Rights & interests: trade & disputes.

Author:Guille, Howard
Position:Trade Imbalance: The Struggle to Weight Human Rights Concerns in Trade Policy-Making - Public Values and Public Interest: Counterbalancing Economic Individualism - The Impact of the WTO: The Environment, Public Health and Sovereignty - Book review

Trade Imbalance: The Struggle to Weight Human Rights Concerns in Trade Policy-Making. By Susan Ariel Aaronson & Jamie M. Zimmerman. New York: Cambridge University Press, 2008. 337pp.


Public Values & Public Interest: Counterbalancing Economic Individualism. By Barry Bozeman. Washington, DC: Georgetown University Press, 2007. 219pp.


The Impact of the WTO: The Environment, Public Health & Sovereignty. By Trish Kelly. Northampton, MA: Edward Elgar, 2007. 220pp.


The global financial crisis led to the steepest drop in global activity and trade since World War II (International Monetary Fund 2009c). Recession means unemployment of people and resources. It is a bad time to be a worker and a despondent one for worker representatives. The crisis began, publicly at least, with financial panics and ensuing bank failures in the United States in September 2008. The financial bubble of securities and derivatives burst because of "the obesity of banks and shadow banks" (Johnson 2009). However, politicians and governments had given bankers and financiers a license for excess by deregulating finance and trusting open markets. In essence, elected politicians gave small government to bankers, who in turn gave neo-liberal globalization to us.

Capitalist crises are a time to write-off old assets and old ideas. Some see the current crisis as an opportunity for a "better" globalization. One of the discussions at the 2009 World Economic Forum concluded, "[financial governance requires a new mindset and a new paradigm of thinking. This is not a time for piecemeal reform, but for large-scale, big picture rethinking on how best to govern global capital and the world marketplace" (WEF 2009a). This statement gives a lead to asking what a "better globalization" might entail, especially for labor and the environment. I will use this organizing question to approach the three books under review even though they are not directly about the global financial crisis. Two are about trade; one is explicitly on human rights and trade, the second about the record of the World Trade Organization (WTO) on public health and the environment. The third book illuminates important issues about ascertaining the public interest, which is especially germane to evaluating claims about trade.

Free Trade Survives the Global Financial Crisis

The task of salving the wounds of the financial crisis is now being placed on governments. For example, the International Monetary Fund (IMF), an arch-priest of open markets, is telling governments to restructure and recapitalize failing banks, by nationalization if necessary (IMF 2009a). Economists from banks and academies have disinterred Keynes and are rushing to affirm the goodness of government. This puts regulation, institutions, government, and the state back on the table. However, most of the Keynesian-based responses to the crisis are limited to demand management and certainly do not include his proposal for a "board of national investment" to coordinate a "somewhat comprehensive socialisation of investment" (Skidelsky 1992: 227-28). The current intervention by governments is designed to repair the damage caused by financial excesses but not to confront globalization or the principles of free trade. any hint of "protectionism" attracts stern warnings and "Buy America" proposals are described by "European diplomats" as "a provocative shift away from free trade" (Shipman & Sherwell 2009). Indeed, support for free trade seems to be the new test of liberal market credentials for politicians of the "left" and Australian Prime Minister Rudd has restated support for the Doha Round and free trade (Crook 2009; Rudd 2009).

Workers and the environment are on the receiving end of the current crisis where "[a]dvanced economies are suffering their deepest recession since World War II" (IMF 2009a: 2). As the OECD says, "[t]he crisis is killing jobs in all corners of the economy" (OECD 2009). Recession is defined as "negative growth" or, more plainly, a reduction in the level of national output. Even more plainly this means going backwards. The IMF assesses that the advanced economies shrank by 3.2% in 2009, with a fall of 5.3% in Japan, 4.8% in the United Kingdom, 4.8% in Germany and 2.5% in the United States. The newly industrialized Asian economies shrank by 1.2%, Russia by 9.0%, Mexico by 6.8% and Brazil by 0.4%. The rate of growth fell from 9.6 to 8.7% in China and from 7.3 to 5.6% in India (IMF 2010). The International Labor Organization (ILO) reports that global unemployment increased by 34 million in 2009, with the largest increases in the developed economies, Central and South-Eastern Europe and Latin America and the Caribbean (ILO 2010: 9). Job losses occurred very quickly; 500,000 jobs were reported lost in the united States in November 2008 alone (Reedy et al. 2008) and 300,000 jobs lost in Australia in December-January 2008-2009. In China, some 670,000 small and medium enterprises are said to have closed with more than ten million migrant workers losing their jobs (Bezlova 2009). Another report claims that twenty million (15.3%) of Chinese rural workers who had migrated to towns lost their jobs (Radio Australia 2009).

