Too often, we hear people talk about globalisation as if it were an inevitable occurance. I have even heard some folks ascribe to it as a train that has rolled out of the station at high speed, leaving the rest of us on the platform scrambling after it, fearful of being left behind… and suffer presumably dire consequences.
The GATT and now the World Trade Organisation is not the only institution, but certainly one of the key institutions or actors responsible for speeding up the mechanism of that train which is running down ‘fast track capitalism’.
Perhaps the more appropriate questions should instead be: Is globalisation and this ‘fast track capitalism’ inevitable? Who are the actors behind globalisation? Does the train have to go so quickly? A closer look at the GATT / WTO may provide us with some answers.
What is the GATT / WTO?
GATT was set up after World War II as an international contract that set rules for world trade. It was a landmark agreement bringing trade into a multilateral context, rather than having trade between countries remaining the business of the two or more countries involved.
In its first forty years of existence, GATT’s prime emphasis was on the expansion of trade through the reduction of tariffs. Periodically, the GATT signatories would meet and negotiate tariff and quota rules for trade in products. By the 1970s, some other issues were included in the GATT. These came in the form of Codes. But the Codes were mostly subscribed to by developed countries. Very few developing countries joined in as they found the new disciplines too severe or did not perceive enough benefit accruing to them.
However, things changed radically with the advent of the Uruguay Round in 1986, and the subsequent setting up of the WTO in 1995. At the start of the Uruguay Round, developed countries decided that several areas other than trade in goods had assumed great significance in their economies. They therefore proposed these subjects for a new round of negotiations in the GATT. These were services, investment, and intellectual property rights. They were successful in the Uruguay Round to introduce disciplines in two of these areas – intellectual property rights and services.
Just within a year after the completion of the Uruguay Round, the major developed countries have already tried to bring further new subjects into the agenda of the WTO. These have been investment (again), labour standards, transparency in government procurement and competition policy.
The WTO is a much stronger institution than the GATT. One main reason is that it has a dispute settlement system so that countries can take their trade grievances to the judicial court there.
Based on this promise of ensuring that rules of fair trade are carried out, the majority of countries in the world – developing and developed – are members of the WTO.
Unfortunately, despite these noble objectives, the power play between the strong and weak economies that take place in bilateral trade relations also prevail in the WTO, and in fact are institutionalised in the WTO. The rules of the WTO remain imbalanced and biased in favour of the developed countries, and more specifically, in favour of the corporate interests of developed countries.
This is a simplistic, but visual analogy of the WTO:
Country members are called to a game of soccer. However, in this soccer game, unlike the usual soccer game, there are 3 teams, not 2. The age range of members are also very different. One team of players are 20 years of age. The other team, ten years of age and the last team 5 years of age.
The rules of the game are mostly determined by the oldest and most experienced team – the 20 year olds. And often, in this soccer game, the team members come up with more and more new rules for which all the teams must abide by. They sometimes call themselves the QUAD (coalition of US, EU, Japan and Canada).
The younger teams are given some concessions – the 10 year olds have a few concessions and the 5 year olds a couple more concessions. For example, these two teams are given a few more turns at having the ball.
Apart from which, however, all players are treated equally and all 3 teams play together. It is found that the older team scores most of the goals – 9 out of 10 goals. Often the oldest team also plays a dirty game – team members push and shove the younger players when they are not supposed to. Occasionally, the younger team points this out to the referee and the younger team is compensated, but this is rare. More often, the bullying continues but the younger teams are threatened to keep silent, otherwise they would be beaten up in the changing room. In fact, often, the older team complains about the unruly behaviour of the younger team and are compensated.
The other dimension in this game is that the experienced players have huge reserves of manpower and they change their players frequently, so that the players are not tired out and can play well. In contrast, the youngest team have only a small group of players, have no reserves for back-up and have to take part in this soccer game that (unlike real soccer), does not end – it goes on and on and on.
