Helping the poor to crash fat cats' party

December 9, 2005

The world trading system is a club for rich nations, says Andrew Charlton, who charts his journey from street protester to co-author with a Nobel laureate

It was 5.30 in the morning but the streets were a carnival of music, street theatre and soap-box debate. This was May 1, 2001 and I was an undergraduate protesting with the broad church of anti-globalisation activists at a rally in Sydney, Australia.

The anti-globalisation movement had come of age at the Seattle meeting of the World Trade Organisation in 1999. The scale of the demonstrations - even the lowest estimates claimed there were more than 40,000 people - dwarfed any previous protest associated with global issues of economics and equality. Seattle was important because it unified various strands of dissent into a coherent protest theme: the dividends of globalisation are being expropriated by the few at the expense of the many.

This was a message that could unite a wide range of progressives from old-style unionists to the new age environmentalists - the slogan on one placard read "Teamsters and Turtles, Together At Last!"

I wasn't the most active or radical protester, and I didn't agree with all the causes that found their way under the anti-globalisation umbrella, but I attended the demonstrations and was excited by what I believed to be my generation's attempt to change our world for the better.

Certainly the movement had problems - not least of which was the horrible misnomer attached to it. The term "anti-globalisation" arose from the movement's initial opposition to free-trade agreements. But in the broader context the term made no sense for a self-consciously internationalist movement. These activists weren't against globalisation, they were globalisation junkies.

Like any protest movement, anti-globalisation couldn't avoid defining itself by what it was against. Its message was too chaotic - too many causes were lumped under the anti-globalisation banner. And perhaps most unfortunate, its demonstrations attracted grubby anarchist thugs out for a punch-up.

But, at a fundamental level, the movement's broad purpose - to draw attention to global inequities - was a powerful one.

At the time I hoped that the movement would be my generation's version of the Boston Tea Party; our Paris 1968; our Vietnam resistance. But as quickly as the street protests came, they were gone. Just as the movement seemed to be building towards a tipping point, the horrible attacks of September 11, 2001, made the world pause. The anti-globalisation movement, which had seemed so unstoppable, became yet another casualty lying in the ruins of Ground Zero.

If the protest movement had an intellectual leader, it was the Nobel prizewinning economist Joseph Stiglitz, who has just been appointed head of Manchester University's World Poverty Institute. Of course, Stiglitz neither agreed with all that the protesters claimed nor adhered to all their causes. And, having worked at the top of the World Bank, he was inside, rather than outside, the global economic elite. Moreover he approached problems with the analytical rigour of an economist, rather than the world-view of an activist. But he shared the fundamental concerns about the trajectory of globalisation and the gross inequities in the world. His book Globalisation and its Discontents burst onto the scene in 2001 and quickly became the standard text for young radicals.

As chief economist of the World Bank, Stiglitz was greatly worried about the imbalances of the last round of world trade negotiations, the Uruguay Round. In an address to the WTO in Geneva, he documented those imbalances and called for the next round to be a "Development Round" to redress them.

The advanced industrial countries responded to the events at Seattle and the broader public mood for a new approach to international issues at their next trade meeting. At Doha, in November 2001, they agreed to begin negotiating a different style of trade agreement with an agenda that they claimed reflected the concerns of developing countries.

But less than two years after the Doha Declaration, it had become clear that the round was seriously off track. In September 2003, the WTO convened another ministerial meeting in CancNon, Mexico. Its aim was to "take stock of progress in the (Doha Development Agenda) negotiations, provide any necessary political guidance and take decisions as necessary". After four days, the meeting ended abruptly without agreement on any of the main issues. Many of the participants in the CancNon meeting felt that Europe and the US had reneged on the promises that had been made at Doha, emblemised by the lack of progress in reducing agricultural protection.

At this time I was working in New York at the United Nations on issues related to trade and development. It was then that I met Stiglitz in his offices at Columbia University. He had just been asked by the Commonwealth Secretariat - the body representing the 52 Commonwealth countries - to undertake a study of the world trading system. After the failure of the WTO talks in CancNon, there were mutual recriminations: the developing countries blamed the developed countries for reneging on their promises. In return, the US blamed the developing countries for turning the WTO into a "forum for the politics of protest" and pledged, if necessary, to eschew multilateralism and pursue bilateral trade agreements outside the WTO with a compliant group of "can-do" countries (presumably trade's equivalent of the "coalition of the willing").

The Commonwealth decided to take a more constructive tack: rather than finger-pointing, it would attempt to assess what a true development round would look like - one in which the agenda reflected the priorities of the less developed countries - and what kind of assistance would be required if these countries were to avail themselves of the new opportunities. I went to work with Stiglitz and his policy institute, the Initiative for Policy Dialogue, on a book that would do just that.

In Fair Trade for All , we argue that a true development round - one that reflects the interests and concerns of the developing world and that promotes their development - would look very different from that embodied in the agenda that was set forth in Doha, and even more different from how matters have evolved subsequently. We came to the conclusion that the so-called Development Round did not deserve its epithet. It failed to prioritise many of the issues that would do the most to promote development in poor countries, and it has included a host of issues that are (at most) of tangential interest to developing countries and, in some cases, detrimental to them.

The world trading system was developed as a club for the rich countries, which were responding to their own domestic business lobbies and building a system tailored to their interests. As a consequence, the system is extremely self-serving: goods from developing countries face tariffs that are four times higher than tariffs on goods from rich countries, and rich countries subsidise their own production of goods that developing countries should be exporting.

In addition, rich countries use their economic power to force developing countries into changing their own policies on public health, human rights, environment and intellectual property. One of the most shameful features of the Uruguay Round of trade negotiations was the imposition of rules that prevented developing countries accessing the generic medicines they need to fight Aids. The world trading system prioritised the profits of drug companies over the health crisis in Africa and prevented African countries from importing affordable HIV/Aids drugs.

The intellectual property system is so corrupt that a US company called Rice Tec was successful in receiving a US patent on "Basmati Rice" - which came as a shock to the Indian farmers who had been growing it for hundreds of years and successfully took their grievance to the WTO. The self-interest of rich countries is glaring. Our book critiques the "market fundamentalism" that endorses the view that a "free" market solves all problems flawlessly and the extreme laissez-faire trade policies that encourage developing countries to reduce their tariffs indiscriminately and throw themselves at the mercy of the "invisible hand" of the market. It shows how one-size-fits-all economic policies can damage rather than help countries.

The good news is that the developing countries are wising up. The word from developing nations' governments is that they are increasingly disillusioned with the round and the broken promises it represents.

This will all come to a head next week when the WTO meets in Hong Kong for the first time since the 2003 disaster in CancNon. Again, the world will be watching developments.

It is likely to be another tense meeting, and it is almost certain to end in disappointment - either through collapse or by agreeing to a lowest common denominator deal that achieves very little. But we hope to influence the debate that follows by showing that there is, in fact, a rich agenda ahead and pointing to a variety of channels through which progress can occur.

Andrew Charlton is a research officer at the London School of Economics.

Fair Trade for All by Joseph Stiglitz and Andrew Charlton is published by Oxford University Press this week, £15.99.

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