Breaking the WTO: How Emerging Powers Disrupted the Neoliberal Project
288
Breaking the WTO: How Emerging Powers Disrupted the Neoliberal Project
288Hardcover
-
PICK UP IN STORECheck Availability at Nearby Stores
Available within 2 business hours
Related collections and offers
Overview
Hopewell argues that the collapse of the Doha Round negotiations in 2008 signals a crisis in the American-led project of neoliberal globalization. Historically, the U.S. has pressured other countries to open their markets while maintaining its own protectionist policies. Over the course of the Doha negotiations, however, China, India, and Brazil challenged America's hypocrisy. They did so not because they rejected the multilateral trading system, but because they embraced neoliberal rhetoric and sought to lay claim to its benefits. By demanding that all members of the WTO live up to the principles of "free trade," these developing states caused the negotiations to collapse under their own contradictions. Breaking the WTO probes the tensions between the WTO's liberal principles and the underlying reality of power politics, exploring what the Doha conflict tells us about the current and coming balance of power in the global economy.
Product Details
| ISBN-13: | 9780804798662 |
|---|---|
| Publisher: | Stanford University Press |
| Publication date: | 08/03/2016 |
| Series: | Emerging Frontiers in the Global Economy |
| Pages: | 288 |
| Product dimensions: | 6.00(w) x 9.00(h) x 0.80(d) |
About the Author
Read an Excerpt
Breaking the WTO
How Emerging Powers Disrupted the Neoliberal Project
By Kristen Hopewell
STANFORD UNIVERSITY PRESS
Copyright © 2016 Board of Trustees of the Leland Stanford Junior UniversityAll rights reserved.
ISBN: 978-1-5036-0059-1
CHAPTER 1
Introduction
FOR over half a century, the global economy and its governing institutions have been dominated by the United States and allied advanced-industrialized states. From its hegemonic position in the international system, the US has played a vital role in managing the making of global capitalism as we know it today — from the golden age of postwar reconstruction and embedded liberalism to the contemporary era of neoliberal globalization. Yet the global political economy is currently in the midst of profound change. There has been a significant shift in global economic activity from the advanced countries of the Global North to the developing countries of the Global South, with China, India, and Brazil, in particular, emerging as major players in the world economy. The share of global GDP produced by developed countries has dropped dramatically — from 80 percent in 1960 to 44 percent today — while the share of developing countries has risen from 20 to 56 percent, such that developing countries now account for more than half of global economic output. Just three developing countries alone — China, India, and Brazil — now make up 25 percent of the global economy, whereas the entire Group of 7 (G7) advanced economies (US, UK, France, Germany, Italy, Japan, and Canada) accounts for only slightly more, at 33 percent. China provides the most striking illustration of this change: three decades of sustained economic growth at rates averaging 10 percent a year have made it the world's largest manufacturing exporter and second largest economy. India's growth rates have been nearly as impressive, with it becoming one of the world's leading exporters of information technology (IT) and IT-enabled services. Brazil has emerged as an agroindustrial powerhouse, threatening to unseat the US and EU as the world's largest agricultural exporter. These large emerging economies are now major consumer markets, with their own globally competitive multinational corporations, and an important source of outward investment, loans, and aid. As Martin Wolf (2009) declared in the Financial Times, "[F]or the first time since the industrial revolution, economic power is no longer concentrated in Western hands." Instead, we are seeing the emergence of multiple centers of global economic power. Along with their increasing importance in the global economy, the emerging powers are demanding a greater role in its management, including at the World Trade Organization (WTO), International Monetary Fund (IMF), World Bank, and Group of 20 Leaders' Summit.
