In December 2017 Buenos Aires will host the 11th Ministerial Conference of the World Trade Organisation (WTO). Remember the WTO? It was a major target of our protests in the late 1990s and into the 2000s, and for good reason.  The WTO epitomised the grand plan for a global constitution that would ensure the expansion and profits of global capitalism and lock in the neoliberal agenda. For the last few years, the same WTO has been ostracised as a dinosaur by its disappointed founders. The consensus decision-making process, which now involves many more countries from the global South, has stopped its advance beyond what was imagined in the early 1990s.

Until recently, the WTO was relegated to a body that could usefully settle international trade disputes and little more. The self-selected powerbrokers looked elsewhere, initially advancing their new agenda through various free trade agreements (FTAs). In the late 2000s they identified mega-regional agreements as the alternative pathway to design the economic constitution for the 21st Century. That gave us the Trans-Pacific Partnership Agreement (TPPA), Trans-Atlantic Trade and Investment Partnership (TTIP) and the Trade in Services Agreement (TiSA).

They pursued this over-ambitious project with a breathtaking arrogance. Now it has imploded. TiSA is the last man standing and those negotiations are currently suspended until later in 2017.  That outcome is no accident. Nor is it the doing of Donald Trump. The Trump Administration’s withdrawal from the TPPA is the culmination of years of education, mobilisation and resistance against this agenda.

The TPPA Rescue Mission

It would be nice to think the lightbulbs would flash and our Government and its fellow travellers would see the error of their ways. Instead, they are in a state of denial. Chile convened a crisis meeting in March 2017 to plan how to rescue their agenda. Those invited to this High-Level Dialogue on the Integration Initiatives in the Asia-Pacific Region were the TPPA signatories, the US (no longer a signatory), the Latin American Pacific Alliance countries (which allowed them to include Colombia), plus South Korea and China. They all came. But the US was represented by its Ambassador to Chile. Singapore was the only Asian country to send an actual minister.

The China Factor

As Chile showed by its invitation, China is now a major player in making the new rules for the international economy. China’s driving motivation is to build its domestic economy and middle class to cement social and political stability and the survival of the one-party State, supported by a diaspora. In the past few years its position on international trade and investment agreements has been shifting.

In the Association of South East Asian Nations (ASEAN)/China-led Regional Comprehensive Economic Partnership (RCEP), for example, China strongly supports investor-State enforcement, including for investment contracts on infrastructure projects and natural resources, and is demanding more market access, but it is defensive of its regulatory sovereignty.

An article by Chile’s Ambassador to China described the country as “a crucial piece in the jigsaw puzzle of designing an architecture that will give new impetus to trade across the Pacific”. While some undoubtedly viewed China’s presence in Chile as a means to prod Trump into rejoining the club, it is clear that China is ready to adopt a new role. The invitation was doubtless discussed with the others.

Public reports said Japan was unhappy, saying the meeting would become unproductive with China there – which probably meant that China would oppose a future platform based on the TPPA, especially those parts that the US demanded and Japan was now championing on e-commerce and State-Owned Enterprises. 

China’s own reported statements were significant. It agreed to attend to exchange broad ideas, but sent a low-level delegation. China was committed to the RCEP. The meeting was not about the TPPA, which was “too complex and politicised” – a coded reference to the US plan to use the TPPA as the basis for its “pivot” to Asia, and President Obama’s claims that failure to support the Agreement would mean China makes the new rules for the global economy, not the USA.

A State Of Denial Over The TPPA

If “the meeting was the message” from Chile, it said very little. The TPPA parties, minus the US, had a breakfast meeting. Their three-paragraph statement was devoid of content, aside from plans to meet again on the side of the Asia Pacific Economic Cooperation (APEC) Trade Ministers’ meeting in Hanoi in late May 2017. There was no statement from the meeting as a whole, which suggests a lack of agreement on even the banal.

That is consistent with divergent side comments from various participants. Some were desperate to “hold onto the gains” from the TPPA. New Zealand’s Trade Minister Todd McClay and his Australian counterpart refused to declare the TPPA dead, holding out the prospect for some Lazarus options at APEC in late May.

Others said the TPPA needed to live on in other FTAs, a strategy that is well-advanced as similar texts have already been tabled in TiSA, the RCEP, and Japan’s new FTA with Mongolia and investment agreement with Uruguay. We have long learned that proposals defeated in one place will resurface elsewhere. The stillborn 1990s’ Multilateral Agreement on Investment (MAI) is a classic example. Even though the TPPA is dead, countries that resisted US-driven texts are now tabling them in the TiSA and the RCEP, giving US corporations the benefits for free.

