What's really at stake in Seattle

Economists speak out on the issues behind the World Trade Organization summit and the street protests.

Published December 2, 1999 5:00PM (EST)

Accounts of the weeklong World Trade Organization conference in Seattle have thus far been dominated by the raucous events on the streets of Seattle, where protesters determined to disrupt the summit have thwarted the scheduled talks about world trade by delegates from 135 nations.

The issues at stake in the conference are numerous and complex; they pit the interests of middle-class American steelworkers against the desperately poor in the Third World, the cost of food on shelves in the United States and Western Europe against the future of many endangered species. The lineup of complaints by the alliance of groups protesting the WTO is equally complex; indeed, they have created an interesting coalition of environmentalists, labor unions and a rainbow of public interest groups.

Salon News spoke to four economic experts to clarify the issues at stake at the conference -- both in the official proceedings and on the streets. On the one hand, there are the issues on the WTO's table, and the conflicts the protests highlight: The future of global economy and its impact on national sovereignty, workers' rights and the environment. On the other, there is the efficacy of the opposition's tactics: Will the protest actually influence the WTO? And what about the violent tactics employed by the most radical of the groups in the streets of Seattle?

Peter Leyden is the co-author of "The Long Boom: A Vision for the Coming Age of Prosperity" and director of the Long Boom Project.

The way the economy is rapidly globalizing is very disruptive to a lot of people. But in the long run, the globalizing of the economy is very positive for a lot of the developing regions and a lot of the marginalized peoples that have not been partaking in the economic booms of the 20th century. This kind of growth is something to be enhanced rather than thwarted. Some people are looking at the developments in a very limited vision of where the actual trajectory of this development is going.

The feelings and the values of the groups that are protesting are totally legitimate. But I see those values being realized in a very different way than the way people think [they're] going to be realized.

The way to actually deal with the pervasive environmental problems on the planet is to accelerate the economic growth, to transition more quickly to new technologies which are much more clean and much more benign on the environment, rather than kind of choking up the process of globalization and keeping these regional or national economies.

For example, if you do limit the trade and interactions between nations, you would have countries like China and India, which have 70 percent of their energy needs rooted in coal, probably the dirtiest energy source on the planet. If you don't accelerate the technology transfer so they can transition to the new generation of technologies that the developed nations like the U.S. already enjoy, you're actually going to damage the environment more severely in the long run.

Rapid global integration of the economy and rapid technology transfer across the world is the solution to the environmental problems -- it is not causing the problem. To stop that process in its tracks now is in fact the exact opposite [of the] thing you want to be doing.

If you take the labor concerns, you have got to understand this in the big picture perspective. For example, a steel manufacturer in the U.S. is all worked up because he thinks somebody producing steel across the world is going to take his job away. Well, frankly, that may be true. His kind of job could be done better and cheaper in another part of the world. And from that lone steelworker's perspective, that could be terrifying.

But from the perspective of the American economy, we have the lowest unemployment rate in 30 years. We have sectors of the economy that are just screaming for labor and screaming for people to transition into those sectors. Of all the countries in the world right now, this country is the last one that needs to protect any sector of the economy. We could cede the entire global steel industry to developing Asian countries and it wouldn't seriously affect the American economy.

I'm not going to completely defend the World Trade Organization as an organization, in terms of policy decisions or the bureaucrats who run it. There is a legitimate concern about having more people at the table, that should be a democratic process, an open process and a decentralized process.

That said, our technological infrastructure has already gone global. The entire economy is rapidly globalizing. Technology and the economy are now operating at this global scale. The thing that has to happen in the next 10 to 20 years is that we have to see forms of governance evolve to deal with the nature of that globalized technology and economy.

It's in everybody's interest to find a way that that works best, a form of global governance, or regulation, that can deal with the nature of this new, very potent, powerful global economy, one which doesn't really fit, in this 20th century way that we regulate it, within national borders.

When people say, We don't want a global organization that's up to the task of working at that level, they're totally shooting themselves in the foot. In fact, it's impossible for national governments to deal with this creature, this global economy.

In other words, if you really were for the people's perspective in this, if you wanted the average person to have some kind of leverage in what's going to happening in the future here, you would be encouraging global organizations that are up to the task of wrestling with and structuring this global economy in ways that work for human beings and societies, rather than just for corporations.

To dismantle the WTO is just ludicrous -- it's about the only thing we have that's even halfway up to the task. It's a very recent organization, which is good. The IMF and the World Bank are trying to restructure or reformulate after they were created 50 years ago for an economy that was international, not global.

Although [the WTO] is far from perfect, in general it's the right direction. We have to find ways to make it more democratic. We need to find other organizations to go beyond this that can help to craft this global society.

Gerald Meier is Konosuke Matsushita professor of international economics and policy analysis, emeritus, at Stanford University and author of "The International Environment of Business: Competition and Governance in the Global Economy."

This is a hiccup. It's a dramatic three-day thing. There's solid concern and support for liberalizing trade and having some kind of governance over international trade, and some of these other issues do not belong with the WTO. Debt forgiveness has nothing to do with trade -- it's something for the advanced nations and the IMF. But I think the WTO will try to do something about that and make some statement. The latent general concern is about globalization and the global economy and increasing inequality and some getting so rich and the Internet, which is global, and suffering. Inequality and globalization are coming in here, along with concerns about global fairness, global justice.

