|IFPRI Research Perspectives, Vol. 22, No. 1, Spring 2000 (IFPRI, 2000, 16 p.)|
WTO STRUGGLES IN SEATTLE
Research fellow Eugenio D-Bonilla of IFPRI's Trade and Macroeconomics Division represented IFPRI at the turbulent World Trade Organization (WTO) meetings in Seattle this past December, where he spoke at the opening symposium. Here he gives us his views on what happened in Seattle and why.
Q: RP: Did the extent of the protests in the streets at the WTO meetings surprise you?
A: D-Bonilla: Having followed the exchanges on the Internet beforehand, I was not surprised. What I did not expect was that the most blatant misrepresentations of what the WTO is and does would go unanswered by the U.S. government, as the host of the meeting, and by the European Union, especially since most of the protesters were American or European.
As the main architects and beneficiaries of a system of international rules and institutions, advanced western countries should have made a better effort to explain to their constituencies the importance of the international system developed since the end of World War II and the significance of the creation of the WTO in 1994 as a component of that system. The unchallenged circulation of gross misrepresentations contributed to the climate that led to hostility and violence in the streets. The medium-term threat is the weakening of commitment to the international rule of law and the intensification of power politics.
Q: How would you characterize the protesters?
A: Although all of the protestors were critical of the WTO, they had very different agendas. First, the violent demonstrators have to be separated from the rest. The self-styled anarchists (basically middle-class youths from developed countries) do not believe in markets or in the functioning of democracy. They wanted to destroy the WTO as a symbol of the capitalist system they detest.
Leaving aside the anarchists, there were at least four different groups, along developing/developed and reformist/abolitionist dimensions. NGOs with a developing-country and reformist perspective criticized the WTO for quickly advancing causes in which developed countries were interested (such as intellectual property rights), while moving slowly, if at all, in areas of great importance to poorer countries, such as agriculture and textiles. In this context, several NGOs opposed or did not actively support the introduction of labor and environmental standards for fear of tilting the WTO's institutional power and agenda further away from poorer countries. These groups, although not shy in voicing criticisms of the WTO, appeared more interested in reforming the institution than trying to stop the negotiations.
Contrary to the reformist view, some groups advocated the elimination of the WTO or the exclusion of agriculture from the WTO framework. They argued that the WTO was completely dominated by industrialized countries and therefore beyond repair. They did not explain, however, how developing countries would be better off in a system in which power politics prevailed, with the industrialized countries retaining all the pre-WTO instruments of trade protection and retaliation but without any of the post-WTO restraints.
Protesters from developed countries, mainly labor unions and a combination of consumer, environmental, and antiglobalization groups, differed from critics from developing countries and also among themselves. Some wanted the WTO to impose labor and environmental standards on trade issues, in fact strengthening the WTO. Others, however, complained that the WTO was too powerful and encroached upon the sovereignty of different countries by forcing them, for example, to accept free-trade rules over other legitimate concerns such as food safety. In spite of their different positions, the two groups joined forces and constituted the bulk of the street demonstrators, who were non-violent but appeared very angry and determined to stop the negotiations.
Some protestors made valid points for institutional and policy reform, but others perpetuated gross misrepresentations of what the WTO stood for. Unfortunately, the latter received more attention. Of course, if all the allegations were true, there would be more than enough reason to be against the WTO. But most of the latter criticisms misrepresented the nature of the WTO (see the accompanying Commentary).
Q: In many quarters, the next round of trade negotiations - the Millennium Round - was considered a done deal. What in the end scuttled the talks, and did the public protest have a significant effect on the negotiations?
A: There were always reservations about a large round. With the formation of the WTO as a full-fledged international organization, some argued that a round was superfluous, since ongoing negotiations on multiple issues within the new organization were now possible. Others were concerned that, while in theory bringing together different issues under an umbrella negotiation would allow all parties to compromise, in practice a large round with too many issues would overwhelm the process.
To sort out the technical and political issues involved would have required more preparation time in Geneva, but the WTO was without a director general for several months, and some of the deputies only took office a few weeks before the Seattle meeting. Also, a successful launching of broad trade negotiations would have required a greater investment of political capital on the part of the developed countries; however, for different reasons, they were not prepared to do it. The European Union could not agree to cut their agricultural export subsidies without having a comprehensive round that would have allowed some gains in other sectors. The United States felt that an ambitious round of trade negotiations would be a hard sell domestically, and it kept pressing for labor and environmental standards. Rather than a new large round, the developing countries wanted to focus on implementation of the 1994 Uruguay Round agreements, particularly on issues like textiles, which they felt industrial countries were not implementing as agreed. They interpreted the insistence upon labor and environmental standards as a protectionist ploy. Yet, for all the public rhetoric, the elements of a compromise were all there but would have required a greater investment of time and political capital.
