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The Trade War

By William SaletanPosted Friday, Dec. 3, 1999, at 3:30 AM ET

Thousands of demonstrators mobbed Seattle this week to protest the Third Ministerial Conference of the World Trade Organization. They argued that the WTO, a 135-nation club in which membership is voluntary but "free trade" rules are mandatory, threatens to dissolve human rights, labor laws, and health and environmental protections in the acid of global capitalism. Tuesday and Wednesday, President Clinton and WTO Director-General Michael Moore fired back. The WTO's advocates, belatedly realizing that it has become a political target, are beginning to counter the principal spins against the organization.

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1. Whether to trade vs. how to trade. The protesters want us to ask first what political terms of trade are being offered, and then to decide, based on how good or bad those terms are, whether or not to trade. By this logic, because the WTO doesn't include labor and environmental regulations in its trade rules (thereby undermining such regulations in many countries, according to the protesters), the WTO should be suspended. "Until the WTO addresses these important issues, there will be no support for a major new round of trade negotiations," declared AFL-CIO President John Sweeney several days before the Seattle meeting. "Hey, hey, ho, ho, the WTO has got to go," protesters chanted in the streets. In a New York Times ad, a coalition of environmentalists said "public interest groups … want the WTO to stop in its tracks. … Many feel the WTO can never be democratically reformed."

Clinton wants to reverse these two questions. He wants us to ask first whether trading is generally good or bad, and then--only after we've agreed that it's good--to begin discussing on what political terms we should trade. "We are going to have to listen to people who have legitimate economic concerns, legitimate environmental concerns, legitimate labor concerns," Clinton conceded in a speech in Seattle Wednesday. But first, said Clinton, "Everybody has to decide: Do you think we are better off or worse off with an increasingly integrated global economy, where productive Americans have a chance to sell their goods and services and skills around the world? I think we're better off. That's the number one core decision we ought to make up our mind as a country we agree about."

2. What is capitalism destroying? The protesters contrast global capitalism with enlightened national laws. According to the environmentalists' ad, the WTO, by promoting and mandating unfettered trade, is destroying "standards for safety, health and the environment" in "nations … that try to protect the safety of their food, their jobs, small businesses or Nature." The AFL-CIO says the WTO should be reined in to preserve "workers' rights" and to "protect the ability of governments, at all levels, to use their purchasing power to reinforce their values and standards."

The WTO and its defenders argue that the regimes and laws mowed down by global capitalism are more often corrupt than enlightened--in short, that capitalism is an improvement. Clinton says the WTO fosters respect for the "rule of law," which weeds out corruption and discourages war. Francis Fukuyama, writing in the Wall Street Journal, says poor people around the world are dominated by "local companies … interlocked with local political elites in a web of cronyism and corruption. Globalization in the form of foreign direct investment by multinational corporations not only creates employment but directly threatens these local elites by exposing them to competition."

Addressing the WTO conference Tuesday, Moore argued that global capitalism has replaced not Marxist utopia but warped Marxist totalitarianism and aggression. Free trade "tore down the walls of economic and political oppression," said Moore. "Our parents learnt from the great depression, made deeper and more lethal by rising trade barriers from which came the twin tyrannies of our age, fascism and Marxism, thus war; hot and cold. They swore it would not happen again, and they created an international architecture which included the UN, IMF, World Bank, and the GATT, now the WTO, to achieve that peaceful purpose."

3. Does the WTO permit problems or solutions? The protesters say the WTO is bad because it permits oppressive and environmentally destructive practices and, by liberating greed, promotes these practices. By focusing on the free flow of capital, WTO leaders "are not supporting human rights and workers' rights," said a union official in Seattle. Clinton sees it the other way around: The WTO is good because it permits discussion of these practices. "It is not wrong for the United States to say we don't believe in child labor, or forced labor, or the oppression of our brothers and sisters who work for a living around the world--and [that] we don't believe that growing the economy requires us to undermine the environment," said Clinton. But to make those arguments and resolve those issues with other nations effectively, said Clinton, "You have to have some system to resolve them."

