Vijay Prashad: Southern countries defend mandate as the “North” pushes a “global supply chain” that
could obliterate smaller countries
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington.
Towards the end of April, we presented a story to you about the United Nations Conference on Trade and Development meetings in Doha and the struggle that was taking place between the BRICS countriesâ€”that’s Russia and Brazil and China and India and South Africaâ€”and some of the other developing countries versus the North, meaning Europe and North America, over the issue of whether UNCTAD, this United Nations organization which is an important center for policy development and economic analysis, whether or not it would have part of its mandate [be] work on financial reform and linking the issue of global poverty to the issue of speculation and parasitical capital.
Now we’re going to pick up what happened after that conference. And we’ll put part one down below this one if you haven’t caught up, and you can perhaps watch that one first. And joining us again to continue our discussion is Vijay Prashad. He’s a professor of international studies at Trinity College in Hartford, Connecticut. He’s the author of the book The Darker Nations: A People’s History of the Third World. Thanks for joining us again, Vijay.
VIJAY PRASHAD, PROF. INTERNATIONAL STUDIES, TRINITY COLLEGE: My pleasure.
JAY: Okay. So pick up the story. They issued their statement at the end of the conference, which is what a big fight was about. So what finally was in that statement? And now what?
PRASHAD: Well, it’s an interesting moment, because the fight went right up to 5 p.m. on the final day, and in fact the closing ceremony had to be postponed because it took so long to get to the final negotiating statement. So that statement is called the Doha Mandate, and in many ways it’s a very optimistically named statement, because it could have been named the Doha Compromise. You know, it felt like a compromise. There were sentences from the south, the global southâ€”their preferred sentences entered the final document, the mandate. There were sentences from the global north. There was a mismatch of ideological perspectives in the final document.
So, for instance, the global south was pushing for an idea of a so-called enabling state, where the state could take a role in promoting economic development. And the North wanted something called an efficient state, where the state would not so much take a role in promoting development on behalf of the population, but it would be efficient in helping private capital make the decisions about, you know, how, you know, society and the economy should be organized. So in the final mandate you had both sentences about the enabling state and the efficient state.
Some people see the Doha conference, therefore, as a draw. Others, because of the disproportionate power that the north has over the south, see this as a victory of the south, because it preserved the mandate of UNCTAD and it is allowing it now for the next five years or so to continue researching the question of finance, questions of economic development, as far as, you know, it being people-centered and not finance-centered. So because the mandate of the UNCTAD was not touched, there are people who say this is a major victory for the south, and it leads into other meetings this summer, principally the Los Cabos meeting where the G-20 will gather in mid-June, and then shortly thereafter the RIO+20 meeting in Rio de Janeiro where questions of climate change and, again, finance are going to be at the center of the debate. So because UNCTAD [crosstalk]
JAY: So just to remind everybody thatâ€”down below this video screen you’ll see some of our interviews with Heiner Flassbeck, who has been heading up the economic section at UNCTAD, and you’ll see why some of these northern countries might have wanted to stop this work, because the analysis, the discourse is quite opposed to neoliberal economics. Heâ€”they talkâ€”one of their reports was Approaching the Brink, and in one of our interviews with Flassbeck, he says Europe is over the brink in terms of heading into recession. So it’s a source of intellectual work that obviously must have mattered or they wouldn’t be fighting over it, although I guess it also became a platform just to wage this kind of global fight about the role of the state. So go on, Vijay. So where are we now?
PRASHAD: Well, look at the UNCTAD meeting. There were two other points that were very important. The first is that UNCTAD, from the 1980s, at a time when the global south had been weakened by the debt crisis, UNCTAD had taken on a new role. It had become, in a sense, an emissary of foreign direct investment, and it had become a place for technical support for countries in the developing world to help them draw in foreign direct investment, investment capital, etc. So one part of UNCTAD was producing very fierce critiques of neoliberal economics. One part of UNCTAD, you know, the division headed by Flassbeck, for instance, was producing reports critical of the way in which finance in particular had come to dominate social life.
Another part was a pledge to helping investment capital enter the global south. And so there isâ€”there was an imbalance at Doha, as there has been within UNCTAD for a long period. And this question has also been raisedâ€”you know, what is this double-headed nature of UNCTAD?
And the third thing, very important thing, a preview of the rest of the summer’s debates between north and south, this third thing was around the so-called new trade narrative. So at UNCTAD, the head of the World Trade Organization, Pascal Lamy, talked a lot about this new trade narrative. And what they are trying to suggest is that instead of seeing trade negotiations as being, you know, a give-and-take negotiation, whereas, say, if Mali is negotiating with France, Mali says, look, these are the kinds of things we require, we cannot sell our product at a price lower than the following, and they have an actual negotiationâ€”you know, sometimes this negotiation might be hostile, at times the countries might get together, the countries that produce, say, oil in a cartel like OPEC, and have a hostile relationship with the north around the price to be set for the commodity. So instead of that, said Pascal Lamy, we need to have a new, much more gentle form of international trade, and this is: we need to understand the new trade narrative as part of this supply chain, that every country in the world is linked into the supply chain; there is no real contradiction between north and south; there are no antagonisms in the world anymore; everybody just needs to find their place. In a way, this is the 21st century version of David Ricardo’s comparative advantage theory. So at the Doha meeting, Pascal Lamy made this point. He was backed up by the Costa Rican minister of finance. You know. And she, by the way, used to have a job in the commodities division of the WTO before she returned to Costa Rica to become the minister of finance. But she made a stirring defense of this new trade narrative, this supply chain theory for trade.
JAY: I mean, it’s a great story, except we usedâ€”we heard this story early in the 20th century about how all this global capitalism would all work so well together, and then we had the First World War. So it’s an old story.
