With remarkable prescience, Upendra Baxi observed in 1994 the
‘emergence of a market-friendly (or specifically trade-related) human rights paradigm’ (Baxi, 1994). In an embryonic ‘post-Dunkel’ world, states were becoming more the enablers of capital than the representatives of their citizens. Transnational corporations were the new recipients of internationally guaranteed and enforceable rights, with no corresponding legal obligations.
The paradigm shift from a social to a market conception of human rights and development confronted the Western-derived norms and moral language that had dominated the twentieth century. Perhaps the starkest collision involves the Declaration on the Right to Development,1 agreed to by UN member states in 1986 just as the Uruguay round began. The Declaration confers the right and duty on states to formulate appropriate national development policies that will continuously improve the wellbeing of their general population and all individuals. The people have the corresponding right to participate actively, freely and meaningfully in their own development and to a fair distribution of the resulting benefits. The Declaration requires states to formulate policies in the international arena that facilitate the full realisation of this right and to ensure that new treaty obligations do not disproportionately reduce their capacity to set and implement national development policy. Such priorities, processes and outcomes are antithetical to the primacy that trade in services agreements require states to accord to the economic interests of foreign corporations.
When norms, instruments and institutional mandates conflict like this, they must be left to co-exist in an uncomfortable disjuncture or be reconciled by subordinating one to another. From the mid-1990s, the ‘human’ rights and development discourse was progressively co-opted and displaced by the ‘trade-related’ rights and development paradigm. The former has not disappeared. It has been reinvented through the medium of the Millennium Development Goals (MDGs) and the ‘pro-poor’ policies prescribed by the IMF and World Bank as Poverty Reduction Strategies, within a WTO- compatible model of development.
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The triumvirate of the Bretton Woods institutions and the WTO effectively trumps any international organisation that champions the old paradigm.
Their hegemonic project of ‘global economic policymaking’ is advanced under the rubric of ‘coherence’. This chapter interrogates the ideological, institutional, policy and operational layers of ‘coherence’ to reveal their distinct, yet synergistic, functions. Although the institutions rarely collaborate actively across these levels, the cumulative effect is a seemingly impregnable edifice. Despite this appearance, they have failed to drown out the dissident voices of the disempowered and dispossessed who demand alternatives to neoliberalism or to subdue those international organisations that continue to insist that services are inescapably social.
The analysis in Case study 5 of the World Bank’s World Development Report Making Services Work for Poor Peoplereveals how the World Bank and the GATS complement each other organically, without the need for active collaboration. Case study 6 traces how this hegemony was advanced through an integrated circuit of UN-sponsored summits on trade, finance and sustainable development that began in 1995 and intensified between 2001 and 2003.
Ideological coherence
The GATS assumed a successful ‘socio-regulatory adjustment’ from old discourses of human rights and development to new norms that celebrate the market as the vehicle for development. Beginning in 1995, and especially after the collapse of the Seattle ministerial meeting in 1999, the major powers set out to capture every significant international summit as an ideological platform – from the early iterations of the market model at the Copenhagen Summit on Social Development in 1995 to the UN Millennium Summit in 2000, through a rapid succession of further summits on trade (Doha in November 2001), finance for development (Monterrey in July 2002) and sustainable development (Johannesburg in August 2002). This strategy is analysed in depth in Case study 6.
These summits served four important functions. First, a decade-worth of cross-referenced, mutually reinforcing international declarations from (almost) all the world’s leaders amounted to a consensus endorsement of neoliberalism.
Each summit was the site of diplomatic contest by some participating governments and more trenchant opposition from external critics. Yet the final declarations invariably reflected the agendas of the major powers and recited the new mantra of trade-driven development in an integrated global economy. Southern governments were promised rewards of debt cancellation and new loans for adopting these policies. Deviant states that displayed ‘bad governance’ were marginalised or denied debt relief and trade preferences.
The seriously recalcitrant were demonised as a threat to the integrity of the global economy and freedom loving people everywhere.
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Second, these summits were hosted by the UN – the institutional home of the old human rights and development paradigm. Each declaration reinforced the need for coherence: horizontally across the UN agencies, the Bretton Woods institutions and WTO; and vertically by ‘mainstreaming’
neoliberalism, especially trade liberalisation, within countries’ national development plans and Poverty Reduction Strategy Papers (PRSPs), and in their trade agreements.