The rise of new powers and the corresponding decline in the hegemony of the US — and of the Global North more broadly — are reshaping the world economy and the institutions charged with its governance. This transformation has been identified as one of the most important in modern history (Ikenberry 2008; Warwick Commission 2008) and generated significant debate about the agendas of the emerging powers and the implications of their rise. This book focuses on how changes in the distribution of power among states are affecting the governance of neoliberal globalization. By neoliberal globalization, I refer to growing global economic integration occurring through the increased movement of goods, services, and capital across borders, propelled by free market ideology and policies, championing open and competitive markets, freed from the fetters of the state. In the prevailing popular discourse, economic globalization is depicted as a spontaneous and agentless economic process, propelled by the ingenuity of markets and the magic of the invisible hand (Friedman 2004; Wolf 2004). Extensive scholarship, however, has shown that globalization is neither a natural nor an inevitable force but a project, driven by specific agents, political struggles, and institutional changes (Chorev 2008; Gill 2002; McMichael 2004). It is thus as much a political as an economic process. Moreover, contrary to its own mythology, neoliberal globalization entails not the removal of economic regulation but the construction of new rules, regulations, and institutions to facilitate the spread and deepening of global markets (Block and Evans 1994; Braithwaite 2008; Fligstein 2005; Levi-Faur 2005; Peck and Tickell 2002). In other words, it is an institution-building project — and one that remains ongoing.
The US has been the primary driver of neoliberal economic restructuring globally (Babb 2009; Cox 2008; Evans 2008; Fligstein 2005; Harvey 2005; Helleiner 2001; Mann 2001). As the world's largest and most advanced economy, the US actively propelled the liberalization and opening of global markets, as a means to gain access to foreign markets, investment opportunities, and cheaper inputs. Multilateral economic institutions, such as the WTO, IMF, and World Bank, have played a central role in this endeavor, creating and enforcing new rules to govern the global economy, while inducing states to adopt neoliberal economic policies and open their national economies to foreign trade and capital. For their part, developing countries have historically been marginalized and excluded from decision-making in the multilateral economic institutions, while the "Washington Consensus" policy prescriptions they propagated produced economic and social dislocation across much of the Global South and provoked intense protest in many countries (Babb 2005; Shadlen 2005; Wade 2003).
In short, neoliberal globalization to date has been a US-led project, pursued in large part through the multilateral economic institutions and often resisted by the Global South. A key question, therefore, is what impact the rise of new powers from the developing world is having on the neoliberal project. This book sheds light on the nature and implications of contemporary power shifts by analyzing the case of the WTO, a core institution in global economic governance, responsible for setting and enforcing the rules of the global trading system. Changes in the global distribution of power, I argue, have ruptured the WTO's ability to fulfill its intended purpose in driving forward the process of neoliberal restructuring on a global scale, as signaled by the collapse of the Doha Round of trade negotiations. The rise of new powers has thus precipitated a crisis in one of the central governing institutions of global neoliberalism. Paradoxically, however, the rising powers should not be seen as carriers of a counterhegemonic movement in opposition to neoliberalism. They are certainly counterhegemonic in the sense that they are challenging US hegemony, but not the institutional structures and logic of global neoliberalism. Yet, even if the emerging powers do not represent an antisystemic movement — they are decidedly not seeking to bring about fundamental changes in the contemporary workings of global capitalism or to bring down the governance system that supports it — their rise has nonetheless had powerful, though unintended, antisystemic effects. Ironically, what has disrupted the continued expansion of the neoliberal project at the WTO is not an oppositional countermovement but just the reverse — the wider embrace of the neoliberal trade agenda by emerging powers from the developing world. The emergence of new powers, I contend, has led to the disintegration of multilateralism and a moment of disjuncture in the project of neoliberal globalization, by heightening and bringing to the fore inherent contradictions contained within the liberal international economic order constructed under American hegemony.
Debates about Contemporary Power Shifts
Given the rapidly changing and still unfolding nature of contemporary power shifts, much of the existing literature on this subject has been of a highly speculative nature, attempting to predict the consequences of shifting power. With limited clear data yet available, such accounts have been heavily shaped by prevailing theoretical divisions in the study of international political economy. Different theoretical camps have produced at least three sets of competing analyses and predictions.
