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12 February 1999

Dodging the paupers’ custard pies

Resentment of the World Trade Organisation is growing among the world's poor, warns John Madeley

By John Madeley

When the head of the World Trade Organisation (WTO), Renato Ruggiero, strolled out of the august premises of the Royal Institute of International Affairs, in London’s elegant St James’s Square last October, some most inelegant objects hurtled their way through the air in his direction. The smile on the ebullient Ruggiero’s face disappeared as protesters successfully pelted him with custard pies.

The protest was the tip of a largely unreported iceberg. The policies of the World Trade Organisation have sparked huge worldwide protest. At stake, in the eyes of critics, are questions such as: why is the free-trade dogma of the WTO being allowed to rule the world? And why are the effects of its policies on the livelihoods of people in developing countries being ignored?

The WTO’s free-trade rules have led to the US threatening sanctions against the EU because of its banana policy. Further conflict looms over hormone-treated beef: concerned that hormones might be a health risk, the EU has banned the import of hormone-treated beef; the US countered that this was a restraint on its trade. The WTO has set a May deadline for the EU to lift the ban, showing once again the muscle-power of US commercial interests.

The influence of business is not confined to US boundaries, though; everywhere, transnational corporations are urging governments rigidly to apply those rules because it helps their globalisation plans.

While transnationals increase pressure on governments, worldwide opposition to WTO ideas is growing apace. Non- governmental organisations, mostly from developing countries, formed “a global alliance of peoples’ movements” last year to co-ordinate resistance against free trade, globalisation and the WTO. The alliance includes Movimento Sem Terra (Movement for the Landless) in Brazil, the Karnataka State Farmers’ Association of India, the Movement for the Survival of the Ogoni People, Nigeria, and a Spanish-based organisation, Play Fair Europe!

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The WTO itself has had to wake up to its unpopularity. When ministers from its 132 member countries held a meeting in Geneva last May, 10,000 people gathered outside the United Nations building for the largest demonstration the UN has seen for years. If the likes of Clinton, Blair, Castro and Mandela – all of whom were attending the meeting – were kept well away from the rumpus outside the conference hall, the demonstrators still got their message across.

Activists from India spoke of the hundreds of thousands of Indian farmers fighting WTO rules, of how globalisation, especially lower tariff barriers on food imports into the country, has severely damaged livelihoods and driven many to suicide.

Sarath Fernando of the Movement for National Land and Agricultural Reform in Sri Lanka said that “globalisation is destroying millions of livelihoods . . . The alternative is for us to fight back for our survival.”

“We want to tell the governments that they are destroying humanity with these policies,” said Alejandro Demichelis of the Confederation of Education Workers in Argentina. Another campaigner claimed the rise of opposition to WTO policies prompted activists to speak of “the first flutter of a new global social movement”.

The WTO vision is clear – global governance, based on free trade. It is to be free trade, not the democratically expressed wishes of electorates, that governs. In such a system it would be the most powerful “actors” in the world trading system who rule – in practice, transnational corporations. In the “new global age”, democratically elected governments would be subservient to unelected transnationals.

The policies that thousands are now opposing were effectively summed up by Renato Ruggiero at a meeting at London’s Chatham House in January last year: “We stand at the very beginning of a whole new phase of internationalism,” he said. “We are living through a time of deep and rapid transition towards a very different world. This year . . . we have an occasion [the 50th anniversary of the multilateral trading system] to send a positive message about the reality of global transition, but also about the unprecedented opportunities this offers, an opportunity to reaffirm our political will to move towards a better system of global governance . . . shaping the institutions of an increasingly borderless economy . . . The great promise of the new global age demands nothing else.”

The World Trade Organisation came into being following the conclusion of the Uruguay round of trade talks in 1993. The talks, organised by the General Agreement on Tariffs and Trade (Gatt) – not just an agreement, more an organisation – radically reduced international trading barriers, cutting them by an average of 40 per cent. It also swept away the right of countries to keep measures that stipulate, for example, that a foreign investor must use local labour or supplies.

