It was supposed to be a trade summit with a difference. The major sponsors promised to devote themselves to the poor. Nonetheless, the recent summit in the posh resort city of Cancun replayed old themes. Rather than develop new approaches to world poverty, the conference served only to reaffirm the political and moral virtue of the wealthy.
Three members of the Bangor-based Peace through Interamerican Community Action (PICA) attended the conference. Their comments on returning nicely summarized the failings of his conference: "The talks at the WTO broke down largely over European Union/U.S. insistence on addressing the 'new issues' of investment, competition, government procurement and trade facilitation before solving the problem of the enormous agriculture subsidies of developed countries."
For most Americans, it is difficult to recognize the significance of agricultural subsidies. Less than 2 percent of the U.S. population is directly dependent on agriculture for its income. Nobel Laureate Joseph Stiglitz reminds us that: "America's $4 billion cotton subsidies to 25,000 well-off farmers bring misery to 10 million African farmers and more than offset the US's miserly aid to some of the affected countries."
Not only has United States - in collaboration with most of Western Europe - insisted on retaining generous agricultural supports, it has also demanded that developing nations reduce their own agricultural subsidies, eliminate remaining tariffs, and fully open their industrial and capital markets to foreign penetration. These demands fly in the face of much in recent history and current practice.
Commentators routinely treat the so-called developing nations as a vast abstraction.
Many Latin American economies were doing far better in the '70s and '80s than they are today. A combination of import substitution, selective government subsidies, and a modest safety net was reducing economic inequality within these states and between them and the advanced industrial world. University of Massachusetts economist Robert Pollin shows in a perceptive and readable new work, Contours of Descent, that the imposition of the so-called Washington consensus on these nations has been a disaster. Subsistence farmers have been driven off their land only to end up in cities where even sweatshop labor is hard to find. Currency speculation and capital flight further ravaged these economies.
Even more ironic, medicine the United States imposes does not reflect our own path. As Pollin points out, early United States industrial development depended on tariffs for infant industries. In a similar vein, in a recent interview for the Mexico City newspaper La Jornada, MIT professor Noam Chomsky commented humorously that if current United States intellectual property norms had prevailed during the 19th-century, India. would be the world's predominant economic superpower today. The British employed technology stolen from India to develop their own empire and in turn the United States steel industry was heavily dependent on tariffs and technology stolen from Britain.
The trade norms advocated by the United States would prohibit developing nations from even modest regulation of their own financial markets. These regulations would also prohibit developing states from negotiating with multinational corporations for equitable terms of investment and technology transfer. They would be unable to assure adequate means for their own citizens to compete effectively in the global market.
Advocates of the U.S. model like to suggest that corporate globalization has achieved some spectacular successes in the last decade. They point especially to such nations as South Korea and Taiwan. These examples, however, are misleading. The so-called Asian Tiger states that have enjoyed success in recent years all provided subsidies for strategic industries, erected tariffs, and closely regulated the terms of foreign investment. As Pollin suggests, these experiments have not been perfect and corruption has accompanied some. Nonetheless, their results far exceeded the gains achieved by states that accepted the Washington consensus.
In perhaps a final irony, the Bush administration continues to advance its trade agenda just at the time that the Washington consensus is having its most adverse effect on Americans as well. Deregulation of financial markets, tax cuts for the wealthy, and reductions in the safety net have left many American workers extremely vulnerable to the vicissitudes of the global economy. Yet even as assistance to the poor and middle-class is curbed, bailouts to airlines, agribusiness, steel producers, and media conglomerates seem altogether fair and appropriate.
Cancun suggests one obvious conclusion. The modern march to impose deregulation on the developing world is an obsession pursued with a studied blindness to the history of both poor and wealthy states alike. Whether out of genuine conviction or in deference to their wealthy contributors, the Bush administration acts as though wealth is a reflection of virtue. Whatever goals the wealthy seek, they merit political support. Those who cannot share this faith need to redouble their efforts to fashion more just and democratic alternatives to Washington's agenda.