Globalisation's Cruel Smokescreen

Will the South really achieve prosperity through greater access to Northern markets? The logic of today's global economy suggests that it won't.

During last December's 'Battle of Seattle', developing country speakers made it clear that export-led growth was damaging their social and environmental fabric. Sara Larrain, a Chilean grassroots environmentalist who stood for President on a manifesto based on a two year community consultation process, asked exasperatedly "why is it that people from the North think exports benefit us? They are wrecking our environment and increasing inequality."

Yet the World Bank, IMF, WTO, Ministries of Development, UN Agencies and, to their discredit, most development NGOs are virtually united in their belief that exports to the North are a route for funding improvements in living conditions of the poor in the South. The same approach has now been extended to the former communist countries of Russia and Eastern Europe. Yet the NGO movement's own research and that of the World Bank shows that, with the exception of the Newly Industrialised Countries (NICs), in the period before the 1997 Asian financial crisis, the position of the majority in such export-dependent countries did not improve and in many cases worsened. Of course, it is always possible to find those involved in exports who, for a while at least, earn more from them than they would otherwise. Some young women also manage to escape the strictures of family life for a while in export zones, for instance, but most experience an oppressive and time-limited stay in such industrial establishments.

With cash crop exports, the position is even clearer after decades of experience of their adverse effects. Cash crops worsen land tenure, deprive small farmers of a living, and result in increased numbers of landless and neglect of the rest of a nation s rural infrastructure. Should any group of export workers get organised to improve wages and conditions, then they are likely to be either personally intimidated or killed, or their governments threatened with, or experience, relocation of the employer to a more pliant country.

Export model's only success story?

The one example that supporters of the export route to poverty eradication used to point to was the manufacturing and hi-tech sectors of the Asian Tigers. Usually overlooked is the fact that their head start was only made possible by domestic protectionist policies in these countries, coinciding with the opening up of markets in the North. Now, under the World Trade Organisation rules, such an approach by the South is impossible.

Even before the 1997 Asian crisis finally ended the region's economic 'miracle', relocation was beginning to threaten the domestic advantages of these countries. Workers there had begun to earn higher wages and the response was for Japanese, Korean, Thai, Taiwanese, and other owners of factories to go offshore in search of cheaper labour.

Exporting ruthless job competition

Those who think that more access to Northern markets for developing world exports will help the poor often highlight what they argue is the hypocrisy of the North in delaying the opening up of its markets, such as those in agriculture and textiles, in contrast to the South which has been bullied into opening up its markets far more quickly.

However, even if Northern opposition could be overcome and the last remaining barriers to the South's exports were removed, the international competitive pressures between these Southern exporters alone would result in worsening conditions for the world's poor. Development priorities are and will be pushed aside in the race-to-the-bottom in production costs and as work-place and environmental standards are suppressed in a bid to grab new export markets.

China, like Russia, has seen conditions for the majority of its citizens worsen as both countries have opened up to the global market. Should China join the WTO, the situation will worsen both internally and for other developing countries competing for the same export markets. Wages and conditions will remain very low and probably worsen. An estimated 100 million people have already left the land in search of work in towns and cities, thought to be the biggest migration in human history. WTO membership will result in cheap food imports, thus accelerating rural decline and the move to urban centres. In addition it is expected a further 150 million jobs will be lost as 'inefficient' state enterprises are made ready for international competition. Whatever the actual final numbers, this trend will ensure a permanent cheap labour force whose products will undercut workers in other developing countries as well as in the North.

As an indication of what lies ahead, when Canada removed cotton T-shirts from quota restrictions in 1997, China gained 95 per cent of its market -- at the expense of Bangladesh and other developing country textile manufacturers. Mohammed Uzair Afzal, Chief Executive of the Bangladesh garment manufacturers, expressed concern after having seen the Chinese government's forecasts suggesting that its garment exports will double over the next few years as the Multifibre Agreement is phased out by 2005 and their country joins the WTO.

Those who imagine that wide open markets in the North will help the poor of the South should consider what Southern exporters' options will be should China's textile exporters, for example, fulfil what they perceive as their potential for producing all the world's textile needs by this 2005 deadline.

To point this out is not to be anti Chinese, but anti the impoverishing effects that Globalisation is already having in China. These trends must serve as a wake-up call to highlight the implications for their competitors, and for those who propose an export-led route to poverty alleviation for the South in general.

Developing world opposition

Developing world citizens' movements are already opposing this export-led model. In India, recent grassroots resistance to their export-oriented economy has encompassed fighting large scale export agriculture such as prawn farming; countering the 'illegal' rollback of land reform policies to enable TNCs and domestic industries to buy agricultural land for growing luxury crops for export; fighting World Bank policies of privatisation of water resources and demanding that water rights remain common rights; and opposing new export policies encouraging the slaughtering of 'sacred' farm animals in slaughter houses for meat exports. Also, thousands of villages in Gopalpur in Orissa blocked the setting up of a new steel plant by Tata and Nippon. The steel plant is only for export production and will use iron ore from newly opened mines and energy from new dams, whose construction has led to the uprooting of millions of people.

More open markets: a TNC agenda for global poverty

Since the collapse of the WTO talks in Seattle last December, the trade liberalisers have made great play of their plans for increased transparency and consultation with disenchanted Southern governments. But behind this smokescreen of warm words, the real question to be asked is what good is more open discussions if the only thing on the table is a done deal which insists on ever more open markets, aligned with a ruthless emphasis on international competitiveness to achieve the cheapest exports. Northern governments are promising the South increased access to their markets if they will only sign on to a new round of world trade talks. This must be fiercely opposed as the reality is that such talks and their outcome will be as lopsided as they always have been, with the poor and disadvantaged everywhere the losers.

What the WTO has in store for poor countries was clear before the Seattle talks collapsed. Had an agreement been signed, among the items to be negotiated into law would have been the EU's goal of reintroducing the basics of the discredited Multilateral Agreement on Investment, which would be particularly damaging to poor countries and their often nascent manufacturing, service and financial sectors [see Martin Khor's article on page 45].

The UK Development Minister Clare Short, however, is decidedly on-message for this corporate agenda, singing from the same hymn sheet as the TNCs and constantly repeating the mantra, 'more investment and trade, more development'. Most development NGOs don't fundamentally challenge this; they merely try to make the process a little kinder and gentler with unobtainable or impotent calls for 'fair trade' and 'voluntary codes' for corporate activity.

Both government and those who call for a fairer world for the poor seem mesmerised by Mrs Thatcher's corrosive legacy of TINA -- 'there is no alternative'. This leaves them mentally stranded, the only option being to tinker tentatively with proposed new regulations in order to limit slightly their devastating impact.

A new development agenda: Localism

A far more radical approach is urgently needed. It must not encourage further downward spirals caused by ruthless competition, but must oppose the very principle of economic globalisation and instead facilitate the building up and diversification of local economies globally. This end goal will be a major engine for change that will help bring about the necessary conditions to meet the needs of the poor majority. But such a major transition requires the grassroots movements and development NGOs to co-operate very closely in a serious campaign designed primarily to win over public opinion against the outrageous activities of the Bretton Woods institutions. Governments at present all subscribe to the 'globalisation is like gravity' school, and so will have to be forced by the politically active to change direction dramatically if there is to be a hope of truly alleviating world poverty.

Colin Hines is an Associate of the International Forum on Globalisation, he is also the co-ordinator of 'Protect the Local, Globally', an anti-free trade, pro-localist think tank.

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