Why? Because such constraints might interfere with investors’ ability to buy their labour and supplies in the cheapest possible market. Nothing must stand in the way of free trade.

The promise held out by unfettered free trade and globalisation is one of “jam tomorrow”: that all will eventually be better off under such a regime. But the failure of this philosophy – held by classical economists down the ages – is seen today in the faces of the more than one billion people in the world who exist on less than a dollar a day. Globalisation means that the weaker members of the global society – peasant farmers, for example – are plunged into the same economic stream as transnational corporations. There is no competition.

Soon after the nameplate on Gatt’s offices on the shores of Lake Geneva was replaced in 1995 by “World Trade Organisation”, the thinking of the new body began to permeate into negotiations for other agreements – like the Multilateral Agreement on Investment (MAI). The MAI would have handed enormous power to foreign investors, mostly transnational corporations, without any corresponding responsibilities, making it illegal for governments to veto the corporations’ projects, no matter how ecologically or socially destructive.

The agreement aroused a huge storm of protest from the “new global social movement” and has been dropped, at least for the time being. But a measure now before the US Congress, the African Growth and Opportunity Bill, would, if approved, remove all restrictions on foreign investment and effectively prohibit African governments from regulating transnational corporations.

The WTO rules were also invoked by European Union members who sat down recently with the 71 countries that make up the African, Caribbean and Pacific group. Under the Lome Convention on trade and aid, those countries get preferential access for their products in European markets. The convention expires in February 2000, and the EU representatives insisted that it had to change – because it did not comply with WTO rules.

The African, Caribbean and Pacific countries were furious. “The WTO is not the master but the servant of human welfare,” said Billie Miller, deputy prime minister of Barbados. “Negotiations must not be conducted as if WTO rules are written on tablets of stone. Rather, the rules should be applied on the basis of flexibility, to make them compatible with the basic objectives of development. If not they will have to be revisited.”

Ministers of developing countries are therefore beginning to talk of “revisiting” the WTO rules. Developing countries make up three-quarters of the WTO’s member states, which gives them the power to put through changes if they wish.

The European Union has also shifted its position on bananas to comply with WTO rules, although not far enough in the view of the United States. The WTO has a “disputes settlement” procedure, which rules on disagreements between member countries. Last year this procedure upheld a US complaint that EU policy discriminates against American banana companies, such as Chiquita Brands. This was highly revealing; it showed just who counts with the WTO – certainly not Caribbean banana growers.

For transnationals, the international trade system created in their image is no longer a corporate dream but a reality, as a recent publication, Towards a World Transnationals’ Organisation?, shows: “The enormous interest that transnationals have in the WTO,” writes Myriam Stichele, “is expressed in their growing influence over decision-makers on all WTO matters.”

While it is government ministers and officials who conduct business at WTO meetings, representatives from major corporations are usually there to lobby for decisions which help their business; indeed, they are often part of official delegations.

At the end of October, when protesters pelted Renato Ruggiero with custard pies, he tried to placate critics by talking about the environment, but this only underlined how much the WTO is misreading popular feeling. It is not chiefly the environment that the new movement is concerned about, but rather democracy and the damage to people’s livelihoods.

Ruggiero completes his term of office at the WTO in April. Candidates from Canada, Morocco, New Zealand and Thailand stand next in line. Probably the only hope of changing WTO policy, and making free trade compatible with social and economic development, lies in the appointment of a third-world candidate with a reforming agenda. The US and the EU could oppose but not block such a candidate. For all its faults, the WTO has a one country, one vote decision-making process.

But as the weaknesses of globalisation become apparent, it could even be smart for western politicians to recognise the need for change, a need which arises because the poorest, most vulnerable people are most at risk from existing WTO rules. “Jam tomorrow” is no option for people who could be dead tomorrow. The “first flutter of a new global social movement” may mean that the next head of WTO will spend a great deal of time dodging custard pies.

John Madeley’s “Big Business, Poor Peoples”, about the impact of transnational corporations on the poor, is published in June by Zed Books, £13.95