The outcome of the game? Of course almost all the goals are scored by the oldest team. The 10 year olds very occasionally makes a couple of scores, but end up loosing out as well. The youngest team is completely defeated.
This is over-simplified, but gives the gist of the power politics at the WTO today and the bleak picture for developing countries.
What type of Development is Implicit in the WTO Agenda?
Why do I paint such a gloomy picture of the WTO? I do so because the development model implicit in the WTO’s agenda, is one that has already been tried in many parts of the developing world, including our region – with disastrous results. And the WTO in fact is taking it even further than what has already been pushed on developing countries.
The ground work for the WTO had already been laid in most developing countries. These countries in the 70s, 80s and up till today are either strongly encouraged or arm twisted into taking on board certain policy options. The policies typically included:
1) the removal of protective tariffs which directly endangers local industry
2) the removal of rules controlling foreign investment, which ushers in the foreign domination of local industry
3) the conversion of self-sufficient, small-scale diverse agriculture to corporate export-oriented monocultures, which severely threatens the food security of local populations
4) the elimination of price controls
5) the drastic reduction in social and health services
6) the aggressive privatisation of government agencies which renders social services inaccessible to the poor
7) the ending of popular ‘import substitution’ programmes that encouraged local people toward diverse local production and self-sufficiency.
Let me elaborate on some of the characteristics of this development model:
1) Emphasis is placed on the export sector. If a country opens up its borders, there will be a flood of goods coming in from abroad. It will in turn have to pay for these goods through its exports. However, what happens is that developing countries largely become producers of low-value industrial goods or simply export raw materials.
How does this happen? To a large extent, it is due to the presence of tariff escalation for industrial and also agricultural products. Tariff escalation is put in place by protectionist policies of the developed countries. Tariffs on semi-processed products are higher than those on raw materials, and those on finished products are even higher. This locks developing countries into exporting raw materials or low-value goods. It discourages diversification to more processed products since the market openings are not available.
2) Emphasis is placed on the urban industrial sector, and few resources are channeled to the rural sector so that even though growth rates may be increasing, the agricultural sector is really being impoverished, with serious consequences for large sectors of the rural population.
The result often is that there is very unequal development between the rural and urban sectors. And we are deceived by the apparently high growth rates – many people may be getting rich – but there are even more people getting poor. This has been the case in Thailand and Indonesia even before the financial crisis.
3) Rural communities whose traditional livelihoods are based on the subsistence economy find that their resources (land, forest, fish, water etc.) are taken away and are channeled towards industrial development or for export. From surviving on a non-monetised economy, these communities are forced to enter the monetised economy. From being able to pick fruit and fodder from the forest, people now have to buy what they need from the market. Their dependence on the money economy grows, yet they may not necessarily have more access to the money they now need for their basic survival.
4) There will no doubt be a trend towards rural-urban migration as resources from the rural sector are taken away. This has led to many cities in developing countries being overcrowded by squatters and an increasing number of urban poor, since the cities are largely unable to absorb the burgeoning numbers that arrive in search of jobs.
5) In the area of agricultural production, self-sufficiency is eroded as export crops are promoted. Many developing countries – particularly low-income countries find that even though the majority of their population may be engaged in agriculture for export, food shortage remains a fact of life. The well-being of the population would be better ensured, if people are instead given the land to farm for their own subsistence.
Even in the hey-day of the Asian tigers, where growth rates were high and businesses were booming, poverty and environmental degradation was present and on the increase. No attention was given to these because people felt that it was an exception to the rule. But no, poverty and environmental degradation, especially the impoverishment of women, was a direct consequence of the high growth rates.
A very clear example is of Thailand – as the urban sector grew by 10-12%, the rural sector was struggling along at 3% growth rate on average. In fact, in parts of Thailand, the farmers are heavily in debt and face harsh conditions and food shortages themselves.
And with the devaluation of the baht and the financial crisis – it is as if the wool has been pulled off our eyes, and we see with clarity, the fragility upon which wealth had been built. The poverty that had already existed before the crisis, is of course now further aggravated with the devalued currencies and widespread unemployment.
