I have always wondered about the relationship between Socialism and WTO. Socialism is an age old concept whereas WTO is slowly fading the international boundaries of Trade. Here are some of my views on this topic.
Introduction
Before starting, let us
take a brief overview of the manner in which I am going to explain this topic.
I have taken a China Centric Approach in this article. First, I will start with
the notion of Socialism. I will discuss a general definition, a definition
given by the Indian Courts, Soviet Style Socialism and finally, the Chinese
Socialism. This will help enhance and refresh our understanding of Socialism
and also tell us how Socialism is viewed in different countries.
Next, I will state the
broad principles of WTO and compare it with the basic tenets of Socialism. This
is very important as without knowing and understanding these principles, it
would be futile and difficult to associate and link Socialism with WTO.
My next chapter will
talk about Chinese Socialism and WTO. China and WTO is a hotly debated topic
these days. That is why I thought that it would be interesting to understand
the Chinese Socialism with a WTO perspective.
It is important to see
that today is not an era of ideologies or school of thoughts. There are no hard
and fast rules in the present world. People and governments try to find methods
and approaches which are best suited to them. In finding such approaches,
governments are willing to mold their old principles and philosophies. However,
some things are still common. The general inclination is to move towards rule
of law, freedom, liberty openness and other like principles. Establishment of
WTO, UNO and other corresponding organizations is a proof of this. I personally
believe that what works best is the best approach. Alexander Pope succinctly
explains this:
“For Forms of Government
let fools contest; whatever is best administered is best.”
Socialism
General
Perspective
Encyclopedia Brittanica
gives the definition of Socialism in the following manner.
“Socialism
calls for public rather than private ownership or control of property and
natural resources. According to the socialist view, individuals do not live or
work in isolation but live in cooperation with one another. Furthermore,
everything that people produce is in some sense a social product, and everyone
who contributes to the production of a good is entitled to a share in it.
Society as a whole, therefore, should own or at least control property for the
benefit of all its members”.[i]
Indian view towards Socialism
In the
celebrated case of D.S. Nakara, the court talked about Socialism in the
following manner.
“The basic framework of
socialism is to provide a decent standard of life to the working people and
especially provide security from cradle to grave. This amongst others on
economic side envisaged economic equality and equitable distribution of income.
This is a blend of Marxism and Gandhism leaning heavily towards Gandhian
socialism. During the formative years, socialism aims at providing all
opportunities for pursuing the educational activity[ii].”
This statement wonderfully explains the Indian understanding
of Socialism. The word ‘socialist’ is also present in our Preamble to the
Constitution of India. However, we are watching a departure from Socialism to a
free market economy in India[iii].
Still, our Constitution incorporates a lot of Socialist Principles in the Part
IV which talks about “Directive
Principles of State Policy”[iv].
Soviet Style Socialism
Soviet Style Socialism
was explained by Lenin is his various discourses. He stated
that "socialism is nothing but state
capitalist monopoly made to benefit the whole people”[v].
The Soviet perspective also assumes that
the people must trust the benevolence of their leaders, expresses the concept
of 'socialism' to the needs of the Elite Class. This view was expressed by Noam
Chomsky[vi].
Chinese Socialism
China’s Constitution itself talks about Socialism in great
detail. Article 1 of the Constitution of the People’s Republic of China states
that:
“The People's Republic
of China is a socialist state
under the people's democratic dictatorship led by the working class and based
on the alliance of workers and peasants. The socialist system is the basic
system of the People's Republic of China. Sabotage of the socialist system by
any organization or individual is prohibited[vii].”
Article 6 of the Constitution further states that
“The basis of the
socialist economic system of the People's Republic of China is socialist public
ownership of the means of production, namely, ownership by the whole people and collective
ownership by the working people. The system of socialist public ownership
supersedes the system of exploitation of man by man; it applies the principle
of 'from each according to his ability, to each according to his work[viii].”
Another
important article which explicitly talks about Socialist Public Ownership in
the Constitution of People’s Republic of China is article 15.
“Article 15- The state practices economic
planning on the basis of socialist public ownership. It ensures the proportionate and co-ordinated
growth of the national economy through overall balancing by economic planning
and the supplementary role of regulation by the market. Disturbance of the
orderly functioning of the social economy or disruption of the state economic
plan by any organization or individual is prohibited.[ix]”
This
clearly shows that Chinese Socialism talks about regulation of market. However,
this article also talks about balancing of national economy. This shows a hint
of flexibility that for the growth of the nation, Chinese could adopt some
principles of Free Market and Free Trade as well.
