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Ed Webb

The WTO 20 years after the 'battle of Seattle' | Business and Economy | Al Jazeera - 0 views

  • On the 20th anniversary of the protests against the World Trade Organization (WTO), evidence of its harm to workers, healthcare, farmers, and the environment – and particularly to developing countries – has proven its critics right.
  • At the time of the protests, the WTO was less than five years old. But critics had already seen how the largest corporations in the world had succeeded in using its founding – and the good name of trade in promoting prosperity – to achieve a new set of agreements covering not just trade in goods but also trade-related investment measures, trade-related intellectual property (IP) rules, agriculture and services. These new agreements, far from the original goals of multilateralism, gave new rights to trade (which are exercised by corporations) and constrained government regulation in the public interest. 
  • corporate elites hijacked “trade” and rigged the rules to distribute income upwards, while reducing protections for people who work. Highly paid professionals (like doctors) are protected (by being able to regulate their own licensing) and businesses are given market access rights and predictability. Meanwhile, workers are forced into unfair competition without a minimum floor for protections, and developing country workers have been kept at the lowest levels of the global value chains
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  • As rich countries have been allowed to maintain their level of agricultural subsidies – which are mostly handed out to large producers, not family farms – developing countries have not been allowed under WTO rules to subsidise food production for domestic consumption to guarantee food security, nor to protect their farmers from unfair dumping.
  • subsidies for the environmentally damaging production of oil and gas remain undisciplined, while countries have successfully sued each other in the WTO for directing subsidies towards greener fuels, especially if they try to create jobs at the same time.
  • The environment has suffered as countries use environmental exploitation as a comparative advantage, and trade is responsible for a growing percentage of the greenhouse gases that contribute to climate change.
  • supporters of the WTO were able to get developing countries to agree to a new round of trade talks only by claiming it would be a “development” round – ie, one that put the needs of developing countries at its heart.  Since then, unfortunately, developed countries have never delivered on their promises to address the constraints that bad WTO rules put on development
  • most developing countries that have gained from trade have done so by exporting to China, whose growth is usually attributed to its divergences from the WTO model. 
  • At a time when most conversations regarding Big Tech are around the need for stronger antitrust and tax enforcement, and how their model of surveillance capitalism should not be allowed to shape the contours of our media, democracy, human rights, education and social relationships – or even how to break them up – they are working through the WTO, without public debate, to gain a new constitution that will consolidate their power and profits.
  • the problem with the dispute system is that it adjudicates according to a set of rules guided by corporate interests
  • The crisis is that people around the world have suffered through nearly 25 years of a damaging pro-corporate trade model, encapsulated by the WTO, and the domestic policies of austerity that have led to uprisings on four continents, mass migrations, and the election of right-wing governments in many countries.
  • We all need a global economy that facilitates decent jobs, access to affordable medicines, healthy food, and a thriving environment. Nearly all governments agreed to this mandate through the Sustainable Development Goals (SDGs) and Agenda 2030 in 2015. The rules of the global economy should be shaped around ensuring that trade can help achieve these goals, but at the minimum, it should not constrain governments from doing so.
  • The solution to the current conflicts on trade policy is not a false nationalism that nonetheless expands corporate control, nor a defence of the current failed corporate system. We need a wholly different system than that embodied in the WTO, just as the protesters clamoured for in Seattle 20 years ago. That will require a multilateral vision of ecological stability, shared prosperity, and leadership committed to that vision. Until then, we can expect more crises. 
Ed Webb

Here's what will happen if Iran joins the WTO - The Washington Post - 1 views

  • While it remains uncertain whether economic and financial sanctions would be technically permissible under the WTO’s national security exception — which allows a member to take measures that it “considers necessary for the protection of its essential security interests”– these actions would clearly violate the spirit of the WTO and have therefore been rarely used.
  • the United States has switched to using other tools for coercive diplomacy to punish other recent WTO entrants.
  • Congress therefore created the China Commission, which was specifically formed to monitor China’s human rights practices and maintain pressure on it. Similarly, Congress passed measures designed to allow it to more effectively use visa restrictions and financial asset freezes to coerce Russia, and foreign aid to extract concessions from Vietnam, after these states joined the WTO.
Ed Webb

Russia's WTO 'national security' victory cuts both ways for Trump - Reuters - 0 views