The realist tradition of international relations provides a pessimistic view of the prospects for global governance and multilateral cooperation in the context of shifting power. Hegemonic stability theory contends that an open, liberal economic order requires a single hegemonic or dominant power (Gilpin 1981; Kindleberger 1973; Krasner 1976). An international system without a leader is seen as unstable and potentially dangerous (Bremmer and Roubini 2011; Haass 2008). In a context of shifting power, realists foresee conflict, with many viewing emerging powers as holding fundamentally different interests and agendas than those of the dominant powers and, therefore, as system-challengers rather than system-supporters (Gilpin 1981; Kagan 2010; Kupchan 2014). As Stewart Patrick (2010) of the US Council on Foreign Relations states, for example:
The United States should be under no illusions about the ease of socializing rising nations. Emerging powers may be clamoring for greater global influence, but they often oppose the political and economic ground rules of the inherited Western liberal order, seek to transform existing multilateral arrangements, and shy away from assuming significant global responsibilities. The emerging non-Western powers do not share the United States' view on global governance. The ideal scenario for Washington would be for the rising powers to embrace Western principles, norms, and rules. ... But the emerging nations are intent on altering existing rules, not adopting them hook, line, and sinker. ... They believe that they are entitled to reshape international arrangements to suit themselves.
It is assumed that the emerging powers will reject the rules, norms, and principles of the liberal economic order created by the Western powers (Bremmer and Roubini 2011; Castañeda 2010; Kupchan 2014; Patrick 2010). Realists thus expect the decline of US hegemony and the emergence of new powers to weaken multilateral cooperation and threaten the international economic arrangements that support globalization. Realism foresees a possible breakdown of the liberal international economic order, triggering rising nationalism and mercantilism, and ultimately "deglobalization" (Layne 2009; Patrick 2010).
In contrast, liberal institutionalism is considerably more optimistic about the prospects for multilateral cooperation and the maintenance of the liberal economic order in the absence of a hegemon (Keohane 1984). Liberalism envisions a smooth integration of new powers into the Western-made liberal world order. It suggests that emerging powers will be supporters of the existing order, based on the belief that in the current situation of global economic interdependence, all states have an interest in participating in and maintaining the system (Cox 2012; Ikenberry 2011; Nye 2015; Snyder 2011; Xiao 2013). The old and new powers will therefore find ways to jointly manage the international economic architecture and collective action will prevail to preserve an open, liberal international economic system. Liberal institutionalism thus sees multipolarity as congruent with cooperative and successful multilateralism (Bailin 2005; Snidal 1985). Ikenberry (2009), for example, foresees a "post-hegemonic liberal internationalism," arguing that reform of the global governance institutions to increase the weight of rising powers would lock in their support for an international order based on the Western model (see also Drezner 2007; Zakaria 2008). Many thus argue that the incorporation of new powers would strengthen the multilateral system by making it more inclusive, representative, and legitimate (Vestergaard and Wade 2015; Warwick Commission 2008; Zoellick 2010).
Critical approaches informed by world systems, dependency, and neo-Marxist theory yield yet another view of the potential impact of contemporary power shifts. Critical scholars contend that developing countries are systematically disadvantaged within the global political economy and that its rules and governing institutions have worked to maintain relations of domination and exploitation between the advanced-industrialized core and underdeveloped periphery (Bailin 2005; Chang 2002; Gallagher 2008; Jawara and Kwa 2003; McMichael 2004). Given the particularly harsh effects of neoliberalism in the Global South, many have looked to the developing world as the potential source of an emancipatory movement of resistance to neoliberal globalization (Roberts 2010; Silver and Arrighi 2003). Among critical scholars, there has been a great deal of speculation and debate about whether the rise of new powers from the developing world could rupture the current trajectory of neoliberal globalization and help usher in an alternative form of globalization and a more equitable and progressive global economic order (Arrighi 2007; Evans 2008; Gills 2010; Gray and Murphy 2015; Pieterse 2011; Pinto, Macdonald, and Marshall 2011; Thakur 2014). Arrighi and Zhang (2011: 45–46), for example, raise the prospect that the emerging developing country powers could "lead to the formation of a new and more effective Bandung — that is, a new version of the Third World alliance of the 1950s and 1960s better suited to counter the economic and political subordination of Southern to Northern states in an age of unprecedented global economic integration."
