College of Education
School of Continuing and Distance Education2014/2015 – 2016/2017
SOCI 424:
THE CONTEXT OF DEVELOPMENT
AND UNDERDEVELOPMENT
Lecturer: Dr. James Dzisah
Email: [email protected]
SESSION 10:
THE GLOBALIZATION PROJECT II: WTO AND THE MAKING OF A FREE TRADE REGIME
SESSION OVERVIEW
In this session, we explore the fact that globalization is not universalist. Globalizationassigns specialized roles (including marginalization) in the global economy. Offers newforms of authority and discipline such as the WTO, World Bank, IMF, and nationalinstitutions, which perform governance functions to enforce free market logic. The WTOAgreements on Agriculture, Trade Related Investment Measures (TRIMs), Trade-RelatedAspects of Intellectual Property Rights (TRIPs), and General Agreement on Trade in Services(GATS) are modes of global regulation that legislate liberalization by subordinating citizens’rights to the rights of corporations. As the “advance guard of the WTO regime,” regionalfree trade agreements lock in neoliberal doctrine.
Goals and Objectives:At the end of the session, the student will be able to:
1. Explain the political and economic origins of the demise of the Third World.2. Describe the politics of Cold War containment3. Discuss how the defeat of Third World Unity in the form of the New International Economic Order4. Describe the globalization project, as a new direction of the world capitalist order born during the
debt crisis5. Illustrate how the growth in power of transnational banks and corporations strengthened forms
of global governance, such as the WTO, and the Bretton Woods institutions beyond the reach ofthe nation-state.
SESSION OUTLINE
1. Globalization Project’s Vision of Global Order
2. Making of a Free Trade Regime
3. World Trade Organization (WTO)
4. Agreement on Agriculture (AoA)
5. Trade-Related Investment Measures (TRIMs)
6. Trade-Related Aspects of Intellectual Property Rights (TRIPs)
7. Case Study: Big Pharma and Intellectual Property Rights
8. General Agreement on Trade in Services (GATS)
9. Ingredients of the Globalization Project
10. Activity
11. References
GLOBALIZATION PROJECT’S VISION OF GLOBAL ORDER
• Global Project’s Vision:
– Development project: “Learn from and catch up with theWest”
– Globalization project: Under comparative advantage, “Findyour niche in the global market”
• Key for National Development
– Development project: Replication
– Globalization: Specialization
But as mechanisms of specialization are repeatedeverywhere, they intensify competition, and cause socialand economic marginalization, poverty, environment stressand displacement
MAKING OF A FREE TRADE REGIME
• 1980s U.S. initiated Uruguay Round of GATT to liberalizeagriculture and services– 1948-80 General Agreement on Tariffs and Trade had expanded trade by
reducing tariffs on manufactured goods by 75%
– Liberalization supported by “free trader” agro-exporting states, TNCs, andagribusinesses
– Won acceptance from South,
– Uruguay Round redefined food security as best provided through smooth-functioning world market
– Placed small farmers at comparative disadvantage
– Food security “governed” through the market by corporate, rather thansocial, criteria
WORLD TRADE ORGANIZATION (WTO)
• Created January 1, 1994
– Governs member states via liberalization
• Sets rules to guarantee movement of goods, money and production acrossborders
• Privilege corporate rights
• Guarantees treatment for TNCs equal to domestic firms
• Integrated dispute settlement mechanism, e.g. sanctions
– Challenges national democratic processes
• Removed decision making in nontransparent tribunals in Geneva
• Integrated dispute settlement mechanism
• Threat of complaints against “trade-distorting measures” dilutes nationallaws protecting human and environmental health
– Depoliticizes social impact of market reforms
• Challenges national laws and regulations regarding environment, health,preferential trade relations, social subsidies, labor legislation
AGREEMENT ON AGRICULTURE (AOA)
• 1995: Advocated universal reductions in trade protections, farm subsidies andgovernment intervention
– While Southern farmers face 30% collapse of world prices, U.S. andEuropean states retained subsidies
– 20-30 million people lost land
• Liberalization consolidates a corporate food regime
• AoA: “Comparative disadvantage” for unprotected farmers in the South
– Self-sufficiency not viable as a national strategy
– 88 low-income, food deficit countries spend half their foreign exchange onfood imports
• Oxfam: “How can a farmer earning US$230 a year (average per capitaincome in LDCs) compete with a farmer who enjoys a subsidy ofUS$20,000 a year (average subsidy in OECD countries)?”
