Free Trade at the Crossroad

The collapse of World Trade Organization talks in Cancun has greatly delayed the negotiations of any new expanded trade agreement. That prospect brought moans from U.S. Trade Representative Robert Zoellick, who blamed the result on a clash between “can-do” and “won’t-do” countries. It also brought cheers from some anti-globalization groups. There is reason to cheer—but not much. With the delay comes hope that a better deal might emerge for developing countries. It also will be tougher for President George W. Bush to push through his Free Trade Agreement for the Americas when negotiations begin this November in Miami. But delaying the WTO negotiations is not likely to lead to a progressive trade agreement that will reduce inequality, favor farmers and workers, protect the environment, and build genuine popular democracy.

The WTO negotiations stalled, in part, because a bloc of 21 developing countries emerged as a new negotiating force willing to stand up to the United States and the European Union, which typically dominate the organization. The G21, along with other developing countries, resisted the agreement because the rich countries offered too little (particularly an inadequate reduction in their dumping of agricultural products at low prices on the world market) and demanded too much (especially a commitment to negotiate rules governing investment, government procurement, competition and trade facilitation).

This round of trade talks was supposed to bring more fairness to world trade. As even former International Monetary Fund Deputy Director Stanley Fischer admitted, “The world trading system is biased against developing countries.” While some developing countries, notably China, have grown rapidly over the past decade, conditions in Africa, Latin America and parts of Asia have gotten worse.

Often the successful countries, like China, have prospered by violating the free trade doctrines of the “Washington consensus”—financial openness, privatization, government austerity and low tariffs—that some of the less successful countries have followed more rigorously. Tanzanian Minister of Industry and Trade caught the mood of the dissidents when he asked, “Do you want us to continue with a multilateral system that does nothing for us?”

At Cancun the United States ignored the demand from four small African countries to stop dumping subsidized cotton on the world market—a practice that depressed the cotton prices their poor farmers are dependent on. According to Oxfam, the United States spends twice as much on its harmful subsidies for cotton exports, mainly for a small number of wealthy Southern farmers, than on aid to sub-Saharan Africa.

Yet simply attacking subsidies for European and American farmers misses the mark. The agricultural systems of rich countries can be reformed both to support reasonable incomes for small farmers and to stop the dumping that undermines world markets. Likewise, encouraging agricultural exports from some developing countries might help them earn hard currencies. But the winners, even in a country like Brazil with its progressive leader, Lula, are likely to be big soybean farmers on former rainforest land and agribusiness corporations employing child laborers in orange groves—not the poor and landless peasants of a group like Movimiento Sin Tierra.

Critics of the WTO may be happy that the G21 blocked the rich countries, but are the leaders of these countries really a progressive force or are they simply reflecting the interests of their own elites, much as United States trade representatives represent American multinational corporate interests? Will the G21, for example, fight for labor rights in a global economy when two of its members are Colombia, where more trade unionists are killed each year than in any other nation, and China, where all worker organizing outside the state-controlled union is ruthlessly quashed?

Ultimately, a comprehensive development strategy must expand the social rights and power of the majority of people in each country. To take advantage of the opening at Cancun, it is more important than ever for the labor and environmental movements to forge political ties with progressive forces in developing countries.