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The
Cancún Summit Clash: So Much for Regulated International Free
Trade!
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The
summit received wide-scale protests |
The
foremost legacy of Cancún is how the rich countries refused to ease up on
export tariffs levied against the poorer and poor ones on what stands as their
main source of foreign income, agriculture. In as much they did, the World Trade
Organization Cancún Ministerial Summit (September 8-13) closed in
failure. As a follow-up to the manifested goodwill of the 2001 Doha round, this
dramatic outcome is the result of hypocrisy among the wealthy.
Lifting
tariffs on industrial imports and loosening intellectual property rules,
proposed as compromises by the US and EU, in no way alters the balance of power
in international trade. That’s because few countries outside the G7 and
South-East Asia have any industrially manufactured goods to export. For those
that do, like Brazil and India, they have been deprived of broader markets.
Despite
the failure, the Cancún Summit will be most remembered for the spotlight
it shone on the mathematics of the pending global trade imbalance. Much of the
developing world’s industry is based in agriculture. The formation of a large
group of countries with similar exporting ambitions in that sector sought to
drive that reality toward broader understanding. The G21, as the association was
called, at one point growing to 23, was led by Brazil’s astute staff of
diplomats and negotiators. Without a move from the North, the G21 refused to
bend on the so-called Singapore issues regarding investment, competition and
transparency in government procurement.
The
G21’s attempt was to break a stalemate that just happened to confirm what has
been suspected for some time. Free trade has one primary direction: North to
South. As with its other international commitments, the US had no intention on
settling for anything less than the status quo.
The
free-market ideology that has been the backbone to “globalization” flowed
liberally in Cancún. It was contradicted collectively. Well ahead of the
summit, it was as clear as day for anyone caring to leaf through the pages of
Business Week. From the American perspective, the main problem with the WTO
suddenly became what the Seattle demonstrators had pinpointed in 1999 as they
fled from teargas. The Organization profoundly lacked a democratic structure and
catered only to the corrupt.
Free
trade has one primary direction: North to South. |
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The
upshot holds that the US cannot afford to negotiate for broader free trade in
such a philosophically deprived environment. Underlying it all is the fact that
numerous punitive decisions were taken against the US in recent months for its
protectionist farming subsidies and import levies. The entire purpose of the WTO
was to make such trade practices unlawful. It would set international standards
by which to pass punitive action.
Opposition
to US and EU farming “subsidies” delves much further, though. Rubens
Ricupero, Secretary General of UNCTAD, writing in the Folha de São Paulo
on June 6, portrayed these funds as destined “to fattening the pocket-books of
the largest farming estates, the gigantic agribusiness conglomerates and their
allies in the Congresses and governments of the wealthiest countries.” A
statement from Oxfam reinforced his point: “distribution of agricultural
support in the industrialized countries is far more unequal than the
distribution of income in the world’s most unequal countries.” The claim to
protect farmers turns out, yet again, to be but a house of cards. In the
meantime, the land and soul of American and French farming culture spiral
downward into poverty and suicide as a function of depopulation.
Purporting
to protect such privileges, the northern countries have blocked the economic
aspirations of the South. Next to the Brazilian delegation, perhaps nobody
expressed deeper dejection than Supachai Panitchpakdi himself, current head of
the WTO. “We seemed to be making real progress. We were very, very close to a
final agreement,” he insisted.
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General
Director of the World Trade Organization Supachai Panitchpakdi |
The days following the summit’s failure have been rowdy. The international
press has reported how most of the 146 member-states are posturing toward
bilateral trade talks. The US has predictably returned to its moral high horse,
threatening the developing world with retaliation for unlawful trading. Even
during the summit, as reported by The Financial Times, Robert Zoellick, the US
trade representative, energetically attempted to split the G21 “by telling its
members that they were jeopardizing their chances of doing bilateral deals with
the US.” Brazil’s Foreign Minister and head of the G21 group, Celso Amorim,
regretted the “psychological war” waged against the coalition by the EU, US
and Canada. In the end Zoellick failed in his rabblerousing in Cancún. On
the other hand, there is surely little reason to believe the G21 will easily
settle for a compromise now.