  • Russia won a dispute about “national security” at the World Trade Organization on Friday, in a ruling over a Ukrainian transit dispute that may also affect global automobile tariffs that could be imposed by U.S. President Donald Trump.
  • The panel also confirmed the WTO’s right to review national security claims, denting U.S. claims that national security was not subject to review, and said any such claim should be “objectively” true, relating to weapons, war, fissionable materials or an “emergency in international relations”.
  • Invoking national security was taboo at the WTO for decades after it was founded in 1995. Diplomats referred to it as “Pandora’s box” which could never be closed once it was opened, and would undermine the discipline of the WTO’s widely accepted rules.
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  • in the past three years, Russia has cited it in the dispute with Ukraine, Trump has used it to justify tariffs on steel, aluminium and — potentially — autos, and Bahrain, the United Arab Emirates and Saudi Arabia have cited it in a dispute with Qatar.
Ed Webb

Associated Press News - 0 views

  • A World Trade Organization panel ruled Tuesday that Trump administration tariffs on $200 billion worth of Chinese goods are illegal, vindicating Beijing even if the United States has all but incapacitated the WTO’s ability to hand down a final, binding verdict.
  • The ruling, in theory, would allow China to impose retaliatory tariffs on billions’ worth of U.S. goods. But it is unlikely to have much practical impact, at least in the short term, because the U.S. can appeal the decision and the WTO’s appeals court is currently no longer functioning — largely because of Washington’s single-handed refusal to accept new members for it.
  • the United States can appeal the decision “into the void,”
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  • “This panel report confirms what the Trump administration has been saying for four years: The WTO is completely inadequate to stop China’s harmful technology practices,” said U.S. trade representative Robert Lighthizer in a statement. He said the U.S. had presented “extensive evidence” of China’s intellectual property theft and the WTO has offered no fixes for it.
  • The Trump administration has justified the sanctions under Section 301 of the Trade Act of 1974, once a common tool used by the U.S. government to impose sanctions — and recently revived by Trump. The U.S. argued that China’s actions had amounted to “state-sanctioned theft” and “misappropriation” of U.S. technology, intellectual property and commercial secrets.
  • The WTO panel ruled that the U.S. measures violated longstanding international trade rules because they only applied to products from China, and that Washington had not adequately substantiated its claim that the Chinese products hit with the extra duties had benefited from the allegedly unfair Chinese practices.
Ed Webb

Twenty Years After We Shut Down the WTO, the Left Is Finally Resurgent - 0 views

  • Activists overestimated the WTO’s sway. As the Columbia economist and militant free-trader Jagdish Bhagwati told Liza Featherstone and me in an interview a couple of years later, the organization’s entire budget was smaller than the IMF’s travel budget, which should give you an idea of the two institutions’ relative importance. But it nonetheless served as something of a home address for global capitalism
  • the WTO scheduled its next major meeting for Doha, a site where riots seemed highly improbable, two years later. That 2001 meeting opened a trade round that continues to this day because no one can agree on anything still
  • Organized labor had, at least for this event, shunned the nationalist rhetoric of old in favor of international labor solidarity. A South African mineworker quoted Marx by name, urging the workers of the world to unite — to a great cheer from the crowd. There were jingoistic bleats from some Steelworkers and Teamsters, but it was largely contained.
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  • There was a modestly attended rally outside the city’s Labor Temple, where Nichols and I talked with a shirtless member of the Santa Cruz chapter of the Lesbian Avengers who said, “When we got here, the Steelworkers weren’t very queer-friendly. As the week wore on, they got more comfortable with us. My nipples stand in solidarity with the Steelworkers and Teamsters and all the laboring people!” A locked-out Kaiser Aluminum worker standing near her said: “A year ago I thought a redwood deck was the most beautiful thing in the world. Now I understand the importance of sustainability. I guess I’m an environmentalist now.” There’s nothing like common struggle to forge alliances among the most apparently unlikely people.
  • The Seattle-era left was heavy with philanthropists and the NGOs they funded. Critiques of capitalism were largely over size and style, never critiques of capitalism as a social system. “Globalization” was identified as the major problem, a word that always sounded like a euphemism for capitalism and imperialism, but those concepts were shunned as hopelessly antique. If you pointed out the euphemizing, you were red-baited.
  • Some of the spirit of Seattle animated the Occupy movement — the same aversion to structure, hierarchy, and agenda, the same belief that taking up public space could lead to some kind of durable social transformation. But as marvelous as it was in many ways, it couldn’t.
  • On a website put together by a group of DAN activists to memorialize the Seattle events, there’s a page listing the moment’s heirs: the fight against the Dakota Access Pipeline, the Movement for Black Lives, the migrant justice movement, struggles for gender self-determination, against the prison-industrial complex. All these are thoroughly admirable and worthy of support (though, not surprisingly, there’s no mention of the revival of socialism). But the whole approach seems a holdover from the days of hot-linked nodes and movements of movements.
Ed Webb

