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Debacle in Doha
The latest WTO ministerial was a disaster for workers and developing nations
Sounding a bit like Ronald Reagan after the invasion of Grenada, U.S. Trade Representative Robert Zoellick beamed out at the delegates to the World Trade Organization ministerial meetings last month and declared, “We have removed the stain of Seattle.”
The WTO ministerial was its first since the collapse two years ago, when activists disrupted meetings and delegates from developing countries resisted efforts by the U.S. and other large economies to railroad through an agenda for a new round of trade negotiations. Things were different this time: the nearest streets, in fact, were about half a mile away from the conference center; and while several hundred anti-globalization NGOs sent representatives there to buttonhole the delegates on topics ranging from workers' rights to genetically engineered crops, the mainstream press ignored their presence during the meetings. Likewise, tens of thousands of anti-WTO activists in cities from New Delhi to New York who took to the streets the first day of the meetings barely rated a mention in most American newspapers.
Back in Washington three weeks later, the Bush administration capped its success in Doha by ramming a vote through the House, 215-214, granting the president fast-track authority to negotiate trade agreements. The vote was a bitter defeat for organized labor, which had turned up the pressure on wavering Democrats with lobbying and a phone-and-fax campaign from their constituents. In the end, fewer Democrats voted for fast track than had supported any major free-trade bill in the last 10 years—just 21, versus 70 for NAFTA in 1993, for example. But the margin was just enough.
With fast track, Bush can dicker for further corporate dominance of the global economy, knowing that the few congressional gadflies who oppose globalization will be unable to chip away at his work. A vote in the Senate, where opposition to free trade agreements is less pronounced, is expected early in the new year.
Fast track—or Trade Promotion Authority, as Republicans have renamed it—isn't essential for Bush to complete the program of economic globalization that Seattle seemed to have derailed. But it makes his job a lot easier.
Bush wants fast track badly enough that in the final days before the vote, the White House directed the House Republican leadership to compromise on the economic stimulus bill now working its way through Congress. He offered to add $20 billion in aid for the unemployed to the package in exchange for key Democrats' support on trade authority. That's a major ideological concession: House and Senate Republicans have loaded up their versions of the stimulus bill with favors to corporations and had thus far firmly rejected Democratic efforts to shoehorn some money for workers into the deal.
So, in just three weeks, Bush turned a neat double play that not only starts the economic globalization agenda moving forward again, but also largely protects him from congressional critics as he pursues more trade talks. These are coming up thick and fast: serious negotiations for a Free Trade Area of the Americas, talks to bring Russia into the WTO, free trade deals to conclude with Chile and Singapore, and a new effort to beef up the U.S. anti-drug Andean Trade Preference Area in South America.
How big a switch is this? Consider that two years ago, after the WTO talks in Seattle collapsed, some commentators said multilateral trade negotiations like those the WTO sponsors were a thing of the past. That governments and their corporate sponsors would now have to pursue globalization through incremental, one-on-one deals between nations. Bush was able to turn that around for three reasons.
First, scheduling the WTO meetings in Doha effectively kept global justice activists out of sight of a myopic mainstream press. It also helped Zoellick sell the talks as a step for global solidarity behind the U.S. war on terrorism in the Middle East. “Free trade is the best answer to terrorism,” he said.
Second, Zoellick and the Republican party leadership successfully argued to Republicans that voting no on fast track would “undermine” the president's authority during wartime. That brought back in to the fold a slew of Republicans from states that stand to lose from lower trade barriers. Third, the AFL-CIO has still not completed its work of turning the Democrats into the party of opposition to corporate globalization—even though its biggest supporters, Bill Clinton and Al Gore, are gone from Washington.
In reporting on the Doha meetings, particularly, the mainstream press has concentrated on a few cosmetic concessions that developing nations were able to win as the ministerial declaration was being cobbled together. “Poor Nations Win Gains In Global Trade Deal, as U.S. Compromises,” a Wall Street Journal headline proclaimed the day after the talks ended. But in reality, the Doha meeting, coupled with fast track's passage, represents a major defeat for the global justice movement. It now faces the prospect of a new round of WTO talks built around an agenda that almost completely ignores the concerns of working people and developing nations.
Thea Lee, the AFL-CIO's chief international economist who attended the WTO meetings, sums up the result bluntly: “What happened in Doha was a disaster for American workers.” The WTO meeting dealt a blow to labor's efforts to have workers' rights addressed in the trade talks, she says—efforts that actually had some backing from the Clinton administration two years ago. Despite a lot of empty rhetoric by Zoellick and his allies in the mainstream press, critics say the new talks will do nothing to help the economy pull itself out of recession—or to grow faster in the long run.
Take U.S. antidumping laws, which Lee calls “the only thing keeping the American steel industry alive—protecting us from unfair competition from other countries.” Congress, before the Doha meetings, considered a resolution ordering Zoellick not to agree to any language in the WTO declaration on new trade talks that would force the U.S. to change its antidumping rules.
