Big stakes in rich countries' new 'free trade' push

December 1, 1999

By Eva Cheng

Headed by the US, the rich countries will increase their plundering of the rest of the world if they have their way in the coming round of world trade haggling likely to take place in the next three years under the auspices of the World Trade Organisation (WTO).

The Third World's chance of a dignified development, its rich bio-heritage, on which the livelihood and the lives of billions depend, and even basic sovereignty will be endangered.

Trade ministers from 135 WTO member countries are meeting in Seattle, on the US west coast, from November 30 to December 3 to finalise the call for the new round and to determine its agenda.

Billed as the "Millennium Round", this new series of negotiations will be more decisive than any of the previous seven rounds since 1947, which took place under the auspices of the WTO's predecessor, the General Agreement on Tariffs and Trade (GATT).

Decolonisation after World War II created an urgent need for a more opaque means of controlling the peripheral economies and ensuring their continued subjugation. GATT was established to tackle this job in the area of trade, complementing the roles of the World Bank and the International Monetary Fund, which used "development loans" and international balances of payments for the same purpose. All three bodies' technical ownership by the majority of countries gives them a fake democratic cover.

Sharks get more teeth

The first six rounds of negotiations dealt with the cross-border sales of physical goods only. However, some industries have been shifting some productive activities overseas, especially the more labour-intensive elements. This contributed to rising capital exports. The explosion of financial speculation in recent years boosted these flows dramatically.

To facilitate capital movements and an ever growing volume of exports, the associated funding, payments and profits need to be managed efficiently. Such activities had to become more specialised. They became the "service sector" — air, sea and land transport, telecommunications, banking and insurance.

To maximise profits, these service providers from the capital exporting countries, which are often part of major manufacturing and exporting conglomerates, need to establish a base in the key overseas markets.

Therefore the rich countries sought to stretch GATT's mandate beyond traditional trade matters (on the pretext that they are "trade-related") during the last round of global trade talks, the Uruguay Round, which started in 1986. This resulted in GATT's extension to services, investment and "intellectual property rights" (IPR).

GATT was also extended to agriculture. This move was aimed by the US at both the Third World and the European Union countries, which have been heavily subsidising their farm exports. US agribusiness will be the key beneficiary. Other US capitalists were the driving force behind GATT's other extensions.

Such an expansion could devastate the Third World. In the name of "equality", any barriers (tariffs or otherwise) to the import of goods and capital, as well as measures to protect domestic industries and jobs, would have to be reduced and eventually removed. But imperialism's historical subjugation has deformed Third World economies, leaving them to struggle with inferior productivity and technology which they cannot overcome because of the big powers' continuing domination. Given such a wide gulf, fair competition between the two camps is impossible.

Yet the WTO was set up in January 1995 to replace GATT, armed with the authority to rule on trade disputes and approve countries "hurt" by rule violators punishing the latter with economic sanctions. Disputes are judged by a three-member panel of dubious accountability.

In reality, this weapon exists only for the powerful economies. They can and do bully the weaker economies into many lopsided rules.


However, due to the grave consequences of the Uruguay Round proposals, many Third World governments resisted. They dragged the talks on for eight years, doubling their scheduled time, and managed to water down some of the harshest requirements. Nevertheless, the key elements were still pushed through.

Because most of these obligations took effect only after five to 10 years for the Third World (slightly longer for the poorest countries), they haven't yet drawn much blood. This is why hopes and efforts have been generated among social movements across the world that there's still a chance to stop and even roll back the implementation of the Uruguay Round obligations.

The steps by the major economies to broaden the "free trade" agenda further through the Millennium Round have reinforced this growing resistance. Having failed to obtain the Multilateral Agreement on Investment (MAI) (a bill of rights for the transnational corporations and capital exporters) through the OECD (Organisation for Economic Cooperation and Development), the EU has made clear it wants to revive the MAI in the coming WTO talks.

The EU is also keen for the WTO to establish rules on so-called competitive policy, requiring that foreign capital obtains no fewer privileges than domestic capital, and government procurement, ensuring such "national treatment" specifically for public works projects.

The US is pushing to dismantle all barriers in the global "cultural market" (covering such products as magazines, broadcasting, books and films) and to force its way into new markets under the deceptive headings of "trade and environment" and labour standards.

Not satisfied with partial success in the Uruguay Round, Washington is also seeking to reopen negotiations on services (only some of the 155 service sectors identified have been tackled), agriculture and IPRs. In addition, both the EU and the US are keen to establish new rules on telecommunications and electronic commerce.

To weaken Third World governments' 1994 opposition to the Uruguay package, the rich countries promised concessions, such as the gradual reduction of their import quotas on textiles and clothing, an important industry in many Third World countries. They also promised the complete elimination by 2005 of restrictions under the Multifibre Arrangement (MFA).

So far, there have been more evasions than real efforts to deliver the promises. The quota reduction not only avoided the items that mattered most, but the rich countries also often resorted to using their residual rights to impose "safeguard measures" (temporary quotas) on products not yet on the MFA lists.

In addition, they have made little more than token effects to reduce the tariffs on textiles and clothing, keeping them at levels way above the average of other industrial goods.

While the powerful economies tried to pry open Third World markets with a crowbar, they preserved their "right" to be exempted from opening their own due to "domestic considerations". Making unsubstantiated claims that Third World countries are "dumping" their cheap products gives them the "right" to counter by increasing subsidies to their own export industries or coercing their competitors into accepting "voluntary" export restraint agreements.

Aware of its clout, the US has been exercising such "rights" most aggressively and vocally, especially sections of its trade law which authorise it to punish its competitors with sanctions unilaterally, regardless of what the WTO might rule.

Not too late

There is little left to sustain any illusions that the rich countries were serious about a real trade-off under the WTO.

Of all the upcoming battle fronts, one deserves special attention: Article 27.3 (b) of the Agreement on Trade-Related Aspects of Intellectual Property Rights is scheduled for review. Through obliging member countries to provide IPR protection for all micro-organisms, and non-biological and microbiological processes for the production of plants and animals, that article, couched in loose terms, in effect permits the patenting of living beings generated from genetic engineering and other biotechnologies.

This blatantly encourages the misguided rush of genetic manipulations with little public accountability. By rewarding genetic engineering with patent (profit-making) rights, it is taking biotechnology down a very dangerous path.

One example of abuse is the moves by Monsanto of the US and Zeneca of Britain to develop "terminator seeds", which are programmed to be sterile in their second generations so that farmers will be forced to buy new seeds every year. The danger of farmers in both the First and Third Words losing their traditional varieties and becoming totally dependent on such seed-producing robber-barons is a real one.

Formally, with a-member-a-vote constitution, the WTO is trumpeted as being more "democratic" than the IMF and the World Bank, which were formed on a-dollar-a-vote charters. In reality, key decisions are made in informal meetings among the key countries, then forced down the throats of the rest, according to a public statement of the Third World Network (TWN) at symposia in Geneva March 15-18.

The statement continues: "The vast majority of developing countries have very little real say in the WTO system. Many lack the financial and human resources to adequately participate, even in the formal meetings, let alone the many informal meetings to which they are not invited."

Only days before the WTO summit, US President Bill Clinton called the governmental chiefs of 30 countries to meet in Seattle while the trade ministers of more than 130 countries, including the 30, are meeting in the same city on the same matters.

The TWN statement adds: "Up to now, the public in WTO member countries have been kept in the dark about the negotiations, and public knowledge even about the existing agreements (and their effects) is most inadequate". A lot needs to be done in this area to strengthen the coming fight back against the Millennium Round.

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