This economic model that is promoted is bringing about the ‘champagne glass civilization’, where the gap between the rich and poor is widening. Today, the rich are really the corporations and a minority of people who benefit from this corporate and profit-driven globalised economy. In this champagne glass civilization,
‘the top 20 per cent of humanity, controls 83 per cent of the world’s income, and the bottom 20 per cent survives on only 1.4 per cent. The gap in the distribution is growing…’ (An Unwanted Child Grows Up 1995; 33).
Seventy per cent of global trade is controlled by just 500 corporations; and a mere 1% of the TNCs own half the stock of foreign direct investment.
The new trade agreements can only greatly accelerate corporate concentration and increase corporate power in relation to nation states. As an analyst has commented, ‘This is one of ‘free’ trade’s main purpose’.
How is this development agenda sold to the developing world? How is it people have bought into it? Amongst the many reasons, one crucial argument that has gained wide currency is the GDP argument. When countries focus on industrial development and on exports rather than production for their own subsistence and self-sufficiency, GDP increases. The logic is that when GDP increases, wealth increases and this wealth will trickle down to the average person on the street.
While, let me tell you that GDP does not increase wealth. In fact GDP is a measure of how fast we are destroying our resources – especially our environmental resources, and also our labour resources.
When we sell our trees – we increase our GDP. But if we leave our trees to stand in the forest, to provide our food and fodder, to clean and maintain our environment and to prevent floods, GDP is not increased. When we take part in a ‘throw away culture’ – by using disposable goods instead of recycling, GDP is increased. When I drive up the road in my car, GDP increases, but not when I walk up the road. When women work at home engaged in productive work: bearing and looking after children, cooking and cleaning, GDP does not increase. However, when they take on a double load, when they enter the free trade zones and work there in the day, then to go home to look after the children and cook and clean, GDP increases.
So do not be taken in. GDP does not measure wealth. In fact, it measures how fast we are destroying our environment and our people, including our women.
Who are the Actors Behind the WTO?
GATT and now the WTO as well as many of the ‘free’ trade agreements are not really about making trade really ‘free’. No, instead, these agreements dismantle policies that protect people, but increase protection for the corporations.
Some analysts have coined this the age of ‘Corporate globalisation’. The Uruguay Round was a landmark step in the direction of getting governments out of the way so that companies are given free access to cross national boundaries and therefore access to resources – land, water, labour, marine resources, anywhere in the world. This process is continuing at a rapid pace as newer issues are introduced in the WTO.
If one traces the history of GATT / WTO, and how new issues have been brought in, it will basically be a reflection of the areas corporations and big businesses have been expanding into and a reflection of their profit interests – from industrial goods, to services, when corporations had expanded into that sector. Now agriculture, and intellectual property rights have been brought in, to protect the industrial farm businesses and the biotechnology companies. As banks in the developed countries gain maturity, the WTO moves into financial liberalisation. With the growth of the internet, presenting new business opportunities, electronic commerce is introduced into the WTO, so that the developed countries do not need to pay tariffs when selling goods over the net. Now, investments and government procurement are on the tables, because developed country corporations need new markets to continue making their huge profit margins.
What are some practical examples of the corporate agenda driving the WTO agenda?
1) Take agriculture – at the start of the Uruguay Round, the US trade negotiator was former Vice President of Cargill. After his stint as trade advisor, he went back to his previous job in Cargill (Cargill is one of the largest industrial agricultural corporations in the world.)
2) The TRIPS agreement in the Uruguay Round was drafted by representatives from the corporations. This was possible because the US has trade ‘advisory committees’ which are basically made up members of the business community .
3) The third ministerial is being held in Seattle in the US because trade there is dynamic, particularly the electronics industry. Importantly, it is home of Microsoft and Boeing – so Bill Gates and the director of Boeing will in fact be the ‘community representatives’ hosting the governments and non-governmental representatives at the 3rd ministerial.
