People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 21

May 21, 2006


Hopes Of The South Betrayed


N M Sundaram


THE story of subversion of the UNCTAD itself by GATT that later morphed into WTO, enveloping within itself subjects like investments, intellectual property rights and a plethora of non-trade issues, is the story of continuing poverty of nations and backwardness of their development. It is the story of the roll back of political and economic policies underlying New International Economic Order – 1974 that was initiated with much fanfare. It is the story of betrayal of the hopes of the South. As already stated in these columns, it is the story that unravelled during the tenures of Ronald Reagan and Margaret Thatcher as president of the US and prime minister of the UK, respectively. It is the offensive strategy of neo-liberal globalisation with its emphasis on so-called ‘free markets’. It is the crux of the present imperialist offensive for ensuring its hegemony.




For an international agreement, the Uruguay round of trade talks concluded at Marrakesh, was altogether one sided, with the developed countries dominating the outcome. It was a classical case of winner takes all. The negotiations were totally dominated by the developed countries, with the developing countries whining, insisting and sometimes protesting, but in the end inevitably yielding. As George Soros put it in his critique ‘On Globalisation’:   the developing Third World countries “did not have much say in designing the provisions of the Uruguay round; yet they had to buy into them wholesale because, under WTO rules, a country must be a party to all the negotiated agreements as a single package.” There was no question of conditions; no ifs and buts. That was why it was winner takes all. The US and the European Economic Commission (later EU) dominated the scene with Japan and Canada playing significant role. There was no space whatsoever to the weighty concerns of the countries of the Third World – the countries of the South – with its enormous problems of development and welfare of its people.


The brazenness of the First World was illustrated by the fact that the major agreements were not drafted by their official trade representatives or diplomats but by representatives of their Transnational Corporations (TNCs). For example, the agro-giant Cargill was involved in the agreement on agriculture; the giant pharmaceutical firms on Trade Related Intellectual Property Rights (TRIPs); the auto-industry on Trade Related Investment Measures (TRIMs)! It left very little for imagination to gauge whose interests were being served.


From United Nations Conference on Trade and Development (UNCTAD) to General Agreement on Trade and Tariffs (GATT) to World Trade Organisation (WTO), international trade relations had morphed and degenerated into a one way street. The UNCTAD under the umbrella of the UN provided some space, though limited, to address the concerns of the Third World countries, it being more democratic in character. It could be said to have imbibed the spirit of the New International Economic Order (NIEO), crafted after the Second World War. Even as the spirit of the NIEO was being snuffed out soon after its adoption, it was inevitable that every institutional arrangement under its aegis would also be subverted. However, it must be said that UNCTAD’s successor in trade related issues, namely GATT, struggled to maintain certain balance albeit unsuccessfully. Still the scope of GATT remained limited only to trade related matters. This balance was shattered by the Marrakesh agreement concluding the Uruguay round of talks under the GATT that led to the formation of WTO in 1995, under the offensive thrust of Arthur Dunkel and his infamous ‘Dunkel Draft’. The agreements thereunder were vastly expanded in scope and comprehensive, covering not only trade in industrial and manufactured goods as was the case with GATT , but also agriculture, services as well as non-trade issues  as investments and intellectual property rights.




The negotiations leading to formation of WTO lasted eight long years (1986-94) marked by contentious and acrimonious discussions. As mentioned, it was characterised by bullying and cajoling on the one hand and righteous protests and meek submissions on the other. The objective of the developed countries of the North prevailed. As George Soros observed, it was “the only international institution to which the United States has been willing to subordinate itself.” (ibid) And, why not? It was clear that though every nation was theoretically equal to the others on the basis of ‘one country, one vote’, the system was loaded heavily in favour of the rich countries of the North, the US in particular. There was no principle of ‘affirmative action’ involved in its scheme of things that was so essential and that could have helped to keep even the scales to some extent at least, as between the weak and the strong.


