What Now? New Zealand and the WTO

The collapse of the WTO Ministerial Meeting in Seattle is further evidence that this central pillar of economic globalisation faces terminal paralysis.

Treated by its cheerleaders (and some of its opponents) as omnipotent, and driven by a combination of ideological fervour and major power self-interest, the WTO seemed almost destined to fail. The Seattle debacle was just the latest in a series of challenges from without and within which has beset the institution since it was created.

Some laid the blame for Seattle on the US for overplaying its hand, having finessed its way into hosting the ministerial and taking control back in Geneva in 1998. US Trade Representative Charlene Barshefsky added fuel to claims of major-power bullying by vowing to secure a deal even if she had to make her own rules.

Equal blame was attributed to Director-General Mike Moore (constantly referred to as a former New Zealand Prime Minister, without saying that it was for just two months before he lost the 1990 election). The dog-fight over his appointment to the D-G's job seriously damaged already fragile relations between rich and poorer WTO members. While Moore's defenders claim that lengthy process left the secretariat insufficient time to prepare, his tactic of telling African countries they were wrong and insisting that further liberalisation was the solution to poverty showed how out of touch he was with their concerns. Moore's resort to exclusive Green Room negotiations, where 20-odd hand-picked countries (including New Zealand) tried to stitch up deals to sell them to the rest, intensified opposition from the South. African, followed by Caribbean, countries told the WTO Council they would not support the outcomes of such an anti-democratic process. The overall verdict on Moore came when his final address to the WTO Council in Seattle was met with a near-complete silence.

Seattle Outcome Not Hard To Predict

These were merely symptoms of a longer-term malaise. Any careful observer of developments since the WTO came into being in January 1995 should have seen the outcome as inevitable. There were four major reasons. First, poorer countries felt coerced into the GATT Uruguay Round agreements that threatened to cripple them and on which richer countries had failed to deliver. Since the first WTO ministerial meeting in Singapore in 1996 they had demanded a review of Uruguay Round commitments and rejected a new millennium round. At Seattle, they were patronised, sidelined and ignored, As a majority of members of the WTO, they held the upper hand. Speaking with a more united voice than they have in previous years, they made it clear in Seattle that they would no longer play the game.

Second, the superpowers had stitched up a deal in the Uruguay Round which, behind a façade of concessions on agriculture, allowed both to hold their ground or mutually prosper. Neither was prepared to accept a negotiating platform that risked compromising its domestic priorities.

Third, the credibility of all three of the so-called Bretton Woods institutions - the IMF, World Bank and GATT/WTO - had been further undermined in recent years by deepening poverty and inequality between and within countries, massive profiteering by transnational corporations and financiers, and a systemic crisis of self-regulating global capitalism.

Refusing to recognise the basic flaws in their model, its cheerleaders maintained an ostrich-like belief that poor countries and external critics just needed to have the benefits better explained to them. Such arrogance would ultimately prove fatal.

Finally, people were reasserting their right to challenge their exclusion and impoverishment at the hands of international institutions whose goals were anathema and over which they had no control. The waves of resistance which had built over the years to colonisation, structural adjustment, and globalisation now focused on the international agencies responsible, from the World Bank and IMF, to NAFTA, APEC and the MAI, and on governments who sold their people down that line. These voices were now better informed, better coordinated and better heard. Attempts to legitimise the institutions by co-opting market-friendly unions and NGOs will not defuse the time bomb of popular resistance.

The WTO is now deeply fractured. The chances of the major powers achieving their objective of a new round are minimal, and will only occur as the result of bullying which will prove counter-productive in the long run.

Likewise their attempts to forge a "partnership" with compliant unions and NGOs through peripheral dialogue and a social or green clause will intensify opposition from governments and NGOs in the South. The long term prospects for the WTO are (happily) dismal.