Opponents
to northern rigidity could only rejoice, but rejoice they did after successfully
countering the final summit declaration. The world is clearly divided, once
again, by an opaque North-South border. In hindsight and contrary to what many
of its critics contended, the principles of the WTO do favor the economies of
developing nations, at least partly. Given the northern stance, however, it now
appears to have been nothing more than a finely woven trap for the latter.
Despite what the poorer nations might lose out on in the short-term—and by
listening to the northern press’s morality tale, it will be significant—the
South has perhaps managed to communicate the collective nature of its terms.
The
WTO lacked a democratic structure and catered only to the corrupt. |
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Perhaps
is the keyword. For northern audiences can hardly be expected to grasp the gist
of this gathering. Those who opposed the WTO, and have done so especially since
Seattle, have played into a devious logic. Ever since the Bush administration
was elected, it has drawn back from its international commitments. That stands
foremost for the WTO. Even in its imperfect form, the WTO represented
opportunity for the South, provided that its free-market principles were
respected. Demonstrations against the very existence of the organization
ultimately ended up sustaining the most conservative of Northern economic
doctrines.
Then
again this was not the first time that the free trade dream has faced its Janus
head. For all the denial displayed by rich countries regarding the links tying
political turbulence, including political terrorism, to trade, the WTO has
consciously connected its goals with 9/11. The round held in Doha was done so in
urgency after the Twin Tower and Pentagon attacks. Last week’s scheduling was
no different. But just as the mood has changed since the months following 9/11,
so has the negotiating spirit. As Brazil’s President Lula da Silva proclaimed
after the summit’s end in praise for his country’s stance: “We are not out
to win. We just want fair play because we can compete… This is hardball and we
know that you do not win if you do not play hard.”
A
gap has thus emerged between the meaning of northern protest movements and the
business needs of southern economies. The fact that the world, with few
exceptions, is affected by an economic slowdown does not change the expectations
of developing nations. Nor are they seemingly prepared to stand by as obedient
spectators, swayed by the prescriptions of economists. Instead of being dictated
to by the North about “fair trade,” southern economies are above all after
“free trade.”
The
WTO has consciously connected its goals with 9/11. |
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The
sack in Seattle confronted the WTO to the fact that both the organization and
the question of international trade were found out to be the rulers and agents
of the out-sourced empire of American power. Prior to that date, taking a
political stance against an economic system was a political act, and remained as
such. From Seattle on, what would soon become the alter-globalization NGO
movement proved that it had done its economic homework. Even President Clinton
reacted well to the protests, somewhat as a teacher impressed by the savviest of
his students. Political protest had managed to come around to the new world
economic system and tackle it head-on.
The
grounds of the Organization had changed considerably since the 1994 Uruguay
round. Prior to that date, its predecessor, the GATT (General Agreement on
Tariffs and Trade) was basically a G7 affair. In Seattle, the South yearned for
a seat at the negotiating table. Clinton’s terms in office exhibited a certain
diplomatic goodwill on the part of negotiators, a sentiment from which the WTO
also drew. A lot was on the table. Clever cunningness could get States what they
wanted. The WTO’s agenda appeared to be no different. To the astonishment of
business sectors in the developing world, however, they had to face off in the
same square against northern protectionism and protest.
This
negotiating spirit was pointed to as compensation for the lack of democratic
structure or transparency in the Organization’s decision-making processes. The
Doha round and agenda seemed to prove that in spite of 9/11, the developing
countries could count on the G7’s good spirits. It was as if a kind of
universal democratic ethics was taking shape amongst multilateral organizations.
The WTO suddenly crystallized into a broker of beliefs.
Despite
the so-called concessions the US was willing to make, and Europe’s following
the lead, nothing ever touched the tip of southern demands in Cancún. In
the end, China stood askance from the G20+ group out of self-interest, but also
out of a sense of fulfillment. The compromise to lift tariffs on some industrial
goods clearly corresponds to the nature of Chinese exports, whereas agriculture
merely corresponds to its import needs. Moreover, the entangled web of Chinese
and American trade relations, making the former the latter’s biggest creditor
and the latter the former’s largest buyer, places China in America’s camp.
After all, Treasury Secretary John Snow was just in China making a humiliating
visit to request that the Chinese Yuan be appreciated, amounting to a
depreciation of the American dollar.
