Mobilization Against Globalization

1. Mobilization Against Globalization Why All The Fuss? Mobilization Against Globalization Lecture 18

2. The World Trade Organization • Created in 1994 as Part of the Uruguay Round GATT Negotiations. • An International Organization. • 144 Member Countries • Budget of $86 million • Staff of 550 • Most Important Functions: • Administering WTO Trade Agreements • Forum for Trade Negotiations • Handling Trade Disputes • Monitoring National Trade Policies • Technical Assistance and Training for Developing Countries See www.WTO.org for more details

3. Sense and Nonsense About the WTO • “The WTO Benefits Rich Countries at Expense of Small Countries.” • Rule of Law Levels the Playing Field: Small and Poor Countries Have Same Rights and Responsibilities as Large • “The WTO is Run By MNCs.” • WTO is Run By Governments; if Governments are Too Responsive to MNCs, that’s a Different Matter. • “The WTO Imposes Trade Laws.” • WTO Has No Authority To Impose Anything. • All Changes are Determined By Governments and Ratified by National Legislatures. • All Disputes Within WTO are Initiated by Governments.

4. 4. WTO Undermines Democracy The Dispute Settlement Mechanism

5. The DSM • Alleged Violation • Consultations • Panel Established By DSB • 3 Trade Law Experts • Reviews Evidence, Meets with Parties, Issues Report • DSB Must Accept Report Unless Unanimous Vote Against • Right to Appeal • Appellate Body 3-5 People • DSB Must Accept Appellate Report Unless Unanimous Vote Against • If “Guilty” Must Alter Practice • Compensation Until Changed • Retaliation if Practice Not Changed • Undermines Democracy?

6. 5. The WTO Is Hostile to Legitimate Environmental Objectives? • Early 1990s, U.S. Requires American Shrimpers to Use Turtle Exclusion Devices (TEDs). • In May 1991 U.S. Prohibits Shrimp Imports From Countries that Don’t Protect Sea Turtles. • October 1996: India, Malaysia, Pakistan, Thailand File Case Against U.S. in WTO. • WTO Rules that US Law Represents “Arbitrary and Unjustifiable Discrimination.”

7. Hostile to Environment? • What the WTO Appellate Board Ruled: • American Policy Justified Under Article XX(g): • Can restrict trade when attempting to conserve “exhaustible natural resources.” • Governments Can Restrict Trade to Achieve Legitimate Environmental Goals (such as protecting Sea Turtles) • American Policy Unjustified Under the Chapeau of Article XX: • trade restrictions adopted under Article XX cannot be “applied in a manner which would constitute a means of arbitrary and unjustifiable discrimination between countries where the same conditions prevail…”

8. Hostile to Environment? Cont… • Broader Implications: • Growing Sensitivity to Environmental Issues in WTO. • Lack of Clarity Concerning How To Reconcile Existing Trade Rules with Emphasis on Non-Discrimination with Environmental Policy Objectives. • Generated support for the idea of restricting trade on the basis of “processes or production methodologies” (PPM) rather than the goods themselves • Nothing wrong with the shrimp, just the way they are raised.

9. 6. WTO Advantages MNCs at The Expense of Labor • WTO Rules, and Trade Liberalization Benefit MNCs. • No International Rules that: • Regulate Corporate Activity • Regulate Treatment of Labor • Propose to Incorporate “Core International Labor Standards” into WTO • Better Wages • Improved working Conditions • Reduced Hours • End Child Labor

10. Developing Countries Disagree • “The Western World, the industrialized world, wants to take away our comparative advantage. It’s a pernicious way of robbing our comparative advantage.” Murasoli Maran, Indian Delegate to the WTO. • “Unfortunately, trade unions in developed countries feel that . . .their employment prospects are imperiled.” D.L. Sachev, Secretary of the All India Trade Union Congress (2.5 million members). • “The objectives of the…trade unions…that back the push for core labor standards are mainly protectionist in nature…They want to protect jobs in the north by reducing the low-cost incentive that attracts global corporations to the developing countries.” Martin Khor, Director of Third World Network. • More Broadly, African, Latin American, and Asian Academics, Labor Officials, and Non-governmental Organizations Protest the Inclusion of Labor Standards in the WTO.

11. Comparative Advantage and Factor Price Equalization Drive This Conflict • Low Skill Labor in the United States Has Been Hurt By International Trade • Attempt to Raise the Cost of Labor in Developing Societies • Resist Additional Trade Liberalization • Labor in Developing Countries Gain From Trade • Efforts to Raise Standards in these Countries Can Eliminate the Basis of their Comparative Advantage and Make it Impossible to Develop • They Resisted The Clinton Administration’s Efforts to Incorporate Labor Standards into the WTO.

12. 7. Globalization Causes Inequality Source: World Bank. 2001. World Development Indicators CD-ROM

13. Globalization Causes Inequality Source: World Bank. 2001. World Development Indicators CD-ROM

14. What Have We Learned? • Globalization is Not New. • Product of U.S. Policy Initiated in the 1940s and Implemented through the GATT/WTO During the Last 60 Years. • Globalization Has Unambiguously Raised Global Income. • The World as a Whole is Wealthier Today Than Ever Before in History. • A Large Share of these Income Gains Can Be Directly Attributed to the International Economic System that was Created Following WWII. • These Gains Are Not Evenly Distributed. • Globalization Generates Winners and Losers.

15. The Politics of Globalization are Driven By These Distributional Consequences of Economic Integration • Politics is “who gets what.” • The Politics of Globalization are about who wins and who loses from the Global economy. • Winners and Losers are Not Quite as the “New Left” Would Have You Believe. • Not a Simple MNC vs. Labor Issue: Whether you win or lose depends upon what you do and where you do it. • Developing World Does Benefit From Globalization • Then why are they still so poor?