A WTO with New Visions?

by Dr. Christian Friis Bach

This paper is the last chapter of the booklet The Global EU written in year 2001 by Dr. Christian Friis Bach, who is a Professor in International Economics at the Royal Veterinary and Agricultural University in Copenhagen, Denmark.

Christian Friis Bach was for decades the head of the Danish non-governmental organisation "Mellemfolkeligt Samvirke" (in English: International Cooperation), which organization currently was, and still is, scrutinizing social and economic life in many countries around the globe. The MS publishes in Danish the monthly magazine Kontakt and several other publications. Further the organisation works locally in developing countries on practical aid programmes in cooperation with local organisations. Further information about the organisation is to be read on the Internet at the website address www.ms.dk/

The foreword of the booklet is written by the former Danish Minister of the Environment, Mr. Poul Nielson (Social Democrat), who for many years has been a member of the European Commission, and Commissioner for Development.

The booklet (43 A4-pages in English) is readable on - or can easily be downloaded from - the Internet-address www.theglobaleu.dk/

O L

This small booklet makes an attempt to draw a picture of the future development in the World Trade Organization (WTO).

The WTO is a unique organization because it contains binding rules, and because the organization with the system of disputes settlement and collective sanctions has moved a long way towards establishing a global state of the law.

There are two scenarios for the future WTO. Either the WTO continues as a narrow co-operation on trade barriers without visions and with an agenda that is detached from – and often in contradiction with – the desire for sustainable development. Or the course is set towards “The global EU” with social improvements, environmental protection and security policy as key issues.

If we choose the latter, there are several things to learn from the EU process. Firstly, it is obvious that it is necessary to create a broader vision for the WTO, and that it is urgent to incorporate sustainable development and security policy in the international trade negotiations.

Secondly, we can learn how the economic agreements can be used as lever for a stronger political construction, and how the most important argument for free trade is political. Free trade creates the necessary political pressure that forces countries to co-operate. If countries are allowed to use trade barriers as they wish, then the will to engage in global negotiations will vanish – and we will experience a nationalistic and protectionistic back clash.

However, this strategy is not without risk. In the EU there was a time lag of several years after the free trade regime (the Common Market) was in place and before the development of common rules and standards gained momentum. In the WTO with a far larger number of member countries and many more different interests, there is a risk that the process might be delayed by several decades. In the meantime, we run the risk of being left with a neo-liberal construction that could cause damages.

This risk is particularly great as the development towards “The global EU” is seriously hampered by the fact that large parts of the social democrats, the left wing, trade unions, environment, development, and consumer movements continue to be reluctant towards free trade and towards the WTO. This tendency is even more visible in the US and in many developing countries where the left wing has a nationalistic strategy and rejects both free trade and the WTO.

When it comes to issues like globalisation and the WTO, the political spectrum is not a straight line from left to right but rather a circle in which the extreme left wing stands shoulder to shoulder with the extreme right wing and – consciously or unconsciously – ends up in supporting nationalistic and protectionistic currents.

However, if the global strategy is to succeed, the left wing actors must stop fighting against free trade and for national self-determination. Instead the combined energy should be used in a global struggle for global, binding rules for human rights, social redistribution, labour standards, and environmental protection.

Moreover, the European right wing should stop behaving as if they were members of WTO’s fan club and uncritically accept the erroneous claim that any kind of liberalization is good.

They fail to recognise that there is a need for strong national, regional and international rules to ensure that the benefits accrue to everybody and that the destructive forces of globalisation are tackled.

As such, the old claim that all problems of developing countries stem from international trade and unequal exchange is just as wrong as the new claim that international trade and market access will offer developing countries a quick and efficient salvation.

The success of a strategy towards “The global EU” depends critically on whether the political parties can establish an active and global political response towards the problems of globalisation and the negotiations in the WTO. The global issues receive far too little attention in most countries and the political parties have not managed to create a global political alliance that could act responsibly in the WTO, the World Bank, the IMF and other global organisations.

However, new alliances are beginning to develop between organisations, consumers, companies and politicians that recognise that the negative sides of globalisation can only be tackled through a strong and binding global co-operation. Apart from this, the process has been hampered because neither the EU nor the US has yet realized that they cannot anymore do as they wish or decide what the want. Through their current approach to the WTO agreements and decisions, the EU and the US are undermining the future of the organisation and the possibility of incorporating new issues on the agenda.

Only the EU can take the lead in building a “global EU”. But the European agricultural policy, the reluctant and lacking implementation of the previous WTO agreements and the many bruises from the WTO cases on bananas and hormones prevent the EU from playing a leading role in a more visionary strategy in the WTO.

This leads to yet another lesson learnt from the EU. Namely, that free trade only works as a lever for better international agreements and standards if the negotiations comprise many issues and are closely linked to ensure that all countries benefit. As it stands today, the international negotiations are all too fragmented and confusing.

This must be changed. The global rules on labour rights and environmental protection should be linked into the WTO and new rules on redistribution (development aid), competition, taxing, investments and many other aspects should be added.

This should not be done to take these issues “away” from the UN system. On the contrary it would strengthen the UN and create a positive synergy between the UN and the WTO. This is what has appeared when it comes to food standards.

Finally, as the last lesson learnt from the EU, it must be ensured that there is a far greater political openness, dynamism and democratic anchorage in the WTO negotiations through greater involvement of parliamentarians and NGOs. If this is not achieved the resistance towards the WTO reform agenda will continue to grow, and in the end this will undermine any efforts to use the WTO as a platform for fighting a social and environmental agenda. If the development towards “The global EU” is to become a reality, it must also lead to marked changes in the construction of EU. A simple employment of the principle of subsidiary reveals that a range of decisions taken in the EU ought to be transferred to global plan. An example is food standards where the EU should use more energy on global food standards in Codex Alimentarius and less on specific food standards in the EU.

Another issue is agricultural policy where a global framework should be developed in the WTO and where the actual implementation should then be left to the individual member states. Left is only a marginal role for the EU. The principle of subsidiary should be used “upwards” to strengthen the international society and not only “downwards” to strengthen the competence of the nation states. The struggle for social and environmental standards must not end at the borders of Europe.

In this respect, there is a danger that the great efforts to build the European construction will become an obstacle to the global construction. Approached wrongly regionalism, which I otherwise believe is an essential element in building a global construction, can become a stumbling stone instead of a building block. There is a danger that the EU will become self-centered and self-sufficient. On the other hand, it is only the EU – in co-operation with a broad coalition of development, environment and consumer organizations, trade unions and progressive companies – that can set a different and visionary agenda for the future negotiations in WTO. It is about time it happened.

The road towards “The global EU” is narrow, difficult and dangerous. But there is no alternative. The problems of globalisation will not be solved by the free market – nor by the nation state alone.

The reader's comments are very welcome. Please send a letter to the International Georgist Union, 212 Piccadilly, W1J 9HG, United Kingdom, or e-mail to iu@interunion.org.uk