Fair
Trade For All – How Trade
Can Promote Development
By Jim Miles
24 August, 2007
Countercurrents.org
a book with major flaws that reveal much truth
Fair Trade For All – How Trade Can Promote Development. Joseph
Stiglitz and Andre Charlton. Oxford University Press, Oxford, U.K.,
2005.
In 2003 Joseph Stiglitz published
his much acclaimed and critically popular book Globalization and it
Discontents. Its overall thesis, arguable particularly to those hidebound
within the ‘Washington Consensus’, simply stated that following
International Monetary Fund (IMF) rules and regulations – the
combination of trade rules, loans, and ‘structural adjustments’
required to receive financial assistance – “the result for
many people has been poverty and for many countries social and political
chaos. The IMF has made mistakes in all the areas it has been involved
in.”
These allegations have become
more apparent as truths as time has passed since the publication of
Stiglitz’ first book. It is a book that is readily accessible
to the public. Stiglitz’ writing is clear and well argued. He
does not slip into a frenzy of economic jargon and presents concise
historical examples of the different situations that unfolded globally
due in part to IMF ministrations (along with other non-governmental
organizations and other governmental interference, especially with the
EU and the US.). At the end of his arguments he presents what he sees
as reasonable ways and means to help correct the faults of the IMF,
the World Bank and the World Trade Organization (WTO).
For the WTO he argues that
“Reforming the WTO will require thinking further about a more
balanced trade agenda – more balanced in treating the interests
of the developing countries, more balanced in treating concerns, like
environment, that go beyond trade.” He follows by saying that
“so long as globalization is presented in the way that it has
been, it represents a disenfranchisement…” and “…of
equal concern is what globalization does to democracy.”
With those positive concerns
in mind, it was with positive anticipation that I read his subsequent
work, Fair Trade For All. Unfortunately I was fully dismayed by the
faults of the book, both of its writing style, and its lack of insightful
arguments.
To be fair, Stiglitz is writing
in companionship with Andrew Charlton, who has wonderfully impressive
credentials as professor at the London School of Economics, but with
equally unimpressive results. Also to be fair, the book was written
on “behalf of the Initiative for Policy Dialogue (IPD), a network
of some two hundred economists and development researchers throughout
the developed and developing world” and was then presented to
various high level economic meetings (World Bank, IMF, WTO, UN Commonwealth
Finance Ministers). That perhaps explains it first major flaw: the lay
reader will become lost in the economic jargon, research papers, and
suggestions of “empirical evidence” that overwhelm the book.
Fair Trade For All certainly is not accessible for all, quite ironic
in that Stiglitz and Charlton along with the major groups involved are
continually asking for more “transparency” – this
book delivers opacity instead. If this work is typical of the trade
papers that travel throughout the world of economics, it is no wonder
that we are in significant trouble – lots of jargon and rhetoric,
very narrow perspective, (although there are some superficial attempts
to be more broadminded with a paragraph or two on the environment and
labour), and not much real wisdom and intelligence.
There are a few gems contained
within, short summary comments, almost like diamonds in a slag pile
of kimberlite. The forward indicates, “The world trading system
has protected the interests of the rich countries, at the expense of
the poor, and entrenched inequalities.” Describing the situation
six years after the Doha talks with the WTO, those promises “…lie
discarded at the base of a trading system whose credibility is crumbling.”
The first chapter, “Trade Can Be Good For Development” says
that the few successes over the “…last fifty years have
pursued inventive and idiosyncratic policies. To date, not one successful
developing country has pursued a purely free market approach to development.”
Another gem is their argument that “None of today’s rich
countries developed by simply opening themselves to foreign trade,”
a relatively well-known position that is historically supported.
Few new insights are contained
concerning how the system needs to change, in particular the WTO that
is the focus of this book. There are some common sense statements that
seem terribly obvious yet may not be to the economists targeted initially
by the authors, or perhaps they were thrown in for lay people to feel
that they could actually understand what was going on. This ‘duh’
factor stands out significantly in two areas: fairness and costs to
the poor countries.
