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  A Powerless WTO: Traders of the Lost Ark

A Powerless WTO Traders of the Lost Ark

By Klaus Brinkbäumer

Part 2

The China issue is truly awkward. China is changing the world's economy, and as it becomes more and more vocal, it is starting to change the WTO by blocking agendas with its veto. "China is taking its place, and this place happens to be big," says one of the European representatives.

The smaller countries also want their place. Was the United States entitled to ban internet games from Antigua & Barbuda? No, it wasn't. Antigua won, but did it gain anything? Antigua could impose trade sanctions on the United States, but who would suffer most? "That all countries are equal is a fiction. The United States is strong and can exert pressure, and that's just the way things are," says a German diplomat. Nonetheless, he describes a WTO where the rich endeavor, if only for reasons of their own security, to stop "the poor from sinking into oblivion" - for the sake of the "world of tomorrow."

One recent dispute at the WTO: Should the European Union be allowed to protect geographic food names for certain products, such as "Thüringer" ("Thuringians," or sausages) or "Budweiser"? The United States filed suit. A lot of hemming and hawing followed. "Today, both sides feel they have prevailed," says Doaa Abdel-Motaal of the Trade and Environment Division. Another recent disagreement: Did France have the right to block imports of asbestos due to health concerns, although people in Québec, Canada, live off their asbestos exports? It was a bitter fight. And in the middle of the battlefield sat Abdel-Motaal. This Egyptian woman was born in Belgium, grew up in India, China, Japan, Sri Lanka and the Philippines, and was lured to Geneva from Cambridge University by WTO talent-seekers when she was 23. The ruling went in France's favor; then Canada objected; France finally won out. Abdel-Motaal says: "Sometimes the pace here can be very slow. If, for example, we discuss the problem of overfishing the oceans and the subsidies which actually encourage overfishing, and we then spend weeks discussing the definition of the word 'subsidy,' while in the ocean species after species disappears, it makes you impatient. But on the other hand, disputes are exciting, because then every word and every comma and every nuance in the translations can mean a lot."

And now the spotlight is on Boeing and Airbus, the United States and Europe - it couldn't get any bigger than this. After the complaint was filed, both parties had time for negotiations. Now the three-member panel is meeting; depositions, reports, a verdict, perhaps a counter-complaint and a new verdict will follow. Many in Geneva are nonplussed by this dispute. People here are certain that both companies are subsidized - Airbus through low-interest loans and Boeing through regional subsidies and defense contracts. After all, the reasoning goes, it is impossible to manufacture large civil aircraft without government support. Why should anybody still be disputing this fact? Many at the WTO agree on one other thing. "Both sides will win and lose, or both will lose," says someone who must know what he is talking about, because it is his area of expertise. In the end, this specialist says, China and Canada will be the winners, because the market leaders will have gambled away their lead with their posturing.

But this is typical for the global economy, which is driven by rage, lobbying, campaign promises and national pride, and - at times - can seem rather stupid. "It's big, it's moving and it's important," says Abdel-Motaal.

Others in the William Rappard Center are preoccupied recording economic data or determining how to quantify payment difficulties. Most write reports and compile tables. All arrive early and leave late, and many have built up 70 or 80 days of vacation that they may never take. But they earn a lot of money, €10,000 to €13,000 a month. And anybody who manages to pass the interview and the written test has made it: After two years, WTO staff members get a permanent contract. Clever? Generational battles are waged in the corridors of the WTO, the young against the old. The young are better educated, and many of the older employees cannot use e-mail. But, of course, the elders tell their juniors what to do. There are some unwritten rules. Women wear jackets; men wear shirts and ties and they hang their jackets over their chairs. Smoking is only allowed in the courtyard. Spanish, French, and English are the official WTO languages, but most people speak English, English overloaded with abbreviations and codes. Everybody knows which nations hide behind the G90 - the poorest. Everybody here refers to Pascal Lamy, the director general, only as "D. G." And those wishing to discuss "special and differential treatment" for a particular country merely have to toss out a casual "s 'n' d." This jargon is the rock 'n' roll of the world of money.

