Of tuna, turtles and red herrings [by Martin Wolf]
Concern about the environment, labour rights or even democracy have little to do with global commerce
Few events deserve to be called historic: the agreement between China and the US on the terms for Beijing's membership of the World Trade Organisation should, if it comes to expected fruition, be one.
This accord represents a decision by the middle kingdom to join an international organisation whose kernel is the rule of law. It marks an end, just over a month before the new millennium, to a century scarred by the malign search for self-sufficiency.
Yet victories are never final. The attitudes that motivated the anti-market experiments of this century have not perished: they have mutated, instead. They will be displayed on the streets of Seattle during the WTO's ministerial meeting at the end of this month. There, the self-proclaimed representatives of "civil society" will cry in unison: stop the world, we want to push you all off.
The activists there gathered will agree, passionately, on what they are against: the market; multinational corporations; liberal trade; and, above all, the WTO. This small organisation in Geneva stands for everything in the modern world that they most detest.
Their complaints must be answered, because they express the fears of hundreds of millions of people. The kernels of sense must be separated from the chaff. Above all, it is essential to tackle the extremist charges that the WTO destroys democracy, sacrifices labour rights, ruins the environment, serves only greedy multinationals and creates growing global poverty.
Of these charges, none is as mistaken as the proposition that the WTO is undemocratic. The WTO is not a state - and cannot be judged by the standards applied to states. It is something quite different: an agreement among states.
Such an agreement is necessary because international trade is essential to our prosperity. Throughout the past half-century, the most economically dynamic period in human history, trade has grown faster than output.
Yet trade axiomatically involves the jurisdictions of at least two governments. Which is to hold sway? It could simply be the stronger, but that is a recipe for open-ended conflict and insecurity. Far better, then, to reach agreement on a regime that protects each country from short-sighted and mutually ruinous action by others. Such an agreement would have as its core principles non-discrimination, liberalism and impartial adjudication of disputes. Happily, this is the WTO.
As an agreement among states, the WTO cannot itself be democratic. But decisions are reached by consensus and legislated by parliaments. Any state can also leave if it wishes, but it cannot also expect to receive the protections of membership.
Yet, in truth, the protesters do not care a jot whether the WTO is democratic. US activists complain, for example, that the WTO impinges on their ability to force Mexicans to net tuna or the people of Thailand to catch shrimp in ways that preserve dolphins and marine turtles. Their difficulty then is that the WTO limits the ability of powerful electorates to impose their will on the weak. They believe that all democratic electorates are equal, but some are more equal than others.
Worries about labour and environmental standards follow closely on those about the alleged loss of democracy and - again - the protesters have things upside down. In a world of multiple sovereignties and vast differences in levels of development, wide variations in standards are to be welcomed. Yet this is what activists object to. They complain that political processes elsewhere reach conclusions different from their own.
The imposition of so-called core labour standards will do nothing to improve the plight of the hundreds of millions of desperately poor rural workers in China or India. But nor are they expected to do so. The motivation for linking labour standards to trade is protectionist - it is simply a way of achieving indirectly what restrictions on imports of labour-intensive commodities, such as textiles and clothing, have hitherto achieved directly.
This absence of any evident link between the issues being raised and trade applies as much to the environment as to labour standards. National environmental problems are the concern of those affected. Cross-border problems need agreements designed to remedy the harm at the lowest cost. Neither has anything important to do with trade. The only reason for the link is that strong countries find trade weapons a cheap way of bullying those weaker than themselves.
Again, what makes the observer despair is the hypocrisy. Global warming is, if true, potentially the most significant worldwide environmental threat. The principal cause of this problem is the advanced countries. Yet nobody envisages a global warming treaty enforced by the trade sanctions of developing countries against the US and the European Union. Sanctions are to be used, instead, by the powerful to remedy relatively trivial problems, such as the use of nets that kill dolphins.
Turn to the most intellectually primitive of all allegations - that the WTO regime benefits only multinational corporations (MNCs). One of the most significant changes of the last two decades has been the increased openness of developing countries to foreign direct investment. This is simply because MNCs are the world's chief repositories of economically useful knowledge and skills. All the screaming in the world will not change this. Openness to trade and direct investment is not done for the benefit of MNCs. It is done because the consequences of cutting oneself off have been disastrous.
Last of all, consider global poverty alleviation. Just one region of the developing world has seen big reductions in poverty over the past generation: east Asia. These successful economies share the ability to exploit gains from trade. To complaints that globalisation has gone together with increasing inequality between countries, the answer is: yes - and the explanation is that so many countries were determined not to take advantage of the opportunities offered by trade. This is precisely the unhappy state that the more extreme activists gathered in Seattle hope to recreate.
How then should grown-ups respond? They should listen. They should answer the legitimate concerns that are hidden behind the hysteria. But they must also insist that the move towards rule-governed liberal trade gives the best hope of prosperity to the bulk of humanity. Almost every developing country knows this. This cause must be defended to the bitter end.
Contact Martin Wolf by e-mail on Martin.Wolf at ft.com