Chapter 1 for Sweet Talk

Chapter 1

When asked for his views on Western Civilization, Mahatma Gandhi is famously supposed to have said it would be a good idea. Poor countries are equally cynical about western governments’ commitment to free trade. With good reason: America and Europe are forever lecturing developing countries about the need to open their markets, yet they do their best to keep out many poor-country exports.

The Economist, “White Man’s Shame,” September 23, 1999

This book explains the degree of reciprocity in North–South trade relations. Specifically, it explains the lack of reciprocal tariff and nontariff concessions toward the Global South and the presence of a small amount of nonreciprocal trade concessions.¹ These meager concessions are analyzed in the context of the postwar rhetoric of benevolence toward the Global South and the West’s exhortations to them to join the global liberal order.

The argument situates the lack of reciprocal concessions in the Global North’s paternalism, defined here as a patronizing discourse resulting from a position of economic and political strength and cultural distance from the Global South. This paternalism can be historically traced back to colonial-era racism. Nevertheless, we would expect paternalistic countries, with a discourse laden with benevolence, to make trade concessions. Unfortunately, the paternalistic countries do not do so. The study employs mixed methods, two original data sets, and findings at various levels to validate its central supposition on the negative correlation between paternalism and trade concessions. The following pages examine every major issue in North–South trade: agriculture, manufacturing, services trade, and intellectual property. The book analyzes these issues at various levels: macroquantitative studies to provide a broad picture; case study methods for historical analysis; microcases such as sugar, cotton, textiles, and high-tech outsourcing that allow for granular process tracing. One of the original data sets is a paternalistic strength index (PSI), which measures the economic, political, and cultural distance of the Global South from the Global North. This index confirms that paternalistic strength is negatively related to trade concessions. At multiple levels and in multiple issue areas, the book confirms that paternalism is not benevolent; it does not result in trade concessions to the paternalized.

We would expect that sweet-talking benevolent or paternalistic countries would make trade concessions to the Global South. We would expect that there would be some truth in the benevolent rhetoric about the concessions the Global North promises to make. This turns out to be a benevolent lie. The second original data set codes 1,925 pages of press releases from the U.S. Trade Representative’s Office in the 1982–1993 period, roughly equivalent to the beginnings and end of the Uruguay Round of multilateral trade negotiations. It finds that 93 percent of the paternalistic references, mostly about U.S. benevolence in trade policy, were toward the developing world. Yet there is very little to show in terms of meaningful concessions to correlate with this moral rhetoric.

The Global South’s negotiation strengths explain the presence of even the minimal trade concessions, including nonreciprocal trade concessions that the developing world receives. Negotiation factors explored in this book include coalition building, multilateralism, and the ability of the Global South to leverage its trade portfolios for obtaining concessions. Through multiple issue areas at multiple levels, the book validates that the few trade concessions the developing world receives result from its negotiation advantages and not paternalistic benevolence.

This chapter and the next make a broad case for the lack of reciprocity and the presence of cultural preferences traced to historical racism in international trade relations. The subsequent chapters provide the empirical evidence. This introduction explains the argument in brief but first provides the reasoning against the main counterfactuals.

The Departures

Sweet Talk’s findings are surprising and counterintuitive. Strategic trade theory and related concepts provide the counterarguments closest to the theoretical leanings in this book. These are examined here, although others follow later.

Strategic trade analysts would accept the case for lack of concessions but explain it differently as the pursuit of strategic interests in trade (and security policy).² Strategic trade theory predicts that trade concessions (or an open trade policy) are contingent on utility maximization strategies that employ specific import restrictions and export incentives, sometimes linked to a conception of the national interest.³ We can expect prosperous states in the Global North to negotiate reciprocal concessions with Global South countries with large markets in seeking increasing returns and benevolently offer reciprocal or nonreciprocal trade access, as needed, only to those with small markets. Empirically, neither proposition is found to be valid in this book. The United States and the European Union (EU) now resist reciprocal trade concessions to Brazil, China, and India at the multilateral level and exclude them altogether in preferential trade agreements (PTAs). This book also provides some evidence that the Global North may have sought to “punish” trade coalitions such as the G10 to which Brazil and India belonged in the Uruguay Round by making even smaller concessions to them than to the rest of the developing world. In the PTAs with small states, there is no evidence of great power benevolence. The consensus is that PTAs do not offer small states a better deal than those negotiated multilaterally. Both the United States and the EU have squeezed every little concession they could from a small power, whether it is Costa Rica, Morocco, or Brunei.⁴

