Focus on Trade #64: Genoa Special
Contents

FOCUS ON TRADE
NUMBER 64, JULY 2001

NEXT weekend, thousands of activists and a handful of politicians will gather 
in the Italian port city of Genoa for the annual G7/8 photo opportunity 
disguised as a meeting.

The politicians will be "protected" by 20,000 police and troops, who in turn 
will be backed up by 15 helicopters, four aircraft, and seven naval boats 
while the town itself will be cordoned off into no-go "red zones" and restricted 
areas.  The protesters want to stop the meeting from going ahead, pledging 
to use all possible non-violent (and even amusing) means at their disposal. 
The world's media will also be there, outnumbering the officials if not the 
protesters, waiting for violence and hoping for a headline. But for the 
activists, there are few newsworthy headlines:  "G7 cancels third world debt"
would be one or perhaps "G7 calls moratorium on trade negotiations."  Or 
what about "G7 deplores repression of demonstrators" or, fantastically, "G7 
leaders announce end of elite politics." 

Instead, what will happen is that the leaders of the seven richest countries in 
the world will lock themselves in a bunker, convince each other that the 
global economy is only going through a "temporary slowdown", that the 
market knows best and technology can conquer all. They will propose some 
cosmetic "reforms" to the World Bank, and probably make a big splash 
about the global AIDS fund. They will also agree that the globalisation 'nay-
sayers' are either anarchist trouble-causers, rabid autarkists or misguided
and naive do-gooders. They will see what they want to see, hear what they 
want to hear, and do nothing. No wonder people are being forced to think, 
see and act for themselves!

In this issue of Focus on Trade Walden Bello and Christophe Aguiton assess 
the significance of Genoa, Aileen Kwa sends out an urgent call for civil 
society to rally behind developing countries as they struggle to resist a new 
round in the WTO, and Nicola Bullard gives an update on plans for the 2002 
World Social Forum in Porto Alegre. 

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IN THIS ISSUE 
GENOA AND THE MULTIPLE CRISES OF GLOBALISATION
By Walden Bello
WHY GENOA IS IMPORTANT, FOR ITALY AND FOR THE WORLD
By Christophe Aguiton
A ROUND BY ANY NAME SPELL DISASTER FOR  THE SOUTH
By Aileen Kwa
VIVA PORTO ALEGRE!
By Nicola Bullard

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GENOA AND THE MULTIPLE CRISES OF GLOBALISATION
By Walden Bello*

Genoa is a name associated with the emergence of capitalism in Europe six
centuries ago.  Genoa may also now become a symbol of the crisis of
corporate-driven globalisation.

The siege that thousands of protesters are planning to mount on the Group
of Eight's annual summit in that historic Italian city in the third week of July
has become emblematic of the global state of siege that now surrounds the
key institutions of the global economy and global politics.
The historical context of the coming meeting is that in a little over a decade,
the system of global capitalism has passed from triumph to crisis.  As the
world stands on the brink of a deep recession, it would be useful to reflect on
some of the key dimensions of this historic transition–on the multiple crises
wracking the globalist project.

The last decade of the twentieth century began with the resounding collapse
of the socialist economies of Eastern Europe and a lot of triumphalist talk
about the genesis of a new market-driven global economy that rendered
borders obsolete and rode on the advances of information technology. The
key agents of the new global economy were the transnational corporations,
which were depicted as the supreme incarnation of market freedom owing
to their superior ability to bring about the most efficient mix of land, labour,
capital, and technology.

Midway in the decade was born the World Trade Organisation (WTO), which
was painted by partisans of globalisation as providing the legal and
institutional scaffolding for the new global economy. By creating a rules-
based global system grounded in the primordial principle of free trade, the
WTO would serve as the catalyst of an economic process that would bring
about the greatest good for the greatest number. It was the third pillar of a
holy trinity that would serve as the guardian of the new economic order, the
other two being the International Monetary Fund (IMF), which promoted ever
freer global capital flows, and the World Bank, which would supervise the
transformation of developing countries along free market lines and manage
their integration into the new world economy.

MULTILATERALISM IN CRISIS
Yet even as the prophets of globalisation talked about the increasing
obsolescence of the nation-state and the growing irrelevance of national
interests, the main beneficiary of the new post-Cold War global order was
the United States.  Though it was supposedly a mechanism for freer trade,
the WTO's most important agreements promoted monopoly for US firms: the
Trade Related Intellectual Property Rights Agreement (TRIPs) consolidated
the hold over high-tech innovations by US corporations such as Intel and
Microsoft, while the Agreement on Agriculture institutionalised a system of
monopolistic competition for third-country markets between the
agribusiness interests of the United States and the European Union.

When the Asian financial crisis engulfed countries that had been seen by
many in the US business and political elites as America's most formidable
competitors, Washington did not try to save the Asian economies by
promoting expansionary policies, Instead, it used the IMF to dismantle the
structures of state-assisted Asian capitalism that had been regarded as
formidable barriers to the entry of goods and investments from US
transnationals that had been clamouring vociferously for years to get their
piece of the “Asian miracle.” It was less the belief in spreading the alleged
benefits of free trade than maximising geo-economic and geo-strategic
advantage that lay behind US support for the policies of the IMF, the World
Bank, and the WTO. As Chalmers Johnson has noted, a good case can be
made that Washington's opportunistic behaviour during the Asian financial
crisis reflected the fact that 'having defeated the fascists and the
communists, the United States now sought to defeat its last remaining rivals
for global dominance: the nations of East Asia that had used the conditions
of the Cold War to enrich themselves.”(1)

Acting to achieve its interests under multilateral cover was the preferred US
strategy for most of the post-war period, whether it was the Bretton Woods
institutions, United Nations, or the Group of Eight that provided the
framework for 'hegemonic leadership.”  Yet when these institutions got in
the way of US interests, Washington did not hesitate to act unilaterally.  This
was increasingly the case in the 1990s, with the removal of the incentives for
multilateral behaviour posed by Soviet competition.

The instrumental use of multilateral agencies was stark when it came to the
UN.  While using the United Nations to provide cover for its policy of isolating
Iraq, Washington also refused to pay its dues to the UN for not kow-towing
wholeheartedly to US policy.  Or it simply disregarded the UN when it could
not get a mandate and proceeded to work its will through more pliable
institutions, as it did when it resorted to NATO cover for the bombing of
Yugoslavia during the Kosovo conflict.

The G-8 (then G-7, without Russia) emerged in the 1970s to provide a
mechanism for more multilaterally-shared decision-making among the
advanced capitalist countries, especially in economic matters.  Yet,
especially under the administration of George W. Bush, Washington has
embarked on a unilateralist course that has brought it to sharp conflict with
other members on the burning issues of climate change, missile defence,
and reconciliation between the two Koreas.  The brusque junking of a
painstakingly negotiated agreement, the Kyoto Protocol on Climate Change,
marks a new low in unilateralist behaviour, and its contribution to eroding the
European Union-United States alliance that has served as the foundation of
Western hegemony in the last 50 years cannot be underestimated.

LEGITIMACY CRISIS
Increasing resort to unilateralism and the brazen manipulation of multilateral
mechanisms to achieve hegemony by the United States was a key source of
the crisis of legitimacy that began to grip the global order in the late 1990s.
But equally important as the erosion of multilateralism as a source of de-
legitimisation was the spreading realisation that the system could not deliver
on its promise. That the system could not create prosperity for all but only the
illusion of it was something that many observers had known for sometime.
However, the realities of growing global poverty and inequality were
neutralised by the high growth rates and the prosperity of a few enclaves of
the world economy, like East Asia in the 1980s, which were (mistakenly)
painted as paragons of market-led development. However, when the Asian
economies collapsed in 1997, the follies of neoliberal economics were
brought to the fore. All talk about the Asian financial crisis being caused by
crony capitalism could not obscure the fact that it was the liberation of
speculative capital from the constraints of regulation, largely in response to
pressure from the International Monetary Fund (IMF), that brought about
Asia's collapse. The IMF also came under severe public scrutiny for
imposing draconian programs on the Asian economies in the wake of the
crisis–policies that merely accelerated economic contraction, saved
foreign banks and speculative investors, and restructured economies along
'American lines.”

