John Rapley - Foreign Focus THE WTO (Word Trade Organisation) ministerial meeting began yesterday in Cancun, Mexico. High on the agenda is global agriculture.
This current round of WTO discussions has been dubbed the development round, owing to the recognition that the world trading system is currently biased against Third World countries. At Seattle in 1979, Third World delegates and anti-globalisation protesters shut down the WTO summit in protest at the continued marginalization of those governments which represent four-fifths of the planet's inhabitants.
Agriculture is a top grievance for Third World countries. Closed borders and subsidies in the First World have greatly impeded the ability of Third World farmers to compete. By some estimates, for example, a fair trading system in agriculture would eliminate any need for aid to Africa. If progress is not made on agriculture at this meeting, it could break down, throwing the WTO into crisis.
That would not bother many of the protesters gathered in Cancun. While some are calling for a fairer system of international trade, others doubt whether a liberal international environment can bring about development, or even if it is intended to do so. It is therefore perhaps fitting that this meeting is taking place in Mexico, since both proponents and opponents of neoliberal globalization cite the country to support their cause.
Mexico has been something of a laboratory for globalization since it entered into free trade with the US and Canada in 1994. An agreement which eliminated trade barriers between rich and poor countries was bound to be a test case for neoliberal ideals. In theory, capital would flow south of the Rio Grande in search of cheap labour, thereby benefiting Mexico. But the resultant rise in Mexican employment would augment wages, boosting demand for American and Canadian goods. Meanwhile, greater international competition would force firms to improve quality, restrain prices and improve efficiency, to consumers' advantage. In this rosy scenario, everyone would win.
Initially, the results of the North American Free Trade Agreement seemed to vindicate the optimists. While many American plants relocated to Mexico, the jobs lost were generally low-skilled, low-paying ones. Higher-end employment picked up in the US. Meanwhile, Mexican wages rose. The entry of women into the industrial work force also brought greater independence to Mexican women. Meanwhile, the greater flow of information across borders strengthened the hands of Mexican democracy activists, weakening authoritarian traditions and practices.
AMBIGUOUS
However, more recently, the picture in Mexico has begun looking more ambiguous. Income gains, it turns out, were largely offset by increases in work effort, not to mention greater job insecurity. Put differently, if Mexicans earned more, it was because the famed leisurely pace of Mexican living gave way to the fast pace of a life given over to labour.
Equally worrying was the way in which the Mexican economy was as the economist Fred Rosen put it disintegrating. It was not collapsing; rather, the linkages among Mexican firms dwindled, as companies which had produced for the local market went out of business.
Instead, firms which imported American inputs to re-export to the US, and which were concentrated along the border, prospered. Reflecting this new reality, Mexico's road and rail network increasingly moved along a north-south axis, rather than an east-west one. In short, Mexico is being integrated into the US economy.
If the border zone has benefited, some of the more southerly regions of Mexico have sunk into poverty. Moreover, small farmers who produced food crops have found it difficult to compete with their northern counterparts. Some scholars believe that it is such marginalisation that has driven the Zapatista uprising.
All this could be accommodated if employment was shifting from decaying to dynamic sub-sectors. Yet now a new problem has emerged.
With wages rising, US firms are now looking to new destinations to locate their plants. Having just started to taste the fruits of free trade, Mexicans now find themselves in a race to the bottom with countries like China.
But having allowed their economy to "disintegrate," they would now find it hard to pull out of that race.
If Mexico is a test case for neoliberal globalization, its proponents will have to come up with solutions to these emergent problems if they are to win the Third World over to their cause.
John Rapley is a Senior Lecturer in the Department of Government, UWI, Mona.