The security variant of the strategic trade explanation would predict trade rewards for allies and benevolence for small states that are important for Global North’s strategic interests (Gowa and Mansfield 1993, 2004; Mansfield and Bronson 1997). Again, these are empirically dubious propositions. At the macroquantitative level, we find some evidence that the Global North might reward countries that are strategic allies, as measured through the UN General Assembly Strategic Index (Voeten 2015). However, when these data are parsed further into countries that are developing versus developed, the affinity index predicts concessions only to prosperous allies, mostly in the Global North (Chapter 7). David Lake’s (2009) supposition regarding benefits to the subordinate states as the price to pay for the global order provided from superpowers also does not hold for North–South trade reciprocity.

There are also many examples in this book where the United States cast aside its strategic interests to not make any concessions or, worse, withdraw concessions to strategically important small countries. The inability of the affinity index to predict trade concessions to allies in the Global South is an instance at the macrolevel. At a microlevel, one example may be sufficient for now. In the 1980s, the U.S. President Ronald Reagan was trying to check against communist insurgency with the Caribbean Basin Initiative (CBI) launched in 1984. However, in 1987 the Reagan administration reduced the duty-free sugar quotas from the Caribbean from 2.7 million tons to 1.0 million tons, in responding to its sugar lobby, which led to a loss of 350,000 jobs and foreign exchange shortages in the Caribbean, which is counter to the logic of thwarting communism. Using the logic of the theory-infirming case study method, if the strategic interest argument does not hold in this most likely case of checking for communist insurgency under President Reagan, then it is unlikely to hold elsewhere (Eckstein 1975; Odell 2001).⁵ There are many “elsewheres” described in the book.

A few findings in this book also deepen insights of strategic trade theory in showing how trade preferences may be culturally constituted (Mansfield and Mutz 2009). There are many products from the developing world—agriculture or textiles, for example—that would constitute a large share of the global trade volumes from the Global South if reciprocal concessions were allowed. We find that the developed world maintains protections on these products, thereby depriving the developing world the benefits of trade and economic advantages to consumers in the developed world. Here the book’s findings may be consistent with a version of strategic trade policy that inefficiently rewards domestic producers (Grossman and Helpman 2002; Reinert 2008). The historical evidence presented in this book, in the protected agriculture and textile producers in these countries, shows the power of open deceit and manipulation, at times with the support of political leaders, and racist arguments against the developing world to keep out their exports. This book, therefore, veers toward culturally defined trade preferences while also showing that many models of strategic trade theory that take entrenched opposition of domestic trade interests are insufficient in explaining the puzzle posed in this book.

Finally, one might argue that the Global North’s concessions toward the South are in the form of nonreciprocal preferences, such as that of sugar just mentioned. However, these concessions are very small, less than 2 percent of the trade volumes for the United States and the EU, and they result from the Global South’s collective advocacy and not the Global North’s benevolence. The story is complicated: The developing world did not initially seek preferences and accepted its provisions begrudgingly. Once the Generalized System of Preferences (GSP) was in place, it produced a system of dependency allowing the Global North to make claims about its benevolence, while restricting meaningful concessions. The book also shows that GSP system is conditional, and the North uses it strategically in another sense: to divide and rule. The 2015 services trade agreement directed at the least developed countries, offering them nonreciprocal market access, is an example. LDCs have miniscule services exports to the developed world, and the initiative for services preferences came from the North, not from the South.

Neither the “sweet talk” of paternalistic benevolence nor a majority of the “straight talk” of strategic trade theory explains the lack of trade concessions to the Global South. Instead the book advances an understanding of culturally constituted paternalistic trade preferences in the Global North, which only marginally include the developing world in the global liberal trading order. Trade concessions the developing world obtains result from its own negotiation advantages.

Other historical explanations—power politics and core–periphery relations—will be debunked in the conclusion and briefly later in this chapter. They fare even worse. There is one exception: The Global North has succeeded in creating dependencies in the South for certain products with preferential access. This is consistent with recent arguments on coercive diplomacy, where resource-rich states can manipulate the weak through trade dependence (Carnegie 2015). In doing so, the North thwarts attempts from developing countries for reciprocal concessions by either rousing dependent states to the cause of preferential access or shepherding the nondependent states toward such policies. Strategic trade theory might predicate that the paternalism that results in such manipulative preferences is in fact a strategic interest to keep out these countries’ exports. If so, strategic trade theory’s cultural underpinnings are underexplored.

