*{After Seattle: the debate over free trade [http://www.weforum.org/site/knowledgenavigator.nsf/Content/After%20Seattle%3A%20the%20debate%20over%20free%20trade?open&topic_id=300250000&theme_id=300]

            28.01.2000

            Annual Meeting 2000}

            Percy Barnevik, Chairman of Investor AB, Sweden, noted that world trade is growing twice as fast as production. The globalization process is being driven by market liberalization, the expansion of multinational corporations and the IT revolution. Standards of living are improving and hundreds of millions are being plucked from poverty. Yet there is resistance to the further opening of markets, as the World Trade Organization (WTO) meeting in Seattle demonstrated. 

            According to Martin Khor, Director of Third World Network, Malaysia, the vast majority of countries have not benefited from trade liberalization. Some of the losers are the very economies that have liberalized rapidly. In many cases, opening of markets has led to a rapid increase in imports, but without a corresponding rise in exports. The entry of cheap imports has undermined domestic industries and led to unemployment. Before a country opens up its markets, conditions must be right - an economy should already have developed enterprises of its own and gained access for its products in advanced markets. Khor called for greater transparency in the WTO and for a correction of the imbalance which currently favours developed countries. "Until that happens, we should not embark on a new round," he said, adding that "each country should be allowed to open up at its own pace." Khor argued that the WTO's agenda should not be overloaded with various new issues. "The multilateral trading system is deformed," he concluded. "We have to reform it to save multilateralism in trade relations."

            Lewis B. Campbell, Chairman, President and Chief Executive Officer of Textron, USA, warned that the opponents of free trade are winning the propaganda war. The supporters of free trade, he said, have failed to build an international coalition sufficient to push the cause of globalization and explain its benefits. The advantages of free trade are impossible to dispute, Campbell added, but the inevitability of achieving that goal is what is at stake. The anti free trade camp's emotional arguments naturally have appeal. "The international business community must take the lead" in putting across the pro free trade side, he said. He noted that the NAFTA initiative found support because business went to bat for it.

            Mike Moore, Director-General of the WTO, stressed that despite the overwhelming evidence of the benefits of free trade, its supporters must always re-establish their credentials. He defended the WTO as the best institution we have. The problems at Seattle were due to the diversity of the WTO's membership and not because developing economies and smaller members were somehow kept out of deliberations. Nor did the rioting really play a role in the collapse of the talks, Moore argued. "We didn't need any help from protesters to fail. We did it on our own." The positions of members across many issues were just too far apart. Proponents of free trade must work harder to improve the system and correct the injustices of the global trading regime. By no means should trade liberalization be abandoned or e-commerce blocked. That would be a "cruel betrayal" of the poor. What needs to be done is to build capacity and to push for good governance.

            John J. Sweeney, President of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), said he was speaking for millions of working families. Seattle marked a crossroads. It was an "economic five-alarm fire" on the globalization train, but "was not an isolationist rejection. It was a call for new global rules." Sweeney warned that "this crisis cannot be salvaged by better public relations," adding that developing countries should not be forced into one economic straitjacket.

            President Ernesto Zedillo Ponce de Leon of Mexico spoke of a new "peculiar alliance" bringing together disparate elements from the far left and far right with environmentalist groups and trade unions of developed countries and "self-appointed representatives of civil society." Their common goal in Zedillo's view: "to save the people of developing countries from development."

            Speaking of an emerging "globaphobia", he suggested that the motives for it had more to do with vested interests and fears of competition than any real altruism. The concerns for developing economies are misplaced, Zedillo argued. History has shown that "in every case where a poor nation has significantly overcome its poverty, this has been achieved while engaging in production for export markets and opening itself to the influx of foreign goods, investment and technology; that is, by participating in globalization."
            The President added that open economies tend to converge over labour standards, while closed ones do not. Trade is the most powerful catalyst for such convergence.

            Zedillo spoke of Mexico's experience, noting how people working in new industries and factories that have emerged because of the NAFTA agreement are enjoying much-improved working conditions. While he is fully committed to fair legislation on labour rights, "what I strongly oppose is the invocation of those rights to destroy trade opportunities, and therefore better employment opportunities, for poor workers in developing countries."

            Zedillo was also sceptical of the arguments against free trade on environmental grounds. There has not been a single case of a factory moving across the border from the US to take advantage of more relaxed environmental regulations, he said. Finally, the President assured participants that despite what happened in Seattle, Mexico remains committed to a new trade round. Meanwhile, his country would actively conclude WTO-consistent free-trade agreements with other countries or regions.                 

                  *{Contributors:       Barnevik Percy
                  Campbell Lewis B.
                  Khor Martin
                  Moore Mike
                  Sweeney John J.
                  Zedillo Ponce de Leon Ernesto}