From WTC to WTO

By C. Rammanohar Reddy

THERE WAS a world before September 11 and there is one after that. The two are different and yet they are the same as well. Daily life was a grind for perhaps a majority of the world's people before the terrorist attacks on the World Trade Center and the Pentagon. And for them the routine has not changed for the worse after the crimes against humanity that were committed on September 11, just as it remained the same after similar horrific events in the past. It is the families of the victims of the horror and the millions of Afghan refugees whose lives have been turned upside down. But the world of global politics and diplomacy is unrecognisable after September 11 if only because this particular crime against humanity was perpetrated against and on the soil of the most powerful country.

The structural shift in global politics is working its way through many areas far removed from terrorism because there are always opportunists who are quick to invoke the ``global war against terrorism'' to push their partisan agendas. The U.S. economist, Prof. Paul Krugman, recently accused some members of the U.S. Congress of ``wrapping themselves in the flag'' while pushing for lower corporate taxes, lower capital gains taxes and related issues of self-interest. There are some using the occasion to even justify opening up the Arctic wilderness for oil exploration! But the most cynical use of September 11 in the past fortnight must surely be that by Mr. Robert Zoellick, the U.S. Trade Representative, who last week cited the terrorism attacks as reason for drawing up more national and global agreements on trade. In one article in The Washington Post, Mr. Zoellick elaborated on the role that trade had in the fight against terrorism: ``Trade is about more than economic efficiency. It promotes the values at the heart of this protracted struggle.''

In another speech earlier this week, this senior member of the Bush Cabinet argued that trade legislation was needed to signal that the U.S. would not retreat from its responsibility to defend free trade against terrorists and the critics of globalisation. The immediate context is the need to persuade Congress to enact trade promotion authority, required to give the U.S. President flexibility to negotiate agreements at the World Trade Organisation but which has not been available since 1994. But there are two objectives: one, use current domestic U.S. cohesion to have the trade promotion authority approved and, two, use the global moral high ground after September 11 to launch a new round of trade negotiations as part of the ``global war against terrorism''. News reports of the past few days suggest that the first has been more or less sewn up. The second is now within grasp as in the new situation countries find it more difficult to stand up to the U.S. (and the European Union) at the WTO. The Wild West ``either your are with us or with the terrorists'' statement has implications for alliances everywhere, including at the WTO. There was also Mr. Alan Greenspan, Chairman of the Federal Reserve, who was even more unequivocal about the connection between September 11 and trade. In a testimony to the U.S. Congress, Mr. Greenspan said ``As a consequence of the spontaneous and almost universal support that we received from around the world, an agreement on a new round of multilateral trade negotiations now seems more feasible.

There is another way in which the WTC and Pentagon attacks are having an impact on the WTO. The recession which the U.S., west Europe and Japan were all heading towards before September 11 is now certain, no more so than in the U.S. where consumer spending has plummeted since September 11 and job losses over the past fortnight alone have approached the half a million mark. The argument is now made with renewed force that to end the downturn caused by September 11 the world economy needs as many confidence- building signals as possible - of which few could be more important than the launch of a new round of trade liberalisation negotiations at the WTO. Assuming that there can be such a connection, the problem with this argument is that even if negotiations begin now, it will be years before a successful agreement can be reached. This makes the launch of a new round irrelevant for ending the current global downturn. There is also the slightly more important question that if a new round is more likely to focus on services and agriculture while the sliding fortunes of the global economy are related to a downturn in manufacturing, how would fresh trade talks at the WTO help?

Unfortunately, the swift developments over the past fortnight have suddenly made the situation extraordinarily difficult for India, which over the past two years had carefully assembled a WTO coalition of developing countries on the platform of first correcting the defects and imbalances in the existing WTO agreements before taking up an ambitious negotiating agenda for new agreements. That coalition of a ``like-minded group'' is now going to crumble even as only crumbs are being offered on the implementation issues. Egypt had already shown signs of leaving; Indonesia, after Ms. Megawati Sukarnoputri's visit to Washington last week, has indicated a change in stance on a new round and with the new Washington-Islamabad tie-up it is just a question of time before Pakistan too signals that it has had to succumb to U.S. pressure at the WTO as well. Malaysia too was a member of this coalition but its opposition was always narrower than that of other developing countries. That just leaves the Africa group opposed to the grand design at the WTO. Even if this group remains united - as it did indicate at a meeting of the Organisation of African Unity - it does not need much foresight to observe that India and the Africa group cannot by themselves shape a decision at the WTO. The room for manoeuvre is now doubly reduced because other countries such as Brazil and the Cairns group of agricultural exporting nations (comprising developed and developing countries) which, while even earlier supportive of a new round had reservations about the U.S. and E.U. agendas, will now go along with the U.S.

It is by no means all wrapped up. Time is running out to strike a deal before the WTO's Doha ministerial meeting in early November - and it is not even clear if that meeting will be held under the shadow of possible military action by the U.S. And recent WTO proposals show that in this expanded global coalition against terrorism that is being fought on so many fronts there are still serious differences on WTO issues, especially between the U.S. and the E.U. on agriculture and food-related environment matters. That said, there is no disputing that the forces in favour for a new round of trade negotiations have gained considerable strength in the past fortnight.

It is an unfair world where while the issues and the essential arguments for and against a new WTO round have not altered one bit, a mere change in the global environment and the constellation of forces can make such a dramatic difference to the trade agenda. It is also a different kind of injustice that a tragedy like September 11 can be so cynically used for advancing trade interests. The Indian position at the WTO was this time round more carefully constructed, in spite of conflicts within the Government and gratuitous advice from domestic trade experts who are unconnected with reality. And unlike the embarrassing, unsolicited and unrequited willingness by the Government of India to join the alliance against terrorism, the stance at the WTO was more moderately crafted. However, unless yet another confluence of factors pushes a final decision at the WTO further into the future, giving us more breathing space, India has little choice now but to find ways to make the best of a very bad bargain.

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