The IMF's role in East Asia triggered a fresh re-examination of its role in
imposing structural adjustment programs in much of Africa, South Asia, and
Latin America in the 1980s, and the fact that these programs had, as they did
in Asia, exacerbated stagnation, widened inequalities, and deepened
poverty now became widely realised–so much so that the IMF, in a
desperate effort to exorcise its record, felt compelled to change the name of
the extended structural adjustment fund facility (ESAF) into the poverty
reduction and growth facility prior to the World Bank-IMF annual meeting in
Washington in September 1999.

The Asian financial crisis triggered the unravelling of the legitimacy of the
IMF. In the case of the WTO, the situation was even more dramatic. In the last
five years of the decade, growing numbers of people and communities
began to realise that in signing on to the WTO, they had signed on to a
charter for corporate rule that enshrined what consumer advocate Ralph
Nader called the principle of 'trade uber alles,” or corporate trade above
equity, justice, environment, and most everything else we hold dear. Many
developing countries discovered that in signing on to the WTO, they had
signed away their rights to development. The many streams of discontent
and opposition converged in the streets of Seattle and the meeting rooms of
the Seattle Convention Centre in December 1999 to bring down the third
ministerial of the WTO and trigger a severe institutional crisis from which the
organisation has yet to recover.

The World Bank, under the leadership of Australian-turned-American James
Wolfensohn, appeared to be charting a course that would allow it to escape
the damage inflicted on its sister institutions, until it was subjected to fire in
early 2000 from an unexpected quarter: the Meltzer Commission. Ever since
he took over as chief of the institution in the mid-1990s Wolfensohn had
managed to defuse criticism through very skilled public relations work and
co-option of non-governmental organisations (NGOs). But when the same
criticisms that had been made by people from the left were made by a
commission created by the US Congress, the game was up. Headed by
conservative academic, Alan Meltzer, the commission concluded that the
Bank's performance when it came to addressing its avowed goal of
eliminating global poverty was miserable and that it would be better to
devolve the task to regional bodies.

Not surprisingly, in the face of criticism coming from left to right, reform of the
multilateral system has been prominent in the rhetoric of the multilateral
agencies and the G-8 governments that are their most powerful backers.
Debt forgiveness, a new global financial architecture, and reform of the
decision-making structures of the WTO and Bretton Woods twins have been
among the high-profile issues on which expectations of change were
promoted.

These initiatives have, for the most part, proved disappointing, with little in
the way of concrete action. The most prominent reform initiative, the G-8's
plan to lighten the servicing of the external debt of the 41 highly indebted
poor countries (HIPC), has actually delivered a debt reduction of only $1
billion since it began in 1996–or a reduction of their debt servicing by only
three percent in the past five years!

When it comes to the question of the international financial architecture,
serious discussion of controls on speculative capital like the Tobin tax has
been avoided. An unreformed IMF continues to be at the centre of the
'firefighting system.” A pre-emptive, pre-crisis credit line at the Fund (which
no country wants to use) and a toothless Financial Stability Forum–where
there is little developing country participation–appear to be the only
'innovations” to emerge from the Asian, Russian, and Brazilian financial
crises of the last three years.

Reform of the decision-making structures of the multilateral institutions that
serve as the key rule-setting and global management institutions of
contemporary capitalism was also supposed to be spearheaded by the G-8.
Yet, talk about democratising the WTO has vanished, with Director General
Mike Moore saying that that the non-transparent 'consensus” system that
triggered the developing country revolt in Seattle in December 1998 is 'non-
negotiable.”(2) And with respect to the IMF and the World Bank, there is no
longer any discussion about diluting the voting shares of the US and
European Union in favour of greater voting power for the developing
countries, much less of doing away with the feudal practices of always
having a European head the Fund and an American to lead the Bank.

THE CORPORATION UNDER SCRUTINY
By the end of the last decade of the twentieth century, in short, the
triumphalism that marked the beginning of the decade had evaporated and
given way to a deep crisis of legitimacy of the multilateral order. The crisis of
the multilateral system was, moreover, translating into a deepening unease
globally with the prime actor of globalisation: the corporation.

Several factors came together to focus public attention on the corporation in
the 1990s–the most egregious being the predatory practices of Microsoft,
the environmental depredations of Shell, the irresponsibility of Monsanto and
Novartis in promoting genetically modified organisms, Nike's systematic
exploitation of dirt-cheap labour, and Mitsubishi, Ford, and Firestone's
concealment from consumers of serious product defects. A sense of
environmental emergency was also spreading by the beginning of the 21st
century, and to increasing numbers of people, the rapid melting of the polar
ice caps could be traced to Big Oil and the automobile giants' continuing
promotion of an environmentally destabilising petroleum civilisation, and,
more generally, to the process of uncontrolled growth driven by the
transnational corporations (TNCs).

Ironically, in the United States, it was during the apogee of the New Economy
that the distrust of the corporation was also at its highest in decades.
According to Business Week survey, '72 per cent of Americans say business
has too much power over their lives.”(3) And the magazine warned:
'Corporate America, ignore these trends at your peril.”(4)

Some of the more enlightened members of the global elite took such
warnings seriously, and their annual meeting in Davos, Switzerland, became
the venue to elaborate a response that would go beyond the bankrupt
strategy of denying that corporate-driven globalisation was creating
tremendous problems to promote a vision of 'globalisation with
compassion.” Yet, the task was formidable, for it became increasingly clear
that in an unregulated global market, it was even more difficult to reconcile
the demands of social responsibility with the demands of profitability. The
best that 'globalisation with a conscience” could offer was, as C. Fred
Bergsten, a noted pro-globalisation advocate, admitted, a system of
'transitional safety nets...to help the adjustment to dislocation” and 'enable
people to take advantage of the phenomenon [of globalisation] and roll with
it rather than oppose it.”(5)

THE STRATEGIC NEXUS
Corporate power is one dimension of global power. But there is, equally of
consequence, strategic power, and this, even more than corporate power, is
concentrated in the United States.  Strategic power cannot be reduced, as
in orthodox Marxism, to simply being determined by the dynamics of
corporate control. The US state cannot be reduced simply to being a servant
of US capital. The Pentagon has its own dynamics, and one cannot
understand the US role in the Balkans or its changing posture towards China
as simply determined by the interests of US corporations.  Indeed, in Asia, it
has been strategic extension, not corporate expansionism, that has been the
mainspring of US policy, at least until the mid-1980s. And, in the case of
China, US capital's desire to exploit the China market has increasingly found
itself in opposition to the Pentagon's definition of China as the Enemy, which
must be headed off at the pass instead of being assisted by western
investment to become a full-blown threat. In many instances, indeed,
corporate power and state power may not be in synch.

Having said this, a primordial aim of the US transnational garrison state that
is ensconced deeply in East Asia, the Middle East, and Europe and projects
power to the rest of the globe, is the maintenance of a global order that
secures the primacy of US economic interests. New York Times columnist
Thomas Friedman may be wrong about the benign impact of globalisation,
but he is definitely on target when he asserts that:

THE HIDDEN HAND OF THE MARKET WILL NEVER WORK WITHOUT A
HIDDEN FIST.
McDonald's cannot flourish without McDonnell Douglas, the designer of the
US Air Force F-15.  And the hidden fist that keeps the world safe for Silicon
Valley's technologies to flourish is called the US Army, Air Force, Navy, and
Marine Corps. (6)

With the growing illegitimacy of corporate-driven globalisation and the
growing divide between a prosperous minority and an increasingly
marginalized majority, military intervention to maintain the global status will
become a constant feature of international relations, whether this is justified
in terms of fighting drugs, fighting terrorism, containing 'rogue states,”
opposing 'Islamic fundamentalism,” or containing China.

