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 You are in: Special Report: 1999: 11: 99: Battle for Free Trade
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Sunday, 5 December, 1999, 21:38 GMT
WTO talks: Anatomy of a failure
The US discovered it no longer controlled the agenda

In retrospect, it was clear that the talks to liberalise world trade were in trouble when President Clinton, sitting down in a hotel room beseiged by demonstrators, told the local newspaper, the Seattle Post Examiner, that he wanted to get tough with labour rights.

The battle for free trade
For the first time, he indicated that the United States wanted enforceable labour standards included in trade talks.

boy with sign Domestc politics was dominant
That would allow countries like the United States to ban the import of goods if they were produced by child labour or in countries which did not recognise the right of workers to form trade unions.

His words caused immediate outrage among developing countries, who make up the bulk of the 135 members of the World Trade Organisation, and surprise even among the US trade delegation.

Linking trade and labour standards, many delegates argued, would ensure that trade unions in rich countries could block goods from poor countries ever being sold on their shores.

Although both the United States and the European Union, had previously talked about a working party on labour standards, this was the first time sanctions had been mentioned.

The United States delegation sought to soften the blow by arguing that President Clinton's words were only meant as a long-term goal, and not the immediate objective of the trade negotiations.

Trade unionists made their point
But the damage was done, with developing countries convinced that the world's biggest economy was going to close off its market to their products.

That gave them little incentive to open up their own markets to further foreign investment, as the EU wanted, or get tough on intellectual property rights and allow more telecommunications and financial fims access to their markets, as the United States wanted.

With the usual deadlock between the United States and the EU over agriculture, the developing countries were then able to use their veto power - the fact that all decisions had to be reached by consensus - to prevent the expansion of the agenda and ultimately, to delay any decision at all.

Unity and diversity

The unity shown by the delegations from developing countries contrasted with the lack of clear, over-riding political objectives by the rich countries.

delegates Delegates objected to US plans for labour laws
The difficulties were indicated early on when President Clinton failed to persuade other world leaders to attend the summit to give it their personal backing.

During a month of frantic phone calls from the White House, they all said they were too busy to join him in restating the case for free trade in Seattle.

Instead the EU opposed the US demands for a limited trade agenda, seeking to broaden out the conference - and lessen the pressure on its own agricultural sector for further reform.

The result was that the two major trading parties arrived in Seattle without a deal, after months of bickering both over the agenda and indeed who would run the World Trade Organisation itself.

In the past, when free trade had a political edge, the United States was prepared to open its markets to other countries in the free world in order to strengthen their economies in the Cold War battle against Communism.

Other countries, like Japan and Germany, eager for US guarantees of military security, were also more willing to follow the American lead on trade.

But this time the domestic political constituencies, both in Europe and the United States, were much stronger and better organised.

The massive scale of the protests in Seattle surprised the police as well as WTO delegates, and gave some indication of the dificulty of the task they were facing.

Trade has always a difficult issue to sell politically, as the losers are likely to be more concentrated in certain key sectors than the winners.

But the consensus and momentum built up over the last 50 years of trade liberalisation had usually prevailed - not least because of the clear economic benefits many countries saw from open markets.

Now the costs of trade - to the environment, to workers, and for the poor - were more in evidence. And the issues that might be on the agenda would impinge more deeply in domestic politics, in effect allowing the WTO to over-rule domestic decisions on saving turtles or protecting small shopkeepers or banning genetically modified foods.

USA: politics over economics

Nowhere was the domestic impact greater than in the host country.The anti-WTO demonstrations - the largest since the Vietnam war - were splashed across the front pages for days.

In addition, the politics of the US Presidental election campaign -less than a year away - also came into play.

President Clinton's expression of sympathy with the mainly trade union demonstrators may have been intended to help his protege, Vice-President Al Gore, win the Democratic nomination for President in a tough fight with rival Bill Bradley.

But he may also have made the gesture knowing that there is less chance than usual of passing comprehensive trade legislation in the United States in the next few years.

The Congress has turned increasingly protectionist, and had not even granted him the "fast-track authority" that would allow him to complete a trade deal without having to submit each individual item to a vote in Congress (a sure recipe for disaster if anything was turned down).

In truth, President Clinton's position was even weaker. As a lame duck President, still deeply wounded by the Monica Lewinsky scandal, his power in the US political system is rapidly ebbing away.

President Clinton may have wanted to make his mark in history by attending the trade talks. But its unprecendented rejection of further trade liberalisation surely marks a milestone he will not want to be remembered for.

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See also:
01 Dec 99 |  Battle for Free Trade
Seattle trade talks timeline

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