There
is a gap between the meaning of northern protest movements and the
needs of southern economies. |
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Meanwhile,
the US has been dealing with another agenda. Bilateral agreements with countries
on the American continent have predominated in view of a Free Trade Agreement of
the Americas (FTAA). Robert Zoellick made a good show of professing interest in
multilateral agreements, when he was not amusing himself by launching faceless
threats against Brazil and other dissenting G21 nations. The fact is the US has
been withdrawing from WTO rulings through complaints of foreign “dumping.”
In turn, it has never come as close to dumping the very organization to which it
gave rise.
Most
North Americans and many Europeans perceive Third World leaders most often as
corrupt embezzlers who feast while their people starve. The vision of the banana
republic was always more self-serving than accurate. Given that the US only
seemed to sponsor, support or fund the most corrupt, murderous and tyrannical of
southern regimes, its factual basis proved to be little more than fictions.
Nowadays the entire South American region is run by democratically-elected
governments, whose security agendas range in varying proportions, though none
exceeding America’s own. The attempt to split the political class from the
people therefore amounts to being a diversion tactic.
It
reminds one of the glee with which the Northern hip audiences received
Brazil’s hit film, City of God. One Montreal critic seemed to climax at the
thought of how replete with fright the film left the Brazilian middle class. Far
from such unsubstantiated artistic sublimation, this middle class has no need
for a film to be scared out of their wits: violence abounds in the country, as
it does in Colombia. Northern city-dwellers can hardly suspect the degree to
which it has become banal, which is hardly to deny the pain and suffering of its
experience. What has triggered the hopes of the middle classes in most Latin
American countries is the old trickle-down dream. Income from trade can offset
the debt balance which in turn might allow governments to invest in local
infrastructure – and loosen IMF-managed austerity measures on social spending.
The
WTO suddenly crystallized into a broker of beliefs. |
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On
paper, the WTO aimed at concretizing some of those aspirations. When Brazil
succeeded in establishing a national aeronautics industry, for example, the
North came challenging. An unlikely Inquisitor, Canada showed a considerably
different face to what we have seen since it sided with the UN against the US
over Iraq. It sought a WTO sanction against Brazil for unlawfully subsidizing
its industry, a devastating consequence whose outcome the Canadians clearly
caressed.
In
the end Brazil was the camp to receive retribution. The WTO ruled against
Canada’s claim and competitive strategy, consisting basically of offering
low-interest loans for foreign companies to buy its nationally produced
aircraft. Brazil requested $5.2 billion in countermeasures; the countries
settled for $385 million. Such rulings confirm what Joseph Stieglitz, writing in
The Guardian, confirmed as the current structure going “some way to
restricting the brutal exercising of economic muscle by the more powerful.”
By
merely focusing on the very poor, the wealthy nations are confronted with a
workable option: give a little, the result can mean a lot. Even so, the deeper
confrontation lies on this side of charity. The less poor of the world persist
in being tired of the North’s arrogance regarding their education system,
industry and governance. When the North dispatches their unemployed technicians
down south, they are treated like princes whereas local university grads with
n-years of experience pocket only a fraction of the Gringo’s salary and
benefits. In such circumstances, the world’s non-Western middle classes are
demanding more. And that does equate with a thinning northern pocketbook. It’s
a question of balance, of moral and ethical due.
Were
they to take it from the positive end, what would be in it for Americans,
Canadians and Europeans? The possibility of tackling the long term question of
an exhausted consumer society. The last period of economic growth in the US,
Canada and Asia (Europe has been relatively stagnant in low growth for over a
decade) proved to be a bubble. Personal savings were erased in its burst, but
populations were coerced into blowing the consumer bubble back into shape. The
message with which Cancún has closed is that consumerism will be forced
onto the developing world as a last resort by the US to hold onto its economic
predominance.
In
the meantime, it is said that in conflict new formations arise. The G21 may not
long survive as a lasting entity. The South has still mustered up its skills,
competence and courage to spell out what it understands by capitalism,
globalization and free trade. Accurately measuring its importance may end up
shaping the Cancún legacy.
Norman
Madarasz is a Canadian
philosopher residing in Rio de Janeiro, Brazil. With a Ph.D. from the University
of Paris, he teaches and writes on international relations, political economy
and philosophy. He is also a regular contributor to Counterpunch and has
published think pieces and philosophical research extensively. You can reach him
at nmphdiol2@yahoo.ca
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