One cannot say, however, that the military structure of US hegemony is
suffering as profound a crisis of legitimacy as that which has gripped the
processes and institutions of corporate globalisation. The US military
structure remains solidly rooted in both Europe and Asia, and the reason it
remains so is to be found at the level of the ideological: the deep-seated fear
of both European and Asian elites that without the US to serve as a
'benevolent hegemon,” they would not be able to create by themselves
benign regional orders that would ensure the peace among themselves.

Nonetheless, this sentiment is not as strong as before.  The collapse of Soviet
power created the condition for a reassessment by Washington's allies of the
role of US power.  Doubts have increased with the Pentagon's insistence on
building a missile defence system against potential rather than real enemies
while preparing the ground for a new Cold War crusade against China.
Indeed, these developments have indeed opened the eyes of many of
Washington's allies that the greatest threat to their security may now be
Washington itself.

DEMOCRATIC DEGENERATION
It is not, however, corporate power or military power that is the US's strongest
asset but, following the thinking of Antonio Gramsci, its ideological
power–its 'soft power.”

The US is a Lockean democracy, and its ability to project its mission as the
extension of systems centred on free elections to choose governments
devoted to promoting liberal rights and freedoms continues to be a strong
fountain of legitimacy in many parts of the world. The trend away from
authoritarian regimes and toward formal democracies in the Third World
happened in spite of rather than because of the United States. Yet,
especially under the Clinton administration, Washington was able to skilfully
jibe to catch the democratic winds, in the process reconstructing its image
from being a supporter of repressive regimes to being an opponent of
dictatorships.

In the last few years, however, Washington or Westminster-style
democracies–or, as William Robinson calls them, 'polyarchies”(7)-- with
their focus on formal rights and formal elections and their bias against
economic equality achieved through such measures as asset and income
redistribution — have degenerated into increasingly stagnant and polarised
political systems, such as those in the Philippines, Brazil, and Pakistan.  The
World Bank and the Asian Development Bank continually talk about the
plague of corruption in developing countries.  It is, however, the deeper
corruption that is embedded in economic and political structures that are
superficially democratic but perverted by the realities of economic inequality
that is the greater concern of the vast masses of people in the South.

This stagnation of Third World liberal democratic systems has been
paralleled by the realisation of increasing numbers of Americans that their
liberal democracy has been so thoroughly corrupted by corporate money
politics that it deserves being designated a plutocracy.  Indeed, as William
Pfaff notes, 'nothing on the scale of the American system of political
expenditure and influence exists anywhere.”(8) The fact that the candidate
most favoured by Big Business lost the popular vote--and according to some
studies, the electoral vote as well–and still ended up president of the
world's most powerful liberal democracy has not helped in shoring up the
legitimacy of the political system in a country that has been described by
many observers as already being in a state of "cultural civil war."

There is also a growing crisis with democratic governance in Europe,
brought on partly by the increasing captivity of party politics to moneyed
interests, as the case of Helmut Kohl and the Christian Democratic Party
illustrated.  But there is as well another, related cause of disaffection, and this
is the non-transparent process that technocratic elites allied to corporate
elites have, in the name of European integration and rationalisation, eroded
the principle of subsidiarity by funnelling effective decision-making power
upwards to technocratic structures, at the apex of which stands the
European Commission, that are largely unaccountable to electorates on the
ground.

THE CRISIS OF OVERPRODUCTION
What makes the crisis of legitimacy of the key institutions of the global
economic and political system so volatile from the point of view of the elites
of the North is that is intersecting with a profound structural crisis of the
global economy.

The G-8 came into existence to co-ordinate the macroeconomic policies of
the rich countries in order to navigate between the Scylla of inflation and the
Charybdis of stagnation.  However, in the last few years, efforts to synchronise
fiscal and monetary initiatives have proved elusive, and what modicum of co-
operation was achieved has failed to bring Japan out of a decade-long
recession or prevent the onset of a new global recession.

The reason that the economic slowdown seems to be immune to orthodox
fiscal and monetary mechanisms, even when co-ordinated across borders,
is that structural imbalances have been building up for some time.  The
boom of the early and mid-nineties resulted in a burst of global investment
activity that led to tremendous overcapacity all around. (9) The indicators are
stark.  The US computer industry's capacity has been rising at 40 per cent
annually, far above projected increases in demand.   The world auto industry
is now selling just 74 per cent of the 70.1 million cars it builds each year.  So
much investment took place in global telecommunications infrastructure that
traffic carried over fibre-optic networks is reported to be only 2.5 per cent of
capacity. (10)

Seen in retrospect, profits stopped growing in the US corporate sector after
1997, (11) leading firms to a wave of mergers, the main purpose of which
was the elimination of competition. The most prominent of these were the
Daimler Benz-Chrysler-Mitsubishi union, the Renault take-over of Nissan, the
Mobil-Exxon merger, the BP-Amoco-Arco deal, and the blockbuster 'Star
Alliance” in the airline industry.

Another avenue that was taken to avoid the crunch of profitability in industry
was to push investment to speculative activity, notably to the stock market
and the real estate sector, leading to the spectacular boom and bust in East
Asia in the 1990s. (12) It was this same hothouse speculation that
underpinned the Wall Street-Silicon Valley complex that drove the US
economy and the global economy in the nineties.  This 'New Economy”
seemed for a time to defy the laws of economics, with internet stars such as
Amazon.com registering an explosive and seemingly permanent rise in
stock values even as they continued to operate at a loss.

But all talk about the emergence of a New Economy vanished when the law
of gravity caught up with the speculative sector in late 1990s, resulting in the
wiping out of $4.6 trillion in investor wealth in Wall Street, a sum that, as
Business Week pointed out, was half of the US Gross Domestic Product and
four times the wealth wiped out in the 1987 crash. (13)

Two things about this structural crisis, in short, are increasingly clear: it is no
ordinary bust and it comes at an extraordinary time of great popular
disaffection with the globalist project and its key institutions.

THE GLOBAL PROTEST MOVEMENT
In retrospect, with the deepening crisis of legitimacy of the prime institutions
of the global system in the latter half of the 1990s, Seattle was a cataclysm
that was waiting to happen.   The force of pent up global rage went on to
manifest itself in Washington during the World Bank-IMF spring meeting in
April 2000, in Chiang Mai, Thailand, during the Asian Development Bank
annual meeting in May 2000, in Melbourne during the World Economic
Forum gathering in early September 2000, and in Prague during the World
Bank-IMF annual meeting in late September 2000.

While the global elite assembled in Davos in late January 2001 to ponder the
meaning of the burgeoning "anti-globalisation movement," some 12,000
representatives of civil society organisations and political movements met in
Porto Alegre, Brazil, to declare that "another world is possible." The World
Economic Forum had found its political and ideological nemesis in the
World Social Forum.  Celebration of the power of the movement was one
aspect of Porto Alegre; the other was the gathering of energies for the next
move.  That move was directed at the Summit of the Americas in Quebec
City in late April 2001, which had been called to push forward a key project
of the US corporate elite, the Free Trade Area of the Americas (FTAA).
Despite the effort of some of the established media to portray the protesters
as either uninformed or anarchists, the confrontation in Quebec, like Seattle,
was a major setback, in terms of legitimacy, for the system of corporate-
driven globalisation.   So was the clash with 20,000 protesters that grabbed
the centre stage during the European Union summit in Gothenburg three
weeks ago.

