World Trade Disorganization
By William Pesek Jr.
Bloomberg News
December 18, 2005HONG KONG Here's a temptation I sometimes fight while covering protesters at global trade meetings: joining them. I too am deeply troubled by the widening gap between rich and poor around the globe. Strains put on the environment in the name of corporate profit anger me. Seeing CEOs in developed nations making millions of dollars thanks to developing-world workers toiling for pocket change raises my blood pressure.
After observing events in Hong Kong last week, though, I'm no longer tempted to grab a banner and join activists fighting for economic equality. The reason: many of those shouting outside the World Trade Organization meeting were hurting those they claimed to be helping.
This column is not defending the trade organization - far from it. The protesters in Hong Kong may have been wasting their breath chastising an institution that is collapsing on its own. The problem, they failed to see, is not that there is too much globalization - rather, there is too little.
If free trade and globalization pose difficulties, that is because the regions that need them most are not getting enough of either. Opponents of globalization, however well intentioned they may be, should strive to extend the benefits of free trade and capital flows to the world's poorest nations, not halt them.
Promoting a coherent message is a good place to start. It was hard to find one at Victoria Park, the protest venue of nongovernment organizations.
While Koreans demanded that trade tariffs remain in place, Brazilians called for an end to subsidies.
Westerners from places like Chicago and London carried effigies of starving Africans. Yet, ask some of them if they've been to Africa to determine sentiment there, and they'll invariably say that they haven't. And when you mention that many Africans want more globalization, not less, they accuse you of being a capitalist pawn.
Filipinos and Indonesians representing migrant workers complained that the World Trade Organization forced them to move abroad to make a living. Few seem to realize that their governments are to blame; they like the billions of dollars of remittances that flow back to their economies and fill government coffers.
In addition, there were environmental activists and those campaigning to stop the spread of HIV. Some groups demanded better treatment for women, others wanted higher wages for maids in Hong Kong and Singapore. Some wanted to end the global trade in diamonds, others wanted to save the whales. Some wanted higher coffee prices, others wanted fewer Starbucks outlets. And some came to Hong Kong to denounce the U.S. war in Iraq.
Folks, a little coordination might be nice.
Here's a question for WTO protesters: Is it a coincidence that the nations that tend to be ardently free-trade and those most intertwined with the global economy are the richest? No. That is because until now, the wealthiest nations called the shots, while poorer ones largely fell in line.
Not anymore. Less developed nations are deciding that the problem is not so much globalization as the ability of global elites to make the rules. They are also deciding that no trade deal may be better than a bad one.
Last week's 'development' round "doesn't deserve its name," said Joseph Stiglitz, the Nobel Prize-winning economist.
As chief economist for the World Bank in 1994, Stiglitz spoke out against what was then the Uruguay round of trade talks, with the opinion that they discriminated against developing nations. He also said he thought the current Doha development talks would "almost surely fail" the only test that matters, which is whether such an agreement promotes development in the poorest nations.
Far from seeking to slow globalization, its opponents should be working to broaden it. They should demand that rich nations end trade-distorting farm subsidies.
They also should expose wealthy nations that promise free trade and then use gimmicks and technicalities to avoid it. Rich countries say one thing on trade and do another. The problem isn't the World Trade Organization - it's hypocrisy.
Protests should be directed at governments that circumvent multilateral trade efforts with one-on-one deals. As a result of such pacts, smaller developing economies are left out as the big countries cherry-pick the nations they negotiate with. That could lead to more protectionism, not less.
Bilateral trade deals are all about choosing the most lucrative industries, while avoiding contentious ones. It is no coincidence that Japan's first free-trade agreement was with Singapore, which lacks an agricultural industry. That is why you didn't see Japan scrambling to sign a similar deal with New Zealand.
What might be called the "bilateralization" of trade creates a kind of tunnel vision, where countries pick the low- hanging fruit and ignore the more controversial disputes. Leaders claim that bilateral deals complement multilateral ones, but that is disingenuous. All this could put the WTO out of business sooner rather than later.
Those who protest against globalization have their hearts in the right place. It's just not clear that many know what they're talking about.