Third, the declarations deployed a depoliticised discourse. Neutral terms such as ‘coherence’, ‘partnership’, ‘stakeholders’, ‘safety nets’ and ‘sound’
economic policies implemented within an ‘enabling’ environment disguised the structural disparities of power. Likewise, the epithets of ‘civil society’
and ‘non-state actors’ portrayed the corporate lobbies, transnational NGOs, more activist NGOs and transformative social movements as one harmonious and depoliticised entity. Their contrasting social locations were exposed at the summits themselves. Transnational corporate NGOs who wanted a seat at the table alongside the Fortune 500 companies were given recognition and sometimes funding. The ‘uncivil society’, whose popular struggles challenged neoliberalism and the geopolitical ambitions of the major powers, was excluded or boycotted the events.
Fourth, the summits consolidated the MDGs, endorsed by the UN Millennium Summit in 2000, as the normative reference point for trade- driven development – and its source of virtue. Sweeping commitments were made to halve the number of people living in poverty, reduce child and maternal mortality and the incidence of HIV/Aids, and dramatically improve the provision of education and safe drinking water by 2015. These goals were bound together by MDG8, which made government/corporate partnerships and trade liberalisation the primary means for achieving them.
Situating trade-driven development amidst goals on poverty and pandemics conferred an unearned legitimacy on free markets and free trade. It also made the IMF, World Bank and WTO the primary institutions through which the goals should be achieved (WDM, 2005). Even though there was no explicit reference to the GATS, trade in services agreements were one legal vehicle for ‘enabling’ public–private partnerships and private firms to deliver health care, education, water and other essentials of life.
Institutional (in)coherence
The legal mandates of the Bretton Woods institutions and the WTO provide the platform for their role as hegemonic vehicles of neoliberal globalisation.
Article III:5 of the Agreement Establishing the World Trade Organization reads:
With a view to achieving greater coherence in global economic policymaking, the WTO shall cooperate, as appropriate, with the 1111
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International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies.2
Article I of the IMF’s Articles of Agreement lists as one of its purposes: ‘to facilitate the expansion and balanced growth of international trade’.
Likewise, the purposes set out in Article 1(iii) of the Articles of Agreement of the International Bank for Reconstruction and Development (the World Bank) include ‘to promote the long-range balanced growth of international trade . . . by encouraging international investment for the development of the productive resources of members’.
The three institutions formally agreed in 1996 to hold regular high-level consultations and to grant reciprocal observer status at key meetings and communicate on matters of mutual interest. They would also establish protocols for co-operation and communications between staff.3Giving effect to these commitments has not been easy (Sampson, 1998, p 258).4 The World Bank and IMF occupy adjacent complexes in downtown Washington.
They maintain a minimal presence in Geneva to service the WTO and other international agencies. While they have vastly greater resources than the WTO Secretariat, their specialist trade departments are relatively small. The Bank’s trade directorate was strengthened after 2000 by employing several former WTO economists, including GATS specialist Aaditya Mattoo (Case study 5).
Their divergent governance structures also affect how the institutions interrelate. Finance ministers govern the Bank and Fund, trade ministers the WTO. Finance ministers have more power and view trade liberalisation as one consideration among many. The Bretton Woods institutions hold joint executive meetings where the major powers, as the majority shareholders, control the decisions. While the IMF has a centralised and rigidly hierarchical bureaucracy and the World Bank is more amorphous, the staff of both institutions produce only documents that they know the board will approve.
By contrast, the formal governance arrangements of the WTO involve one-country-one-vote, which means the major powers have to rely on the less predictable methods of back-room deals, persuasion and coercion. The WTO Secretariat is authorised only to perform the will of the members, although it is frequently accused of actively promoting the North’s agenda (Hilary, 2004).
The objectives and priorities of each organisation necessarily reflect their distinctive mandate. Trade policies espoused by the World Bank have to be consistent with the IMF’s macro-economic framework, while the Fund’s trade liberalisation conditionalities have traditionally depended on aspects of the Bank’s structural adjustment programmes (Sampson, 1998, p 260).
The WTO’s activities are defined solely with reference to its legal texts. At times the mandates of the institutions compete. The WTO texts defer to the IMF’s assessment of a member’s balance of payments situation when 1111
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considering measures under Article XV of GATT and XII of GATS, but a senior legal adviser at the IMF has noted the potential for jurisdictional, substantive and institutional tensions in the IMF/WTO relationship (Siegel, 2002).
These practical difficulties and institutional differences are overcome by their underlying ideological convergence. The World Bank’s World Development Report 2004 shows it is not necessary for the institutions to collaborate actively to achieve a synergy of both ideology and policy (Case study 5). Conversely, the circuit of international summitry shows how all three institutions and the major powers can and do join forces to suppress a challenge to their hegemony (Case study 6).
