TCS Daily

Who's Afraid of WTO? Not Us

By Madhu Kishwar - January 28, 2004 12:00 AM

Editor's Note: This is the second installment in a two-part series on the World Social Forum in Mumbai, India. Part One may be found here.

Part II: Who's afraid of WTO? Not us

The rent-a-crowd WSF is only protecting western jobs and inefficiencies. It doesn't speak for Indians A great deal of the ire of the AGBs that gathered in Mumbai for the World Social Forum was focused against multinational corporations (MNCs) and the economic regime institutionalized by the WTO, seen as yet another First World conspiracy to enslave the Third World. The phobic propaganda against WTO builds cleverly on the memories of colonial subjugation that India experienced in the 18th and 19th centuries. However, WTO belongs to a New World and represents a major historic paradigm shift away from 19th and 20th century imperial domination in world trade. This is the first time in history that we have a rule-based multilateral regulatory body for trade of goods and services between different nations.

By effective lobbying, Third and Second World countries can muster enough clout to take on the superpowers. Through astute and strategic lobbying, many decisions have gone in favor of Third World countries in recent years. It cannot be a coincidence that a strong movement against globalization and MNCs began to emerge in the West only in the past decade, when the following new developments began to get consolidated:

• The WTO regime added to the clout of Second and Third world economies by giving them the possibility of a level playing field. Many decisions on trade-related disputes have gone in favor of the developing world and against First World countries.

• MNCs began shifting their manufacturing base to Asian countries in a big way, leading to flight of capital and job losses in First World countries. That MNCs owe no loyalty to nation-states and move to whichever countries they find profitable to operate from, has earned them the wrath of western intellectuals and trade union leaders, who derogatively refer to them as "footloose" companies.

• While Asian countries are actively wooing MNC investments, the MNCs are facing harsh criticism from people of the very countries that gave them birth. If the MNCs are indeed evil, then the first world anti-MNC radicals should be glad to be rid of them. The fact is they are upset at their mobility.

• There was no comparable criticism of MNCs as long as they merely sought export markets in Second and Third World countries, because dumping of MNC goods is beneficial for First World economies if the MNCs are based in the First World. However, ever since the MNCs started shifting their manufacturing base, flooding western markets with "Made in Korea", "Made in China" or "Made in Japan" labels, there is legitimate panic in the First World.

• Several Asian economies that began by inviting MNC investment have generated enough wealth to start their own MNCs. These Asian MNCs are giving western MNCs a run for their money in virtually every manufacturing area barring defense.

• Nearly 21 percent of the world's foreign investment is going to developing countries. Countries like the US are beginning to run huge trade deficits with the Asian Tigers. All this is changing global power equations.

• In the 1990s the pressure to open up with speed was on developing countries. In recent years, domestic political compulsions in the developed world - fear of job losses, collapse of agriculture, of two-way flow of trade - are driving protectionism.

• India may not have attracted much direct investment flows because of its poor infrastructure and politicized economy, but there has been a steady and inexorable shift of labor from western economies to India. A Morgan Stanley report predicts that this will soon assume the form of a "seismic shift", creating four million jobs and steering the Indian economy to a trillion-dollar level.

• Exports from India's IT sector have already reached $16 billion a year. They will grow exponentially over the next decade. Under WTO, India's exports doubled in less than a decade, from $26.33 billion to $51.70 billion.

• Fifteen of the world's major automobile manufacturers now obtain components from Indian firms. In 2003, exports of auto components were close to $1.5 billion. Estimates indicate they will reach $15 billion in six to seven years.

• India's pharmaceutical industry has come to be feared as much as its IT industry. It is already worth $6.5 billion, growing at 8-10 percent a year.

• The European Union and American governments are worried that if they are compelled to withdraw their $300 billion annual subsidy to farmers, their respective farm sectors will simply collapse. By contrast, farmers of countries like India have borne the brunt of negative subsidies and artificially-depressed prices, as well as government restrictions. They will out-compete European and American farmers if the subsidy regime is dismantled, as mandated by WTO.

It is noteworthy that all those who make common cause with American and European farmers against the WTO, never showed any inclination to join in solidarity with India's farmer movements, when they battled price warfare by their own government. India was one of the few countries where the government would dump imported farm produce -- wheat, sugar and cotton -- in order to depress the prices of the farm produce of Indian farmers through non-market mechanisms. And yet all those who claim to stand up for swadeshi today did not register even a nominal protest against policies designed to wreck the Indian farm sector.

Not surprisingly, huge protest demonstrations are being organized by trade unions, farmer unions and intellectuals through aid groups, with active support of many First World governments -- funding Third World protesters to add numbers to the WSF and give it the appearance of a global movement against globalization! That some First World people are worried about MNCs shifting operation, leading to unemployment in their countries, is understandable. But what is not is why certain Indian NGOs and intellectuals are upset at the prospect of increased employment opportunities for Indians. When political parties in India hire buses and people for rallies where the poor are given some freebies, we frown upon it as cynical manipulation of people. By contrast, we are failing to register the significance of a new kind of hired rallyist.

Most of the self-styled radicals who demonstrated against WTO in Seattle and Rio de Janeiro or in Hyderabad, the site of the Asia Social Forum in 2002, or gathered in Mumbai for the WSF, did not pay for the trip. They had their tickets and per diem expenses paid for by a range of western donor agencies and European governments. It is dishonorable enough that the AGBs in the West want to fire on the shoulders of Third World people by making a case that the Third World countries would be devastated by freer trade. But it is even more dishonorable that our self-styled radicals are happy at being thus used.

The author is a senior fellow at the Centre for the Study of Developing Societies. She is also founding editor of Manushi, a bimonthly journal of development and gender. This article is an excerpt from her new book Deepening democracy: Challenges of governance and globalization, soon to be published by the Oxford University Press, New Delhi.


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