[Here's Stratfor's take on this.]
STRATFOR.COM Weekly Global Intelligence Update 11 January 2000
China and India Declare War on the WTO
Summary
China and India are championing the cause of developing nations that are members of the World Trade Organization (WTO). India has warned that the "WTO cannot be allowed to become another world government," while China has said that the organization "does not reflect the interests and demands of developing countries enough and clearly has defects." Both nations have called for developing nations to rally together to take a stronger role in the WTO. As major economies of the developing nations prepare for conflict with the developed nations, the efficacy and fate of the WTO are at stake.
Analysis
Speaking on Jan. 10 at the Confederation of Indian Industry's annual Partnership Summit, Indian Commerce and Industry Minister Murasoli Maran called for developing nations in the World Trade Organization (WTO) to join together to counter the influence of developed nations. At a Beijing press conference, also on Jan. 10, the Chinese vice-minister of the Foreign Trade and Economic Cooperation Ministry, Zhang Xiang, criticized the WTO for insufficiently reflecting "the interests and demand of developing countries." Zhang further suggested that China's WTO entry would strengthen the negotiating hand of the developing nations within the organization. With both India and China targeting the WTO, the showdown recently seen in Seattle [ http://www.stratfor.com/services/giu/112999.asp ] is likely to continue, threatening the role of the international body [ http://www.stratfor.com/shakeupimf.htm ].
The WTO is divided between developing nations and developed nations, particularly the United States and the European Union. The battle between these two factions hampered agreement in Seattle last year. India, currently one of the largest economies among the developing nations in the WTO, has called for the uncoupling of labor and environmental standards from the WTO's core focus: trade.
During his speech in New Delhi, Maran called for more time and preferential treatment for developing nations as they worked to integrate with the global economic system. Maran warned, "The WTO cannot be allowed to become another world government." He called for developing nations to resist moves by the developed nations that threaten sanctions to reduce the competitiveness of the developing nations.
Even though it has yet to complete the bilateral agreements that precede membership in the WTO, China, too, has attacked the dominance of developed nations in setting the organization's agenda. China is already setting itself up as a leader among developing nations in countering what it perceives to be the overwhelming influence of the United States in the international organization.
In a Chinese government paper detailed by Japan's Kyodo News, China foresees a clash between the "Chinese-style market economy based on socialism and the interventionist policies of Western countries." China expects that its entry into the WTO will increase the ability of developing nations to "counter large countries and obtain equal rights and interests amid the world economy which has been manipulated by the economic policies based on Western countries' strong-arm politics."
With China and India, both major economies among the developing nations, looking to take control of the WTO agenda, conflict with developed nations - led primarily by the United States - is inevitable. The WTO may well end up perpetually mired in debates between the developing and developed nations, leading to more ungainly compromises, like the sharing of the director-general position [ http://www.stratfor.com/services/giu/050699.asp ].
In addition, if developing nations in support of preferential treatment and state-run economies do take control in the WTO, the United States and other major developed nations may pull back from the organization, leaving it an ineffective bloc of third-world economies with little international influence. Already, the WTO's size and the economic disparities between member nations seriously hamper the institution.
The failure of the recent agenda-setting meeting in Seattle, as well as the difficulties in even choosing a WTO director general last year are clear indicators of the direction in which the WTO as an organization is headed.
(c) 2000, Stratfor, Inc. http://www.stratfor.com/
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