Yet most New Zealanders are unaware of this. The carefully crafted propaganda that promoted free trade and investment policies for the past 15 years, and shielded it from critical inquiry, continues. The media sympathetically reports Mike Moore¹s quest for the holy grail as he races from India to Washington to Geneva. Labour's trade minister Jim Sutton continues to evangelise where Mike Moore left off. Helen Clark maintains the free trade line, mitigated only by support for a social clause and discussion of labour and environment -ironically, a policy which will help intensify the internal fractures at the WTO. There is no suggestion of opening the government's negotiating stance to public debate, or even select committee scrutiny, and no sense that tino rangatiratanga may require an effective say by Maori in what new treaties are negotiated in New Zealand's name.

Free Trade Gospel With "Social Face"

We remain locked into free trade evangelism, with a new "social face". In the lead-up to Seattle, the committed cheerleaders of globalisation in government, opposition, the Ministry of Foreign Affairs and Trade (MFAT) and its allies, the private sector and fellow-travelling "think tanks" set out to sell the free trade line. "Consultation" was a carefully stage-managed affair, piggy-backing at a safe distance on New Zealand's year as APEC chair. Back in August 1998, officials advised the first step was to consult industry and interest groups to "establish trust" and build a sense of ownership. "This will also tend to counter the opponents of trade liberalisation".

That September, the private sector and "interested parties" were invited to comment on New Zealand's negotiating priorities. MFAT posted information on its website. A seminar co-hosted with the Institute of International Affairs was designed to "build the constituency" for a new round. Ministers and officials gave speeches. Lockwood Smith claimed the Uruguay Round had produced $1 billion in benefits to New Zealand - a claim which lacks any empirical support. The MFAT official in charge of WTO negotiations promised industry "that we very much want to ensure that New Zealand’s approach to the negotiations is dictated by the business sector’s trading needs and priorities." Another senior official assured the Business Roundtable that the "WTO system also helps governments to reinforce domestic economic reform".

Well down the track, in April 1999, a newspaper ad called for public comment on New Zealand's approach to the negotiations -a move intended to let government "indicate that it has consulted widely". The bulk of submissions opposed the WTO and any extension of commitments and were predictably ignored. Priorities remained "far-reaching" liberalisation of agriculture; further liberalisation in all services sectors; and cuts and preferably complete elimination of tariffs on industrial goods. A less ambitious investment agreement and rules on competition would be supported, provided it did not prolong negotiations beyond three years!

There was also a "dialogue/consultation process with the Treaty partner", designed to "keep them fully informed of New Zealand's objectives". There would be no repeat of the hui which had roundly condemned the MAI; these would be invitation-only affairs. Officials noted that New Zealand was already irreversibly committed to the WTO process, and preferred to use the word "dialogue" to signify "discourse without necessarily agreement". Yet the same concerns emerged: the centrality of the Treaty; the uneven impact of trade liberalisation on Maori workers and small businesses; the need for cooperative rather than competitive tribal-based trading arrangements; opposition to trade in taonga and extension of intellectual property rights; removal of the statutory monopoly of producer boards.

In October 1999 the deputy secretary of MFAT described "a sense of great purpose, even excitement in the air, a conviction that we are moving forward with our longstanding trade policy and really are making a difference". In December he blamed Seattle's "disappointing outcome" on a slow start to the meeting, a disorganised chair, "developing countries [who] wanted to make their mark on the negotiation, but were not yet sufficiently organised to be able to achieve consensus outcomes", the failure of working groups to do their work efficiently enough, poor country unhappiness about the Green Room approach, all of which made it impossible to do the deals needed to launch the round.

There was no sense that this was, perhaps, a time to rethink. With the Alliance and Greens both critical of the free trade and investment dogma, strong scepticism-cum-opposition from Maori, conflicts emerging between Labour policies and CER and WTO commitments in relation to broadcasting quotas, and mounting challenges to the democratic deficit of secretive treaty-making processes, it is time for the new government to foster a full and open public debate on the merits of the global free trade and investment agenda.

By Jane Kelsey, Professor of Law, Auckland University, author of "The New Zealand Experiment" and "Reclaiming The Future".