Stating that “It seems
self-evident…” the authors say it anyway, “Any agreement
should be fair” and “Any agreement should be arrived at
fairly.” It seems economists are also in need of reminders of
what they should have learned in grade school, with the ever increasing
“life’s not fair” mantra creeping in more and more
as education becomes higher and higher, until it becomes the dog-eat-dog
world of free market capitalism. Unfortunately, it is the WTO that is
being discussed here and “fairness” is not exactly something
it cares about.
The asymmetrical costs to
the poorer developing countries also should seem self-evident, though
they are presented as discoveries from “empirical evidence”.
The fourth reason in particular is classic, “…developing
countries are home to the world’s poorest people and weakest credit
markets.” Well, surprise, surprise. Equally unsurprising is the
third reason for these unequal costs, as biggest distortions occur “…in
the industries of importance to developing countries.”
Common sense would tell me
that “fair trade” would encompass many other issues: labour
rights and protections; environmental protections and responsibilities;
military projections (and not just complaints about poor countries “wasting
money” on their militaries); social services support; and, ‘it
seems self-evident’, democracy.
Labour receives a page or
two in arguments about the movement of labour (a good point as free
trade is hardly free without free labour movement), but the arguments
are confined to rules and regulations that will assist immigrants to
work where the lower paying positions are not filled by the local people.
To be truly fair, labour also requires the freedom to establish unions,
the rights of a safe work environment, and fair remuneration for work
performed.
The environment receives
short shrift, the main example being a trade clause restricting trade
on tuna that endangers turtle species in international waters. There
are no true insights offered nor any real concern expressed for the
increasing need to protect all environments against the over-consumptive
development demands of the west and the overall growing global population.
No discussion is made of the need to preserve fresh water and promote
sustainable lifestyles in a finite world.
The military is mentioned
just in passing with the Meiji restoration in Japan (“a wealthy
nation and a strong army”) and does not even rate a mention in
the index. Common sense should indicate, especially after the debacle
in Afghanistan and Iraq and the many books on or related to military
topics (Bacevich, Johnson, Greider, Galbraith, Grandin, Ritter among
many others) that the military plays a huge role in the economic life
of most of the world, if not all of it. Significantly, it has been called
the “hidden fist” behind the economic prosperity of the
U.S.
Social services are identified
as being weak in developing countries and needing assistance, but again
with only minimal mention and an emphasis on some kind of cost accounting
for the losses incurred by the poorest workers. No mention is made of
the “structural adjustments” (an IMF term) that requires
downward ‘adjustments’ to the educational system, any welfare
system, and health services, that result from revenue required to pay
adjustment costs elsewhere (including, ironically, the huge economics
bill for all the new economists and accountants and government bureaucrats
required to track it all).
The largest fault in these
common sense items is in a bizarre way the strongest positive –
through the implications of its lack of attention. Democracy.
By now the world understands
the end all and be all of all this free trade marketing rhetoric and
the imperialistic wars waged against the ‘terrorists’ and
‘evil’ people of the world is to bring them democracy. Stiglitz
mentions democracy twice – once in passing in relation to media
control by conglomerates; twice as an adjective describing a poor country;
and, whoops, a third time not mentioned in the index but significantly
more important: the North America Free Trade Agreement [NAFTA]“...contains
provisions that would probably never have been accepted by a democratic
parliament with open discussion in a deliberative process.”
As a Canadian living under
NAFTA I can attest to that view. Canada is supposedly democratic, but
both major political parties, the Liberals and Conservatives, Chretien
and Mulroney, favoured NAFTA, lied about their intentions, and went
against the clear majority of Canadian opinion and signed on to it anyway,
presumably as always because of corporate interests lining the political
pockets. Canada lost sovereignty over its energy resources (and possibly
later, water), social services are increasingly under attack, the rich
are getting richer and the poor poorer (admittedly still well off in
comparison to the majority of the world), economic integration with
the U.S. is almost complete, and we are producing far more greenhouse
gasses per capita than any other country. Great.
