[R-G] [BillTottenWeblog] Impasse

[Bill Totten]

Are We Nearing the End of the Corporate Globalization Era?

by Deborah James

AlterNet (August 21 2008)


When the history of the seismic shifts occurring today in the global
economy is written, the failure in July 2008 of corporate interests and
some governments to expand the World Trade Organization (WTO) through
the Doha Round will stand as a watershed moment.

It was in this lakeside town where negotiators threw in the towel on
their seven fruitless years of trying to expand a particular,
corporate-driven set of policies, to which the majority of governments
have said "no", time and time again (in Seattle in 1999, Mexico in 2003,
and Geneva in 2006). WTO Director General Pascal Lamy attempted a
last-minute push to conclude a Doha deal by calling for an exclusive,
invitation-only mini-Ministerial of around thirty of the WTO's 153
members in Geneva last month, despite wide divergences in political
positions within the areas of negotiation, and despite the fact the Bush
administration has no authority to sign any potential deal.

And since it wasn't enough of an abrogation of democratic process to
exclude four-fifths of the WTO's membership from the so-called "Green
Room" negotiations, when talks failed to converge amongst those thirty
countries, Lamy continued negotiations with a mere seven members,
including almost all of the developed world, yet excluding all of Africa
- in a round that proponents still shamelessly refer to as a
"Development Round". Many developing countries such as Bolivia and Kenya
and even the host, Switzerland, raised significant process concerns
about their exclusion from the meeting, but their concerns were
dismissed by Lamy.

Were Africans allowed to participate in the secret discussions, they
would have demanded resolution on issues such as the reform of US cotton
subsidies to 20,000 domestic producers, which encourage overproduction
and erode the income of ten million African cotton farmers in countries
such as Benin, Burkina Faso, Mali and Chad, driving many of them out of
business and reducing revenues key to health care and education budgets
for the poor. Some observers have highlighted Africans' strong stand on
development issues when they were allowed at the table. Many have even
argued that rich countries' desire to avoid key African issues such as
cotton is actually what led to the collapse, but this part of the story
seems just too ugly to have been repeated in the US press.

Recent coverage in the United States of the talks' failure has focused
on the negotiating positions of various countries, particularly blaming
India and China. But when one delves into the underlying issues, it
becomes clear that much more was at stake in the negotiations than
"trade", and that the collapse was due to forces far greater than
individual countries' positions - including issues surrounding the food,
climate, and financial crises - as well as the lack of progress on
development due to the failure of neoliberal policies to actually
promote growth or reduce poverty. Given the changes in international
political dynamics as well as the global agenda, the collapse in the
current negotiations will have far-reaching impacts beyond just the WTO.


Food Sovereignty or Food Crisis

Take agriculture, for example, the issue cited by most accounts to have
provoked the collapse. India, supported by the vast majority of
developing countries, fought for the right to be allowed within the WTO
to protect its farmers, food security, and rural development from the
volatility of the commodity markets. Surges of subsidized imported
products have so devastated local agricultural producers, who represent
three-fifths of the workforce in a population of 1.1 billion people,
that it is said that over 100,000 farmers have committed suicide in
recent years. However, US negotiators wouldn't allow for the
protections, and demanded increased access to poor countries' markets
for its agribusiness exports, while refusing to reduce the cap on
domestic subsidies below twice their current rate.

It is not a coincidence that the talks fell apart over issues related to
agriculture, in a year where countries from Haiti to Pakistan and Mexico
to Cameroon have seen riots break out over food prices. While commodity
prices are fortunately on a slight decline, the food crisis is eroding
allegiance to the free trade dogma in agriculture. Many developing
countries that used to be able to take care of their own food needs are
now heavily dependent on imports. Two-thirds of developing countries are
now net food importers. Decades of IMF and World Bank-mandated
structural adjustment policies, coupled with "free trade agreements" as
well as WTO policies, have forced developing countries to reduce tariffs
- which, combined with high levels of permitted subsidies in rich
countries - has eviscerated the productive capacity of many developing
countries. WTO policies have also contributed to the erosion of the
family farm in the United States and other rich countries. Further WTO
expansion would exacerbate, not solve the food crisis, no matter the
claims of Lamy.

