WTO is a War Machine

By Yash Tandon

The World Trade Organisation (WTO) is holding its tenth Ministerial conference (MC10) in Nairobi from 15 to 18 December. This is the first of six blogs I intend to write before the Conference. The objective is to analyse the ever changing dynamics of the WTO, and to raise the voice of democratic forces – from Africa and beyond – to try and influence the outcome of the Nairobi Ministerial. Why is that important? Because, the processes and outcome of MC10 are subject to manipulation – like all previous WTO Ministerials have been – by the big and the powerful trio: the United States, the European Union and Japan.

At the November 1999 Seattle Ministerial the Organisation for African Unity (OAU) had threatened to walk out of the Conference in protest against its exclusion from the so-called ‘Green Room’ processes. These are behind-the scenes negotiations among the ‘Big and Powerful’ to which a selected number of countries from the South are invited to give the outcome an aura of legitimacy. Small African countries do not matter – they are objects of history not its makers. But the mighty do not always have their way. Seattle eventually collapsed. African voices joined with forces from the Global South and street protests by thousands do people led to its demise. The ‘Big and Powerful’ had illusions until the last day that they would win. They lost. Sometimes, the small and weak can unite to make history.

It is not the aim of this series of six Blogs to ‘Seattlize’ Nairobi (if you’d excuse the expression). We want this first WTO conference to be held on the African soil to succeed. But it must be ‘success’ as defined by the broad democratic forces of Africa and the world and not by ‘the Big and Powerful’. The objective of this series is to define want ‘success’ means from the perspective of the former - not the latter.

The series will try and analyse some of the difficult technical issues in a language that is understood by the ordinary citizens who want to be a part of the WTO Nairobi process and its outcome. This will be done by rigorous application of logic and test of evidence, and rooted in principles of equity and justice.

So the first challenge I face is to explain why I think the WTO is a ‘war machine’. Is it a mere hyperbole – a rhetorical exaggeration? I think not, but you must wait to read the six Blogs and judge for yourself.

But before I go into the basic argument of this piece, let me list the tentative titles of the rest of the five Blogs:

# 2: Solidarity and Responsibility: A New International Ethical Order (NIEO)

# 3: Dangers of WTO10: A new Round + TTIP + TPP + TISA + EPA

# 4: The march of the flowers: From Naivasha to Amsterdam

# 5: Africa draws Six Red Lines on the sands of the WTO Tenth Ministerial

# 6: Fighting WTO's culture of terror and impunity

Trade is War and the WTO is a Weapon of War

At first sight the phrase ‘Trade is War’ - does look like a hyperbole – even counter-intuitive. How can it be so? After all human beings have traded for thousands of years. Indeed, our civilization owes itself to trade. People produce for consumption; and what one cannot produce one must procure from those who can. Trade is vital. So how come that I describe it as ‘war’?

Actually, it is not a simple question. The German political-economist, Karl Marx, wrote Das Kapital in 1857 to show that under capitalism production is not for consumption but for trade. It is for profit and not for social welfare. Social progress may advance as the ‘productive forces’ develop; but it does so only as a result of class struggle. Capitalism is based on the exploitation of labour. Left to its own laws of motion, Capitalism bipolarises society into the rich and the poor. Trade between nations bipolarises them into the rich and the poor. This last point Marx did not fully develop, but as an economic historian I can say with some knowledge that since the rise of capitalism some 300 years ago, trade has been an act of war between nations. Trade kills – as surely as guns. In the case of Africa the experience of trade goes even before the rise of capitalism. Slave trade was war against the people of Africa. To come more recent times – I mean the last 30 years – trade war has devastated African economies. The official story that Africa has ‘enjoyed’ enviable 4 to 5 percent ‘growth’ is belied by the harsh reality on the ground. Millions of people are reduced to levels of poverty they had not seen before. In subsequent blogs, I’ll provide evidence of this, and the reasons for the continued impoverishment of the African continent.[i]

People in the West believe that with the end of colonialism, the Empire has ceased to exist. Not so. It has simply muted into a ‘multilateralised neo-colonial system.’ Instead of Britain ruling Kenya or France ruling Algeria, it is the Empire of the US, Europe, Japan that now reign over the global south. They created the principal instruments of global economic governance - the World Bank, the IMF and the WTO, and they are still busy creating others such as the EPAs (Economic Partnership Agreements) and the TTIP (Transatlantic Trade and Investment Partnership) – structures of dominance that I discuss in future Blogs.

The WTO is the principal instrument of global trade war. If small and middle sized countries do not 'follow the rules' as dictated by the Big and Powerful who effectively control the WTO, then they are - collectively and individually - subjected to sanctions. Sanctions are acts of war.

Sanctions within the global trading system are new phenomena – barely, sixty years old, as old as the WTO. The WTO, in fact, is a leftover of the failed agenda to create the International Trade Organisation (ITO) during the post Second World War Bretton Woods negotiations. The ITO's initial enforcement proposal focused on remedies for violations in the form of compensation for injury rather than sanctions. France and Benelux were opposed to giving the ITO the power of sanctions; they were concerned that the ITO might be politically influenced by the power of the Anglo-American dollar/sterling empires. The US and UK, on the other hand, pursued the sanctions route. They argued that mere compensation negated what they called a 'higher moral duty to abide by promises'. The ITO never took off the ground, but the shell that was left behind - namely the WTO – incorporated the sanctions apparatus. In the entire global governance structure the only other body that has teeth – the power of sanctions – is the Security Council of the United Nations.

Let me give just one illustration of how the WTO is effectively controlled by the Empire.

