A chance at Cancun to make trade democratic

A chance at Cancun to make trade democratic

Yanuar Nugroho, Director, The Business Watch Indonesia, Surakarta,
yanuar-n@unisosdem.org

Sumiah, 26, hails from Mojokerto, East Java. A permanent
employee in a furniture factory for more than eight years, last
year she was made a part-time worker, along with some 200 others.
Their employer told them that the company needed to be "flexible"
to stay in business.

As a result, Sumiah no longer receives overtime or
"menstruation leave". She is no longer protected by the state-run
workers' insurance scheme (Jamsostek). If she is fired, she will
receive no redundancy pay as legally-speaking she cannot actually
be fired -- to get rid of her all the employer has to do is
refuse to renew her weekly contract. Every Monday morning,
together with or sometimes hundreds of other workers, she checks
the announcement board near the factory gate to see if her name
is on the list of workers hired for the week.

The "Washington Consensus" on the global economy states that
the labor market needs to be "flexible" as a precondition for
investment to take place. This simply means that labor is only a
function of production. The higher the production, the more labor
can be employed -- and vice versa. The clear consequence is that
only contract labor will be needed.

Sumiah's story and the issue of labor is among those to be
discussed in Cancun, Mexico, during the fifth WTO Ministerial
Meeting from Sept. 10 to Sept. 14 -- an issue that comes under
the prestigious title of "business services".

Free trade or, at the least, very low tariffs on trade is the
basic philosophy of the World Trade Organization. Free trade
means more than just no tariffs, it also means no indirect
obstacles to trade. Hence, the WTO is also in favor of
deregulation and liberalization, at least where it relates to
trade. Whether it shares a strong preference for market-based
solutions is a moot question.

The UN Conference on Trade and Development (UNCTAD) noted that
there are 40,000 corporations in the world whose activities cross
national boundaries. These firms access overseas markets through
some 250,000 foreign affiliates. The top 200 global firms account
for an alarming and growing share of the world's economic
activity.

No doubt, trade plays a significant part in these figures.
Trade brings prosperity through the delivery of goods and
services, with economic growth and technological advancement both
shaping it and being shaped by it. Trade even contributes to more
open and democratic governance.

But inequality remains and the gap both within and between
rich and poor countries seems to be widening. In 1960, the
richest fifth of the world's population received 70 percent of
global income compared to 2.3 percent of global income for the
world's poorest 20 percent. By 2001, the richest 20 percent had
increased their share to more than 85 percent of global income
while the bottom fifth's share had shrunk from 2.3 percent to
less than 1 percent (UN Development Report, 2002).

The problem is not in trade itself, but in its current
patterns and practices. Trade practices that neglect everything
else in favor of profit alone must be stopped. The concerns
expressed by many about the trade process must be acknowledged
and addressed in any development model since these concerns
affect the daily lives of billions.

But we sense powerlessness, despite all the rhetoric of
participation. Most countries are now WTO members, but membership
does not equate with influence. Many developing countries have
limited or non-existent representation in Geneva. Nineteen of the
42 African WTO members have zero representation.

Many other developing countries lack the technical capacity to
negotiate meaningfully for the rules have already been set based
on developed country models, which can be inappropriate and
prohibitively expensive for poor countries. In fact, many WTO
signatories have been unable to comply with agreements negotiated
under the earlier Uruguay round.

If we want a balanced and inclusive world trading system that
attracts developing countries, much needs to be done to enhance
these countries' capacities to participate in the rule-making
process, to move away from the "one size fits all" approach and
to ensure that its implementation does not place unreasonable
financial and technical burdens on those least able to bear them.

We need to work with others on issues and solutions. This
means partnerships within and between countries and their
external supporters; and partnerships among these external
supporters themselves. It is only in this light that this fifth
WTO Ministerial Meeting will be relevant to the world as a whole.

Properly conceived globalization means much more than merely
market integration. It also means -- and requires -- working
together towards agreed solutions to global problems.

And these solutions need to be developed in a cooperative and
transparent way that explicitly includes the priorities of the
poorest countries and their peoples. We need an increasingly
inclusive approach to development issues in general and to
poverty reduction. More particularly fair trade, not free trade,
as the heart of our "new" globalization, must be the foundation
of all our business practices and trading endeavors in an
increasingly interdependent 21st century world.

As to a workable framework for action by ministers, the draft
of the Ministerial Text for Cancun reads, "We believe (the
framework) constitutes an adequate and manageable basis for
discussion, and we hope it will prove a useful tool in our search
for common ground in Cancun." This "common ground" should be the
democratization of trade practices through business
accountability.

It is something of an irony that the "power of capital", as
reflected in the development of world trade, seems to have been
exempted from the criteria of public accountability.

Thus, Cancun is a chance to make trade accountable and
democratic. This "one world" cannot remain split along a fault
line that separates the rich from the poor, like those in
Sumiah's position.

Trade alone will not bridge this divide. Rather, our sense of
common humanity must be our shared bond, and must form part of
one united endeavor.

Otherwise, such transnational institutions like the WTO will
only trade life away for profits.

The writer is also a lecturer at Sahid University in Surakarta
and a researcher with Uni Sosial Demokrat, Jakarta.