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Al-Ahram Weekly 6 - 12 January 2000 Issue No. 463 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 6 - 12 January 2000 Issue No. 463
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Heritage Millennium Features Profile Living Travel Sports People Time Out Chronicles Cartoons Letters Rethinking the WTO
By Faiza Rady
Last month was filled with victory celebrations for the anti-World Trade Organisation (WTO) activists, whose militant protests and marches closed down the powerful ministerial meeting in Seattle in early December. Vowing to intensify the struggle against the rule of transnational capital encoded in the WTO trade legislation under the guise of "free trade", the Seattle activists launched a new programme of action for the year 2000.
Besides planning a new round of vigorous protest against any upcoming WTO ministerial meeting, the activists -- who represent a broad-based international coalition of organised labour, farm workers, left-wing political parties, progressive church groups and NGOs -- are also planning to dismantle some of the most blatant neo-liberal myths through networking and teach-ins.
Most essential to the propagation of such myths is the "free trade" mantra, a central feature of neo-liberal ideology and the WTO's raison d'être. Nevertheless, the definition of "free trade" remains singularly elastic and is interpreted according to the developed countries' relative needs. "The US, Europe and Japan will demand 'free trade' only in areas where they have advantages. Otherwise, they will fight to the death," notes political analyst Fred Goldstein.
Despite calling for an end to protectionism worldwide, the US has used so-called national security reasons to protect its shipbuilding industry and prevent Japan from selling ships to the American merchant marine. In an attempt to protect its steel industry against cheaper foreign competitors, Washington has also brought suit against Brazil, Japan and Russia at the WTO for exporting steel to the US. Meanwhile, the WTO authorised the US to impose tariff barriers of up to 100 per cent on selected European imports -- including French Roquefort cheese -- to counter the European Union's refusal to import American genetically-modified beef.
While proponents of globalisation claim that free trade benefits rich and poor nations alike by stimulating economic growth and investment worldwide, opponents respond that globalisation is fragmenting production processes, disrupting labour markets and increasing unemployment.
In effect, expansion of trade and economic growth does not automatically translate into more employment and better wages. Even in the rich countries of the Organisation of Economic Cooperation and Development (OECD), job creation has trailed far behind the expansion of trade and investment. Despite average two to three per cent annual growth in per capita Gross Domestic Products (GDP) over the last two decades, aggregate unemployment figures increased in the EU and Japan. More than 35 million are unemployed and another 10 million have given up the job search altogether. The youth are the hardest hit, with one in five being unemployed.
In the world's poorest nations, material conditions are, by definition, more dramatic. In sub-Saharan African countries and other less-developed nations which have experienced steady growth since the 1980s, per capita incomes today are lower than they were in 1970. Contrasting the theory with conditions in the real world, Third Word Network -- an NGO with a Secretariat in the Ghanaian capital Accra -- denounced the WTO's function of promoting the neo-liberal sham in the strongest terms. "The WTO regime has contributed to the concentration of wealth in the hands of the rich few; increasing poverty and indebtedness for the majority of the world's population and unsustainable patterns of production and consumption."
Another much-touted cornerstone of globalisation concerns the liberalisation of investment worldwide, which is also said to benefit Third World countries by developing production and creating new jobs. Foreign direct investment (FDI), in effect, topped $400 billion in 1997 -- seven times the level in real terms in the 1970s. The phenomenal growth of FDI, however, is characterised by investment trends largely benefiting northern transnationals and their affiliates, rather than Third World economies. While 58 per cent of FDI goes to developed economies, only 37 per cent is invested in the South. Moreover, an excess of 80 per cent of FDI goes to just 20 countries. For 100 countries, FDI has averaged less than $100 million a year since 1990.
Equally deceptive in terms of creating new wealth in the South is the neo-liberal export-oriented model, pushed by the WTO and grandly backed by zooming aggregate export figures. World exports of goods and services, now worth $7 trillion, averaged 21 per cent of GDP in the 1990s, compared with 17 per cent of a much smaller GDP in the 1970s. While a limited number of developing countries like Botswana, China, the Dominican Republic and the Republic of Korea enjoyed an annual 10 to 13 per cent export growth, southern countries' share of the world market remains marginal.