The Cotton war: the Case of the Cotton-4

The cotton sector is the second largest formal employer (the largest is the state sector) in Benin, Burkina Faso, Chad and Mali. Almost a million farm units provide employment to 7 to 8 million actively farming adults and livelihoods to some 10 to 13 million people (including children and non-farming adults). Cotton also provides employment to workers in the associated agro-input, transportation and small scale local value added industries.

On 10 June 2003, at a meeting of the WTO's General Council, Burkina Faso on behalf of the Cotton-4 raised the issue of the serious damage caused to their economies by American distorting subsidies on cotton.

Most analysts agree with the C-4 that the US cotton subsidy is ‘trade distorting’ (a technical term meaning it violates the WTO’s own principle of ‘free trade’). It results in at least a 10 percent reduction in global cotton prices.[ii] Another study reported this: ‘Because of the prominent role cotton plays in the economies of C-4 … a small decline in cotton prices can make an enormous difference in the ability of their farmers to pay for health care, education, and food. A good price for cotton allows farmers to boost production of subsistence crops, slows urbanization by keeping people in rural areas, and creates localized wealth in rural places that need it most.’[iii]

On 19 November 2004 the C-4 again brought the matter before the WTO, which was persuaded to set up a body to look at the cotton issue. That was over a decade ago. However, because of American persistent refusal to cooperate, this body has made no progress. On July 28, 2009 the C-4 sent a high level delegation to Washington to discuss the issue. They were given an audience by a low-level official team, but they came back home empty-handed.

Four years later – in anticipation of the 2013 WTO Bali Ministerial - the C-4 proposed to the WTO that the issue of distorting subsidies be settled by the end of 2014. Nothing happened. Then, at the Bali Ministerial they managed to get a statement in which the Ministers expressed ‘regret’ that ‘we are yet to deliver’ on the trade-related components of the Hong Kong Declaration. On the cotton issue it simply said that the Director General of the WTO would ‘provide periodic reports on the development assistance aspects of cotton.’ There was no mention that the US subsidies were trade-distorting and therefore illegal.

What should the C-4 do now? Should they take the matter to the WTO Disputes Settlement body (DSB)? In theory, every member state of the WTO has a right to the DSB if it feels that its rights have been adversely affected by the action, or lack of action, of another country. But that is at the level of formal equality of membership. The reality is very different. In real life, power and wealth count. Assuming the DSB decides in favour of the C-4. Then what? Then ... well, nothing. The DSB can make a judicial determination but it has no power of sanctions - these are left to the aggrieved party or parties. The US might even accept the panel's decision, and then challenge the C-4 to impose sanctions against the US. What sanctions can the C-4 impose on the US? The C-4 can hoist a moral flag but it will not make any material difference to the case in dispute.

What lesson does one draw from the above? There can be only one. There is no chance that the C-4 will win this war in the WTO. The C-4 countries are up against a Goliath. It is a one-sided war.

But there is a more subtle, more insidious, side to the story which is very interesting - the Goliath provided an alternative to removing its trade-distorting subsidies on cotton. The US offered to give ‘aid’ to the four countries within the framework of ECOWAS (the Economic Community of West African States). The Empire threw money at the problem. Under its ‘Feed the Future’ project called Comprehensive Africa Agriculture Development Program (CAADP), the US signed agreements with the ECOWAS countries to enable them to improve their agricultural productivity.[iv] Its two significant components are: The West Africa Seed Program and the West Africa Fertilizer Program. As these titles make it clear, what the US is offering is to ‘modernize’ agriculture in the regional context, instead of removing its illegal – for that’s what they are - trade-distorting subsidies. The US has offered so-called ‘development aid’ to the Cotton-4 to enable them to purchase from American agro-corporations certified and drought resistant seeds and chemical fertilizers. In addition, the project promotes the adoption of integrated soil fertility management practices and – the icing on the cake - address issues of climate change. The corporations are now foraging in the desert created by the US trade war.

Conclusion:

The WTO is a war machine. Ironically this machine is located in one of the most peaceful places on earth. Geneva is surreal. It is not really part of the ‘normal’ world. The city projects a comfortable veil of (apparent) aloofness from the real world. Geneva is a synthetic, sanitized place. I know this because I breathed its dreamlike air for five years, four of these as head of the South Centre – the policy-oriented think tank of the Global South. Trade negotiations have an air of abstraction from the reality of power politics. The existential detachment also leads to conceptual detachment. Thinking becomes universalized and idealized, abstracted from reality. When it comes to trade negotiations within the sublime waterfront façade of the WTO, mathematical formalism – an abstruse numbers game – takes over in ever-repeating incantations. Coefficients and percentages parody life. In this rarefied field of negotiations, metaphors ranging from ‘landing grounds’ to ‘taking a walk in the woods’ circulate from desktops, to evening party talks, to the media. Sadly, as trade negotiators take a walk in the woods, they count the trees and often lose sight of the forest.

It is the forest that we shall be exploring in my future Blogs. To start with, however, and before we enter the forest, I would explore the question of whether there are people who seek to bring some sanity – some humanity – to those warring factions of the WTO. This is the theme of the next Blog: ‘Solidarity and Responsibility: A New International Ethical Order’.


[i] For fuller analysis, see my Trade is War, OR-Books, 2015.

[ii] See Oxfam, ‘Cultivating Poverty: The Impact of US Cotton Subsidies on Africa’ Briefing paper; Baffes, 2003

[iii] Andrea R. Woodward (2007), ‘The Impact of U.S. Subsidies on West African Cotton Production’. In: Per Pinstrup-Andersen and Fuzhi Cheng (editors), ‘Food Policy for Developing Countries: Case Studies.’ http://cip.cornell.edu/dns.gfs/1200428204.

[iv] https://www.usaid.gov/west-africa-regiona/agriculture-and-food-security

Last modified onMonday, 07 December 2015 15:34

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