Will the WTO Strike Out in Hong Kong?

The December meeting could be a repeat of Seattle and Cancún--or the rich countries may have some new tricks up their sleeves.


This article is from the November/December 2005 issue of Dollars and Sense: The Magazine of Economic Justice available at http://www.dollarsandsense.org

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This article is from the November/December 2005 issue of Dollars & Sense magazine.

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This December, delegates from 148 countries will meet to shape the future of the world's nearly 6 billion people. From December 13 to 18, the World Trade Organization will hold its sixth major meeting, known as a ministerial, in Hong Kong, China, to negotiate on such crucial matters as the fate of public services, the global food supply, and jobs and development.

The WTO is the global promoter and enforcer of the ideology that "free trade" is the best way to foster economic growth and, hence, development. The theory might sound great if you don't look at the record. For example, in the 25 years Latin American governments have submitted to the prescription to open their economies up to free flows of goods and capital, economic growth has ground to a near halt, marking only about a half a percent per capita income growth per year. That's left 222 million people--an outrageous 43% of the region's population--impoverished. In fact, the fastest growing economies in Latin America are those that are rejecting orthodox "free trade" doctrine, primarily Venezuela and Argentina. And in China, growing rural poverty is linked to the country's 2001 accession to the WTO, according to a study the World Bank released last February.

Moreover, the fine print of WTO agreements often turns out to have more to do with protecting the interests of multinational corporations and specific sectors in the economies of the rich countries than with actual adherence to the doctrine of free trade. Ten years into the WTO process, for example, the United States and the European Union are still refusing to give up their agricultural subsidies, which have swamped poor countries with artificially cheap food imports and forced countless farmers off the land across the global South.

Six years ago, the world watched as activists from across the United States shut down the third WTO ministerial meeting in Seattle. Yet while the WTO remains a grave threat to communities, the environment, democracy, and global development, only a handful of organizations are gearing up for the Hong Kong ministerial.

Strike One, Strike Two

By 1999, developing country governments had begun to recognize that the WTO, though masquerading as a neutral arbiter of trade rules, was actually facilitating a giant corporate power grab, threatening democracy, natural resources, and labor rights across the globe. Over 50,000 people came to Seattle to say no to the WTO's corporate agenda, successfully shutting down the meetings on the first day, November 30, 1999. Activists wanted to build a world where life values--like the right to good jobs, clean water, health care, education, democracy and sovereignty--trumped the money values of the WTO. Emboldened by massive civil society resistance, the African, Caribbean, and other least-developed country representatives literally walked out of the meetings, causing the negotiations to collapse. Strike one.

The fourth ministerial took place in 2001 in Qatar, a country where free-speech rights are effectively nonexistent. The rich countries promised that this round of negotiations would focus on development and the needs of the poorest countries--an implicit acknowledgment of the unfairness of the existing system. But behind closed doors and out of the civil-society and media spotlight, hard pressure could be applied. Few countries actually participated in the negotiations, but the United States and the EU bullied and arm-twisted all member countries into signing onto a largely corporate trade agenda--and thus succeeded in launching the so-called Doha Development Round, a misnomer of epic proportions.

In 2003 the process moved to Cancún, Mexico, where the rich countries sought to expand the scope of the WTO, pressing for agreements in new areas such as investment at the fifth ministerial. But they didn't count on the rise of a remarkable new alliance: Brazil, India, South Africa, China, Indonesia, Venezuela, and 14 other countries created a negotiating block representing over half of the world's population. This "Group of 20" argued that the unfair global agricultural system had to be cleaned up first, before new issues could come onto the table. The tragic suicide of Korean farmer Lee Kyung Hae brought the collective rage of the outside civil-society mobilization inside the closed gates of the negotiating halls. Most important, the least developed countries stood their ground against the intransigence of the rich countries and refused to accept an expansion in the scope of WTO agreements without a genuine development agenda. Strike two.

Then, in the summer of 2004, a funny thing happened. Major WTO decisions are supposed to be made at the biannual ministerial meetings, but those gatherings kept striking out. So the United States and the EU turned a General Council meeting in Geneva into a decision-making forum where, out of sight of teeming protests and behind closed doors in invitation-only "green rooms," the WTO was saved from a third strike. The United States and the EU pulled India and Brazil (along with Australia) into a meeting of the so-called Five Interested Parties (FIPs). With false assurances that agriculture would be fairly reformed, they cobbled together a minimal consensus to get the negotiations back on track. After subduing Brazil and India, they pressured the rest of the members of the WTO into going along with the new patched-up framework agreement--sight unseen. Thus the WTO was given a walk, and is up at bat at the next ministerial this December.

