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 You are in: Special Report: 1999: 11: 99: Battle for Free Trade
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Wednesday, 24 November, 1999, 12:24 GMT
Trade blocs and bullies
Critics say that the trade system is undemocratic

The world's leaders are gathering in Seattle for trade talks, the outcome of which will likely influence the world economy well into the new millenium.

The battle for free trade
The Seattle meeting is only be the beginning of a series of negotiations that could stretch on for years, changing the way people do business around the world.

The talks aim to extend the benefits of free trade to new industries and cement the world's ever-closer economic ties.

But the trade blocs are divided among in their objectives for the talks.

And they face opposition from thousands of environmental and political activists who are determined to derail the trade talks.

The activists are planning a week of demonstrations, ranging from teach-ins to street theatre, hoping to overshadow the talks.

Meanwhile, the main trading blocs, the EU and the United States, cannot even agree on the agenda for the trade talks.

Why has free trade suddenly become so unpopular? And why is this trade round proving more difficult than ever?

Retreat from free trade

Past trade rounds have also been difficult. The last Uruguay round went on for more than seven years.

But in the end, countries were able to agree a series of trade-offs that led to further expansion of world trade.

It helped that negotiations were conducted in private, making behind-the-scenes bargaining possible.

The benefits of free trade, in contributing to the economic growth of both Europe and Asia, also seemed obvious.

Now that many of those countries have achieved a high level of prosperity other concerns have become more important.

Lack of global leadership

A new set of issues has also emerged that are far more difficult to handle.

Competition policy, the role of the public sector and its suppliers, environment and health legislation - all these issues have domestic as well as international elements.

And nowhere is opposition greater to international rules limiting domestic laws than in the United States, the main architect and prime mover of the world trading system as it currently exists.

The United States had traditionally forced the pace of the trade talks, extending them to services and pushing hard on agriculture.

But now the US lacks a key negotiating authority which would allow the US President to negotiate a deal, and make bargains, essentially without consulting Congress on every detail.

Protectionist pressures in the Republican-controlled Congress made it impossible for President Clinton to secure the extension of 'fast-track' negotiating authority - which means that even if a trade deal is signed it could become hostage to Congressional special interests.

That has led to the US seeking to limit the scope of trade negotiations to areas it hopes can be easily agreed in Congress.

The EU, however, is taking the opposite tack, trying to broaden the talks to include investment and competition policy.

With the US Presidential election looming, suddenly the Democratic party has been showing its sensitivity to labour and environmental concerns.

The EU shares these concerns, much to the violent disagreement from developing countries, who see these issues as backdoor protectionism.

Democratic deficit

The latest talks have also attracted so much interest because of the perception that trade matters are still decided too much behind closed doors.

Like other UN institutions, from the IMF to the World Bank, the WTO is slowly being pushed to open up its procedures and debates - and to give more of a voice to the poor and voiceless, both from developing countries and from non-governmental organisations.

After some earlier success in derailing agreement on investment - the OECD's attempts to agree international rules on foreign direct investment fell apart as a result - the NGOs are spoiling for a fight.

Seattle is probably where they are best placed to get it.

Business too, wants to mobilise in favour of free trade. And it will be in Seattle in force as well.

It plans to lobby trade leaders, but has failed to reach out to the wider public to preach the benefits of free trade.

Seattle may be over in a week - but the battle for public opinion has just begun
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