These just gives a glimpse of the extent to which the corporations are behind the WTO. Suffice it to say that the corporations use the WTO as an effective vehicle to set in place the institutional mechanisms and arrangements they need for their agenda. This agenda is about expanding beyond their traditional markets in order to increase profits. They go in search of new territory with more consumers and new and often cheap resources which they can exploit – land, trees, water, plant varieties, inexpensive labour.
This profit agenda places at risk the interests of the majority of people; the preservation of the environment; millions of livelihoods; the food security of people all over the world.
Reasons Why Developing Countries Lose Out
In contrast to the special treatment given to the corporate sector at the WTO, developing countries are marginalised. Even though the GATT in its preamble states that ‘relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment…’ etc. this is not operationalised in reality, and concern is only about pushing countries to accept the accelerated trade liberalisation agenda.
There are many reason why developing countries loose out in this WTO system. These are only some of them:
1) Differential and more favourable treatment is given to developing countries in certain areas. However, these usually amount to the provision of a longer time frame for the implementation of obligations. This is at best superficial and does not address the real needs of developing countries. Take for example, the telecommunications industry in a low-income country. They may be given 6 years longer than developed countries to open up their telecommunications sector to foreign competition. Yet its industry is possibly 25 years behind that of the US. The extra years therefore are hardly adequate in comparison to their real needs.
2) The other basic weakness of the system that works to the disadvantage of developing countries is that the ultimate instrument for enforcement of rights and obligations is trade retaliation. The dispute settlement system bases itself on this principle. If a small country wins a case against a large economy, and if that economy still refuses to implement the necessary policy changes, the small country can retaliate – for example, by not allowing certain products into the country. However, this system is only a real threat to small economies. The US, for example, would not be unduly worried if a certain line of her products are not allowed into a small economy. But it would be very difficult for small countries to stand up to a large economy, such as the US, and possibly face closure of the US economy to their products. The use of retaliation is therefore quite impractical for smaller countries, both economically and politically.
3) The old GATT rules were not as binding as the WTO rules. Unlike the old rules of the GATT, the new WTO requires that all members agree to be bound by all the Uruguay Round Accords. The old GATT rules did not require this all or nothing standard. This weighs heavily against developing countries, especially the smaller countries. Accepting liberalised trade in all the many facets of the WTO will no doubt be detrimental to their domestic economies in the long run. They choose between agreeing in totality or being left out of the international world trade system.
4) At the WTO, only a simple majority vote is needed in order to initiate on-going negotiations on WTO provisions. However, under the old GATT, that vote had to be unanimous. The new rules more easily allow the larger nations to coerce the smaller ones.
5) Most developing countries, particularly the smaller countries just do not have the resources to actively take part in the WTO negotiations that take place in Geneva everyday. While the US has literally hundreds of people working on WTO issues, developing countries would count themselves lucky if they even have the resources to have a mission in Geneva. And if they do have a mission in Geneva, they have maybe only a handful of people in that mission – these persons have to cover all that is taking place in Geneva – including the ILO, the WHO, UNCTAD etc. Formal WTO meetings add up to approximately 47 meetings per week.
6) This is probably the most important point: apart from the issue of the resources, the decision-making process at the WTO is far from transparent. At the Singapore Ministerial Conference, the most important negotiations were carried out in meetings where only selected countries were invited to. Many country delegations did not even know what negotiations were taking place where, because they had not been informed, and really, were not allowed into these ‘closed door’ meetings. This is reflective of the on-going process of negotiations in Geneva where the largest countries dominate and move the negotiations forward without consultation with the smaller countries.
I have occasionally heard small economies which are in the process of accession into the WTO speak optimistically, that even though they are small, they can find ways around protecting their interests at the WTO by negotiating with the larger countries and by asking for concessions. The political reality is that the opportunity for negotiations may not even be there, given the terrible lack of transparency in decision-making.