The WTO holds official meetings in its many spacious chambers with long tables, where Brunei sits next to Cambodia, and Jordan is seated alongside Israel. At any one time, experts are meeting in ten negotiating committees. In all, about 1,000 conferences are held at the WTO every year. The delegates understand that they will achieve more if they form coalitions - flexible coalitions whose compositions change depending on the topic and underlying political alliances.

The "Quad" - the United States, the European Union, Japan and Canada - set the tone. Together, they command 50 percent of the world market. The so-called G10 are the richer nations, the net importers of food. And then there's China, a strange solo artist in their midst. But there are other groupings too: the African Union; the "ACP" (African Caribbean Pacific Group); the "likeminded group," a coalition of states with common interests that includes Cuba and India, Egypt and Jamaica; not to mention the "Cairns" group of agricultural states. All have succeeded in establishing themselves here, because nothing is ever achieved without consensus. Usually, that is.

But politics works differently, on several levels, and the WTO is definitely political. The many bilateral and regional agreements, for example, are new. Three hundred of them are in force worldwide. The Americans like to cut such deals with their favorite partners, because they serve as a reward for their courageous service in Iraq. And, occasionally, for voting correctly in Geneva. Sometimes, such agreements actually help poor countries gain access to rich markets, normally something that would entail years of strife in Geneva.

The catch is that the bilateral agreements contravene the guiding principle of the WTO, which rejects the "most favored nation" status and prohibits giving preference to certain trade partners and discriminating against others - such as those who opposed the Iraq war. The WTO strives to eliminate regional regulations and to promote fairness worldwide. That's its purpose. It was created with the premise that the world can be "steered."

That's the problem with ideas and realpolitik. As illustrated by the "spaghetti bowl" familiar to everyone in Geneva these days. The "spaghetti bowl" is a cute metaphor for the lack of headway made by the WTO in chewing through trade regulations. In reality, it is dealing with a mountain of pasta, with one trading partner at either end of every single noodle. Each of the noodles is a bilateral agreement, and nobody can ever hope to untangle the mess.

"It doesn't jeopardize our overall direction," says the optimist Rockwell. But some feel the bilateral agreements could render the WTO as irrelevant as George W. Bush would like the U.N. to become. Political realism also means that many issues are worked out at parties and receptions - to which Americans and Europeans always receive invitations but Africans only rarely. The political reality is that the strong have very many friends in Geneva and the weak, very very few. The strong retire behind closed doors, while the weak wait in the wings, pondering what is coming next. Even the director generals maintain the tradition in the "green room," which owes its name to its green carpet. The envoys from Africa and Southeast Asia hate the green room: Most only know its door - from the outside.

But the strong, of course, have a point when they say that this madhouse would make no progress whatsoever if all 148 parties had to agree. According to Rudolf Adlung in Office 3124, job description "Counselor, Trade in Services Division," political realism means that "the formalities count less than intellect and stature. For us in the secretariat, this means talking to the right people at the right time and offering services as a mediator," Adlung says. Adlung, a man with a goatee and short, somewhat tousled hair, loves architecture, the German playwright Schiller, and the soccer team Stuttgart. He worked in the German Ministry of Economic Affairs for a long time and moved to Geneva in 1990, back in the days of GATT. Today, Adlung is constantly on the road, advising governments in Cuba, Singapore and Africa. He primarily deals with the liberalization of services - a cause that is running very smoothly in the telecommunications sector but getting bogged down over labor mobility. But Adlung, too, evidently numbers among the happy few that love - and believe in - their work: "The goal is a non-discriminatory trade system in which all countries have the same rights. When we've achieved that, liberalization will happen automatically," he says.

Out on the roof terrace, Gabrielle Marceau, job description "Counselor, Legal Affairs Division," has taken a seat. Hailing from Québec City, Marceau drinks coffee and likens the WTO, only 10 years old, to a teenager: "Sometimes his movements are erratic, then his voice breaks; and it takes a while for everything to start working properly together."