Another significant counterfactual is David Lake’s (2009) critical realist analysis of the international political order as one characterized by hierarchical relations, rather than anarchy. Lake argues that superpowers such as the United States exercise legitimate authority over the subordinates as an act of social exchange: While benefiting themselves, they provide a legitimate social order. He throws down a gauntlet in his preface: “If others believe that a social contract is an insufficient approach to understanding hierarchy between states, they should develop alternative theories, deduce their implications, and compare the evidence for and against their theory relative to mine” (p. xii). Lake deduces his perspective on authority and domination from above, from the perspective of superpowers.⁶ This book posits paternalism and resistance from below, from the perspective of the Global South’s “subordinate.” For example, Lake’s relational model does not allow for any bargaining and negotiation from the South—they are mostly “provided for.” The theoretical suppositions and the evidence in this book demonstrate that the social exchange is unjust, possibly racist, and illegitimate in many ways. This does not mean that a social contract does not exist but that it is seriously broken.

Sweet Talk points out the broader issues of economic injustice inherent to North–South trade relations and the social meanings of these interactions. These meanings are important for understanding the longevity and legitimacy of the liberal world order. However, social meanings or cultural origins of trade preferences are important for another immediate reason: They predict North–South trade negotiation outcomes better than extant theory.

Explaining the Puzzle: Reciprocity

Cultural concerns are often missing from scholarly and media perspectives in the West on international trade. The Economist story quoted at the beginning of this chapter, about poor countries’ cynical and collective beliefs regarding trade, is a departure. Gandhi references the cultural practices in the West that trumpet its civilization. Understood in the Global South, these historical references to civilization can carry the imprint of paternalism. In the past, they resulted in the North lecturing the South about economic development and making promises in return for adopting its prescribed market-oriented economic policies.

This book narrates a narrow story about trade reciprocity, but the broad meaning of the book’s puzzle lies in the cultural context that intersects and departs from the empirical evidence about the developing world and international trade. The intersections provide a happy ending in which middle-income countries of the Global South begin to garner a bigger share of international trade to capture ever-growing shares of traditional and new high-tech services products (Table 1.1). However, this book also elaborates on a tragic story in which the West continually bars the Global South from flourishing in international trade despite exhorting it to participate in the global economy. The South’s assigned position: Either accept the deal the North offers or be cast as obstreperous and unwilling. Table 1.1 captures this story for developing countries, whose share of world trade remains slow despite the benevolent “preferential treatment” they have received in trade from the developed world. For the low-income countries (LICs), the share of merchandise exports has declined from an already low figure of 0.7 percent to 0.5 percent. In fact, although high-income countries might claim that their “average tariffs” are low, the low-income countries of the Global South continue to face protectionist barriers for products for which they might claim comparative advantage. This applies to most agricultural commodities and, until 2005, to textiles. Table 1.2 shows that for primary foods (from meat products to oil seeds in column one), although the applied tariffs are low in Organisation for Economic Co-Operation and Development (OECD) countries, the frequency of nontariff barriers is high compared to that in low-income countries. On the other hand, the OECD maintains low tariffs and nontariff barriers (NTBs) for mineral ores and fuels that are crucial for its economies. Although both OECD countries and LICs employ tariffs, the frequency of NTBs on primary foods shows that the North has liberalized much less than the South in these important export products for the developing world.⁷

Table 1.1. Total merchandise and commercial services exports.

US$ billion rounded (current prices) and percentage of total world exports (in parentheses/rounded)

SOURCE: The World Bank, World Databank. Retrieved on February 26, 2013, from http://databank.worldbank.org.

