WTO mandate for "sufficiently broad-based" liberalization - a prelude to new issues?

In mandating a "sufficiently broad-based" trade liberalization process, the draft text of the WTO Ministerial Declaration which was adopted by the WTO General Council on 17 May, seems to have paved the way for new issues to be negotiated. This appears to be at the expense of developing countries' problems and is bound to lead to more of the sort of neo-liberal measures against which the grassroots and demonstrations around the venue of the Ministerial Conference were protesting. This article and the two articles that follow, report on the state of negotiations leading up to the WTO Ministerial on 18 May.

by Chakravarthi Raghavan

GENEVA: The 2nd Ministerial Conference of the WTO will mandate the start of a process that would lead to decisions in 1999 on negotiations for "sufficiently broad-based" trade liberalization to "respond to the range of interests and concerns" of all Members within the WTO framework.

The draft text for adoption by Ministers, negotiated informally at the level of heads of delegation and formally adopted by the General Council on 17 May night, is such that negotiations on what issues would figure on the agenda of further trade liberalization, are formally pushed into the preparatory process under the WTO General Council. But, in fact, it is clear that the European Commission, which has been pushing for a new round of negotiations to be kicked off by another Ministerial session in 1999 - incorporating the so-called built-in agenda of the WTO plus the new issues (investment, competition, government procurement) identified at Singapore and others that could be raised in the preparatory process - has won the first skirmish.

"Compromise outcome"

The "compromise outcome", hammered out in three days of informal heads of delegation meetings (behind heavy barricades, more like a citadel drawing up the drawbridges and lowering the portcullis, just to keep at bay some 5,000-odd demonstrators, with perhaps a score or so of hooligans), can be interpreted as shutting out nothing or admitting nothing.

Trade diplomats could perhaps argue that trade and the WTO are too serious a business to be left to ministers (or heads of government) to negotiate, that it is better to keep it in the WTO General Council process of trade negotiations, and that there is no agreement for a new round or a millennium round of old and new issues (with the old issues of interest to the developing world shunted into a work programme as in the past).

In the battle over "language", Malaysia, Pakistan and Egypt negotiated hard to reject some of these earlier EC formulations, and the final compromise language emerged.

It perhaps underlines what UNCTAD Secretary-General Rubens Ricupero has been saying to developing countries for quite some time, that all negotiations are based on power, and it is easier to achieve something on the basis of a "positive agenda" of what one wants, rather than a negative agenda of what one does not want.

But despite the efforts to be cohesive, developing countries at the WTO are each still groping for some small benefits. Meanwhile, Geneva was the scene of demonstrations - most of which were peaceful, but with some not so peaceful, where demonstrators wrecked or set on fire some cars (including the Jamaican ambassador's), attacked McDonald's and some other American-style fast-food stores on their route, and sprayed slogans on windows of banks. But the demonstrators and their "street party" upstaged the official celebrations kicked off by US President Bill Clinton's solo performance on 18 May (to avoid appearing on the same platform as Fidel Castro or the other G-7 leaders?) and a day of commemoration speeches from 13 other Heads on 19 May.

Holed up at the WTO's headquarters, and behind barricades, the diplomats were negotiating the fine points of an eleven- para text for adoption by ministers, including arguments about sustained economic growth (that developing countries insist upon) and "sustainable development" (in the name of which the developed countries, unwilling to cut back on their own consumption, want the developing world to follow a different path to safeguard the quality of their own affluent lives).

But the barricades around the entire international complex - the separate building housing the headquarters of the WTO (which prides itself in not being a part of the UN system) and the UN's own Geneva complex - were such that only those with unsustainable lifestyles of cars, preferably chauffeur-driven, with special badges, could pass through. Those with sustainable lifestyles, using buses or other "environmentally sustainable" transport, had to jump the barricades to get in.

By and large, and away from the demonstrators, the police, and some conscript soldiers in battle fatigues, kept some humour in the proceedings (and even assisted this writer to cross barricades, two of them physically lifting him from one side of the barricade to the other). But many others were not so lucky.

And while those who staged the demonstrations had for weeks and months made no secret of their plans, announcing them at press conferences and preliminary meetings here in March, and posting notices in web pages in cyberspace, the Geneva cantonal authorities said they had been "surprised" by the demonstrations and were calling in reinforcements, and that "security" would have precedence over "access" to participants. They could not promise easy access to those relying on their feet to enter the UN complex for non-WTO activities.

Broad-based opposition

The demonstrators and their opposition to "globalization", "neo-liberalism" and "WTO free trade" could be dismissed, as the WTO's head had done a few weeks ago, by describing them as forces or voices from the past, some "Marxists and communists and left-wingers."

They could be dismissed too as "a motley collection of peasants' organizations, students and squatter groups, and far-left trade unions", as a Financial Times writer said on 18 May - the same writer who complained that the NGO lobby groups and their "guerilla war" had made it impossible for the OECD to write investment rules, and would make it equally difficult in future for the WTO to write its rules.

The Peoples Global Action (PGA) is a broad coalition of many grassroots movements, and many more activists from Asia and Latin America who have reached the conclusion that any "dialogue" with the WTO and trade ministries would not change anything.

But the opposition to the WTO version of "globalization" and "trade order" also comes from old and established, and not-so-established, newer environmental and development NGOs who are beginning to lobby their governments and even their domestic (non-TNC) businesses, and forming their own broad coalitions against the IMF-World Bank-WTO economic oligarchy.

