At what cost should free trade occur?

By Еvan Osentоn

It’s being called the protest of the century, the greatest security risk Seattle has ever known, and a "kick to the groin" of the ruling class.

From Nov. 30 to Dec. 3, 1999 over 120,000 people will converge on Seattle to shut down the World Trade Organization summit. Their intention is to literally prevent the over 6000 delegates from meeting–to physically bar them from the Seattle Convention Center while simultaneously distributing their message of opposition to the world media.

Such a well organized mass-resistance to an international agency is infrequent (to say the least) and was met by an equally impressive police presence.

On Nov. 30, the two forces collided in a clash reminiscent of the civil rights protests of the 1960’s. Protesters sitting in front of buildings were met by armed police who attempted to scatter them with rubber bullets and tear gas. Tanks rumbled through the cordoned Seattle downtown core–eight blocks by eight blocks shut off to the public and clogged with protesters waving banners and carrying placards.

None of this is new to anyone who has been following the mainstream news for the past week. But do the majority of people really know what the issues at hand are?

Background of the WTO
A relatively new institution, the WTO was born in 1994, the successor to the General Agreement on Tariffs and Trade (GATT), created following the Second World War. Currently, the WTO has over 130 member countries with several prominent countries such as China and Russia actively seeking membership. However, the WTO agenda is generally considered to be driven by the United States.
As an international organization governing trade between nations, the WTO states its purpose as guaranteeing that trade flow as freely as possible; that "consumers and producers can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use." They claim the result of freer trade is a more prosperous and accountable economic world. They also claim their role as international trade arbiter reduces the risk of trade disputes spilling over into violent political or military action between nations. The architects of the GATT felt closer economic integration through trade and the economic prosperity generated therein would prevent another world war. By lowering trade barriers, the WTO claims they break down barriers between peoples and nations; that through increasing the wealth of developing nations a better standard of living and a cleaner environment can be enjoyed by all member countries.

The WTO argues that increased global trade benefits everyone, especially underdeveloped countries, by encouraging prosperity. They boast that total international trade in 1997 was 14-times the level of 1950 and that this fact has helped contribute to unprecedented growth. In short, the WTO sees itself as a force that works for unprecedented growth through breaking down barriers to trade; growth that allegedly makes for a better world.

Opponents of the WTO
Resistance to the WTO is widespread and unique in that it combines seemingly disparate forces such as labour interests and environmental groups. Many of those opposed to the WTO believe global free trade gives multinational corporations vast powers to enforce their agenda against the will democratic governments. They claim that by allowing the WTO to expand these corporate powers, governments will be further crippled and be even less able to protect their citizens from corporations. They feel the only aim is to increase corporate wealth at the expense of the cheap labour and lax environmental regulations typically found in underdeveloped nations.

Protesters at the Seattle WTO summit include such diverse interests as Amnesty International, religious groups, Greenpeace, the American Federation of Labour, and farm leaders. As Reuters News Service put it, "The protests are over just about everything you can demonstrate against."

Opponents of the WTO warn of an encroaching regime of corporate dominance–one, they say, could ensure human misery, environmental catastrophe, and short-term profit to the detriment of billions of people. They assert that removing barriers to free trade generally means weakening or preventing environmental, wage, worker safety, public health, and consumer protection legislation. Worker’s rights might also be compromised, leading to a rise in child and slave labour. A cessation of the right to organize, the right to bargain collectively, and increased discrimination in the workplace would be the by-products of a thriving WTO. Essentially, critics argue the last five years (since the WTO’s inception) have seen enormous harm to the economies and resources of the developing world as well as to democracy worldwide.

The Expert Opinion
University of Calgary Law Professor Irene McConnell recently spoke on the U of C campus to discuss why such dramatic protest is being witnessed in Seattle. She has studied GATT and presented some of the cultural, health, and environmental implications GATT and its governing body, the WTO, have on the world today.

McConnell’s talk focused on explaining how the WTO is supposed to work and how it has worked to this point. She explained that while the fledgling WTO is supposed to be benefitting the poorer nations of the world, the reality is a furthering of their plight.

"The WTO is making plans for trading into the future," she said. "However these plans may have ambiguous effects on the poor of this world. The WTO is making plans right now, in Seattle, for trading away the future in non-economic matters such as the environment, culture and health–matters which will determine the quality of life in the future."

McConnell explained that the WTO is well-intentioned, which is why few opponents are calling for its outright dismantling.

"The WTO is here to stay," she said. "Having recognized this, we need to put our efforts into changing the flight plan the WTO is now on by taking steps to cure the flaws identified in the WTO system."
McConnell explained that the WTO does have positive qualities, at least in theory.

"The advantages [of the WTO] come out of standard economic theory which says that if we conduct our economic business, either domestically or internationally, on the basis of specialization, that we will all benefit because production will be much more efficient," she said.

