The Poor Speak Up
Foroohar, Rana. Newsweek, February 11, 2002: 32.

They drew blanket press coverage and a watchful audience of New York police, but mainly on the strength of past protest performances. From Seattle to Davos, the riotous anti-globalization road show had pressed its case that rising trade and capital flows are bringing nothing but oppression and instability to the developing world. Their ranks boomed with the global economy, but faded with it as well. The thousands who descended on the World Economic Forum last year in Davos dwindled to a few hundred by the time the fete reconvened last week in New York.

Inside the party at the Waldorf-Astoria, the protesters still inspired a degree of soul-searching among the gathered stars of the global age--CEOs, prime ministers, princes and celebs--as if they had noticed that the era and the opposition have changed. But leadership of the effort to alter the course of globalization has shifted away from Western street rebels--and toward those they have long claimed to represent. The main actors now are leaders of the poor nations, who have united against the global trade elite and are demanding radical changes in the rules of international commerce.

This is now a far more powerful movement, particularly in the grim wake of an age of plenty. Unlike anarchists, greens and reds, the presidents and ministers of the developing world cannot be humored and dismissed as a bag of mixed nuts. They have a seat at the table, real influence. At the November trade summit in Doha, Qatar, they stepped forward in a show of unity and strength that, arguably, had not been seen from poor nations since the days of Tito, Nehru and Nasser. Led by India, Brazil and South Africa, this emerging front is opposed to globalization as defined by Western governments and Western activists. In short, they are for free trade (unlike the activists) but on their own terms (not those of the West). Born of long frustration with the postwar commercial order, the mystery is why this movement is erupting so publicly only now. "There was a clear improvement in the awareness of developing countries at Doha, and in their capacity to deal," says EU Trade Commissioner Pascal Lamy, who now expects this front to "go on pushing us."

In Doha, a bloc of developing nations won unprecedented victories. They helped force Europe to consider phasing out subsidies for its farms, which elbow out produce from poor, farm-based economies. They compelled the United States to consider limits on anti-dumping laws, which are often used against cheap exports from emerging manufacturing powers. They won the right to ignore Western drug patents when necessary to fight developing world scourges like AIDS, and then kept right on fighting. They recently pushed for new rules that would give their own ambassadors the lead role in the new trade round launched at Doha, and lost. But they'll be back. Many want no less than major reform of global financial institutions that date to the Bretton Woods agreement of 1944, which they believe has failed crisis-torn emerging nations like Argentina. "Financial capital is globalized, but not policy decisions," Brazilian President Fernando Henrique Cardoso said recently. "The Bretton Woods system is obsolete."

The new alliance has distant roots in the Third World solidarity of the early postwar years. The Group of 77 was founded in 1955 as a united front against the injustices of the colonial era. Many of its members were still colonies, barred by their rulers from working as full partners in the emerging international trading regime. Once they won independence, the emerging nations set out to develop in solidarity with one another, as a union of the poor against the empires they had just thrown off. They shut out imports in the hope of developing local industry, sealing themselves off in a socialist Third World.

Many of the poor were still living in this state of partial isolation at the start of the 1980s, when Reaganism and Thatcherism set off a boom in trade and in the complexity of trade agreements. In 1986 the Uruguay Round expanded the talks beyond simple tariffs to subjects like financial services and intellectual property. By this time, many poor nations had begun to drop state capitalism and to prosper as export powers in the global markets--but few had the sophistication to analyze issues like the trade-related aspects of intellectual property rights, or TRIPS. "Many countries didn't understand what they were signing up for," says Leif Pagrotsky, Sweden's trade minister.

The poor would soon suffer the consequences of obliviousness. By 1995 the United States was demanding that poor nations live up to the detailed letter of Uruguay. Even those prospering as export powers couldn't always enforce new rules around issues like intellectual property. The United States wound up suing India and Pakistan for patent-law violations. "It became clear that no matter what we had thought, the other side would take all this quite seriously," says Rashid S. Kaukab, a former Pakistani diplomat now at the South Centre in Geneva. "We couldn't afford not to look at these issues very carefully."

The more they studied, the angrier they became. Even booming nations like India and Brazil came to believe that, while they benefit from global trade, the West was benefiting more. In fact, a growing body of research showed that the global tariff system favored the rich. According to the World Bank, the poor countries pay average Uruguay Round tariffs of more than 14 percent, a rate more than twice as high as everyone else. Worse, developing-country exports tend to be farm goods or simple manufactures, two of the markets most heavily protected in the West by nontariff barriers. For example, African sugar and Brazilian steel both face stiff quotas and heavy subsidies in the developed world. "Developing countries are encouraged to diversify their exports," says Brazilian Trade Minister Sergio Amaral. "But precisely when they do so, and become competitive, they hit barriers in the developed world."

By the mid- to late 1990s there was a growing perception among emerging countries that they had been bamboozled in Uruguay and that the West was still pressing its advantage in trade expertise and clout. "Throughout the 1980s and 1990s, it was easier for the U.S. and the EU to intimidate the developing countries," says Alan Winters, a fellow at the Centre for Economic Policy Research in London. "They'd pick a few at a time and work on them individually, getting them to agree to enforcement of trade issues, like patent laws." To a growing number of developing-world trade ministers, it looked like a Western strategy of divide and conquer.

