The trade gangs of Hong Kong

Alex MacGillivray
22 December 2005

Negotiators from around the world gather for a bruising week. On the table: a deal to reshape world trade. After the debate, posturing and backroom deals, the proposal is put to the forty-one delegates from twenty-five nations. No matter how big or small the commercial and strategic clout, it’s one country, one vote. Brazil abstains; the French object.

Nevertheless, a clear and binding decision has been reached. Greenwich becomes the international meridian, making London the undisputed centre of global maritime trade and finance. The venue is Washington DC. The year: 1884.

On 13-18 December 2005, 6,000 negotiators, 3,000 business and NGO lobbyists, 2,000 journalists and 5,000 demonstrators from 149 countries converged on Hong Kong for the World Trade Organisation’s biennial ministerial conference.

The event was covered on 8.5 million web pages. The logistics of having so many negotiators interact are daunting: six major plenary sessions, 149 consecutive position statements from governments, more than 200 workshops and 450 side meetings. As the conference got underway, Pascal Lamy, head of the WTO, told European parliamentarians that the world trade body (and its predecessor Gatt) “is a project that has contributed to world peace and economic growth, and which has brought greater predictability and accountability to trade relations.” Has there been much progress since the Washington conference 121 years ago?

Also in openDemocracy on the WTO ministerial in Hong Kong:

Tom Burgis, “The WTO’s raw deal”

Ehsan Masood, “Why the poorest countries need a WTO”

Tom Burgis, “The siege of Hong Kong”

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Long hours, late nights

The outcome of the Hong Kong negotiations was indeed predictable. There are huge sums of money potentially up for grabs by liberalising trade – $300 billion according to a World Bank study.

By coincidence, $300 billion is also the sum that Chinese statisticians announced on 20 December 2005 that they somehow overlooked when calculating the country’s 2004 gross domestic product. Few now doubt that China will overtake Britain and France when the 2005 figures are announced. The rise of China and India makes richer nations distinctly uncomfortable, despite the claims of economists that freeing world trade will be of equal benefit to everyone – a “non-zero-sum-game.”

Trade negotiators clearly don’t believe a word of it, which is why they fight so hard and so dirty for their country or company. To the negotiators, trade is not about cooperation. It is about cutthroat competitiveness. After the debacles of Seattle (1999) and Cancún (2003), it was something of a feat to get all 149 countries to agree the forty-page final declaration, irrespective of the contents.

Following the rules of the game, negotiators from all sides fell over themselves to express disappointment in the declaration – full of compromise, backsliding, selfishness and obfuscation dressed up in the opaque language of “supplementary modalities” and “preference erosion

So predictable outcomes, yes. But what about accountable processes? It’s an old but fair criticism that the very culture of trade negotiators makes a mockery of the goal of a “development round” intended to benefit poor nations. Fleets of black limousines ferry delegates from luxury hotel to conference centre to nearby restaurant – all within easy walking distance. BMWs weren’t good enough for the Italian delegation; I saw them cruising downtown Hong Kong in a Maserati. Even the protestors caught the spirit: natty “WTO Kills Farmers” black-and-red reversible headscarves were for sale from out-of-pocket Korean farmers on Lockhart Road for HK$100 ($10).

The WTO, Pascal Lamy concedes “is not the most popular international organisation around.” But it is not necessarily the organisation that is unaccountable – it compares favourably to corporations and even some NGOs in terms of member control and access to information, according to the Global Accountability Project, and to many United Nations agencies in terms of economies of scale and access to the poorest nations, according to Ehsan Masood on openDemocracy. The WTO even discloses how many cups of coffee negotiators quaffed on Sunday night in efforts to strike a final deal: 350.

But trade negotiators (of both genders) are a tribe fuelled by testosterone, not coffee. The negotiator’s ethos – long hours, late nights, fighting line by line – increases crankiness and reduces cooperation. Even their own political bosses are getting fed up with the pettiness and lack of strategic perspective of the negotiators, according to Larry Elliott of The Guardian. "We need a different tempo,” said the European Union’s Peter Mandelson, “and a different politics."

The trading game

What will it look like? From England’s Lord Palmerston in the 19th century to France’s Charles de Gaulle in the 20th, statesmen have warned that countries have no friends, only interests. Times change, or at least language does. On the Hong Kong waterfront, the talk was all of which G number you belonged to.