Brazil Arms Exports: Country Preaches Peace, Sells Tons Of Arms - 0 views

  • "To be honest, there are a lot more regulations on the export of corn, cars or any other product, than on arms," said Nicholas Marsh from the Norwegian Initiative on Small Arms Transfers. "Everything has to be registered with the WTO. Commerce is well-regulated. Meanwhile, arms commerce has always been excluded from international treaties."
  • since 2006, there is a WTO negotiation about establishing an international treaty to regulate the international commerce of conventional arms, whether heavy or light. Nuclear arms or high-lethality arms, such as clusterbombs, would be treated specifically. At the time, the negotiations for the Arms Trade Treaty were supported by 153 countries -- including Brazil -- but were rejected by the US, the world's biggest arms exporter. Although the Obama administration had supported the initiative, the majority of US senators were opposed, which resulted in an enormous international impasse. Such an idea also came up against fierce resistance from arms industry representatives in Brazil. "You are not going to have global organizations taking care of the market. Each nation is sovereign. Its people deserve respect and have the right to self-determination. Whether they have a bloody dictator or not, the people deserve it," said Jairo Candido, president of Com Defesa, a group from the Federation of Industries of São Paulo (FIESP) that lobbies for the sector.
Ed Webb

How Globalization Will Look After the Coronavirus Pandemic - 0 views

  • has also illustrated that national governments remain the primary actors
    • Ed Webb
       
      Has it really? Which perspective would argue this and how might we challenge it?
  • the world is likely to see a different, more limited version of global integration than the one we have known over the past three decades
  • Before the pandemic, global goods trade was still rising, but relative to the total output of the global economy, the share of trade is lower today than it was before the financial crisis.
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  • Total global foreign direct investment has not returned to its highs more than a decade ago.
  • globalization is complex, and not every indicator points in the same direction. The intensity of trade in goods is down, but in services it’s up. The flow of data across borders has risen dramatically, even as countries like China and Iran seek to restrict it. International travel and study abroad were at all-time highs before the coronavirus pandemic
  • Globalization is often blamed for financial crises—not only the global one of 2008, but also the 1997 Asian crisis and others in Russia, Turkey, Ecuador, Cyprus and elsewhere
  • expanded inequality both among nations and within them
  • consume more energy and produce higher greenhouse-gas emissions
  • since 2003, the world has seen successive outbreaks of SARS, swine flu, MERS, Ebola, and the Zika virus
  • many of those benefits are diffuse and taken for granted, while the costs—lost manufacturing jobs, for instance—remain concentrated. And those on the losing end of globalization now have a new political voice: populist parties promising sovereignty, nationalism, and local solutions, as well as a weakening of elite-led, seemingly unaccountable international institutions
  • Many see COVID-19 not as a cause around which the world’s governments should rally, but rather as the most dramatic example of an already broken globalized system.
  • it is easy to imagine governments around the world broadly rethinking international travel, migration, supply-chain risk, export controls, information sharing, and more—in short, key components of globalization itself. The new watchword is likely to be risk reduction rather than cost reduction.
  • Fragile supply chains are not an indictment of globalization per se, but of the way companies have become dependent on single sources of supply
  • economic integration will still take place, but it will continue to shift from the global to the regional and bilateral level
  • How to protect workers without undermining globalization’s economic benefits, including a higher standard of living, remains an unsolved question.
  • Closed borders, travel bans, paralyzed supply chains, and export restrictions have prompted many to ask whether globalization itself might fall victim to the coronavirus.
  • globalization was already in decline well before the outbreak, having reached its peak before the 2008 global financial crisis and having never recovered since then
  • The worldwide interconnectedness of goods, services, capital, people, data, and ideas has produced undeniable benefits. But during this pandemic, the risks of dependency have fully entered the public consciousness
  • the pandemic has demonstrated the fragility of supply chains, prompted national responses rather than cooperative international ones, and reinforced nationalist arguments for reshoring manufacturing and more limited migration
Ed Webb

