PARIS – The year is, of course, 2002. Take the ministers of economy and trade of the member-countries of the Organization for Economic Cooperation and Development (OECD) – in theory the representatives of the 30 richest countries on the planet. Get them together at the plush Chateau de la Muette in Paris. Feed them champagne and caviar. Forget about the official sessions and listen to what they say in the corridors. What do you get? A lot of doom and gloom – or a lesson in dehumanized globalization.
Twenty-nine of those ministers – plus a handful of observers from developing countries – came to Paris basically to express their barely contained rage against the so-called Mecca of free trade: protectionist America post-September 11. They complained about the latest “scandal” – a 70 percent raise in agricultural subsidies for the next 10 years, approved last Monday by the US Congress. They complained about 30 percent more taxes on imported steel, 29 percent more taxes on Canadian timber.
America did not even bother to send its tzar of trade liberalization, Robert Zoellick. The American-in-charge was Glenn Hubbard, an economic consultant to the White House. He was reassuring: America would grow between 3 percent and 3.5 percent in 2002, so this was an “encouraging” prospect in terms of recapturing its position as the main engine of world growth. But that was about the only consensual issue at the Castle of the Swallows.
A disgruntled European diplomat observed that “the idea of creating a fund for aid to development, like the US advanced at the Monterey summit, is worth nothing at the moment because the same US multiplies its agricultural subsidies. This will only encourage dumping in poor countries.” A Brazilian delegate to the WTO in Geneva was fuming: “The Americans are going bananas with their agricultural subsidies plus their taxes favoring their steel.”
Officials from multilateral organizations, on the receiving end of the poor countries’ uncontrollable exasperation, were defining Washington’s New World Order as nothing less than “devastating.” An IMF official could be heard saying that “we are now victims of the hypocrisy of both the US and Europe.” There is an embryonic campaign now rolling in Europe in favor of the abolition of the World Bank – considered to be a behemoth bureaucracy absolutely contrary to poor countries’ interests. But this did not prevent a World Bank official from expressing his frustration: “How can we convince these countries to fight corruption, reduce their public deficits, and when they are qualified to receive some aid, they simply cannot export because of the barriers imposed by rich countries.”
The European Union, on paper, considers itself to be a model – because it is actually removing tariff barriers against the poorest countries. But anybody bothering to read the labyrinth of “annex” rules may verify that three absolutely essential items exported by poor countries – rice, sugar and bananas – are liable to be taxed by up to 98 percent .
A theoretically unrestricted opening of rich countries’ agricultural, textile and shoe markets to developing countries would mean a staggering US$700 billion a year. This is more than 13 times the current aid for development budget of the OECD countries: this budget is now 0.22 percent of their GNP. The initial target, fixed in 1970, was 0.7 percent of GNP. This can only mean one thing: a total absence of political will to reduce glaring imbalances in the world system.
As an African delegate put it, the whole system is “a bloated exercise in hypocrisy.” No spinning by any government or multilateral organization can disguise the fact that the system is “Europe and the US against the rest of the world” – as recognized by a UN official: “And this is even more incredible when compared to the project of reducing poverty in the world by half.”
Developing countries’ officials, invited as observers to this OECD meeting, simply are not swayed anymore by the usual mantras: the “virtues of the free market,” or “good governance,” or “equality of market access,” or “the merits of an impartial judge like the WTO.” They see the whole system as rigged – an abyss between Virtuous Rhetoric and Opportunistic Practice.
Officials trying to do their job at the IMF, the World Bank and the WTO are as frustrated as their colleagues working on behalf of poor and developing countries. Even Anne Krueger, the ultra-orthodox chief economist of the IMF, was against the latest “regrettable” American trade policies.
Professor Jagdish Baghwati from Columbia University recognizes that even if Europe – and Russia, China and Brazil – try to retort in the steel war, America still has its “commercial nuclear weapon”: millions of subsidies. Professor Baghwati sees a real risk of “aggressive unilateralism” being the new paradigm in international trade relations as well.
European Union diplomats are saying in private that as America multiplies its subsidies, Europe will be forced to do the same. The only victims, of course, will be poor and developing countries. Belgian Prime Minister Guy Verhofstadt put it in no uncertain terms: “This imparts the feeling that globalization works only one way, it’s a game that only profits the rich. Our self-interest is destructive. We cannot keep from planting the seeds of an anger against ourselves.”
Ignacio Ramonet, director of the insigthful monthly Le Monde Diplomatique, considers the real Axis of Evil to be not Iran, Iraq and North Korea, but the IMF, the World Bank and the WTO. The truth, though, may lie deeper, as these organizations are only pawns in a much larger, one-sided globalization game.