Two contrasting views frame this book’s puzzle regarding reciprocity in the context of the happy and tragic circumstances of trade described in the preceding paragraphs. They obliquely reference the cultural conditions within which international trade takes place. Both deal with the World Trade Organization (WTO) or its prior incarnation, the General Agreement for Tariffs and Trade (GATT), which since 1948 has provided the negotiation forums for crafting the multilateral rules governing international trade. The first view enhances the image of the rule-based system that the WTO offers to note that these rules are inherently fair and result from the moral and ethical concerns of the developed world, in this case mostly the West. Ethan Kapstein (2008) represents this story in writing: The global economy is a hard case for “fairness economics,” Kapstein admits, but he seeks to demonstrate that principles rooted in fairness and justice have guided even the strategic considerations of powerful states in framing WTO rules. Great powers make fair propositions because they believe unfair ones would be rejected. Therefore, Kapstein exhorts scholars to move beyond the prisoner’s dilemma beggar-thy-neighbor policies in the game theoretic models used for understanding international strategic conduct. As evidence, he cites data that show that the European Union and the United States made far bigger concessions in millions of dollars in tariff cuts than the developing world at the Uruguay Round (Table 1.3). Kapstein’s case is partially or wholly corroborated in, and follows from, other findings from negotiation theory and normative concerns in trade policy. Negotiations studies now frequently show that multilateral forums such as the WTO allow the weak to make gains against the strong (Singh 2000; Odell 2006). Studies of normative concerns also show that ethical considerations can guide negotiators (Albin 2001).

Table 1.2. Applied tariff rates and frequency of NTBs in OECD countries (1994–1998) in select products.

SOURCE: Merlinda D. Ingco and John D. Nash, eds., Agriculture and the WTO: Creating a Trading System for Development (Washington, DC: The World Bank, 2004), pp. 12–15.

The counterpoint about reciprocity is that developing countries, as in the Economist story cited earlier, make few gains in international trade negotiations; consequently, they are stuck in unequal exchanges whereby they open their import markets more than their gains through exports. Scott and Wilkinson (2011) note that both the past and current multilateral trade rounds offer the developing world precious little by way of meaningful concessions. They start their evaluation with econometric computational general equilibrium models that predict the effects of tariff liberalization or gains from trade on the economy. Given the variation in estimates, the total global gains from trade between 1996 and 2006 vary between $376 billion and $2,080 billion in the decade following the close of GATT’s Uruguay Round of trade talks from 1986 to 1994 (614). The gains to the developing world from these econometric models are meager, note Scott and Wilkinson, and they continue to fall because developed countries neither fully honored the agreements they made in GATT’s Uruguay Round of trade talks nor have they agreed to make deep concessions in products of value to the developing world in agriculture and nonagricultural market access (NAMA). In the now defunct Doha Round, launched in November 2001, the developed countries offered duty-free and quota-free access to 97 percent of the products coming from the least developed countries. However, the excluded 3 percent includes most of the products that make up a bulk of exports from least developed countries. In Bangladesh’s case, the United States offer to liberalize its trade is worthless: It lists products that Bangladesh does not export (623). This story is widely corroborated in other accounts where developed countries are able to obtain concessions in products such as intellectual property (Sell 2003) and services (Kelsey 2008; Narlikar 2003) but are loath to make concessions in products that matter to the developing world (Jawara and Kwa 2003; Srinivasan 1998). Table 1.4 provides additional data showing that the concessions the developing world made at the Uruguay Round were more than twice those of the developed world.

Table 1.3. Concessions given and received during the Uruguay Round (in millions of dollars).

SOURCE: Ethan Kapstein (2008), “Fairness Considerations in World Politics.” Kapstein statistics cited from J. Michael Finger et al. Market Access Bargaining in the Uruguay Round: Rigid or Relaxed Reciprocity? (Washington, DC: World Bank Publications, 1999).

Table 1.4. Uruguay Round tariff concessions, all merchandise.

* Depth of cut: dT/(1 + T) comes from the weighted average across all products, including where no tariff reductions were made. SOURCE: Michael J. Finger and Ludger Schuknecht. “Market Access Advances and Retreats: The Uruguay Round and Beyond.” In Bernard Hoekman and Will Martin, eds., Developing Countries and the WTO: A Pro-Active Agenda (Oxford, UK: Basil Blackwell, 2001).

Both of these narratives about the presence and lack of reciprocity are partially correct, but taken together they are contradictory. In the first instance, the WTO is a rule-based system and offers many advantages to developing countries, both through their inclusion in its negotiation forums to effect trade concessions in the future and also through the WTO’s legalistic dispute settlement mechanism to correct present and past unfair trade practices and injustices. Fairness and justice considerations, even those motivated with self-interest, as Kapstein argues, may be widely prevalent. In general, scholars have also demonstrated that ethical and humanitarian considerations have historically been on the rise (Barnett 2011; Crawford 2002). However, the limits and connections between the narrative of reciprocity and the one about its absence are crucial. There is only scattered empirical evidence that justice and fairness considerations have led to meaningful and effective concessions in trade negotiations (Singh 2010). The data that Kapstein provides are not persuasive: As the second narrative and the empirical evidence provided later validates, developing countries have often not received concessions in products in which they can claim an advantage. A careful look at the original sources from where Kapstein cites his figures (Finger, Reincke, and Castro 1999: 22) also paints another story. In percentage terms (concessions received minus given), many developing countries in the world (India, Korea, Malaysia, Thailand, Turkey) fared much worse than the EU or the United States. Second, the data do not include trade preferences, making the option of lower tariffs in the United States and EU unavailable to them, thereby overstating the value of the concessions that the developing world received (Finger, Ingco, and Reincke, 1996: 13, 20).