Accordingly, the top fifth of the world's people in the richest countries monopolise 82 per cent of the blooming global export trade, while the bottom fifth are left scrambling for crumbs -- a mere one per cent share of the market.
Such disparities in the world trade system are contingent on the North's control of the market. "Inequalities of distribution or trade flow result from inequalities in the ownership of the instruments of production, transportation and communication," explains Goldstein.
The old adage, "The rich get richer as the poor get poorer", holds true for other market sectors. Controlling the export market and reaping the high profits of largely tax-free FDI niches worldwide, northern-based transnationals have also contributed to the phenomenal growth of speculative money and stock markets.
Hence, transnationals have made short-term investments contingent on the liberalisation of capital movement across national borders. Portfolio and other short-term capital flows grew substantially and now total more than $2 trillion in gross terms, almost three times the figure in the 1980s. The daily turnover in foreign exchange markets increased from between $10 to $20 billion in the 1970s to $4.2 trillion in 1994. And international bank lending grew from $265 billion in 1975 to $4.2 trillion in 1994.
However, deeply buried beneath the abstract rubble of the billions and the trillions, transpires the same old tale of unequal and limited access. In 1996, some 94 per cent of the portfolio and other short-term capital flows to southern economies only went to 20 countries. Currently, only 25 developing countries have access to private markets for bonds, commercial bank loans and portfolio equity. The remaining 105 countries are locked out for lack of credit rating -- a decision imposed by the world's 100 largest banks, all based in the Group of Seven countries (G-7): the US, Britain, France, Germany, Japan, Italy and Canada.
Motivating this monopoly of northern transnational capital are policy shifts ostensibly promoting "economic efficiency" through market policies that require deregulating national markets and dismantling the welfare state. But many analysts contend that the raised banner of "economic efficiency" masks the ruthless and relentless pursuit of transnational corporate profits epitomised by the WTO. "Globalisation is a process of expanding the transnationals' ability to accumulate profits on a wider and wider scale, through setting up factories, selling commodities and financial plunder," writes Goldstein.
Besides the mind-boggling magnitude of increased trans-border capital flows over the 1990s, other statistics also seemingly confirm that the world has become a more prosperous place. In effect, over the past 50 years, average per capita incomes have more than tripled as GDP increased ninefold, from $3 trillion to $30 trillion.
Again, global or national per capita incomes and GDP statistics tend to blur and distort reality by lumping together and averaging out global and national economic disparities of an unprecedented scale. "Poverty is everywhere," says the 1999 Human Development Report (HDR). Measured by the human poverty index, more than one quarter of the 4.5 billion people in the South are still deprived of most of life's most fundamental rights: survival beyond age 40, access to knowledge and access to private and public services.
The reality of encroaching global poverty and its ensuing litany of ills has by now become disturbingly familiar. As a result of structural market inequities, an estimated 1.3 billion people are still deprived of potable drinking water and survive on incomes of less than $1 a day. One in seven children of primary school age is out of school and 840 million people are malnourished.
In the South, despite much official talk of women's empowerment, gender disparities remain institutionalised. As overall levels of destitution increase despite the liberalisation of trade and the WTO regime, the feminisation of poverty is on the rise. At this dawn of the third millennium, female illiteracy is still 60 per cent higher than male illiteracy.
Besides having its own share of gender inequality, the North also has its share of abject poverty -- deeply buried under the deceptive statistics of macro-economic success indicators. In the richest countries of the world, one person in eight is handicapped by poverty and its dire consequences: a life span shorter than 60 years, an income below the official poverty line and deprivation of the literacy needed to survive in a high-tech society.
Determining the rise of global poverty is creeping neo-liberalism and its most powerful agent, the WTO, contend the Seattle activists. Following last December's victory, the movement is bent on exposing the myth of the "free market" and its alleged global fringe benefits.
The activists may have found a strange bedfellow in renowned currency speculator and billionaire George Soros. For it was, after all, Soros who had warned some years ago against "extending the market mechanism to all domains because it has the potential of destroying society".
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