GENOA: NEXT STOP IN THE ANTI-GLOBALIZATION EXPRESS.
To contain the anti-globalisation shock troops that are now on the road
headed for Genoa, nervous Italian authorities are deploying 20,000 police
and troops, backed up by 15 helicopters, four aircraft, and seven naval
boats.  In a sign of panic, the government has announced that it will close
Genoa's airport between July 18 and 22 and seal off a 'red zone” in the
inner city that will be kept free of demonstrators.

Undaunted, protest organisers say they will bring 200,000 people to Genoa
and that they will definitely breach the red zone.   They may yet make Genoa
the most dramatic example of the mass 'withdrawal of consent” that is
shaking the system of global capitalism to the core.

One must not, of course, overestimate the impact of these protests so far, nor
gloss over their weaknesses in terms of shared agenda or decision-making.
However, neither must one underestimate their consequences.   As C. Fred
Bergsten, one of the most ardent promoters of the Washington Consensus,
now admits, "the anti-globalisation forces are now in the ascendancy."(14)
Bergsten is haunted by a 'Gramscian” fear: the structures of the system may
appear to still be solid, but when legitimacy or consensus goes, it may only
be a matter of time before the structures themselves begin to unravel,
especially when one factors in the crisis of overproduction noted above, with
the recession, unemployment, and increases in poverty and inequality that
will come with it.

THE FUTURE IN THE BALANCE
Yet the crisis of the system will not necessarily result in its replacement by a
more benign system of international relations. As Rosa Luxemburg so
presciently pointed out before the rise of fascism in crisis-ridden Europe in
the early part of the 20th century, the outcome may be 'barbarism,” where
the ideals and themes of the progressive opposition are hijacked and
perverted by demagogic forces that are hostile to freedom, equality, and
democracy. Which is why the articulation of the alternative or the alternatives
is so critical.  Creating these alternative visions and programs centred on a
participatory process to create the institutions that would once again
subordinate the market to society, promote genuine equality across gender
and colour lines and within and among countries, and establish a benign
relationship between human community and the biosphere remains the
great challenge of the opponents of corporate-driven globalisation.

On the success of this enterprise depends a future that now hangs in the
balance.

* Dr. Walden Bello is executive director of Focus on the Global South, a
research and advocacy program of the Chulalongkorn University Social
Research Institute.  He is also professor of sociology and public
administration at the University of the Philippines and the chairperson of the
Akbayan, the Citizens' Action Party of the Philippines.  His latest book is The
Future in the Balance: Essays in Globalisation and Resistance (Oakland:
Food First, 2001).

1. Chalmers Johnson, Blowback: The Costs and Consequences of American
Empire (New York: Henry Holt and Company, 2000), p. 206.
2. Michael Moore, speech at UNCTAD X, Bangkok, Feb. 15, 2000.
3. “Too Much Corporate Power,” Business Week, Sept. 11, 2000, p. 53.
4. “New Economy, New Social Contract,” Business Week, Sept. 11, 2000, p.
80.
5. C. Fred Bergsten, “The Backlash against Globalization,” speech delivered
at 2000 meeting of the Trilateral Commission, Tokyo, April 2000
(downloaded from internet).
6. Thomas Friedman, The Lexus and the Olive Tree (New York: Farrar, Straus
Giroux, 1999), p. 50.
7. See William Robinson, Promoting Polyarchy: Globalization, US
Intervention, and Hegemony (Cambridge: Cambridge University Press,
1996).
8. William Pfaff, “Money Politics is Winning the American Election,”
International Herald Tribune, March 11-12, 2000, p. 8.
9. See, among other analyses, Robert Brenner, “The Economics of Global
Turbulence,” New Left Review 229 (May-June 1998) and A. Gary Shilling,
Deflation (Short Hills, NJ: Lakeview Publishing Co., 1998).
10. “Too Much of Everything,” Business Week, April 9, 2001, pp. 74-76.
11. John Plender, “Falling from Grace,” Financial Times, March 27, 2001, p.
14.
12. Ravi Arvind Palat, “Miracles of the Day Before?: The  Great Asian
Meltdown and the Changing World-Economy,” Development and Society,
Vol. 28, No. 1 (June 1999), p. 40.
13. "When the Wealth is Blown Away," Business World, March 26, 2001, p. 33.
14. Bergsten, “The Backlash against Globalization...”.

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WHY GENOA IS IMPORTANT, FOR ITALY AND FOR THE WORLD
By Christophe Aguiton*

All indications are that Genoa will be the biggest mobilisation against neo-
liberal globalisation yet. More than 10,000 Europeans are expected to join
the demonstrations, with large contingents from the UK, Spain, Germany,
Greece and France. Add to this the Italian associations, political parties,
NGOs and unions which make up the Genoa Social Forum and it is likely
that more than 100,000 people will join the main demonstration on Saturday
21 July, which will be the culmination of a week of seminars, educational
and cultural activities and protests.

The media attention has been incredible. For weeks, the main Italian
newspapers have dedicated whole pages to the preparations for the
protests, and the rest of the European press is not far behind. This intense
interest is explained partly by the tensions following the EU meeting in
Gothenburg where police used live bullets against protestors, but also by
the growth of the anti-globalisation protests in all parts of the world. In the
contest between the G7 meeting itself and the protests, it is the anti-
globalisation movement that grabs the public interest. Even government
officials and international institutions now routinely refer to the activism, a
sign that they can no longer afford to ignore them.

Before Genoa, both the WTO director general Mike Moore and the French
minister for foreign affairs Hubert Vedrine, explained (once again) that "the
demonstrators are missing the target" because these institutions are here to
"to regulate globalisation." Furthermore, they proposed that the groups
opposed to globalisation should adopt a "code of conduct" which would
exclude the violent extremists and which would, in exchange, give those
groups who want to be part of the international negotiations a "stake in the
process."

To understand what is at stake in Genoa, it is important to separate the
specific situation in Italy from the broader context of Europe and the world —
although, of course, they are intimately connected.

In Italy, the preparations for Genoa and the events themselves are a vital part
of building the local movement opposed to corporate globalisation. They
are also the first mass mobilisation against Berlusconi since he was elected
in May.

As in all the countries where these summits and international meetings have
been held — whether it's Prague or Chiang Mai, Melbourne or Quebec - this
has been the opportunity to create or reinforce the protest movement.  And in
all of these events, the vast majority of activists are local. That was the case in
Quebec April this year, in Gothenburg in June and it will be the case again
in Genoa where the Italians will be make up more than 80 per cent of all
demonstrators.

REJECTION OF THE 'OLD POLITICS'
Analysts in Italy see Berlusconi's election as a mass rejection of the politics of
the centre-left which had adopted neo-liberal policies, losing both popular
support and the support of those groups which make up the 'militant'
element of Italian politics.  Almost 10 per cent of votes went to the
Rifondazione Comunista and the populist anti-corruption party lead by the
former mafia prosecutor Antonio Di Pietro. This, according to the left,
indicates a break with the old politics.

Berlusconi and his new government symbolise the power of money  (the
prime minister himself is the 14th richest man in the world and controls Italy's
biggest private broadcasting company) and includes some of the most
reactionary groups in Italy. The National Alliance, originally a fascist party, is
the main ally of Berlusconi, while Forza Italia and the Northern League — both
racist and populist — are part of the coalition. For the Italian left and the social
movements, which have been rebuilding during the past years, Genoa is the
chance to challenge the politics of money and to build a new politics
through the process of 'united front' mobilisation.

Genoa is also a step for the coordination of movement at the European level.
Europe, as in other parts of the world, is experiencing a new wave of social
activism and mobilisation, but it is still fragmented. The diversity of social
and political realities within Europe — and the diverse trade union and social
movements that have emerged from these national realities — largely
explains this fragmentation.

