Apparently the Cancun ministerial conference of the World Trade Organisation has got to such an appalling standstill that they all decided to pack up and go home. And the interesting thing is that what killed it wasn’t EU intransigence on agricultural subsidies, but rather something called the “Singapore issues”; a set of proposals about foreign investment on which the developed world is more or less united. Which is really rather a scandal., but as I argue below, the good thing about the Cancun collapse is that it allows us to get the measure of the character of the WTO as an organisation.
The Cancun round was meant to be all about the rich countries giving something up for the benefit of the developing world. We were going to reduce farm subsidies and let the poorer nations compete in our markets on fairer terms. And as far as one can tell from the outside, real progress was being made on these issues before the round collapsed.
However, lower down the agenda (and off the media agenda entirely, perhaps because it didn’t offer all that many opportunities to bash the French) were a raft of issues grouped together under the name of Singapore because they were discussed there in 1996. There are four of them; “Investment”, “Competition”, “Transparency in Government Procurement” and “Trade Facilitiation”. Of these four issues, the last two are not particularly controversial; what tore the Cancun summit apart were the first two, which India in particular had been campaigining to keep off the agenda for a long time. Here’s a few questions and answers.
What are the investment and competition “issues”?
What are they is a fairly easy question to answer. They’re basically a set of proposals which would have the effect of making WTO rules apply to cross-border investment as well as to trade in goods and services.
What does that mean?
Effectively, that it would become illegal under the WTO not only to place tariffs on trade in goods and services, but also to place any restrictions on investment by overseas corporations, or to have any laws in place which had the effect of disadvantaging foreign companies compared to domestic ones.
Absolutely not. The WTO is the World Trade Organisation, which was set up in order to facilitate trade in goods and services, something which more or less everyone agrees to be a general good. Free mobility of capital and investment is a much more controversial topic, mainly because the legal procedures needed to establish it would be much more invasive of national sovereignty, and because the benefits from liberalising capital flows are much less certain and significant than those from liberalising trade (for example, it’s not really consistent with the existence of nationalised industries, and it provides an easy channel for multinational companies to launch harrassing cases against any domestic legislation they don’t like; to take a hypothetical example, the local Coke bottling plant could launch an action against a free school milk program for unfairly prejudicing their investment1.). This used to be recognised before 1998, when there existed something called the Multilateral Agreement on Investment (MAI), a sort of sister to the WTO which was meant to negotiate, well, a multilateral agreement on investment. But the MAI folded in ‘98 due to lack of support. And a certain coterie of neoliberal types have been trying to bring it in through other means ever since
So anyway, the state of play was that India and Malaysia were dead set against the Singapore “Son of MAI” proposals, the EU, Switzerland and Japan were dead set on them and the USA was happy to let the whole thing fall apart because they were not exactly mustard-keen on getting rid of agricultural subsidies anyway. The Africans decided that they couldn’t wear the Singapore agenda either, and walked out So the entire Cancun talks fell apart.
I say that this provides a useful yardstick to measure the character of the WTO by because it brought face to face the two views of what the WTO is actually for. On the neoliberal side, we’ve heard for years that WTO is all about bringing the benefits of free trade and free markets to the poor of the world and allowing them to gain the benefits of “globalisation”. On the “anti” side, we’ve heard for years that the WTO is nothing more than a cynical exercise in attempting to subvert the democratic process of poor countries and forcing them to accept foreign ownership and control.
In other words, the neoliberals have said it was all about things like the agricultural subsidy proposals, while the antiglobos have said it was all about things like the Singapore issues. And when the two came head to head in Cancun, the Singapore agenda won. When push came to shove, the rich nations were not prepared to give an inch to the poor ones on agriculture unless they got their quid pro quo in the form of progress toward an agenda which has nothing to do with trade and everything to do with massively undermining the ability of democratically elected governments to set the terms on which the ownership of the means of production is decided.
On the basis that you can tell a lot about a person or an organisation from what it regards as negotiable and what it regards as a deal-breaker, it appears that those who suspected that the WTO was a ploy to force a political agenda down the throats of the third world would appear to have a point. It is going to take a heck of a lot for the WTO to win back the credibility it lost in Cancun.
(Finally, let it be noted that China, India and Malaysia, three of the four poster children for the “benefits of globalisation”, were in the group of countries dead set against the Singapore issuses).
1Which is not to say that they’d win such an action, or that the specific Coca Cola company would ever want to do so; Coke actually has a pretty good track record as a corporate citizen in the third world. But the legal framework would be there which would allow such an action to be taken, and lots of companies would be happy to use it unscrupulously.