Howdy,
In light of the scuttling last fall of the Multilateral Agreement on
Investment, and continuing tensions in the World Trade Organization (WTO),
proponents of international free trade have discovered a spot of bother
lately. There are two major faultlines : the long-standing division
betwixt the developing and the developed countries and another, much newer
fissure which has opened between the United States and the European
Union.
Since the end of offcial colonialism nations in the South have vainly
struggled to improve their economic position vis-a-vis the North. For a
brief period the emphasis in developing countries was on
import-substitution and other autarkic measures. However, these steps
towards the so-called New International Economic Order were reversed with
a vengeance : first by the debt crisis, which allowed the International
Monetary Fund (IMF) to step in and "adjust" economies to suit creditors in
New York and London; later by the demise of the Soviet Union which left
America the unchallenged ruler of the globe.
Third World states have attempted to accomodate the new realities by
implementing the neoliberal prescriptions of the Washington consensus but
the promised reward for good behaviour - foreign investment - has remained
elusive. Thus, "[b]etween 1983-1992, the largest net transfer was to the
US at an average of $100 billion a year, and in 1995, it was to the tune
of $119 billion" (1).
Many in the South had hoped that the World Trade Organization (WTO), which
is empowered to compel members to conform to international trade
protocols, would at least lead the North to accept the medicine it had
administered to the developing countries by dismantling protectionist
policies at home. However, the WTO has made very little progress in areas
of prime concern to the Third World, such as agriculture, while great
strides have been made in the deregulation of telecommunications,
financial services and other sectors which are of importance to the
North.
The resulting resentments have been exacerbated by certain recent events.
First, over the past six months there has been considerable lobbying by
rich countries for a "Millenium Round" of WTO negotiations; this flies in
the face of calls from India and other developing nations to undertake a
comprehensive review of what the WTO has wrought to date before
contemplating further liberalization.
Second, Bill Clinton has indicated that he wants labor and environmental
standards to be incorporated in new WTO disciplines (2). His hand is
likely to be strengthened on this point by an offer extended to him in
April by the Sierra Club and the National Wildlife Federation : the two
organizations promised to lobby Congress to grant "fast track" authority
to Clinton in return for a promise from him that specific environmental
protection measures would become US policy at the WTO (3). Fast track -
which allows the US executive to present trade agreements to Congress not
subject to amendment, but only to approval or complete rejection - is
often said to be necessary for the conclusion of important US trade
initiatives.
Yet in the South such standards are widely regarded as disguised trade
barriers. The US, it is observed, achieved its present might through the
virtual extermination of the aboriginal American population, the
exploitation of slaves and the despoliation of the natural world. Many
Third World prolocutors - while not suggesting that it is essential to
recreate the US record in detail - argue that they must not be deprived of
their primary source of comparative advantage : the willingness of
populations in the South to endure conditions which people in the North
now deem intolerable. Even commentators who reject this line of thought
express considerable bitterness about the hypocrisy of the US in
lecturing other countries on human rights when its own ledger of abuses -
at home and abroad - is full to overflowing, but passes unremarked (4).
Third, there is the circus which is standing in for what should be the
hiring of a new Director-General of the WTO. As I outlined in 'A few ideas on (over)running the planet' the
US has done all in its power to thwart the candidacy of Supachai
Panitchpakdi - a Thai who was long the clear favorite amongst Third World
delegations - and promote that of New Zealander Mike Moore.
The May 17th edition of BRIDGES Weekly Trade News Digest revealed
speculation that both men might be urged to withdraw their applications to
make way for a compromise candidate - BRIDGES mentioned four contenders,
all of them from developing or newly industrialized countries - but
compromise is not part of Washington's lexicon. A May 26th report from
Agence France Presse quoted US ambassador Rita Hayes as firmly resisting
any motions other than that put on behalf of Moore : "'There is only one
proposal on the table and that is the chairman's proposal,' Hayes said"
(5). US intransigence on this matter can
hardly increase the Third World's faith in the WTO.
If strained relations between South and North are old news the increasing
estrangement of the European Union from North America is somewhat more
novel. While historically France has distanced itself from US foreign
policy, Germany and the United Kingdom have tended to align themselves
closely with Washington; and all of these states, under the aegis of the
Organization for Economic Cooperation and Development, have traditionally
found a broad coincidence of commercial interests.