A shrinking economy means that some people must get less, and "the young, the old and migrants are hit hardest" (OECD 2009). Differences also occur between countries. Some of the differences can be seen in the IMF data cited above. Japan and Germany are the worst-off developed economies; Russia and Mexico the worst-off transitional and emerging ones. The recession is more severe in the United Kingdom than in the United States, and in New Zealand more so than in Australia. The difference between the Anglophone countries is intriguing because they are widely presumed to have shared the "innovations" of the turn to neo-liberalism and pro market policies under Reagan (US) and Thatcher (UK), who were of the "right," and Hawke-Keating (Australia) and Lange-Douglas (New Zealand), who were of the "left." Note, though, that "national differences" obscure differences according to class, occupation, and region, and the overwhelming point is that the already poor, the unskilled, and the landless will suffer the most in any period of adversity. I share the view expressed at Davos that "a major share of the cost of the financial and economic crisis will be borne by hundreds of millions of people who have not shared in the benefits of recent growth" (WEF 2009b). Put another way, the poor lose the most in war and benefit the least in peace.

Trade and Globalization

The free movement of trade and finance are the characteristic features of globalization in the late twentieth and early twenty-first centuries. A supra-national system of open, unfettered markets in goods, services and finance operates across most of the world and its peoples, and economic and political power is shared between national states and global corporations. The world's financial markets are centered in London, New York and Tokyo but do not rely on national institutions or national currencies. The markets have constructed a bewildering array of securities and derivatives that are traded to the tune of $US 1 trillion per day. Almost all of this is speculative and less than five percent of the total financial transactions are needed to fund trade and travel between countries. In turn, trade is dominated by transnational corporations, and half of what is counted in statistics as national trade in manufactures is actually moving between branches of the same corporation. Alumina is a good example; statistics show it is the largest manufactured export from Australia. Yet almost all the alumina exported from Australia is being shipped within the same company; alumina is refined in Australia by Comalco (now RioTinto-Alcan) and shipped to smelters in Iceland and New Zealand owned by the same corporate group.

More generally, production is organized as "commodity chains" (Geraffi 2006) in which global firms bring together components from geographically scattered subsidiaries or contractors. This can be very complex, for example, Toyota's use of "just-in-time" methods across the globe. Or, it can be a centralized marketing exercise whereby global brands such as sports clothing is made to very tight specifications and margins by contractors in Southern Asia, South East Asia, Central America or Eastern Europe. The overall point is that the global organization of production by corporations is not "free trade" as postulated in economic theory. Instead, free trade and open movement of foreign direct investment (FDI) has made the world a relatively seamless single market for corporations. Despite this, economists cling to trade theories based on countries. Corporations know better; thus Barnevik, the one-time chief executive of Asea-Brown Boveri, said "[w]e function as a lubricant for worldwide economic integration," and "[w]e make visible the invisible hand of global competition" (Taylor 1991: 105).

Moreover, governments of the advanced North and the developing South seek to make their economies "competitive" in order to attract and retain foreign direct investment (FDI) from corporations (Panitch 2001: 44). Many attractions are laid out to tempt corporations, including tax holidays, market share, trained labor forces, research grants, and export process zones exempt from domestic labor laws. The World Bank keeps a scorecard of this in its "Doing Business" web-site, which assesses nations based on ten indicators of how welcoming they are to corporations (International Financial Corporation (IFC) 2009). These include taxation, protection of investments, corporate regulation, employing workers, and starting and closing a business (IFC Doing Business 2009). This is the most frequently accessed web-site hosted by the World Bank Group. The Bank claims the material is for "information only" and...

To continue reading