Certainly, for most of the period since World War II, the Global South has been a fierce source of criticism and opposition to the US-led global economic order. In the 1950s–70s, Third Worldist movements such as the Nonaligned Movement (NAM) and the Group of 77 (G77) called for a radical overhaul of the rules and principles of the global economic system and the establishment of a New International Economic Order (NIEO) (Krasner 1985; Mortimer 1984; Prashad 2012). The new powers emerging today were central figures in and around these movements, and the international trading system was one of their primary targets. Brazil, India, and China "all historically espoused conceptions of international order that challenged those of the liberal developed West" (Hurrell 2006: 3), from the socialist revolutionism of China to the Third Worldism of India and Brazil. Even after the demise of the NIEO, these countries adopted generally defensive positions in relation to the norms of economic liberalization being advanced by the West (Hurrell 2006: 11). Within the international trading system, for example, Brazil and India led fierce resistance from the developing world to the neoliberal agenda pursued by the US and other Northern states in the 1980s and 90s.
There are thus major debates among scholars, policy-makers, and foreign policy analysts and observers about the objectives and intentions of the emerging powers — whether they will challenge or support the rules, norms, and principles of the existing international economic order — as well as whether their rise is likely to generate conflict or enhanced cooperation in the international system and what its implications are for the management of economic globalization. The case of the WTO provides an important point of empirical intervention into these debates. As I will show, contrary to the expectations of liberal institutionalism, the rise of new powers has created a crisis of multilateralism that profoundly threatens the way global trade governance has functioned for the last half-century. However, this is not for the reasons predicted by either realists or critical theorists: the emerging powers have imperiled the existing institutional order not because they sought to bring about its collapse but precisely the opposite — because they bought into the system and sought to lay claim to its benefits.
The Case of the WTO
The WTO provides a critical case to understand current transformations in global economic governance. With its system of rules and trade disciplines underpinning international economic relations, the WTO has been compared to a constitution for the global economy (Ruggiero, former director-general of the WTO, cited in McMichael 2004: 166). It is a core pillar in the management of economic globalization and the construction of global neoliberalism, since its rules define the "line between legitimate and illegitimate state intervention in the market" (Mortensen 2006: 172).
(Continues...)
Excerpted from Breaking the WTO by Kristen Hopewell. Copyright © 2016 Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of STANFORD UNIVERSITY PRESS.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Contents and Abstracts1Introduction
chapter abstract
This chapter explores the immense changes that are currently reshaping the global political economy, with the rise of new powers, such as China, India and Brazil, challenging the dominance of the US and other advanced-industrialized states in the global economy and its governance. It introduces and situates the key questions at the core of the book: What agendas are the emerging powers pursuing? How is their rise affecting the governing institutions created under US hegemony and the American-led project of neoliberal globalization? It explains why the WTO is a critical case to shed light on these questions and understand the causes, nature and implications of contemporary power shifts. It sets out the book's central argument: the rise of new powers has precipitated a crisis at the WTO, a core institution of the neoliberal global economic order, signalling a moment of disjuncture in the institutional project of neoliberal globalization.
2Liberalism and the Contradictions of American Hegemony
chapter abstract
This chapter explores the tensions in the US-led global economic order. It argues that, while multilateralism and free markets served as its core pillars, both were in practice highly asymmetrical. The US created and used multilateral institutions as a means to exercise its authority over the international system and promote its own national political, economic and security interests abroad. In the economic realm, the US hegemon deployed the discourse and policies of free markets – propagated through multilateral institutions – to compel other countries to open their markets to its goods and capital, while nonetheless maintaining substantial protections in its own. This exercise of American power, however, contained the seeds of its own undoing: the expansion of global markets gave rise to new economic competitors and involved the creation of institutions and discourses that could eventually be used against the hegemon.
3Power, Multilateralism, and Neoliberalism at the WTO
chapter abstract
This chapter examines the WTO as a central institution in the American-led project of neoliberal globalization. It provides an overview of the history and evolution of the multilateral trading system. The chapter highlights the tensions within the liberal principles of multilateralism and free trade that lie at the center of the GATT/WTO. It shows how the superior economic and political resources of the US and to a lesser extent other Northern states have enabled them to dominate the institution and design and structure the rules of international trade to serve their economic and strategic interests. It also looks at the historically disadvantaged position of developing countries within the multilateral trading system and the particularly onerous costs exacted from them in the previous Uruguay Round.
