Skewered in Seattle

Last month, the Clinton White House was frantically trying to drag G-7 heads of state to last week’s Seattle meeting of the World Trade Organization. They turned it down flat, offering only the flimsiest excuses: It seems French President Jacques Chirac, British Prime Minister Tony Blair, German Chancellor Gerhard Schroeder and Japanese Prime Minister Keizo Obuchi were all washing their hair that night and couldn’t come.

Just as well for them. The WTO ministerial meeting, theoretically about launching a big new round of trade talks for the new millennium, was the biggest flop since the Edsel. Instead of launching an ambitious round of talks, the meeting, and the weeklong series of dramatic protests surrounding and overshadowing it, only revealed just how much trouble globalization--supposedly an unstoppable juggernaut irresistibly mastering the world--is in.

The riots on the streets of Seattle were the most dramatic sign of the dissension, disorganization and backlash that have temporarily stopped the march toward world order dead in its tracks. While the street demonstrations got all the headlines, the story in Seattle was the deepening deadlock among the world’s trade negotiators. If the protesters hadn’t shown up, the headlines from Seattle would have trumpeted the diplomatic gridlock among the world’s trading nations.

Unable to agree even on an agenda for the Seattle meeting, trading countries could not bridge the gaps between their positions when they met. Agriculturally successful countries such as Canada, Argentina, the United States, Australia and Thailand want agriculturally challenged countries, including Japan and the European Union, to stop protecting inefficient farmers. The agriculturally challenged don’t want to budge. Not only do farmers have lots of votes; countries like Japan worry about “food security”: the ability to feed themselves if world trade should be disrupted by, for example, a war.

The United States and the European Union, with high wage costs and strong labor unions, want to link trade with labor standards. That is anathema to developing countries, which see cheap labor as their key competitive advantage.

The United States and the EU are also united in a desire to do something, or at least to appear to do something, about using the trade system to protect the environment. But linking trade to environmental standards infuriates developing countries, which see trade as the way they can get rich enough to afford the luxury of high environmental standards.

All this is complicated by hypocrisy and bad faith on all sides. Delegates from all the countries profess the most high-minded devotion to the sacred principles of free trade--and then make slippery proposals that pay lip service to free trade while offering protection and advantages for politically well-connected industries at home.

The confusion in the suites was mirrored on the streets. The protesters outside the convention center were so deeply divided among themselves. Some protesters, especially those from the developing world, don’t like the WTO because they believe rich countries use trade rules to keep poor countries down. Textiles and agriculture, two sectors where developing countries hoped for big gains from free trade, remain tightly controlled.

The majority of U.S. protesters, especially those connected with organized labor, had a different agenda. For them, the WTO gives the Third World too much access to U.S. markets, with too few conditions. They want to make Third World access to U.S. markets dependent on it adopting higher labor standards. They also want the U.S. to use tough antidumping laws.

In effect, unions and environmentalists want the WTO to act more like a world government, setting environmental and labor standards and using enforcement powers if the standards are violated.

Other protesters (or sometimes the same protesters in a different mood) think the WTO is too much of a world government already. They don’t like the way WTO panels can determine that U.S. laws violate free-trade agreements--and then give the right to foreign countries to set penalty tariffs against U.S. exports. Too tough on the Third World or too easy on it? Too much power or not enough?

This isn’t a social movement, it’s a Cave of Adullam, the cave into which David fled from the wrath of King Saul and where, the Bible tells us, “everyone who was in distress and everyone who was in debt and everyone who was discontented gathered to him.” They don’t like the status quo, but they don’t agree on anything else.

Into this dismal and disagreeable mess stepped President Bill Clinton, trying, as usual, to please all sides. Committed as a matter of personal conviction to free trade--perhaps Clinton’s two greatest political achievements are the ratification of the North American Free Trade Agreement and the WTO agreement--the president is now backtracking as fast as he can. On the one hand, he believes in free trade, supports the WTO and condemns the small minority of protesters who resorted to violence. On the other, he feels the protesters’ pain and argues for stronger protections for labor and the environment and demands that the WTO “open up” its proceedings to the public.

To which the protesters can fairly say it was Clinton’s refusal to insist on these standards before the WTO was established that makes it so difficult to get them now. Before the WTO, the United States had far more power to insist on foreign concessions in exchange for opening its markets. It was Clinton who gave that power away by signing onto the WTO without nailing down these commitments.

The WTO we have now is, for better or worse, the WTO that the Clinton administration designed, and administration officials once bitterly condemned the dissenters who warned of the dangers that Clinton now vainly seeks to address.

So what can we learn from the shambles in Seattle? First, while Clinton is a late and unconvincing convert, he is right. Further progress in trade liberalization depends on making the trade system morally acceptable to public opinion in the West. Those who oppose labor and environmental standards for world trade haven’t grasped the idea that a one-world trading system can’t have only one dimension. Trade is important. It has real social, political and environmental consequences, and democratic governments can’t isolate trade policy from these issues forever.

Second, the globalization juggernaut is slowing down. Building an economic and financial system acceptable to 6 billion people in almost 200 countries in a world with five major civilizations takes lots of time and lots of trial and error. When the Cold War ended, many thought we had reached the “end of history” and that the democratic, free-market new world order was just around the corner. They were wrong.

Third, the political and trade tensions so evident in both the streets and the suites of Seattle aren’t going away. If anything, they are increasing. Poor countries are increasingly dissatisfied with the international system as it now exists, and so are a substantial number of citizens in the world’s richer countries.

Unfortunately, these unhappy people want very different things. Billions of poor people in countries like China and India want to work in factories that sell goods to the rich countries, but voters in many rich countries don’t want to face ruinous wage competition from the Third World.

If there were easy answers to problems like this, we would have found them already. As it is, expect more controversy and demonstrations over trade but don’t hold your breath for solutions. The world’s economic and political systems are headed for unknown waters and choppy seas. The shambles in Seattle are a taste of things to come. *