4. Opening the WTO vs. opening world trade. Sweeney blasts "trade accords negotiated behind closed doors" and demands that the WTO become "open" and "accountable." The environmentalists call the WTO an "invisible government" that "was elected by no-one" and "operates in secrecy." Moore replies that the WTO is democratic--"Ministers are here because their people decided so. Our agreements must be agreed by Parliaments"--but Clinton goes further. He frames the issue of openness more broadly, arguing that the WTO has made trade decisions more accountable and more universally beneficial than they used to be. "We do have to open the WTO and the world trading system to greater public scrutiny and to greater public participation," says Clinton. But "what we came here to the WTO meeting in Seattle to do" is "to open markets and expand opportunities."

5. Stability vs. progress. The protesters focus on "stability" and worry that unfettered trade will demolish it. Thanks to world capital flow, says Sweeney, "financial collapses have grown more severe and more frequent." But what the protesters call stability, Moore calls stagnation: "The least-developed countries are not threatened by globalization. They are threatened by de-globalization, falling outside of the world economy and slipping ever further behind." Clinton portrays the instability of big industrial shifts--for example, the loss of American jobs in steel and the simultaneous creation of American jobs in software--as a transition to a world in which "everybody can do what they do best." To mitigate that instability, he promises to give people "time and support and investment to make the transitions into the new economy."

Human nature puts Clinton at a disadvantage in this debate. Most people would rather keep what they have than risk it for a hypothetical payoff. And while the costs of unrestricted trade tend to be visible because they're nearby and concentrated (e.g., the closure of a local factory), the benefits tend to be invisible because they're faraway or diffuse (e.g., lower prices at the grocery store or higher wages in Latin America). "The people that are going to win will always be somewhat uncertain of their gain, whereas the people who will lose are absolutely sure of what they are going to lose," says Clinton. Therefore, embracing free trade "will require … imagination and trust and humility and flexibility."

6. Bully or protector? Former WTO Director-General Renato Ruggiero once called the WTO a "new constitution for a single global economy," and protesters have seized on this somewhat presumptuous self-characterization to portray the WTO as a police state designed by rich nations to facilitate the exploitation of poor ones. "Unlike other global bodies (including the UN), the WTO enjoys unique enforcement powers," the environmentalists warn in their ad. "Offending countries must conform with WTO rules, or face harsh sanctions."

Moore sees these governmental analogies in a different light. He thinks the WTO's constitution and police powers will protect poor countries, not exploit them. "Developing countries need a secure and stable world trading system," he says. "They need more openness, not less. Stronger rules, not weaker ones. … I'm from a small country [New Zealand], but I don't see what we are doing here as a threat to our sovereignty. I see interdependence as a guarantor of our sovereignty and safety."

7. Imports vs. exports. Some goods are produced more cheaply in the United States than abroad. Others are produced more cheaply abroad than here. Unrestricted trade will help U.S. industries in the first category but will wipe out those in the second category. That's why Clinton talks about the first category, while the protesters talk about the second. Two weeks ago, Sweeney brought a steelworkers union official to the National Press Club to illustrate how the WTO's prohibition against trade barriers facilitates the loss of U.S. manufacturing jobs to "dumped imports" and cheap labor abroad.

Wednesday, Clinton chose to talk about a different industry. "The typical American eats 20 pounds of fresh apples each year," whereas "the typical European consumes about 46 pounds," said Clinton. "So America exported $353 million worth of apples last year." Lowering trade barriers in China, Japan, and Mexico means "more apple sales from Washington" and more help for "family farmers," he observed. Clinton joked that his apple reference was "a pander to Washington state," but it was more than that. The national industries that will lose under global capitalism and the national industries that will win are--to borrow a self-illustrating rhetorical metaphor--apples and oranges. And the key to reassuring Americans about the WTO is to talk about the apples.

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William Saletan is Slate's national correspondent and author of Bearing Right: How Conservatives Won the Abortion War. Follow him on Twitter here.