4Power Shift
chapter abstract
This chapter examines power shifts at the WTO, challenging the assumption that the emergence of new powers is a function of their growing economic might. While China's rise has been closely tied to its economic weight, it shows that Brazil and India used their activist and entrepreneurial leadership of developing country coalitions to propel themselves to power. Despite their relatively small economies and limited roles in world trade, Brazil and India assumed a more aggressive and activist position in WTO negotiations than China and played a greater role in shaping the agenda of the Doha Round. Later, China did come to exercise significant influence as the negotiations neared a potential conclusion, but in a reactive veto capacity, unlike the proactive agenda-setting of Brazil and India. It also shows that even China, though a follower rather than a leader, has sought the benefits and protections afforded by developing world alliances.
5Brazil: New Drivers of Liberalization
chapter abstract
This chapter focuses on Brazil's objectives and behavior at the WTO, which have been driven by the rise of its highly competitive agro-export sector. It shows that far from rejecting the discourse and tools of global neoliberalism, Brazil has become arguably the most active and aggressive proponent of trade liberalization in the current Doha Round. Brazil has advanced the interests of its agribusiness sector by portraying them as a universal interest of the Global South and strategically mobilizing a discourse of development and social justice and the politics of the North-South divide. The influence of Brazil and its agribusiness sector is critical to explaining the direction that developing country "activism" has taken in the current round, with an intense focus on liberalizing agriculture markets through the removal of subsidies, rather than advocating policies that would mark a more radical departure from the WTO's traditional neoliberal trade paradigm.
6China: A Delicate Dance
chapter abstract
This chapter examines China's position at the WTO to highlight the constraints on the emerging powers. China has a major interest in reducing trade barriers and further opening markets to its exports but has been cautious in pursuing its offensive trade interests in the Doha Round. For China, the massive expansion of its industrial capacity and exports are perceived by states around the world as a threat; aggressively seeking to expand its market access through the Doha Round would risk provoking a backlash that could ultimately jeopardize its exports and economic growth. In addition, a further constraint operating on China and the other emerging powers stems from the need to maintain their developing world alliances. Thus, although they have indeed gained power and exercise considerable influence at the WTO, the new powers are not unconstrained in their ability to pursue their offensive trade interests.
7India: Balancing Complex Trade Interests
chapter abstract
This chapter examines India's agenda at the WTO. It challenges the widespread characterization of India as an irresponsible power, intent on derailing WTO liberalization. It shows that India's process of domestic reform and liberalization, coupled with the development of a world-leading services export industry with substantial interests in liberalizing foreign markets, has fundamentally altered its orientation towards the multilateral trading system. Far from an opponent of global trade liberalization, India has major export interests that it has sought to advance through the Doha Round, although its offensive interests are also balanced by important defensive concerns in agriculture. India's negotiating position at the WTO has therefore combined efforts to promote liberalization in its areas of export interest and to secure protections in sensitive sectors where it is vulnerable to liberalization. Contrary to the claims of its critics, far from being unusual, such behavior closely resembles that of the traditional powers.
8Conclusion: A Rupture in the Neoliberal Project
chapter abstract
This chapter argues that emerging powers have imperilled the neoliberal project at the WTO – ironically, not by rejecting its goals and principles but embracing them. Rising challengers usurped the dominant norms, discourses and institutional tools of the WTO, which had once been instruments of US hegemony, and used them to destabilize the existing hierarchy. Yet their challenge to American dominance has had profound and unpredictable consequences: when the weapons of the powerful became appropriated by formerly subordinate states, the system itself broke down. A situation of more equitable power relations among states has caused the Doha Round to collapse and thus cut short the American-led neoliberal project at the WTO. The current crisis at the WTO is a crisis of the liberalism underpinning the international economic order created under US hegemony, unleashed by power shifts that exacerbated the contradictions contained within its foundational myths of multilateralism and free trade.