The most concrete outcome was the announcement from the Pacific Alliance (hardly a powerhouse combination of Chile, Colombia, Peru and Mexico) that they will create associate membership with a view to negotiating deals that are modelled on TPPA. Predictably, Todd McClay put his hand up for New Zealand to be first. The Chileans also suggested a possible pact between the Pacific Alliance and ASEAN, and even said it would be interested in joining RCEP when (if) those negotiations are completed.

These were Pavlovian responses to the crisis in the neoliberal agenda at the international level. There was no substantive research to back the merits of these proposals, aside from a report from a group including former leading US TPPA negotiator, Wendy Cutler, which claimed that all the (illusory) gains from the TPPA could be shared among the remaining countries. They embody the old adage of the “wobbly bicycle” -  the free trade bicycle will fall over if governments stop pedalling forward. The survival of the regime is an end in itself, even when its skewed results and discredited ideology have become a political liability for its devotees.

New Zealand is the classic example. Not only is it pursuing a TPPA without the US, when the only significant (and again, illusory) gains it pointed to were from the US and Japan. Worse, National is so desperate to keep the US in play and be its playmate that it may seek to justify an even worse deal with the US than the TPPA.

While PM Bill English said Trump’s early statements made such an agreement unattractive, you can bet Ambassador to the US, Tim Groser, is busy plotting away in Washington with his new best friends in the Trump Administration. Labour has said nothing that would reassure us that it would not do the same, despite the risks that opposition to the TPPA will become a launching pad for a politically damaging resistance to such negotiations.

The only minister who seemed to make some concession to reality was the Canada’s new Trade Minister, François-Philippe Champagne. According to Politico, he told a business audience in Chile on 15 March that “promoting a progressive trade agenda means going beyond simply pushing against rising anti-globalisation sentiment - it's taking that a step further to focus policy on people, including women, indigenous people and youths, among others”.

“‘Why don't we start putting people at the centre of what we're doing and perhaps we will be more successful?”. It’s hard to know how serious he is or what that would actually mean, but presumably the prospect of renegotiating a deeply unpopular North American Free Trade Agreement (NAFTA) with the Trump Administration has focused the mind on political realities.

What Now For The WTO?

Despite all their talk, and the relatively minor deals that might be done, nothing significant is going to happen among the TPPA countries in a hurry. That raises important issues for the WTO. With the demise of the mega-regional strategy, at least for now, the WTO has a renewed significance. The biennial meeting of ministers will host a revitalised battle for control over who makes the rules for the next 30 years and what they are.

There has been a struggle over who controls the WTO since its inception. That struggle became potentially terminal as a result of the Doha Round, which was launched in 2001. It was informally dubbed the “Doha Development Round”, something a reasonably unified global South took seriously, insisting they were due a “development dividend” from what they had already agreed. The old powers largely ignored the development rhetoric as they unsuccessfully pushed a new agenda of investment, competition and government procurement. The WTO was no longer serving their ambitions, hence the alternative agenda of the FTAs and mega-regionals.

Sixteen years after the launch of the Doha round, the South have remained sufficiently united to resist concerted bullying from the old major powers to abandon that agenda and launch a new negotiating mandate. That pressure has intensified over the past year in Geneva as it became clear that the mega-regionals were in trouble. WTO Director-General, Brazilian Roberto Azevêdo (who defeated NZ’s Tim Groser for the job), has not been standing up to them.

Weakening US Power In The WTO

But this is not the same old power politics of the 1980s to 2000s. There is an underlying battle for hegemonic power. The US has dominated the international economic rule-making arena since the Uruguay Round that created the WTO, through the phase of bilateral FTAs to the mega-regionals. It is ironic that Trump says these deals didn’t work for America, when they were designed for, and often by, the US corporations that worked hand-in-hand with the Administration. Bernie Sanders’ campaign to be the 2016 Democratic candidate for the US Presidency forced Hillary Clinton and Donald Trump to address the failure of that globalised and financialised model of capitalism to work for the American people.

Trump’s unorthodox executive orders have thrown the traditional US strategy for exercising hegemony into disarray, and with it the US claims to leadership. Aside from withdrawing from the TPPA and promising to negotiate NAFTA, no one yet knows what the Trump Administration will do in the WTO (or in plurilaterals he has not yet pulled out of, notably TiSA). It is likely that they do not know the answer themselves. There are competing interests in the Administration jockeying for the power to set this new agenda, and a new US Trade Representative has yet to be formally appointed.