Take for example, the hurried manner in which the Declaration on electronic commerce, which eliminates the ability of countries to impose taxes on trade conducted through the internet, was brought into the WTO at the second Ministerial Conference. It was only presented to WTO members shortly before the Ministerial Conference itself, and many developing country governments felt pressured into giving their consent without fully being able to investigate its long-term consequences for their country.
8) A good amount of arm-twisting goes on behind the scenes when developing countries refuse to agree to certain decisions. While in conversation with a trade representative from a developing country recently, he told me that when he obstructs certain positions put forward by the US, it is not uncommon for the US to ring up his minister in the capital and report this to his minister. Trade ministers in the capitals usually bend under such pressure from a large country and would inform their representative in Geneva to give in. Sometimes, he then gets a call from the US delegate to tell him that he’ll soon be receiving word from the capital, that his position will have to change.
We also talked about TRIPS and its negative implications for developing countries. He assured me that the whole African continent put together, even if they chose to, would not have the power to change the existing TRIPS agreement in their favour or prevent the TRIPS from being strenthened in favour of the corporations in the current TRIPS review.
Therefore, developing countries, because of their economic and political vulnerability, end up being bullied in what is supposedly a democratic process.
Various WTO Agreements: Issues of Concern
1) Textiles and Clothing
This area is of crucial interest to developing countries. At the time of the Uruguay Round, liberalisation of this sector was cited as the area developing countries would benefit most from. Some even estimated that the earnings of textile exporting countries would increase by over US$300 billion.
The US and EU are the main parties that have to liberalise in this sector. In the first 2 years of liberalisation, no progress has been made even though they were supposed to liberalise by 16%. They are required to open up by 17% in the second phase, which started in Jan. 1 1998. It is expected, however, that the EU will liberalise only 3.6% of imports and the US 1.3%.
So instead of the developing countries increasing their exports in this area compared to the developed countries, the reverse is true. Textile exports in developing countries have risen only 4.3 per cent over the past 4 years, while exports from developed countries have risen by 9 per cent in the same period.
What developed countries have done is that they have abided by their technical commitments – they have ‘liberalised’ but have included in their ‘liberalisation’, those products which were not in the first place protected.
If this present trend continues, only about 20 per cent of items under the textile and clothing agreement would be liberalised in the 10 year transition period, leaving 80 per cent to be ‘integrated’ right at the very end.
2) Anti-Dumping
Over the last 15-20 years, anti-dumping has been used by the developed countries as an important instrument of protectionism. Developed countries have persistently initiated investigations regarding the same products exported by developing countries. In doing so, they have demanded information that is difficult and expensive for developing countries to furnish. Furthermore, when a case is taken against a developing country, even if the developing country is found not to be in the wrong, the country pays heavily since it suffers the sudden loss of a market. Albeit this is only for a few weeks while a challenge is considered, it can be devastating for fragile industries, or for countries that are heavily dependent on a few export products.
It is also difficult for most developing countries to take on the developed countries in this area. Firstly, they need to prove that the other party has caused significant injury. Detailed and highly technical information need to be collected to prove this injury. Similar to the dispute settlement system, the process is very costly.
3) The Agreement on Subsidies
Most types of subsidies applied in developed countries such as those relating to research and development, adaptation of environmental standards etc, have been non-actionable, whereas, the subsidies normally used by developing countries for their industrial development and export development have not been given this treatment.
Similar to the anti-dumping agreement, to lodge a case requires highly technical information and costly legal expertise. These processes should really be simplified and there should be adequate legal and advisory services available in the WTO to ensure that developing countries are able to use the system.
4) Trade Related Investment Measures (TRIMS)
In this area, the agreement specifically prohibits enforcing domestic content requirement, as that is contrary to the obligations of the national treatment principle. However, this is vital for developing countries as it encourages:
a) the use of domestic raw materials, hence saving scarce foreign exchange
b) the creation of additional domestic employment
c) the growth of general domestic economic activity
5) Agriculture
The Agreement on Agriculture has really been about selective deregualation of agricultural products, so that the large exporting countries, particularly the EU and US are still able to maintain their high levels of subsidies while the developing countries are prohibited from increasing their minimal levels of subisidies or from introducing new ones. The Agreement works out to favour the corporate agribussinesses of the developed countries. It is gradually sqeezing and pricing out the small-holder famers in developing countries from agricultural production because of the continued high levels of subsidies provided by developed country governments in conjunction with the forced lowering of tariff barriers in developing countries. The OECD, for example, provided subsidies to the tune of US$280 billion in 1997 alone.