Imperialist appropriation in the world economy: Drain from the global South through une... - 0 views

  • Unequal exchange theory posits that economic growth in the “advanced economies” of the global North relies on a large net appropriation of resources and labour from the global South, extracted through price differentials in international trade.
  • Our results show that in 2015 the North net appropriated from the South 12 billion tons of embodied raw material equivalents, 822 million hectares of embodied land, 21 exajoules of embodied energy, and 188 million person-years of embodied labour, worth $10.8 trillion in Northern prices – enough to end extreme poverty 70 times over.
  • Historians have demonstrated that the rise of Western Europe depended in large part on natural resources and labour forcibly appropriated from the global South during the colonial period, on a vast scale. Spain extracted gold and silver from the Andes, Portugal extracted sugar from Brazil, France extracted fossil fuels, minerals and agricultural products from West Africa, Belgium extracted rubber from the Congo; and Britain extracted cotton, opium, grain, timber, tea and countless other commodities from its colonies around the world – all of which entailed the exploitation of Southern labour on coercive terms, including through mass enslavement and indenture. This pattern of appropriation was central to Europe’s industrial growth, and to financing the expansion and industrialization of European settler colonies, including Canada, Australia, New Zealand and the United States, which went on to develop similarly imperialist orientations toward the South
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  • Our analysis confirms that unequal exchange is a significant driver of global inequality, uneven development, and ecological breakdown.
  • Today, we are told, the world economy functions as a meritocracy: countries that have strong institutions, good markets, and a steadfast work ethic become rich and successful, while countries that lack these things, or which are hobbled by corruption and bad governance, remain poor. This assumption underpins dominant perspectives in the field of international development (Sachs, 2005, Collier, 2007, Rostow, 1990, Moyo, 2010, Calderisi, 2007, Acemoglu and Robinson, 2012), and is reinforced by the rhetoric, common among neoclassical economists, that free-trade globalization has created an “even playing field”.
  • Emmanuel and Amin argued that unequal exchange enables a “hidden transfer of value” from the global South to the global North, or from periphery to core, which takes place subtly and almost invisibly, without the overt coercion of the colonial apparatus and therefore without provoking moral outrage. Prices are naturalized on the grounds that they represent “utility”, or “value”, or the outcome of “market mechanisms” such as supply and demand, obscuring the extent to which they are determined by power imbalances in the global political economy. Price differentials in international trade therefore function as an effective method of maintaining the patterns of appropriation that once overtly defined the colonial economy, allowing blame for “underdevelopment” to be shifted onto the victims.
  • Historians have demonstrated that the rise of Western Europe depended in large part on natural resources and labour forcibly appropriated from the global South during the colonial period, on a vast scale. Spain extracted gold and silver from the Andes, Portugal extracted sugar from Brazil, France extracted fossil fuels, minerals and agricultural products from West Africa, Belgium extracted rubber from the Congo; and Britain extracted cotton, opium, grain, timber, tea and countless other commodities from its colonies around the world – all of which entailed the exploitation of Southern labour on coercive terms, including through mass enslavement and indenture. This pattern of appropriation was central to Europe’s industrial growth, and to financing the expansion and industrialization of European settler colonies, including Canada, Australia, New Zealand and the United States, which went on to develop similarly imperialist orientations toward the South (e.g., Naoroji, 1902, Pomeranz, 2000, Beckert, 2015, Moore, 2015, Bhambra, 2017, Patnaik, 2018, Davis, 2002).
  • for every unit of embodied resources and labour that the South imports from the North they have to export many more units to pay for it, enabling the North to achieve a net appropriation through trade. This dynamic was theorized by Emmanuel (1972) and Amin (1978) as a process of “unequal exchange”.Emmanuel and Amin argued that unequal exchange enables a “hidden transfer of value” from the global South to the global North, or from periphery to core, which takes place subtly and almost invisibly, without the overt coercion of the colonial apparatus and therefore without provoking moral outrage. Prices are naturalized on the grounds that they represent “utility”, or “value”, or the outcome of “market mechanisms” such as supply and demand, obscuring the extent to which they are determined by power imbalances in the global political economy. Price differentials in international trade therefore function as an effective method of maintaining the patterns of appropriation that once overtly defined the colonial economy, allowing blame for “underdevelopment” to be shifted onto the victims.
