Clinton throws brick

The President's talk of sanctions shatters chance for WTO unity.

BILL CLINTON CAME to Seattle last Wednesday to save the World Trade Organization from paralysis and chaos. Instead he managed, with just one word, to give it the coup de gr⣥. Late Friday afternoon, after months of labor, the multinational mountain produced not so much as a mouse: only a burp, a bad smell, and humiliating defeat for Slick Willie, United States foreign policy, and multinational capitalism's dogma that unrestrained trade is the ultimate economic good.

The word that brought catastrophe down on Clinton's head was "sanctions." In an exclusive interview with the P-I's Michael Paulson the day before his arrival in Seattle, the President dropped a brick of historic dimensions while discussing US concern to improve labor standards worldwide. "I think that what we ought to do first of all [is] to adopt the United States' position on having a working group on labor within the WTO, and then that working group should develop these core labor standards, and then they ought to be a part of every trade agreement, and ultimately I would favor a system in which sanctions would come for violating any provision of a trade agreement. . . ."

It sounds like a mild enough proposition on the surface—after all, who's in favor of prison factories churning out export goods and 12-year-old Asians chained to benches making tennis shoes for 12-year-old Americans to wear? And the message went down like hot buttered rum with its intended audience, leaders of organized labor and environmental and humanitarian protesters. But representatives of poorer member nations of the WTO—as many as three quarters of the total—found in Clinton's use of the word "sanctions" confirmation of their worst suspicions about American trade policy.

They had plenty of ground for suspicion long before arriving in Seattle. Countries like India, South Africa, and Indonesia have little financial, technological, and educational capital to put into the production process: Cheap labor is their primary resource in producing goods to trade with the developed world. In the two earlier WTO "rounds" at Singapore in 1996 and Geneva in 1998, the US negotiators, ably backed by the European Union team, persuaded countries dependent on labor-intensive industries to open up their markets for Western goods and services in exchange for greater access to Western markets for their textiles, clothing, and steel.

But when Third World exporters tried to put the agreements into practice, they found their products blocked: by quotas that had theoretically been eliminated and by "anti-dumping" statutes against goods a little too price-competitive against those of the supposedly rabid free-marketeers.

The Third World representatives attending the WTO meeting in Seattle weren't anti-trade—they are, after all, mostly trade experts by profession—but they were determined to resist the US demand coming into the conference for yet another round of one-way "liberalization." They came to Seattle determined to insist that if there were to be a new "round" that it be dedicated mainly to evaluating how well the WTO had been working in its first five years and implementing the provisions of existing agreements.

Their position should have come as no surprise. They began making their concerns known over a year ago, when the campaign to elect a new director general for the WTO began heating up. The runaway early favorite was Thai trade minister (and professional economist) Supachai Panichpakdi. But the US team, led by ambassador-level negotiator Charlene Barshevsky, wasn't ready for a Director General, however qualified, from a country and region whose economic interests were so different from theirs. It backed ex-New Zealand premier (and professional politician) Mike Moore for the job and refused every attempt at compromise.

The US and its guy won, finally, after a prolonged, bloody backroom fight, but it cost the winners dearly in terms of credibility. When Clinton got up in Seattle and told the ministers that WTO had to clean up its act if it wanted American support, home folks may have nodded sagely in agreement; the delegates could only goggle speechlessly at his hypocrisy. When he dropped the sanctions brick in his P-I interview, they took it to mean that the US proposal of a WTO body to consider worldwide core labor standards was the first step toward establishing compulsory international sanctions against "violators."

Why was this so disturbing? Because under its charter the WTO is a consultative body making decisions by consensus, not a legislature passing rules binding on all parties by majority vote, not a court handing down rewards and punishments according to its opinion of its members' deserts. It is not equipped to apply sanctions to its members. So how were these "core labor standards" to be enforced? Suddenly the specter of the WTO as the "new world order" so feared by the more paranoid among the demonstrators outside the Convention Center seemed a little less fantastical, and this time it was WTO members themselves who were scared.

With the reek of tear gas and the clash of breaking glass outside the Convention Center to distract them, it was easy at first for reporters to ignore the subtler evidence of trouble inside, as in speech after speech delegate after delegate asked ever more insistently just how another round of cutbacks in tariffs, export subsidies, currency controls, limits on foreign ownership of telecoms and banks, and better protection for copyright in software, entertainment, and biotech would benefit their countries.

Apart from generalities about the overall beneficent impact of free trade, they didn't get an answer. So, one by one, then in informal groups drawn together by common interest in one or another trade issue, opposition to the grandiose US agenda began to crystallize.

Bully-bribe-and-blandish might still have saved the day if the economic superpowers, the US, the European Union, and Japan (which among them account for more than 70 percent of the world's production and trade) had again been working from the same playbook. But this time around conflicts are deep. Japan is looking inward, mired in a seemingly endless recession. The United States is determined to sell genetically modified foods in Europe, no matter how violently Europeans object to eating them, while the European Union feels it has a perfect right to spend half its annual budget subsidizing farm production.

With the big kids on the block at each other's throats, the smaller kids found a rare chance to assert their common interests. They didn't have power enough to force the US to recognize their demands, let along accede to them; but they did have the strength to prevent the US from getting its way.

There's been speculation already that thanks to Seattle, the WTO itself may be doomed. If that happens, it won't be because Zimbabwe or Pakistan or Ecuador jumps ship; it will be because the US decides the group has lost its usefulness as a cover for its economic ambitions. Bill Clinton's loosey-goosey feel-your-pain approach to international politics is nothing like the dry, unashamed brutality of a John Foster Dulles. But though the words have changed, the song remains the same sung 50 years ago by Eisenhower's redoubtable secretary of state, laying down the law for the whole "Free World" in the sublime confidence that no one was about to contradict him.

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