Demonstrators did have an influence on the outcome, although smaller than what they claimed. At first, ironically, the outside pressures created a climate of common purpose among the delegations. However, many people agreed that the atmosphere of the negotiations changed after President Clinton's interview in a Seattle newspaper, where he was interpreted as siding with the demonstrators and suggesting the use of trade sanctions to enforce labor and environmental standards. While at first everyone attributed the street problems to the lack of preparation by a police force that never had faced such an experience, after President Clinton's remarks some representatives from developing countries came to believe that the harassment they felt in the streets and the pressures in the negotiations were all part of the same design. I do not share this interpretation, but the atmosphere changed in a way that made compromise less likely.
Q: Did the developing countries play a significant role in this meeting?
A: Yes, and they are playing an increasingly significant role in the workings of the WTO, as exemplified by the different governing and operational bodies chaired by developing-country officials. For instance, the General Council, the highest WTO authority, is chaired by Tanzania. Out of the five working groups established in Seattle to draft the terms of reference for the new round, three were chaired by developing countries: agriculture by Singapore and Bangladesh, market access by Lesotho, and institutional reform by Chile and Fiji. Chairing the working groups may not necessarily translate into greater influence by the developing countries, but I think there was a serious attempt by the industrialized countries to facilitate larger participation of developing countries in this meeting.
However, the WTO is still trying to find the right operational procedures to balance two realities: that the developing countries are the numerical majority of the WTO membership, but that the largest proportion of world trade takes place among industrial countries, basically the United States, the European Union, and Japan. It is unrealistic to assume that these countries will make their trade systems dependent on a world majority rule. Although the WTO is a one-member, one-vote organization, in practice it works on the basis of consensus, not voting, which allows both realities to be accommodated. I think that both industrial and developing countries did much in Seattle to begin to shed the habits of the past that do not work anymore. Industrial countries can no longer decide among themselves and count on automatic acceptance from the rest, and developing countries can no longer indulge in posturing and requests for free rides. All countries, I believe, are adjusting to the new scenario, but the proper operational mechanisms are still evolving. For instance, everybody knows that a final proposal cannot be drafted by individual representatives of the 135 countries that are members of the WTO. But who decides which countries participate in which one of the smaller drafting groups is an important operational issue, which, considering the rumors circulating in Seattle, led to some disagreements that were not resolved there.
Q: What happens next? What are the implications for developing countries if the Millennium Round is postponed indefinitely?
A: The WTO is a forum where members basically try to resolve trade disputes according to the set of rules agreed upon by all of them. In that sense, the WTO operates both as a place where countries can directly and freely discuss with other members their trade concerns and as an arbitration mechanism in a dispute if countries are unable to solve a specific problem through direct negotiations. Also, during the Uruguay Round, which ended in 1994, participants agreed that negotiations should continue for some sectors, including agriculture. This is the so-called built-in agenda. All aspects of WTO's operations (administration of past agreements and negotiation of new issues agreed upon during the previous round) will continue, with or without a new and more ambitious round of trade negotiations.
I think that the preparatory work before and during the Seattle meeting, for all the problems, helped to clarify the issues now on the table, and the WTO members will be working on them in the coming years, whether they call it the Millennium Round or not. As they did for this Ministerial, developing countries should continue to work on their own positions, which of course are not homogeneous across countries, as well as on the possible tradeoffs and compromises needed to put together a balanced agenda and outcome for the negotiations.
Q: What is IFPRI's comparative advantage in the trade sector, and how can we most effectively contribute to the coming policy debate?
A: As an independent policy research organization, IFPRI can contribute significantly, as it has in the past, to the policy debate on trade and agriculture. Food security, poverty, and the environment are all key issues in the debate about trade and agricultural policies. For instance, is trade hurting or helping food security in poor developing countries? Are poor consumers and poor producers positively or negatively affected by the policy changes related to the WTO agreements? How about the environment? The outcome of these debates will help shape the new agreements on agriculture. It must be remembered that the WTO legal framework covers not only traditional trade issues, such as market access or export subsidies, but also domestic agricultural policies. In that sense practically all the work that IFPRI does - from macroeconomic to household-level research, with markets, technology, and the environment in between - is extremely relevant to the current debate on the WTO and agriculture.