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APEC fails to kick-start stalled WTO trade round

by Eva Cheng

Anti-capitalist protesters, who in Seattle in November-December 1999 helped to block the launch of a new round of global trade negotiations under the auspices of the World Trade Organisation (WTO), can proudly register their first full year of success in holding their line on the battleground.

Asia Pacific Economic Cooperation (APEC), the body of 21 governments through which the United States has been pushing its "free TRADE"/WTO agenda in Asia since 1993, failed miserably at its November 15-16 annual leaders' summit in Brunei to achieve even the bare minimum. It couldn't get all members even to pay lip-service to the call for a new round of global "free trade" talks.

Superficially, all APEC members did claim that they want a new round. The catch is what kind. What to include or drop from the agenda has become crucial. On this point, there was a fight in Brunei that appeared as a smaller-scale replay of the dispute in Seattle.

Although, in their end-of-meeting statement, the APEC leaders loosely express the wish that such an agenda "should be formulated and finalised as soon as possible in 2001 and that a [WTO] round be launched in 2001", the battle over the agenda is far from over.

Speaking to journalists after that statement was released, Malaysian Prime Minister Mahathir Mohamad, a vocal spokesperson of the opposition group, said: "If there is no agenda, how can we have a meeting? It is conditional on having an agenda." He stressed that Malaysia wasn't alone in this view.

This battle over the agenda actually started at Seattle, where the imperialist countries had set two strategic objectives for the new trade round. They wanted to make sure that those areas, such as investment, competitive policy and government procurement, which they managed to put on the agenda during and after the 1986-94 Uruguay Round of trade negotiations but which weren't adequately dealt with (i.e., were not yet included in formal negotiations and subject to the subsequent commitments), should now be brought into the negotiations.

They also wanted to extend the WTO discipline regime to new areas such as industrial tariffs, the environment and labour standards, some of which have only flimsy connections with trade. To bring more areas in would mean more effective domination of the Third World economies by the First World. Disguised by superficially equitable obligations and rights applicable to all its 139 members, the WTO in fact works totally in favour of the rich countries.

Under the WTO, violators of the rules can be punished by economic sanctions, but how hurtful will be the sanctions of a weak economy against a powerful competitor? Moreover, the powerful economies have the luxury of observing the rules selectively to suit their needs. Their records in circumventing the rules are scandalous.

Centuries of colonial plundering by the imperialist countries have left most Third World economies mutilated and weighed down by lopsided structures that they are still struggling to get out of. Since its 1995 formation, the WTO has been a tool of the imperialist countries for maintaining this unjust global economic order.

Naked plunder was no longer readily accepted, so they pumped out myths about "free trade" bringing faster economic growth, creating a bigger cake from which all countries would have a bigger slice.

Expanding WTO?

In reality, by attaching the "trade-related" prefix to an ever expanding number of areas, the imperialist governments hoped to legitimise the extension of their tentacles to more and more fields where they also have an undisputed advantage.

For nearly all sectors that count—whether agricultural production, intellectual property rights (IPR), services or investment—the imperialist economies' domination is overwhelming. How much capital export can realistically be expected to come from the Third World and enjoy the unfettered investors' bills of rights currently being pushed by the imperialist economies?

The key exportable service items, such as financial services and telecommunications, are, again, controlled by powerful corporations from the imperialist countries. They are not at all concerned by the "supply capacity" of their Third World competitors, if the latter are in the game at all.

Similarly, the competition in agriculture and IPR (under which the imperialists are seeking to cover everything from medicine and genetically manipulated products to life forms and almost any bright idea) is also determined by technology and capital base, where the First World has the upper hand, obtained and maintained essentially through robber-baron methods since colonial times.

One notable exception in services in which the Third World is a "dominant" supplier is the export of labour—certainly cheap labour and usually in the least desirable jobs. Different rules apply here: the imperialist countries don't even whisper of removing the barriers to the free movement of labour, in stark contrast to the unfettered freedom of movement they seek to enforce for capital.

The weaker economies have hitherto been trying to fend off such powerful competitors by tariffs, non-tariff barriers and other defensive policies. But the few successes have been very partial, and even such limited protective mechanisms will disappear under the WTO regime, with grave consequences for most Third World countries. This is only one reason why they revolted at Seattle.

The poorer countries were also deeply angered by the naked hypocrisy of the rich countries in technically complying with, rather than honouring the spirit of, the agreements sealed under the Uruguay Round. Both the developed and Third World countries were gradually to reduce their tariffs and non-tariff barriers such that, as a country becomes less protected against imports, it can in theory be compensated by a bigger market for its exports.

For most Third World countries, such promises were far from delivered. For example, in textiles and clothing, a key Third World export, the import quotas in the rich countries were to be removed over ten years. But six years on, these rich markets have relaxed primarily the non-essential items rather than the ones that count most to Third World exporters. They have also increasingly resorted to anti-dumping and countervailing measures, which were meant for exceptional circumstances only, as regular non-tariff barriers or weapons.

Export subsidies and other domestic support for agricultural products are predominantly a First World practice because poor countries can't afford them. Now, under the WTO, countries aren't allowed to introduce them if they don't have such measures already!

The existing subsidies can be kept and were to be reduced over time. These subsidies have traditionally been massive, so much so that even after an average 36% reduction in the last few years, they are still at very high levels. In the US, for example, the subsidy for sugar remains 244% and for peanuts 174%, while in the European Union, it is 213% for beef and 168% for wheat. In Japan, it is 353% for wheat, and in Canada, 360% for butter and 236% for eggs. Does the average ill-equipped under-resourced Third World farmer really stand a chance to compete with agro-giants from the First World?

