WTO: thus far and no further?

The sands of time seem to be running out fast for any further progress for the World Trade Organisation. Stalled at Seattle in 1999, the so-called Development Round ran into trouble again at the later ministerial conference in Cancun. Unfortunately for the advocates of further progress on the free trade front, fine words have not been translated into positive agreement. The reality is that the breakdown between the developed and the Third World states which first occurred at Seattle has not been repaired.

Despite cosmetic modifications, agriculture remains heavily subsidised in the First World, which continues to raise punitive tariffs on the exports of the Third World. The outgoing WTO director-general, Supachai Panitchpakdi, commented on his departure from office this summer that the talks appeared to be heading for failure. While the leaders of the G8 nations paid lip service to the notion of eliminating the $300bn they hand to their farmers each year, little concrete has been done to implement their fine words.

But there are other factors apart from the friction between the First and Third Worlds. The sudden emergence of China (and, to a lesser extent, India) as a major force in international trade has suddenly put a brake on the enthusiasm of the West for a headlong rush to general liberalisation. Now it is becoming clear that what Europe and North America had in mind was one-way traffic. Look no further than the American reaction to the $18.5bn bid made to the Chinese company Cnooc for the US oil corporation Unocal. Despite assurances given by the Chinese company, in which the Chinese Government holds a majority interest, so hostile was the political opposition to the proposal in the United States, that Cnooc withdrew its bid. Meanwhile, in Britain, the Chinese have come in for the remnants of MG Rover, and show interest in other areas of the British economy. The recent “bra wars” spat between the EU and China, where trade commissioner Peter Mandelson was caught in the crossfire, is highly significant. On taking up his post, Mandelson delivered an emotional panegyric on the virtues of free trade, to coincide with the ending of the former MFA quota system for textiles. Although several forecasts were in existence that this would lead to China securing up to 50% of the world textile trade, MFA ended, but, within months, new quotas were imposed to protect EU manufacturers. The recent hastily cobbled interim agreement is just that. Either the EU will revert to protectionism, or its textile industries will be finally wiped out.

Increasingly, commentators are suggesting that globalisation as a geopolitical ideology is finished. An excellent primer on this point of view is The Collapse of Globalism by John Ralston Saul (Atlantic Books). He argues that a growing vagueness now encircles the original promise of the global ideal, which had originally been propounded with an almost religious certainty. Instead of surrendering or sharing sovereignty, in his view governments and citizens are reasserting their national interests. It is now doubtful that economics will determine the course of human events, rather than politics or even armed struggle. He concludes that there is little evidence so far that growth in international trade can foster prosperous markets which, in turn, will convert dictatorships into democracies. As he points out, African debt, the AIDS epidemic, and resort to fundamentalism and terrorism all perversely refuse to disappear. Even those who do not agree with his views on international trade will find this a stimulating and thought-provoking read.

Gavin McFarlane of Temple Chambers, Cardiff.