"If you unilaterally lower your tariffs, you will achieve a certain level of benefit, simply because goods, at a lower price, will be able to come into the country. Countries that specialize in certain goods will ship to you at a lower price than perhaps your domestic producers can make them for, or perhaps they’re simply not available in your country, so your consumers benefit. They benefit as a result of lower prices and a bigger choice in consumer goods. So even if you, yourself, only lower the tariffs, you should benefit according to economic theory.

"If you have mutual lowering of benefits across the board then you will have mutual gains from trade and everyone should benefit. We specialize, we then compete with each other as to who can produce the goods the most efficiently and at least cost."

McConnell cautioned that this particular concept really operates only in theory, but that it is the rationale for the WTO’s actions nevertheless.

This theoretical premise is the reason for the WTO’s many shortcomings, says McConnell, adding that the poor suffer the most from the current operation.

"The economic growth generated in part through the increased trade that has occurred in the last 50 years has had ambiguous welfare effects," she said. "It is true that the rich of industrialized countries have prospered, but the poor however, whether in rich or in poor countries have not necessarily benefited from increased trade."
She said that it is not difficult to find statistics to show that the rich have prospered while the poor have seen their standard of living decrease throughout the 1990’s.

"The current director general of the WTO [Michael Moore] has acknowledged that the WTO has failed the poor of the world and he has made helping the poor countries his priority during his term of office."

McConnell described how the WTO has spawned other inequities. "Despite their avowed commitment to free trade, rich countries have conspired to keep their markets closed against poor country exports. Rich countries cut their tariffs by less in the last negotiating round than poor countries did. Since then they have found other ways to close their markets, notably by imposing anti-dumping duties on imports that they determine to be unfairly cheap."
Rich countries are particularly protectionist in sectors where developing countries are best able to compete, such as agriculture, textiles and clothing, said McConnell.

"A UN agency reports that developing countries could export $700 Billion more a year by 2005 if rich countries did more to open up their markets," she said. "There’s tremendous potential there for poor countries to be enriched by trade."

"Poor countries are also hobbled by a lack of know-how about the WTO," she continued. "Many had little understanding about what they had signed up to. That ignorance is now costing them dearly. Implementing commitments to improve trade procedures, which they are required to do, and to introduce intellectual property laws, a tremendous undertaking, can cost more than a year’s development budget for the poorest countries."

McConnell explained that instead of using the money for development as they see fit, poorer countries are forced to put money into WTO commitments.

"These commitments may or may not bring them economic benefits," said McConnell.

Moreover, she explained, in those areas in which poor countries could benefit from WTO agreements, they are often unable to do so.

"Of the WTO’s 134 members, 29 do not have missions at the Geneva headquarters," she said. "Many more can barely afford to bring their complaints before the WTO dispute settlement process and the WTO is not permitted to fund a dispute settlement process of one country against another."

Her main criticism is that poor countries are not benefitting from the WTO system despite assurances they would, said McConnell
"They’re supposed to [be benefitting], according to economic theory and under WTO’s convictions and beliefs, but they are not. Did [poor countries] make a mistake? Perhaps they made a mistake, but under economic theory it should have worked better, and I think if the rich countries hadn’t been greedy and wanted always more, then it might have worked out better."

McConnell noted other flaws in the WTO system that lead her to conclude the WTO is trading away our future in respect to non-economic matters.

"[These are] matters that determine quality of life in the future," she said. "Trade-generated growth and the WTO rules which promote trade do not guarantee that the quality of life will improve. I’m including education, human rights, and labour rights in this list as well. These are aspects of our lives that we cannot entrust to market forces, nor to institutions like the WTO which give primacy to market forces. These are public goods and there is often no market in these goods or the market fails to provide an adequate supply of these goods. When there is no market or the market fails, governments must intervene with policies, laws, standards, and economic incentives, to ensure that public goods are supplied. The WTO can trade away our future with respect to public goods if its rules prevent governments from intervening effectively or intervening at all. If the WTO is not to trade away our future it must give governments room to manoeuvre to provide the quality of life people desire."

McConnell concluded with a warning.

"The WTO’s plan to generate economic growth and prosperity worldwide will not necessarily lead to economic prosperity for any of its members, and unless the interests of the poor countries are made a priority there is no reason to believe that trading into the future will improve the economic lot of the world’s poor."

Even protesters admit this year’s action in Seattle isn’t likely to change the outcome of the trade talks. However, they feel that it is an important gesture to let the public know the issues of the WTO and their vision for global trade is being contested. According to at least one protester, his goal is to create something that later will cause politicians to say, ‘Remember Seattle?’–Making them pause before advancing a corporate agenda. Protesters hope that moment of pause will lead to more responsible decisions; decisions that can lead to better working conditions both in the first world and in developing nations; decisions that will pay close attention to the environment and to profitability; and decisions which will enrich the lives of people everywhere rather than the lives of the wealthy few.