Next Sunday will mark the 15th anniversary of the World Trade Organization (WTO) Ministerial Conference of 1999.
Here and elsewhere, it will long be remembered as the “Battle in Seattle,” where protests disrupted what was intended to be a triumphant event for the city and the neoliberal trade agenda.
Five years ago, I wrote about how the mostly peaceful protesters’ concerns were prescient. They were not merely about globalization, but rising inequality, environmental harm, financialization, corporate oligarchy, destruction of local economies and marginalization of workers’ rights.
Those warnings went unheeded. The problems worsened. Yet the streets of Seattle did not give birth to a new era of progressive dominance.
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But it’s also worth considering other ways the world envisioned by the framers of the 1999 Ministerial Conference has and hasn’t worked out.
As difficult as it is to imagine now, China barely figured into the event. Beijing was two years away from joining the WTO and although its growth had been spectacular, Chinese gross domestic product was less than $1 trillion. It had a smaller economy than Italy.
Today, China boasts the planet’s second-largest economy. Calculated for cost of living, it slightly surpassed that of the United States this year, according to the International Monetary Fund. One big asterisk is that Chinese statistics can be suspect.
But no one doubts the country’s enormous new power. For example, in 1999 the United States was the world’s largest exporter. Last year, that crown passed to China.
In 1999, the big players were the U.S., Japan and the EU. Now Japan and Europe have either fallen back into recession or are perilously close. While Germany remains an export powerhouse, it has faltered lately. The European Union itself is in doubt, something unthinkable when the Seattle conference began.
The major point of conflict then was between advanced and developing nations over what the latter saw as unfair policies on agriculture subsidies. Seattle was intended to launch a new round of negotiations to further liberalize trade. But this disagreement more than anything killed the Millennium Round.
The WTO tried again in Doha, Qatar, two years later. But the Doha Round has been held up for years. This time the roadblocks were not only agriculture, but also basic disagreements between developed countries and the rising powers of China, India, Brazil and South Africa. Repeated efforts at a restart have failed.
No wonder Director-General Roberto Azevedo said last month that the WTO was in “what could be the most serious situation that this organization has ever faced.”
It wasn’t supposed to turn out this way. The WTO was a crowning achievement of U.S. policy after World War II. Begun as the General Agreement on Tariffs and Trade (GATT), it was intended to liberalize trade and have everyone playing by the same rules.
Protectionism was seen as a significant cause of the economic disruptions after World War I, helping set the table for the rise of aggressive totalitarian regimes.
The first GATT round involved 23 nations. By the end of the century, more than 120 nations were members and the issues had become much more complex than simply lowering tariffs.
With the paralysis of the WTO, we see a general disagreement on tariffs and trade.
The result: Individual nations are cementing trade agreements with one or more countries. The WTO allows this within certain restrictions. China has aggressively done bilateral deals. But the U.S. set the template with NAFTA (marking its 20th anniversary) even while the WTO was healthy.
The U.S. is continuing with the ambitious Trans-Pacific Partnership and, with the EU, the Transatlantic Trade and Investment Partnership. Both face serious opposition. In a slow-growth economy, many point to trade deals as killers of good jobs and corporate giveaways. Also, such issues as intellectual property, services and investment are highly complex.
World trade more than doubled from 1999 through last year. Washington exports increased from about $36.7 billion to $81.6 billion. Not bad considering the Great Recession was dropped in the middle of this timeline. Was the growth because of the WTO, bilateral agreements, globalization or mere momentum?
At the least, one could argue the WTO has helped members avoid all-out trade wars. But its resolution process is long, as evidenced by the Boeing-Airbus subsidies case, first filed in 2005 and still ongoing.
But on big decisions, all 150 member nations must reach consensus. And they rarely do, as Doha shows.
The two biggest economies in the world don’t agree on many tenets of free trade that were long considered foundations of the organization. China’s “neo-mercantilism” is not the United States’ “neo-liberalism.” Thus, Beijing is content to be a WTO member but will not comply with policies it sees as advancing American dominance.
And this is only the biggest source of tension. The divides run north and south, between developed nations versus developing ones and among powerful constituencies within nations. They come amid severe stresses in the global economy. Much of the world can ask the WTO, “What have you done for me lately?”
The real crisis facing the WTO today is not paralysis but relevancy.
Few trade ministers could have imagined that in 1999, when the Battle in Seattle seemed like only a bump in a road temporarily filled with tear gas.
You may reach Jon Talton at email@example.com