The WTO convened another General Council meeting in Geneva this July that was supposed to be a major step forward. Fortunately, there was anything but consensus. When WTO spinmeisters start to downplay expectations for upcoming meetings, that usually means the "free trade" juggernaut is stalled. That's good news: global justice activists have reached a broad consensus that blocking any new agreements within the existing WTO framework is critical. But as with the passage of CAFTA in the U.S. Congress this summer, you never know what kinds of buy-offs, procedural tricks, or pork barrel the Bush administration is willing to parlay to get a deal.

Here is a preview of what is at stake in the negotiations this December in three key areas: public services, agriculture, and jobs.

Taking the Public Out of Public Services

Traditionally, international trade agreements were focused primarily on trade in goods. But in recent years, corporations and their government allies have fought to expand the scope of these agreements to include services as well. The U.S. government's agenda is to gain access to the world's financial and energy services markets for U.S. corporations. This would give the green light for U.S. banks like Citigroup and JP Morgan Chase to control the world's capital and banking industries. And it would allow U.S. corporations like Halliburton and Bechtel to control the world's energy services--everything that has to do with getting oil out of the earth and into the market. Also on the chopping block are education, water, and health care--in other words, the services that citizens of rich and poor countries alike expect their governments to provide to all, not merely to those who can afford to purchase them in the marketplace.

Evidently, developing countries aren't lining up fast enough to privatize their public services. (Sometimes privatizations have been halted by public pressure; for example, in Cochabamba, Bolivia, massive protest forced the government to reverse the handover of the city's water system to a private corporation in 2000.) In response, the United States and the EU are pushing for an inflexible new bargaining framework, known as benchmarking, that would set a high bar for the level of privatization countries must allow. Developing-country negotiators have vehemently rejected the benchmarking proposal at WTO meetings this summer and fall. But they face great pressure to open up their public services to privatization and liberalization, especially since the 2004 framework agreement linked negotiations over services to the rest of the WTO agenda, essentially telling poor countries that they will not get any of the changes they seek in areas like agricultural subsidies unless they concede on services.

Even more controversial are the negotiations around what the WTO calls Mode 4, or the "natural movement of persons." Developing countries generally want more access for their citizens to migrate freely and to work in the United States and the EU. India, for example, has made the permanent codification of the current standard of 65,000 H1B visas for highly-educated workers to enter the United States a principal demand (admittedly a move some consider strange as a key development strategy for a country of more than a billion people). But easing immigration is not exactly popular in the United States or Europe. Some labor rights groups are concerned that H1B visas amount to an "internal outsourcing" where U.S. jobs physically stay in the country but are filled by foreigners. And immigrants'rights activists are sounding the alarm bells about the lack of labor rights for immigrants allowed in on H1B visas. In any case, U.S. and EU negotiators have made only vague and minimal commitments to the developing countries on this issue.

Food: To Eat or to Export?

Since the U.S. government abolished its supply management program in 1996, agricultural oversupply has led to a price collapse. To bail out the system, the government instituted subsidies to farmers, which disproportionately benefit large-scale agribusiness over family farmers. This crazy regime allows giant corporations like Monsanto and ConAgra to dump artificially cheap food in developing countries, undercutting local markets and pushing farmers off the land.

Export subsidies are supposed to be phased out under the WTO and other free-trade regimes. But the rich countries, with stunning hypocrisy, have largely won exemptions for the types of subsidies they use, while pushing to prohibit the subsidies and regulations used by poor countries to protect their domestic agriculture sectors. For example, about 70% of U.S. agricultural subsidies fall into a loophole category called the Green Box. Another loophole, the Blue Box, originally covered only those farm subsidies that were linked to limits on crop production, to address the vicious circle of oversupply, price drop, subsidy, oversupply, and so on. Far from being phased out, though, the Blue Box was actually expanded in the July 2004 framework agreement to cover subsidies without production limits--in order to accommodate some of the subsidies in the 2002 U.S. farm bill, according to the advocacy group Focus on the Global South.

Developing countries have been demanding that the EU and the United States cut back their agricultural subsidy programs and provide market access for products like Central American sugar and Brazilian orange juice. But with agribusiness in control of several key red states and the farm bill coming up for reauthorization in Congress, it's unlikely the Bush administration will negotiate seriously on these issues in the near future.