If those appointees remove control of their portfolios from Trump’s inner circle, we can expect a combination of previous practice and more headline-grabbing demands. The bigger concern, even among those of us who don’t support the overall agenda, is that Trump will continue behaving like a wounded bull and provoke a trade war with China. Again, there are battles within the Administration trying to prevent this.

Whatever position Team Trump takes, we can expect more aggression from the US, not less. Despite his preference for bilateralism over collective agreements and hostility towards the WTO, it is hard to imagine the US simply conceding its dominance within the multilateral forum. But it cannot exercise the same supreme authority as before.

There will be a domino effect. As the US weakens, so does the broader transatlantic alliance with Europe, which has its own problems. Externally, it has upped the ante and is trying to fill the superpower void by pushing to conclude agreements with Japan, Mercosur (a sub-regional trade bloc of several South American countries), ASEAN and India, some of which had been going for many years.

Yet its unified external face belies its internal fracturing with the UK and Brexit, the ongoing Greek crisis, disarray in Italy, and fractious elections in France and Germany.  Other old Group of Eight (G8) countries can hardly fill the gap. In Canada, Justin Trudeau is nervous about the domestic impacts of renegotiating NAFTA and Canada is likely to keep its head down. Japan has taken over as a proxy for the US in various agreements, but it has never been a strong power in the WTO. Australia and New Zealand will try to flex their puny muscles, but few will care.

A Mandate To Negotiate E-Commerce

Despite their declining power, the old hegemons are trying to secure a new mandate at the Buenos Aires Ministerial to launch new negotiations on e-commerce. There is a pitched battle being fought over this in Geneva. Behind the benign sounding name lies what I call for short-hand the Uberisation of the global economy. A network or gig economy operating off digital platforms, with global logistics chains, “smart” products whose computerised elements rely on digital technology, connecting producers and consumers through digital markets that increasingly displace brick and mortar stores, online and offshore call centres delivering services globally, using artificial intelligence in workplaces, transportation, delivery, 3D computers replacing physical production, drones operating from across borders, etc.

The digital platforms and tech-driven global chains that some are calling the 4th Industrial Revolution require even greater globalisation of regulation and disempowerment of the State through new global rules. The same e-commerce text has been recycled across numerous arenas: the TPP, TiSA, RCEP. The main focus is to prohibit requirements for companies to have a local presence inside the country, prohibit requirements to hold data inside the country, no forced disclosure of source codes, no conditions on foreign investment to use local content, employ locals, transfer technology etc.

This cross-fertilises with demands in TiSA to have no restrictions on cross-border delivery of services, applying the concept of technological neutrality to commitments so they cover whatever new technologies emerge; negative listing on national treatment/discrimination so what is not listed is automatically subject to the rules; automatic commitment of new services not yet created, etc.

The BRICS’ New Role In The WTO

The informal grouping of large South countries known as the BRICS was a convenient shorthand for the struggle between ascending and declining hegemons in the 2000s. Brazil, Russia, India, China and South Africa are very different. Each has a critical role in its own continent. When it comes to e-commerce they do not have a common position. Ironically, India may now be the weak link.

After years of resisting expansion of the WTO agenda, India is proposing an Agreement on Trade Facilitation in Services as part of the Buenos Aires agenda. This reflects its offensive interests in cross-border e-services, and includes the unrestricted cross-border supply of services and rights to transfer and hold data offshore that are parts of the e-commerce agenda proposed by the global North.

How China positions itself will be pivotal.  For over a decade after its accession to the WTO, China in 2001 played a passive role. It is now more assertive in international negotiations, negotiating its own FTAs, investment treaties and the RCEP. To reiterate, its approach to liberalisation is still within a framework of State planning, with the aim to grow and service its middle class, not simply to expand its commercial reach internationally – the agenda that the US, EU and others brought to the WTO. China has a nuanced approach to e-commerce that works for Ali Baba yet retains its regulatory capacity intact.

What We Need To Do

If e-commerce rules are adopted in the form being proposed, we can expect a 21st Century of continuous reorganisation and disruption, offshoring and outsourcing, competitive contracting, automation, precarious work for the so-called “self-employed”. Corporate wealth is bound to strengthen the power of those who control global supply chains and digital technologies. Their actual operations will run through layers of competitive contractors who employ a fragmented, vulnerable, deunionised and exploited international workforce.

For years now we have battled the TPPA, and now TiSA, and focused on issues like affordable medicines and investor-State disputes. It is time to turn our attention to the new agenda that will transform food production, industry and manufacturing, logistics and transportation, finance, wholesale and retail distribution, education and health services, and remove the right to regulate and determine our future even further from our hands.