This common cause is also apparent in their relationships with UN agencies that continue to espouse a ‘human’ human rights and development paradigm.
Back in 1995 the Programme of Action from the Copenhagen Summit on Social Development had proposed strengthening inter-institutional co-ordination in economic and social development programmes, including joint meetings at the UN Economic and Social Council (ECOSOC). The first ECOSOC session for that year included a ‘high level economic policy dialogue’. The newly appointed World Bank President James Wolfensohn bluntly distinguished between (acceptable) co-operation and (unacceptable) guidance and co-ordination: ‘I have a job to do and I don’t want . . . to carry out my business according to some resolution made at the UN’. At the same meeting the Director General of the newly established WTO, Renato Ruggiero, pointed to his organisation’s mandate to improve policy coherence with the Bretton Woods institutions, and stressed the WTO’s reliance on their policy analysis and research. He did not mention the UN. Ruggiero also insisted that the WTO’s contractual nature meant it could only discuss what the members had agreed was its mandate. That was confined to trade, including the promotion of development through progressive liberalisation.
Other dimensions of development were beyond its purview (Khor, 1995).
All the UN agencies came under intense pressure to conform. The primary target was UNCTAD, whose role as a partisan for the South before and during the Uruguay round had seen it marginalised and starved of resources.
Trade ministers of larger Southern governments are said to have pressured UNCTAD’s research staff in recent years to abandon any leftist positions.
The appointment of former WTO Director General Supachai Panitchpakdi as Secretary-General of UNCTAD in 2005 was expected to bring any dissident elements to heel.
It was partly to gill the gap left by UNCTAD that the South Centre was established in 1990 as a think tank to provide research support and promote South/South co-operation in Geneva. In 2006, the South Centre submitted a report entitled ‘Reinventing UNCTAD’ to the Panel of Eminent Persons on Enhancing UNCTAD’s Impact. It pulled no punches, asserting that a
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of its Charter functions in the economic field and whittling down its role and authority’ had reduced inter-governmental deliberations in UNCTAD to a charade and its research and policy analysis work had lost its earlier élan, punch and distinctiveness. . . . In the name of coherence, [UNCTAD] is being required to conform to the mainstream views espoused by developed countries and their preferred international organizations . . . and is not being allowed to question the existing world order or to bring out its inequalities and imbalances.
(South Centre, 2006, p 5) The South Centre blamed the ‘Partnership for Development’ (endorsed at UNCTAD IX in 1994, at the end of the Uruguay round) for de-emphasising the organisation’s focus on the role of governments and policy measures, and converting it into a more pragmatic and action-oriented institution that primarily delivered donor-driven technical assistance. Some ground had been recovered at the UNCTAD X and UNCTAD XI, which followed the collapse of the Seattle and Cancún WTO ministerials respectively, when Southern governments had used UNCTAD to voice their critiques of the WTO. The promotion of the concept of ‘policy space’ had opened the possibilities for a more pluralist approach, even though ‘certain powerful countries refuse any reference to the concept in UNCTAD’ (South Centre, 2006, p 10).
The hostility of the major powers to UNCTAD was readily apparent in discussions on ‘coherence’ in the WTO Working Party on Trade, Debt and Finance. The committee had been established under paragraph 36 of the Doha Work Programme. It was empowered to explore broader trade and development debates and produce recommendations ‘within the mandate and competence of the WTO’ that would contribute to a durable solution to the external indebtedness of developing countries and ‘safeguard the multilateral trading system from the effects of financial and monetary instability’. The committee was perpetually split on North/South lines (ICTSD [International Centre for Trade and Sustainable Development], 2004). The US and its allies blocked a proposal to ask the Hong Kong ministerial meeting in 2005 to establish a permanent committee with an explicit mandate that would have authorised UNCTAD to play a more active role (ICTSD, 2005, p 36).
The organisation still publishes several flagship reports. Their orientations vary according to which division produces them. The annual World Investment Report is the work of the Division on Investment, Technology and Enterprise Development. Its 2004 report The Shift Towards Services documented the uneven distribution of trade in services, noting that most poor countries had fallen further behind as the major powers had accumulated greater control through their transnational corporations (UNCTAD, 2004). In what has become UNCTAD’s standard line, the report promoted foreign direct investment in services in countries that had effective 1111
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regulatory regimes, provided they could preserve the flexibility to pursue their national objectives.
