TWO DECADES OF WTO: THE FAILURE TO DELIVER*
By K Vijayachandran: Chairman Cochin Center for Policy Initiatives
With WTO hijacking the role of UNCTAD, United Nations has lost its development mission. UN is managed by a global bureaucracy, today, sitting over the head of a virtually apolitical Security Council. It has lost its moorings and has to re-discover its founding objectives. And, the two decades of WTO were a disaster: World has turned more unsafe and insecure for its inhabitants. These are my stray thoughts as we observe the 70th UN Day.
World Trade Organization was founded on 1st Jan 1995 in a unipolar global environment, three years after the dissolution of USSR on 26th Dec 1991 and the demise of socialist camp. United Nations Conference for Trade and Development (UNCTAD), established in 1964 under the initiative of G77 including China with the support of Non-Alignment Movement (NAM) and the socialist camp, had served as its harbinger.
For the past two decades, WTO has been trying jointly with the International Monetary Fund (IMF) and World Bank, to develop a global market economy that functions. This TRIO, now virtually independent of the UN System and its Security Council, is held together by the developed countries and the Organization for Economic Cooperation and Development (OECD).
How far the concept, framework and practice of WTO could succeed in achieving the declared objective of building an orderly global economy during the last two decades, is planned to be examined by the 10th Ministerial Conference of its 161 member countries, scheduled for December 2015 at Nairobi. Issues to be hammered out in the Ministerial Conference are being finalized, now, in the so-called Doha rounds of consultations among various interest groups.
Institute for Studies in Industrial Development (ISID-1) New Delhi and their affiliates organized a two day National Conference on 22-23 Sept on the theme, WTO Negotiations, Free Trade and Investment: Implications for Development Policy Space: Venue was the well appointed conference hall of ISID at Vasant Kunj: It was attended by some eighty delegates from professional bodies, NGOs and Trade Unions: This writer was invited as an observer.
The conference was over-represented by Delhi-based institutions and experts. There were one or two foreign delegates; participation by mass organizations, rural communities and non-Delhi states was scanty. Nevertheless, the conference papers, as well as the discussions thereon, were reflective of the larger concerns of the Indian people.
Statistical data and information revealed in the conference intro-paper, circulated by the Secretary General of ISID, were quite revealing and disquieting: “India has signed some 14 FTAs and is negotiating 16 more. The most controversial amongst these include the EU-India FTA and the Regional Comprehensive Economic Partnership (RCEP) with the ten ASEAN Countries plus Australia, China, India, Japan, the Republic of Korea and New Zealand.
…..Another mega FTA, the Trans-Pacific Partnership Agreement (TPP) is being used as a benchmark for standards on IP and this will have an impact on RCEP and other FTAs. With the growing coverage of trade agreements spanning agriculture, industry, services, intellectual property, investment, government procurement and other areas, the interactions between provisions in the sector/area and specific liberalization policies are becoming more complex. These interactions have to be fully understood for their likely impacts on future policy space.
….Further India’s trade policy continues to be undemocratic and opaque, especially in case of FTAs and BITs. Negotiating texts are secret, consultations with affected groups are limited to the big industry bodies, and there are no publicly available impact assessment studies especially from a human rights or development perspective. Neither is there parliamentary oversight, or consultation with state governments.
…..What is at stake are livelihoods, incomes and labour rights; agriculture, seeds and the right to food; access to affordable medicines; environmental protection; access to essential services such as health, education, water, and energy; conservation and peoples control over natural resources”.
And, we may append to this long listing of treaties: reports on collapse of the manufacturing sector, chaotic roads and power systems, break-down of infrastructure in general, farmer suicides, rapid increase in crime rates, galloping corruption and lawlessness, and rapid decline in the quality of governance all around the country and at every level. In brief, WTO was being used as an instrument for forcing down the unwilling throats of our people all sorts Free Trade Agreements, without rhyme or reason. It was an irresponsible act of the ruling elite classes and history will not forgive them.
Picture at the global level and the experience of the people of other countries was also not different, according to the ISID report: “…trade and investment landscape has expanded in the past two decades in a big way through the execution of FTAs. As of 2015, some 406 Free Trade Agreements (FTAS) are in force according to the WTO. Further, UNCTAD estimates that there are more than 2200 Bilateral Investment Treaties (BITs) currently operational…ability of national governments to pursue independent macro-economic and development policies on a range of issues from agriculture, industry, services and the environment has been compromised. Global institutions and forums are today crucial in determining people’s access to decent jobs, incomes, food, essential services and natural resources”.
It is, now, more than obvious: Attempts to regulate and expand the global economy in a crisis free manner through Free Trade Agreements under the supervision of WTO have proved to be a grand failure. The current year (2015) report of ILO on World Employment and Social Outlook (2) had noted that the Global economy had failed to recover the output levels of pre-crisis trends: “Employment creation is still not sufficient to close the jobs gap that opened up with the crisis. Indeed, there were more than 61 million fewer jobs in 2014 than would have been expected had the crisis not struck.
