Numerous Seattle writers and analysts have offered looking-back pieces in recent days regarding the World Trade Organization fiasco here 10 years ago. I have a somewhat different take on the matter.
First, as regards the riot itself, one of our weaknesses locally is a provincialism and lack of knowledge about developments elsewhere. The WTO demonstrators who came to Seattle had done their thing in other places; their objectives and tactics were well known. Yet our mayor, Paul Schell, and his police chief misread them badly. Schell, in a famous statement, asked, "Why are we afraid of our children?" — as if the WTO demonstrators were merely '60s-era flower children coming to Seattle to plead for humanity. The resulting debacle, and subsequent Mardi Gras violence, cost Schell his mayoralty.
Time-tested tactics for dealing with violence-prone demonstrators call for a strong police presence, overwhelming the demonstrators in number, and forceful and preemptive response at the first sign of disorder. Instead, Seattle police held back and, predictably, the demonstrators' planned disruptions and violence took place. They quite literally shut the meeting down.
Now, as to the trade policy context. The so-called Seattle Round of global trade negotiations, which were expected to flow from the WTO meeting 10 years ago, was to be only the most recent of several rounds that had liberalized global international trade since President Kennedy's 1962 Trade Expansion Act had led to the first Kennedy Round negotiation. The purpose of such negotiations was to reduce barriers to international commerce on a global basis: That is, all countries would lower their barriers together rather than striking bilateral or regional deals which would leave some countries on the outside looking in.
A departure took place when President Bush the Elder proposed a North American Free Trade Agreement melding the economies and financial systems of the United States, Canada, and Mexico. A NAFTA had been proposed before but dismissed as a bad idea because 1) it would meld two advanced, open-trading economies, the U.S. and Canada, with a less advanced, highly protected economy, Mexico, causing dislocations; and 2) it would break the steady path toward global liberalization by setting up a regional arrangement involving the world's most powerful economy, the United States. Countries outside a NAFTA, such as neighboring Caribbean countries, would immediately be hurt as their products were discriminated against.
NAFTA became a prime issue in the 1992 presidential election campaign. Arkansas Gov. Bill Clinton, the Democratic candidate, was undecided whether to support or oppose it. In the end, however, he came down on the positive side because NAFTA (unjustifiably, in my judgment) had become a litmus test of whether a candidate was a free trader or protectionist. Clinton wanted to be seen as a free-trader.
As it turned out, Clinton was able to get congressional approval for a NAFTA deal only with Republican support. At the last stages of negotiation, to mollify labor-union and environmentalist objections to NAFTA, Clinton tossed in sweeteners. The U.S. thereafter would include labor and environmental standards in trade negotations. (Opponents of NAFTA said lower environmental and labor standards would provide Mexico with competitive advantage over U.S. and Canadian producers). NAFTA would have gotten done without these sweeteners, and these issues had never before been included in major trade negotiations, in part because there were other major international forums in which to deal with them. But, short term, these concessions gave Clinton some breathing room with important constituencies. He did not recognize that, thereafter, they would become major impediments to future global liberalization.
The WTO and global trade liberalization have been slowed in large part because developing and industrializing countries have simply refused to retard their own growth by agreeing to labor and environmental standards under which their economies could not be competitive. (We have seen the same reaction — for instance, by China and India — to global-warming initiatives which second- and third-world economies have seen as disguised rich-country attempts to slow their growth.)
Politically correct doctrine currently holds that Juan Valdez and his poor-country counterparts have stolid champions among U.S. adherents of labor and environmental standards. Why should they not enjoy the same pay and working conditions as their American counterparts? Trouble is, their economies have not developed to the degree that their employers can give them the same pay and working conditions — anymore than American employers could have done so during 19th century growth of our own economy. The leaders of their governments, not incorrrectly, perceive labor/environmental standards as disguised protectionist devices designed to give rich-country competitors an unfair advantage.
Additionally, since NAFTA many bilateral and small regional trade deals have taken place, each discriminating against those who are not part of the deals. A global WTO deal has not been possible.
Some recent commentary argues that the WTO meeting breakup 10 years ago was justified and that the protesters were, in fact, foresighted tribunes of the future who now should be heeded. This is interesting analysis, but it overlooks the previous 100 years of international economic and trade-policy history.
The real reason WTO and global trade liberalization are stalemated is the interests of the players in the game have become quite different. So long as the United States and its major rich-country partners insist on standards less developed countries cannot reasonably meet, the less developed are not going to play. To put it in everyday terms: The underdogs see the U.S. and other developed countries as Junior League housewives telling their less affluent neighbors that they cannot live in the neighborhood unless their yards meet beautification standards.
This, no doubt, will unsettle consumers of Fair Trade coffee and other politically correct products who see themselves as progressive, forward-looking advocates of a new international economic order. What they are doing, though, is fronting for disguised protectionism which is retarding the living standards of both rich and poor.
In our current financial/economic malaise, one of the greatest risks is a general fallback toward protectionism by the world's major economies. We've already reached the point where no major trade deal, today, could get congressional approval. Even modest bilateral deals are on the shelf.
In one sense the WTO riots of 10 years have figuratively never stopped. There was nothing positive about them. They were bad news then; the thinking they represented remains bad news now.
