The Stalemate in the WTO and the Crisis of the Globalist Project:
Update on the World Trade Organization and Global Trends

By Walden Bello May 23 2003   modified version, June 2003

(Revised version of a presentation at the Hemispheric and Global Assembly against the FTAA and the WTO held in Mexico City on May 12-13, 2003. A brief version was also delivered at the Transnational Institute Fellows Meeting in Amsterdam on May 16, 2003, and at the Jakarta International Peace Conference on May 18-21, 2003.)

Hi. This update is in two parts. The first consists of observations on recent developments in the World Trade Organizations negotiations leading up to Cancun, most of which are based on data generously shared by my colleague Aileen Kwa, Focus on the Global South's point person in Geneva. The second part sketches the global context against which to place the developments at the WTO.

I. Recent Developments in the WTO

1. Perhaps the best way to characterize recent developments in Geneva is that the negotiations are practically at a stalemate.

2. What does all this add up to? What does it mean for the Cancun Ministerial? We posed the question to Pascal Lamy a few weeks ago. Interestingly, his answer was to sidestep the question and simply say that if one views the process from the Doha Ministerial's mandate for the negotiations to end by 2004, then things don't look so bad, since "in some areas, negotiations are 2/3rds of the away through, in some halfway through, in others a third through, in TRIPs 98 per cent through."

Now, the role of ministerials is to carry out negotiations in several areas simultaneously in order to bring about a comprehensive settlement. Since member countries cannot even agree on the modalities of negotiations in so many key areas, the WTO faces a great problem of what they will do in Cancun. Perhaps this is the reason why key WTO officials are now talking about coming up not with a declaration announcing agreements on issues being negotiated, but a "communiqu?" serving as a "progress report" on the ongoing negotiations, drawing upon short reports made by the various negotiating groups on the work they have undertaken since Doha.

3. The hopes for a Doha-type outcome in Cancun have been further doused by the recent worsening of trade ties between the United States and Europe. The EU has threatened to impose sanctions on the US by the end of 2003 for tax breaks for exporters that a WTO judicial panel has found to be in violation of WTO rules. In what has been perceived as a retaliatory move, the US said it will file a case with the WTO against the EU's de facto moratorium against genetically modified foods. Taken in the context of already existing trade conflicts as well as the bitter conflict between the US and France and Germany over the US intervention in Iraq, these recent moves do not bode well for both parties arriving at consensus positions on negotiating modalities in agriculture and other trade issues before Cancun. It must be remembered that it was not only the revolt of the developing countries at the Seattle Convention Center and the mass mobilizations in the streets that brought down the third ministerial in Seattle in 1999 but also unresolved conflicts between the US and EU on agriculture, the environment, and labor standards.

US Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy, who are close personal friends, are said to be moving to bridge the Washington-Brussels gap before Cancun, but the contextual conditions are more difficult now than before the Doha Ministerial in November 2001, when the US and EU shared a common position on combating terrorism and intervening in Afghanistan and Washington had not yet imposed a 40 per cent protecting tariff on steel imports and passed its $100 billion subsidies for American farmers. Nevertheless, it is important not to underestimate the capacity of Zoellick and Lamy to engineer a US-EU concordat as they did in the leadup to Doha.

II. The Global and Conjunctural Context of the WTO Negotiations

The context for understanding the stalemate at the WTO is the crisis of the globalist project and the emergence of unilateralism as the main characteristic of US foreign policy.

1. First of all some notes on the character and development of the globalist project.

2. The apogee of the second phase of globalization was reached, in my view, with the founding of the WTO in 1995. The triumphalism marking this event was conveyed by the joint statement of the World Bank, WTO, and IMF in 1996 at the Singapore Ministerial of the WTO, where the three institutions said that the task at hand was bringing about the "coherence" of the policies of the WTO, IMF, and the World Bank to create the framework of international economic governance that would assure global prosperity.

The Economist and the rest of the establishment press toasted the WTO as the gem of capitalist global governance, setting up a "rules-based" system of world trade that both powerful and poor economies would submit themselves to. According to George Soros, the significance of the WTO lay in its being the "only global institution to which the United States was willing to subordinate its national laws."

3. In just five years, however. the globalist project, whether in its "hard" Thatcher-Reagan version or its "soft" Blair-Soros version (globalization with "safety nets") was in very serious trouble. There were three key moments to this crisis:

The Asian financial crisis was the Stalingrad of the IMF, the prime global agent of liberalized capital flows, bringing about a review of its record in Africa and Latin America, which showed that the program of structural adjustment that it had promoted alongside the World Bank had failed almost universally, institutionalizing instead stagnation, greater poverty, and greater inequality.

Along with economic crisis, the Asian financial crisis spawned a massive crisis of legitimacy and credibility of the globalist project, resulting in the defection from neoliberalism of several of its key intellectuals: Jeffresy Sachs, Jagdish Bhagwati, Joseph Stiglitz, and George Soros.

