The Road From Seattle

UN Chronicle, Spring, 2000 by Ann Marie Erb-Leoncavallo

Globalization is a hot topic, and the World Trade Organization (WTO) is feeling the heat. While the protests in Seattle did not cause the trade negotiations to collapse, they certainly did not help; neither did the unprecedented revolt by developing countries against a process that excluded them from negotiating rooms and a global trading system they view as unfair. Of course, the primary reason the talks failed is because major trading partners could not agree on their priorities.

The United States pushed for the addition of core labour rights to the WTO's agenda and resisted calls to ease its anti-dumping rules. Developing nations said labour standards could be used as a protectionist is tool to exclude their exports. The United States, the European Union and others disagreed on the issue of farm subsidies. All told, the trade delegates' failure to reach agreement on launching the next round of trade talks is a major setback for the WTO. It is also a wake-up call.

Things are changing. Corporate power and people power are stronger than ever. In the past 10 years, global market forces have been unleashed by reformed regulatory systems, privatized assets and liberalized trade and foreign investment. Transnational corporations (TNCs)--a driving force of globalization--wield more power than ever. They now produce one fourth of the world's total output, which is 5 per cent more than the output of all developing countries combined. And TNCs are increasingly forging strategic alliances to consolidate their power. Also, their direct investment in developing countries is now the single most important source of external finance, overshadowing inflows from official aid and exceeding net lending by international banks.

In Seattle, an estimated 30,000 protesters rallied against corporate control, secrecy in trade decision-making, environmental destruction, genetic engineering and the patenting of life forms, job insecurity, exploitative labour practices and growing inequality, to name a few issues. They targeted the WTO because it is viewed as an agent of globalization that has the power to make important decisions and enforce them.

Developing countries are also concerned about globalization and the WTO, and they came to Seattle with concrete proposals to make trade work for them. While the United States and Europe pursued a broad round of talks on new issues such as investment, electronic commerce, competition policy, and labour and environmental standards, many countries in Africa, Asia and Latin America sought a "development round" to review implementation of some Uruguay Round agreements that were reached between 1986 and 1994.

After two decades of the Tokyo and Uruguay Rounds, the vast majority of developing countries have ended up with 3 per cent more trade deficits than in the 1970s and 2 per cent less economic growth. Even major financial institutions seem to be convinced that the multilateral trading system is imbalanced and that action should be taken to enable poor countries to reap the benefits of globalization. In Seattle, the heads of the WTO, the International Monetary Fund (IMF), the World Bank and the United Nations joined the developing countries in calling for a "development round" of trade talks. The IMF, the World Bank and the WTO issued a joint statement saying, "trade and trade policy reform must be made more effective tools for poverty reduction."

They pledged to increase their support for countries to use the opportunities offered by the global economy as key elements of their strategies for poverty reduction and development.

Reducing poverty has become a priority for the United Nations and the Bretton Woods Institutions, and this is reflected in their internal reforms. Rightly so. Half of all people live on less than $2 a day. The gap between the richest 20 per cent of humanity and the poorest 20 per cent doubled between 1940 and 1990. Furthermore, it has become clear in the past few years that free trade and global market forces are not dosing the gap between rich and poor. On the contrary during the 1990s as the pace of globalization accelerated, "the income gap between the developed and developing countries has grown wider, and the prospect of marginalization is becoming increasingly real", said the Group of 77 developing countries in a recent assessment of the situation.

Developing nations are convinced they need differential and more favourable treatment in order to advance in the global economy. Their domestic producers now face greater competition from large multinational corporations. Before he died, former President of the United Republic of Tanzania Julius Nyerere compared the world trading system to a boxing ring. "If I get in with Mohammed Ali, I will get knocked out," he said. To level the playing field, developing countries have been calling for better terms of trade, increased investment and technology transfer, and expanded technical cooperation, capacity-building and trade infrastructure.