The consequences are detrimental to the food security of developing countries, since local production to support local food needs are severely at risk and many low-income countries and people will not have sufficient financial resources to purchase even the basic foods they require. Developing countries in turn are being strongly advised by the international financial institutions to venture into the export markets – in cash crops, luxury fruit and vegetables, cut flowers etc. This type of crop conversation especially to luxury items has met with tremendous problems. It has led to many farmers being left with large debts since it requires large capital outlay.
6) Intellectual Property
TRIPS introduced sweeping and overwhelming opening of the patenting of life forms that brought the world in line with US-style patenting system. This system has allowed corporations to patent the natural biological resources of many communities and countries. No compensation is paid to the indigenous population which may have nurtured these species for a long time.
Because of the action of NGOs such as Third World Network at the time of the Uruguay Round, Article 27.3 (b) was included into TRIPS to allow local communities to use their own systems of protecting their seeds, plant varieties etc. But this ‘sui generis’ article is now being reviewed and local systems of intellectual property rights protection are seriously being threatened. The US government, this year, is working to get local control eliminated.
7) Services
The motive for including services into the GATT and now WTO is so that the businesses of the developed countries can have legal permission to take over the service sectors in developing countries – insurance, movies, shipping, banking, airlines, telecommunications etc. The opening up of our service sectors will deprive developing countries’ economies the opportunity to naturally evolve and gain strength in these areas. It will deprive developing countries of the right to diversify and strengthen their economies.
Following the Uruguay round, the following issues under the services sector were on the tables for discussion. These included the movement of natural persons, financial services, maritime transport services, basic telecommunications etc.
The area of greatest interest to the developing countries – the movement of natural persons as a means of providing services concluded in July 1995, but with insignificant results for developing countries. However, negotiations on financial services and basic telecommunications have since been concluded.
Developing countries do not stand to gain from these agreements. They have no export interest in financial or telecommunications services. However, they have been pressurised into making concessions in these areas, by allowing the entry of these services into their countries.
8) Electronic Commerce
The Declaration prohibits Members from imposing an entry tax on commercial transactions conducted across borders by electronic means. For the moment, it does not affect developing countries since most developing countries do not conduct their trade through electronic means. However, it is likely that this is an area will be expanding and in time, it will be a commonly used mode of trade especially by developed countries. By that time, developing countries would be deprived the right to collect taxes and increase their much needed government revenues.
9) Government Procurement
Most governments give preference to buying from local suppliers. In fact, using tax dollars to purchase goods and services from local companies is, in most countries, a key governmental policy tool aimed at strengthening the local economy or industry.
As much as 40-50% of GNP (if we factor in schools and services) come from government procurement. Bringing government procurement into the WTO means forcing governments to abandon the practice of buying from local sources. It means allowing much greater penetration of developed country’s corporations into our economies. Governments will have to allow equal treatment of domestic and international companies for providing the government goods and services. It means giving up control and the ability to nurture and strengthen local enterprises.
The flip side of the coin: developing country companies will not be poised, on the contrary, to enter the developed countries and provide the required supplies for government procurement contracts there.
10) Forestry
This is the newest issue that may be added to the WTO. There was an attempt at the last APEC meeting to push for near total liberalisation of the forestry sector. Japan resisted and the issue is likely to be shifted to the WTO. Apparently, negotiations in the area have already commenced. The countries pushing for it, especially the US, want it completed by December 1999.