The construction of the European Union did not automatically create the
circumstances for collaboration between social movements across
countries. Even as recently as the mass public service strikes in France in
1995, and the emergence of strong national campaigns such as Jubilee
2000 in the UK and ATTAC in France, which did not at first translate into a
European project.

The situation now, though, is different and there are signs of change.  In
1997, the European march against unemployment, insecurity and social
exclusion converged from all points in Europe, ending with a 30,000 strong
demonstration in Amsterdam. Encouraged by the success of the
unemployed movement (and perhaps fearing being overtaken by the left)
the European Trade Union Confederation (ETUC) organised European
mobilisations in Luxembourg at the end of 1997 and in Porto and Nice in
2000.

Seattle and the growth of international mobilisation also has a positive effect
in Europe, precipitating the growth of many activist structures, such as
coalitions for the cancellation of the debt.

The G7 meeting in Cologne in 1999, the IMF and World Bank meetings in
Prague in September 2000 and the EU Summit in Nice in December 2000,
provided the opportunity for these networks to work together. And, as we
have seen this year, the level of activism is growing, with more than 20,000
activists joining demonstrations in Barcelona and Gothenburg.

TRADE UNIONS SITTING ON THE FENCE
The role of the European unions in this process is not resolved. In many
countries of the South, but also in North America, from Seattle to Porto
Alegre, the unions are part of these demonstrations and encounters and are
building alliances with other movements, even if there are still debates and
divergences.

This is not yet the case in Europe. In Prague, for example, the big majority of
demonstrators were young. In Nice ETUC made sure that they were totally
separate from the anti-globalisation demonstrators and in Genoa, the three
big Italian union confederations will not be in the demonstration. Only the
most radical element European unionism, the French SUD and FSU, the
Italian Cobas and the metalworkers branch of the CGIL, the anarcho-
syndicalist CGT from Spain and the major Greek unions. However, there are
signs of change. In Barcelona in June, the two main Spanish trade union
confederations were part of the mobilisations that forced the World Bank to
cancel its scheduled conference.

The final challenge is building an international movement. The Genoa
Social Forum, which will be held between 15-22 July, is important because
dozens of militants from around the world will be able to meet and discuss
the alternatives and the situation of movements in different continents. But the
more important framework for these discussions and processes is the World
Social Forum (see below) which will be held again in Porto Alegre Brasil in
January 2002.

Genoa will, however, be a chance to analyse up close the strategies of the
powers and to see what sort of world government they have in mind for us!
And it will be occasion for people in all parts of the world to demand the
cancellation of third world debt.

AVOIDING THE 'D' WORD
The G7 meeting will talk about the world economic situation and probably
agree to lower their interest rates to spur economic recovery. The G7 will also
discuss, as did their finance minister colleagues in Rome last week, poverty
reduction. In fact, it is obvious that the big countries want to avoid discussing
debt and are instead giving prominence to the provision of basic services
such as health and education. Following that, and in the spirit of the US
Congress' Meltzer Commission, the G7 finance ministers recommended that
development banks should leave infrastructure investment to the private
sector, and should focus their own resources on providing grants for health
and education. At first glance, this seems like a good idea, but in fact it is
completely consistent with neo-liberal thinking which gives opens the door
for the private sector to control the (potentially profitable) "public" activities.
But most of all, the G7 — by proposing some superficial "reforms" of the World
Bank and the other regional funds — are hoping to avoid dealing with the
demands to cancel the debt.

In Cologne, they threw us the bone of the "reformed" HIPC, which is little
more than debt re-scheduling. We now know that the bone should have
been buried immediately and this experience has made the debt campaign
more radical and more militant. This time, they will not be so easily bought.

* Christophe Aguiton is responsible for international relations for ATTAC
France

******************************************************

A ROUND BY ANY NAME SPELLS DISASTER FOR THE SOUTH
By Aileen Kwa*

"The developed countries have been saying it would be a development
Round. But when you see what they are putting in, it has little to do with
development. Rather, it is trying to limit the space of our development. So we
look at the agenda, and so far, what is on offer is not acceptable to many of
us."
Nathan Irumba, Uganda's Ambassador to the WTO, Geneva, 5 July 2001.

Developing countries are loath to launch any form of a trade negotiating
round at the WTO Ministerial in Doha. However, they are under intense
pressure that will only increase in the weeks leading up to the November
meeting.

The developed countries — particularly the EU and to a lesser extent the US —
are whipping everyone into line before Doha, desperate to prevent a repeat
of Seattle. Yet, for developing countries the promises of Seattle have not
materialised. Implementation issues have been discussed — endlessly — but
the US and the EU have given nothing away and have shown no willingness
to rectify the situation.

While the majority of developing countries are refusing to back down, their
positions could easily collapse without massive civil society backing.

It is the responsibility of civil society groups in the South and the North to take
up the call for "No New Round." They should instead support the demand
that the Doha Ministerial
- limits itself to delivering on implementation issues
- addresses key institutional questions within the organization — including the
non-democratic decision-making processes, the lack of internal
transparency and the marginalisation of most developing countries in Green
Room-style consultations
- launches the mandated assessments in agriculture and services before
these negotiations continue further.

The stand-off between developed and developing countries reflects the fact
that the non-democratic structure of the WTO — the fundamental cause of the
developing country revolt in Seattle - has not been addressed and that the
rich and powerful countries continue to operate non-transparently in their
attempts to intimidate, divide and rule the majority.

THE EU AND WTO SECRETARIAT: CARPETBAGGERS FOR A NEW ROUND
The EU Trade Commissioner, Pascal Lamy, and the WTO Director General,
Mike Moore, have been working overtime in the past months, garnering
support amongst WTO members to get a new round off the ground in Doha.

Despite the vehement protests by developing country governments against a
comprehensive round, both Lamy and Moore claim to know what is in the
best interest of the South. Pascal Lamy told a recent NGO symposium that,
while the EU and the US could get along without a round, "I am less sure
about developing countries, particularly the poorest. My fear is that without a
round, the world trade system will leave them further behind."

In the past year, the EU has tried to "soften" (but not change) their position,
arguing that a comprehensive round — which includes industrial tariffs,
investment, trade facilitation, competition policy, environment and
government procurement — is beneficial for developing countries. As part of
the public relations drive, at the Least Developed Countries conference in
May the EU committed to giving LDCs unrestricted market access
(notwithstanding some significant restrictions) in the Everything But Arms
initiative. Late last year they also suggested including investment and
competition as 'plurilateral' agreements in the WTO (that is, to be signed
only by those interested). Most recently, the EU tried to appear sympathetic to
developing countries concerns on TRIPs (the intellectual property
agreement in the WTO). But they have yet to offer anything more tangible
than sympathy.

Mike Moore, too, has been heavily criticised by governments and NGOs for
crisscrossing the globe promoting a new round when this is not the position
taken by all WTO members. Moore claims that "a round would help the poor
and weak countries more than anyone else. The big guys can fend for
themselves. But without multilateral rules, the poor are subject to the law of
the jungle."