Notionally the G is short for Group, but could just as well stand for Gang. Navigating international summits used to be easy: there was the unaccountable group of rich nations called the G7, which first met in France in 1975; and there was the “third world,” represented by the G77 (which first met in Algiers in 1967). The history of the WTO since its founding in 1995 is also one of proliferating alliances of interest and convenience. Today, in the swirling soup of WTO negotiations, an attentive observer has to take account of the following trade gangs as a bare minimum:

  • G149 – the whole unruly WTO “family.” It is notable that forty-two UN member-states are still not represented, including huge exporting countries like Vietnam – held up in the crossfire as the United States demands additional concessions from eager candidate Russia.

  • G110 – all those disparate WTO members driven into each other’s arms by the sheer intransigence of the wealthy Europeans, North Americans and Japanese. This group was formerly the G90, but the numbers keep growing.

  • G33 – a group of forty-plus developing countries, led by Indonesia and Kenya, which focus on defending their food security and rural economies.

  • G32 – a group of countries defined by the UN as “least-developed”, like Bangladesh and Cambodia. They account for a miniscule percentage of world trade and have been granted tariff-free access to rich markets for 97% of their exports (the remaining 3% just happens to include crucial sectors like textiles). The EU allegedly has worked to bolster the legitimacy of the G32 in order to weaken the G20.

  • G20 – a group of large, food-exporting developing nations “coordinated” by Brazil and India, born amid the ruins of the 2003 Cancún trade summit (and not to be confused with the informal forum of leading countries’ finance ministries and central bankers set up in 1999). I counted the chairs around the table in one G20 meeting room, and there are actually twenty-one members; but is the unnumbered extra member Zimbabwe, or Uruguay?

  • G13 – a new group emerging from the shadows, composed of the old G8 plus five big developing economies; all can expect to be invited to Tony Blair’s proposed summit early in 2006 to get the WTO negotiations moving again.

  • G10 – a gang of independent-minded countries like Switzerland, Japan, South Korea, Liechtenstein and Taiwan (called “Chinese Taipei” in the WTO as in the Olympic games to satisfy the demands of the People’s Republic of China); it exists mainly as a counterpoint to the G33.

  • G1 – a convenient way to characterise those states with a brazenly selfish approach to trade negotiations (at the Hong Kong summit: France, the United States, South Korea, Brazil, the Philippines, and Venezuela); it is also, however, the group most trade negotiators feel most comfortable in.

The shock of the new

Unaccountable, shifting alliances and blocs have always been part of international negotiations. But there is something different about the sheer number, complexity, overlapping membership and competitiveness of these new trade groups. It’s actually easier to find out about Hong Kong’s fifty triad groups than it is to get to grips with the lobbying positions and governance structures of the trade gangs (one of the best efforts is here).

Does the complexity signify that global trade has become an unaccountable, internecine race to the bottom, where G20 countries fight for gains at the expense of the G32, where the European Union halts its in-fighting only for long enough to assault the United States, where corporate lobbyists masquerade as NGOs, and where journalists spend more time photographing picturesque protestors than tracking the real power-play inside the conference? Or can global markets be reshaped in a more responsible way?

The Hong Kong conference’s concluding declaration lacks any reference to “responsibility” or “accountability.” But one of the most interesting sessions of the week was a fringe meeting on responsible business practices convened by Thomas Östros, Swedish minister for industry and trade. The panel of speakers ranged from Cambodia, South Africa and Thailand to Europe, and represented business, government, NGOs and trade unions.

Mary Robinson of Oxfam, Sok Siphana of the International Trade Centre, Iqbal Sharma of South Africa’s Department of Trade and Industry and Ivanka Mamic of the International Labour Organisation joined Neil Kearney of the International Textiles, Garment and Leather Workers’ Federation and Philippe de Buck of the European Employers’ Union to debate the opportunities and challenges of responsible competitiveness.

Away from the mercantilist trade gangs fighting over agricultural-export subsidies, a group of seventy participants shared ideas on how countries, sectors and business partnerships could enhance competitiveness and act responsibly. From Sweden and Cambodia to South Africa and Brazil, the meeting discussed examples of how to win market access not though Realpolitik but by respecting human rights, labour standards and sustainable development.

The trade minister Thomas Östros laid down a challenge – and an opportunity – to the fractured trade gangs of Hong Kong, by calling on “all countries, whatever their levels of economic development, to do more to promote initiatives that further responsible business practices and build competitiveness.” Were those present witnessing the formation of a new, more accountable sort of trade gang open to all: a Group of Responsible Competitors?

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