COMMENTS

The readers respond:

If global trade endangers so many jobs, how can it be that U.S. unemployment is at historic lows and that real income for the bottom 60% of workers is going up for the first time in 25 years?

If global free trade exploits third-world workers and destroys indigenous cultures, how can it be that third-world delegates to WTO believe that U.S. talk of core labor standards--and the demonstrations themselves--were a ploy by the Clinton administration to deprive them of needed jobs?

If corporate investment is so destructive of the environment, why is it that the pollution in China and India comes from antique, state-owned coal-burning plants, not newer, cleaner, private factories?

The protesters in Seattle were naive, confused, ill-informed, and were definitely not helping developing countries.

--{{Andrew Goodwin

#2:mailto:abg@whidbey.com}}(To reply, click here.)

Those Third World delegates are the pro-WTO contingent of their nations: of their countrymen, they have the most to gain. They must have been bitterly frustrated to find themselves temporarily foiled in their attempts to circumvent their countries existing social order (for better or worse).

--dan klloke

(To reply, click here.)

Clinton quoted Machiavelli in describing the two sides of the WTO issue. Those who are uncertain of what they have to gain if they win, and those who are definitely certain of what they have to lose if and when they do. This makes moving forward so difficult--inertia being more than just a physical law. It just goes to show you that for all our technology and supposed social advances things haven't changed much in past 500 years. Time to read The Prince and the Discourses again.

--glenn

(To reply, click here.)

I think that a sound defense of the WTO is premised on the idea that the very existence of an international forum where delegates from developed and developing countries can deliberate issues is better than having no such forum. Are there unjustifiable inequalities within LDCs? Absolutely. Are there gross inequalities within the United States? You bet. But abolishing the WTO would not mitigate these inequalities. It would only serve to intensify the macro-inequalities of the international system. Do top-level political officials ever truly speak for the poor huddled masses? Generally, no.

So, my argument is that placing the blame on the WTO is misspent and misdirected effort. Treehuggers should instead lobby our government to cancel the foreign debt of LDCs (see Jubilee 2000 and http://www.netaid.org for good information on why this is a vital step in the promotion of social justice) and lobby to increase domestic social spending and pay off our debts to the UN.

Accountability must occur on both strata: internationally and internally. Bitching about the WTO will not bring about social justice within nations. Only through concerted substantive effort (not just carrying signs and harassing delegates and not just donating money) can social justice be achieved. After I finish up my Master's, I'm going into the Peace Corps as a development planner. That is the type of work that helps ensure that the many benefits of free trade are distributed equitably.

--Jennifer Fitzgerald

(To reply, click here.)

As far as I can make out, some of the protesters want the WTO to stop interfering in internal matters, while others want it to interfere more. Still others want it abolished altogether, while yet others seem actually to be against trade itself.

--Tony Welsh

(To reply, click here.)

One of the main premises that WTO protesters seem to hang on to is that the World Trade Organization is an entity in itself--it has been described as a corporation, a secret government and one poster mentions that lowering America's standards is only going to benefit "the WTO". America is the WTO, as is Senegal, South Korea, Chile, Hungary and any other country that sends delegates to its meetings. It is not a corporation and contrary to popular belief, multinational enterprises do not have any say in the dealings of the WTO.

One can of course argue that they have sway over the government delegates that attend WTO meetings, but this is then an internal, national problem. Write your congressman/woman, parliament representative or other politician if you don't like it but attacking the WTO itself will not dislodge any perceived big business influence. As one poster points out, the WTO is an organization of over 130 nations, all with their own national agendas and prerogatives. Just as it is unrealistic to assume the organization will function perfectly it is equally absurd to see it as a secret government bent on controlling the world.

The WTO is the world--its delegates eat the same food as you and I, pay the same taxes and are forced to deal with the same economic realities. To assume they exist on a wholly different level and that they actively attempt to better things for themselves is unrealisitic, to say the least.

--Jesper Edman

(To reply, click here.)

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