THE US: AMBITIOUS BUT AMBIGUOUS
The US, in the past weeks has made great efforts to appear to take a similar
position as the EU. In the senior officials meeting on 25 June in Geneva, the
US and the EU gave a joint press conference calling on the WTO to launch
"an ambitious round of trade negotiations at Doha." The reality, though, is that
their positions remain far apart. The US is unlikely to halt the launch of a new
round, but they are certainly not demanding one. Bush seems far from likely
to get the trade promotion authority ("fast track") he would need to realistically
negotiate a broad round. The most recent exposition of their position (25
June) has shown carefully and cautiously crafted language aimed to give the
appearance of support to the EU, but also with large doses of ambiguity.
Washington's interests include:
- ambitious negotiating mandates for the built-in-agenda items of agriculture
and services
- further development of the dispute settlement understanding with particular
attention to transparency in proceedings
- market access in non-agricultural products (usually known as industrial
tariffs)
- "appropriate means" to address trade facilitation, transparency in
government procurement, investment and competition policy. "We are open
to exploring how best to treat these topics in the context of launching the
Round."
- intersection of trade and environment issues
- "immediate and continuing efforts on implementation issues..."
- "internal transparency in the operations of the WTO and external
transparency to enhance the credibility of the WTO in the eyes of public
opinion."

Also significant is the reference to the Punta del Este negotiating mandate.
The US has pointed out that the declaration that launched the Uruguay
Round was a fairly "simple" mandate, which enabled negotiations to begin,
suggesting that this could be useful again at Doha. That is, that the
negotiating mandate, as in the Uruguay Round, could be changed along
the way.

The US also underlined that "the WTO can't afford to fail a second time," and
that Washington is "cautiously optimistic that we will succeed in launching a
Round at Doha."

DEVELOPING COUNTRIES: IMPLEMENTATION IS THE UNIFYING ISSUE
While there are certainly shades and differences between developing
countries' positions, one clear fact is that they are not demanding a new
round. The developing countries which have come out openly in support of a
comprehensive round are South Africa, Costa Rica and Chile and, less
vocally, Colombia and Singapore.

THE CAIRNS GROUP: The Cairns Group of (agricultural exporting)
developing countries are cautiously agreeing to a round, but are taking the
offensive in challenging those calling for a new round to make concessions
that are sufficiently significant. Their main interest is in agricultural markets,
particularly in the EU where they want market access plus a firm
commitment to significant cuts in their huge domestic and export subsidies.

THE LIKE-MINDED GROUP (LMG): The LMG is an informal coalition of like-
minded countries at the WTO. This group includes India, Pakistan, Egypt,
Dominican Republic, Uganda, Malaysia, Indonesia and Cuba, amongst
others. The group has been in existence for some years and has been
coordinating positions, sometime meeting daily when negotiations are
intense.

        **********************************************
"We're not ready for it (a new round). We'll lose more than we'll gain. "
Srinivasan Narayanan, India's Ambassador to the WTO, Geneva, 26 June
2001.
        **********************************************

This group can be credited with the fact that that all developing countries
have rallied around the common demand for implementation issues
(redressing imbalances from the Uruguay Round) to be addressed. This has
been top of their agenda long before Seattle. It is also members of the LMG,
such as India and Pakistan, who have repeatedly emphasised that
implementation issues must not be put in the basket of a round or
developing countries would have to give more concessions in order to attain
the benefits that had already been promised by the developed countries, but
which never materialised.

There are of course some differences between the positions of these
countries, with India and Pakistan taking strong positions against a round.
Malaysia says that it is not against a round, but that the agenda for a round
must be agreed by all and that the negotiating mandate must be made
clear. That is, new issues must not be added on in the course of the round.

AFRICAN GROUP: Many in the African Group do not want any round of any
sort to be launched, however limited or manageable. Many African countries
are still struggling to implement the Uruguay Round commitments, and find
it incomprehensible that they would commit themselves to further, knowing
that this would only bring them to dispute settlement. Indeed, despite
intense pressures that have been building up, the African countries have
refused to agree to the launching of a new round. This was evident at
Libreville a year ago, but also during the UN LDC conferences in Brussels in
May.

INDIA: LEADING THE RESISTANCE?
On 14 June, India's Minister of Commerce and Industry, Murasoli Maran, sent
round a seven-page communiqu? to his counterparts of the G77
highlighting India's opposition to a new round. It included the following
points:

- The EU "has been relentless in its efforts to launch a comprehensive New
Round" on the basis that the Round would promise "welfare gains to all."
Maran categorically states that "There is a widely shared view that Uruguay
Round of Negotiations resulted in serious imbalance and asymmetry to the
detriment of developing countries."

- "Despite the May 2000 decision of the General Council that 'implementation
issues' should be resolved before the 4th Ministerial Conference, many
developed countries are now openly stating that these implementation
issues can be resolved only as part of a new round of negotiations. Most of
the developing countries including India have been taking a stand that
'implementation related concerns' are a legacy of the Uruguay Round of
negotiations and the developing countries have already paid for them by
way of taking onerous obligations though not to their liking, under TRIPS,
TRIMS etc and that these concerns should be resolved up-front without
linking it to any new round of negotiations. We would like to stress that the
resolution of the implementation related concerns requires political will and
good-faith efforts on the part of the developed countries."

- "We remain unconvinced that issues such as investment, competition,
labour and environment under WTO will facilitate any additional market
access or open up newer development opportunities for the developing
countries."

- "We are of the view that the WTO work should concentrate on the full
implementation of the Uruguay Round results and the 'built-in-agenda'
(agriculture and services). Other matters of priority are a) implementation of
special and differential treatment as envisaged in various WTO agreements,
and b) correction of imbalances in several WTO agreements including
subsidies and countervailing measures, anti-dumping, TRIPS and TRIMS
which have major implications for development policies and interests of
developing countries...Unless the present inequalities are removed, we do
not believe in the success of any Round of Negotiations'.

TRUST IN WTO AT A LOW EBB
The day before the WTO NGO Symposium in early July, the LMG convened
press conference to publicise their position. This was clearly a sign that they
did not trust that the WTO Secretariat, who was organising the Symposium,
would correctly represent the variety of positions in the organisation.

At this event, Malaysia's Ambassador Supperamaniam said that there was
now no consensus at the WTO on the launching of a round. On
implementation issues, Egypt's Ambassador Aboulnaga said that the
developing countries had already paid a price twice on their issues — once
during the Tokyo Round, and the second time in the Uruguay Round and
that they still had not gained or benefited. They were now being asked to pay
the price a third time by going into another round, with new issues and more
unkept promises. This was not acceptable.

Uguanda's Ambassador Irumba even said "there is a systemic issue here...
The whole notion of Rounds was before the WTO was created as an
organisation. Our understanding was that when it was created, it was
supposed to be a continuous negotiating forum." On the Singapore issues
(investment, competition etc) that some countries are pushing, Irumba
commented that 'the developed countries have been saying it would be a
development Round. But when you see what they are putting in, it has little to
do with development. Rather, it is trying to limit the space of our
development. So we look at the agenda, and so far, what is on offer is not
acceptable to many of us'.

         *******************************************
"This time round, we in the LMG (Like Minded Group) think we should
proceed on the basis of a realistic assessment. If by the end of July, there is
no movement on issues of importance to developing countries, but
convergence on other issues, the level of ambition for Doha will have to be
lowered. In that event, Doha could result in some simple declaration for a
work programme or other options. " Munir Akram, Pakistan's Ambassador to
the WTO, Geneva, 5 July 2001.
         ********************************************

Indeed, at this press conference, the like-minded group ambassadors
present complained of the "spin" that had been put on the issue of a round
gaining consensus as a result of the position Mike Moore is taking in his
personal capacity. This, they said, was not an accurate reflection of the
reality.

MYTHS, THREATS AND ACCUSATIONS ABOUND
Northern countries, particularly the EU, and the WTO Secretariat, are
spreading threats and accusations in their attempt to corner the South into
accepting a round. These include:
- The WTO will collapse if a round is not launched
- This could mean going back to the "law of the jungle"
- If the multilateral system does not move in the interest of the North, the North
will slowly opt out and carry out their business in another forum — regionally
or bilaterally.
- Countries who close themselves up could end up like North Korea.
- "Trade is good for the poor." If you oppose the WTO, you are opposing
lifting the poor out of poverty. This particular charge is usually directed at
NGOs by Northern governments (especially Pascal Lamy and the UK's Clare
Short) but also by the WTO Secretariat.

