The WTO, with its “market that knows best” ideology, has failed. It’s time to bury it | Nick Dearden
Ohen delegates arrive in Geneva today for the long-delayed World Trade Organization (WTO) summit, they will find an institution in the midst of an existential crisis. For 18 long months, the WTO debated a moderate proposal from South Africa and India that would have allowed countries to temporarily override the property rights of pharmaceutical companies so they could produce vaccines patented against Covid-19. Opposition from Britain, Switzerland and other European countries prevented him from making progress. Even a global pandemic, it seems, is not enough reason to prompt a temporary rethink of the WTO’s business-friendly approach.
Equally serious, the WTO cannot agree on a common approach to the food crisis which is spreading rapidly throughout the world, or to the invasion of one of its members by another, or, more serious than everything, to the climatic catastrophe that humanity is facing. All it can do is fall back on the mantra of greater free trade. Unable to break with a “market that knows best” ideology that actively exacerbates global problems, the WTO today is a failing institution. It’s time to bury him.
The crisis of the WTO is an integral part of the greater crisis of liberal globalization as a whole. It was formed in the mid-1990s, the height of free market capitalism, when the answer to every problem was more markets, more private sector, less government bureaucracy. There was, we were told, no alternative. Summing up that sentiment a few years later, Tony Blair told the Labor Party conference: “I hear people saying we have to stop and talk about globalisation. You might as well debate whether autumn should follow summer.
But it has not always been so. Before the WTO, there had been a much looser set of international trade rules created at the end of World War II. This system was also based on the idea that trade was a good thing and that high tariffs were generally a bad idea. But to the extent that free trade policies did not achieve these goals, countries had some freedom to ignore them. There was no enforcement mechanism, and developing countries, in particular, had a lot of leeway to design policies that they considered most effective for their own development.
The WTO changed all that. Radical free trade has become an end in itself. The WTO treaties have laid the foundation for a set of strict global economic rules, anchored in international law. Basically, they have taken away the power of the state to interfere with the supposed rights of big business and big finance, undermining the ability of governments to protect their farmers and infant industries and to regulate big finance and big business. businesses. Unlike its predecessor, the WTO incorporated a dispute settlement system with real teeth that made the whole system enforceable.
We can see the results all around us. Far from creating a global version of a farmers’ market, it has encouraged the growth of intensive farming monopolies, which dominate our food system at enormous cost to the environment. He has encouraged manufacturers to “outsource” production to where labor is cheapest and regulations are weakest, creating political resentment and fueling right-wing populism in the West.
It created incredibly complex and vulnerable supply chains, best symbolized by an oversized container ship stuck in the Suez Canal and crippling global trade. And it allowed a handful of multinational corporations to dictate the world’s ability to produce the vaccines needed to end a global pandemic, because they owned the research — often publicly funded — behind those drugs.
None of this should surprise us. The great theoretician of capitalism, Karl Polanyi, warned us 75 years ago that trying to turn the whole world into a gigantic market would lead to the “demolition of society”. The fascism of the 1930s was the nightmarish reaction that Polanyi experienced, but today we see our own version of this social breakdown.
This system cannot cope well with the crisis. But crises are now a defining feature of our times. This is why many governments, including the administration of Joe Biden in the United States, are gradually moving away from the free trade system of the WTO. It is a process initiated, perhaps unwittingly, by Donald Trump. Seeing which way the wind was blowing, Biden continued in that direction — with less bullying and bluster — avoiding free trade deals and opposing the corporate monopolies that globalization has created.
It’s welcome. But we will have to go further and faster if we are not to replace a global free market system with a system of nationalist competition in which the strongest player wins. We need a fundamentally different global trading system that helps rather than hinders governments in protecting their people and the planet. The WTO cannot play this role. It is not reformable, as the Covid waiver debacle proves.
Developing states have always been particularly constrained by this system. If we want change, these countries will have to work together to start creating change on the ground: developing their own industries, supporting their small farmers, regulating and taxing big business and big finance, and using the revenue to create services. public in order to remove the basic needs of market people.
There are encouraging signs – from South Africa’s creation of ‘open source’ medical research to Indian farmers who have successfully resisted further liberalisation. The globalization project ended the developing world’s experiment in economic decolonization. It’s time to get back to it. Any attempt by the United States and Europe to punish these countries will be met with resistance there and here.
From there, we can begin to rebuild an international architecture for true fair and free trade. None of the problems we face will be solved by the WTO’s “market knows best” proposals that will only accelerate social and environmental degradation. It would not be a loss for the vast majority of the world if this WTO summit were the last. It is high time to move on.