Seattle: failure or new departure?

Trade Directorate

David Rooney

Civil society and the developing countries are growing more assertive. Meeting their concerns without jeopardising multilateralism is the big test for policymakers. 

The tear gas had only just evaporated from the streets of Seattle and the shouts of the demonstrators still seemed faintly audible when, on the doorstep of the OECD’s Paris headquarters, a café organised a philosophical debate on the theme "Can failure give birth to progress?". The reply seems obvious since, from time immemorial, Man has only been able to evolve through a process of trial and error. The multilateral trade system is no exception; there are times when goals are not achieved, when results fall short of expectations.

But what progress can result from the "failure" of Seattle? Was it really a failure? And if so, was it any more serious than that of the 1982 Ministerial meeting of the GATT which proved unable to launch a new round of multilateral negotiations (indeed, four more years were needed before the Uruguay Round was launched); or the meetings of Montreal in 1988 or Brussels in 1990, all of which failed to meet their goals, including conclusion of the Uruguay Round?

A distinctive feature of the Seattle meeting was that media expectations were undoubtedly higher than those of the participants. True, there were differences among the developed countries themselves, but the failure was not as substantial as the media portrayed it to be. Why focus on the lack of results, when in fact the Seattle meeting can take credit for bringing to public attention two key forces in the debate: civil society, whose protests were loud enough for their governments to hear, and developing countries. Together, these largely contributed to the breakdown of the Millennium Round.

The latter group is important. Further multilateral talks, and how those talks are organised, depend on encouraging developing country representatives to participate more actively at the negotiating table, and on taking their interests and expectations into account. Not that the developing countries are altogether newcomers to the multilateral trading system. They were, from the outset, involved in the process of development and negotiation, but were either in the minority or only a few of them were given a say in the proceedings (or access to the now much-discredited "green room"). Though few in number, they were extremely important in terms of the effectiveness of their participation and the success in making their opinions heard. Countries such as India, Brazil, Egypt and Morocco, as well as Bangladesh, El Salvador, Tanzania and Jamaica, to name a few, have always participated actively in the work of the GATT and its successor, the WTO. Nevertheless, it has to be admitted that the more delicate negotiations have largely been dominated by the principal trading partners of the "Quad" -- the European Union, United States, Japan and Canada.

The frustration being expressed today addresses both substance and form. As for substance, over the years in which the trading system has developed, from the Havana Charter to the GATT and then the WTO, the interests of developing countries have usually been taken into account by means of "escape clauses" vis-à-vis the rules defined by and for developed countries ("à la carte" membership of the Tokyo Round codes, transition periods of the Marrakech Agreements). As it is not feasible to have two different trade institutions in a world of multiple and global links, a number of rules will always be applied differently, depending on the level of development. This approach of special and differentiated treatment has to be maintained.

It is equally important to be more goal-oriented in the definition of rules, including those concerning market access, that directly promote development. From this point of view, the term "developing country" warrants careful consideration, as some of those which claim to be in that bracket and which are relatively well-off, have a real responsibility towards the poorest countries among them. The OECD will contribute its ideas on these issues to the WTO, in particular addressing the way in which trade liberalisation or the definition of rules, past and future, affect developing country economies.

As for the form of the frustration, the increase in WTO membership of transitional and developing countries -- which at 113 out of 136 now constitute a very large majority -- means that thought has to be given to the organisation of discussions, and to representation in restricted meetings (restricted in terms of numbers, not in the sense of confidentiality). The WTO and its director-general, Michael Moore, are currently working on this question. Resurrecting an institutional organisation like the CG-18 of the 1980s, which at the time was purely advisory, is one possibility, provided that it better reflects the new composition of the WTO; another option is rotational representation. Proposals were made at one time to set up a sort of economic Security Council, and the WTO would do well to look at this again.

The other issue raised at Seattle (and later at Washington) is public concern about globalisation’s seeming disregard for people, the result of some international conspiracy led by nebulous governments and multinationals. Apart from the errors of analysis and fallacious arguments about the non-democratic nature of international organisations or the power of multinationals (which, incidentally, must abide by the rules governments make and the WTO implements), the ideas they put forward are often altruistic and undeniably moral, even if the most vociferous critics are those benefiting most from the system. Protecting the planet’s environment and raising living standards and working conditions are laudable objectives which cannot be brushed aside. The problem is that in many cases the very people these ideas are supposed to help, reject them for being at best neo-colonial, at worst, protectionist.

Therefore, without rejecting these ideals, which can only contribute to the general well-being of the planet, the real question is whether the WTO should, or even can, incorporate them into its legal order, on a functional basis. It should be emphasised that the WTO’s current legal system is based on the balance of rights and obligations: when one of its members fails to comply with its obligations, as decided by the dispute settlement procedure, it is obliged to rectify the situation. The implementation of retaliation/compensation depends on how much trade was prejudiced by non-compliance with the rules. The concept of moral or social prejudice does not exist in the laws of the WTO; it is probably impossible to address moral concepts within the current legal framework.

This does not mean, however, that the WTO should disregard them entirely, especially since the environmental and social objectives of this organisation are now recognised. Two approaches are therefore possible: the first is a political examination of these issues within the WTO on the clear understanding that the questions concerned are not subject to the legal order of the organisation or to the system of sanctions/withdrawal of concessions authorised in the framework of its dispute settlement procedure. This political examination, using a peer pressure approach such as the OECD uses, should be conducted in close collaboration with the other organisations concerned, perhaps on the basis of reports they could prepare for the WTO; this is certainly in the spirit of the kind of collaboration mooted with the ILO, for example. The second approach would rely more directly on governments, both at national and international levels. It would also depend on good governance and the coherence of policies with general principles universally recognised at international level.

The common objective in the ideals expressed at Seattle, whether in conference rooms or on the streets, is development for all, including protection of the environment, workers and consumers. But it is no less ethical to espouse equal opportunity by means of rules preventing the "law of the jungle" whether public or private: this is, after all, the fundamental goal of multilateralism. It would be useful to rank the objectives called for at Seattle and to consider whether there is not one from which the others would naturally flow. And as previous and current studies suggest, development is at the root of individual and community well-being. Future endeavours must focus on this objective in all its aspects -- market access, equal opportunity, adaptation of rules. Legitimate moral objectives would then follow. Indeed, tools like persuasion, incentives and the cultivation of new levels of awareness about environmental, social and human rights issues will surely be more effective than coercion and confrontation.

If the lesson of the fundamental importance of development has been learned, if adequate measures are taken that meet the expectations of the developing countries themselves, especially the poorest among them, then Seattle will not have been a failure, but simply a false start. The OECD is one organisation ready to help build the bridges needed to ensure that the next departure will be a real one.

©OECD Observer 221/222, Summer 2000

Economic data

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