But the week before the meetings began, House Ways and Means Chair Bill Thomas switched the wording of the resolution so that it only told the trade representative to try to preserve the antidumping laws. Thomas turned the procedural trick so deftly that some House members may not have known exactly what they were voting for when they passed the resolution, 410-4.
That overwhelming vote didn't stop Zoellick from agreeing to a declaration that reopens talks on antidumping rules. Lee blames Zoellick and the Bush administration squarely for signaling to other countries that the U.S. would agree to anything if it would keep the new talks on track. “Zoellick sold out his American constituents to launch a new round of talks,” she says. “He made it clear that he was desperate to do so when a lot of other countries weren't.”
The only U.S. industry that Zoellick stood firmly behind in the talks was textiles, where big American producers were worried about demands by Pakistan for more access to the U.S. market. American textile producers did indeed win concessions in Doha assuring that garments assembled overseas must be finished in the U.S. to avoid higher duties. Coincidentally, labor activists noted, textiles are a far less unionized industry than steel, and that its production center is closer to Bush's political base in the South than to the traditionally Democratic Rust Belt.
The WTO's new agenda leaves out one item labor organizations had wanted to see the new talks address—workers' rights. The U.S. had put some guarantees of workers' rights on its laundry list for the WTO before the Seattle meetings two years ago, and Zoellick was supposed to pursue it in Doha. But he didn't.
“We feel that because the U.S. under Bush put this at the bottom of its priority list, it meant it didn't have a prayer,” Lee says. Every nation at the WTO meetings was allowed to give a five-minute opening statement. In his statement, Zoellick did not even mention labor rights.
Pro-globalization pundits argue that labor and environmental standards, for example, have no place in trade agreements. But, as the New York Times' David Sanger astutely pointed out following the fast track vote, “The reality of the post-Cold War era is that trade negotiations have become the basic treaties negotiated among nations.... When individual agreements come up for a vote, they almost always pass because the strategic cost of defeating them is simply too high.”
When globalization's critics can't get any part of their agenda accepted in the WTO's meetings, and can't muster the votes to defeat anti-labor treaties on Capitol Hill, their issues are effectively swept off the table. The WTO's new negotiating agenda does nothing to solve this problem—and fast track will compound it.
Labor wasn't the only constituency to lose out. Developing countries facing massive public health emergencies also saw their demands frustrated. Trade-related intellectual property rights (TRIPs), the one area of the WTO agenda where the mainstream press has been declaring victory for activists, also looks less bright the closer one peers at it.
The pharmaceutical industry “was outmaneuvered by activists,” declared the Wall Street Journal the day the meetings broke up, as the deal negotiators approved for new talks “declares that poor countries can ignore drug-company patents and buy cheap generic drugs to meet public-health needs.” The new language on the declaration does not limit poor countries' latitude to pandemics like AIDS and tuberculosis, either.
Pharmaceutical companies were “scrambling to limit the damage,” the Journal said. But limit it they did. Activists wanted the WTO to explicitly state that countries like Brazil and India that manufacture cheap generics can sell them in other countries. The matter was referred to a committee.
“There's going to be discussion in the WTO about compulsory licensing for export, but my reading of the room at Doha is that no one is seriously interested in this,” Alan Larson, Undersecretary of State for Economic Affairs said two weeks after the meetings ended.
A close look at the WTO's actual language on TRIPs reveals that even the general principle the Journal claims that developing countries had won is less than certain. “We affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health,” it says—not shall.
As a result, activists Walden Bello of Global South and Anuradha Mittal of Food First concluded in their evaluation of the WTO meetings, “there is no commitment to change the wording of the TRIPs agreement to accommodate developing countries' overriding of patents for public health purposes.” Without an explicit commitment, the upcoming new round of talks could result in no progress at all for developing counties struggling with AIDS.
The news out of Doha on other matters crucial for the developing world was no better. The final ministerial declaration contains no commitment that the WTO will exempt countries' efforts to promote food security and development from its trade rules. This is an especially important matter for African countries that are being pressured to open their markets while they are struggling to restore agricultural production that's been destroyed by years of famine and civil war.
Both environmentalists and developing nations—frequently portrayed as enemies in the mainstream press—had been demanding that the WTO agenda condemn biopiracy and patents on life. This also was a nonstarter in Doha.
One of the most critical areas of dickering over the new WTO agenda—although almost completely ignored in the mainstream press's coverage—was GATS, the General Agreement on Trade in Services. This is the section that addresses barriers to trade—such as, for example, any highly regulated or government-owned industry or public service such as education, health care, water, and energy as well as labor and environmental laws.
