October 23, 2017

On Seattle

Edward Goldsmith writes of the tumultuous events in Seattle surrounding the World Trade Organization ministerial meeting in late November 1999, when an estimated 50,000 – 100,000 protesters gathered to oppose the free trade agenda the WTO is forcing upon the globe.

The World Trade Organization suffered a humiliating setback this week in Seattle. It was a great – indeed unprecedented – victory for humanity as a whole and for the natural world. I am not suggesting that those who run and support the WTO will accept defeat, but at last the world at large knows that it exists and how what it does affects the lives of a very large number of people – or else there would not have been 50,000 demonstrators at Seattle, with often very different and even conflicting interests who thronged there in such numbers and with such determination.

To understand why the WTO is in such trouble one must first of all look at it in its right context. At the famous meeting at Bretton Woods in New Hampshire in 1944, America and other Western powers decided that the era of political colonialism was at an end. It served above all to enable industrial countries to find a market for their goods and services and to have access to cheap sources of raw materials. This was essential to our industry if it was to continue to expand. Clearly another means could be devised for obtaining them.

The answer was economic development, a term that was apparently coined by President Truman at the time. Third World countries had to be transformed so that they could be incorporated in the Western industrial and trade system. For this purpose three institutions were created, and they are generally referred to as the Bretton Woods institutions.

  • The first is the World Bank, whose role it was to requisite physical infrastructure (roads, power stations, harbours, airports, etc.)
  • The second was the International Monetary Fund (IMF) whose main role was to provide the funds the Third World countries would require when they had balance of payment difficulties, as indeed they would as building all this infrastructure would not be very profitable, at least in the short term.
  • The third institution which was to be set up four years later was the International Trade Organization (ITO), whose role it was to make sure that Third World countries would not put up any barriers to the import of our goods and services or to the export of their raw materials.

The American Congress refused to go along with the ITO, which they saw as irreconcilable with the preservation of US sovereignty – so it remained an informal body, which did not prevent it from organizing further rounds of negotiations, each one of which reduced trade barriers, so that by the end of the 7th round they had been reduced to an average of 4-5 percent.

The last round – the Uruguay Round – which lasted seven years, was by far and away the most ambitious. At the time it started the world situation had changed considerably. Most important was the massive increase in the size and power of the large corporations that dominated world trade, for they dominated the proceedings and made sure that GATT would become a formal institution and it was smuggled in at the end of the Uruguay Rounds in 1995.

In the eyes of the world the GATT’s agenda is liberalization of world trade – in other words promoting global free trade. We have all been taught that free trade is a wonderful thing. Many economists would assure us that it provides the most equitable way of distributing resources and is the best means of increasing prosperity, reducing poverty and unemployment, and generally increasing human welfare. This is not so. Free trade was imposed upon the world in the middle of the nineteenth century by England – not so as to achieve all these wonderful things but to achieve the same ends as those later achieved by colonial systems set up towards the end of the nineteenth century and the global free trade system set up at Bretton Woods, largely on the US initiative, nearly a century later.

In the 1850s Britain dominated manufacturing and trade worldwide, just as the United States were to dominate them in 1944. Trade was seen above all as creating a level playing field, one in which every country is subjected to the same rules. This sounds highly equitable, but in reality it provides the obvious means for the powerful to dominate the weak. If I wanted to confront Mike Tyson I would not want to do so on a level playing field and would need a lot of bodyguards to protect me, as would a small Third World country if it were to confront the United States of America.

Free Trade, among unequal competitors is a recipe for economic and indeed social domination. It is far more effective and also cheaper to operate than the political colonialism of old, and it served the purposes of the US and the other Western powers extremely well, as did the World Bank, the IMF and the GATT institutions, which from the start were dominated by the rich Western countries. All this made it possible for Western corporations to buy or put out of business all their smaller competitors, especially those in the Third World – to the point where they now largely control world trade.

The ninth round of GATT negotiations, referred to as Uruguay Rounds, as I have already mentioned, went far beyond what was then referred to as trade liberalization. To begin with it brought new areas of economic activities into their purvey (TRIPS) and patent law (TRIMS). In addition not content with further reducing tariffs, which were already extremely low, it introduced a new concept – that of “on tariff barriers, or non tariff measures”.

These referred to any regulation which could be construed as adversely affecting trade – either by reducing access to markets or to resources or by increasing costs to industry. Such regulations must be eliminated, hence the accent in the last decades on deregulation – elimination of regulations, most of which were set up to protect the poor, the unemployed, the old, the sick, not to mention communities, local economies and of course the natural world, none of which in the eyes of the corporations and of their political allies have any value whatsoever when compared with the immediate interests of the multinationals.

As a result since the Uruguay Rounds were ratified and the WTO came into existence the poor have got poorer, unemployment rates have escalated in all but the most favoured countries, the old are increasingly neglected, local economies have been devastated, and local communities have increasingly disintegrated. Environmental destruction has increased exponentially, to a point where the very survival of our species is now seriously threatened.


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