PRASHAD: Well, it’s old. As I say, it’sâ€”goes back to David Ricardo. This goes back to the formation of the discipline of economics. But at the Doha meeting, the South African trade minister, Rob Davies, very strongly contested the story, and he said that, look, what you are trying to say is precisely why UNCTAD was created in the first place, because the first secretary-general of UNCTAD, RaÃºl Prebisch, critiqued this Ricardo kind of theory.
JAY: And let’s make it clear for people what we’re talking about. When they say global supply chain, that means, like, Cuba can produce sugar and somebody else can produce fruit, and we’ll produce industrial goods, or you can produce industrial goods with cheap labor, and we’ll own the copyright.
PRASHAD: I’ll put it in the worst way. Malaysia will find the rubber. Singapore will produce certain kinds of technical equipment. This will be put together in Shenzhen in China. But the entire idea is created in the United States, and because of international property laws, the United States will protect its ability to make money off work done by people outside the United States. This is bad for U.S. workers, because it means there is no need to create jobs in America, and it’s appalling for people in Malaysia and people in Shenzhen, because they make a very tiny part of the profit in the sale of whatever they’re making. The bulk of that profit is going to be made by the so-called intellectual property holder, which is likely to be a major transnational corporation based in the north, and then it’s going to be shared out to people who are lawyers, bankers, etc., whose job is to protect the copyright and to preserve the wealth accrued by this transnational firm. So if we get down to it, what Rob Davies said is this is a kind of new colonialism. It’s not what we want.
Now, what we are going toward in the G-20 meeting in Los Cabos, the agenda for that meeting was leaked. The agenda was produced by Pascal Lamy of the WTO and the head of the north’s, you know, think tank, the OECD, Ãngel GurrÃa. They made the agenda, in which the agenda basically says, we should talk about the new trade narrative, we should talk about supply chains; we should not be talking about, you know, agricultural subsidies in the north, we should not be talking about all these issues that are holding up the so-called Doha round of WTO negotiations; all that, all the contradictions between north and south need to be swept away, and we have this new story which we want to put before you, and we want the G-20 in Los Cabos to ratify it.
JAY: Now, this is going to mostly affect smaller countries. I mean, China, India, Brazil, I mean, they’re not going to be part of some global supply chain. They have very multifaceted, complex economies and production. So this is more about what happens to some of the smaller countries, isn’t it?
PRASHAD: Well, the smaller countries would get obliterated. You know, Costa Rica, whose minister of trade was speaking so strongly in favor of global supply chains, is slightly insulated from the problems that small countries face, because they have made a very smart move going into ecotourism, and thanks to their very close political relationship with the United States they were able to enter a very tiny area of the microchip industry. So Costa Rica’s example is not an example that you can then generalize. You know, it’s not an example that will make sense if we look, say, at Cambodia, or if we look at, again, you know, Benin, or we look at any of these other countries. They’re not going to share the Costa Rican example. Costa Rica is a very specific story, and therefore it was able to, in a way, put forward itself by denying the specificity, by saying that their story can be universal. It is not possible at all for countries in West Africa to enjoy at this point the Costa Rican story. But this is a political fight.
JAY: Nowâ€”but one of the issues here, though, is it’s not like China, Russia, India, Brazil (I mean, Brazil’s somewhat a question, but not that much), it’s not like they’re not really into neoliberal economics. It’s that they don’t like the domination of the United States in this global neoliberal system. But it’s not that they’re against it in some form of principle or something.
PRASHAD: No, not at all, I mean, which is why the section of this particular so-called new trade narrative that they are most upset by is something they’ve been upset by for 20-plus years, and that is the question of intellectual property rights. You know, if you look at the pyramid of profit, you know, it’s actually a reverse pyramid of profit. If you look at it like that, you see that the country where the firms control intellectual property are able to make the most out of the global supply chain. You know, they are able toâ€”because of so-called value added, they are able to make the most out of the sale of commodities. It’s not the person who makes the Nike shoe in Indonesia that makes the money for Indonesia; it is still Nike in the United States who is reaping theâ€”taking in the profits for Nike shoes, even though Nike doesn’t actually make any shoes. You know, Nike is a design and brand firm. They don’t actually manufacture shoes. But the design and brand section of the supply chain is where the real profits lie.
So countries like Brazil, India, China, these countries are fighting to bring their own brands to market, to bring their own designs to market, and they are being held back by a global or international intellectual property regime that prevents many of them from pushing their brands forward. I mean, one of the real tricks in the 1980s that they are most upset by was the shift in intellectual property from where you copyright not the process by which you get to, say, a sneaker but the actual sneaker itself. That means that you cannot figure out a novelâ€”your own way of making the same product, your own way of making, say, a drug that, you know, is antiretroviral. You can’t do that, because now what is copyrighted isn’t any longer the process but the product itself. And that is something that is holding back countries like China, India, Brazil. They are frustrated and angry about this one aspect of the global supply chain narrative.
JAY: Well, it may only beâ€”it may be one aspect, but if it were to unravel, it would unravel the whole complex of relationships of the global economy.
PRASHAD: Exactly. This is precisely why these countries are going to, I think, not lie down like lambs at Los Cabos. One will see, you know, what kind of, you know, sort of concessions they’ll be willing to make to this new trade narrative. But as far as what happened in Doha is concerned, it looks like they are not going to go to Los Cabos on June 18 and 19 and ratify this new trade narrative, which really, as we say, is Ricardo’s old trade narrative, but with new language.
JAY: Thanks very much for joining us, Vijay.
PRASHAD: Thank you.
JAY: And thank you for joining us on The Real News Network.
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