Under GATS language being pursued by European Union negotiators, national laws and regulations would be deemed unacceptable if they are “more burdensome than necessary” to companies. Instead, governments would have to modify their laws to make them more “efficient”—that is, ease barriers to entry into those businesses. This could also provide cover for governments that want to relax labor and environmental laws by allowing them to argue that these laws do not meet the WTO's efficiency tests, writes Greg Palast of Britain's CorpWatch.
Before Doha, developing countries were countering this program by calling for the WTO to assess the impact of GATS before implementing any rules changes. Some NGOs wanted vital public services explicitly exempted from GATS. None of this made its way into the final ministerial declaration coming out of Doha. Instead, it calls for negotiations on all products—without exclusions. It commits WTO members to an extremely fast timetable under which requests to open up their services sectors will appear this June and countries must submit their initial offers to liberalize by March of next year. That won't leave any time for the impact studies the developing nations want.
One of the global justice movement's biggest victories in recent years was the defeat of the Multilateral Agreement on Investment. The MAI would have committed every country that signed it to opening their corporate sector to foreign ownership and then assuring foreign owners that they would not be “discriminated” against. If the deal had acquired any momentum, developing countries faced loss of control of their economies to powerful multinationals. Thanks to a strong grassroots anti-globalization campaign around the world, it didn't.
But at Doha, MAI came back to life. Objections from developing countries were waved aside as the negotiators include in the declaration a complicated commitment to restart talks on investment at the next ministerial meeting in two years.
Finally, developing nations' efforts to open up the WTO process and dampen the overwhelming negotiating superiority of big economies like the U.S., got nowhere near liftoff.
Perhaps the most fundamental criticism of the WTO concerns its deeply undemocratic character. The richest delegations—from the U.S. and the European Union—get 553 delegates, versus 92 from China and India, which together compose 40 percent of the world's population. Traditionally, representatives of the big economies met in a “Green Room” to hammer out their position before emerging to give it to the developing nations as a fait accompli—one of the principal reasons developing nations revolted in Seattle.
At the same time, large multinational corporations appear to have privileged access to key WTO negotiators who often won't receive representatives of NGOs with global justice agendas. When the Clinton administration negotiated the pact that led to China's entry into the WTO two years ago, for example, it made sure the deal allowed one extremely pushy insurance company, American International Group, to expand in China without taking a Chinese partner, as that country was requiring of all other insurers.
Then U.S. trade representative Christine Barshef- sky personally discussed AIG's case with the Chinese ambassador, the Wall Street Journal reported recently. European Union insurers, meanwhile, are being told they have to enter into 50-50 partnerships with Chinese companies if they want to compete in the huge market. The WTO's “level playing field” for multinational companies turns out to be more level for some.
Weeks before the Doha meetings, CorpWatch reported that the Netherlands think tank Corporate Europe Observatory had obtained minutes of 14 secret meetings that the UK's chief negotiators on trade in services had held between April 1999 and February 2001. In on the meetings were representatives of such financial services giants as Morgan Stanley Dean Witter, UBS Warburg Dillon Read, Prudential, and accountant/consultant PriceWaterhouseCoopers.
“The minutes indicate that the government officials shared confidential negotiating documents with the corporate leaders as well as inside information on the negotiating position of the European community, the U.S. and developing nations,” CorpWatch's Palast writes. One subject they discussed was ways to make GATS less vulnerable to criticism from global justice activists.
After Seattle, the WTO leadership gave lip service to the idea of making the WTO more “transparent”—but lip service was all it was. The agenda for new talks is completely silent on reforming the WTO process.
While the WTO's negotiating agenda may not be perfect, one Administration source who attended the Doha talks argued that launching a new round was necessary for one reason: to get the global economy back on its feet.
“The global economic slowdown has only heightened anxieties,” Zoellick said in a speech in September. “So will the ripple effects from terrorism. Financial markets are skittish and fearful of protectionism. Movement on trade liberalization is now vital for our economic recovery—and for sustaining economic reforms globally.”
In the mainstream press, the trade representative's allies parroted this line clear through the Doha meetings. “The negotiations are widely seen as crucial to stimulating the global economy and restoring confidence in the trading system, which suffered a severe blow two years ago when similar talks collapsed in Seattle,” the New York Times' Joseph Kahn wrote on the last day of the meetings. “One incentive to continue discussions is a common feeling that a setback could damage prospects for economic recovery and potentially reduce the rate of growth in trade that powered the world economy in the 1990s.”
Next day, Kahn's article on the close of the talks ran under the headline, “Nations Back Freer Trade, Hoping to Aid Global Growth.” Explaining the compromises some countries' delegations had made, he wrote, “negotiators were under intense pressure to act together to stimulate growth.”
But one administration source acknowledges privately that there's no immediate effect. The new round of negotiations will not begin for another year and probably couldn't result in a new set of rules until 2005 at the earliest—and more likely until 2008. But, he says, the start of a new round has a profound “psychological effect” on “the economic mindset of investors.”
