I do not believe that a country with 4.5% of the world's people can maintain its standard of living if we don't have more customers ."
-- From President Clinton's millennium message
Trade between nations needs to be regulated so that the strong do not bully the weak. The World Trade Organisation (WTO) is committed to making trade regulations reliable and fair in order to give confidence to companies trading across borders. Its judgements are strictly in accordance with its terms of reference and are impartial, frequently going against the wishes of the more powerful nations. It acts within provable scientific knowledge. It is a rules-based organisation working at a global scale. The WTO is a model for other aspects of world government.
But there is no higher authority. The WTO, not surprisingly therefore, treats free trade as an ultimate good, and its experts are forced to make decisions on social and environmental issues that are outside their terms of reference and beyond their competencies. By default free trade, or `market fundamentalism', has become the organising principle of the world.
The World Trade Organisation aims to encourage trade, and in this (with its predecessor) it has been remarkably successful. In 1946, trade between countries totalled only five per cent of global domestic product and now it has risen to 26%. The WTO hopes it will rise to 50% by 2020. Trade involves more than goods; it spreads films, music, language, business methods and attitudes. The WTO is therefore establishing a single cultural framework. Adherents to other belief-systems have the options of acceptance or disruptive reaction.
The WTO aims to weaken the power of national governments in favour of global trade. This suits the North. The North has few raw materials of its own, so it must obtain these from poor nations -- if poor countries had strong governments they would protect these assets. The North produces more goods than are necessary to meet its own needs, so it needs customers elsewhere -- therefore governments of southern countries must not be allowed to protect their local markets from northern goods.
Under WTO rules, governments are not allowed to: favour local firms, prevent foreigners having a controlling interest in local companies, favour trade partners, or subsidise domestic industry, (though it has not prevented the massive US and EU subsidies to their farmers). Governments are not allowed to `interfere' in a market to pursue social objectives, such as to promote racial, ethnic or gender equality, or favour friendly countries that might have special needs. The rules work to the advantage of transnational companies which benefit from economies of scale, which can undercut to capture a market, which are immune to local consumer feedback, and which can shift their production at short notice to countries with lower wages and fewer environmental or labour regulations. In all these fields, local manufacturers, suppliers and retailers in poor countries are at a disadvantage. It is hardly believable, but the WTO sets maximum, not minimum, standards for environmental protection. This is because it would be `unfair' to have such high standards that goods from a country with lower standards would be excluded.
The WTO has hardly ever ruled in favour of society, local economies, health or the environment in preference to free trade market fundamentalism. But the WTO, the World Bank and the IMF do not believe in market fundamentalism when it affects First World interests -- they intervened massively when the Japanese financial system faced meltdown.
The World Trade Organisation is housed in grandiose premises on the shores of Lake Geneva. It is advised by hundreds of experts and lawyers. It takes advice on food safety from the Codex Alimentarius Commission, a body largely consisting of people from the food industry, which meets in secret. Poor countries cannot afford to keep delegates in expensive Switzerland; cannot keep up with the mountains of documents which may hide crucial information; cannot send experts and lawyers; and so cannot effectively represent their case.
The demonstrations in Seattle in December 1999 were a clear indication that WTO policies are perceived as favouring transnational corporations in preference to the poor. The agenda was set by the rich nations, the chairwoman was the head of the US delegation, and delegates from poor countries were sidelined and ignored both in the preparations and during the conference itself. To avoid further embarrassing demonstrations, the next meeting of the WTO was in Qatar, an autocratic country that does not allow opposition, whose security forces are notorious, and where accommodation is limited and very expensive -- a clear sign that the WTO has lost all legitimacy. Civil society was represented by non-government organisations (NGOs) but the organisers found a subtle way to marginalise them -- two-thirds of groups given the much-sought-after NGO accreditation were corporate lobby groups or government advisers.
Civil society is saying that laissez-faire corporate capitalism is unacceptable, and corporations must be subject to standards set by democratically elected national governments.
The former chief economist to the World Bank, Joseph Stiglitz, said: "The problem is with the IMF and US Treasury's fundamentalist market ideology, a faith in free, unfettered markets that is supported by neither modern theory nor historical experience."
Excerpted from The Little Earth Book by James Bruges, published by Alastair Sawday. To order a copy or for further details visit www.littleearth.co.uk