A Two-Pronged Assault on the Concept of Free Trade

By Andrea Knox
Inquirer Staff Writer
Philly Inquirer, Nov 26, 1999

Seattle is bracing for a ruckus next week when the World Trade Organization arrives to chart a path toward freer trade in agriculture and services among its 134 member nations. The WTO dignitaries will run headlong into thousands of activists who already are converging on the city for "The Battle of Seattle," a four-day challenge to free-trade dogma in the full glare of the world media spotlight.

Anti-WTO billboards have already gone up. Marches, teach-ins and mock trials are scheduled to start next weekend. And protesters plan to jam the streets Nov. 30 in hopes of wreaking havoc on the opening day of WTO deliberations. The protest movement "has gathered a head of steam and will arrive in Seattle like a big locomotive," said Dan Seligman of the Sierra Club.

The protesters, who predict that their ranks will number between 20,000 and 50,000, could far outnumber the meeting's 3,000 official delegates and observers - high-ranking officials and functionaries from member nations and about 30 nonmember nations. Even without this cauldron of controversy on the streets, the WTO's mission in Seattle would have been thorny enough. The purpose of the meeting is to set the agenda for new trade talks to begin next year.

But despite broad agreement to bring agriculture and services to the table, members are at odds over almost every specific issue and show little inclination to compromise. The splits are so deep that the WTO's director-general, Mike Moore, has warned that the meeting could be headed for failure. Formed five years ago to monitor global tariff reductions and settle trade disputes, the WTO operates on the premise that free trade is essential to promote economic growth and bring the benefits of economic development to all countries.

When it was formed, member nations signed treaties that provided tariff reductions on manufactured goods, stronger copyright and patent safeguards, and freer cross-border movement of services. By setting "rules of the game that will be enforceable," the WTO has contributed to growth in world economic prosperity, said Elliot Feldman, chairman of the international trade group in the Washington, D.C., office of Pepper Hamilton L.L.P., a Philadelphia law firm.

That world trade benefits everyone is increasingly challenged by critics who contend that free trade is bad for jobs, the environment, national sovereignty, and the economic health of developing nations. "Free trade really means eliminating the laws that restrict multinational corporations," said Michael Morrill, executive director of the Pennsylvania Consumer Action Network in Reading. He organized a cross-country whistle-stop bus tour by 16 anti-WTO activists from developing countries who will reach Seattle in time for the meeting.

The United States wants the next round of negotiations to focus narrowly on agriculture and services, while the European Union is seeking a broad-ranging agenda including investment and competition policy. The United States is also under pressure from unions and environmentalists to negotiate agreements that would treat poor working conditions or low environmental standards as unfair trade practices, a move adamantly opposed by developing nations.

U.S. Trade Representative Charlene Barshefsky will head the U.S. delegation; President Clinton and several Cabinet members are expected to attend some sessions. Many developing nations want to reopen some parts of previous trade treaties, a demand that has so far been stoutly resisted by the United States. This dissension may explain why the United States worked so feverishly to conclude last week's trade agreement with China, which paves the way for China's entry to the WTO, Feldman said. "I think that was to give President Clinton something to take to Seattle," he said.

Though China is not likely to dominate discussions in Seattle - to be admitted to the WTO, it must conclude similar agreements with all member countries - the agreement could improve the mood, said Geza Feketekuty, a former senior U.S. trade official who teaches commercial diplomacy at Monterey Institute in Monterey, Calif. "The atmosphere has been so bad that anything cheerful will give a positive fillip to the whole process," he said. Feketekuty, more optimistic than Moore, said he expected that members would come away from the meeting with at least a bare-bones agreement on a negotiating agenda.

Broadly, the interests of various parties break down this way: The United States would like to see the negotiations wrapped up in three years and is pushing to limit the talks to a few clearly defined issues. These include reducing agricultural subsidies and tariffs, and guaranteeing that Internet commerce remain untaxed. The United States also wants food exports to be covered by existing protocols, a move that would force other countries to accept hormone-fed beef and genetically modified crops.

Europe, which pays huge agricultural subsidies and faces farmers' revolt should subsidies be lowered, wants to discuss agriculture only in tandem with other issues. "They are saying that they need some wins in investment and competition to sugarcoat the bitter agricultural pill," Feketekuty explained. Europe is backing restraints on the right of countries to apply antidumping sanctions - taxes or quotas on imports that allegedly are being sold below cost - without WTO approval. This measure is aimed squarely at the United States.

Though the developing countries are hardly a homogenous bloc, many share a feeling that benefits promised in previous tariff-cutting negotiations have not materialized, said Martin Khor, director of the Third World Network, a coalition of nongovernmental organizations with headquarters in Malaysia. They are pressing for the next round of negotiations to revisit these issues.

These nations charge that developed countries have not lived up to 1994 promises to open their markets to textile imports, and have not fairly reduced their subsidies on agricultural products such as sugar and orange juice that compete with products from developing countries, Khor said. The developing countries also worry that their 1994 pledges to reduce agricultural subsidies starting in 2000 will devastate their farmers and their ability to feed their people. They want the deadline extended.

Though the arguments are couched in economic terms, the major strains and stresses within the WTO are fundamentally political, said Eugene A. Kroch, professor of economics at Villanova University. Congress has been suspicious of the WTO because it can declare any member state - including the United States - to be in violation of international trade treaties and subject to sanctions.

Other WTO members are equally concerned that "the vision the United States has is not of a world economy, but of [using the WTO to make] the entire world its marketplace," Kroch said. Europe, with its ossified labor market, where unemployment is high and few jobs are being created, resists freeing up its markets "because free trade doesn't protect jobs, at least not in the short run," Kroch said. In fact, he said, only the United States and Britain really believe in free trade and global competition, while other nations are more protective of their markets.