Another key factor at play in the negotiations in Geneva was the
continued mobilization against the expansion of these failed policies by
civil society worldwide. For example, farmers in India have been
organizing massive protests over the last many years against the WTO.
Their anger sharpened as they witnessed the harsh pressure their
government was subjected to during the talks, including at least three
personal calls from President Bush to Prime Minister Manmohan Singh
during the negotiations. Farmers from Indonesia, India, the Philippines,
Brazil, and other countries lobbied their representatives in Geneva
while keeping civil society at home up to date about the state of play
in the negotiations. They pressured their governments to resist the
anti-development demands, and helped ensure the victory of the collapse.


Kicking Away the Ladder of Development

A similar dynamic emerged in the other major pillar of the negotiations
in Geneva, regarding tariffs on industrial goods. Tariffs are
essentially taxes that corporations pay to governments for the privilege
of selling their goods, and making a profit, in another country.
Strategic use of tariffs has been a core strategy of any
industrialization policy; governments increase tariffs to protect infant
industries from foreign competition to promote domestic jobs and
development, then lower tariffs when those industries are competitive,
to save consumers money. As Cambridge economist Ha-Joon Chang
illuminates {1}, the US had the world's highest tariffs at the turn of
the century, during our industrialization. Now, rich countries are
essentially saying, "Do as I say, not as I did", arguing that developing
countries should reduce their tariffs, because rich countries now have
lower tariffs and are richer. This amounts to the proverbial Kicking
Away the Ladder of development {2}.

In the WTO this plays out in the area of negotiations called "Non
Agricultural Market Access", or NAMA in WTO-speak. Both developed and
developing countries have agreed to reduce tariffs, within the Doha
mandate of Less Than Full Reciprocity. This means that developing
countries are supposed to gain more "market access" to developed
countries (and hence reduce their own tariffs by a lesser percentage)
than vice versa. However, in the actual negotiations, rich countries
demanded that developing countries slash their bound tariffs by an
average of about sixty percent, while only offering to cut their own
tariffs by half as much (about 28 percent.)

According to the International Trade Union Confederation, these tariff
cuts would result in tens of thousands of lost jobs in
newly-industrializing developing countries, in the midst of a crisis of
poverty and lack of development progress in many countries. In addition,
the Third World Network has pointed out that the cuts will also
foreclose the possibilities for industrial development for many of the
poorest countries. The United Nations Conference on Trade and
Development estimates that tariff losses (which provide for a
significant portion of health and education budgets in many developing
countries) would amount to nearly four times the small projected "gains"
for developing countries from the Doha Round.

Fortunately, trade unionists from South Africa, India, the Philippines,
Argentina, Brazil, Mexico, and other countries have become increasingly
vocal about their concerns, and traveled to Geneva to lobby their
governments, raise their voices in the media, and ensure that workers at
home were putting pressure on their capitals to defend their interests.
While the issue of industrial tariff cuts was not reported as being the
deal-breaker this time, it is clear that it will remain a primary
objective of the rich countries in the negotiations.


WTO Expansion would Exacerbate, not Solve, Climate, Financial Crises

Agriculture and jobs-and-development are not the only arenas in which it
is becoming increasingly evident that the WTO is a contributor to,
rather than a solution to, present global crises. The global climate
crisis will also require new, innovative solutions. Unfortunately many
of those ideas will clash with WTO prohibitions on regulatory policies
that could, in some way, unintentionally restrict trade. We already know
that shipping products tens of thousands of miles across the world so
that corporations can take advantage of cheap labor in some countries,
weak environmental standards in others, and developed consumer markets
in yet a third, contributes significantly to global warming. Do we
really want our ability to preserve life on our planet to be constrained
by the WTO?

No issue has dominated headlines this year more than the global
financial crisis, now widely agreed to have been facilitated by a lack
of adequate regulation in the financial markets. Yet in the WTO
negotiations on services, further deregulation and liberalization of the
financial markets are sought by rich countries, representing the
interest of their financial industries. It is without logic that the WTO
Director General, Pascal Lamy, has called for a conclusion to the WTO
expansion agenda as a solution to the global financial crisis, when its
actual policies would, by any sensible estimation, contribute to further
instability.