The WTO is just not strong enough to take care of all that. All these other concerns are being put on the WTO and should be put elsewhere. The protestors have been physically effective in disrupting the meetings, but of course some of their demands would be considered without their protests -- working parties were scheduled for labor and the environment. The protests are also counterproductive because they've been anticipated and the Clinton administration has been advocating some of [the issues].

Thomas Friedman had a good article [Wednesday] in the Times, [in which he wrote] that some of them are looking for a '60s fix. Some of the arguments are nonsensical. Some of the protestors are inconsistent. Some groups would just as soon have the smoke stacks be in Bangladesh. Other groups worry about the rain forests in the developing countries -- and don't want exports from them. Others don't want Weyerhauser to export lumber from Seattle to Indonesia because then they're cutting down forests here. It gets all mixed up -- whose environment and where? [In some cases, the protests are] disguised protectionism -- [labor unions bring up] child labor, a humanitarian motive, but their real motive is to protect textiles and steel in the advanced countries.

You're not going to get world government [with the WTO], but it is a step toward governance. It's brought some rule of law and order to trade relations, and it has liberalized trade. Trade has increased more rapidly than world output. The increase in manufacturing goods from developing countries has been outstanding. That gives them a much higher rate of development. This meeting from the beginning was not going to be as constructive as you might think: It's only the drafting of the agenda for the next round of trade negotiations, which take three to five years. But there is an interesting feature here: There is more concern about the role of developing countries in the global economy now.

The WTO emerged historically from the abortive International Trade Organization [ITO], based on the Havana charter, which was vetoed by Congress because it had provisions on international investment and restrictive business practices and international commodity agreements. The General Agreement on Trade and Tariffs was just the general agreement for the trade part of the ITO. The WTO was strengthened with its dispute resolution. It also moved in with concern to investment-related trade issues. Now those old issues that were rejected with ITO keep reemerging.

Dean Baker is co-director of the Center for Economic & Policy Research in Washington.

I think that the protests have been tremendously effective. But I am concerned about the framing of the issues. I think that the proponents of the WTO are painting this as pro- or con-globalization. And that's really not at all what the protests are about. It's not that the protestors are against globalization and the people inside are about eliminating barriers. It's simply deciding which barriers are going to remain. The real question is: What does globalization look like?

All the laws about copyright, those are protectionist. In a fully free market, if I want to go out into the marketplace and sell Microsoft Word to somebody, I can do it. But I can't because Bill Gates will have me arrested. It's not a bad thing, but that is a protection. The WTO [says it] wants to talk about the inexorable march towards eliminating barriers, but that's not quite true. A lot of people who will point to [violence in the demonstrations] were not sympathetic to the protesters anyhow. I think that the people who look at it seriously will realize that [the rioters] were a tiny minority of the protestors. When you have 50,000 people, there will be a small number of them there to break some windows. The public will understand that this is a minority that has to be stopped, like the Seattle mayor Paul Schell did.

People are there for very different reasons and they'd like to see it go in different ways. But I suspect that probably the largest group of [protesters] are there over environmental concerns. Certainly the overturning of several U.S. laws that were ruled in violation of the WTO did upset many environmentalists. The WTO cannot actually overturn laws, but the prospect that any environmental law in the U.S. could be challenged -- ruled a WTO violation -- certainly is a great concern to the environmentalists who work to get laws changed. It all seems very futile.

There's not much that can come out of this [meeting] that will be very good news for workers. Just about every economist agrees that there's been a negative impact on the wages of less-skilled workers as a result of the direction that international trade has taken. The item that the AFL leadership has pushed forward -- setting up a working group on labor standards in the WTO -- is going to mean almost nothing any time in the foreseeable future, given the timeline: If they get a working group out of the Seattle session, that working group will report back. And if they report that labor standards are an appropriate item, then in the next session, seven years out, then it might be an item to negotiate; that round will run another seven years. Maybe in 2014 or 2015, they'll talk about beginning some sort of labor standards. That doesn't promise very much to the people who are out there.

In terms of the protesters' agenda, the best thing that can happen is a stalemate -- that you don't see any movement forward on the ground at the WTO, you don't see anything move forward on free trade. I think that's the best they can hope for. As for what effect it will have on the [presidential] candidates, they might not be terribly anxious to come out and say, "Yes, let's move forward on the agenda of the WTO." What I get a kick out of is that people from the [Clinton] administration like [U.S. Trade Representative] Charlene Barshefsky say that these issues -- labor standards and the environment -- should get top priority. Two weeks ago, she's in China, up until all hours of the night sitting down with the Chinese, working on this trade deal. Is there anyone who thinks that what she was talking about was labor standards or environmental standards? That's laughable. She was talking about opening up China to our insurance companies and our banks. Those are [the administration's] agenda items.

