mandated by the Uruguay agreement can begin in January. Clearly, the US view is that even though it has not clinched a deal, it has set the direction which any future talks would take. In the long haul it expects that, as happened with the last round of trade talks which took almost a decade to get going in 1986 and end in 1994, WTO members can be tired into arriving at some agreement along the lines it desires.
There are important lessons here for developing countries like India. First, the Seattle talks once again reveal that in the world of trade it is power and politics and not altruism that determines the rules of the game. The belief, therefore, that a multilaterally-brokered liberalisation of trade would result in fair trade is completely misplaced. Second, the view that there are no choices other than participation in the WTO needs to be rethought if such participation is a sure route to turning the world trading system further against developing-country interests. Finally, if the most powerful in the world do not want to give up protection in traditional areas like textiles and agriculture, and are seeking to win for themselves new instruments of protection in the form of labour standards and environmental conditions, going ahead with unilateral liberalisation of external economic policies at home would be mistaken, since the world trading system itself may foreclose the export benefits such liberalisation is expected to offer. Its time to stand up and say that it is not US workers alone who matter. Ours do too.
Outside, on the streets and at the intersections, an odd combination of protestors, with widely varying and even contradictory motives, jostled with each other and the police, to demand an end to the process of liberalising trade overseen by the WTO. Dominating the demonstrations, which resulted in a cancellation of the opening ceremony, were American trade unions and western environmental groups. The unions are against freer trade because it ostensibly pits US jobs against imports, that are believed to be cheap because of poor labour standards in the developing world. The 'greens' were concerned that freer trade would only benefit the big multinationals, which, in search of profits, were not merely threatening health by genetically modifying food products, but also relocating in countries with inadequate environmental safeguards, putting at risk everything from rainforests to dolphins, sea turtles and butterflies.
At the fringes of the protest, however, where those who felt that WTO governance of trade was diluting national sovereignty, worsening unemployment and adding to poverty in the Third World. Unlike many of their comrades at Seattle, they believed that an emphasis on labour standards and environmental protection could be turned by the "Quad" group (US, Canada, the EU and Japan) into protectionist levers that would further widen the North-South divide.
Confusion, both organisational and ideological, permeated the conference venue as well. Many developing country negotiators arrived unsure of why they were there. They had started on the long road to Seattle more than a year back, with the idea that the principal task of the ministerial meet was to implement the mandate of the Uruguay Round to complete its unfinished liberalising agenda in the areas of trade in agriculture and services. Further, given the inequities arising from the experience of implementing the decisions of that Round, they wanted the WTO to start a process of reviewing, reforming and, if necessary, partially rolling-back some of the liberalisation already underway. Along the way however they were confronted by an EU suggestion, picked up and promoted by the US and other developed countries, that Seattle should serve as the launch-pad for a new round of negotiations aimed at substantially advancing the "opening up" agenda, with talk of investment agreements, competition policy, coherence and labour and environmental standards. The power of this group is such that by the time the Seattle meet began, the New York Times, for example, declared that the meet "is intended to open a new round of negotiations".
The EU, in fact, was completely against review and reform in the contested agricultural trade arena, standing much to lose if it was forced to cut back on agricultural support and put and end to covert and overt subsidies. Japan and South Korea had also for long held that given its "multifunctional" character, touching even on lifestyles and cultures, agriculture cannot be treated on the same footing as manufacturing and services when trade liberalisation is discussed. They felt that focusing on a new round and new areas would get the heat off their back. The European Union's Trade Commissioner Pascal Lamy, joined Clinton in using the protestors as backing for his cause, arguing that their demonstrations rendered it "even less possible" to given in to US demands to wipe out EU agricultural subsides in order to help American farmers.
The EU's intransigence was indeed reflective of what trade liberalisation has come to mean. It was willing to ignore the original in-built agenda of the Seattle meet to start in year 2000 negotiations in the contested areas of agriculture and services, even though these negotiations were mandated by the Uruguay Round, since they were the two areas in which the least progress towards reducing trade barriers had been made at that time. Of the two, some progress has been made in the services area in 1997. Despite this unfinished agenda and pressure from the US to open up its agricultural product markets, the EU managed to hold out because of the implicit support from Japan and South Korea and differences within the developing country camp. While there were some developing-country members of the Cairns group of agricultural exporters and some pro-market ideologues who were for agricultural trade liberalisation, there were other nations and sections worried, for valid reasons, about the impact such multilateral liberalisation can have on their farming community and their food security in the long run.
These developing countries, including India, were for greater attention to be given to the iniquitous market access benefits that have flowed from the Uruguay Round in the area of manufactures. In practice, not only have developing countries lifted non-tariff barriers to trade and bound their tariffs at relatively low levels, but they have unilaterally reduced tariffs to levels way below the promised ceilings. However, the developed countries have failed to respond similarly in crucial areas like textiles and leather, where liberalisation has been tardy and restricted to products where developing country competitive advantages were minimal. Further, they were joined by countries like Japan, in questioning the use of clauses relating to "dumping" of goods in export markets, which allowed the US, in particular, to impose high tariffs on not-so-substantial grounds of unfair competition. In response to this experience the developing countries wanted the summit to pay attention to what were cumbersomely titled "implementation issues".
