Headlines - The Jakarta Post, 10 September 2003

http://www.thejakartapost.com/Archives/ArchivesDet2.asp?FileID=20030910.B01

A chance at Cancun to make trade democratic

Yanuar Nugroho,
Director, The Business Watch Indonesia, Surakarta,
yanuar-n@unisosdem.org

Sumiah, 26, hails from Mojokerto, East Java. A permanent employee in a furniture factory for
more than eight years, last year she was made a part-time worker, along with some 200
others. Their employer told them that the company needed to be "flexible" to stay in business.

As a result, Sumiah no longer receives overtime or "menstruation leave". She is no longer

protected by the state-run workers' insurance scheme (Jamsostek). If she is fired, she will
receive no redundancy pay as legally-speaking she cannot actually be fired -- to get rid of her
all the employer has to do is refuse to renew her weekly contract. Every Monday morning,
together with or sometimes hundreds of other workers, she checks the announcement board
near the factory gate to see if her name is on the list of workers hired for the week.

The "Washington Consensus" on the global economy states that the labor market needs to be
"flexible" as a precondition for investment to take place. This simply means that labor is only a
function of production. The higher the production, the more labor can be employed -- and vice
versa. The clear consequence is that only contract labor will be needed.

Sumiah's story and the issue of labor is among those to be discussed in Cancun, Mexico,
during the fifth WTO Ministerial Meeting from Sept. 10 to Sept. 14 -- an issue that comes
under the prestigious title of "business services".

Free trade or, at the least, very low tariffs on trade is the basic philosophy of the World Trade
Organization. Free trade means more than just no tariffs, it also means no indirect obstacles
to trade. Hence, the WTO is also in favor of deregulation and liberalization, at least where it
relates to trade. Whether it shares a strong preference for market-based solutions is a moot
question.

The UN Conference on Trade and Development (UNCTAD) noted that there are 40,000
corporations in the world whose activities cross national boundaries. These firms access
overseas markets through some 250,000 foreign affiliates. The top 200 global firms account
for an alarming and growing share of the world's economic activity.

No doubt, trade plays a significant part in these figures. Trade brings prosperity through the
delivery of goods and services, with economic growth and technological advancement both
shaping it and being shaped by it. Trade even contributes to more open and democratic
governance.

But inequality remains and the gap both within and between rich and poor countries seems to
be widening. In 1960, the richest fifth of the world's population received 70 percent of global
income compared to 2.3 percent of global income for the world's poorest 20 percent. By 2001,
the richest 20 percent had increased their share to more than 85 percent of global income
while the bottom fifth's share had shrunk from 2.3 percent to less than 1 percent (UN
Development Report, 2002).

The problem is not in trade itself, but in its current patterns and practices. Trade practices that
neglect everything else in favor of profit alone must be stopped. The concerns expressed by
many about the trade process must be acknowledged and addressed in any development
model since these concerns affect the daily lives of billions.
But we sense powerlessness, despite all the rhetoric of participation. Most countries are now
WTO members, but membership does not equate with influence. Many developing countries
have limited or non-existent representation in Geneva. Nineteen of the 42 African WTO
members have zero representation.

Many other developing countries lack the technical capacity to negotiate meaningfully for the
rules have already been set based on developed country models, which can be inappropriate
and prohibitively expensive for poor countries. In fact, many WTO signatories have been
unable to comply with agreements negotiated under the earlier Uruguay round.

If we want a balanced and inclusive world trading system that attracts developing countries,
much needs to be done to enhance these countries' capacities to participate in the rule-
making process, to move away from the "one size fits all" approach and to ensure that its
implementation does not place unreasonable financial and technical burdens on those least
able to bear them.

We need to work with others on issues and solutions. This means partnerships within and
between countries and their external supporters; and partnerships among these external
supporters themselves. It is only in this light that this fifth WTO Ministerial Meeting will be
relevant to the world as a whole.

Properly conceived globalization means much more than merely market integration. It also
means -- and requires -- working together towards agreed solutions to global problems.

And these solutions need to be developed in a cooperative and transparent way that explicitly
includes the priorities of the poorest countries and their peoples. We need an increasingly
inclusive approach to development issues in general and to poverty reduction. More
particularly fair trade, not free trade, as the heart of our "new" globalization, must be the
foundation of all our business practices and trading endeavors in an increasingly
interdependent 21st century world.

As to a workable framework for action by ministers, the draft of the Ministerial Text for Cancun
reads, "We believe (the framework) constitutes an adequate and manageable basis for
discussion, and we hope it will prove a useful tool in our search for common ground in
Cancun." This "common ground" should be the democratization of trade practices through
business accountability.

It is something of an irony that the "power of capital", as reflected in the development of world
trade, seems to have been exempted from the criteria of public accountability.

Thus, Cancun is a chance to make trade accountable and democratic. This "one world"
cannot remain split along a fault line that separates the rich from the poor, like those in
Sumiah's position.

Trade alone will not bridge this divide. Rather, our sense of common humanity must be our
shared bond, and must form part of one united endeavor.

Otherwise, such transnational institutions like the WTO will only trade life away for profits.

The writer is also a lecturer at Sahid University in Surakarta and a researcher with Uni Sosial
Demokrat, Jakarta.