Dr. Sun Yet
Sen, a Chinese revolutionary, had emphasized the importance of a mixed economy,
which he termed "The Principle of
Minsheng" in his book, Three
Principles of the People[x]:
"The
railroads, public utilities, canals, and forests should be nationalized, and
all income from the land and mines should be in the hands of the State. With
this money in hand, the State can therefore finance the social welfare programs[xi]."
Thus, we see
that Chinese Socialism is about public ownership and nationalization of
resources and prohibits exploitation by men. The reality might be different in
China but this is what the Chinese principles are enshrined in its Constitution.
It will be interesting to see how Chinese Socialism can be reconciled against
the principles of WTO.
The WTO Website states the principles as follows:
1.
Trade
without discrimination
a. Most-favored-nation
(MFN): treating other people equally.
b. National
treatment: Treating foreigners and locals equally.
2.
Freer
trade: gradually, through negotiation
3.
Predictability:
through binding and transparency
4.
Promoting
fair competition
5.
Encouraging
development and economic reform
We see that Socialism talks about co-operation with each
other and working towards each other’s benefits. Let us see WTO principles in
the light of Socialism.
It is interesting to see that the Club Model of WTO
lacked the ingredients of Socialism. It was being run by and for the rich
countries. These rich countries expanded the membership of WTO to developing
countries only for their own personal benefits. ‘Participation in WTO’ in the true sense of the term was not
available to these developing countries[xiii].
The
situation was something like, Trade Ministers ran the GATT, Finance ministers
ran the IMF and Foreign Ministers colluded at the NATO. Their negotiations were
held in secret and largely unchallenged[xiv].
Thus, there was neither co-operation amongst the members nor was there a mutual
benefit accrued in the process. Hence, in my opinion, the club model of WTO was
a blatant anti-thesis to the concept of Socialism.
However,
with Globalization and time, these things have changed. Globalization has
caused an explosion in the number of non-state agents such as business
associations, NGOs, labor unions, all wanting their voices to be heard at WTO.
This creates a lot of pressure and demands for increased transparency. Rich
Countries cannot simply hold negotiations in secret and expect their verdict
and decisions to remain unchallenged.
Also, the mouths of developing countries have
opened. They demand participation and are suspicious about the effect of
leadership of rich countries on the legitimacy of WTO[xv]. The
numbers of disputes against the Developed Countries have only increased in the
Dispute Settle Body of the WTO[xvi].
Thus,
previously, socialistic ingredients were absent in WTO. Now, things are changing.
Socialism and WTO are towards reconciling themselves with each other. One
important reason for this is the Dispute Settlement Procedure of the WTO. It is
designed to produce conclusive rules while still providing ample space for both
diplomacy and national democratic processes.
Chinese Socialism and WTO
As we
know that, socialist states such as China used to think that the Multi- Lateral
Trading System is pro capitalists only and it does not take into consideration,
the needs of a communist or a socialist society[xvii].
Now, it seems that China does not see things that way. It has started believing
in the ‘unity’ of International Law.
This can be seen by the 1998 Sino-Barbadian Bilateral Investment Treaty (BIT),
in which China agreed to allow foreign investors to take recourse of
international arbitral tribunals without obtaining the consent of Chinese
Government[xviii].
After
the 2nd Amendment to the Chinese Constitution in 1993[xix],
China does not equate the notion of Market Economy with Capitalism. Thus, by
actively participating in the global trade, Chinese Government thinks that it
is only strengthening the Chinese Socialism[xx].
Also, because of the ‘Single Undertaking’
Approach of WTO, China had to accept the jurisdiction of WTO Dispute Settlement
Mechanism. Hence, it no longer sees itself succumbing to the Western Forces and
their ideology[xxi].
But
the question of Chinese Socialism and WTO Model still does not seem to have
been reconciled. A lot of economists still think that the problem of state
monopolies is not addressed by the WTO Model. They think that State Trading
(Chinese Case) seriously distorts competition and is an anti-thesis to the
concept of Market Economy[xxii].
Thus, they think that to maintain and enhance the freedom of International
Trade, State Monopolies and their trading system must be discussed effectively
in the future rounds of WTO Negotiations[xxiii].
It is important
to note that earlier most of the economic policies of the world centered either
around US Style Capitalism or on Soviet Style Socialism[xxiv].
But, such kinds of exercises are not needed in the present era[xxv].
It is better to look for variations and middle paths such as mixed public and
private economies.
