Trading concessions
The four-day ministerial conference of the World Trade Organization (WTO), which opened in Seattle in the United States on Tuesday, could be a watershed for the world trading system. But the meeting, expected to launch a new millennium round of multilateral negotiations to further liberalize trade and write new rules to govern additional types of economic transactions among nations, could also turn into an acrimonious huffing and puffing affair.
In fact, early indications from the first day portend that heated disputes among delegates could scuttle the round before it even gets started. Media reports said violent street clashes with thousands of demonstrators consisting of labor, environmental and human rights activists, as well as aid lobbyists, prompted the Seattle mayor to declare a civil emergency and impose an overnight curfew.
Inside the WTO meeting, delegates found hostilities, and officials from several countries in Asia and Africa balked at signing on to a new round of trade talks until their own demands were met.
Unlike many other multilateral forums which usually feature two broad groups of different, and often opposing, interests consisting of industrialized nations on one side and developing nations on the other, the WTO meeting deals with a wide range of different, and often opposing, national and regional interests. Even the industrialized nations, who pride themselves on being the champions of free trade, have widely differing priorities of agenda when it comes to trade-related issues.
The United States, despite the continued robust performance of its economy over the past few years, seems to be shackled by the interests of its militant, protectionist trade unions. President Bill Clinton, expected to provide leadership to a new round of multilateral trade negotiations, appears to be held hostage by trade unions' demands for linking labor rights to trade as he hopes his Vice President Al Gore will win the presidential election next year.
The European Union, backed by Japan, South Korea, Switzerland and Norway, is pitted against the United States and most other developed and developing nations on the issue of abolishing agricultural subsidies. But the European Union and the United States sit in the same camp against most developing countries in the demand for linking trade with labor rights and the environment. There are numerous other battlegrounds, depending on the issues.
The problem is that while the second half of the 20th century has seen an unprecedented expansion of world trade and economic growth thanks to liberalization, the economy has become global and politics seem to remain largely local.
The trade negotiators should realize that the future of the world economy depends on free and fair trade. The ministers, as well as the demonstrating critics of the WTO, should not make liberalized trade a scapegoat for domestic policy failures. Experiences show it seldom makes any sense to use trade restrictions to resolve problems whose origins lie in other areas of policy.
The United States and other developed countries should not push labor rights and environmental issues onto the agenda. Experiences have shown that trade and investment generate not only economic development, but higher standards of human rights and environmental protection as well. In fact, people in developing countries usually insist on higher standards, once they get the chance, without any industrialized countries telling them to do so.
Developing countries in turn should realize that opening the domestic market is a concession to be traded for access to foreign markets. Instead of demanding changes to WTO rules, as many of them are demanding on the grounds that they have yet to digest the regulations of the previous Uruguay round, they should vigorously press their own priority interests, such as textile, farm subsidies and services, in pursuing a new round of trade talks.
The WTO has enhanced the stable and predictable conditions of access to markets, which are important prerequisites to bolstering investment. Indonesia as well as most developing countries have learned that economic success requires outward orientation to compete aggressively for footloose investment.
A political stalemate in Seattle could fatally undermine the WTO and its rules. Therefore, avoiding such an impasse should be the top priority for the 135 trade ministers. Perhaps, hindered by the extreme lack of common ground, they could zero in on a narrow, yet manageable round for, say, three years. They should not be as ambitious as the eight-year-long Uruguay round in order to maintain the momentum of the global movement for free, fair trade.