….Global employment grew at an average annual rate of 1.7 per cent between 1991 and 2007. However, since the outbreak of the economic crisis, employment growth has slowed to 1.2 per cent per annum between 2007 and 2014. On current trends, unemployment will continue to rise as the labour force expands. Going forward, job creation is expected to remain at this lower growth rate over the medium term, causing a widening of the global jobs gap to around 82 million jobs in 2019. If new labour market entrants are taken into account, 280 million jobs will need to be created over the coming five years to close the crisis-related global jobs gap and to absorb the increase in the labour force.”
Trade and Development Report of UNCTAD of 2014 (50th Anniversary-3) had made this disquieting observation: “…Markets require a framework of rules, restraints and norms to operate effectively. As such, the market economy is always embedded in a legal, social and cultural setting, and is sustained by political forces. How and to what extent the framework of rules and regulations is loosened or tightened is part of a complex political process specific to each society, but it cannot be dispensed with without threatening a breakdown of the wider economic and social order.”
In more recent years this sort of breakdown of economic and social order or breakdown of political economies of nation-states has been widespread experience among the developing countries of almost all continents. Destabilization of the state, internal strifes, stage-managed color revolutions, military interventions and cultural invasions of every sort, all reminiscent of the massive trade expansion through colonial wars of the earlier centuries, were the indirect if not the direct consequences of the invasion of policy spaces of developing countries, by the OECD, using WTO as a cover.
Under the direct and indirect impact of WTO, India’s education system is in a total crisis: With the spread of English medium schooling, abetted by the CBSE (4), starting from KG and primary, we have shifted away from the time-tested culture of neighborhood schooling. Quality education is a luxury and perceived as a passport for migration to OECD countries: Anarchy prevails at every level, starting from KG classes. Worst is yet to come, according to a campaign paper presented in the Delhi Convention, by All India Forum for Right to Education (AIFRTE): “The offer of ‘Market Access’ to higher education under General Agreement of Trade in Services (GATS) will turnout to be a commitment in perpetuity”.
Political economies of several Afro-Asian and Latin American countries have virtually collapsed under the impact of mindless globalization presided over by WTO. Political economies of the Southern partners of even EU are reportedly under strain. Political economy of Greece, the citadel of a millenniums old civilization, is under serious repair: With two-thirds of its people voting against economic policies, its economy had collapsed, contributing to the rapidly swelling ranks of refugees in Europe. Reports by the UN High Commission for Refugees (UNHCR) indicate that the number of refugees under its care has already crossed the post-war record of 60 millions.
The desire for cultural autonomy of nationalities and nation-states is quite logical and legitimate: Peaceful coexistence and mutual cooperation were the basic building bricks of UNO: The tempo of globalization forced on the member countries using the WTO mechanism, is being resisted today not only by developing countries but even by some of the developed countries. Even the United Kingdom of Great Britain is facing dissent from within: People of Scotland have won their demand for autonomy and the new leader of Labour Party in UK, Jeremy Corbyn, has announced several policy initiatives to strengthen local governments and grass-root level democracy.
Intellectual Property Rights (IPR) regime forced on the peoples of the world by WTO was supposed to globally accelerate S&T development and spread the use of new production technologies. Experience of the past two decades in this regard was disappointing: UN organizations like WHO, FAO, UNIDO, UNDP, IAEA, ITU, WMO and the others, established for promoting technological cooperation among member-states turned more and more dysfunctional under the weight of WTO and its totally irrational IPR regime.
This had a negative impact on even the Millennium Development Goals (MDG) program of UN launched in 2007 in its fight against diseases as well as for agricultural, industrial, infrastructure and cultural development in less developed countries (5): As Prof Galbraith used to point out, Mankind has all the technologies needed for supporting several time the present day world population and for sustaining the environmental balance. (6)
Global production-distribution systems based on market competition are wasteful and inherently incapable of making full and optimum use of already established technologies. And, history of discoveries and innovations would tell us that they are not the products of market forces or competition. In fact, it is the other way round: market is the product of S&T developments. State monopoly capitalism of USA is supported by a state supervised S&T program in the public domain and an all pervasive National Science Fund administered by Federal Government (7).
WTO has failed in delivering its commitments to the global community. Promise of accelerating global economic development through free trade, FTA etc has not been fulfilled. It has failed in ensuring the optimum use of the technologies already available. Its contribution to improve work participation rates and creating new jobs has been negative. Reforms have disrupted the political economy of several nation-states, creating massive refugee problems, reminiscent of the post-war and prewar situations.
It is time for the countries of the South to think of quitting WTO and getting back to the UNCTAD perspective and agenda of real development, by utilizing the expertise and resources of UNDP. UNIDO, FAO, WHO, WMO, ITU, and other UN Institutions. What humanity needs, today, is a performing world political economy that could make full use of the vast possibilities of information, space and bio technologies, but at the same time assuring the cultural autonomy and identity of nationalities and nation states based the principle of peaceful coexistence and mutual cooperation, and not anymore on destructive competition and conquests of the colonial period. Prospects of using UNO for global governance was the theme of my seminar paper presented on the UN Day observed by CCPI, two years ago(8).
UNO and the several institutions created and developed under it for mutual cooperation among members have been rendered dysfunctional thanks to the disruption caused by WTO during the last two decades of its existence. There are hardly any statistics or logic to support its existence: It is time to get back to the spirit of UNCTAD and wind up this white elephant.
* Paper for the UN Day Seminar of 24th Oct 2015 at the Ernakulam Public Library Hall