Companies that stand to benefit from globalization wouldn't be so eager to invest in new growth if they didn't think the WTO's agenda was moving forward. That's why, the source says, delegates in Doha were “constantly asking if [fast track] was going through”—without it, they wouldn't believe the U.S. was serious about supporting free trade.
“Idiotic,” Lee says of the argument for the trade talks' psychological effect. “Ridiculous,” adds Mark Weisbrot, co-director of the Center for Economic and Policy Research (CEPR) in Washington, DC.
International trade is indeed a larger component of global economic activity today than it used to be—equal to about 26 percent of the total, versus about 17 percent 20 years ago, according to the Paris-based Organization for Economic Cooperation and Development. But Lee and Weisbrot don't believe negotiations that will take years to bear fruit will have any effect on investors' decisions over the next 12 months.
Nor have they ever. The AFL-CIO undertook a brief study during its anti-fast track campaign that looked at the stock market's reaction to a decade of trade-related bills coming before Congress. When lawmakers voted not to renew fast track authority for Bill Clinton in 1997 and 1998, the Dow went up, not down. When WTO talks collapsed in 1999, the Dow continued to rise. Yet, when NAFTA—the biggest free trade deal on record—passed in 1993, the market went down. All these votes took place during a period of unprecedented stock market growth. Clearly, Lee says, there is no evidence that free trade talks directly help the stock market.
The evidence that denying Bush fast track authority would set back the cause of free trade isn't very convincing either. The U.S. has signed hundreds of free trade agreements in the last quarter-century—the Clinton administration alone took credit for nearly 300, notes Mike Dolan of Global Trade Watch. The six presidents who have served during that period have only invoked fast track a total of five times.
More important, of course, is economic globalization's long-term effect on workers—the CEPR, in a study released just before the Doha meetings, concluded that trade liberalization has had a negative effect on American workers over the last two decades. Using a low estimate of trade impact, the CEPR found that workers saw their net hourly wages go down between 1.6 percent and 2.4 percent; using a higher estimate, the drop was even more dramatic—between 9.4 percent and 10.1 percent.
The meetings opened with the formal admission of China to the WTO, after years of negotiations. China's exports are already putting pressure on prices elsewhere in Asia, and this effect will spread around the world if its share of the world export market doubles to 6.8 percent, as the World Bank predicts it will. Especially hard-hit will be huge Asian textile exporters like India, Bangladesh, and Indonesia, predicts Lee.
When WTO rules breaking down import barriers to apparel kick in, she says, “a lot of countries' products will be wiped off the face of the earth.” While these developing countries are anxious to kick down barriers to their own products today—a fact with which pro-globalization pundits love to skewer their critics—“they'll all come running to us when they're having their butts kicked by China,” Lee argues.
Chinese workers may find they have their own problems with the new world of the WTO. Membership in the organization means that Chinese companies will have to compete with an army of foreign multinationals eager to pick up profits in a market of 1.2 billion souls. The government will be rewriting dozens of laws and regulations to comply with WTO rules and in meetings with provincial officials, acknowledges that millions could lose their jobs as whole industries restructure.
The government is nervous enough that by early December, according to the Wall Street Journal, it had still not published the text of the new WTO trade talks agenda in Chinese for its people to peruse. The result has been confusion and concern among provincial officials, the Journal reported.
But if Lee is right, the best hope for halting the march of corporate globalization lies in letting it run its course and pull the world's economies down in a heap. This is a sufficiently real possibility that even a globalization fan like the Times' Joseph Kahn implicitly acknowledges it. The current recession represents the first time the economies of the U.S., Europe, and Japan have collectively contracted since the mid-1970s oil shocks, he noted on November 25. “Nations that enthusiastically courted foreign multinational investment and followed American advice to keep their markets open and their currencies freely convertible have suffered most,” Kahn wrote.
Certainly, the answer to how the march towards corporate globalization can be halted is not somewhere on Capitol Hill. Bush's victory on fast track demonstrated that labor still hasn't discovered a way to counter the Washington consensus that trade treaties are too “strategically important” for such matters as working conditions, the AIDS crisis or basic public services to get in the way. The answer, most likely, is in the streets.
Some NGOs are getting the idea. In an email communiqué it issued after the fast track vote, Public Citizen called for “a blow out Battle of Seattle II at ‘Davos on the Hudson' in NYC this January,” during the World Economic Forum annual meeting—the corporate-government elite's private smoking club. Activists in New York and around the country didn't have to be reminded—coalitions are already forming to extend a warm welcome on January 31 to the WEF, many of whose members were in Doha and which claims intellectual authorship of the WTO. Representative government having failed, activists will be bringing their message directly to the elite. Z
Eric Laursen is a freelance journalist and member of the New York City Direct Action Network.