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DECEMBER 17, 1999 VOL. 25 NO. 50
No Compromise
That was the problem that crippled the WTO in Seattle
ALSO IN ASIAWEEK
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Many thought the launch of new global trade talks was too important to be allowed to fail. But collapse the agenda-setting sessions did. Most of the 100,000 activists who descended on Seattle will no doubt claim credit, with some justification. Their riotous protests, which paralyzed downtown and messed up the meeting's opening day, helped propel the WTO onto the radar screens of ordinary Americans. With the nation watching, the Clinton administration was less willing to make compromises that might displease major constituencies, particularly unions crucial to the presidential ambitions of Vice President Al Gore. Says European Trade Commissioner Pascal Lamy, who headed the E.U. delegation: "Many have commented about the influence of the American electoral campaign on the conference . . . I recognize the difficulty for any country to make concessions under these circumstances."
The mess in Seattle will hopefully bring home to the international community, particularly to powerful but intransigent countries, the need to compromise. In particular, the United States must open its eyes to a pattern emerging. In the mid-1990s, the agriculture and services agreements faltered at the eleventh hour because America refused to sign. Last year's selection of a new WTO director-general went several months into overtime and was resolved only after the six-year term of office was bizarrely split between former New Zealand PM Mike Moore, the U.S. choice, and Thai Deputy Premier Supachai Panitchpakdi, backed by Asia.
This year, the U.S. was the toughest customer for China's entry into the WTO, rejecting a generous package of concessions in April and dragging out membership talks long after other major trading nations had given verbal assent. Then in Seattle, "Mr. [Bill] Clinton almost single-handedly scuttled the meeting," says Dartmouth College economics professor Douglas Irwin, who has written a history of trade liberalization, in a Wall Street Journal article. "He insisted on putting labor standards in all agreements and endorsed the use of trade sanctions to enforce them. This put developing countries in a tizzy."
No doubt, all nations will need to yield ground to achieve progress. In particular, more serious efforts to improve working conditions in developing nations under the International Labor Organization, particularly the reduction of child exploitation, can help blunt the appeal of anti-trade activists. (At the meeting, one of the few accomplishments was an ILO agreement on child labor, which Clinton signed.) But the industrialized world clearly has more room to compromise, from outrageous farm subsidies to abuse-prone anti-dumping and textile-import regulations. Moreover, the U.S. economy's unprecedented expansion is testimony to the benefit of more open markets to developed nations themselves. However, if the haves prove unwilling to meet the have-nots halfway, then the WTO may become further polarized and paralyzed. That prospect will become even more likely with the entry of China, which could draw disgruntled nations around it as the leading advocate of Third World interests.
There are fears that the Seattle debacle may doom future negotiations, or that the activists, flush with seeming victory, may get the U.S. Congress to block Beijing's entry into the WTO even after its recent deal with Washington. The benefits to all nations of both new global negotiations and China's membership can hopefully overcome obstacles ahead. On the other hand, advocates of open markets should not underestimate the increasing power of their opponents, who can now organize globally through the Internet. Moreover, with the spread of democracy, free traders will increasingly have to win broad support for liberalization initiatives, especially by taking steps to minimize any adverse impact on the underprivileged and the environment. Even autocratic Beijing needs to go slow on opening up its markets and move fast in weaving social safety nets, to keep unrest manageable as it implements its WTO entry commitments.
So what next? Common sense dictates that long-overdue accords on agriculture and services be concluded before starting new talks. Also urgent is China's entry, which must soon be followed by Taiwan's. To frame the agenda for future talks, developing nations should form a negotiating panel, perhaps under the Group of 24 leading Third World countries, to meet with representatives of the U.S., Europe and Japan. This will help boost their clout and help win broad support for the eventual agenda. Ultimately, however, movement will require give and take all around. Indeed, that's what trade is all about.
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