  • Following Dorninger et al. (2021), we use a “footprint” analysis of input–output data to quantify the physical scale of raw materials, land, energy and labour embodied in trade between the North and South, looking not only at traded goods themselves but also the upstream resources and labour that go into producing and transporting those goods, including the machines, factories, infrastructure, etc.
  • Grounding our analysis in the physical dimensions of unequal exchange is important for several reasons. First, these resources – raw materials, land, labour and energy – embody the productive potential that is required for meeting human needs (use-value) and for generating economic growth (exchange-value). Physical drain is therefore ultimately what drives global inequalities in terms of access to provisions, as well as in terms of GDP or income (see Hornborg, 2020). Second, this approach allows us to maintain sight of the ecological impacts of unequal exchange. We know that excess energy and material consumption in high-income nations, facilitated by appropriation from the rest of the world, is causing ecological breakdown on a global scale. Tracing flows of resources embodied in trade allows us to determine the extent to which Northern appropriation is responsible for ecological impacts in the South; i.e., ecological debt (Roberts and Parks, 2009, Warlenius et al., 2015, Hornborg and Martinez-Alier, 2016).
  • Due to the growing fragmentation of international commodity chains, monetary databases on bilateral gross trade flows have been criticised for not accurately depicting the monetary interdependencies between national economies (Johnson and Noguera, 2012), i.e., the amount of a countries’ value added that is induced by foreign final demand and international trade relations. Trade in Value Added (TiVA) indicators Johnson and Noguera, 2012, Timmer et al., 2014 are designed to take into account the complexity of the global economy. The TiVA concept is motivated by the fact that, in monetary terms, trade in intermediates accounts for approximately two-thirds of international trade. Imports (of intermediates) are used to produce exports and hence bilateral gross exports may include inputs (i.e., value added) from third party countries (Stehrer, 2012). TiVA reveals where (e.g., in which country or industry) and how (e.g. by capital or labour) value is added or captured in global commodity chains (Timmer et al., 2014).
  • TiVA, which is sometimes referred to as the “value footprint”, is the monetary counterpart of the MRIO-based environmental footprint because both indicators follow the same system boundaries, i.e., all supply chains between production and final consumption of two countries including all direct and indirect interlinkages. Moreover, in contrast to global bilateral monetary trade flows, TiVA is globally balanced, meaning that national exports and imports globally sum up to zero. This is an important feature of the TiVA indicator that facilitates more consistent and unambiguous assessments.
  • for every unit of embodied raw material equivalent that the South imports from the North, they have to export on average five units to “pay” for it
  • For land the average ratio is also 5:1, for energy it is 3:1, and for labour it is 13:1
  • Table 1. Resource drain from the South.ResourceNorth → South flows 2015South → North flows 2015Drain from South in 2015Cumulative drain from South 1990–2015Raw material equivalents [Gt]3.3715.3912.02254.40Embodied land [mn ha]527.421,349.01821.5932,987.23Embodied energy [EJ]21.5543.5121.06650.34Embodied labour [mn py-eq]31.11219.22188.125,956.62
  • in the year 2015 the North’s net appropriation from the South totalled 12 billion tons of raw materials, 822 million hectares of land, 21 exajoules of energy (equivalent to 3.4 billion barrels of oil), and 188 million person-years equivalents of labour (equivalent to 392 billion hours of work). By net appropriation we mean that these resources are not compensated in equivalent terms through trade; they are effectively transferred gratis. And this appropriation is not insignificant in scale; on the contrary, it comprises a large share (on average about a quarter) of the North’s total consumption.
  • significant consequences for the global South, in terms of lost use-value. This quantity of Southern raw materials, land, energy and labour could be used to provision for human needs and develop sovereign industrial capacity in the South, but instead it is mobilized around servicing consumption in the global North.
  • Eight hundred and twenty-two million hectares of land, which is twice the size of India, would in theory be enough to provide nutritious food for up to 6 billion people, depending on land productivity and diet composition
  • material use is tightly linked to environmental pressures. It accounts for more than 90% of variation in environmental damage indicators (Steinmann et al., 2017), and more than 90% of biodiversity loss and water stress (International Resource Panel, 2019). Moreover, as Van der Voet et al. (2004) demonstrate, while impacts vary by material, and vary as technologies change, there is a coupling between aggregate mass flows and ecological impact. Net flows of material resources from South to North mean that much of the impact of material consumption in the North (43% of it, net of trade) is suffered in the South. The damage is offshored.