Sweet Talk shows that most of the concessions developing countries have received—especially the ones that the developed world casts as benevolent—have resulted from hard-fought negotiations. Chapter 4 details how even the GSP, taken to be an exemplar of the Global North’s benevolence, resulted from (or deflected) demands for market access from the developing world. The developing countries have taken advantage of multilateral processes to advance their interests and, if they have the resources, to redress their grievances through dispute settlement in challenging sugar, banana, cotton, underwear, and gambling rules in the developed world that are arrayed against them. Sweet talk continues. The latest example is the now-moribund trade round that started with the sweet talk of development aspirations when it began in November 2001 and was termed the Doha Development Agenda.

A Brief Cultural Context of the Argument

This book advances supplementary hypotheses, rooted in cultural factors, which resolve the tension between the binaries of justice and bullying mentioned in the preceding section. The following question provides the context: Under what conditions can the developing world effect concessions in its favor in international negotiations governing trade? This leaves open the possibility that there are gains to be made and losses to be faced.

Two broad hypotheses result from the theoretical literature discussed in the next chapter: (1) Developed country paternalism results in few trade concessions to the developing world; (2) The developing world’s advocacy and negotiations facilitate the trade concessions that it receives. The second hypothesis is rooted in the collective advocacy and negotiation strategies from the developing world that are seen to positively affect the concessions developing countries receive. The first speaks to the spectrum of developed world discourse, from fairness to paternalistic, the former leading to concessions whereas the latter is problematic (even racist) in terms of concessions. Paternalism often results in trade measures that over the long run do not make developing country exports competitive. Foreign aid might be an example.

Smart negotiations from the developing world coupled with developed country paternalism collectively explain both the concessions gained and lost and the rhetoric of benevolence that often accompanies Western behavior at international negotiation forums such as the WTO. Nevertheless, paternalistic sweet talk and handouts or side payments eclipse the negotiated trade concessions that the developing world receives (Table 1.5). Figure 1.1 makes this argument visually: Countries that receive foreign aid do not receive trade concessions in agriculture, suggesting that foreign aid may be a side payment. Studies acknowledge that foreign aid is inherently political.⁸ I add to these understandings in showing that paternalistic countries would rather provide foreign aid than trade concessions.

Table 1.5. Paternalism versus trade liberalization concessions.

SOURCE: Adapted from J. P. Singh, “Development Objectives and Trade Negotiations: Moralistic Foreign Policy or Negotiated Trade Concessions?” International Negotiation 15 (2010): 367–389.

Figure 1.1. Percentage agriculture concessions received and official development assistance as a percentage of gross national product (GNP).

The case for smart negotiations is well documented but will be spelled out in detail in the next chapter. For now it is important to note that global institutions do allow developing countries a fair playing ground. However, from the discussion so far it does not seem that the Global North plays fair. Evidence points to the contrary: Tariff peaks, nontariff barriers, and low levels of tariff cuts on products of interest to the developing world speak contrary to the rhetoric of benevolence and paternalism. The unsuccessful Doha development round of trade talks (2001–2015) at the WTO featured coalition building and often empirically well-informed claims from the developing world about unfulfilled promises and effects of unilateral trade liberalization. The United States and the EU responded through seeking regional and preferential trade agreements (RTAs and PTAs) with select and, until recently, weak trading partners against whom they can make substantial gains. This phenomenon is known as forum shopping in negotiation literature. A new trend is to hold negotiations in secret, such as the Anti-Counterfeiting Trade Agreement (ACTA) on intellectual property, which began in 2008 and concluded in 2011, and the Trans-Pacific Partnership trade negotiations signed in 2015 between the United States and trading partners mostly in East Asia. ACTA has endorsed highly restrictive intellectual property practices, after the modest gains the developing world made at the beginning of the Doha Round on intellectual property. Moreover, in the case of many RTAs and PTAs, the developed world has sought to exclude countries such as Brazil, China, India, and South Africa who provide leadership to other developing countries in the WTO. Kapstein (2008) argues that neoliberal global institutions have an in-built fairness, but it seems that the developed world navigates around the fairness of multilateral institutions.