As recently as 6 July, Pascal Lamy gloomily predicted that "The WTO may go
into hibernation if we do not launch the Round in Doha. It may be worse than
that: sometimes hedgehogs do not survive a long cold winter."

But developing countries at the WTO are not buying into these arguments.
India's Minister of Commerce and Industry Mr Maran, in the communiqu?
sent to the G77, stated that he is "painfully aware of the veiled threat given by
some of the developed country friends that if the developing countries do not
agree to the launch of a new round of negotiations, then WTO would lose its
relevance and regionalism would get an upper hand." In response to such
an argument, he says that these regional trading arrangements have been
entered into by various countries based on "perception of their self-interests
and may have nothing to do with the launch or otherwise of a new round."

Geneva-based representatives of developing countries have repeatedly
argued that the system is already overloaded. To put more onto the WTO,
and without sorting out the problems in the current system, would be
detrimental to achieving development objectives in the South.

WHY A LIMITED ROUND WOULD BE A DISASTER FOR THE SOUTH
A round of any nature, no matter how 'limited' or 'manageable' would not
benefit developing countries for two reasons:

First, it would mean that implementation issues would not be addressed as
stand-alone issues but would be traded-off with other new liberalisation
commitments. This would obviously not redress the imbalances, but in fact
exacerbate the imbalances for the South. Southern governments have
repeatedly called for implementation issues to be dealt with first, and
separately, from any other negotiations for precisely this reason.

Second, the US and the EU have already asked for flexibility in the
negotiating mandate at Doha. The US recently called for a "mandate in
general terms, like at Punta del Este" and the EU stressed that they wanted a
"permissive and sufficiently open-ended and not restrictive mandate." That is,
even if the most limited of rounds is launched, these countries will certainly
continue to put pressure on developing countries to include new issues
along the way.

IMPLEMENTATION: THE HEART OF THE MATTER
Developed countries claim that implementation issues can only be
adequately dealt with in the context of a new round. The US' position,
articulated by former US trade representative Charlene Barshefsky before
Seattle, is well-known: a deal is a deal. The EU also says that while there are
a few issues that can be dealt with without changing the texts,
implementation issues that are of greater significance, or require changes to
the language of current agreements, can only be dealt with in a round.

In fact, the General Council in the WTO does have the power to make
changes to texts of current agreements. That this has not happened --
despite implementation being high on the post-Seattle agenda — does not
reflect any strictly legal procedural impediments but reflects the playing out
of the power imbalances within the WTO which leave the South unable to
make changes in areas which would impinge on the commercial interests of
the major players.

         *********************************************
"A comprehensive Round would lead to a 'comprehensive disaster."
Indian, Pakistan & Malaysian representatives to WTO, Geneva, 25 June 2001.
         **********************************************

Indeed, there are gapping inequities in the current Uruguay Round
package. Developing country governments have identified problems in
almost all agreements, from agriculture, to textiles, services, TRIMS, TRIPS,
subsidies agreement, anti-dumping, technical barriers to trade, sanitary and
phytosanitary agreement. Below are only highlights of some implementation
problems. In particular, agriculture and textiles have been key areas which
developing countries had hoped that they would gain from in the Uruguay
Round package.

AGREEMENT ON AGRICULTURE: Six years into the WTO, despite the
Agreement on Agriculture, the overall subsidization of agricultural producers
in the OECD countries is much higher today than in 1995. OECD estimates
that overall support levels have increased from US$247 billion in the base
1986-88 period to US$274 billion in 1998, to US$326 billion by 1999. This is
taking place even as developing countries are reducing their tariff levels,
and therefore making themselves much more vulnerable to this unfair
competition. Furthermore, the rich countries have refused to implement their
promises they made to soften the impact of liberalization. The Ministerial
Decision approved at Marrakech in 1994 to take measures to counteract the
negative effects of trade liberalization on net food importing countries has
never been implemented. Not surprisingly, the impact of this Agreement has
been destructive for many developing countries, whose imports have
suddenly surged, while their exports have not significantly increased,
leading to a host of problems, including food insecurity, and increasingly
rural unemployment and poverty. According to the FAO, growth in agriculture
exports in the period 1990-97 was 3.05% per annum for developed
countries and only 0.63% per annum for developing countries. On the other
hand, annual growth in agriculture imports was 1.85% for developed
countries and 3.87% for developing countries during this same period.

AGREEMENT ON TEXTILES AND CLOTHING: Similarly, in textiles,
developed countries have failed to implement the agreement according to
the spirit of the agreement. This area is of significant export interest to
developing countries, but has also represented a key area whereby the rules
offer the rich countries special treatment. Even though these countries have
been expected to remove their quota restrictions over the 10 year transition
period from 1995-2005, at present, (six years on) only a fraction of these
restrictions have been removed. According to the International Textiles and
Clothing Bureau in June 2000, the status quo on the removal of quota
restrictions are 13 out of 750 by the US; 14 out of 219 by the EU; and 29 out of
295 by Canada.

GENERAL AGREEMENT ON TRADE IN SERVICES (GATS): In the area of
services, developed countries have refused to abide by the originally set
deadline to establish rules on emergency safeguards before market access
negotiations in the many services sectors take place. They have also
circumvented any serious discussion on the extent of subsidies they provide
to their services corporations, even as they are pushing relentlessly for more
access to developing countries' services markets. At the same time,
developed countries are refusing to open up their own markets in the area of
most interest to developing countries - service provision via the "movement of
natural persons." The imbalances of the GATS are evident in the following
statistics: In 1997, services trade conducted via commercial presence
amounted to US$820 billion, while it was a mere US$30 billion via the
"movement of natural persons."

DANGLING CARROTS AND BREAKING PROMISES
Despite developing countries' efforts to stand their ground and insist on
addressing implementation issues first, their capacity to resist pressures is
fragile.

The process since Seattle of long negotiations on implementation but never
delivering on promises, has been described by a key developing country
delegate in Geneva as one of "dangling carrots before us." Just at the
moment when Southern negotiators think that they are finally going to get
some results, no matter how paltry, the carrot of moved, ever so slightly, out of
reach again. This is how, despite implementation being the key area of work
by the General Council in 2000, the year ended with the sum total of zero
results. The US and the EU simply would not give.

To date, there are still developing country governments, such as the LMG,
which are standing up for their rights and pushing the line that what is
rightfully owed to them should be duly delivered.

The current standoff between the Quad countries (EU, US, Japan, Canada)
and the majority of developing countries was crystallized by a mainstream
WTO press reporter who asked NGOs at the launch of the campaign to
oppose a new round "How do you expect implementation issues to be
addressed when you do not want your governments to engage in further
negotiations?"

TOP ISSUES FOR DEVELOPING COUNTRIES
DECISION-MAKING PROCESSES OF THE WTO: A key reason why
developing countries are in a weak position is because the decision-making
structure, based on consensus and the Green Room, remains unreformed.
This allows the North to play a non-transparent game whose results are then
passed off as consensus.

Indeed, the Green Room-Consensus system remains the key decision-
making mechanism of the organization. This is despite the fact that right
after Seattle, two key officials, then USTR Barshefsky and UK Secretary of
State for Trade and Industry, Stephen Byers, admitted that it was
undemocratic.

At the last Seattle press conference, Barshefsky said, "The process was a
rather exclusionary one... The WTO has outgrown the processes
appropriate to an earlier time. An increasing and necessary view, generally
shared among the members, was that we needed a process which had a
degree of internal transparency and inclusion to accommodate a larger and
more diverse membership." (Press briefing, Seattle, 2 December 1999).

