Attempts to implicate critics of globalisation and of the proposal for a new WTO Round with the events of Sept 11 are contemptible, according to an article by Chakravarthi Raghavan, Chief Editor of the SUNS Bulletin. A shortened version was published in the International Herald Tribune of 5 Oct 2001.

By Chakravarthi Raghavan

Economic misery and political fanaticism we all now know is a combination that can produce horrific consequences.  Soon after the attacks in New York and Washington, EU Commissioner Chris Patten suggested a link between imbalances in the contemporary globalization process and terrorism. Nobel laureate Dario Fo has made a similar connection. It is therefore particularly troubling, indeed, contemptible, that Maria Cattaui (IHT September 21) and Reginald Dale (IHT, September 22) have looked to implicate anti-globalization activists and opponents of a new round of trade negotiations in the horrific events of 11th September.

The case for launching a broad multilateral trade round does not rest on its promotion of democratic values or the fight against global terrorism. The case against has nothing to do with opposing those goals. Governments across the developing world, with many religions and poverty-stricken people, have problems enough in building strong economies and civil societies and fighting terrorism. These should not be compounded by attempts to use general revulsion at the carnage in the United States, to launch a new trade round.

Opposition to a new round, my own included, stems from long and close scrutiny at Geneva over 20 years of the general workings of the GATT and WTO, and a careful assessment of the impact of the Uruguay Round on developing countries in particular.

The implementation of the WTO rules has failed to deliver the promised economic benefits to much of the developing world and has heightened economic tensions within and across countries.  In part, this is because of the unwillingness of the rich countries to open markets to goods from the developing countries and to remove the massive subsidies to many of their producers, particularly in agriculture.

In part it has to do with the damaging policy burdens placed on economies of developing countries through the non-trade issues (such as intellectual property) which crept into the Uruguay Round, largely under corporate pressure. Correcting these deep-seated biases in the system, so that the developing counties can have their fair share of benefits whilst reducing the burdens on them, should be the priority for trade negotiators and this is what the developing countries are calling for.

The major developed countries however are advocating the injection of more "new issues" (such as investment, competition, government procurement) into the WTO through a new round, which would add even heavier burdens onto developing countries as rules in these areas would severely restrict their development options and strategies.  Thus, a new Round of the type envisaged by its proponents would not be beneficial for most members of the WTO and on the contrary is likely to result in an even more imbalanced and inequitable outcome.

Nor am I persuaded by those who call for a new Round to stave off the threat of global recession. Neither history nor economic common sense suggests a close causative or associative  connection.  Macroeconomic policy is what counts here and in today’s interdependent world that must mean better coordination of expansionary fiscal and monetary measures in the leading industrial economies and the timely provision of international liquidity. In this regard, today’s fragile state of global economic relations can, in no small part, be traced to the persistent undermining of multilateral coordination and cooperation after the breakdown of Bretton Woods system in the early 1970s. Since the March 11 attacks, there have, however, been some positive developments that need to be quickly built upon.

The link between unregulated global financial markets and the funding of terror, including stock-market profiteering from the attacks themselves, is now coming in for close scrutiny. Controlling the excesses and irrrationalities of these markets can and should go further. US Treasury Secretary O’Neil’s interest in an international bankruptcy law is, in this respect, encouraging. More encouraging still has been the support for expansionary economic policies to combat recession. Only a few years ago, the IMF ruled out such policies in East Asian and Latin American economies that were suffering deep recessions as a result of financial shocks.

And while Ms Cattaui may have little faith in aid and debt relief for developing countries, large sections of her own corporate constituency in the most advanced industrial countries are now hoping that both, and on a massive scale, will help them through difficult economic times.

Fundamentalism, in economics as much as in religion, was the scourge of the late twentieth century. Building a new spirit of economic multilateralism rather than finger pointing and tired sloganeering is surely the best riposte to agents of global terror. Business as usual in the international economic sphere will no longer stand.

NOTE:   Chakravarthi Raghavan is Chief Editor of the South-North Development Monitor, a daily bulletin, published in Geneva, which specialises in trade and development issues.