It was this coalition of NGOs of the North and the South who overcame, at least temporarily, their mutual differences (on how to safeguard the environment and improve social standards), and have seen the same "face" behind proposals on IMF capital account convertibility, WTO liberalization of financial services (which, in fact, includes all forms of capital movements and rights), and the OECD's efforts to write rules for Multilateral Investors' Rights and its variations at the WTO/UNCTAD-TNC division and so on - and are now uniting to oppose and sink them.

Bite and reach

It will not be until 2000 before the bite and reach of the current WTO's rules into the domestic sovereign jurisdiction of countries take effect - going beyond the traditional area of trade in goods crossing the frontier, and rules to safeguard concessions granted and bound - and encompass other state roles and non-roles in the economies of countries.

And already both their reach, and the fears of their full reach, are generating opposition movements in the developing and developed worlds. And tarring these movements with a Marxist or communist brush as in the old MCarthy era - and five years after the fall of the Berlin Wall - is unlikely to create many echoes or frighten away the opposition.

But when foreign capital, and TNCs, get such a right of entry and exit at will - with all rights, including enforcement rights, written into binding international agreements, rights that would make them enjoy superior rights to natives and domestic capital - it is a new ball game, with every likelihood of a tinderbox effect.

When even in the current situation, negotiators have to meet behind such barricades and citadel-like stances, with drawbridges up and portcullis down, to safeguard existing rights of capital in the 50th year of the multilateral trading system and write new rules for the next 50 years, has anyone inside contemplated the kind of world we would be living in, the WTO's chief spokesman, Keith Rockwell, was asked on 17 May, at a pre-Ministerial meet press conference.

It is a good question, Rockwell responded, thus ducking an answer.

Opponents outside may not be matched by many of the governments inside. And in an "organization" with a "liberalizing" culture, it is not so easy for any negotiator to oppose such "liberalization".

But nevertheless, a few are beginning to challenge and oppose, couching their opposition in terms of their need to proceed at their own pace and not be forced to hurry at the pace set by the EC or the US or Japan to suit their corporate interest.

The US appears to be somewhat behind in pressing for further "broad-based" liberalization: but that is only because the present sectoral or salami process seems to be working to its advantage without it having to give anything anywhere in return. And without accord with Congress on a new negotiating objective or fast-track authority, the US administration cannot deliver.

It can only cloak its "empty hands", open and ready to receive but not to give anything, with much rhetoric and calls for bold actions - that President Clinton trots out on 18 May night, while inviting the WTO to stage its next meeting in the US.

The EC already has made known that it would want such a meeting in July 1999, both to force the pace of preparatory work in the WTO General Council and to kick off the broad- based liberalization negotiations it seeks - to encompass investment and its version of competition policy, to knit an iron-plated suit of armour for the transnational neo-liberal order.

The arguments and the outcome in many areas are perhaps instructive.

Having started with an "extreme" demand to launch a "comprehensive" millennium round, the EC has "given way" and "compromised" with "further liberalization sufficiently broad- based to respond to the range of interests and concerns of members". Anything and everything can be made to come into this picture, particularly with the "trade and..." approach instead of the older "trade-related..."

Some obeisance has been paid to the concerns of the Asian and other countries hit by the financial crisis - but they remain words, without content.

A paragraph in the declaration text says:

"The fiftieth anniversary comes at a time when the economies of a number of WTO Members are experiencing difficulties as a result of disturbances in financial markets."

And what are the solutions? "We take this opportunity to underline that keeping all markets open must be a key element in a durable solution to these difficulties."

Keeping markets open is to be even-handed, and applied to both those affected by and those benefiting from the crisis.

"With this in mind," the draft text says, "we reject the use of any protectionist measures and agree to work together in the WTO, as in the IMF and the World Bank, to improve the coherence of international economic policy-making with a view to maximizing the contribution that an open, rule-based trading system can make to fostering stable growth for economies at all levels of development."

Coherence and transparency

The efforts so far of the governments to have "coherence" of the trading and money and financial systems have been for the IMF and the World Bank to use informally WTO trade expertise to pry open developing country markets - for goods and financial services exports - for developed countries and their firms.

There is no record, for example, of the IMF and the World Bank specifically directing their influence, beyond general statements, to opening up the markets of individual countries and sectors of developed countries - even if the powerful would listen to their advice.

And the only policy reaction after the Asian crisis has been talk of improved transparency of developing country government activities vis-a-vis financial enterprises, domestic and foreign.

As was set out at the recent UNCTAD seminar, everyone wants everyone else's activities to be made transparent.

Meeting behind barricades, and making themselves as inaccessible as possible - even more than is normal at such meetings - even to the ability of media representatives to waylay Ministers in and out of their meetings, the Ministers, in the Declaration to be adopted, have promised "to consider" how to improve the transparency of WTO operations.

They are also to "recognize" the importance of enhancing public understanding of the benefits of the multilateral trading system in order to build support for it and agree to work towards this end.

The proof of a pudding may be in the eating, but only as a saying.

The Managing Director of the IMF has been quoted in the media as hav-ing told church leaders that a generation of sacrifice is needed for the IMF (neo-liberal) model of development to succeed.

The WTO has not so far been so foolish as to set a target date to achieve its promises. (Third World Economics No. 184/185, 1-31 May 1998)

Chakravarthi Raghavan  is the Chief Editor of the South-North Development Monitor (SUNS).