Part 1 of 2 Trade between nations needs to be regulated

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?