• 40% of Kenya’s children work on export plantations supplying Europe’sfood, but 4 million Kenyans face starvation
TRADE-RELATED INVESTMENT MEASURES (TRIMS)
• Aim to reduce “performance requirements” on foreign investment byhost governments– Example: Requirements that a TNC invest locally, hire locally, buy locally and
transfer technology– WTO uses TRIMs to:
• Manage cross-border movement of goods and services, to secure investor rights asif they have no political impact
• Arguments in favor of TRIMs:– They reduce domestic content requirements that misallocate resources,
raise costs, penalize investment, burden consumers, slow technology, etc.– They enhance conditions for transnational investment by reducing friction
of local laws
• Effects of TRIMs:– Meant to favor “integration” of investors with local economy but rather
push integration of local producers into world market
TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS)• Intellectual Property Rights: Rights given to persons over the creations
of their minds
• TRIPs Protocol: Protection of intellectual property by WTO– Advocates: TRIPS simplifies protection across borders, promotes innovation by
guaranteeing profits from technological development
– Critics: Biodiversity and generic knowledges should remain available to humankindas global “commons”
• Examples: frog secretion for painkiller, rosy periwinkle for childhood leukemia andtesticular cancer, , sweetener from West African berry, Indian neem tree, etc.
• Global south contains 90% of global biological wealth but northern scientists andcorporations hold 97% of patents
• Biopiracy: Appropriation and commodification of genetic material by foreigners withoutpayment or obligation; threatens livelihoods
TRIPS-Cont.
• Privileges governments and corporations anddisempowers villagers by disavowing indigenous,collective knowledge rights
• 1992 Convention on Biological Diversity
– Confirmed national sovereignty over geneticresources and nations’ entitlement to fair andequitable sharing of benefits
– How states interpret this right and obligation iscontroversial
– Possibility of sui generis system to recognize andsecure collective rights for biodiversity
CASE STUDY: BIG PHARMA AND INTELLECTUAL PROPERTY RIGHTS
• Efforts to break Big Pharmaceuticals’ monopoly on genericantiretroviral drugs for HIV/AIDS patients (40 million worldwide)
• 1996: Brazilian government produced generic versions prior toTRIPs agreement– WTO threatened to dispute
– UNCHR and WHO intervened on grounds of human rights
– Negotiated 50% price reduction
• South Africa’s Treatment Action Campaign shamed 39 pharmaceuticalTNCs to allow buying generic drugs from third parties
GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
• Services: “anything you cannot drop on your foot”
– 1994: Opened markets for trade in services with rights fordelivery of finance, telecommunications and transport
– 2000: Far-reaching protocol to force governments to providemarket access to foreign service providers
• Restricts government funding of public works, municipalservices, and social programs
• Every service imaginable: drinking water, health care,education, social security, transportation, postal delivery
• Applies to government measures such as labor laws,consumer protection, subsidies, grants, licensing standards,etc.
INGREDIENTS OF THE GLOBALIZATION PROJECT
• Washington-based consensus among global managers/policymakersfavoring
– Market-based rather than state-managed development strategies
– Centralized management of global market rules by G-7 states
– Implementation of rules through multilateral agencies (World Bank,IMF, and WTO)
– Market power concentrated in TNCs; financial power in TNBs
– Economic discipline (trade, financial) for states, varying bygeopolitical position, global currency hierarchy, debt load, resourceendowments, etc.
– Global development realized via new class, gender, race and ethnicinequalities
– Resistance at all levels: marginal communities, state managers, andfactions within multilateral institution
SESSION SUMMARY
• Globalization project: An alternative form of organizing economicgrowth with scale and power of transnational banks andcorporations– Required forms of regulation such as the WTO
– Subordinated states’ social protections to liberalization
– States became surrogate managers of global economy
– Liberalization reorganizes regions and locales; social protections decline ascommunities lose resources or employment
• Globalization is not universalist– Assigns specialized roles (including marginalization) in global economy
– Offers new forms of authority and discipline governed by the market
SESSION SUMMARY Cont.
• The WTO Agreements on Agriculture, Trade RelatedInvestment Measures (TRIMs), Trade-Related Aspects ofIntellectual Property Rights (TRIPs), and GeneralAgreement on Trade in Services (GATS) are modes ofglobal regulation that legislate liberalization bysubordinating citizens’ rights to the rights ofcorporations.
• As the “advance guard of the WTO regime,” regionalfree trade agreements lock in neoliberal doctrine. In theprocess, liberalization reorganizes regions and locales,and social protections decline as communities loseresources and employment.
ACTIVITY
• What institutional function has the World TradeOrganization (WTO) served in prosecuting globaldevelopment – especially with regard to sovereignty,security, rights, and the social contract?
• The solution to the debt crisis was to shift responsibilityonto individual countries, and to their most vulnerablecitizens. Why?
• What power relations and economic assumptionsenabled this political choice and social outcome? Inwhat terms did citizens respond?
REFERENCES
• McMichael, Philip (2012). Development and Social Change:Global Perspective (Fifth Edition). Los Angeles: SagePublications, Chapter 5, pp. 134-149.
• Cohen, Michael and Robert Shenton. 1995. “The Invention ofDevelopment.” Pp. 27-43 in Jonathan Crush (ed), Power ofDevelopment. London and New York: Routledge.
• Esteva, Gustavo. 1991. “Development.” Pp. 1-23 in WolfgangSachs (ed), The Development Dictionary. London: Zed Books.
