[P2P-F] Fwd: ZNet Commentary: Walden Bello: The Corporate Free Trade Project Reloaded

Wed Aug 27 21:37:11 CEST 2014

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Subject: ZNet Commentary: Walden Bello: The Corporate Free Trade Project
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Walden Bello: The Corporate Free Trade Project ReloadedZ Communications
Daily Commentary

Six years after the advent of the global financial crisis, and with no end
in sight, one would have expected that global capitalism would be in a
serious state of disarray.  Yet neoliberalism, while discredited, retains
its hold on policymakers as a default ideology.  Finance capital has been
able to roll back the initial attempts to reregulate it in Europe and the
United States.  And Washington and Brussels have resumed their aggressive
efforts to create multilateral free trade regimes.

Today, the United States is pushing hard to complete negotiations with 11
countries that would put in place the so-called Trans-Pacific Partnership
(TPP), while it is negotiating with the European Union to set up its twin,
the Trans-Atlantic Trade and Investment Partnership (TTIP).  These
initiatives are in full throttle this year, 20 years after the North
American Free Trade Area (NAFTA), the first neoliberal multilateral trade
regime, came into being in 1994.

*Rocky Road*

The last 20 years have proven to be a rocky road for free trade.

Neoliberal trade policies did not begin with the birth of the North
American Free Trade Area (NAFTA) or the founding of the World Trade
Organization (WTO) a year later, in 1995. They had been in place in over 90
developing and transitional economies through structural adjustment
programs imposed by the World Bank and the International Monetary Fund for
over a decade.  Trade liberalization was one of the prongs of structural
adjustment, along with privatization and deregulation.  The result was the
rise in poverty rates in Latin America in the 1980’s, the so-called “Lost
Decade.”  As for Africa, by the end of the 1980’s, it had been rolled back
to where it was at the time of decolonization in the 1960’s.

The 1990’s saw the Clinton administration push three grand neoliberal trade
projects:  NAFTA, the World Trade Organization (WTO), and APEC (Asia
Pacific Economic Cooperation).  NAFTA and APEC were partly conceived as
fallback positions in the event the WTO did not come into being.  APEC
aimed to unite 21 countries in the Eastern and Western Pacific in a
trans-Pacific free trade area, while NAFTA was seen as but the first step
of a free trade project that would eventually bring the whole Western
Hemisphere into a Free Trade Area of the Americas (FTAA).  APEC was
scuttled by Japan and a number of other Asian countries, which refused the
mandatory liberalization demanded by the United States during the critical
Osaka Summit of APEC in 1995.  NAFTA came into being, but the grandiose
FTAA was torpedoed by Latin American governments led by Venezuela, Brazil,
and Argentina during the Miami summit in November 2003.

As for the WTO, the push by the European Union and the US to initiate a new
round of trade liberalization just five years after the conclusion of the
Uruguay Round fell apart during the Third Ministerial in Seattle in
November-December 1999, undone by the resistance of developing countries
and some 50,000 protesters on the streets.  But the EU and US were
undeterred, and at the Fourth Ministerial at Doha in 2001, they employed
carrot and stick policies to get the developing countries to sign on to a
declaration launching the so-called “Doha Development Round,” which had
nothing to do with development.  But the experience of being bamboozled in
Doha led developing countries to form defensive blocks within the WTO.
There was the Group of 20 led by India and Brazil, which pushed a united
stand to resist further liberalization of developing countries’
agricultural sectors while the EU and the US continued to massively
subsidize theirs.  There was the Group of 33, led by Indonesia and the
Philippines, which sought to protect the interests of countries with large
peasant populations.  Then there was the Group of 90, which resisted the
push by the EU and the US to include investment, competition policy,
government procurement, and trace facilitation within the remit of the WTO,
which would have meant bringing more dimensions of economic life under the
disciplinary authority of this body.  It was members of the Group of 90
that led the walkout during the Fifth Ministerial of the WTO in Cancun in
September 2003 that brought about the collapse of that meeting.

After over a decade of negotiations that went nowhere, a major attempt was
made to revive the WTO leading up to Bali Summit in November 2013.  A Trade
Facilitation deal was promoted by the North that was initially premised on
the countries of the South curbing their food security measures.  Agreement
on the deal was supposed to have been obtained at Bali when India withdrew
its opposition after getting developed country assurance that its food
stockpiling policies would not be challenged.  Three weeks ago, however,
India made a turnaround saying that the deal was off since the developed
countries had reneged on their promise to find a permanent solution to the
food security needs of developing countries.  This collapse will probably
mean the end of the WTO as a mechanism for trade liberalization.

*Shifting Strategies*

After the collapse in 2003 of the Cancun Ministerial—the second in four
years—then US Trade Representative Robert Zoellick made his notorious
remarks to the effect that the WTO was composed of “can do” countries and
“can’t do countries,” and that the US would “do business” only with the
“can do” countries.  The US and EU began to rely less on the WTO as a
mechanism for trade liberalization and more on bilateral or multilateral
free trade agreements (FTAs).  By 2012, the US had concluded 21 FTAs.  Not
wanting to be left behind, the EU had 23 and Japan had 13.  There were
several key features of these agreements:

   - their terms favored the developed countries;
   - many imposed intellectual property rights clauses that were even more
   restrictive than those of the WTO’s TRIPS Agreement;
   - they did not touch the highly protected agricultural sector of the
   developed countries while liberalizing the agriculture of the developing
   countries;
   - they subordinated the environment and the interests of labor to trade
   liberalization;
   - many empowered foreign corporations with the right to sue states for
   what they regarded as violations of investment contracts.

