The WTO at Bay, October 1999

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© Hazel Henderson, October 1999
(844 word count)

“THE WTO at BAY”

by Hazel Henderson

The World Trade Organization (WTO) is apprehensive that its November 30-December 3 meeting in Seattle will be beset by up to 50,000 protesters. Their issues range from human rights and labor standards to environment and the very processes of globalization under the WTO’s model of “free trade”.

These civic, non-profit groups range from the US-based International Forum on Globalization, Public Citizen, The Rainforest Action Network to the Bangkok-based Focus on the Global South, the London-based The New Economics Foundation and even a delegation of Zapatistas from Mexico.

Globalization on the “free trade” model of the neo-liberal “Washington Consensus” economics is colliding with local cultures, national economic sovereignty, social customs and values, as well as traditional agriculture, indigenous rights and protection of biodiversity and the environment.

These clashes go way beyond those on tariffs, trade-rules, non-tariff barriers, the status of eco-labels, social accountability labels such as the SA8000 accreditation on labor standards or environmental standards, including ISO14001 and the EU’s EMAS.

The fundamental issue is the very economic model underlying today’s globalization of technology trade and markets. The critics—from many diverse perspectives—agree that “free trade” which does not account for social and environmental costs and cultural disruption in the price of traded goods and services will continue to cause more harm than good.

The “Washington Consensus” (i.e. The World Bank, the IMF, the US government) and the WTO still refuse to recalculate prices and macro-economic indicators, including the Gross National Product (GNP) to include these social and environmental costs. Neither do they recognize or account for the full value of human and social capital—or the estimated $16 trillion of unpaid work in all countries: volunteering, caring for the old and sick, raising children and housework which supports paid workers and subsidizes the official, GNP-measured half of all economies (UN Development Report, 1995).

Their official view is still that the benefits of textbook-style free trade eventually trickle down to benefit everyone. Their view of pollution is similar: when there is sufficient money-denominated growth of trade and free markets, this will mean higher average per capita incomes. Then, there will be enough money to clean up the mess and, presumably, people will vote for social protection and environmental remediation.

Many now discredit this view of a new kind of Kuznets Curve (in economists’ jargon). They point out that prevention is usually cheaper, more effective and less disruptive than after-the-fact attempts to fix up the damage.

In fact, all world trade in goods is today heavily-subsidized by below-full cost prices, cheap energy and all the taxpayer-subsidized roads, rails, harbors and airports and other infrastructure, which make world trade possible. When more of the social and environmental costs and the taxpayer subsidies are included in the prices, there will be much less world trade in goods.

These below-full cost prices make consumers choose these lower-priced goods over their own home produced, local goods. Often, as huge retail marketers reach into these local markets, small stores and businesses on “main streets” cannot survive. Once they have been put out of business, the global marketers can raise their prices.

The problem is that economists do not use accurate calculations of efficiencies of scale. When these obsolete economic efficiencies of scale truly reflect actual efficiencies of scale (used by engineers and in thermodynamics), it turns out that local and regional production and trade is the most efficient for most goods. World trade would then be largely in services and information, licenses for greener technologies, etc.

We don’t need to ship cakes around—but the recipes instead. This includes agricultural products, to be discussed at the WTO in Seattle. Here global giants, Monsanto, Novartis and others seek to control the world’s seeds and bio-diversity as “intellectual property”. The potentially devastating effects on small farmers is causing a storm of protest—as well as the safety and environmental issues around genetically-modified foods and crops.

A check-list of demands of civic society point to the end of cozy trade negotiations behind closed doors. Rejecting environmental, labor and social concerns as “beyond the competence” of economically-focused trade bureaucrats just won’t wash.

Globalization means the integration of all economies—and their domestic issues within a planetary biosphere. World traders cannot ignore human rights (as they tried at the APEC meeting in New Zealand as East Timor exploded). Neither can they ignore any of the other issues civic society will present in Seattle. Continuing to say, in effect “We are just here at the WTO to make money” just won’t cut it.

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Hazel Henderson’s latest book is Beyond Globalization: Shaping A Sustainable Global Economy, for The New Economics Foundation (U.K) and Focus on the Global South (Bangkok).

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