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Misadventures of the Most Favored Nations - Book Review

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Misadventures of the Most Favored Nations - Clashing Egos, Inflated Ambitions, and the Great Shambles of the World Trade System. Paul Blustein. Public Affairs (Perseus Books).New York, 2009.

Since its arrival in public awareness - at least for the public that follows ideas related to international trade, not many in our star studded frivolous media world - I have been antagonistic to the WTO. Reading this work by Paul Blustein was a self appointed task to read the opposition's own ideas and how they are formulated.

His most current writing in Foreign Policy [1] carries some very good news for those who, like myself, think of the World Trade Organization (WTO) as a supra-national level of corporate governance that is neither democratic nor open and transparent. Blustein says, "After eight painful years of standstill and failure, with each meeting just a shoveling of intractable problems forward to the next, the Doha talks might collapse once and for all in 2010, possibly taking the World Trade Organization (WTO) down in the process."

One can only hope that this comes to pass. Even if they do reach some kind of a "deal', Blustein still thinks it might be the end,

The round's initial goals -- making globalization work for the billions left behind by eliminating the farm subsidies and tariffs that adversely affect the world's poor -- have become so laughably implausible that completing what's left of an agreement will prompt a painful reckoning. The deal on the table has been so watered down by negotiations that it cannot be credibly said to work wonders for the poor, or even effect much change in how global trade takes place.

For myself, that is good news, for in spite of all the positive spin that Blustein tries to put on the WTO, his thesis and supporting arguments tend to contradict one another. In his recent book, Misadventures of the Most Favored Nations, he argues that the WTO "is a crucial linchpin of stability in the global economy,"the ultimate safe keeper of open world markets." Along the way he argues the "traditional' right wing arguments including the idea that "Terrorism and hatred grow their strongest roots in poor soil," a nice metaphor except that terrorism and hatred grow strongest in occupied soil, soil contaminated by foreign elements - poisons if you will to fit the metaphor. He later argues that "impoverished countries pose an acute risk of becoming havens for terrorists," another specious addition to the argument without supporting evidence, partly because there is no evidence of this - other than when the country is invaded, occupied, or subverted by the CIA or some other special ops group.

He argues in absolutes - always dangerous outside of religious dogma - that "among sensible and knowledgeable people" the expansion of trade has been a force for growth and higher living standards. Agreement is universal." I and many others would like to consider ourselves "sensible and knowledgeable" people who fully disagree with the setup and intentions of the WTO, and agreement is hardly "universal" on any idea, let alone that the demise of the WTO would be a "disaster." Further, he provides no statistical support that the expansion of trade has been a force for growth and higher living standards - true for some, certainly not universal - and for certain areas it has been nothing but negatives (most of the developing world). It also needs to be considered that those measurement statistics are readily manipulated and do not take into account anything to do with the environment, social health and welfare, and global labour that is definitely not free to move.

But that is getting ahead of the development of the book. Other fallacious arguments are that the WTO discussions involve "complex economic issues" and "affords protection against bullying by the wealthy." First, the issues are not really complex. Detailed yes, but only complex because of the arcane language and mathematical formulas derived from thin theoretical pure air that economists use to obfuscate their very real lack of understanding of how anything truly works, especially people. As for the bullying, the very structure of the WTO and its formulation of "consensus" that creates to a large degree a global bullying structure.

He argues, with the implication that it is bad, that the "governments of major countries bowed to the heavy influence of domestic interest groups," those groups being the "domestic factions such as the environmentalists, health workers, educators, labour unions, that decried the power of the WTO when it tried to impose the Multilateral Agreement on Investment (MAI) that was essentially defeated in the late 1990s because of the activist work of these groups. The MAI was the brainchild of the Organization for Economic Cooperation and Development (OECD), the think tank that did a lot of the thinking for the WTO.

Another big fallacious argument is that "governments around the globe will resort to protectionism," a statement that is true but needs to be put in context. The rise to riches in most countries has been due to protectionism, free trade is what those countries wanted after they became wealthy and powerful and could control their idea of "free" markets. South Korea, Taiwan, Japan, the U.S., Great Britain, Singapore, China, and others have all created wealth by protecting their export industries and agriculture through various means (tariffs, import taxes, subsidies, various other rules and regulations) before allowing themselves to open and declare themselves free traders - and even at that many still are far from free trade.

Consensus, democracy, and transparency

Consensus is one of Blustein's big arguments in favour of the WTO. He says the "WTO extends its rules deeply into the domestic economy of its member countries in ways unmatched by other international bodies." This can be read as surrendering national sovereignty to that of the corporations, which in reality is exactly what it is. He then continues with this line of thought, that the "depth and scope of these rules affect all members, they should be agree by all members," thus consensus.

The overall theme of the book, apart from the historical description of all the action that takes place under the name of Doha, is that of consensus and democracy, transparency being a natural part of the first two. Yet throughout the work, as it outlines the history of the Doha round of talks, there are serious problems with all three, making them more talking points for public consumption rather than a reality.

His initial argument is that because most of the world's governments are "democratically elected" they "might therefore command a certain degree of legitimacy." That degree of legitimacy is near zero on any legitimacy thermometer. Many countries are only nominal democracies, places like Egypt being among the most obvious of that kind, along with the not so obvious nominal democracies of Israel, South Korea, Japan where the democratic structures are there but the real power lies with the hidden - or not so hidden - powers of an elite class of businessmen and political bureaucrats. Even given the democratic election of many governments, once in power those governments rule to stay in power more than they do to satisfy their population. The "ambassadors" that are sent to the WTO are definitely not democratically elected, and I do not remember the results of any WTO decisions being brought back to the populace for a referendum for acceptance (it certainly did not happen with NAFTA in Canada that was railroaded through by both lead parties against a majority of the population against it).

Returning to the MAI, an official of the WTO is quoted in many references saying,

"This is the place where governments collude in private against their domestic pressure groups," says a former WTO official. "Allowing NGOs in could open the doors to European farmers and all kinds of lobbyists opposed to free trade."

Yes, those nasty "Domestic pressure groups" need to be kept at bay, and lobbyists, whoever would have thought that they would oppose free trade - imagine. This bit of history is not recorded by Blustein, probably because it contains too much truth in countering his arguments about democracy and transparency.

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Jim Miles is a Canadian educator and analyst who examines the world through a syncretic lens. His analysis of international and domestic geopolitical ideas and actions incorporates a lifetime of interest in current events, a desire to (more...)

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