The siege of Hong Kong

Hong Kong’s Exhibition and Conference Centre is veiled in a pall of haze. It is here that ministers, trade officials and civil-society campaigners from 149 countries today, 12 December, begin six days of talks on a deal to rewrite the rules that govern global trade – a process that is equally befogged. After a decade’s wrangling, the World Trade Organisation (WTO’s) sixth ministerial is a crunch moment. The advocates of free trade are hoping that, come the end of the meeting, market liberalisation will be entrenched globally; protest groups say they intend to make Hong Kong “the WTO’s Stalingrad”.

Some 300 ministers, 6,000 delegates, 3,000 journalists and 2,000 NGO campaigners have gathered here and tension is mounting. An estimated 10,000 protesters will be shepherded by 9,000 police, who have been studying tapes of the riots that halted the ministerial at Seattle in 1999 and helped stymie a deal in 2003 at Cancún. A colonial prison has been cleared to house the more exuberant activists.

An opening rally passed off peacefully yesterday. More than 4,000 people took to the streets, many of them Hong Kong’s downtrodden immigrants. “Our world is not for sale,” they chanted. Their idea, clearly, is to “sink the WTO”. Amid the carnival, Martin Khor of the Third World Network looked fretful.

“This could be a disaster. There’s nothing left in the round for development. It’s simply about market access.”

Som Fak, 44, one of a group of 100 rice farmers from Chiang Mai, Thailand, said he had been driven to desperation by a free-trade deal his country signed. “I have come to protest because once I was able to grow rice. Now I cannot sell what I grow. My family and my community are in debt. I can’t look after my wife, my son and my daughter.”

Tom Burgis has been recording his experience of the Wto ministerial conference in Hong Kong:

Read his blog posts here

A cloud of misinformation has enveloped both the negotiations and the arguments of the protestors. The ministerial is meant to resolve the WTO’s Doha development round, launched in Qatar in 2001, which ostensibly aims to ensure that globalised trade “plays its full part in promoting recovery, growth and development”. By January 2005, member-states were meant to have sealed a deal to liberalise trade in agriculture, services and manufactured goods and to have ironed out irregularities in everything from investment restrictions to intellectual property rights.

Prolonged elbowing, wheedling and banging together of heads have yet to achieve the consensus required for the WTO to issue a resolution – and expectations of a settlement in Hong Kong have recently been “recalibrated” downwards by Pascal Lamy, the WTO’s director-general. What we now expect is a lavish and lengthy “progress capture” in Hong Kong, with members eventually signing on the dotted line during 2006.

That has not put the round’s opponents at ease. They fear that ministers from poor countries will sign up to an apparently innocuous document here, only to have delegates use it as a platform on which to snipe at developing-country protections from the ivory-towers of the WTO headquarters in Geneva. Such free-marketeering, they argue, would throttle farming, undercut public services and reverse embryonic industrialisation in the global south. This, campaigners say, is “life or death time.”

If a soup can be impenetrable, the WTO’s alphabet broth is one such. Floating in it are Nama, Gats, SDT, SSM, SPs (and, of course, the other SPs), Trips, Trims – and the horrors of a mooted non-linear or variable-coefficient tariff-reduction formula.

Somewhere at the bottom of the bowl, though, is a very simple idea that few would oppose: that goods and services, the products of the planet and human labour and the fruits of civilisation, should move untrammelled to where they are needed. In this sense, the label stamped on protestors – that they are “anti-globalisation” – is nonsensical. If anything, the masses with placards are often keener on an equitable global village than member-states’ trade delegations – which, after all, are handsomely paid to fight their respective countries’ corners tooth and nail.

In fact, matted activists and militant economists have much more in common with the men in suits than either side would like to think. This week, while one side sips cocktails and the other throws them, they will all be demanding “development”. They each use the same poverty statistics to reach opposing conclusions. The problem is not the goal, but how to move from a blighted world of poverty, disease and starvation to one of universal welfare.

The problem is not easily overcome. On the one hand, the neo-liberal argument – of which Tony Blair, the British prime minister, and Peter Mandelson, the European Union trade commissioner, are quivering champions, and on which President George W Bush has reportedly “staked his legacy” – says that the market will see us right in the end. By levelling the playing-field on which domestic producers and transnational companies compete for the consumer’s dime, an “ambitious” conclusion to the Doha round would harness commercial self-interest for the greater good.

