Playing the Global Trade Game

by Lila Rajiva

Leading Columbia U. economist, Dr. Jagdish Bhagwati, thinks the agreements on safety in agricultural trade contained in what’s called the Uruguay round of the General Agreement on Trade and Tariffs (GATT) must be grounded in scientific evidence. In his book, In Defense of Globalization, he gives the example of the European Union initiative to ban the sale of hormone fed beef. Since the EU couldn’t muster enough scientific proof for the ban, the World Trade Organization was bound to find the EU in violation of WTO rules.

Dr. Bhagwati objects to the EU’s moratorium on the sale of Genetically Modified seeds and foods for the same reason. There simply isn’t enough scientific evidence to warrant it, he claims. The anti-globalization crew, on the other hand, thinks that scientific proof is not essential. They think the principle of precaution should be enough, while Dr. Bhagwati sides with “respectable scientists,” who consider the ban fear-mongering.1

One can only be pleased to be on the opposite side of respectable science. One vastly prefers disrespectful, unrespectable science - the kind of science that blows wind up the skirts of pompous blowhards. Respectable scientists are consensus mongers, organization men……only with higher IQs. The tools with which they arrive at proofs sufficient to pass peer review are so fine we fear we can hardly see them. And, like the mills of god, they grind exceeding slow. It might take them 20 years to definitely prove that genetically modified beef plays Chinese checkers with your immune system. When the worst case scenario is as awful as an international plague, then the reasonable position actually becomes the most unreasonable. The unexpected, low risk event may be just what should occupy center stage in people’s consciousness.

This doesn’t mean one is in favor of government regulation of food. We are neither prescribing policy nor proscribing it…. we are merely grumbling that we liked the old genetically unmodified world better. We have no desire to eat strawberries armed against frostbite with herring genes or cauliflower with an IQ higher than ours.

We would like the state to stop telling us what to do…whether it is in airports, in our schools, or in our bedrooms…but we dig in our heels equally at efforts by global corporations to improve our water or our vittles at the expense of our health and with subsidies from our tax dollars.

This is unlikely to win us any popularity contests today when there are only two acceptable positions on globalization – it is a Very Good Thing. Or, it is a Very Bad Thing.

If you are a poor country, you are supposed to take to the thing as eagerly as a diabetic to insulin. Now, if trade was just the exchange of goods and services between people, we would say it is and always has been, a good thing. But many of the rules of global trade are set by the very people who are weighing down the market with all sorts of subsidies, sweetheart deals, perks, pork, and privileges, in the first place.

Take the World Bank, which is in the business of telling countries what they need to do to play the global trade game. In the popular imagination, the World Bank is a kind of multicultural version of the friendly bank in It’s a Wonderful Life. But the real World Bank is headed up not by Jimmy Stewart but by Paul Wolfowitz, a man whom his best friend wouldn’t call a soft touch. Confirmed as the bank’s boss in 2005, Wolfowitz immediately proclaimed he was on a mission of mercy:

"Helping the poorest of the world to lift themselves out of poverty is a noble mission or, as former Secretary of State George Shultz said, 'a beautiful mission'."2

But, the Sisters of Charity do not have to worry about the competition. Wolfowitz has been one of Washington’s biggest hawks, ever since the days when he argued for the use of tactical nuclear weapons in Europe. To this day, he likes to praise Indonesia’s Suharto, who in his 32-year reign, looted $30 billion from the public treasury and turned his country into one of the most corrupt in the world. Of course, on second thoughts, that might be the perfect resume for the head of the World Bank.3

After all, the World Bank has a bit of a track record when it comes to getting and spending, not to mention laying waste.

Trade? Western import restrictions on third world products are not only unfair to Western consumers, they reduce third world national incomes by about twice as much as what those countries receive in direct foreign aid. What the right hand – foreign aid – giveth, the left hand - import barriers – taketh away. 4

Aid? “Billions of dollars, collected from middle-class taxpayers of the West, have 'aided' Third World elites to possess grand estates, private zoos, classic car collections, and Swiss bank accounts.”5

But, the free moolah has also “aided” first world corporations, larding them with perks that have turned them into gigantic monopolies that crush competitors and consumers both abroad and at home. When the money goes as “loans,” it ends up grinding down tax payers in the third world, who get to foot the bill even if they never see a dime in benefits.