11) Investment
As a result of strong citizen activism, the MAI negotiations were stopped from being passed in the OECD. But the MAI was then moved to the WTO. The MAI is about corporations being given national treatment – that is, they must be treated the same way local companies are treated. This will be highly detrimental to the economies of the developing countries, which would be literally taken over by developed countries’ corporations.
In Singapore, many developing countries were strongly against the inclusion of investment into the WTO. However, India, which was a lead opposition country buckled under and agreed to the setting up of a study-group on investment. It would be interesting to find out what went on behind the scenes before India changed her position.
12) Dispute settlement system
The dispute settlement system has been acclaimed as one of the most significant achievements of the Uruguay Round. However, since 1995, it has been used mainly by the developed countries. There have been about 150 cases since 1995. The US alone is responsible for initiating about 50 cases and all the developing countries, together, have initiated about 40.
And while developing countries have won some of these cases, the fact remains that the system is weighted heavily against developing countries. One of the main reasons being that the procedure is very costly. Developing countries do not usually have the legal expertise to handle the cases on their own and would have to incur heavy expenses in hiring legal expertise from abroad. They therefore need to weigh whether it is wise to even take the matter to the dispute settlement process.
As mentioned earlier, the other area working against developing countries is that if the country in the wrong does not take the necessary corrective measures, countries have the right to take retaliatory measures equivalent to the losses which the country has suffered. For small developing countries, this bottom line of retaliation, is impractical, politically and economically.
Built-in Agenda of New Round?
According to the last round of talks, several issues were tabled to be reviewed in 1999. This is generally called the ‘built-in agenda’. These issues up for review include: agriculture, TRIPS, SPS, as well as the dispute settlement system.
At the WTO, negotiations take place either by single issues – sectoral talks, or in a round, where all the issues are negotiated simultaneously, and trade-offs between sectors are made.
The EU has been very keen to take this opportunity of the review in the various agreements to launch a new round of talks, so that trade-offs can take place between the different sectors. The EU is reluctant to remove many of its subsidies under agriculture, hence cross-sectoral trade-offs would be to its benefit.
The US does not want to compromise in the area of agriculture. Also it says that it does not want a round whereby one issue is held up until all issues are resolved. The Uruguay Round took 7 years as a result. Their current position seems to be that they would support a round, but issues should be concluded once negotiations have been completed in that area, without having to wait for the conclusion of all issues. US has also given a time-limit of 3 years for the entire Round.
So It looks as though a new round of talks will to be launched at the 3rd Ministerial. Many developing countries are opposed to this. They want only the items on the built-in agenda to be on the table. But as yet, their position is not being heard and seriously addressed. Unless developing countries get together and strongly and effectively oppose the developed countries, a new round – the Millennium Round – is likely to take place.
On the Weighing Scale – Will the WTO Benefit Vietnam?
So what is in the WTO for smaller countries such as Vietnam? The main benefit smaller countries are promised is that of better market access opportunities to the markets of larger countries, particularly the developed countries.
For example, the tariffs charged on Vietnamese textiles entering the US are now 3 times higher than if Vietnam was a member of the WTO. Textiles may just be one example, there may be other examples of better market access opportunities.
I would personally warn Vietnam policy-makers from being overly optimistic. Market access opportunities are often cosmetic. There will be some openings, but they would not be huge. Even in textiles, it may only be in those textiles which the US does not herself manufacture. Certainly in agriculture, that is the case. Martin Khor, a very astute NGO lobbyist on the WTO, sums up the US position in the WTO. The US plays the game of ‘liberalisation if it benefits me, protectionism if it benefits me, what counts is my commercial interests’.
In fact, from the outset of the Uruguay Round – the gains (which now on hindsight are seen to be overly optimistic) were calculated to be some $500 billion. But even at the time, when the effects were looked at regionally, it was acknowledged that the smallest economies would be losers of the GATT.