  • Industrial ecologists hold that global extraction and use of materials should not exceed 50 billion tons per year (Bringezu, 2015). In 2015, the global economy was using 87 billion tons per year, overshooting the boundary by 74% and driving ecological breakdown. This overshoot is due almost entirely to excess resource consumption in global North countries. The North consumed 26.71 tons of materials per capita in 2015, which is roughly four times over the sustainable threshold (6.80 tons per capita in 2015). Our results indicate that most of the North’s excess consumption (58% of it) is sustained by net appropriation from the global South; without this appropriation, material use in high-income nations would be much closer to the sustainable level.
  • In consumption-based terms, the North is responsible for 92% of carbon dioxide emissions in excess of the planetary boundary (350 ppm atmospheric concentration of CO2) (Hickel, 2020), while the consequences harm the South disproportionately, inflicting dramatic social and economic costs (Kikstra et al., 2021b, Srinivasan et al., 2008). The South suffers 82–92% of the costs of climate change, and 98–99% of the deaths associated with climate change (DARA, 2012)
  • Net appropriation of land means soil depletion, water depletion, and chemical runoff are offshored; net appropriation of energy means that the health impacts of particulate pollution are offshored; net appropriation of labour means that the negative social impacts of exploitation are offshored, etc (Wiedmann and Lenzen, 2018). In the case of non-renewable resources there is also a problem of depletion: resources appropriated from the South are no longer available for future generations to use (Costanza and Daly, 1992, World Bank, 2018), which is particularly problematic given that under conditions of net appropriation economic losses are not offset by investments in capital stock (cf. Hartwick, 1977). Finally, the extractivism that underpins resource appropriation generates social dislocations and conflicts at resource frontiers (Martinez-Alier, 2021).
  • the value of resources and labour cannot be quantified in dollars, and there is no such thing as a “correct” price.
  • Prices under capitalism do not reflect value or utility in any objective way. Rather, they reflect, among other things, the (im)balance of power between market agents (capital and labour, core and periphery, lead firms and their suppliers, etc); in other words, they are a political artefact
  • While prices by definition do not reflect value, they do allow us to compare the scale of drain to prevailing monetary representations of production and income in the world economy.
  • Fig. 2 shows that drain from the South in 2015 amounted to $14.1 trillion when measured in terms of raw material equivalents, $5.1 trillion when measured in terms of land, $3.6 trillion when measured in terms of energy and $20.3 trillion when measured in terms of labour.
  • Over the period 1990–2015, the drain sums to $242 trillion (constant 2010 USD). This represents a significant “windfall” for the North, similar to the windfall that was derived from colonial forms of appropriation; i.e., goods that did not have to be produced on the domestic landmass or with domestic labour, and did not have to be bought on the domestic market, or paid for with exports (see Pomeranz, 2000, Patnaik, 2018). While previous studies have shown that the price distortion factor increased dramatically during the structural adjustment period in the 1980’s (Hickel et al., 2021), our data confirms that since the early- to mid-1990’s it has tended to decline slightly. This means that the increase in drain during the period 1990–2007, prior to the global financial crisis, was driven primarily by an increase in the volume of international trade rather than by an increase in price distortion.
  • Table 3 shows that, over the 1990–2015 period, resources appropriated from the South have been worth on average roughly a quarter of Northern GDP.
  • the North’s reliance on appropriation from the South has generally increased over the period (despite a significant drop after the global financial crisis), whereas the South’s losses as a share of total economic activity have generally decreased, particularly since 2003, due to an increase in South-South trading and higher domestic GDP creation or capture within the South, both driven largely by China
  • Aid flows create the powerful impression that rich countries give benevolently to poorer countries. But the data on drain through unequal exchange raises significant questions about this narrative.
  • net appropriation by DAC countries through unequal exchange from 1990 to 2015 outstripped their aid disbursements over the same period by a factor of almost 80
  • for every dollar of aid that donors give, they appropriate resources worth 80 dollars through unequal exchange. From the perspective of aid recipients, for every dollar they receive in aid they lose resources worth 30 dollars through drain
