World Trade Org, MAI and National Interest

Commentary

Romesh Diwan

The Indian elite and its Government, are planning all sorts of activities for the 50th year of its gaining independence from the brutal British imperial rule. This is a time more for reflection than celebration because as Faiz Ahmad Faiz wrote about that 15th August 1947 midnight, "chale chalo, ke woh subeh abhi nahin aayee." (keep moving because that morning has not yet arrived). In fact the morning, which was supposed to usher Gandhiji’s dream of ‘swaraj’ has still not arrived, even after these 50 years. One even wonders if it is in sight.

In fact it seems that we may be going back 150 years when British rule had firm roots in India. British rulers felt secure in their rule and had formulated an intellectually foolproof rationale that gave them the advantages of both power and high morality. They were simply carrying,

in Rudyard Kipling’s graphic language, "the white man’s burden" to civilize the uncivilized. The British did leave but their "burden" still remains and is now carried on, in different labels, by different groups in all parts of the world. In India, it is the RNI -- Resident Non-Indians -- who articulate it, e.g. when Rajiv Gandhi talked of the "21st Century," or when the Government of Rao, and its successor, of Gujral, talks of economic liberalization, export promotion, Narmada Dam, etc. In the world as a whole it has been taken over by the multinationals.

The problem then, and now, is the same. There are vast numbers of ‘uncivilized’ people who have to be ‘civilized’ and only a ‘few’ who can ‘civilize’ them. Given the nature of ‘civilizing activity’ they need necessary capacity and wherewithal -- such as institutional framework and effective weaponry -- to ‘persuade the uncivilized,’ by inflicting pain if necessary, in case they resist these ‘noble’ acts of civilizing them. After all, it is in the best interest of the ‘uncivilized,’ being ignorant, they just don’t understand it! Since these few have to carry the ‘onerous’ burden of civilizing, they deserve all type of deserts; palatial houses, servants, maids, prostitutes, high incomes, elegant life styles that is the envy of every one.

The civilizing institution then was imperialism and slavery. Now it is the market. ‘Civilizing’ is done through material consumption. Adam Smith sang praises about the market two hundred plus years ago. By harnessing self interest, it releases tremendous energies and is therefore a source of high levels of production, the touted GDP and its growth -- production of what?

that is better left for footnotes. Since it produces so much, it satisfies all wants; certainly of the ‘civilized’ who can afford. The market can do best if it is ‘free’ and unshackled by Government regulation framed by mere mortals. The free market thus provides the best economic system. A free market operates through mobility. The producer goes where the factors are cheapest and demand highest.

Larger the geographical area for the market to play around, the more productive the system. Globalization is ideal because it allows the market to seek cheapest resources any where in the world. The Nike shoes can be, and thanks to globalization these are, manufactured in Philippines by labor who don’t earn a living wage; how much more cost effective can any other system be? Slaves were sluggish, had to be fed and were, in the end, far less productive.

The most essential characteristic of a free market is mobility; mobility both of the outputs and inputs. Nation states have generally placed barriers on mobility through custom tariffs, quotas, ‘security’ etc. These barriers become all the more restrictive in this new era of globalization. The ‘civilizers’ have been arguing for the reduction and elimination of all such barriers through the institutional framework in GATT -- General Agreement on Trade and Tariffs. The problem with GATT had been that it had little teeth and could not deal with the national Governments; particularly the parochial, or misguided ones that cared for its ‘national interest.’ But the ‘civilizers’ have continued with their onerous task and have recently succeeded by arguing for WTO -- World Trade Organization.

It took a lot of time for the Uruguay Round to give birth to WTO but the baby is born. Most Governments have signed on it. That WTO is such a ‘civilizing’ institution was not lost upon the RNI Government in Delhi so much so that its most important clauses, about copyrights, were not discussed even in the Parliament. It was done through a Cabinet decision; how noble these ‘Cabinet members as civilizers’ were and how onerous their burden? The organization has started functioning. Given the will, and strength, of these few ‘civilizers,’ it will be nurtured properly. In fact, it has already questioned the clean air act in, of all countries, the US, as a source of barrier to the goodness of free markets.

