Globalization is a hot topic, and the World Trade Organization (WTO) is feeling the heat. While the protests in Seattle did not cause the trade negotiations to collapse, they certainly did not help; neither did the unprecedented revolt by developing countries against a process that excluded them from negotiating rooms and a global trading system they view as unfair. Of course, the primary reason the talks failed is because major trading partners could not agree on their priorities.

"People do not want to be looked after; they want to participate." - Secretary-General Kofi Annan

The United States pushed for the addition of core labour rights to the WTO's agenda and resisted calls to ease its anti-dumping rules. Developing nations said labour standards could be used as a protectionist tool to exclude their exports. The United States, the European Union and others disagreed on the issue of farm subsidies. All told, the trade delegates' failure to reach agreement on launching the next round of trade talks is a major setback for the WTO. It is also a wake-up call.

Things are changing. Corporate power and people power are stronger than ever. In the past 10 years, global market forces have been unleashed by reformed regulatory systems, privatized assets and liberalized trade and foreign investment. Transnational corporations (TNCs) -- a driving force of globalization -- wield more power than ever. They now produce one fourth of the world's total output, which is 5 per cent more than the output of all developing countries combined. And TNCs are increasingly forging strategic alliances to consolidate their power. Also, their direct investment in developing countries is now the single most important source of external finance, overshadowing inflows from official aid and exceeding net lending by international banks.

"Failure to reach agreement on launching the next round of trade talks is a major setback for the WTO. It is also a wake-up call."

In Seattle, an estimated 30,000 protesters rallied against corporate control, secrecy in trade decision-making, environmental destruction, genetic engineering and the patenting of life forms, job insecurity, exploitative labour practices and growing inequality, to name a few issues. They targeted the WTO because it is viewed as an agent of globalization that has the power to make important decisions and enforce them.

Developing countries are also concerned about globalization and the WTO, and they came to Seattle with concrete proposals to make trade work for them. While the United States and Europe pursued a broad round of talks on new issues such as investment, electronic commerce, competition policy, and labour and environmental standards, many countries in Africa, Asia and Latin America sought a "development round" to review implementation of some Uruguay Round agreements that were reached between 1986 and 1994.

After two decades of the Tokyo and Uruguay Rounds, the vast majority of developing countries have ended up with 3 per cent more trade deficits than in the 1970s and 2 per cent less economic growth. Even major financial institutions seem to be convinced that the multilateral trading system is imbalanced and that action should be taken to enable poor countries to reap the benefits of globalization. In Seattle, the heads of the WTO, the International Monetary Fund (IMF), the World Bank and the United Nations joined the developing countries in calling for a "development round" of trade talks. The IMF, the World Bank and the WTO issued a joint statement saying, "trade and trade policy reform must be made more effective tools for poverty reduction".

They pledged to increase their support for countries to use the opportunities offered by the global economy as key elements of their strategies for poverty reduction and development.

Reducing poverty has become a priority for the United Nations and the Bretton Woods Institutions, and this is reflected in their internal reforms. Rightly so. Half of all people live on less than $2 a day. The gap between the richest 20 per cent of humanity and the poorest 20 per cent doubled between 1940 and 1990. Furthermore, it has become clear in the past few years that free trade and global market forces are not closing the gap between rich and poor. On the contrary, during the 1990s as the pace of globalization accelerated, "the income gap between the developed and developing countries has grown wider, and the prospect of marginalization is becoming increasingly real", said the Group of 77 developing countries in a recent assessment of the situation.

WEDO Photo/Rosa G. Lizarde

Activists, not just corporations, are transnational. Thanks to the Internet, they mobilize rapidly and efficiently, and issues like trade, which used to be addressed behind closed doors, are now public. Suddenly everyone is a stake-holder and the spotlight phenomenon of public attention is unavoidable.

Developing nations are convinced they need differential and more favourable treatment in order to advance in the global economy. Their domestic producers now face greater competition from large multinational corporations. Before he died, former President of the United Republic of Tanzania Julius Nyerere compared the world trading system to a boxing ring. "If I get in with Mohammed Ali, I will get knocked out", he said. To level the playing field, developing countries have been calling for better terms of trade, increased investment and technology transfer, and expanded technical cooperation, capacity-building and trade infrastructure.

Poor nations are also concerned about the procedures of the WTO. Many trade delegates feel they are second-class members, especially after Seattle where they were excluded from key informal negotiations. They also view the membership process with suspicion. The challenge for many of these countries is adjusting to the economic openness that admission brings and carrying the administrative burden of changing so many policies in a short period of time. Some nations cannot afford to make the effort without external aid.

In his statement to the WTO meeting, UN Secretary-General Kofi Annan emphasized it was up to the WTO and its members to ensure that developing countries benefit from free trade. He urged greater market access for developing-country exports in which they have a competitive advantage, such as textiles, footwear and agriculture. He also pointed out that farmers in the third world cannot compete with agricultural interests in industrialized countries, which now receive some $250 billion a year in subsidies. The benefits of reducing trade protection measures, he said, could increase exports of developing countries by "many millions of dollars per year, far more than they now receive in aid", while costing the rich countries very little. For millions of poor people, the Secretary-General argued, "this could make the difference between their present misery and a decent life". Mr. Annan also pointed out that the tariffs rich countries impose on developing countries' imports are now four times higher than the ones they impose on products from other industrialized countries. Therefore, he concluded, it was not surprising that many developing countries "feel they were taken for a ride". He also said it was "hardly surprising" if developing countries viewed arguments for using trade policy to advance various good causes as "yet another form of disguised protectionism".

At the WTO Ministerial Meeting, James D. Wolfensohn, President of the World Bank, outlined five areas for priority action: Expand market access for all exports from developing countries; Reduce agricultural protectionism in high-income countries; Work collaboratively to support the capacity of the poorest countries to participate in international trade negotiations; Anchor trade liberalization firmly within the wider context of the global development effort; Make trade liberalization work most effectively for the poor.

"My own sense is that if you try to tag all these things onto trade negotiations, it is going to be extremely difficult, if not impossible", Mr. Annan told journalists in December after the Seattle meeting. Instead, he argues, "corporations operating around the world need not wait for the local government to apply these standards which their own Governments have endorsed. You do not have to have a national law to pay your staff a decent salary. You do not have to wait for a national law to respect the human rights of your workers; they should do that as a matter of course."

A year before Seattle, in January 1999, Mr. Annan told business leaders at the World Economic Forum in Davos, Switzerland: "We have to choose between a global market driven only by calculations of short-term profit, and one which has a human face. Between a world which condemns a quarter of the human race to starvation and squalor, and one which offers everyone at least a chance of prosperity, in a healthy environment."

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