The case against fairness considerations is not hard to make, but the case for paternalism does not follow automatically. The scope and consequences of postwar paternalism are gauged in this book by modeling it as a latent variable whose influence can be sifted through a variety of behavioral factors.⁹ For these purposes, the book develops the paternalism strength index (PSI). The index will be fully explained in Chapter 4. In short, it measures the strength of the paternal countries in terms of their export market diversification (WITS 2015), ability to make other countries vote with them in the UN General Assembly (UNGA) (Voeten 2015), and their cultural distances from former European colonies (Hofstede 2015). Export market diversification is opposite of colonial patterns where colonies were locked into exporting few primary products to former colonizers. The UNGA affinity index addresses the political condition of the weak in international politics, whereas the cultural distance variables are self-explanatory.

The negative correlation between the PSI and the inability of the Global South to receive trade concessions in this book is indicative of the broad supposition. However, to show how paternalism informs trade negotiations, historical process tracing is important for causality, which this book provides in each of its issue areas and case studies. In doing so, this book seeks to demonstrate that paternalism and unfair practices are intrinsically linked and rooted in historical racism. Paternalism comes couched in the language of fairness and justice. Such sweet talk sounds good, but, as the following pages will show, the blocking of developing country interests at the WTO smacks of injustice and, arguably, racism.

A focus on paternalism connects postcolonial history with colonial racism. The connection is intuitive if we ask ourselves the following rhetorical question: Did the colonial masters switch from policies of domination and racism to those of liberal internationalist benevolence when they left the lands they occupied? Ethical arguments that ended colonialism may not be sufficient to demonstrate that racism ended with decolonization (Crawford 2002). Although not coterminous, colonial racism and postcolonial paternalism are related.

A nuanced conceptual explanation on paternalism follows in the next chapter because elements of racism and benevolence have always coexisted. As summary, the famous debate in the early sixteenth century regarding the status of the colonized as human beings affixed the ways in which Europe “imagined” and acted on its interactions with the colonized world until the twentieth century. Shortly after the Spanish conquest of the Indies, Juan Gines de Sepulveda argued that the “Indians” were savages and fit to be enslaved, although Bartolome de Las Casas noted that they were humans who needed to be converted to Christianity and introduced to “civilization” as the Europeans imagined it. The colonized world was assigned an inferior and dehumanizing status in both narratives. The dispute centered on human faculties for the reason that Europe had recently discovered among its own inhabitants. The early sixteenth-century debate was never quite settled, but the idea that Europe was bringing civilized conduct to the savages or natives informed the moral justifications for colonialism for three centuries, although within Europe there were strong protests. Nevertheless, even at the time of decolonization, the European elite continued to argue that the colonies were unfit to govern themselves. The postcolonial projects of economic benevolence—foreign aid, preferences in trade, persuasions to “modernize,” technical schemes for catching up, exclusions from U.S.–EU decision making—are all ontologically connected to colonial and paternalistic reasoning. If postcolonialism settled the sixteenth-century debate in elite quarters, it favored Bartolome de Las Casas: Colonies needed civilization, and the developed world would be the benefactor for these efforts.

A stark rejoinder to the civilizational narrative is Europe’s sense of its moral superiority, in which the need to construct a civilizational “other” rationalized its actions in the colonies. However, Europe did not wake up to its racist policies until Hitler. The word racism stood for Hitler’s policies of racial purity; colonial policies were never understood as racist. Again, a full exposition must await, but the following quotation from Aimé Césaire’s (2001: 36) classic Discourse on Colonialism, lays bare the European project of racism, which was introduced to Europe in the form of Hitler: “He [Hitler] applied to Europe colonialist procedures which until then had been reserved exclusively for the Arabs of Algeria, the ‘coolies’ of India, and the ‘niggers’ of Africa.”

