Part 1 of 2 Trade between nations needs to be regulated

Yanuar Nugroho, Director, The Business Watch Indonesia Researcher, Uni Sosial Demokrat, Jakarta, Lecturer, Sahid University at Surakarta, yanuar-n@unisosdem.org

This is a true story, cited from a good book, The Little Earth Book (2002). Tatu Museyni grows coffee in Tanzania. The price she gets for her coffee has halved from 1980 to 2000. It halved again in the last two years. Her income is down to US$30 for the whole year. Her children no longer go to school and the family faces starvation.

Researchers in Hawaii have developed genetically modified (GM) coffee plants whose beans ripen at the same time, making it possible to pick by machine. When machines replace pickers, Tatu Muyseni and 25 million others may have no income at all. On the other side of the planet, Nestle boasts in its annual report: "Thanks to favorable commodity prices, profits have reached a record high."

Approaching the 5th World Trade Organization (WTO) Ministerial Meeting in Cancun in September, it seems that there is more of both optimism and pessimism concerning the big question of whether economic growth can be sustained in its current practice through transnational instruments such as the WTO (particularly) and its proponents the IMF and the WB. There also are doubts about whether "newly made rules" like GATS, TRIPs, TRIMs and AoA should be enforced in all countries without regard to their preparedness.

Among the reasons for optimism is the coming fifth Asia-Europe Meeting (ASEM) meeting, to take place in Nusa Dua, Bali, July 24 and July 25. The meeting is a confirmation amid growing concerns in Asian countries about their European counterparts' commitment to providing economic support.

The EU Commissioner for External Relations Chris Patten is scheduled to present a paper titled A New Partnership with Southeast Asia on regional security and global economic governance. It will discuss new ways to improve ASEM cooperation in tackling security problems, especially in supporting trade between Europe and Asia, since they are partners in trade, as well as security, human rights, regional integration and new technologies.

While among the reasons for pessimism, The International Herald Tribune carried an editorial from The New York Times, with the shocking -- but clear -- title, "Trade rigged against the poor." It explained how trade is not working in favor of the poor in the Philippines and some other countries, and the Times was very critical of the trade is organized today.

With the massive inequalities throughout the world, it would not be surprising to see Cancun in 2004 turn out like Seattle in 1999, when "the last round of trade liberalization talks stalled and protesters outside famously threw their antiglobalization fest".

We live today in tension between optimism and pessimism over whether our life as a whole is going in the correct direction. History is not a linear path, rather it is the result of contradictions and interactions. As is our current history.

For instance, as stated in the editorial in the Tribune about the case of the Filipino farmers, by rigging the global trade game against farmers in developing nations, Europe, the U.S. and Japan are essentially kicking the development ladder out from under some of the world's most desperate people.

This is morally depraved since the action harvests poverty around the world. But surely it is not difficult to understand this. In his Millennium message, President Clinton said, "I do not believe that a country with 4.5 percent of the world's people can maintain its standard of living if we don't have more customers."

So it is clear why trade between nations needs to be regulated so that the strong do not bully the weak. The World Trade Organization was established for this purpose. It is there to make trade regulations reliable and fair in order to give confidence to companies trading across borders; its judgments are strictly in accordance with its terms of reference and are impartial, frequently going against the wishes of the more powerful nations. It acts according to provable scientific knowledge and is a rules-based organization working on a global scale. In short, the WTO is a model for other aspects of world government.

And it seems, from one side, the WTO has been remarkably successful. In 1946 trade between countries totaled only 5 percent of global domestic product, and now it has reached 26 percent. The WTO expects this to increase to 50 percent by 2020. How can this number be reached? Trade involves more than goods -- it spreads music, film, language, business methods and attitudes. In this way, the WTO is establishing a single cultural framework.

But on the other side, this practice creates massive inequality. Four-fifths of the world's population has to make do with only 14 percent of the world's wealth. In spite of the development of agriculture, science and technology, the wealth of the poorest group has actually fallen. The wealth of the 225 richest people in the world has nearly tripled over the past six years and their assets now equal the entire annual income of half the world's population.

Thus, there must be something structurally wrong with an economic system that allows these inequalities to grow. And instead of making a serious correction, Cancun 2004, commanded by rich and powerful countries, will offer a new round to discuss the so-called "new issues", which raises concerns for many parties. And what are they?