With an eye to exploiting these divisions among the 135-members of the WTO to advance its own domestic political and international trading interests, the US, led by President Clinton, chose to play the role of a bully in a chaotic school yard. It had a wide agenda for a new round, including concessions on agriculture from the EU and Japan, further cuts in tariffs on manufactures, an extension of the moratorium on taxes on e-commerce, and linkages between trade and labour and environmental standards. Its first tactic was to use the demands made by some of the protestors to advance this agenda, signalled by the President's gratuitous welcome to demonstrators pouring into Seattle. Later, while regretting the violence resorted to by a small group, Clinton said that it is important to (selectively) heed the voice of peaceful demonstrators and put the question of worker rights and environmental protection on the agenda. This was not only meant to appease powerful democratic constituencies that matter in the run up to the next Presidential election, but also served US trading interests.
Clinton then went on to advocate a working group on labour under the WTO, so as to start the process of making the lack of core labour standards in particular countries a basis for imposing protectionist tariffs and quotas on them. Outside the convention, in an interview to the Seattle Post-Intelligencer, he argued that the WTO should frame rules which allow for sanctions against countries violating core labour standards. Finally, in a symbolic gesture he signed in America's support for the treaty on child labour, which calls for a ban on what it treats as the worst forms of child abuse, including the use of child labour. The treaty, Clinton said, should serve as a model for enforcing other labour rights.
Given the clout of the US, it was not surprising that WTO chief Mike Moore, chose to follow Clinton's strategy and pick on divisions within the developing-country camp to make a case for freeing trade further. Progress on this front in his view, expressed in different ways, was crucial for the poorest of the developing countries. What he failed to note was the fact the poorer and smaller developing countries were not being heard on the matter. According to the South-North Development Monitor (SUNS), the 67 strong ACP (Africa, Pacific and Caribbean) group of countries complained that their joint views (formally adopted at a meeting in the Dominican Republic) presented at a working group were not reflected in the summary of the chairman. Others were disappointed over the lack of transparency, and said that while the reports of the working group chairs claimed it was the result of consultations, it was not clear who had been consulted and where. As Victor Manuel, the trade representative of El Salvador reportedly put it: "They have continued with the old GATT way of doing business. They think they can meet in small gatherings and then announce that the two or three most important countries have already come to a consensus. It is very hard for small countries to have any influence on this process."
The "big bully" attributes of the US also came through in the way the convention was conducted by US trade representative Charlene Barshevsky, who by virtue of being from the host country, shared the responsibility with WTO Director General Mike Moore. Choosing to go above the heads of most member country representatives, she worked through secret dialogues with negotiators from the most powerful and recalcitrant countries, results of which, if any, she expected the rest to go along with. One such result was a committee which was not authorised by the general council of the WTO, to consider the possible linkage of trade and labour standards, which popped up midway through the meeting and received a hostile response from most developing countries.
The tenor of the US strategy appeared to be that in return for minor concessions on what were the original items up for negotiations in the current stage of the WTO's history, the developing countries could be steam-rolled into accepting a new round with a wide and damaging agenda.
In resorting to this strategy the US was clear that one fundamental "convention" adopted earlier in GATT and more recently in WTO proceedings would not be violated. This was that decisions would be based on consensus, allowing the developed countries to use their economic clout, stemming from their dominance over international trade and capital movements, to force some degree of compliance from the developing countries in trade negotiations. If that convention is dropped, and a vote taken based on the one-nation-one-vote principle provided for in the WTO's constitution, the issues of links between trade and labour and environmental standards would have gone out of the window, given the fact that the majority were against them.
Fortunately, partly because unity between the developed countries, especially on questions relating to agriculture and bio-engineered food products, could not be arrived at, and their combined pressure could not be wielded to try and enforce developing country compliance for a one-sided declaration heralding new trade talks, the Seattle negotiations collapse and ended with no result.
Needless to say, every section involved would claim success or refuse to accept failure. The protestors would say that they have been able to stall a new round, though not having such a round which covers labour and environmental standards could actually be a setback for US trade unions and some environmental groups which seek to advance the environmental cause at the expense of everything else. The developing countries would return home saying that they have stalled inclusion of these issues in future negotiations, even though no progress has been made on the demand to review and reform the trading framework created by the Uruguay Round agreement. The EU would be glad that it has, as yet, not had to retract on the question of agricultural support. And finally the US would argue that it has put "implementation issues" on the back-burner and brought to the front its principal concerns, especially the new ones relating to labour and environment, making them an informal part of any agenda for all future trade talks.
In fact, Ms. Barshevsky, even made the collapse of the meeting an American 'decision', when she declared to weary negotiators that: "My judgement and in turn the judgement shared by the director general ... was that it would be best to take a time out, consult with one another and find a creative means to finish the job.'' US officials were still holding that their unfinished agenda would be revived at Geneva in six months' time. In the meanwhile, Barshevsky held, talks on agriculture and services mandated by the Uruguay agreement can begin in January. Clearly, the US view is that even though it has not clinched a deal, it has set the direction which any future talks would take. In the long haul it expects that, as happened with the last round of trade talks which took almost a decade to get going in 1986 and end in 1994, WTO members can be tired into arriving at some agreement along the lines it desires.
There are important lessons here for developing countries like India. First, the Seattle talks once again reveal that in the world of trade it is power and politics and not altruism that determines the rules of the game. The belief, therefore, that a multilaterally-brokered liberalisation of trade would result in fair trade is completely misplaced. Second, the view that there are no choices other than participation in the WTO needs to be rethought if such participation is a sure route to turning the world trading system further against developing-country interests. Finally, if the most powerful in the world do not want to give up protection in traditional areas like textiles and agriculture, and are seeking to win for themselves new instruments of protection in the form of labour standards and environmental conditions, going ahead with unilateral liberalisation of external economic policies at home would be mistaken, since the world trading system itself may foreclose the export benefits such liberalisation is expected to offer. Its time to stand up and say that it is not US workers alone who matter. Ours do too.
© MACROSCAN 1999