And, when the aid goes as a grant, it is even worse, because it can be politicized more easily. The grant giver gets to pull the strings – he gets military bases, preferential treatment, votes in the U.N., or even public assets on the cheap. It’s an endless bonanza.

Even if he means to in good faith, he is unlikely to do either task very well. And all the rushing around is liable to trip up everyone else in sight.

But is it really in good faith? How does the Bank set the trade rules? Not with the idea of protecting all the players equally – as traffic regulations protect all the drivers equally. Instead, they are written to suit all sorts of agendas that seem to have nothing to do with free trade. There are rules that let companies doing one sort of business get government subsidies; there are other rules that tell you what you can or cannot trade freely; there are agents to be paid off; bureaucrats to be bribed; taxes to be paid or passed along, or shucked off altogether. Free trade is anything but free. Instead it is mixed up with empire building, corporate subsidies, misguided humanitarian goals, baksheesh, and a hundred other irrelevant considerations. Whoever has the muscle can get the rules he wants.

So when we find that the one of the major players in the global trade regime is also in charge of the global aid regime, we start wondering what sort of trade...or aid…is taking place.

Until 1950, Indian food production had been growing on track, with steady prices and limited importing. But with its Second Five Year Plan, the government began a program of heavy industrialization. As money in the public and even in the private sector was steered into industry, agriculture became starved of capital. America sent food aid under P.L.480. It was aid in the sense that the Indian government could pay for it either in rupees or in credit. But what was the effect? The domestic price of wheat had to fall to match the lower cost imported food. Farmers cutting back on wheat production went bankrupt. The eventual result was to make Indian agriculture completely dependent on foreign imports and credit.6

In 1989-90, after 40 years of foreign aid, Latin America ended up with a foreign debt of $430 billion and sub-Saharan Africa with per capita incomes lower than in the 1970s.

The World Bank pampered India's central planners and fed one of the world’s biggest, most inefficient and most corrupt public sectors. How inefficient? In 1988-89, almost half of India’s 222 biggest government companies sustained losses. The result was a central government deficit five times as big, in relative numbers, as the U.S. budget deficit.7

None of this is a revelation. It’s public knowledge. So we wonder why those giant brains at the Bank are such slow learners that they keep repeating their mistakes. Over the years, they’ve done so much damage, you could even be forgiven for wondering what their real intentions are. And why they are still calling the shots on global free trade.

  • 1 Ibid., pp. 151-3.
  • 2 “Wolfowitz confirmed at World Bank,” BBC, March 31, 2005.
  • 3 “Wolfowitz Visited Indonesia For Closer Military Ties, Not Tsunami Relief,” Joseph Nevins, Pacific News Service, January 19, 2005.
  • 4 Kamath, op. cit.
  • 5 Departments: Book Review: Perpetuating Poverty: The World Bank, the IMF, and the Developing World Edited by Doug Bandow and Ian Vasquez, By Ken S. Ewert, Cato Institute, 1994.
  • 6 “On Reading ‘Paper,’” Amitava Kumar, Kenyon Review, Summer 2002. See also, “The Great Grain Robbery,” Vandana Shiva, Znet, June 21, 2006.
  • 7  2) Steve Coll, "Budget Axe Endangers India's Socialist Icons: Massive Bureaucracy under Attack," Washington Post, February 26, 1991, p. A-16, cited in Kamath, op.cit.
 published at Endervidualism on February 7, 2007

Lila Rajiva resides in Baltimore, Maryland, has taught at the University of Maryland and freelances as a journalist. In addition to Endervidualism, find her work also published at CounterPunch, Dissident Voice, doublestandards.org, and MRZine. She has written the much talked about book: The Language of Empire: Abu Ghraib and the US Media (Monthly Review Press, 2005).