To me, the results of the weighing scale are clear: Vietnam will get some concessions in market access opportunities for her products. In exchange, the corporations of the large developed countries will come and take over the country – from your farms, your land, your plant varieties (such as your rice and other crops – this is happening in India and Thailand), your forests, your banks and your hospitals and even rights to your water. (In some parts of India one has to buy rights to use the water). The entire country will become converted to a factory line for these corporations, and your people reduced to a nation of workers with very little autonomy in exercising your own destiny.
This will not happen the next day after becoming a member of the WTO. Of course not, but it will take place gradually, 10-15 years on.
Maybe Vietnam’s GDP will increase when she joins the WTO. But only because we will be selling everything – all our resources, from our trees to our land, to our plant varieties, to our women. We think we are getting richer, but the GDP in reality will be a measure of the speed at which we are getting poorer.
And the social consequences of this? There may be a small handful of Vietnamese that will benefit and will become rich. But there will also be a widening of wealth between the rich and poor – so that the numbers getting poorer will become larger and the depth of poverty more acute. Women will be the first to feel the effects because women manage the household and are the first to sacrifice their needs when resources – food, money and time are scarce. They are also the primary care givers and therefore will have a heavier burden when health services diminish, or when the family becomes poorer and cannot afford these services. Women too are the first in the firing line when a company undergoes restructuring. And in the extreme and not too uncommon case – women’s bodies are sold in the sex industry – as a last resort means of survival.
What is the alternative? Let us go back to the soccer field I described earlier. What would you do if you found yourself as part of the youngest team, with a limited number of players, competing with two other teams older and more experienced than yourself?
If I were the leader of the youngest team, I would boycott the game. I would not put up with the older players pushing and shoving me around, and then threatening me in the washroom to bash me up if I complained to the referee.
I would therefore pull my team out of the game and instead set up our own game with our own rules. Occasionally, we can have friendly matches with the older teams, but only if we wish to, at the times we wish to. It is not compulsory.
Vietnam is in that privileged position where now you are out of the WTO. My advise to you is this:
1) Put your resources into your domestic economy, rather than concentrate on an export oriented economy.
2) Diversify your local economy, so that you maintain your current levels of self-sufficiency and in fact increase your self-sufficient capacity – both in industrial and agricultural products.
3) Put your resources into education and the health needs of your people – your people are your future.
4) Together with other countries that have yet to be accepted as WTO members, as well as the many developing countries that are already part of the WTO, work to change the WTO so that the interests of developed and developing countries are more balanced; so that the corporate agenda is taken out completely and the organisation in fact reflects the original aims of a multilateral trade organisation – that multilateral trade is conducted fairly.
It should look much more like the UN then the WTO – the rules are there and the organisation monitors if these rules are kept. Developing countries have much more leverage in the organisation.
But even with that organisation in place – self-sufficiency should be the aim of governments. Of course there will always be products we want that we cannot produce ourselves, so yes, trade comes in. But we need to destroy the idea that international financial institutions shove down our throats all the time: we cannot earn from our exports and then import what we need. For the majority of developing countries in the world, this model has failed miserably. It has only increased their debt and left their people impoverished and with much less autonomy.
I conclude with a quote about self-reliance and the world economy today:
‘Self-reliance as a concept and political objective of developing countries may seem to be out of place in a world of greater interdependence and integrated economies. This may explain why it has become out of fashion. But for a nation to operate on self-reliance or autonomy does not mean that it should practice autarky and reject integration into the world economy. The achievement of self-reliance infers that developing countries are not subject to the dictates of other nations or powerful actors such as multinationals, or indeed the North-dominated multilateral financial institutions, in which they have no effective voice in determining the policies and rules. Fuller control over their destiny and political and economic space would imply, for example, pursuing what some have termed ‘strategic’ integration into the world economy.’ (South Centre, Towards an Economic Platform for the South, http://www.southcentre.org/papers/nam/toc.htm).
* Aileen Kwa is a research associate with Focus on the Global South. This paper was presented at the Workshop ‘WTO and Developing Countries’, organised by the International Economic Integration Unit of Vietnam’s Ministry of Foreign Affairs, and sponsored by Oxfam (GB), March 5 1999.