  • The dominant narrative of international development holds that poor countries are poor because of their own internal failings and are therefore in need of assistance. But the empirical evidence on unequal exchange demonstrates that poor countries are poor in large part because they are exploited within the global economy and are therefore in need of justice. These results indicate that combating the deleterious effects of unequal exchange by making the global economy fairer and more equitable would be much more effective, in terms of development, than charity.
  • In an equitable world, the resource trade deficit that the North sustains in relation to the South would be financed with a parallel monetary trade deficit. But in reality, the monetary trade deficit is very small, equivalent to only about 1% of global trade revenues, and fluctuates between North and South. In effect, this means that the North achieves its large net appropriation of resources and labour from the South gratis.
  • The question of sectoral disparities has been moot since the 1980s, however, as industrial production has shifted overwhelmingly to the South. The majority of Southern exports (70%) consist of manufactured goods (data from UNCTAD; see Smith, 2016). Of all the manufactured goods that the USA imports, 60% are produced in developing countries. For Japan it is 70%. We can see this pattern reflected also in the industrial workforce. As of 2010, at least 79% of the world’s industrial workers live in the South (data from the ILO; see Smith, 2016). This shift is due in large part to the rise of global commodity chains, which now constitute 70% of international trade. Between 1995 and 2013, there has been an increase of 157 million jobs related to global commodity chains, and an estimated 116 million of them are concentrated in the South, predominantly in the export manufacturing sector (ILO, 2015). In other words, during the period we analyse in this paper (1990–2015), the South has contributed the majority of the world’s industrial production, including high-technology production such as computers and cars. And yet price inequalities remain entrenched.
  • if Northern states or firms leverage monopoly power within global commodity chains to depress the prices of imports and increase the prices of final products, their labour “productivity” appears to improve, and that of their counterparts declines, even if the underlying production process remains unchanged. Indeed, empirical evidence indicates that real productivity differences between workers are minimal, and cannot explain wage inequalities (Hunter et al., 1990).
  • wage inequalities exist not because Southern workers are less productive but because they are more intensively exploited, and often subject to rigid systems of labour control and discipline designed to maximize extraction (Suwandi et al., 2019). Indeed, this is a major reason why Northern firms offshore production to the South in the first place: because labour is cheaper per unit of physical output (Goldman, 2012).
  • the terminology of “value-added” is a misnomer. In international trade, TiVA does not tell us who adds more value but rather who has more power to command prices. And in the case of global commodity chains, TiVA does not indicate where value is produced but rather where it is captured (Smith, 2016).
  • our analysis reveals that value in global commodity chains is disproportionately produced by the South, but disproportionately captured by the North (as GDP). Value captured in this manner is misleadingly attributed to Northern economic activities
  • rich countries are able to maintain price inequalities simply by virtue of being rich. This finding supports longstanding claims by political economists that, all else being equal, price inequalities are an artefact of power. Just as in a national economy wage rates are an artefact of the relative bargaining power of labour vis-à-vis capital, so too in international trade prices are an artefact of the relative bargaining power of national economies and corporate actors vis-à-vis their trading partners and suppliers. Countries that grew rich during the colonial period are now able to leverage their economic dominance to depress the costs of labour and resources extracted from the South. In other words, the North “finances” net appropriation from the South not with money, but rather by maintaining the prices of Southern resources and labour below the global average level.
  • Patents play a key role here: 97% of all patents are held by corporations in high-income countries (Chang, 2008:141)
  • In some cases, patents involve forcing people in the South to pay for access to resources they might otherwise have obtained much more affordably, or even for free (Shiva, 2001, Shiva, 2016).
  • In the World Bank and the IMF, Northern states hold a majority of votes (and the US holds a veto), thus giving them control over key economic policy decisions. In the World Trade Organization (which controls tariffs, subsidies, and patents), bargaining power is determined by market size, enabling high-income nations to set trade rules in their own interests.
  • ubsidized agricultural exports from the North undermine subsistence economies in the South and contribute to dispossession and unemployment, placing downward pressure on wages. Militarized borders preclude easy migration from South to North, thus preventing wage convergence. Moreover, structural adjustment programs (SAPs) imposed by the World Bank and IMF since the 1980s have cut public sector salaries and employment, rolled back labour rights, curtailed unions, and gutted environmental regulations (Khor, 1995, Petras and Veltmeyer, 2002).