That's why, at Seattle, many Third World countries insisted that all these "implementation issues" be reviewed and corrected before they would even consider negotiations in new areas. But their concerns were pushed aside.

At the Brunei summit, the rich countries were trying again to sell a new WTO round, with their agenda. It was again rejected. Public resistance in the Third World has been mounting to any more of the devastating consequences of "free trade", especially since the 1997-98 economic crisis. Such pressure has made it more difficult for Third World governments to accept the imperialist agenda unquestioningly.

APEC dealt another blow

Of the imperialist powers, the US has been most aggressive in pursuing its agenda at APEC and has been frustrated in recent years. Its mid-1990s push for APEC members to fast-track the liberalisation of fifteen industries was dealt a blow in 1998 when Japan refused to open up two (forest and fish products) of the nine sectors scheduled for completion that year. As a result, none of the others opened either.

Another six sectors were to be liberalised by the time of the 1999 APEC summit, but that again failed, prompting the APEC leaders to "transfer" the discussion on all 15 sectors to the WTO for consideration at the Seattle meeting, where they of course disappeared.

As the highest level trade gathering since Seattle, this year's APEC summit had the mission to kick-start the still motionless new WTO trade round. Not only did that fail, but APEC was also slapped in the face by the emergence of a string of bilateral trade agreements among its members, some of which, such as Singapore's bilateral trade pact with Australia, were unveiled just before the Brunei summit.

Singapore had already signed a similar trade deal with New Zealand last year and is finalising another one with Japan; similar talks are under way with Korea, Mexico and Canada. Apart from negotiating a similar pact with Hong Kong, New Zealand has joined hands with Singapore and Chile in recent years in pushing for a broader deal to include Australia and the US to form the so-called "Pacific Five" (P5). Cool to the idea earlier, Australia's trade minister Mark Vaile now said the P5 idea is "worthy of consideration". The WTO/apec dream of multilateral agreements is shaken indeed by this stream of bilateral deals.

These countries quickly claimed that their deals would be "WTO consistent". But how can that be in reality when bilateral deals are by definition exclusive of other parties? Will these bilateral free trade agreements (FTA) help over time to forge "an APEC-wide FTA", as claimed by Singaporean Prime Minister Goh Chok Tong? Maybe or maybe not. But the market-opening deals between two or a few parties were the norm and, indeed, the only option before the multilateral trade rounds were introduced after the second world war. Eleven years after APEC's formation, it is nonsense to claim that the mushrooming of bilateral deals today will advance multilateralism.

Chinese Premier Zhu Rongji's proposal during the November 22-25 summit of the Association of South-East Asian Nations (ASEAN) for the formation of a free trade area between China and the ten-member ASEAN is an added bombshell. Japan and South Korea might also be included as option two (dubbed "ASEAN plus Big Three"). Both schemes are now mandated for "formal study", but are immediately backed up by the decision to build a US$2.5 billion 5500-km railway linking seven ASEAN members and Kunming, western China, a concrete step to reduce the cost and delays in the movement of goods and people.

After the meeting, Singapore's super power-broker, Lee Kwan Yew, tried to include Australia and New Zealand in the proposed member lists, but the chance of this being accepted is, at best, uncertain.

Malaysia welcomed China's proposal with open arms. But it only recently succeeded in getting ASEAN to reject Australia's proposal to form a free trade area between itself, New Zealand (its partner in the 17-years-old Closer Economic Relations agreement) and ASEAN.

Whether Australia and New Zealand are included or not, the Chinese proposal—if it takes off—still constitutes a major coup that could rock the foundations of APEC and frustrate further US imperialist aspirations in Asia. Only three countries from ASEAN plus Big Three are outside APEC: Cambodia, Burma and Laos. (The other ASEAN members are Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam).

If ASEAN plus Big Three goes ahead, the APEC members left out would be: Australia, Canada, Chile, Hong Kong (which isn't really excluded because it can always creep in through China's back door), Mexico, New Zealand, Papua New Guinea, Peru, Russia, Taiwan and the US. The key targets for exclusion here are the US and its richer allies. The exclusion of Taiwan is certainly a pleasing bonus for China.

In addition, Zhu also lent China's support to an emerging "currency swap" arrangement among Asian countries, which aims to enable members to dip into a collective pool of foreign currency reserves in case of emergency—the prime role that the International Monetary Fund was supposed to have been playing since 1944. Even though it was couched diplomatically as a supplement to the IMF in Asia, it clearly would undermine the IMF's influence and relevance.

It's inconceivable that Washington isn't furious at these manoeuvres. How much Washington can count on the key countries in Asia to help kick-start the new WTO round in the foreseeable future isn't hard to work out. The US seemed to have sensed that things in APEC were not exactly going its way even before the Brunei summit. Its top trade BUREAUCRAT, Charlene Barshefsky, warned a pre-summit gathering of APEC ministers that the US would turn its attention to the completion of a free trade agreement with Central and Latin America if the global trade round did not start in the next twelve months. (This is its agenda for the Summit of the Organisation of American States in Quebec City in April 2001.)

However, all this is good news for those who oppose the imperialist countries' plan to maintain their neo-colonialist grip on the Third World, which is often done under the cover of "multilateralism".

Helped by the unfolding protest movements in different parts of the world, more and more people are refusing to buy the imperialist lies and ideological justification which seek to disguise their true agenda. But there's no room for complacency, because they are merely pausing before their next move. Anti-capitalist activists must be prepared for the next battle.

Eva Cheng is a journalist with the Australian newspaper Green Left Weekly and a member of the Democratic Socialist Party.

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