In the first ministerial meeting of the WTO itself, held in November 1996 in Singapore, the intent of the North was proclaimed as the famous (or infamous as one would view it) declaration of the WTO, the IMF and the World Bank. The Singapore Declaration, as it was called, heralded the complete integration of capital, production and markets. And, WTO was earmarked to preside over this triumphant coalition woven by the countries of the North. The all powerful finance capital would be the driving force and corporate profitability the overriding objective. It was averred that the wisdom of the market would iron out all disparities and ensure the greatest good to the greatest number; and national policies and priorities would no more have any place or relevance. The all-embracing global market would decide what was relevant and what was not. The concerns of the people would be of no significance whatsoever.


The dispute-resolution mechanism, which was paraded as the most triumphant feature of the WTO arrangement, in practice however, was not to be a smooth and congenial affair. There were inevitably disputes galore. These reflected the urges of the national capitalist interests rather than the interests of different segments of the ordinary people, whose pathetic existence cried for attention. After all, globalisation was taking place in a world marked by great disparities in political and economic status and power as between countries and people.


The rich and the powerful countries of the North – the US, the EU, Canada and Japan – while jockeying for world markets, wanted to safeguard against access to their own. At the same time, they combined together to keep at bay the countries of the South. The crisis of over-capacity and shrinking markets in their own countries made them aggressive in seeking openings for their goods and investments in other markets, both developed and developing. They looked upon emerging markets like those of China, India and Brazil as plum targets. The WTO inevitably had its hands full with these disputes concerning the First World rather than the more pressing concerns of the poorer half that often made the difference between life and death.


The WTO’s emphasis on carrying forward with neo-liberal policies enunciated by the countries of the North and initiated by the IMF and the World Bank on their behalf, made its overriding goal as one of opening up the markets of developing countries. This indeed was a shameful retreat from the spirit of ‘developmentalism’ and the New International Economic Order (NIEO) enunciated by the UNCTAD and other UN sponsored agencies.


Very few countries of the South, with the exception of the big among them like Brazil and India, could make their voices heard to some extent. Even when they did, they were brushed aside. Strong objections couched in bold language were not of much avail in the ultimate; they could articulate their concerns and priorities, even protests, sometimes raising hopes of breakthrough, but only to be frustrated in the end. This scene was witnessed with monotonous regularity. After all, the rhetoric of defending the diverse interests of their own economies could be nothing but a chimera, when the countries in question had already subordinated their interests to the demands of the countries of the North, and their corporate and financial interests, in the name of neo-liberal globalisation and so-called free markets. It must be confessed sadly that the spirit of militant opposition of protesters outside the venues of the discussions was never adequately matched by the ministers and their coterie of assortment of aides – the bureaucrats, the ‘experts’ and the hangers-on.




Often one hears of tall claims on how much world trade has expanded since the formation of the WTO. It is being claimed that international trade expanded seventeen-fold between 1948 and 1997. In value terms the increase was from $124 billion to $10,772 billion during the period. (WTO Annual Report-1998 – International Trade Statistics) This increase obviously took place under the aegis of GATT itself, considering that the WTO was formed only in 1995. In the two years since its formation nothing dramatically more could have materialized.


The nomenclature ‘international trade’ is not wholly appropriate considering that between 30 to 40 per cent of this took place between subsidiaries of Transnational Corporations. The same was the case with investments too. Moreover, the bulk of the trade was corporate over all else, underpinning the truth that corporate profit was the driving force rather than the so-called global free trade. Need it be said that peoples’ welfare or developmental concerns of countries, were hardly the objectives? Ralph Nader, the American consumer activist and presidential candidate against George W Bush in the election of 2000, testified before the Senate Committee on Commerce, Science and Technology on October 13, 1994, that it was indeed a case of pandering to corporate profits. He used the expression, ‘trade uber alles’ meaning trade above all else; nothing else was of relevance, not welfare of national economies or of people and their life and living, nothing else whatsoever.


The Bretton Woods arrangement was intended to ensure lasting world peace as well, apart from smooth facilitation of world economic reconstruction involving redistribution of incomes and wealth as between nations of the world that was later defined in 1974 as establishment of a New International Economic Order. After its advent, it must be remembered that there was not much of a war situation as in the case of the Second World War and earlier that could seriously disrupt world trade. There were no doubt wars like the Korean War (1950-53), the Vietnam War (1945-75), the Suez Crisis (1956), the Arab-Israeli Wars of 1967 and 1973, the Falklands War (1982), the Iran-Iraq War (1980-90), the Gulf War (1990-91) and the ongoing war of occupation in Iraq; but none of these were individually or collectively comparable in sweep or scale or destruction to the two World Wars. More importantly, none of this was connected with trade related issues. Where then was the necessity to replace GATT with WTO other than as a means of securing iron-tight control and domination by the countries of the North on world trade and much else like agriculture, investments, services and intellectual property rights?




