Emory Report

December 13, 1999

 Volume 52, No. 15

First Person:

Pastor says nations still rule World Trade Organization

"Grand theories explain both the unifying pressures of technology and democracy and the fragmenting power of religion and ethnicity. Each set of theories seems to be at war with the other, but they share one idea: that the great powers, and indeed all nation-states, are relics of a bygone era. On that point, we disagree."

-Robert Pastor, A Century's Journey: How the Great Powers Shape the World

The recent trade meeting in Seattle was beset by as much confusion as commotion. Some of the protesters raised legitimate concerns, and some were loony.

Why should you care? When you shop this Christmas, check the labels on what you buy. You'll find more goods coming from more countries than ever before. Foreign trade has become twice as important to our nation's economy in the last two decades, and Georgia has been on the cutting edge. Just since 1990, Georgia's exports have more than doubled.

The expansion of trade did not just happen. It is the result of decisions made by many governments to reduce trade barriers. Since the first round of global trade talks in Geneva in 1947, the United States has led the way, breaking down old colonial divisions and insisting on a freer world with a single set of rules. The progress has been astonishing. In the last 50 years, global tariffs have dropped 90 percent; world trade has increased 15 times; and world production has multiplied six times.

Trade is now the principal engine for economic growth in the United States and the world. But trade negotiations are like high jumping--the more you succeed, the harder it gets. With each round, the world becomes more integrated, and the issues more sensitive and controversial. The issues today include whether farm protection should be reduced in Europe and Japan and quotas on textiles lowered in the United States and other rich countries.

Other issues are whether labor and environmental rights and e-commerce should be part of the agenda for the next round. The trade ministers were not negotiating trade and investment barriers in Seattle; they were simply trying to agree on an agenda for the next, millennium round of trade talks, but they failed.

The Seattle meeting was noisier than previous ones because more groups are reacting to the globalization of the economy. Some groups blame the World Trade Organization for all the world's ailments--from the deaths of dolphins and sea turtles to the high cost of drugs and housing. The WTO is not a world government; it is an international organization, managed by 135 governments, to define and enforce global rules on trade and investment. It serves Americans' interests because it helps us to reduce unfair barriers to our exports. Those who are concerned that the WTO can undermine health, labor and environmental standards are partly right. But the solution is not to close down the WTO--it's to widen its mandate.

Some protesters oppose all trade as harmful to our economy, but as consumers, all of us benefit from more choices and cheaper imports, and as the world's largest exporter, we benefit from new jobs and more income from new markets in China and elsewhere.

Labor unions fear that jobs are lost because of imports or because U.S. firms move abroad. They are right that some union jobs are lost, but many more and better jobs are created--13 million in the last seven years--and freer trade is one of the main reasons. Moreover, while U.S. firms invest abroad, foreign companies have tripled their investment in Georgia since 1985--to more than $16 billion. We will lose jobs, not save them, if we raise trade and investment barriers.

Unions are also concerned that trade benefits are skewered in favor of big business. They're not wrong. Trade is in the interest of our country as a whole, but it is not in the interest of everyone. Some people prosper, and some lose.

The protesters in Seattle got our attention and opened the debate. That's good, but not good enough. The United States and the other governments did not do sufficient homework to resolve their divisions, and they failed to reach a consensus in Seattle, even on an agenda. The United States, Canada and other agriculturally producutive countries failed to persuade the European Union (EU) and Japan to negotiate significant reductions in their farm subsidies. The U.S. and the EU failed to convince developing countries to include environmental and labor standards in the agenda. And the EU and the developing countries failed to convince the United States to negotiate an end to anti-dumping measures and textile quotas.

There was also resistance to making the WTO more transparent. In the end, according to U.S. trade representative Charlene Barshefsky, "governments were not ready to take the leap." The divisions within countries about the effect of future trade liberalization proved at least as formidable as the division between the countries--and this was also true of the United States.

After omitting environmental and labor issues when he pressed for fast-track trade negotiating authority in September 1997, President Bill Clinton reversed himself and insisted these issues be incorporated into the agenda when he arrived in Seattle. He couldn't achieve a consensus on this point at home or at the WTO.

So where do we go from here? First, the president needs to construct a consensus in America on the ends of trade policy--to reduce trade barriers and lift workers' and environmental standards--and then he needs to lead internationally. Secondly, the WTO needs to make its deliberations more transparent and include developing countries and non-governmental organizations in the process. Third, governments need to increase aid and training for workers who lose their jobs when factories are moved abroad.

To sustain a freer trading system, the WTO needs to devise creative ways to share the benefits of trade with those who pay the price of increased competition.

Robert Pastor is a professor of political science. He edited A Century's Journey: How the Great Powers Shape the World, published this year by Basic Books.

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