The UK's Trade and Industry Minister, Stephen Byers, also said that the "WTO
will not be able to continue in its present form. There has to be fundamental
and radical change in order for it to meet the needs and aspirations of all
134 of its members." (Byers, Guardian New Services, 'Deadline Set for WTO
Reforms', 10 January 2000).

But in the past one and a half years WTO officials have been busy defending
these non-transparent structures, rather than working to change them.
Indeed, Philippe Legrain, Special Adviser to Mike Moore, defended this
system in a recent article

"One of the myths about Seattle is that there were no Africans and hardly any
developing countries in the Green Room. In fact, there were six Africans and
a majority from developing countries. Moreover, any deal reached in the
Green Room must still be approved by all WTO members." ('Should the
WTO be Abolished', Ecologist, Dec 2000-Jan 2001 Vol. 30, No.9, p. 23).

Mike Moore himself, in his speech at UNCTAD X, reiterated  "The consensus
system is 'non-negotiable'." (February 15, 2000, Bangkok).

The current system also means that there is no system of checks and
balances for equity within the institution. If there is no consensus on an issue
that may be of critical importance to three-quarters of the membership, but
not for the others, nothing moves. This is the case even if the issue could be
one of life and death for people in Member countries (for example AIDS,
drug pricing and TRIPS). It is therefore almost impossible to make changes
to existing agreements given that there will always be those whose
commercial interests are represented who will block consensus.

NEGOTIATIONS BASED ON RECIPROCITY: Negotiations are traditionally
based on reciprocity and not on any principle of equity. This again gels with
the strictly commercial logic of the WTO: "Until I get some benefits from you, I
will give nothing away." The powerful members never voluntarily relinquish
benefits out of sympathy for the difficulties others may be facing without
extracting a price.

INSTITUTIONALIZING THE LAW OF THE JUNGLE: To portray the WTO as
being above the law of the jungle — characterised by Mike Moore as
something like "the WTO or barbarism" — is plainly wrong. In fact, apart from
the dispute settlement system (which is also highly problematic for the
South), negotiations at the WTO institutionalize the law of the jungle. Arm-
twisting is commonplace and weak countries are constantly threatened that
their food aid would be cut off, or their loan suspended, if they do not tow-the-
line.

MOBILISE TO STOP A ROUND!
The odds are stacked high against developing countries. While Southern
governments can try their best, their continued resistance and fight for their
rights in this highly unbalanced power-based system demands strong
backing from mass civil society mobilisation in the South and the North.

Some NGOs in the North are already weakening, perhaps because of
pressures from their governments or because of the allure of pragmatism.
There are groups which have bought the rhetoric of their governments: that
no new round would bring the WTO to its knees and that the WTO is the only
thing that stands between order and the jungle, that the South has to make
some concessions if it wants to move forward on implementation, and, most
insidiously, that trade is "good for the poor."

The power imbalances in the WTO are so entrenched that we must
challenge the fundamental institutional problems that lie at the heart of the
current stalemate. Timidly chipping away at small reforms does little more
than legitimise the "rules" with which the powerful and rich countries
accelerate and institutionalize their exploitation of the weak in the world
trading system.

* Aileen Kwa is a research associate with Focus on the Global South. She is
based in Geneva and has been following the WTO negotiations since 1996.

**************************************************

VIVA PORTO ALEGRE!
A report of the international advisory committee formation meeting 9 & 10 June, 2001, Sao Paolo, Brasil
by Nicola Bullard*

Porto Alegre is a symbol of resistance and a symbol of hope and the good
news for everyone who was at the first World Social Forum in January this
year (and for all those who wish they had been) is that the people of Brasil
and Rio Grande do Sul are inviting us again next year.

Conceived as a counter weight to the Davos World Economic Forum, the
Porto Alegre World Social Forum carved out a space in the debate about
globalisation and its alternatives that is ready to be filled and expanded. To
do this, the Brasilian organising committee realised that the 'ownership' of
Porto Alegre must be expanded, and that the event itself must continue to
push geographical, social and political boundaries.

In May, representatives from all parts of the world were invited to Sao Paolo
by the Brasilian committee to do just this. The agenda was divided into four
parts: an evaluation of the first WSF, agreement on guiding principles, the
establishment of an international mechanism, and the outline of an agenda
and methodology for the next meeting.

On all the issues there was an open and constructive debate. Many of the
criticisms of the first WSF — especially on race, gender and geographic
representation — were taken up by the coordinating committee and reflected
in the proposals for the working methodology. There was constant reference
to class, gender and race as central elements of analysis.

The proposal for a World Social Forum Charter of Principles to be
"respected by all those who wish to take part in the process and to organise
new editions of the World Social Forum" also showed a strong intention to be
inclusive, non-sectarian and open. It was accepted with some changes by
the meeting.

The Brasilian Committee's proposal to establish an 'international advisory
committee' was debated more rigorously. Many people objected to the word
'advisory' and stressed the need to build a process through collective
ownership. At the same time, though, there was a strong affirmation of the key
role played by the Brasilians, recognising their extraordinary initiative and
efforts. Central to this debate was the agreement that in 2002, and in the
future, World Social Forums will be held in many different places, reinforcing
and building on the vision of Porto Alegre. There are already proposals to
hold forums in Ecuador and Bamako on or around the same time as the
Porto Alegre event.

The discussion was concluded by Joao Pedro Stedile, a leader of the
Brasil's landless movement, MST, who proposed — amongst other things --
the establishment of a permanent and open international council with strong
links between local organising committees (wherever they may be) and the
international networks.

Themes for next year's Porto Alegre World Social Forum were proposed by
Francois Houtart in his presentation on the "state of globalisation." He
characterised globalisation as a fragmenting and destructive process;
destroying communities, cultures, economies and the environment. From
this, the themes of rebuilding and recreating society, nature, economies and
cultures, emerged naturally.  The debate that followed built on this
framework, strengthening the gender and race dimensions. Some warned
against dividing the world into social and economic structures, suggesting
that our themes should reflect our visions of a 'post-capitalist' world.

However the themes are finalised, some things are certain.

The 2002 WSF will be much bigger and much better organised. It will have
the strong and active support of the people and governments of Rio Grande
do Sul and Porto Alegre, as well as the wider national and international
movement of activists opposing neo-liberal globalisation. Youth, women and
people of colour will be better represented, as will the regions of Africa and
Asia. The debates will be more focussed, more interactive and more
inclusive.

Amongst the small, but expanding network of intellectuals, activists, NGOs
and social movements directly engaged in preparations for the next WSF,
there is agreement that this is an important project. As Antonio Martins from
ATTAC Brasil said, "We are involved in a struggle against neo-liberalism. This
is not simply a supermarket of ideas."

There is also a militant and positive attitude best summed up by the Rio
Grande do Sul deputy governor, Jefferson Miola, who described the Porto
Alegre WSF as a "cultural, political and moral victory."

Viva Porto Alegre! Viva World Social Forum!

For more information on plans for Porto Alegre 2002 and to read the
documents referred to in this report and a full summary of the May meeting,
see the WSF website www.forumsocialmundial.org.

* Nicola Bullard was at the first World Social Forum and attended this
meeting representing Focus on the Global South

*************************************************

Focus-on-Trade is a regular electronic bulletin providing updates and
analysis of trends in regional and world trade and finance, with an emphasis
on analysis of these trends from an integrative, interdisciplinary viewpoint that
is sensitive not only to economic issues, but also to ecological, political,
gender and social issues. Your contributions and comments are welcome.
Please contact us c/o CUSRI, Wisit Prachuabmoh Building, Chulalongkorn
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Focus on the Global South is an autonomous programme of policy research
and action of the Chulalongkorn University Social Research Institute (CUSRI)
based in Bangkok.




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