The current crisis is not simply the downside of the normal business cycle. It is the downside of the so-called Kondratieff Wave (named after the economist Nikolai Kondratieff). Kondratieff observed that capitalism progresses via 50-60 year "long waves" marked on the upside by the exploitation of new technologies and on the downside by the exhaustion of new technologies, leading to a prolonged period of stagnation before the next upswing. We are now on the trough of a wave the crest of which occurred around the late sixties and seventies.

4. The crisis of globalization, neoliberalism, and overproduction provides the context for understanding the economic policies of the Bush administration, notably its unilateralist thrust. The globalist corporate project expressed the common interest of the global capitalist elites in expanding the world economy and their fundamental dependence on one another. However, globalization did not eliminate competition among the national elites. In fact, the ruling elites of US and Europe had factions that were more nationalist in character as well as more tied for their survival and prosperity to the state, such as the military-industrial complex in the US. Indeed, since the eighties there has been a sharp struggle between the more globalist fraction of ruling elite stressing common interest of global capitalist class in a growing world economy and the more nationalist, hegemonist faction that wanted to ensure the supremacy of US corporate interests.

As Robert Brenner has pointed out, the policies of Bill Clinton and his Treasury Secretary Robert Rubin put prime emphasis on the expansion of the world economy as the basis of the prosperity of the global capitalist class. For instance, in the mid-1990's, they pushed a strong dollar policy meant to stimulate the recovery of the Japanese and German economies, so they could serve as markets for US goods and services. The earlier more nationalist Reagan administration, on the other hand, had employed a weak dollar policy to regain competitiveness for the US economy at the expense of the Japanese and German economies. With the George W. Bush administration, we are back to economic policies, including a weak dollar policy, that are meant to revive the US economy at the expense of the other center economies and push primarily the interests of the US corporate elite instead of that of global capitalist class under conditions of a global downturn.

5. The Bush administration has supplanted the globalist political economy of the Clinton period with a unilateralist, nationalist political economy that intends to shore up the global dominance of the US corporate elite economically that parallels the aggressive military policy that is meant to ensure the military supremacy of the United States.

I would just like to point out some of the distinguishing features of this approach:

6. So among the key components of Washington's unilateralist economic strategy are:

7. The great advantage of multilateralism as a system of global political and economic governance was that it dispersed the defense of the system to many allies and created a degree of legitimacy and consensus among the masses that did not benefit from it. The great problem for unilateralism is overextension, or a mismatch between the goals of the United States and the resources needed to accomplish these goals.

A key base for successful imperial management is an expanding national and global economy. That will not be here for a long time. Moreover, resources include not only economic and political resources but political and ideological ones as well. For without legitimacy-without what Gramsci called "the consensus" of the dominated that a system of rule is just-imperial management cannot be stable.

Faced with a similar problem of securing the long-term stability of its rule, the ancient Romans came up with the solution of extending Roman citizenship to ruling groups and non-slave peoples throughout the empire, creating what was till then the most farreaching case of collective mass loyalty ever achieved till then and prolonged the empire for 700 years. The US unilateralists have no such "moral element" to accompany their military domination.

8. Overextension is relative, that is, it is to a great degree a function of resistance. An overextended power may, in fact, be in a worse condition even with a significant increase in its military power if resistance to its power increases by an even greater degree. Among the key indicators of overextension are the following:

We have, in short, entered a historical maelstrom marked by prolonged economic crisis, the spread of global resistance, the reappearance of the balance of power among center states, and the reemergence of acute inter-imperialist contradictions. We must have a healthy respect for US power, but neither must we overestimate it. The signs are there that the US is seriously overextended and what appear to be manifestations of strength might in fact signal weakness strategically.

In conclusion, let me make important clarification regarding the implications of the foregoing analysis to our to our task in the run-up to the WTO Ministerial in Cancun. They should not be mistaken as leading to a strategy of saving multilateralism and siding with the competitors of the US to shore up the IMF, World Bank, and the WTO. Neither US hegemony institutionalized in multilateral institutions nor US hegemony exercised unilaterally has brought about anything good for the poor and oppressed countries. Both have spelled trouble for us. On the contrary, the task at hand is to take advantage of the sharpening competition among the US and the other big economic powers to disempower, if not dismantle, the WTO, World Bank, and the IMF. The task at hand is to redouble our collective efforts to derail the Cancun Ministerial.

From this vantage point, let us beware of the proposal being floated by the WTO leadership to form an NGO Advisory Committee for the WTO. This idea is nothing more than a Trojan Horse planted in our midst to split our ranks and shore up an institution of the global capitalist elite that is in the grip of an irreversible crisis of legitimacy.

I thank you.

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