Also, there are many authors who think
that China needs to delete the term “Socialism”
from its Constitution in order to meet the Transparency and National Treatment
requirement under the WTO. But if we look at Chinese Constitution and Chinese
government, we will find that Chinese have taken steps towards fulfilling WTO
Obligations and meeting internationally accepted norms. Previously, the
official motto of the government talked about rule of men which basically
showed an absence of ‘rule of law’
in the state. However, now China has officially incorporated the principles of
‘rule of law’. Their official policy statement is “yifa zhiguo, jianshe shehui zhuyi
fazhi guojia”, which is translated as “run the country according to law and build a socialist rule of law
country”[xxvi].
1. The rule of law is recognized as a
universal value by the Chinese Government and the long-held prejudice against
this “Western” concept is therefore eliminated;
2. Still, a lot of authors feel that
Rule of law is not yet fully established in China;
3. With such additions, China is
determined to construct a rule of law system which will be fully established in
the future.
In my personal opinion, it is wrong to
say that WTO is anti-socialism and China needs to delete the term ‘Socialism’ to become WTO Compliant. The
principles of the multilateral trading system do not suggest that the WTO dictates
a legal system based only on the liberal democratic rule of law. If we look at
the history of WTO, a lot of east European countries of the Soviet Camp were
socialist and authoritarian regimes and were members of WTO. Even now, there
are a lot of countries in WTO who do not follow the Western Style Liberal
Democracy concept[xxviii].
Thus, other concepts of rule of law such as ‘socialist rule of law’ of China can very well find place in
WTO.
Conclusion and Comments
It would not be an exaggeration to say
that the principles of traditional socialism have diluted in the present world.
The world has moved towards Globalization and Liberalization. A lot of states
have transited themselves from Socialistic Economies to Free Market Economies.
There are various reasons for this such as technological revolution, pressure
from developed countries, developing countries’ needs, International bodies
like WTO, UNO and EU etc.
Soviet Style Socialism is also on its
end as it caused only misery to people and undermined a lot of democratic principles.
However, there still remain a large number of countries which are still running
on some form of Socialist Model such as China and Russia. It is important to
see Socialism and WTO in the light of these countries.
We have seen in this article that the
China has slowly opened up its economy by way of various policy reforms and
amendments in its Constitution. It has also started to accept the legitimacy of
WTO as a Multi- Lateral Trading System. But, a lot of this exists only on paper
and not in practice. A clear Chinese Position is difficult to understand
because of the fact that most of their documents are in Chinese and no
authoritative English translation is available for them[xxix].
Also, there Press and Media laws are quite stringent. It becomes difficult to
disseminate true information from China. It becomes difficult to comprehend
that on the one hand China talks about Socialist Rule of Law and on the other
hand, it is abridging rights such as the Right to Free Press. Thus, China has
changed to a great extent, it has opened up its economy but the true picture
and the ground realities are somewhere missing because of the absence of
authoritative information on this subject.
I also talked about the presence of
Socialism within WTO. By taking up this exercise, I wanted to see how WTO fairs
against the basic principles of Democracy and Socialism. My conclusion is that
the Club Model of WTO lacked transparency, democracy and socialistic principles
but the present model is relatively fair, democratic, socialist and
transparent. It takes into account needs of all the members irrespective of the
fact that whether they are rich countries or poor countries.
However, I definitely do not mean to
say that WTO is a perfect body. It is far from being perfect and the basic “Democratic Deficit” still persists in
WTO. Neither, the developing countries nor the Least Developing Countries trust
WTO fully. The element of “Democratic
Deficit” needs to be reduced and eventually, eliminated. This is possible
only by change of attitude in governance and further negotiations[xxx].
Though, WTO does not advocate
Socialism, a lot of Socialist principles such as co-operation amongst members,
mutual benefit, equal treatment etc. are present in WTO. I personally think
that in the not too distant future, the principles of Socialism and the
principles of WTO will meld with each other. In fact, it has already started.
[i] Encyclopedia Britannica ACADEMIC EDITION. http://www.britannica.com/EBchecked/topic/551569/socialism
[ii] D.S. Nakara &
Others v. Union Of India, AIR 1983 SC 130.
[iii] This was discussed by Justice
Aftab Alam in Nandini Sundar &
Ors. v. State Of Chattisgarh, Writ Petition (Civil) No. 250 of 2007.
[iv] This was stated by Dr. B.R.
Ambedkar during the Constituent Assembly Debates. Constituent Assembly Debate On 15th November,
1948.