But that is it for democracy;
it is never discussed otherwise throughout this work, and does not come
under discussion, as it often does in government spin, when discussing
trade and international relations. In a weird macabre way that is a
good thing, because if nothing else it highlights that Stiglitz and
Charlton do not see democracy per se as being in any way related to
free market liberalization. In other words, by deliberate omission,
they are saying that free markets and market liberalization do not have
anything to do with democracy.
Can I say that more clearly?
Free market neoliberal capitalism does not equate with democracy.
That leads into the largest
major fault with the work, the World Trade Organization itself that
is the centre-piece for this document. The WTO (along with its compatriot
think-tank, the OECD) is arguably one of the least democratic institutions
in the global arena today. It is set up as a negotiating unit comprised
of government financial representatives, bankers, economists, CEOs,
lawyers et al who have no interest in the democratic workings of the
world as long as the money is allowed to flow freely into corporate
coffers.
As for the manner in which
those involved – the CEOs, the MBAs, lawyers, economists, and
financial “experts” - perform their duties in secret and
for their own wealth creation against the true forces of any popular
citizens’ democracy is summed up in the wonderful frequently quoted
phrase by a WTO official that “This is the place where governments
collude in private against their domestic pressure groups”, those
nasty people like labourers, environmentalists, health care workers,
and farmers. An earlier Director General of the WTO Renato Ruggerio
boasted, “We are writing the constitution of a single global economy”[1]
[1]. Ruggerio is on record with his environmental concerns as well,
stating, “environmental standards in the WTO are “doomed
to fail and could only damage the world trading system.”
Wonderful! This is the system
Stiglitz and Charlton expect to reform? A highly unlikely project and
one that will only provide another sheen of democratic pretence while
they continue the business of business.
Another fault of all these
arguments is that of growth and development. It is never defined, never
described as ‘this is what it looks like’. Ultimately, in
all the arguments I have read it comes down to being the dollar value
of the GDP, either gross or per capita. Growth and development, in all
the materials I have read, never mention the environment, the health
of the people, the safety and security of the workers, nor the education
system as having any relevance to growth and development as a definition.
Unfortunately, the GDP is a highly fallible argument and can be a very
simplistic misleading statistic.
The ultimate positive from
this book then is the recognition by omission that democracy is not
related to free market liberalization. That should come under the common
sense ‘it seems self-evident’ category of results, nothing
original with that statement either.
The rest is mostly negatives.
Fair trade and globalization could be a positive, but not as presented
by the authors, and not under the rules and regulations of the WTO,
who still insist on a top down (even though they say items are to be
discussed and adjusted with governments, knowing that many governments
do not truly represent the majority of the people of the country, Canada
included) bureaucratic formula to aid the poor. It cannot work, not
unless they ask the people of each country what they want and then effectively
respond to those requests. Most of the answers, perhaps, should be ‘self
evident’, but until the people themselves are actually consulted
and responded to effectively, no true progress on fair trade will be
achieved.
If done as suggested by Fair
Trade For All, the world will continue to be enveloped in a corporate
sponsored, non-democratic, militaristic, environmentally, social, and
labour unfriendly regime. As well as being a poorly written book, it
is not at all helpful either, and definitely not fair.
[1] These quotes are widely cited in a variety of sources active against
the deservedly deceased MAI. Also quoted in Chomsky, Noam. “Hordes
of Vigilantes”, Profit Over People – Neoliberalism and Global
Order. Seven Stories Press, N.Y. 1999. p. 163.
Jim Miles
is a Canadian educator and a regular contributor/columnist of opinion
pieces and book reviews to Palestine Chronicles. His interest in this
topic stems originally from an environmental perspective, which encompasses
the militarization and economic subjugation of the global community
and its commodification by corporate governance and by the American
government.
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