WTO is based on the idea that all trade need to be ‘freed.’ The Governments have to first reduce, and then eliminate, all tariffs, quotas and customs on trade. Furthermore, it allows the multinationals, the new ‘civilizers,’ to fight back against those who just copy. Copyrights are well protected. One may ask, how come there are copyrights but not rights to copy? Language has always been deceptive, it was Saint Kabir who pointed out, ‘chalti ko gaddi kahain, dekh kabira roya.’ This is particularly important in this Information Age where most production involves copying and copyrights. What is further new in this structure is the fact that multinationals can now seek redress through a court of law. Not that it ever disturbed them before. The Bhopal Gas accident is a living proof, if any proof is necessary. 20,000 people have been killed, 100,000 are suffering from various gas-caused diseases and yet little compensation has been given to the suffering or their families. The Union Carbide, the multinational company responsible for this largest in the world disaster, goes on its merry ways. After all, it was involved in the ‘noble’ task of civilizing the poor native Indians. The RNI courts and Judges well recognized the onerous burden that this poor multinational, and they too, was caring. And now WTO provides more support to the multinationals in their ‘civilizing acts’ of transferring products from one place to the other; for removing plants in one place, setting it up at another, throwing high paying wage earners in one State or country to the ‘reserve army of the unemployed’ and hiring in other countries where laws can be guided through the ‘enlightened RNI type elite’ to allow less than living wage, greater pollution, cheaper natural and ecological resources.

All this helps globalization which makes market system more productive and improves the standard of living of ‘the civilized’ who live by material consumption.

But the multinational civilizers’ task is not done. There are many other barriers to the mobility of capital, the most central and essential element in the market system; it is not accidental that the market system is also called capitalism. These barriers are not only in terms of changing places but more seriously in the form of discrimination against the capital used by the multinationals. For example, many countries require that the multinationals must join with local capital and invest in areas needed by the community.

Similarly, county, state, and national Governments pass laws that deal with social needs, environment standards, etc.; such as a living wage -- higher than the minimum wage -- in some US states, clean air and water laws. Such laws affect capital mobility and thereby ‘free markets’ to do their ‘civilizing jobs.’ Given the widespread corruption in Governments of all countries, rich or poor, the multinational can, and do, ignore, and break, such rules. There are, however, always the fundamentalists who want to walk another mile. The ‘far sighted’ civilizers have been working since 1995, in complete secrecy, on a draft treaty known as The Multilateral Agreement on Investment - MAI for short -- at the OECD, The European-based Organization for Economic Cooperation and Development, and were expected to finalize the draft by May, but haven’t done as yet. It will take more time particularly now because there has been a leak of its 147 pages long working draft which reveals at least the mind set and raises a number of questions.

The objective of MAI, it seems, is to develop a ‘rights document for the multinationals’-- a sort of bill of rights for multinational investors. Do the multinationals need such rights? It is interesting, when the US public and Congress has abolished welfare for the poor because it made poor dependent and lazy by harping on their rights, this OECD group is working hard to write up pages and pages defining the rights for the multinationals.

Presumably, what is good for the goose is also good for the gander is not true.

What is good for multinationals is not good for the nation. MAI goes beyond NAFTA and GATT in establishing, for the first time, the right of multinationals to sue and collect compensation from Governments and communities that exercise any kind of control on investment behavior. Paraphrasing late President Kennedy, it says, don’t ask what is good for the nation, ask what is good for the multinationals. With IMF and World Bank, poverty and its growth has been ensured. With globalization, WTO and MAI, national interest is irrelevant and obsolete. The civilizers now have a free hand to civilize the uncivilized.

And when they asked Gandhi, "What do you think of this civilization?" He said, "It will be good if there was one." Who was listening? Are you now?

[Romesh Diwan is a Professor of Economics at Rensselaer Polytechnic Institute, Troy, NY].

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