If every driver insists on bending the rules of the road, no agency can make the world a perfect place. But it can hope to improve it. And who else is going to try?

Moreover, as Marceau says, "Industry is miles ahead of state governments, and these are miles ahead of the WTO. But that does not stop us from taking the initiative."

By contrast, the enemies of globalization - members of non-governmental organizations like Oxfam - do not see startup difficulties or selfishness as the source of the problem, but the WTO itself. "The WTO doesn't work. And when it does, it simply reinforces the global status quo: The developed countries lay down the rules, and for every minor concession they make, they get profits that further extend their lead over the non-developed countries," one Oxfam spokesman protests.

The carrot-and-stick approach persists in Geneva, with promises of development aid and threats of loan cancellations. It was the same after Cancún. The Ministerial Conference failed because it was poorly prepared: The ministers found 400 unresolved issues in the contracts, and 400 problems cannot be solved in five days, especially not when three days are wasted on mumbo jumbo that passes for political speeches. But when those discussions collapsed without a trade agreement, the Americans blamed the G20, accusing the group - which consists mostly of Africans and South Americans - of inflexibility. The U.S. trade representative at the time, Robert Zoellick, then began a world tour, threatening Costa Rica, among others, with exclusion from the proposed Central American trade agreement CAFTA if it remained a member of the "subversive" G20 group. When Zoellick promised the CAFTA states $6.75 million to improve working conditions, Costa Rica resigned from the G20. It cashed in. And shut up. Today the industrialized world can import the raw materials it lacks - duty free - while imposing import tariffs and levies on those that it has. And the industrialized world can demand freedom for markets that it wants to enter, led by spokesmen who preach the economic gospel that free markets foster wealth. Some economists regard this as a fiction: Any weak country that opens its markets will initially be overrun by more powerful competitors. The high-flyers of recent decades - Vietnam, China, and Brazil - initially hid behind walls of tariffs, and only opened their markets after they had bulked up economically. As, indeed, Great Britain once did. And France. And the United States.

The next round of talks is scheduled for conclusion in December - in Hong Kong. This time, the treaties will have to be signed; but it won't be easy.

The French ambassador, Philippe Gros, sits high above Geneva, in his office on the ninth floor of 58, Rue de Moillebeau. Tintin cartoons line the walls. Gros says that 22 issues still need to be discussed before the Hong Kong conference, including six or seven major topics: agriculture, services, opening the market, anti-dumping regulations, development, patents and copyrights, or rather TRIPS - trade-related aspects of intellectual property rights, as they are known in WTO-speak.

"Trying to translate good political intentions into legally binding agreements is never easy," says envoy Gros. And he cites the example of agriculture and Brazil's newly developed efficiency in farming, "If we open up everything, Brazil will secure large parts of the market, and the African countries won't benefit at all." This is the WTO's biggest quandary: Simple solutions are rare, because there are so few things that work equally well for everyone.

The new director general, Pascal Lamy, took office on September 1. A social democrat, he has stated his intention to "regulate, control, balance, redistribute." Lamy was EU Trade Commissioner for many years and tried to lead the negotiations in Cancún on behalf of the EU. He later described the WTO as "medieval." He probably knows the organization rather well. Pascal Lamy is a friend of Robert Zoellick, now U.S. deputy secretary of state. The two men like to talk about the marathons they have run, before they get down to business.

In Geneva, they see Lamy as an overachiever, ambitious, loud, and pushy. Pascal Lamy should instill new energy into the leadership, which should spill over to the secretariat and the WTO as a whole. Many people in the corridors in Geneva are hoping for reforms, and most wish that the organization would work like the U.N. Security Council. They hope that members will be smart enough to turn the flexible associations into firm coalitions, enabling each group to send a delegate to a security council. Fifteen speakers instead of 148? That would be real progress.

The envoy for Burkina Faso, however, maintains that reforms are only possible if the major powers finally turn their minds to cotton. Even the rule that requires decisions to be made unanimously and without a veto, says ambassador Nebie, "can only be revoked in one way: by consensus, without a veto."