COLLIDING WORLDS - WTO

PBS 6dec99

MARGARET WARNER: Now, for further perspective on Seattle and beyond, we turn to Mickey Kantor, former U.S. trade representative, and former commerce secretary in the Clinton administration. Tom Hayden, state senator from California and longtime liberal activist; he took part in some of the protest marches in Seattle last week. Arvind Panagariya, a professor and co-director of the Center for International Economics at the University of Maryland. He also writes a column for a newspaper in India, the Economic Times. And Fred Bergsten, director of the Institute for International Economics, and a former treasury official under President Carter. He also was in Seattle last week hosting a seminar on WTO issues. Welcome, gentlemen. Tom Hayden, what do you make of Ambassador Barshefsky's assessment of why the talks failed. Do you share her view?

TOM HAYDEN: Well, I'm glad to hear the ambassador talking about democratization and greater accountability. I think that the failure was due to an underestimation that was kind of a cluelessness in Seattle, if you will, of the strength of the reservations and the strength of the antagonism towards the shaping of a new international order with such a priority on investor rights without due consideration of human rights and labor and environmentalism.

MARGARET WARNER: Fred, is that what you saw a fundamental miscalculation there?

FRED BERGSTEN: No, I think we face the traditional disputes among the different trading countries. The United States and Europe bickered over agriculture and also some issues the U.S. did not want on the agenda, that the Europeans wanted, like investment and competition policy. Likewise the United States....

MARGARET WARNER: You're talking there about U.S. antidumping laws?

FRED BERGSTEN: No that's in my second category. The U.S. and the developing countries were at loggerheads, the U.S. wanted to bring labor and environmental standards on to the agenda but were unwilling to meet the developing country interests in revising U.S. antidumping statutes, speeding up the liberalization of our textile quotas, spreading out the phase-ins that some of the developing countries took on back in the Uruguay round. So, it was a two-way clash. I think it was the traditional debates among trading partners. I don't think the demonstrations in the streets had anything material to do with it. But these are big problems. If they're not resolved quickly, the costs will be very large both for the United States and the world economy.

The causes of the collapse

MARGARET WARNER: How do you see the causes of why it collapsed in Seattle, professor? I mean, do you see it, as Tom Hayden does, that with this -- there's sort of this new constituency out there saying we want to be heard or do you think it's as Fred Bergsten thinks really kind of the traditional trade issues that couldn't get resolved?

ARVIND PANAGORIYA: I come here on the side of Fred -- particularly I think Fred has emphasized the developing countryside, which has to do with the labor standards and to some degree I find Ms. Barshefsky's assessment a little bit too optimistic. Initially I think even by November labor standards had been put formally on the table by the United States for the creation of a developing working group, and I think a lot of the developing countries, particularly India, were very leery of the intrusion of such a working group in the WTO. We have sort of from India push for putting it into the international labor organization.

MARGARET WARNER: But that's where a lot of the intensity in the street was coming from.

ARVIND PANAGARIYA: That's absolutely right. You have to recognize however that that was not the view of the civil society from the developing countries. Quite a few workers' unions in the developing world have, in fact, gone the other way actually opposing the inclusion of labor standards into the WTO as such. The view that came out of Seattle was quite -- sort of developed countries view. There are trade unions out there with memberships over 120 million people who have actually signed on declarations which oppose the introduction of labor standards into the WTO.

MARGARET WARNER: What's your view of why these talks foundered?

MICKEY KANTOR: First of all, hello Tom, how are you? Nice to see you. First of all economics aren't in front of our politics, politics with a little "p." Economics of trade have gone so far and gone so fast we've forgotten we have got to bring people along. Number two: it's credibility, it's relevancy, it's accountability, none of which the WTO has in terms not only with people here in the United States -- all over the world. We have got to address the new issues of trade or we're not going to have credibility for the WTO. Look, globalization, I sort of agree -- globalization is a fact of life. It's going to be with us. We've got to make it work not only for corporations, which it has to, to grow capital and to grow jobs but also for people to grow standards of living and to raise the level of people all over the world to obliterate poverty if we can. And trade is the way out.

Now, in order to do that, the WTO is important. In order to make it credible, we're going to have to address issues like labor and the environment, bribery and corruption, all these issues that we never felt were part of trade. It's time for the WTO not only to do that but to open up its processes. It's one of the most secret organizations in the world and it's maddening that it continues to be so.

MARGARET WARNER: Is that the problem, Tom Hayden, that there is this backlash against globalization and that no one is making the case with any credibility for why it's a good thing, why it's positive and that it can benefit more than just the corporations as Mickey Kantor put it?

TOM HAYDEN: Well, I think there is a need to be internationalist and have a very positive view, but you don't have to be protectionist to worry about some of the intrusions. For instance, I've seen a law review article that identified 95 California laws, some of which I wrote, that would be lost if these secretive dispute resolution panels had their way. And so we have an imbalance here. We can't expect Americans to give up environmental standards, public health standards, wage levels, local and state government laws in exchange for a kind of abstract mercantilism. But to say "no" is not enough. I think we -- the ingredients of a big "yes" are there: Trade, human rights, bringing people's wages up around the world instead of lowering ours to those levels, environmentalism. That's a big picture that I think the United States ought to align itself with.