  • SAPs, bilateral free trade agreements, and the World Trade Organization have forced global South governments to remove tariffs, subsidies and other protections for infant industries. This prevents governments from attempting import substitution, which would improve their export prices and drive Northern prices down. Tax evasion and illicit financial flows out of the South (which total more than $1 trillion per year) drain resources that might otherwise be reinvested domestically, or which governments might otherwise use to build national industries. This problem is compounded by external debt service obligations, which drain government revenue and require obeisance to economic policies dictated by creditors (Hickel, 2017). In addition, structural dependence on foreign investors and access to Northern markets forces Southern governments and firms to compete with one another by cutting wages and resource prices in a race to the bottom.
  • structural power imbalances in the world economy ensure that labour and resources in the South remain cheap and accessible to international capital, while Northern exports enjoy comparatively higher prices
  • Cheap labour and raw materials in the global South are not “naturally” cheap, as if their cheapness was written in the stars. They are actively cheapened
  • the analysis obscures class and geographic inequalities within countries and regions, which are significant when it comes to labour prices as well as resource consumption. The high levels of resource consumption that characterize Northern economies are driven disproportionately by rich individuals and affluent areas, as well as by corporations that control supply chains, and enabled by internal patterns of exploitation and unequal exchange in addition to drain through trade (Harvey, 2005). For example, there are marginalized regions of the United States that serve as an “internal periphery” (Wishart, 2014). It would also be useful to explore the gender dynamics of unequal exchange within countries. These questions cannot be answered with our data, however.
  • This research confirms that the “advanced economies” of the global North rely on a large net appropriation of resources and labour from the global South, extracted through induced price differentials in international trade. By combining insights from the classical literature on unequal exchange with contemporary insights about global commodity chains and new methods for quantifying the physical scale of embodied resource transfers, we are able to develop a novel approach to estimating the scale and value of resource drain from the global South. Our results show that, when measured in Northern prices, the drain amounted to $10.8 trillion in 2015, and $242 trillion over the period from 1990 to 2015 – a significant windfall for the North, equivalent to a quarter of Northern GDP. Meanwhile, the South’s losses through unequal exchange outstrip their total aid receipts over the period by a factor of 30.
  • support contemporary demands for reparations for ecological debt, as articulated by environmental justice movements and by the G77
  • True repair requires permanently ending the unequal distribution of environmental goods and burdens between the global North and global South, restoring damaged ecosystems, and shifting to a regenerative economic system.
  • It is clear that official development assistance is not a meaningful solution to global poverty and inequality; nor is the claim that global South countries need more economic liberalisation and export-oriented market integration. The core problem is that low- and middle-income countries are integrated into the global economy on fundamentally unequal terms. Rectifying this problem is critical to ensuring that global South countries have the financial, physical and human resources they need to improve social outcomes.
  • democratize the institutions of global economic governance, such as the World Bank, IMF and WTO, so that global South countries have more control over trade and finance policy.
  • end the North’s use of unfair subsidies for agricultural exports, and remove structural adjustment conditions on international finance, which would help mitigate downward pressure on wages and resource prices in the South while at the same time enabling Southern countries to build sovereign industrial capacity
  • a global living wage system, and a global system of environmental regulations, would effectively put a floor on labour and resource prices
  • Reducing North-South price differentials would in turn reduce the scale of the North’s net resource appropriation from the South (in other words, it would reduce ecologically unequal exchange), thus reducing excess consumption in the North and the ecological impacts that it inflicts on the South.
  • Structural transformation will only be achieved through political struggle from below, including by the anti-colonial and environmental justice movements that continue to fight against imperialism today
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