While negotiations on services were not much in the headlines, they were
a key part of the WTO agenda in July. While the chair of the services
negotiations attempted to pressure countries to expand the current level
of services liberalization to the "maximum extent possible", a group of
countries - Bolivia, Cuba, Venezuela, and Nicaragua - successfully
rejected the maneuver. But going further, they also circulated a
proposal to remove health care, education, water, telecommunications,
and energy from the WTO, on the basis that these essential public
services are human rights which governments have an obligation to
provide, and should not be treated as tradable commodities. These
efforts were immediately supported by over 100 civil society
organizations around the world within 36 hours


Doha at an Impasse: Where do we go from here?

Many fear that the collapse of the multilateral talks will lead to
increased pressure for bilateral and regional deals using the same (and
often even more extreme) policies as the WTO. As well, each time the
Doha Round has "collapsed" it has also been called forth from the dead,
and negotiations resumed. And of course, irrespective of the collapse of
the attempted expansion, the WTO will continue to regulate global trade
in favor of corporate profit and against the interests of workers,
farmers, consumers, and the environment.

However, this time is different. Confidence in the particular policies
of corporate globalization has eroded significantly since the founding
of the WTO, due principally to the abysmal failure of these policies to
promote growth, equity, and sustainable development in countries of both
the north and the south in the last three decades (and the failure of
the WTO to do the same since 1995). As well, studies projecting "gains"
from a Doha Round, having been greatly exaggerated by WTO proponents,
shrank over time and remained paltry - about one penny per day per
person in the developing world. (The best recent summary of the gains
and losses is examined here {3}.)

At the same time, some governments are increasingly experimenting with
alternative policies, such as regional integration, resource
nationalization, South-South trade, and increasing budgets for health
and education, which are delivering growth and prosperity far more
effectively. Just to give an example, the increased growth above the
Latin American average growth of just Argentina and Venezuela over the
last four years has brought combined gains of $140 billion to those two
countries. This real economic growth dwarfs the projected gains of $16
billion for all developing countries combined (according to the most
recent World Bank projections for a likely Doha conclusion; both figures
in constant 2001 dollars.)

Just as importantly, global politics have re-aligned since Doha was
launched. Developing countries are far less likely to accept policies
handed down by the governments of rich nations, many of them having
gained freedom from the economic dictates of the IMF in recent years.
And while Brazil, India, and China may be the most oft-cited emerging
market powerhouses, developing countries from Latin America to Africa to
Asia are increasingly demanding a stronger voice in international fora.

And in the United States, Herculean efforts are being made to ensure
that our next Congress and president actually implement the fair trade
policies demanded by citizens who have suffered from lost jobs, stagnant
real wages, and corporations gone wild for far too long, including
through the new TRADE Act.

Civil society organizations have for years developed a number of ideas
for a different paradigm for expanding global prosperity and sustainable
development, through policies that would establish global financial
stability, contribute to solving rather than exacerbating the climate
crisis, and that promote countries' ability to feed their populations,
among other goals. In defeating WTO expansion one more time, the
political space has been created in which these alternative policies and
paradigms could flourish. That space could also shrivel up, if civil
society does not keep working to ensure that the negotiations do not resume.

What is needed now is the continued organizing to keep that political
space open, coupled with the political will convert the innovative
policymaking already in motion into a new economic paradigm globally
that can discipline harmful corporate practices while actually
increasing growth, reducing poverty, and expanding sustainable
development globally. Only then may the victims of that fourth, most
neglected crisis - the one in which over a billion of our fellow human
citizens today suffer from extreme, often lethal poverty - ever find
hope for a better future.

Links:

{1} http://www.cepr.net/index.php/why-the-world-isn-t-flat/

{2} http://www.fpif.org/pdf/papers/SRtrade2003.pdf

{3} http://www.ase.tufts.edu/gdae/Pubs/rp/RISPolicyBrief36DohaMay08.pdf
_____

Deborah James is the Director of International Programs for the Center
for Economic and Policy Research, and a Board member of Global Exchange.

(c) 2008 Independent Media Institute. All rights reserved.

http://www.alternet.org/story/95799/


TO POST A COMMENT, OR TO READ COMMENTS POSTED BY OTHERS, please click
on the word "comment" highlighted at the end of the version of this
essay posted at http://billtotten.blogspot.com/