In search of consensus

Print edition : June 06, 1998

Rhetoric aside, the achievements of the WTO ministerial level meeting in Geneva were modest.

IT was designated as an occasion for celebration and commemoration - with room perhaps for some substantive business on the fringes. A half century had passed since the multilateral trading system came into existence as a complex mesh of rules and conventions known as the General Agreement on Tariffs and Trade. It underwent a decisive transformation in 1994, when the loose network of rules was augmented to include areas till then reserved as the sovereign space of national governments. The concurrent transfer of these rules to the formal supervisory jurisdiction of the World Trade Organisation (WTO) created the third in a triad of agencies - the other two being the World Bank and the International Monetary Fund - that will oversee the global economy into the foreseeable future.

The second ministerial meeting of the WTO was by coincidence scheduled to commence just a day after the leaders of the world's seven richest nations concluded their annual summit, with the Russian President in attendance as a concession to the security challenges that his nation poses. Since it caused no gross inconvenience to his itinerary, U.S. President Bill Clinton was a participant, though reluctant, in the WTO meeting in Geneva. Less hesitant about partaking of the occasion in a spirit of serious global debate were two heads of state whose presence on the world stage is a continuing reproach to the world order that the U.S. oversees - Fidel Castro of Cuba and Nelson Mandela of South Africa.

Substance was rapidly overwhelmed by the symbolic clash of political perceptions that the situation promised. Appropriately enough for the global role that the U.S. has assumed since the end of the Cold War, Clinton delivered an aggressive speech, promising to continue his campaign to open up markets worldwide. He cited no specific cases, but affirmed that in an "era of global financial markets, prosperity depends on government practices that are based on the rule of law instead of bureaucratic caprice, cronyism or corruption."

IT was an unintended irony of these remarks that they were framed against the backdrop of political turmoil in Indonesia, one of the closest allies of the U.S. in the Asian region. Since financial turmoil erupted in the South-East Asian economies last year, it seemed only a matter of time before the spillover effects in the political domain became apparent. Indonesian President Suharto's travails, and his resignation following an unsubtle nudge from the U.S., were a cautionary tale of how advocates of the market have a curious tendency to alter their perceptions to suit the exigencies of the moment.

U.S. President Bill Clinton addressing a meeting in Geneva on May 18 marking the 50th anniversary of the WTO. Clinton urged world economies to work fast to remove trade barriers and develop a trading system that pays more heed to the environment and improves the lives of ordinary people.-GARY HERSHORN / REUTERS

The last round of global trade talks, the Uruguay Round, commenced in direct response to U.S. concerns over its burgeoning trade deficit. It took eight years to conclude. Clinton was insistent that the time-frames involved are unacceptable. New negotiations would have to start on the areas that the Uruguay Round failed to address, he said. And these would necessarily have to be completed within a compressed time schedule.

Clinton was generous in offering his home turf as a venue for the next round of trade talks. But he was less so in insisting that issues that have been left aside because they bristle with the potential for conflict, should be brought on to the WTO's agenda. What the preceding Singapore ministerial meet of the WTO had decided, Clinton sought in his speech to undo. Environmental and labour standards, he said, would be integral to any future trade negotiations.

The developing countries rightly view the Western effort to inscribe intrusive labour and environment standards into the rule-book as an effort to neutralise their competitive advantage in world trade. Faced with their resistance, the WTO had decided in Singapore to entrust these matters to two committees, for detailed research and analysis. Neither has made great progress in tackling the multiplicity of issues involved, all of which impinge on zealously guarded sovereign space.

In a recent ruling, the WTO quashed a U.S. import ban on shrimp harvested using nets that fail to protect an endangered species of turtle. The green lobby was upset, and Clinton's speech was a thinly disguised overture to their ruffled sensitivities. His insistence on labour standards, similarly, was little more than an effort to win the favour of the powerful trade union movement in the U.S.

CASTRO and Mandela attracted attention just by being present. The Cuban President's gesture of politeness in applauding Clinton's abrasive speech was also much commented on. It is unlikely that the same media circles would have paid an equal level of attention to the content of his speech. He began by excoriating the U.S. economic embargo against his country and went on to a minute dissection of the coercive tactics that the U.S. had employed to have its way in the Uruguay Round. He deprecated the dollar's status as the global reserve currency, and expressed the wish that European monetary union would set up an effective counter. He called for unity and solidarity among developing countries to protect their vital interests against the growing encroachment of the West. And he urged that the WTO be galvanised by this unity and transformed into a forum for advancing economic justice for all those who have been denied it.

Although similar in content, Mandela's speech was more sober and restrained and directly challenged the comfortable assumption that had underlain Clinton's speech - that free trade is almost axiomatically an engine of economic growth and universal well-being.

South African President Nelson Mandela with Cuban President Fidel Castro in Geneva on May 19.-RUBEN SPRICH/ REUTERS

All the rhetoric aside, the achievements of the WTO meet were modest. As on most such occasions, the assembled Ministers decided that they needed to meet again to resume deliberations on outstanding areas - notably agriculture and services. India insisted on and obtained an insertion into the ministerial declaration of an undertaking that an evaluation would be conducted of "the problems encountered in implementation" of existing agreements, and "the consequent impact on the trade and development prospects of members."

This raises the possibility that certain thorny issues, such as patents and textile quotas, will come up when the WTO resumes its deliberations in September 1998. In failing to enact a set of comprehensive amendments to its patents legislation, India has been in default on a fundamental requirement for WTO membership. But by opening up a broad front India could deflect some of the heat by bringing on to the bargaining table the West's tardy progress on the textile front, and its tendency to clamp down on developing countries' exports on the pretext of curbing dumping.

AN agreement concluded on the peripheries of the ministerial conference, covering electronic commerce - or trade transacted over the Internet - could acquire increasing salience in the years to come. Clinton opened the debate in 1997, with a call for free trade over the Internet. A recent estimate found that in the U.S., over 100 commercial new Web sites are posted each day. With its massive installed base of computing power, the U.S. is ideally situated to start a global offensive to prise open new frontiers of trade.

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