When they want something, these people are smart, they're energetic, they're tough, they're shrewd, they're aggressive. When they want to open up China for the banks they get it; when they want to open up China to the insurance industry they get it. When they tell China that they have to enforce copyright laws, they get it. But with labor standards and the environment, they say, "Oh, yeah. We're working on it."

Dan Griswold is the associate director of the Center for Trade Policy Studies at the Cato Institute in Washington.

I think that the protesters definitely got the attention of the news media and policy makers. Probably, their ability to disrupt the events there exceeded their expectations. I don't think that anybody thought that Charlene Barshefsky would be trapped in her hotel room.

But on the other hand, I think it could backfire. It may just increase the determination of the negotiators to not be intimidated, and to make some success of it. I think from a public relations point of view, street protests and demonstrations have an honorable tradition in America and in a free society. But when you start getting acts of vandalism, when it just paralyzes the functioning of a city and an organization, I think Americans start asking some legitimate questions about whose interests are being served and whether the process can work.

In a way, the WTO has become a handy symbol for any group that has some grievance against the global trends.

These groups have been coming together ever since the NAFTA fight, which brought some of these groups out into the public arena in the trade issue. Every one of these groups in their own way are critics of the free market and of capitalism. And I think that they rightly perceive that the underlying trend is going against them as more nations turn to more open markets for goods and services and the U.S. economy continues to open up and become more integrated with the global economy.

I think one of the reasons these groups took to the streets is that they have not had the kind of influence that they would have liked to have on a national level.

Americans are uncomfortable with some of the results of globalization -- some people losing their jobs, some industries contracting -- but they also strongly reject the alternative. Anybody peddling old-fashioned protectionism just doesn't get anywhere. Pat Buchanan basically got no traction with his protectionist message. So, on a presidential level, Americans continue to accept an open economy as in the national interest. I think these groups are finding that they don't seem to be getting anywhere through the traditional channels of trying to elect a president, so in effect they're attempting to do and end-run around the process.

It's hard to find any evidence that expanding trade and expanding openness in the United States economy has in any way compromised environmental and health standards. We have the highest, most restrictive environmental laws of any country in the world. We also probably have the cleanest environment of any advanced country at a time when America has never traded more with the people of the rest of the world. So there's no evidence on the ground that our environmental quality is deteriorating because of free trade. Quite the contrary.

Look at all the indicators. Concentrations of sulfur dioxide or carbon dioxide in the air, they've all improved. Water quality has improved. Life expectancy, all these measures of public health have improved in the last 10 or 20 years at a time when we've become increasingly open and integrated into the global economy.

Each country makes its own choices as to the trade-off of environmental regulations and the composition of its economy. And Americans are choosing to encourage less pollution-intensive industries through environmental regulation. Less-developed countries make different choices. They may choose to have less environmental regulation because they can't afford American-style regulation. They just don't have the economic resources to enact our Western standards. Secondly, when you are at a much lower level of development, those sort of things are less important relative to other considerations. When you've got a large part of your population on a subsistence level, they would prefer to have jobs and food and not immediately have Western living standards.

Generally, as countries grow economically and raise their living standards, they have the resources and increasingly the political will to raise their environmental standards, and that's what's happened. So in a way, to impose trade sanctions on developing countries because they don't meet Western labor and environmental standards is to deny them the means of raising those standards.

One thing that people have to realize is that the large majority of WTO members are representing governments of one stripe or another. And those representatives out there either were elected or are representing elected governments. The question is, Who elected these 50,000 people out there, some of whom are committing direct violence, others of whom are just preventing people from getting where they need to go?

Dan Esty is a professor of environmental law at Yale University.

This will be a watershed for the WTO, an organization that has, until now, flown under the radar. The trade community hasn't understood that, in a globalized world, what they're doing is important and high-profile. At least one of the agendas of the protesters is to open up the WTO, make it more transparent.

There's a second question about whether the environmental goals are going to be addressed. Attention has been drawn to the question of a linkage between trade policy and environmental policy, and I think that over time those values will be taken on board. But I don't think you're going to see -- coming out of Seattle -- a dramatic transformation of trade rules. But this issue may now get taken more seriously in the negotiations that follow.

This coalition [of labor and environmentalist protestors] is doing a terrible disservice to the environmental goals, because the real obstacle to getting environmental sensitivity built in to the world trading system is the developing countries, who fear that the environmental agenda is a hidden way of advancing protectionism and obstructing them from getting into the European and the U.S. markets. And that fear is being corroborated by this coalition.

The developing countries have a real interest in economic growth, spurred by opportunities for expanded trade. Some of those protesting are insisting that we not allow goods from developing countries into the U.S. market, and would set up barriers to those goods entering the U.S. markets, which legitimizes the developing nations' concerns. Does that mean that we shouldn't have a clearer set of environmental sensitivities built into the trading system? No. But it has allowed the developing countries, folks who are fearful of this protectionist-environmentalist alliance, to take some comfort that they were correct.

By Fiona Morgan

Fiona Morgan is an associate editor for Salon News.

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By Daryl Lindsey

Daryl Lindsey is associate editor of Salon News and an Arthur Burns fellow. He currently lives in Berlin and writes for Salon and Die Welt.

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