[v] Maurice Brinton, The
Bolsheviks and Workers' Control. Montreal:
Black Rose Books, 1978.
[vi] The Soviet Union Versus Socialism, Noam Chomsky, Our Generation, Spring/Summer, 1986. http://www.chomsky.info/articles/1986----.htm
[viii] Ibid.
[ix] Ibid.
[x] Sun
Yat-sen: “The Three Principles of the People” (1921) Commentary by Torsten
Weber, Leiden University, The Netherlands.
[xi] Qing, Simei:
From Allies to Enemies. Visions of Modernity, Identity and U.S.-China.
Cambridge: Harvard University Press 2007. ISBN: 978-0-674-02344-4; 410 S.
[xiii] John J.
Mearsheimer, “The False Promise of International Institutions,” International
Security19-3 (Winter
1994/95):
5-49. For responses, see International Security 20-1 (Summer 1995).
[xiv] Robert O. Keohane, After
Hegemony: Cooperation and Discord in the World Political Economy (Princeton:
Princeton University Press, 1984).
[xv] Wolfgang H. Reinicke, Global
Public Policy: Governing Without Government (Washington: Brookings
Institution, 1998).
[xvi] Marc L. Busch and Eric
Reinhardt, Developing Countries and General Agreement on Tariffs and
Trade/World Trade Organization Dispute Settlement, Journal of World Trade 37(4):
719–735, 2003.
[xvii] Shan
Wenhua, ‘Redefining the Chinese Concept of Sovereignty’, in Wang Gungwu and
Zheng Yongnian (eds) China and the New International Order (Abindon,
New York: Routledge, 2008) at 57-9.
[xviii] Pasha
L. Hsieh, China's development of international economic law and WTO legal
capacity building, J.I.E.L. 2010, 13(4), 997-1036.
[xix] Preamble to the Constitution was amended
as: "China is at the primary stage
of socialism. The basic task of the nation is, according to the theory of
building socialism with Chinese characteristics, to concentrate its effort on
socialist modernization…”.
[xx] Zhongguo
Gonchangdang Dishisici Quanguo Daibiao Dahui [14th National Congress of the
Chinese Communist Party], available at http://news.xinhuanet.com/ziliao/2003-01/20/content_697129.htm
[xxi] How the
Negotiations Are Organized, WTO, http://www.wto.org/english/tratop_e/dda_e/work_organi_e.htm
(‘virtually every item of the
negotiation is part of a whole and indivisible package and cannot be agreed
separately.’)
[xxii] William
Adams Brown, The United States and the Restoration of World Trade 114 (1950);
Wilcox, supra note 36, at 101-02.
[xxiii] Genc
Trnavci, The virtues and vices of the World Trade
Organization Proposals for its Reform, 18 Emory Int'l L. Rev. 421.
[xxiv] Paul B.
Stephan, The Fall--Understanding the Collapse of the Soviet System, 29 Suffolk
U L Rev 17 (1995).
[xxv] Paul
B. Stephan, Sheriff or Prisoner? The United States and the World Trade
Organization, 1 Chi. J. Int'l L. 49.
[xxvi] Jiang
Zemin, Gaoju Deng Xiaoping Lilun Weida Qizhi, Ba Jianzhe You Zhongguo
Tese Shehui Zhuyi Shiye Quanmian Tuixiang Ershiyi Shiji--Zai Zhongguo Gongchandang
Di Shiwu Ci Quanguo Daibiao Dahui shang de Baogao (Hold High the Great Banner
of Deng Xiaoping Theory for an All-Round Advancement of the Cause of Building
Socialism with Chinese Characteristics into the 21st Century--Report
Delivered at the 15th National Congress of the Communist Party
of China) (12 September 1997), Part VI.
This statement is codified in Article 5 of the PRC Constitution.
[xxvii] Chris
X. Lin, “A Quiet Revolution: An Overview of China's Judicial Reform” (2003) 4
Asian Pac. L. & Pol'y J. 256 at 261.
[xxviii] See
information on WTO Membership, http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm
[xxix]
The USA believes that China's Internet censorship regime
might be inconsistent with China's WTO obligations. One of the obligations that
China accepted when it joined the WTO was to publish and make publicly
available English translations of all laws and regulations which affect
international commerce. This has clearly not taken place in reality. http://www.atimes.com/atimes/China/MJ25Ad01.html
[xxx] For more
information on “Democratic Deficit” refer to, E.U. Petersmann, Constitutional Functions and Constitutional
Problems of International Economic Law, 1991.
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