The Seattle Ministerial Conference of the World Trade Organization (WTO) demonstrated with disturbing force the huge confusions that haunt the public mind and much of global politics about the nature of trade and the process now known as globalization. The notion that globalization is an international conspiracy on the part of industrial-country governments and large firms to marginalize the poorest nations, to exploit low wages and social costs wherever they may be found, to diminish cultures in the interests of an Anglo-Saxon model of lifestyle and language, and even to undermine human rights and cut away democratic processes that stand in the way of ever more open markets is, of course, utter nonsense. Yet the Seattle demonstrations vividly exhibited the worrying tendency to equate these concerns and others to the existence and potential development of the World Trade Organization, the institutional and legal face of the world trade system.

This outpouring of misconceived, ill-understood propaganda against a system that has brought vast gains to most nations over the past few decades is extraordinarily dangerous. It is a threat to the prospects of a better life for many millions, perhaps billions, of people at the start of the new millennium. If left unquestioned and unchallenged in the interests of political correctness or political advantage, this sentiment could set the cause of economic and social development back 20 years. This threat is made all the more serious by the difficult new challenges facing governments today. Still, Seattle showed more clearly some of the institutional difficulties of managing effective decision-making processes, with over 100 countries truly interested and involved in managing the geopolitical realities of the 21st century.

The Biggest Straw Man

In order to understand the dangers implied by attacks on the WTO, one must first distinguish between "globalization" and the World Trade Organization. Neither as a body of international law nor as a governmental institution can the WTO be regarded as synonymous with globalization. The WTO, like its predecessor the General Agreement on Tariffs and Trade (GATT), is a collection of rules and undertakings voluntarily entered into and implemented by governments on the basis of consensus among those governments to provide a predictable, stable, and secure environment in which all types of firms can trade and invest. A small transfer of national sovereignty (insofar as any purely intergovernmental structure can affect sovereignty) in the interest of internationally enforceable disciplines brings economic gains for all and prevents economic muscle from being the sole arbiter of commercial advantage. It is easy to argue that in a period when business is as likely to be conducted at the global level as at the national, the WTO recovers a degree of sovereignty for governments that otherwise find themselves no longer able to influence significant aspects of their economic future.

Of course, open and secure markets have encouraged global trade and investment. They have provided jobs, consumer choice, and rising personal wealth in large parts of the world, including many developing countries. Governments everywhere want to see their firms able to trade, and they actively seek inward investment by foreign firms. But that is not the whole story of globalization. The WTO has had only a marginal effect on other significant elements, most of which relate to the mobility of people, information, culture, technology and capital. Air transport, telecommunications, the media, and now the internet are four of the most crucial drivers of globalization. While they are not without their dangers or inadequacies, few would seriously argue that they have not brought widespread benefits. These innovations represent the positive face of the global economy.

Are the more troublesome aspects of globalization really a reflection of the trading system, or do they represent quite different policy failures, including poor education and training, misplaced and inefficient government intervention in industry, corruption in both the public and private sectors, poor governance, crime, lack of transparency in regulatory systems, inadequate or inappropriate social security and pensions systems, and so on? Admittedly, the trading system has not always provided the right results; for instance, it ought to be able to deliver more for the least-developed countries, even if it cannot solve all their problems. However, equating the WTO with the difficulties of the global economy risks damaging a system which has given much and still has more to offer. Such thinking also neglects the importance of the WTO's fundamental role in simply facilitating trade and investment. The tendency to turn to the trade rules to resolve every challenge facing mankind-the environment, human rights, and labor standards-is almost as dangerous as the desire to dismantle the system in order to halt a process of globalization that is beyond the realm of any institution.

Fruits of the Uruguay Round

The first thing governments need to do in the current atmosphere of sometimes dubiously motivated protest and fear is to stop apologizing for the WTO and start defending it. The GATT helped create three decades of remarkably healthy economic growth. It succeeded in a low-profile manner because, in the 1950s and 1960s, high customs duties could be brought down steadily without attracting much political controversy. By the time the Uruguay Round was launched in 1986, the world was left with the hard cases of international trade. Negotiators finally had to face up to protectionism in the most sensitive industries of the developed countries, particularly in textiles, clothing, footwear, agriculture, steel, and automobiles. They also came to realize that the next stages of reducing protection and opening markets, and thus re-establishing the kind of trade growth spurred by the GATT, would mean moving some of the focus of negotiation from conditions at the border (such as tariffs and quota restrictions) to the heart of domestic regulation and sectoral support.

Immense political effort was required at the highest levels of government, but the Uruguay Round succeeded and established the WTO in the process. The advances made on all fronts cannot be underestimated. Policies in agriculture underwent a revolution: all market-access restrictions were translated into transparent tariffs, and the process of winding back the most distorting features of domestic support and export subsidies was initiated. A higher level of practical liberalization for farm goods might have been preferred, but the fundamental policy changes are irreversible and provide the basis to go further next time. Similarly, in textiles and clothing all the countries maintaining heavy quantitative controls on imports are committed to phasing them out. It will take nearly ten years, but the agreement at Uruguay marked a fundamental change of heart and direction.