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Why we need the World Trade Organization
By: Gerhard Pries Thank goodness for the Battle in Seattle. For the placard-carriers that made it happen, the 1999 anti-WTO protest was a moment of triumph and has since become the historical moment that gives them hope for a renewal of popular movements in the West. For me, while I did not agree with the views of the protesters, it was also a moment of faith renewal - faith that people do raise their voices and that their voices will be heard. A history void of popular uprisings would be far worse. But I did not agree with the views of the protesters. And it is a false triumphalism with which they celebrate, for they did not break the back of the WTO talks in Seattle. Bill Clinton takes those honours. Why do we need the WTO? Bill Clinton's axe on the Seattle WTO discussions is precisely why. Both inside and outside the meeting halls in Seattle, the protesters did their best to bring the leaders of the world to their knees. They blocked the streets, looted shops, and confounded proceedings inside the meeting halls. But the meetings went on. And one by one, the politicians and bureaucrats acknowledged that different voices needed to be heard. And then, nearing the end of the meetings, Bill Clinton arose to tell the US union protesters that he would work for free trade, but that he would not allow jobs to be moved from the USA. Foreign leaders, especially those from the developing world, responded, "Hello? What is free trade if you want to sell products to us, but don't want us to produce for you?" And in a storm of protest, the politicians from these poor countries refused to sign. Good on them, I say. What would free trade be, if it were only for the wealthy? Why does the world need the WTO? Because statistics of the last 20 years show that trade theory actually works. Adam Smith's pin factory workers became wealthier because they specialized and were able to trade with their neighbours who specialized in other products. The same is true of countries. Those that have invited foreign investment and encouraged international trade have benefited not only from internal specialization, but also from international specialization. Has it wrought pain and disruption in the process? You bet. Has the pain been worth the gain? For the world, absolutely. Many of us are sickened by the thought of people working in sweatshops. But, as we saw in Haiti, when Disney's T-shirt factory is removed, the workers end up even poorer. The transfer of jobs from North America and Europe to Low Income Countries may hurt the labourer in Canada, but it benefits a worker in Haiti or in Bolivia. In a country such as Haiti, which has little productive infrastructure to offer to the world, jobs are the first step to bringing in hard currency and creating wealth. With an increasing transfer of low-paying jobs from Canada to Haiti, comes higher demand for workers in Haiti. With higher demand, comes higher skill and higher price. Slowly, the Haitian economy develops to produce not just T-shirts for Disney, but also Internet services for Microsoft. From an international development perspective that is great. As one columnist, writing in Toronto's Globe & Mail during the Seattle protest, points out in his column entitled "In praise of sweatshops," all of the rich countries have gone through this. In order not to minimize the pain, let us recognize that the fear in US and Canada about the potential for lost jobs is real. While the jobs are not lost to the world - in fact, increased trade has the effect of increasing total output and the total number of jobs - they may be lost to specific people in specific instances. Let's also recognize that 'sweatshop' conditions anywhere in the world are inhumane and should be regulated. Perhaps that is where the WTO can help. Why do we need the WTO? To keep Bill Clinton off of the stage. The wealthiest country in the world should not dictate world trade rules. An increase in global trade, resulting from a reduction of trade barriers, is not only inevitable, but also desirable. There are many indications that this does and will continue to support the economic development of poor countries. It is the desire of many poor countries to benefit from this trade that has led to the establishment of democratic institutions and the development of civil society in Latin America and many other parts of the world. In turn, these institutions, this civil society, has led to the reduction of violent conflict, the increase in economic stability, the increase in foreign investment and, in turn, the even greater increase in trade. As public institutions stabilize, as they come into the international arena of economic relations, we are seeing an emergence of global regulatory institutions. The oceans are now a public domain, regulated by global treaties. And there are numerous issue-specific pacts agreed to on an almost-global basis (environment/emissions, nuclear arms, children's/human rights, etc.) that move civil society from a local reality to a global one. For prosperity-for-all to be realized, the world will need to establish strong global regulatory institutions. For some it is scary to hear it, but the world will see the emergence of global government-like institutions over the next 50 years. We need these. They have the potential to bring tremendous benefit to global equity. And it will be the yet-faulty institutions like the World Trade Organization, The World Bank, and International Monetary Fund that will teach us how to forge this path. |
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