*Troublesome Twins*

Continuing Washington’s effort to find an alternative to the WTO as a
multilateral mechanism of trade liberalization, the Obama administration
three years ago resurrected the original APEC free trade project in the
form of the Trans-Pacific Partnership (TPP), which would unite 12 countries
bordering the Pacific in a free trade area.  This agreement is being
negotiated in secret because, as former US Trade Representative Ron Kirk
has said, many of the provisions of the TPP are so unpopular that people
would reject it if they were made public in transparent negotiations.  The
proceedings of some negotiations have been leaked, however, and these
reveal that the environmental protection provisions are very weak, the US
is pushing for tough intellectual property provisions, and corporate
investors would be given great leeway to sue states in cases of conflict
over contracts.

Washington has been trying to wrap up negotiations on the TPP before the
2016 elections, but it has not been easy.  During his visit to Japan in May
of this year, President Obama was dealt a stunning setback when in exchange
for a US commitment to defend the Senkaku Islands (Diaoyu Islands in
Chinese), he was unable to secure a trade agreement with Japan that would
have pried open further the country’s highly protected agricultural
sector.  The deal was a key step towards the completion of the TPP since
the US and Japan are the two biggest economies in the projected 12 country
pact.

The US has made it clear that the other half of its global trade agenda is
the TTIP.  TTIP is TPP’s twin.  Like the TPP, it is being negotiated in
secret.  Like the TPP, it aims not only at eliminating trade barriers but
to weaken regulations on corporate activity and do away with investment
restrictions.  Both seek to institutionalize mechanisms that would allow
corporations to sue states for imposing restrictions on their activities.

*Countering the BRICS*

Both the TTIP and the TPP have not only been conceived as substitute
multilateral mechanisms for trade and investment liberalization in place of
the stalemated WTO.  They are also a defensive response of the old center
economies to the rise of the South and especially of the so-called BRICS.
The BRICS are among the new dynamic centers of the global economy, and
though they rely on the US and EU as markets, they are also competitive
with these economies.  A great deal of their competitive power derives from
the fact that the state plays a very significant role in supporting
domestic and state industries in the BRICS, and the strategic aim of both
TPP and TTIP is to create a bloc that would make the dismantling of the
activist or interventionist state in the South and the BRICS a precondition
for expanding trade and economic relations with Europe and the US.  As
Manuel Perez-Rocha and Karen Hansen Kuhn point out, “Given the global
shifts of power where the main actors are the BRICS countries and in
particular China, some have wondered whether the hidden agenda of the TTIP
may be part of a ‘West against the Rest’ strategy to shore up a US-European
alliance against the perceived threat posed by emerging economies…”

Indeed, there are geopolitical dimensions to both projects.  The TTIP is
largely congruent with the NATO military-political bloc, while the US has
made it clear that the TPP is the economic correlate of its “Pivot to Asia”
military strategy, with the aims of the first to isolate Russia and that of
the second to contain China.

*Towards a New Trade Paradigm*

In the face of the renewed corporate thrust for free trade, how are
developing countries responding?  The BRICS are tightening their economic
coordination, and preferential trade arrangements among them are likely to
follow their recent impressive moves of establishing the New Development
Bank to rival the World Bank and their Contingency Reserve Fund to parallel
the International Monetary Fund.

For both the BRICS and other developing countries, say advocates for the
South, an offensive strategy pushing a new trade paradigm is needed.  Among
the elements of such a paradigm being discussed are the following:

Promotion of more regional economic agreements like the Bolivarian
Alternative for the Americas or ALBA, which makes economic cooperation and
development, not free trade, the centerpiece of economic relations among
countries.

A push for an international trading regime that provides a lot of
development space.  While it had its flaws, the GATT system (General
Agreement on Tariffs and Trade) left a lot of “development space” for
developing countries, and many advocate a return to something like GATT
instead of the neoliberal WTO, which eliminates practically all development
space.  Even better yet in their view is a reinvigorated United Nations
Conference on Trade and Development (UNCTAD), which has among its central
principles the “special and differential treatment of developing countries.”

Abandonment of the export-oriented strategy of development that the World
Bank and neoliberal technocrats pushed on developing countries which has
made them very vulnerable to Northern corporate power because it has made
developed country export markets rather than the domestic economy the
center of gravity of the economy.  Focusing on the domestic market,
progressive analysts say, will necessarily push countries to undertake
reforms promoting more equitable income distribution to create domestic
demand that will trigger industrial development.

20 years after NAFTA, the US and EU are making a renewed push for global
free trade.  But compared to 1994, the capacity of the South to resist the
free trade project and come up with a trade paradigm with a different
vision and based on different principles is greater today.

Telesur columnist Walden Bello is a member of the House of Representatives
(Parliament) of the Philippines.  He is the author or co-author of 18
books, the latest of which is *Capitalism’s Last Stand: Deglobalization in
the Age of Austerity* (London: Zed, 2013) and *Food Wars* (London: Verso,
2009).

ZCommunications, 18 Millfield St., Woods Hole, MA, USA, 02543
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