Other divisions of UNCTAD pushed the boundaries of what the major powers would tolerate. The 2006 Trade and Development Report produced by the Division on Globalization and Development Strategies was, paradoxically, published under Supachai’s signature. It was replete with references to ‘pragmatic’ policy approaches, ‘strategic trade integration’,
‘flexibility’ that requires an ‘appropriate balance between national policy space and international disciplines and commitments’ (UNCTAD, 2006, pp XI–XX). It criticised the prevailing macro-economic orthodoxy of the international financial institutions, and the attempt to establish a homogenous regulatory framework under the WTO, as being unlikely to take adequate account of asymmetries between rich and poor countries.
Moreover, the proliferation of free trade agreements had widened the gap between legal equality and equality of economic constraints. The report floated the possibility that an individual party might opt out of commitments for a limited time under agreement-specific criteria. Taking a swipe at the anti-democratic practices of the WTO, it remarked that a fully inclusive process, and flexibility to reflect the needs of all members, would be necessary to avoid a deadlock in the Doha negotiations.
The US expressed ‘regret’ at recommendations that ran counter to the
‘foundations of sound economic and trade policy’ and the research of other international organisations, and ‘disappointment’ that trade issues were presented as a North/South dichotomy ‘at odds with the economic reality of modern global trade’. An aggregated concept of ‘policy space’ fostered the harmful perception that all developing countries wanted to opt out of their international commitments. Too little had been said about the importance of liberalising infrastructure services, while the multilateral setting of a trade negotiation ‘is simply not the place to try to solve the complicated issues related to international migration and labor’.5
Regional offices of UNCTAD play a pro-South, but pro-liberalisation role. For example, UNCTAD India embarked on joint venture with the UK’s Department for International Development and the WTO to strengthen the capacity and commitment of India’s Ministry of Commerce to participate positively in the Doha round. From June to August 2005 they conducted a series of ‘stakeholder consultations’, including on services (UNCTAD India, 2005). One of the two NGOs invited to speak observed that the published account had been massaged to endorse India’s pro-liberalisation position on modes 1, 2 and 4 and to downplay their criticisms.6
The UN’s other main economic development agency, the UN Development Programme (UNDP), periodically questioned the trade-driven agenda for services. Its Human Development Report for 2003 promoted a human rights approach to policies on the private provision of health, education and water (UNDP, 2003). The same year the UNDP’s Socio-economic Development 1111
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Group published a review that was critical of MDG8. The authors said the assumption that trade increased economic growth, which in turn reduced poverty, had mostly failed the poor. Their position on the GATS was carefully worded: ‘From a human development perspective, it is vital that countries preserve adequate policy space for sequencing the progressive liberalisation of basic public services such as water, health, education and social protection.’ Liberalisation of those services should not be imposed as ‘a blank prescription’. The potential application of the dispute settlement and cross-retaliation mechanisms of the GATS were inappropriate for the liberalisation of such basic services. Concerns about the private management of utilities, especially water in Latin America, showed the need for caution (Vandemoortele et al., 2003, p 8).
The UN’s human rights institutions that adhered to the social paradigm of services were also marginalised. A preliminary report on trade and human rights from the UN Sub-commission on the Promotion and Protection of Human Rights in June 2000 referred to the WTO as a ‘nightmare’ for human rights, provoking a furious response from the WTO (quoted in Picciotto, 2007, fn 3). In 2002 the Sub-commission produced another, more diplomatically phrased report on ‘Liberalisation of Trade in Services and Human Rights’. The authors argued for a human rights approach to trade through which ‘these two processes – progressive realization of human rights and progressive trade liberalization – can be implemented simultaneously and coherently’.7 They would have been well aware that affording human rights equal status to, let alone primacy over, trade liberalisation would negate the core principles and objectives of the GATS.
The report reiterated the state’s role as the primary duty bearer for the implementation of human rights. Moreover: ‘The adoption of any deliberately retrogressive measure in the liberalization process that reduces the extent to which any human rights is protected constitutes a violation of human rights.’8 While not opposing liberalisation, they argued for evidence-based assessments to determine its right form and pace. States should ‘undertake public, independent and transparent human rights assessments of the impact of liberalization policies – both past policies and future options – on the enjoyment of human rights, through a participatory and consultative process with concerned individuals and groups’. If assessments were not available, governments should take a cautious approach to new commitments.
‘Where assessments indicate negative effects of past liberalization policies on the enjoyment of human rights’ other WTO members should allow those governments the maximum flexibility to withdraw their liberalisation commitments.9 This report passed comparatively unremarked in the WTO.
By contrast, a contemporaneous study that was co-authored by the World Health Organisation (WHO) and WTO was profiled on the WTO website.
The report spent relatively little time on the GATS, stressing the voluntary 1111
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