The obvious response was a more united front, even if the interests of poor nations didn't always mesh. As early as a 1996 WTO meeting in Singapore, developing countries were beginning to unite behind a rough agenda: just say no to whatever the rich nations ask. By the time of the 1999 WTO summit in Seattle, trade alliances were emerging among the states of Africa, Asia and Latin America, with increasingly sophisticated demands for greater access to rich-country markets, and a greater say in trade talks. When several small nations were locked out of the "green room" negotiations of the big trade powers in Seattle, several coalitions of lesser powers threatened to walk out. Their backroom revolt had at least as much to do with the collapse of the Seattle talks as protests in the streets, and many were left more alienated than ever. After Seattle, says trade expert Kent Hughes, many developing nations were left wondering, "What were these meetings doing for them?"

In mounting frustration, various alliances of poor nations began plotting for the next big trade summit. Jolted by South African President Thabo Mbeki's critique of its economic failures, Africa began uniting. In July 2001 the ineffectual Organization for African Unity was replaced by the African Union, boasting a clear agenda for trade liberalization. Led by Tanzania, the least-developed countries met in Zanzibar to hash out a plan for Doha. Geneva ambassadors of the Like Minded Group, a coalition of 13 countries from Asia, Latin America and Africa, began dropping by each other's offices more frequently for tea, and targeted issues to press at the upcoming summit. China's Zhu Rongji led a pre-Doha relationship-building delegation to India. Leaders of five developing countries--India, Brazil, South Africa, Malaysia and Egypt--held informal talks to set common goals. And a bloc of 50 nations began lobbying on an old grievance: TRIPS. "There was constant, coordinated pressure by the various developing countries and missions in Geneva," says Egyptian trade negotiator Magdi Farahat. "Everyone kept everyone else in the loop."

The sweep of their victory changed the rules of the game. They pushed the envelope not only on intellectual property, farms and dumping, but also on their complaint that Uruguay left them with trade commitments they could not afford to enforce. The northern countries made concessions on 50 of these "implementation" issues and agreed to help poor nations build up the capacity to carry out their trade-related responsibilities. That could include everything from helping nations pay for technology to carry out stricter customs checks, to boosting their ability to carry out policy research and analysis. At the center of it was Murasoli Maran, who had worked as a screenwriter before becoming trade minister of India, and had scripted an eleventh-hour drama in Doha. Pressured by European and American negotiators to either sign a deal or bump the final agreement up to the presidential level for approval, Maran held out until he got his way. Asked whether he'd been intimidated by the West, Maran shot back, "No. I intimi-dated them."

It was a public declaration of victory for the new southern front, heralding a new era in the battle over globalization. The elite trade powers know it. Europe's lead negotiator, Lamy, says that trade has not only "risen on the agenda of these governments," but trade ministers are increasingly powerful figures in the developing world. Trade ministers like Maran and South Africa's Alec Erwin are "punching above their weight," says Lamy. This new strength will force Europe and America to spend more time courting opinion in the developing world. At the World Economic Forum in New York last week, U.S. Trade Representative Robert Zoellick stressed the importance of the new developing-nation alliances in the post-Doha world. "It is critical to look at the role that developing nations play and the networks they are creating," he said. In order to make the next round successful, Zoellick noted, "We need consensus-building."

But this is not the '50s, when one leader like Tito could claim to speak for the Third World. The movement was simpler then, united by animus against colonial rule, and asking only for a broad redistribution of wealth. It is no longer a unit bound by ideology, but a front of shifting alliances that change from issue to issue. "As long as you're opposed to something, you can hold together," says Columbia University economist Jagdish Bhagwati. "Once you move forward, interests are bound to diverge."

The splits are already appearing. While developing nations agree broadly on opening up richer markets, they differ on the details. India, Malaysia and Egypt want Europeans to cut agricultural subsidies while they keep on protecting their own farmers. Brazil and South Africa are opposed to protection for anyone. The recent European decision to grant preferred trade status to its former colonies pleased the former colonies, but no one else. "It's all a matter of what's convenient," says Tattamangalam Vishwanath, international trade adviser to the Confederation of Indian Industry. "In trade talks, there are no permanent friends and no permanent enemies."

The new battlelines don't necessarily pit rich versus poor anymore, either. In Doha, the United States backed the developing nations that protested against European farm subsidies. And the EU backed the stand against U.S. anti-dumping rules. WTO director-general Michael Moore welcomes this new movement of pragmatic, nonideological developing nations as "healthy." It's no longer so much a revolt against colonial masters as a spat about stuff like steel quotas and banana tariffs. "There is no Third World anymore," says Brazil's chief trade negotiator, Sergio Amaral. "But there is a unanimity among the developing countries that protectionism is the common enemy."

This is a sharp departure from anti-globalization as championed by activists, whether from rich or poor nations. The activists aim to temper the destabilizing effects of rising trade and capital flows by protection, if necessary, and by requiring multinationals to raise wages and improve labor conditions in the developing world. This vision of managed trade would slow the pace of globalization, and was ridiculed at Davos 2000 by former Mexican president Ernesto Zedillo as a plan "to save the people of developing countries from developing." So the game is on. It pits the emerging front of poor nations against rich governments, who once made the rules, but also against Western activists, who once claimed to speak for them. The victors will shape the changing global order.