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Seattle:  A Failure without Losers

Arvind Panagariya

Talking to the Seattle Post-Intelligencer during his visit to Seattle, Bill Clinton decided to take a long leap from his original demand for a WTO working group on labour standards and proceeded to tell the newspaper that the working group should define core standards, which should then be part of every trade agreement.  “And ultimately,” he continued, “I would favour a system in which sanctions would come for violating any provision of a trade agreement.”  According to many, this statement was the last straw that broke the camel’s back and sealed the fate of the negotiations.

Truth be told, neither Clinton’s statement nor the (un) civil society groups to which it catered did any such thing.  The camel had arrived Seattle with an already broken back.  It was only the United States Trade Representative Charlene Barshefsky who refused to confront the looming failure, painting an overly optimistic picture prior to the conference.  But within a week, as the conference prepared to fold without an agreement, dropping all pretences, she admitted, “We could have stayed all night. We could have stayed for five days. It wouldn't matter: Governments weren't ready to take the lead.”

It may be surmised that Clinton had already sown the seed of the failure in early November when he put on the table the proposal for a WTO working group on labour standards.  One cannot rule out the possibility that this was a calculated move on his part to assist Vice President Al Gore in the forthcoming presidential elections.  If developing countries capitulated and agreed to a WTO working group, he would have positioned Gore favourably in the elections, especially with respect to labour interests.  If not, no WTO round will be launched but he will, nevertheless, still win kudos from the labour lobbies and successfully relegate the contentious trade issues to the background.  After he arrived in Seattle, the insurmountable resistance to the working group from developing countries must have reinforced this view, leading him opportunistically to go a step further and call for eventual WTO provisions for trade sanctions for violations of agreed labour standards.

The Government of India, like almost all other WTO members, is likely to take a sigh of relief at the outcome.  Frankly, given where the round was heading, even pro-free-trade economists such as myself are relieved for the moment: it was better not to kick off negotiations at all than to launch a round that piles up non-trade agendas on to an institution that is specifically designed to address trade issue and, ironically, threatens to reverse the trade liberalization that was achieved in the previous rounds.

The Seattle episode brings both good news and bad news for developing countries.  The bad news is that developing countries can ill-afford to be complacent about their access to developed country markets.  The increasing willingness of U.S. government to lend its ear to civil society groups opens the door wider to interventions by it on behalf of protectionist interests that increasingly disguise themselves as groups pursuing genuine social goals.  The good news, however, is that developing countries are not powerless: they have arrived on the global negotiating scene.  With these countries standing united in opposition, even the mighty U.S. failed to launch a round that would have moved the system closer to bringing labour standards into the WTO.

But we are hardly off the hook and there is little time to be lost rejoicing in having dodged the bullet.  The next two years promise to be especially crucial when fresh attempts will be made to launch the new round, with the United States returning with its labour and environmental agenda.  Developing countries will need to fight the ensuing battle on many fronts.  And India, the key developing country that is also likely to bear the brunt of labour and environmental clauses if they are incorporated into the WTO, bears special responsibility in leading the charge.

At the governmental level, it is essential to strengthen the bridges that got spontaneously built across developing country delegations in Seattle in response to one-sided demonstrations and their mindless endorsement by the United States government.   Rather than limit ourselves to the G-15, we must take lead in forging a wider coalition.  In particular, Prime Minister Vajpayee must initiate immediately an effort to get as many developing country governments as possible to sign a joint statement opposing unequivocally any inclusion of labour standards from future WTO rounds.

We must also actively seek media opportunities to take our message directly to the American and European public.  In this respect, former Commerce Secretary A.V. Ganesan is to be applauded for his excellent defence of the developing country position in a recent article in the Washington Post.  Also laudable are the efforts of Pradeep Mehta of CUTS, a NGO, for informing to the readers of the London Financial Times that, contrary to the impression conveyed in the Western media, as many as 120 million workers around the world actually oppose bringing labour standards into the WTO.

 By the same token, it was disappointing to learn that during the Seattle conference, the Indian delegation passed the opportunity to appear on the influential television program Lehrer Newshour.  The Newshour then invited its Pakistani counterpart to join the European Commissioner Lamey and Brazilian Foreign Minister Lampreia.  It is unlikely, however, that the Pakistani representative carried the same credibility with the American public on issues such as child labour that a representative of the largest democracy of the world would have.

Finally, our own civil society groups bear a special responsibility in this fight.  The ethos being promoted by the U.S. civil society groups is that NGOs around the world speak with once voice:  their voice.  Our NGOs need to articulate the message to the industrial world that even as they support higher labour and environmental standards, they carry a different message.

Economic Times, December 13, 1999