From the day the WTO came into being, one could see skepticism written large on the faces of those who inhabited the poor and the not-so-poor countries because they could never believe that the rich countries would ever concede even an iota of economic advantage to create the so-called level playing field that the champions of World Trade Organization (WTO) are promising.
It was too good to be true. And the more they read the fine print of the relevant laws governing the WTO, the more they became convinced that there was no way the globalisation process could ever work to their advantage.
And now it transpires that the rich world is prepared to sacrifice even this all too-advantageous process (for them) at the alter of their agriculture subsidies. In fact, they have brought the crucial Doha talks to almost a stand still by refusing to withdraw these subsidies to which EU alone contributes pounds 30 billion.
The Doha round of WTO talks was meant to level the playing field for developing countries. But negotiations collapsed acrimoniously in July, putting an end to what campaigners said was the best opportunity in a generation to lift Africa out of poverty.
And now it seems that it is not only world peace that has come to depend crucially on the forthcoming US mid-term elections in November but even the talks between the two largest farm subsidising governments (Washington and Brussels) on who would take the initiative of rationalising these subsidies and by how much have been held up because of these elections.
America believes Europe should now be prepared to make the first move in re-starting the deadlocked talks, offering larger cuts in the Common Agricultural Policy (CAP) than put on the table earlier in the year.
Indeed, unless the major economic powers can deliver on the potential of the Doha round, they risk unleashing a protectionist backlash.
CAP reform is an explosive issue within the EU, with liberalising countries such as Britain and Germany pushing for cuts in farm spending, which accounts for more than 40 per cent of Brussels’ budget, while France leads anti-reform countries.
Developing countries worried by the collapse of the Doha round of world trade talks have been warned not to be tempted to sign bilateral deals with the European Union because they could damage their economies and wreck their environments.
A host of experts have highlighted the danger to a developing country of the economic partnership agreements which would replace the multilateral approach envisaged under the WTO’s Doha talks.
A new Oxfam report, Unequal Partners, says the EU wants new free trade agreements with 75 of its former colonies in Africa, the Caribbean and the Pacific (ACP).
“These imbalanced negotiations between the two regions pit some of the world’s most advanced industrial economies against some of the poorest nations on earth,” says the report’s author, Claire Godfrey.
The report says farmers and producers in many of the world’s poorest countries will be forced into direct and unfair competition with efficient and highly subsidised EU producers, that regional integration among ACP countries will be severely undermined and that ACP governments will lose the substantial revenue they need to support economic and social development.
Experts have said that negotiations should not be about the EU demanding something for nothing. In exchange the EU should make radical cuts to its scandalously high protectionism which hurts poor people.
Also not only have the EU partners been pushing unfair trade rules on to developing countries through the WTO, but now they are forcing more harmful European regional trade deals upon them in negotiations conducted behind closed doors.
These deals would force developing countries to open their markets to unfair competition from the EU.
Without radical action to share the benefits of burgeoning international trade more fairly, globalisation is likely to be swept away by the onrushing waters of protectionism within the rich countries.
Most economists agree that rapid technological progress, and the arrival of China and India as serious players in the world marketplace, has been a win-win situation, driving down inflation and pushing up living standards. But whatever its benefits to the world economy as a whole, globalisation has been known to have rendered millions even poorer.
‘The Pollyanna-ish view about globalisation that a lot of people had 10 or 12 years ago - “just be patient, everybody will benefit” - that’s gone,’ says Joe Stiglitz.
‘Economic theory says that there will be losers’. Stiglitz fears that these losers could demand that governments throw up protectionist barriers against the threat of cut-price competition. ‘There have been retreats from globalisation before - after the First World War, for example. You could imagine going back to an era of protectionism,’ he says.
Making Globalisation Work - Stiglitz’s follow-up book to the Globalisation and its Discontents, which detailed the financial crises of the late 90’s from his perspective inside the White House, and then the World Bank - has an ambitious prescription for tackling the inequities at the heart of the global economy.
Some of his solutions are simple, and, in a European context at least, uncontroversial. The winners from globalisation, those at the top of the heap doing highly skilled jobs, should compensate the losers - and that means redistribution: ‘You need to improve your social safety nets, invest more in education so that there are fewer unskilled people, and have more progressive taxation.’
Stiglitz also addresses the problem of ‘global imbalances’. The US is borrowing $2 billion a day from the rest of the world to fund its yawning trade deficit. As the flipside of that, developing countries, particularly China, are piling up low-yielding US Treasury bills to insulate themselves against potential financial shocks, instead of reinvesting their hard-earned cash in their own fast-growing economies.
Finance ministers, central bankers and economists have long admitted that these imbalances make the global economy vulnerable to financial shocks, while dampening demand in developing economies and encouraging the US to keep spending more than it earns. However, few have come up with a solution, other than to blame the rest of the world.
Stiglitz offers an idealistic solution: a collective, international pool of reserves that countries could draw on in times of need. This blueprint is strikingly similar to the proposal for an international reserve currency, called ‘bancor’, advocated by John Maynard Keynes at the Bretton Woods conference in the aftermath of the Second World War.
Here are some of his globalisation nuggets: ‘As most of the world has come to live in democracies, if globalisation does not benefit most of the people they will eventually react.’
‘What is needed is an international economic regime in which the well-being of the developed and developing countries are better balanced: a new global social contract.’
‘If there was ever a country that should have been responsive to the calls from those seeking a fairer globalisation, it should have been the United States: its Declaration of Independence does not say, all Americans are created equal”, but “all men are created equal”.’