Kicking Away the Ladder of Development

In another key area of negotiation, the WTO is pressuring governments to lower tariffs on industrial products and natural resources (Non-Agricultural Market Access, or NAMA, in WTO-speak). Using tariffs to protect new and developing industries against competition from foreign products is a cornerstone of industrial policy, one that every developed country has used. But now rich countries want to prohibit the use of this tool, effectively kicking away the ladder of development they themselves ascended. According to the Third World Network, this would de-industrialize many middle-income countries and prevent the industrialization of most of Africa.

Not only would massive tariff reductions allow floods of cheap imported products into poor countries, putting their own industries out of business, it would also starve many small nations of the revenues they need to finance health care and education. Tariffs are nothing but taxes on corporations for the privilege of selling a product in a foreign country. NAMA, then, can be understood as a massive corporate tax abolition scheme.

NAMA negotiators also want to eliminate so-called "non-tariff barriers" such as bans on importing bacteria-contaminated food or mandates that government agencies use energy from renewable sources, purchase Fair Trade Certified coffee, or buy from companies that use sweatshop-free labor. The NAMA framework deems these and other food-safety, health, environmental, and labor regulations to be unfair trade barriers--unfair, in other words, to products that damage the environment, human health, or labor rights. U.S. negotiators are also pushing within NAMA to eliminate tariffs completely on forest, fishery, and mining products. Both tariffs and regulations are tools governments can use to conserve resources and promote environmentally sustainable development; the prospect of eliminating them has environmentalists spinning.

Last Chance at Bat?

The Doha round negotiations have missed just about every major deadline thus far: talks were supposed to have been wrapped up by January 2005, yet are still stalled over disagreements on the basic framework. The new deadline of December 2006 is not far off, considering that most of the heavy lifting is still to be completed.

A meeting of the WTO General Council this October was suspended to allow for the big powers plus India and Brazil--the FIPs--to hammer out the elusive agricultural compromise. A new draft framework is expected by December 15; early "pre-drafts" demonstrate an alarming trend in favor of rich country corporate interests. If developing country governments, supported by global civil society, can stand up to the arm-twisting and the outrageous demands coming from the United States and the EU, the Hong Kong ministerial could fall apart--a tremendous blow to the WTO's credibility. Then, perhaps, citizens and activists around the globe could declare, "Three strikes and you're out!"

Deborah James is the Global Economy Director of Global Exchange, www.globalexchange.org, a San Francisco-based human rights organization. She runs a weekly listserve on global justice issues available at http://www.globalexchange.org/getInvolved/lists.html. Contact her at deborah@globalexchange.org.


Here are some resources for learning more and taking action:

The Citizen's Trade Campaign is organizing a Congressional sign-on letter to encourage legislators to commit to a fair trade policy, including a re-orienting of our strategy in the WTO—an effort led by Rep. Sherrod Brown (D-Ohio). Call your Representative and ask that he or she sign. Visit www.citizenstrade.org.

Citizens are organizing to pressure their state and local officials to maintain any socially responsible purchasing policies they have and to refuse to bind their government purchasing decisions to WTO rules. Contact Sara Johnson at Public Citizen (sjohnson@citizen.org) to help ensure that your local officials do not cede their governing mandate to an unaccountable corporate trade body.

Support organizations that ally with and empower social movements in the countries of the global South. Global Exchange, for example, works with the Hemispheric Social Alliance, a Latin American network of anti-"free trade" groups, helping them build capacity as they pressure their countries'negotiators to hold the line against U.S. and EU coercion (www.globalexchange.org). The Institute for Agriculture and Trade Policy (www.tradeobservatory.org) and the Third World Network (www.twnside.org.sg) monitor negotiations regularly in Geneva. Our World Is Not For Sale is a global network of civil-society organizations fighting the WTO; visit www.ourworldisnotforsale.org.

In December, call your local newspaper or radio station and ask that they cover the WTO negotiations. Demand that they air interviews with civil-society groups and poor-country representatives, not just with the usual corporate and mainstream-economics suspects.

Build the alternative economy when you shop. Buying fair-trade certified products like coffee, chocolate, and bananas demonstrates that fair trade delivers more economic growth than so-called "free trade." Socially responsible investments can bring financing back to community needs. "Sweatfree" clothing makes a visible statement in support of fair labor practices. Changing individual consumer behavior will not stop the WTO, but it begins to create the building blocks of an alternative, post-WTO economy. Visit www.greenfestivals.org;