Within the rarefied reaches of the European Commission and the US State
Department this mutual sympathy still holds apparently. As adumbrated in
the May/99 issue of Le Monde (6) a
"Transatlantic Economic Partnership" is currently being investigated by US
and EU trade officials (never mind the fact that the European Parliament
has twiced rejected schemes of this sort.) Of late, though, increasing
citizen opposition in Europe to WTO rulings favoring the US (and sometimes
Canada) has riven the compact of the rich countries compelling elected
politicians - as opposed to the appointees of the European Commission - to
take heed. Even Tony Blair, Bill Clinton's (and Monsanto's) staunchest
ally, has had to rescind his support for genetically engineered crops in
the face of massive public mobilization.
As noted above, Canada has tended to side with the US against the European
Union - e.g., Ottawa is, in common with Washington, currently seeking WTO
approval to penalize the EU for interdicting shipments of beef laced with
synthetic hormones. The Canadian government's enthusiasm for WTO
disciplines has evidently not diminished as a result of the successful US
challenge to legislation designed to preserve our magazine industry.
On the other hand the Chretien administration has belatedly discovered
some difficulties with the North American Free Trade Agreement (five years
after Chretien was elected on a promise either to renegotiate or to
abrogate NAFTA.) The May 3rd edition of BRIDGES (7) described an attempt
by Sergio Marchi, Canada's International Trade Minister, to obtain assent
from NAFTA partners to alter the infamous investor-to-state dispute
mechanism of the treaty's Chapter 11.
Interestingly, on April 20 the Financial Post (8) had quoted an anonymous
senior civil servant as saying - in advance of the Minister's proposal -
that this proposition was a non-starter and the best Canada could hope for
would be identic memoranda from the other NAFTA signatories supporting a
narrower interpretation of Chapter 11. As predicted by the Post's source
the motion was rejected (by Mexico's Trade Minister; the US representative
remained tactfully silent despite the fact that, to date, one Canadian,
six US, and no Mexican corporations have used Chapter 11 to sue
governments.) BRIDGES, meanwhile, characterized Marchi's action as
prompted by pressure from non-governmental organizations. Yet, if
functionaries in his department knew the Minister's effort was quixotic it
can only be assumed that Marchi was equally aware; hence his proposal was
nothing but a cynical maneuver designed to give the impression that he
wished to act in the public interest.
In sum, as ever, critics of the dynamics of international trade and
investment are not lacking in the South but, as so often before, the North
is managing to hold them at bay through a combination of coercion and
bribery. Canada - unique in having an economy which, while larger than
that of the vast majority of countries, is diminutive in comparison to the
major players (US, EU, and Japan) - continues in practice to cleave to
neoliberal doctrine while the Chretien administration does its best to
pretend that it cares what citizens think about these issues.
The real area to watch, however, is the European Union. Large enough, if
its 15 member states act consentaneously, to go head-to-head with the
United States, the EU also has a fairly progressive and politicized
citizenry as well as domestic political arrangements (e.g. proportional
representation) which permit greater control over elected officials than
does the "first past the post" system in use in, inter alia, Canada and
the US. On the other hand the structure of the EU itself is rather
undemocratic (the balance of power resides with the appointed members of
the European Council and Commission, rather than with the popularly
elected Parliament) and the technocrats at the top are thorough-going
neoliberals. The key question is to what extent the ordinary people of the
EU are able to take command of the institutional apparatus created by the
Maastricht Treaty. The outcome of the globalisation project may largely
depend on their success or failure.
---Antoni
Notes
(1) 'Financial liberalization hasn't yielded expected
results,' by Chakravarthi Raghavan, Third World Economics, August
16-31/97.
(2) See 'WTO & other news from
BRIDGES'.
(3) 'WTO: Voices Speak Out In Favour Of A Re-Balancing New
Round And Against Further Liberalization,' BRIDGES Weekly Trade News
Digest - Vol. 3, Number 18, 10 May, 1999. There is a searchable archive of
BRIDGES back issues accessible through a series of links from The
Institute for Agriculture and Trade Policy's bulletins index.
(4) A chilling account of how the US government has
smashed domestic opposition in the late 20th century is given in Ward
Churchill's Agents of Repression (South End Press 1990.) A good
recent review of Washington's brutality overseas can be found in Martha K.
Huggins' Political Policing (Duke University Press 1998.)
(5) 'Support for NZ man widens in world trade chief
contest, official says,' Agence France Presse, Geneva, May 26/99.
(6)
'Watch
out for MAI Mark Two,' by Christian de Brie, Le Monde, May 1999.
(7) 'NAFTA Ministers: Canada Proposes To Narrow
Investor-State Provison,' BRIDGES Weekly Trade News Digest - Volume 3, No.
17, 3 May, 1999.
(8) 'Ottawa pushes for reform of NAFTA lawsuit
provisions,' by Ian Jack, The Financial Post, April 20, 1999.