On the other hand, as trade justice campaigners and the beleaguered rice-farmers of southeast Asia point out, that is not the reality. Milton Friedman is not Gandalf. Given that much of the poor world’s industry is in its infancy and that most of its agriculture is for subsistence or minute profit (and hence protected by tariffs and quotas levied by governments), a “level playing-field” for global trade amounts to pitting a Real Madrid of export galacticos against an under-9’s soccer team playing without boots.

The crux of the problem is a confusion of means and ends. The great shibboleth of development is “economic growth”. It is the yardstick by which success in development is judged, by which the policies of the World Bank and the International Monetary Fund are shaped. Yet, of course, it is just as meaningless as the most vapid of protest slogans.

As the economist and Nobel laureate Amartya Sen has been reminding us for some time, what we’re actually after are freedoms – freedoms from insecurity, disease and hunger, freedoms to be educated and to have some say in the running of the communities in which we live. Without any notion of equity, welfare or environmental sustainability, economic growth is no more than a fertiliser for hoarded profit and global degradation.

Time is short. Bush’s congressional mandate to negotiate trade policy expires in July 2007 and is unlikely to be renewed. Britain’s presidencies of the G8 and the EU – wrapped as they were in the banners of the war on poverty – are all but over. The rumour is that if Hong Kong fails, the Doha round and even the WTO itself may collapse (though this may well be a ploy to ratchet up the pressure on dissenting countries cast as “wreckers”).

Depending on who you listen to, that could spell catastrophe or liberation. You can listen to Rob Portman, the US trade representative, who will tell you that sealing Doha is central to the planet’s prosperity. Or you can try to hear the silent message of the 25,000 Indian farmers who have committed suicide since their country’s accession to the WTO in 1995. The likelihood is that nothing limpid will be spelled out when the delegates finally retire in the early hours of next Monday, 19 December. Nonetheless, as the meeting opens, no one is prepared to blink. There is too much at stake.

What’s on the table in Hong Kong:

Agreement on Agriculture (AoA)

The European Union and the United States have made “bold” offers to cut subsidies to agricultural exporters – the principal blockage in the Doha negotiations – to howls of protest from US farm lobbies and Jacques Chirac. The offers (which include a “box-shifting” loophole to preserve the status quo) come with demands for greater access to services and manufacturing markets. Meanwhile, there has been no movement on dumping, the process by which excess crops flood foreign markets at prices below the cost of production, asphyxiating domestic producers. Neither have the “modalities” and deadlines by which trade distortion might be reduced in practice been agreed.

General Agreement on Trade in Services (Gats)

The WTO describes GATS as “perhaps the single most important development in the multilateral trading system” since it began in 1948. An agreement could see all member states’ services sectors – including financial services, energy and transport – opened to global business. Some fear that even public services could be threatened – with similar consequences to water privatisations in Tanzania and Bolivia – though the WTO is at pains to deny this. Frustrated by stalled talks, the EU, pushed by the financial-services lobby, is demanding ten key service sectors be “benchmarked” for compulsory liberalisation, and that the current voluntary “request-offer” negotiating system by made toughened up. The draft GATS text also contains a change to the current voluntary system of “request-offer” system for opening individual countries’ services, and proposals to remove barriers that prevent foreign companies becoming majority shareholders in any domestic business.

Non-Agricultural Market Access (Nama)

Nama is about one thing: market access. The current text – almost identical to that rejected by poor countries at Cancún – would enforce reductions in the tariffs by which countries protect their manufacturers, covering almost everything non-agricultural, including toys, fish, diamonds and rubber. Unlike the AoA, there would be no “sensitive products” exempted from cuts. The proposed formula for tariff reductions effectively requires poor countries, which currently have high tariffs, to make greater cuts than less protectionist rich countries – a factor that seems contrary to the Doha principle that “less than full reciprocity” should be required of developing countries. While some economists argue NAMA would boost efficiency in manufacturing, others say it will hasten de-industrialisation in countries whose industries cannot yet cope with competition from abroad. Like the other elements of Doha, a deal would be binding and permanent.