Whose World Is It, Anyway?

What the Seattle debacle means for the future of globalization

Has the U.S. really grown weary of globalization? It's hard to imagine, after more than two decades in which free trade has been the mantra and expansion into new markets the mission. Harder still to believe that the process that has helped sustain the greatest U.S. economic expansion in history and raised millions of people in developing nations from privation might now be halted because of street demonstrations by American youths outside the World Trade Organization's Seattle meeting--or by the gridlock over issues inside.

But a week after the tear gas has cleared, the questions linger. Did the scene in Seattle reflect a global fin de millennium angst over a world speeding into uncharted economic and political space? Or is it an anomaly--a brief conflagration that won't spread?

The answers, of course, won't be known for years to come. But two things are clear. The victory in Seattle has emboldened labor, environmental, and other anti-WTO forces to redouble their efforts. On Dec. 8, AFL-CIO President John J. Sweeney and other labor leaders joined an anti-sweatshop vigil in Manhattan--the first time they have joined the annual rally. And when Congress returns, the coalition will try to derail China's entry into the WTO. Meanwhile, Global Exchange, a San Francisco-based human-rights group, is preparing a Manifesto for the Global Economy that will call on the U.S. to leave the WTO unless it adopts strong labor and environmental standards. "We're going to make this an issue in next year's elections," vows Global Exchange director Medea Benjamin.

Second, the debacle in Seattle has convinced some policymakers and business leaders that the public at large may have grown wary of the changes that accompany globalization. "A lot of people have the sense that global corporations can't be controlled, that we have lost our cities and towns to chain stores that are the same everywhere, and that we have lost the guarantee of a job and security for life," David L. Aaron, Undersecretary of Commerce, told BUSINESS WEEK upon his return from the failed WTO meeting. "There is now an enormous amount of anxiety about trade, and globalization has become the target for all sorts of unjustified fears."

Justified or not, anxiety over globalization is already affecting policy. The Clinton Administration, which pushed through NAFTA and just made a deal to support China's entry into the WTO, despite the opposition of its labor base, showed up in Seattle insisting that the WTO put labor and environmental issues on the agenda. And, in a Nov. 30 interview with the Seattle Post Intelligencer Clinton went a step further--calling for "enforceable" labor standards as a condition of free trade--angering WTO members and business leaders alike.

In his Dec. 8 press conference the President said he had been misunderstood in Seattle. His stand, he says, "does not mean that I would cut off our markets to India and Pakistan, for example, if they didn't raise their wages to American levels. I know that's what the sort of stated fear was. I never said that. I don't believe that." He also repeated his call for the WTO to take up labor and environmental standards--and denied speculation that his stand in Seattle was designed to boost the candidacy of Vice-President Gore.

Gore now says labor standards are only a long-term goal and should not slow down trade talks. The breakdown of the Seattle summit "need be no more than a temporary setback--if we react by taking sensible steps to open up the process, integrate labor and environmental concerns into the process, and continue moving forward aggressively to open markets," an upbeat Gore told BUSINESS WEEK on Dec. 7.

Given the fissures that erupted inside the WTO in Seattle, such "sensible steps" may become huge hurdles. Instead of sketching out an ambitious plan for years of negotiations on the gamut of free-trade issues, WTO delegates from developed nations clashed over everything from eliminating U.S. antidumping laws to creating rules for trade in biotech and e-commerce. Developing nations resented the implied threat of sanctions over labor and environmental issues. The breakdown, says U.S. Trade Representative Charlene Barshefsky, is a function of the complexity and novelty of the issues, which "raise questions for many countries about sovereignty and democratization."

For now, U.S. business leaders say Seattle hasn't altered their commitment to the WTO--though many concede that the atmosphere has changed. "For better or for worse the WTO is the only game in town," says Michael R. Bonsignore, chief executive of Honeywell Inc. "I think the WTO, like business, needs to listen to what these issues are. And business can go a long way toward normalizing this issue by listening and communicating and setting high standards."

Robert J. Eaton, co-chairman of DaimlerChrysler, takes a darker view: "I think it will result in a backlash against the WTO, against fair and open trade, and against the U.S. in general." And he's angered by Clinton's call for labor standards. "It's not going to happen," Eaton splutters. "You can't lift one country's standards for workplace and employment and impose them on another. You can't even take them from Michigan to Mississippi."

Eaton and other business leaders with interests in China are getting ready to square off against labor and the other anti-WTO forces in the new year, when Congress takes up U.S. membership in the WTO and legislation to grant China permanent normal trade relations status. That, China says, is a prerequisite to its entry into the WTO. "China is the last battle in the first part of our plan, which is to stop the momentum of globalization," says Lori Wallach, commander of a Naderite organization called Global Trade Watch that sits at the heart of a broad coalition of environmentalists, labor groups, religious organizations, and self-styled consumer groups. Led by the AFL-CIO, the coalition has already stopped most significant trade legislation since the WTO was formed five years ago.

All these post-Seattle maneuvers are being carefully monitored in Beijing. "The Seattle meeting has poured some cold water on WTO" prospects, says Hai Wen, deputy director of the China Center for Economic Research at Beijing University. Already, conservatives are counseling Beijing to go slow on economic reform and privatization.

The China-WTO fight and the fallout from Seattle are likely to make trade a larger issue in the U.S. presidential race, too. Gore already has a weak following among business leaders. And his stand on labor and environmental standards as part of the WTO could hurt him. "Now, the real heir to Clinton may be George W. Bush, who is staking out a centrist position on trade while the Democrats have backed themselves into a corner with their need for labor's organizational work," says Edith Wilson, a former official at the Progressive Policy Institute, a New Democrat group.

Whether the march toward greater integration of world economies continues at the rate of recent years or whether it takes a breather, may depend more on next November's election than anything the WTO is likely to accomplish next year. After Seattle, the public may be signaling it's time for a breather.

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