It was not as if these countries of the North were unified among themselves in their approach, though unified in their goal of economically and politically dominating the countries of the South. They had their own contradictions among themselves, as always. Japan for example, was interested in protecting its agriculture and pattern of industrial production as well as technology. As for EU, it was already growing in strength in a manner to pose a challenge to the dominance of the American power. The EU was self sufficient in agriculture, which was heavily subsidized. And therefore, it was likely to come under attack. It was of no surprise that both of them were initially ambivalent in their approach to WTO as was the US itself. But all three of them combined in the ultimate, even as their common interest coalesced in the formation of the WTO.


As for the countries of the South, their only lure was possibility of access to Northern markets. This of course was a pursuit of a mirage as true experience was to reveal much later.


The WTO, as experience would reveal, basically served the dominating interests of the US. The American corporate interests that dominated its foundation and structure, continued to exert pressure for ever greater portion of the cake, by constantly seeking to redefine approaches and goals. It had its own interests to protect and expand, such as its heavily subsidised milk and other dairy products besides agriculture. When it suited its interests, the US successfully kept agriculture away from the dispensation of GATT. And, when it suited its interests later, it pressured inclusion of agriculture in the GATT-WTO purview, in the Uruguay round of discussions.


The audacious statement of the then US secretary of agriculture, John Block at the very beginning of the Uruguay round of discussions, revealed the true intent of the US –– of US imperialism. He declared: “[The] idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on US agricultural products, which are available, in most cases at much lower cost.” (Source: ‘Cakes and Caviar: The Dunkel Draft and Third World Agriculture’ – ‘Ecologist-Volume 23, No. 6 – Nov-Dec, 1993) John Block being only the secretary of agriculture, stopped short of telling: ‘rely on the America for your technology, industrial goods, services, investments, military hardware, and defence as well.’ There were others of his ilk in the administration to say this. The US did not of course add ‘rely on us for your governance as well’ as this would have sounded too open and brazen. After all certain things are to be done on the sly, sometimes cajoling and sometimes bullying. And, that is constantly being done.




As already mentioned, the inclusion of non-trade issues like intellectual property rights etc. in the trade agreement leading to formation of the WTO, was a retrograde step looked at from the interests of the developing countries of the South. How could royalties and collection thereof be construed as being part of trade? But this was what exactly happened. It was an open display of the North’s true intent of bringing in areas of clear and singular advantage to these countries and their powerful TNCs.  The inclusion of TRIPS was akin to bestowing these TNCs the status of virtual states by themselves! It was also a message passed on to the countries of the South that their areas of advantage would be thoroughly eroded.


By agreeing to TRIPs agreement, the countries of the South had virtually given to the TNCs like Microsoft and Intel, the right to monopolise over innovation and knowledge intensive and technologically oriented industries, through highly restrictive patent rights. Similarly, in the realm of biochemistry, the agreement ceded to companies like Monsanto and Novartis, the right to privatise and appropriate for their own benefit centuries of innovation and creative exchange of experience and interaction between human communities and nature. Instead of redistribution of income in the manner envisaged by the NIEO, it would be a one way transfer of income and resources in the form of royalties from the poor to the rich countries and their TNCs. Instead of the much touted competition, it would be greater monopolisation than ever before. “[F]or the very poor countries that have yet to develop IP [intellectual property] industries….the main effect will be transfer of income in the form of royalties from the poor countries to richer ones, particularly the United States.” (Source: Essay on ‘Ambivalent Multilateralism and Emerging Backlash’ in ‘Multilateralism and US Foreign Policy’ edited by Stewart Patrick and Shepard Forman’ – 2002)


Poor countries in the grip of diseases including the dreaded ones like HIV-AIDS found their very future existence in jeopardy and in the hands of the profit centric pharmaceutical industries of the North. These companies virtually wielded the power of life and death over entire people and countries.

(To be continued)