MARGARET WARNER: But Fred Bergsten, this is the kind of thing the President at least has been talking about and that Charlene Barshefsky or Mickey Kantor when he had that job. Why doesn't it take?

FRED BERGSTEN: It's a peculiar disconnect, particularly at this point in time in the American economy when our unemployment rate is at a 30-year low, our economy is growing rapidly, with no inflation. Globalization and trade liberalization deserve an enormous amount of the credit for that. How has it been possible for the U.S. to cut unemployment so low without treating inflation, which everybody feared five years ago was impossible? Part of the answer is globalization and trade liberalization. It has put competitive pressure on our economy. It has kept prices down because of import competition. It has created jobs, indeed good jobs, with wages rising, not falling as Tom Hayden suggested. So there's a huge disconnect between the facts and the perceptions. The president has tried to articulate it. He must not have done it strongly and loudly enough, but the leadership of the country has simply got to get across the message. Now there may be a place to bring in higher standards from various aspects of trade-related issues but the fundamental economics of it -- a big plus not just for corporations but for American workers. The 30 million jobs that have been created in the last ten years -- all of that in large part, as the president repeatedly says, due to trade expansion, trade liberalization, globalization. It's a plus for the working man and woman not just the corporations as some of the rhetoric would have you believe.

MARGARET WARNER: But how do the publics in the developing countries, professor, feel? Do they feel globalization has paid off for them?

ARVIND PANAGARIYA: Most certainly. I think developing countries have been the largest beneficiaries in some ways of the open markets. And if you look at the Asian experience and the recent Indian experience as well, opening up their own as well as the developing countries have helped generate growth enormously but I think... I sort of agree essentially with Fred that if we really stuck to the trade liberalization agenda, therefore gone on to - gone on with services and even industry and products I think much progress would have been made at Seattle.

MARGARET WARNER: You mean, never bring up the labor and environmental issues…

ARVIND PANAGARIYA: Developing countries are not against that actually. What they are arguing is that let's take the labor standard issue in the international labor organization where it belongs and environmental discussions are underway in the WTO, so it's not as though environmental discussions are not there. They are very much a part of the WTO discussions currently. So if this had been the trade liberalization, I think it would have taken off.

MARGARET WARNER: So, how do you bring developing countries move to the view that the President has and that you expressed that these issues do have to be brought up?

MICKEY KANTOR: Two or three ways. Number one is we are going to have to have a continuing dialogue. The president has been talking about eight years since October 4, 1992, at North Carolina State. The vice president went to Marakash in 1994 and advanced labor environment in opening up the WTO. Seattle, I think, was a important time, not the violence which all of us deplore but the time where people became aware in this country, the largest trading nation on earth, that the WTO does make a difference. What we're going to have to do is understand if we're going to do is understand - if we're going to protect intellectual property and investment, if we're going to build credibility for an increased World Trade Organization and increased liberalization of trade, increased growing standards of living around the world -- we're going to have to address these so-called new issues. If you see a turtle sitting on a fence post, you understand it didn't get there by accident. Credibility is the centerpiece of what we're going to have to build at the WTO. If we don't, if we don't, we're going to rue that day because we're going to find out we don't have the support of the people, therefore the support of their governments, therefore the WTO is going to fall of its own weight.

MARGARET WARNER: And when you talk about the turtle on the fence, that's the backlash.

MICKEY KANTOR: That's the backlash. That's not addressing the legitimate and rational issues that affect people's lives. You can't raise standards of living unless we affect core labor standards. What are core labor standards? Child labor, slave labor, prison labor, right to collectively bargain, freedom of association and discrimination in the workplace -- not wages. Those are not legitimate comparative advantage. We need to address those, address them in the WTO And we'll make great progress.

MARGARET WARNER: So can the WTO -- go ahead.

TOM HAYDEN: Well, it sounds as if we're all more or less in agreement here. I'd like to clarify it because if there's this much agreement, then what did happen up there?

MARGARET WARNER: Right.

TOM HAYDEN: What I saw were I don't know how many tens of thousands of people -- I haven't seen anything like it in a very long time. I saw Teamsters and Machinists who were concerned about losing jobs to sweat shops. I saw environmentalists. I saw women. I saw people in the street doing the most phenomenal acts and courageous acts I might say of civil disobedience who actually managed to stop this organization of 135 countries in its tracks. What were they so upset about?

If everybody is in agreement that it should be reformed, that it should be transparent, it should be accountable, all these issues should be on the table, then was this just a big misunderstanding? I think we have to be a little more candid that the momentum of the WTO was more in an investor direction, more in an elite direction and that this was a cry that came out of the streets that stopped it and now we have to take the opportunity, hopefully, for this constructive dialogue about how to reform it or create something in its place.

MARGARET WARNER: All right. Thank you, Tom Hayden I'm afraid we're going to have to leave it there. Thank you, professor, Fred Bergsten and Mickey Kantor.