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Midnight traders

Tom Burgis
25 July 2005

The G8 summit in Gleneagles, Scotland kept everyone outside the global elite on the other side of the security fence – amateur golfers, part-time protestors, professional poets, and representatives of most poor countries.

Those emissaries from the global south who were briefly permitted to approach the group’s table came from the five richest developing countries or from African states blessed with oil or an especially tasty emerging market. In return for their audience with the mighty, they were required to voice their unqualified desire for a successful completion to the latest round of negotiations at the World Trade Organisation (WTO).

The WTO, the mothership of global trade, will hold its sixth ministerial conference in Hong Kong in December 2005. Like executives subjected to the annual ordeal of the shareholders’ general meeting, the leaders of rich nations, accustomed to sealing deals over “working dinners”, will have to endure the company of their irritating poor cousins. The arm-twisting has already begun in earnest.

One week after the G8 summit ended on 8 July, the British aid agency Action Aid unveiled a report – Bound and Tied: The developmental impacts of industrial trade liberalisation negotiations at the World Trade Organisation – informed by the work of development agencies and economists from the global south, who were still seething from watching the G8 co-opt the goals of Make Poverty History. The report focuses on the stalled Doha development round negotiations, and specifically on “non-agricultural market access” (Nama) proposals to remove trade barriers in everything from diamonds to loafers. It argues that the WTO’s neo-liberal juggernaut is wreaking devastation on the global south.

“(An) aggressive market opening agenda is being pushed by developed nations on behalf of their transnational corporations”, the report claims: “Their ‘developmental’ rhetoric is not being delivered. The public position remains a smokescreen to hide their real intentions” – to force poor countries to stop protecting their fledgling industries from western competition.

The politics of trade

Like pretty much everything in global politics, the sordid pragmatism of the scramble for economic power is conducted beneath an (equally ferocious) ideological struggle. On one side are those who believe that markets work: in a perfect market, everyone’s a winner; the greater the tide of wealth, the more of it trickles down to the poorest. On the other side are those who say a perfect market is capitalism’s Shangri La, about as tangible as the Cheshire Cat, and that the destitute are globalisation’s collateral damage.

Then, of course, there are voters (and, dare we say it, the potent invisibles of the corporate lobby). “It’s obviously the case that we do want market access for European manufacturers to markets in developing countries,” says Roger Liddle, a senior aide to Peter Mandelson, Britain’s trade commissioner at the European Commission.

Liddle argues that selling to emerging middle-classes in the most advanced developing countries – Brazil, India and China – is vital for the future of European manufacturers. “Anyone who disagrees that liberalisation is the way forward will have a lot of explaining to do to a European electorate desperate for new jobs.”

Many in the developing world respond: we are not implacably opposed to opening up our economies – but we would prefer to do it on our own terms.

“Liberalising is good when you can afford it, just like swimming is good when you can swim,” says Martin Khor of the Malaysia-based Third World Network. “The Third World is being frog-marched into imposed liberalisation.”

The pressure for sweeping, prescribed and permanent reductions in import tariffs seems directly to contravene the Doha development mandate, agreed in November 2001, by which developing countries should be asked for “less than full reciprocity” in opening their markets to foreign trade.

When domestic markets collapse, the results can be catastrophic: Côte d’Ivoire, Kenya, Senegal, Ghana, Ecuador and Peru have all seen manufacturing jobs slashed by the removal of barriers. Further, such liberalisation could lead to “de-industrialisation” in the global south, resulting in massive unemployment and inter-generational poverty.

For Khor, the very borders that the WTO seeks to open are relics of empire. If the regions that now form India had not been cobbled into a single state, he reasons, each of them would be poor enough to qualify as a least-developed country (LDC) and thus be exempt from many of the WTO’s more drastic measures. Given its track record, Khor augurs nothing but doom for Hong Kong. “We are not hoping that the WTO will foster development; we’re hoping that it will only damage, not destroy development.”

Bad deal or no deal?

At the heart of the conflict are efforts by developed countries to impose a “one-size-fits-all” model for free trade. The so-called “Swiss formula” for calculating developing-world manufacturing tariff reductions is the only such package under discussion when the WTO general council meets in Geneva on 27 July. Development experts and anti-poverty campaigners argue that, without the flexibility to raise and lower tariffs as they see fit, poor countries will be left at the mercy of the leviathan corporations.

In Seattle in 1999 and Cancún in 2003, the WTO negotiations stalled when ad hoc coalitions of developing countries refused to sign their own farmers’ death warrants. Now, a decade after its inception, the very fate of the WTO could be on the line if it once again fails to reach a consensus on development.

That outcome is a distinct possibility, according to Colin Bailey, a deputy director at Britain’s department of trade and industry (DTI). He confirms that the “Swiss formula” is the only deal on the table, and says that 80% of those who control world trade support it:

“Rejection of the Swiss Formula is not a reality on the ground in Geneva. The only way it will be rejected as a whole is if Doha collapses. That would have significant implications for the World Trade Organisation.”

Tim Rice, author of the Action Aid report, says rich countries – bastions of protectionism during their own industrialisation – are being hypocritical in their demands for greater access to emerging markets. And he points out that, apart from some extra fluff about ongoing negotiations, the current Nama text is identical to that proposed at Cancún.

The official line among many campaigners calls for a “genuine pro-development Doha round”, says Rice; but if the deal does not improve between draft and final text, trade justice campaigners in the north and their partners in the south would seriously consider moving to block any settlement in Hong Kong. “Since 2003, all proposals have favoured developed countries. Developing countries are being ignored in the negotiations. No deal is better than a bad deal.”

Further Links:

World Trade Organisation
http://www.wto.org/

Trade Observatory
http://www.tradeobservatory.org/

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