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Little negative post-WTO effect on trade seen here

Tuesday, November 28, 2000

By DUSTON HARVEY
SEATTLE POST-INTELLIGENCER STAFF

The "Battle in Seattle" shook up the world of international trade a year ago, but the rioting has so far had little effect on imports and exports.

"I just don't see it as having any impact on export of products from the state of Washington or what goes through our ports," said Robert Hamilton, assistant trade representative for the state.

To the backers of world trade, the real battle took place at the World Trade Organization ministerial meetings inside the Washington State Convention and Trade Center and not on the streets outside.

Some of the issues -- the environment, human rights, economic imperialism -- were the same. But the disputes at the meeting were between rich and developing nations and between the United States and Europe.

Twelve months later, those deep disagreements are still there. But the WTO is still serving its primary function -- arbitrating trade disputes -- and is moving slowly toward an agreement on one of its most contentious subjects: agriculture.

In assessing the outcome of the WTO meeting, "it's important to note there were two things going on: One was the protest outside; the other was the breakdown inside," said Terry Laggner, communications director of the Washington Council on International Trade.

"It was a very serious breakdown that had to do with many of same issues being raised out on the street. Who had the power? Was it going to remain with the larger, industrialized countries? For the first time, there was a consensus voice from developing countries. And the European Union vs. U.S. disagreements boiled over."

The United States and other major powers wanted developing nations to meet certain environmental and labor standards, while the poorer countries rejected that push as a protectionist effort to prevent them from developing, she notes.

"Outside, the protests were over some of the same issues, including environmental and labor standards," Laggner said.

Since the meeting, exports from the state of Washington have declined. During the first six months of this year, they were down 18 percent to $17.5 billion (plus a couple of billion in the uncounted software category), primarily because of lower airplane sales, according to the Massachusetts Institute of Social and Economic Research.

But Hamilton said he can't imagine any relationship between that drop and what happened here last year. "The rules of the game have not changed," he says.

"One impact it might have had is how companies do business. Their attitudes might have changed about supplier relations. But in terms of actual volume, I don't see it."

Which means, among other things, that the United States continues to run up record trade deficits. In September, the United States imported $34.3 billion more than it exported, with the deficit with China reaching $8.7 billion, the largest ever recorded from any country.

The U.S. Trade Deficit Review Commission, in a report to Congress earlier this month, said the deficit will probably total $450 billion this year. It warned that huge trade deficits are not sustainable and that there is some risk they could lead to a "hard landing" with potentially dangerous repercussions for the economy.

The commission agreed on several things, including the need for a strengthened program of assistance for workers who lose their jobs due to economic change. But it split along Republican and Democratic lines on most issues, including the wisdom of a new round of multilateral trade negotiations unless labor, environmental and human rights issues are on the table.

Not everyone agrees with the trade boosters' assessment of the impact of the "Battle in Seattle."

"The juggernaut has been slowed," said Robert Scott, an international economist at Economic Policy Institute, a "progressive" think tank in Washington, D.C. "There have been no major initiatives since Seattle."

And there have been policy changes, he says, citing the recent U.S.-Jordan trade agreement that included groundbreaking sections on labor rights and environmental standards in its core. U.S. business, which opposes multinational codes of conduct and requirements on enforcement of national regulations, is becoming somewhat isolated in its opposition to these social standards, Scott argues.

Another fallout from last year's events is an increase in companies' attention to socially responsible business practices in countries where they set up operations.

"There are many things that businesses can do, and many haven't been doing them," said Laggner. More firms realize they're going to have an impact on society when they go into a country. If they don't pay attention to the social framework, to human and worker rights, to health, welfare and education, they risk bad publicity. "One modem in Indonesia can put something out all over the world. Companies are realizing that."

The Washington Council on International Trade responded to the WTO fracas by sponsoring a conference on corporate social responsibility last summer. Ironically and inadvertently as far as timing, it's following up tomorrow with a closed-door roundtable on the Starbucks-CARE partnership. The group also is shifting the focus of its education programs for teachers from trade basics to social concerns.

"Environmental, labor and human rights issues are on the table in a much more forceful way than they were 12 to 24 months ago," agreed Bill Stafford, president of the Trade Development Alliance of Greater Seattle. "The business community knows it's going to be difficult in the future to reach trade agreements without some attention to those issues."

The Seattle experience has also made it almost impossible for WTO to find anyone who wants to play host to its 2001 ministerial meeting, with the tiny Mideast nation of Qatar withdrawing its bid last month, citing a lack of hotel space. Yet the Geneva-based trade group continues to gain new members. It now numbers 139 nations and the world's most populous country, China, is seeking admission.

And the organization continues performing its main job -- ruling on trade disputes between its members.

WTO is moving slowly but steadily toward rules for two contentious areas -- agriculture and services.

"The agricultural group pretty much had a proposal hammered out before the Seattle talks fell apart," said Bill Bryant, chairman of Bryant Christie Inc., a Seattle-based trade negotiation firm that represents Washington state farm groups.

"As a result, the talks resumed in February in Geneva and have been going on since then," he said. Bryant is optimistic an agreement will be reached, but predicts it will take another two to four years. "WTO negotiations are not concluded in what most people would consider a normal period of time."

The goal of Washington farmers, he says, is an agreement that eliminates export subsidies and reduces tariffs for high-value products, from hops and apples to wine and asparagus. "We want to open up new markets and ensure all growers are competing on a level playing field," he said.

While the debate over trade rages on, one local group is putting its own positive spin on the "Battle in Seattle."

"Basically, it put Seattle and this region on the world map. After one week in the spotlight of the world business community, we're just one heck of a better-known place," said the trade alliance's Stafford.

Duston Harvey is arts and entertainment editor of the P-I.

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