The recent World Trade Organisation ministerial conference in Seattle has ended in failure. A significant factor contributing to the failure is the inability of the US and the EU to bridge their differences. However, the more basic cause of the failure is the non-transparent and undemocratic nature of the WTO system, the blatant manipulation of that system by the major powers, and the refusal of many developing countries to continue to be bullied.

By Martin Khor

December 1999

It was an amazing week. In Seattle, the contradictions of globalisation revved to a climactic conclusion. At the end, the World Trade Organisation (WTO) Ministerial Conference that was supposed to launch a new Round collapsed, suddenly, in almost total chaos, like a house of cards.

There is no new Round, no Seattle Declaration, not even a brief joint statement to thank the hosts or decide on the follow-up process.

In the aftermath, there will be many theories and analyses on what happened. Some will focus on the protests by civil society groups representing labour, environment, consumer, pro-poor and Third World concerns. There were also the 'direct action' activists who blocked delegates' access to the Opening Ceremony, which had to be cancelled.

The main message of the protestors was heard loud and clear, that the WTO has gone much too far in setting global rules that 'lock in' the interests of big corporations at the expense of developing countries, the poor, the environment, workers and consumers. The impact of grassroots protests against globalisation, already evident in the campaigns against the multilateral agreement on investment (MAI) and against genetic engineering, had its coming-of-age in the street battles of Seattle.

Some will also pin-point the inability of the US and EU to bridge their differences as the immediate cause of the collapse. This was, of course, a significant factor. The two giants of the trade system were striving for a compact in which the EU would agree to significantly reduce their agriculture subsidies, and in return the US would agree to start negotiations on new issues like investment and competition.

As a last chip, the EC also threw in its support to the US to form a WTO working group on biotechnology, but this fell foul of the European Environment Ministers who objected to the EC's move, for which they said the EC had no mandate. This open spat between the EC and the ministers further muddied the last-ditch attempt of the EU and the US to agree to a new Round.

However, the more basic cause of the Seattle debacle was the non-transparent and undemocratic nature of the WTO system, the blatant manipulation of that system by the major powers, and the refusal of many developing countries to continue to be on the receiving end.

The seeds of the North-South battle were sown in Geneva in the weeks before Seattle. Developing countries voiced their disillusionment - that five years after the WTO's creation they had not seen any benefits. Worse, the poor countries face potentially enormous dislocation when they implement their obligations arising from the WTO's many agreements.

They put forward dozens of proposals to resolve the 'problems of implementation' of the WTO agreements, including changing some of the rules. But most of their demands were dismissed by the major powers that, instead, pushed for their own proposals to further empower the WTO through introducing new areas such as investment, competition, government procurement, labour and environmental standards.

The developing countries, in general, opposed these new issues which they saw would open up their markets further to the rich nations' big companies, or would give these rich nations new protectionist tools to block Third World products from the North.

Worse yet, the WTO Secretariat was used by the major powers to engage in non-transparent procedures, such as holding informal meetings on crucial issues in small groups to which most developing countries were not invited. These so-called 'Green Room' meetings infuriated the Third World members of the WTO.

At Seattle, in contradiction to her promise to run a transparent meeting, the US Trade Representative Charlene Barshefsky presided over a totally undemocratic process. She announced on the second day her 'right' as Chairman to use procedures of her own choosing to get a Declaration out of the meeting, a statement that infuriated the developing country delegations.

Barshefsky and the WTO Director-General Mike Moore set up several 'Green Room' meetings, some running simultaneously, on key issues of disagreement. Only 10 or 20 countries (the major powers plus a few selected developing countries) were invited to a typical Green Room meeting.

The plan of the organisers was to get the major powers (mainly the US and EU) to agree among themselves, then apply pressure in the Green Rooms on a few influential developing countries to go along, and then pull together a Declaration to launch a new Round which all members would be coerced into accepting in a special meeting on the last day.

The vast majority of developing countries were shut out of the whole Green Room process. They were not even informed which meetings were going on or what was being discussed. Ministers and senior officials of most developing countries were left hanging around in the corridors or the canteen, trying to catch snippets of news or negotiating texts.

Their anger at the insult of being at the receiving end of such shabby treatment boiled over on the third day of the Conference. The African ministers issued a strong statement that there was 'no transparency' in the meeting, that African countries were generally excluded on issues vital to their future, and that they were concerned over the intention to produce a ministerial text at any cost.

'Under the present circumstances, we will not be able to join the consensus required to meet the objectives of this Ministerial Conference.'

Similar statements were issued by the Caribbean Community ministers and by some Latin American countries.

Barshefsky and Moore were thus faced with the prospect that if a draft Declaration were presented at a final session, there would be an explosion of protests and a rejection by developing nations.

That would totally expose to the public and the world media the manipulative methods by which the Seattle Conference, and more seriously the WTO in general, had been run.

In the end, it was less embarrassing to decide to let the Seattle meeting collapse without attempting even a brief Declaration. But the breakdown took place so fast that Barshefsky at the final plenary did not even try to get the ministers to adopt a formal statement on the procedures for follow-up talks.

All that was left is a transcript of Barshefsky's off-the-cuff closing remarks, in which she admitted that 'we found that the WTO has outgrown the processes appropriate to an earlier time...We needed a process which had a greater degree of internal transparency and inclusion to accommodate a larger and more diverse membership.'

Does the Seattle debacle and Barshefsky's remarks give hope for reform to the WTO's decision-making system? That depends really on whether the developing countries can now make use of the impasse to press for a democratic system, for example, by abolishing the Green Room process that belongs to the feudal age, and which ultimately sank Seattle.

The big powers will, however, try hard to cling to their privileges. Both Barshefsky and the EC Trade Commissioner Pascal Lamy announced that the WTO Director-General had now been delegated with the authority to carry forward the Seattle process. Lamy even told the media that Mike Moore would report directly back to the ministers.

The implication is that the post-Seattle negotiations would be led by the Director- General, who is known to be biased in favour of the major powers, rather than the WTO's General Council, the majority of whose members are developing countries.

Are the major powers setting up one more device to control the post-Seattle process so that they can rebuild the house of cards in line with the same old global trade architecture? And will the developing countries, which never agreed to the Barshefsky-Lamy decision to put the already discredited Moore in the driving seat, refuse to 'join the consensus' and place the authority of the follow-up process with the General Council, where it appropriately belongs?

These will be some of the immediate issues that trade negotiators must face when Moore begins his 'consultations' to bridge the 'remaining gaps' using the final press conferences of Barshefsky and Lamy to assert control over the 'empire'. - Third World Network Features

About the writer: Martin Khor is Director of the Third World Network.