Paternalistic rhetoric is, therefore, understood in this book in the context of colonial and interwar histories of racism. Liberal international institutions such as the United Nations were partly prompted out of the need to counter Hitler-like racism, and many agencies such as the United Nations Organization for Education, Science and Culture (UNESCO) explicitly undertook studies to counter racism. Nevertheless, racists themselves informed these lofty purposes. Cordell Hull, the Secretary of State under President Roosevelt, widely credited with providing the impetus to create GATT, strongly believed that only superior nations such as the United States had a right to colonize. Winston Churchill and his negotiators defended trade preferences they gave to the colonies, not because they brought benefits to the colonized but because the Tories among them viewed imperial preferences as the continuation of the British Empire. Churchill’s racist references to the colonies and dominions abound in history books.

Differences and Frames

Paternalism and racism in international trade negotiations have never received the book-length treatment they deserve. Various disciplines present partial and ideological treatments that either misconstrue or ignore such claims. Cultural studies construes “neoliberalism,” vaguely understood as degrees of free trade in this case, as a grand ideology that explains all contemporary forms of injustice, evil, and inequality. Neoliberalism is seldom defined, and its central claims are mischaracterized. In the Marxian variant of cultural studies arguments, race or paternalism, if mentioned, are always secondary to claims about class. As Chapter 7 will show, such claims are theoretically grand and empirically tenuous. An equally grand claim is that of power politics assuming that the developing world gets a bum deal because they do not have a better alterative. This book shows that the weak can get better deals from their negotiation alternatives and that the shape and scope of the bum deal is better explained through paternalism. International trade negotiations literature, of course, understands preferences in a political economy context, although the next chapter records the hints of social and cultural meanings of trade preferences among officials and interest groups that scholars now record. Nevertheless, racism, or prejudice toward a group of people based on the color of their skin, is excluded a priori in most models, and its inclusion here would probably, and frustratingly, make a trade theorist gasp.

The book mostly attends to the effects of paternalism, a follow-up to colonial racism. This book takes intellectual risks but also situates them in the growing awareness and literature on the cultural origins of preferences and institutions (Akerlof and Kranton 2010; McCloskey 2010; Mazower 2009). The intellectual risks are necessary. Sweet-talking developed nations continue to create the impression that their hearts and pockets bleed for the developing world. Meager foreign aid budgets and the dwindling resources of multilateral development organizations are often sugarcoated with this rhetoric. This ignores the hard-fought concessions that the developing world effects for itself in international trade negotiations. Negotiation strategies underscore the ways in which the developing world can ensure that international rules approach reciprocity and fairness.

The next chapter details the case for paternalism and the details on the conceptual and causal links important for this book. The puzzle or the dependent variable in the book is the degree of reciprocity that results from North–South trade negotiations. Paternalistic rhetoric provides a false sense that trade relations are governed through the North’s benevolence and empathy to the South’s development concerns. If paternalistic countries were really benevolent, we would expect developing countries to do better than reciprocity in trade concessions. In actuality, they fare worse. The chapter, therefore, provides an analysis of the negotiation strategies used by the Global South to steer trade concessions in their favor.

Empirical evidence for the effects of paternalism and negotiation strategies is provided through mixed methods: Multiple regressions techniques test the argument at the macrolevel, historical, and case study methods provide both process tracing and a granular look, and content analysis of official trade documents searches for presence of paternalistic rhetoric in trade policy. The book’s logic is situated in causal inference but enriched both through quantitative variables and cultural contextualization.¹⁰ Chapters 3 through 6 provide the empirical substantiation for the propositions advanced in this book. Chapters 3 and 4 examine North–South trade negotiation at the broadest level. Chapter 3 attends to the GATT era up to the beginning of the Uruguay Round. Chapter 4 deals with merchandise negotiations during the Uruguay Round and the Doha Development Agenda that was launched in 2001. In both chapters, the negotiation concessions resulted mostly from developing country negotiation strategies. It is important to note that Chapter 4 also provides quantitative evidence for paternalism and links it with the lack of reciprocity in merchandise trade negotiations. The presence of benevolence and paternalism should lead us to expect the opposite. Chapters 5 through 6 detail evidence for three broad issue areas in trade drawn from opposite ends of extant theories regarding developing country comparative advantage. Chapter 5 discusses trade in agriculture and then specifically trade in commodities such as sugar and cotton. In both, as the developing world gained a comparative advantage, the developed world became increasingly protectionist. Chapter 6 details the case of high-tech issue areas: intellectual property and trade in services, with a special reference to telecommunications and business process outsourcing (BPO). Trade in services, with less historical baggage, offers the best instance in this book for the ability of developing countries to join international markets. Intellectual property rights offer the best illustration of the coercive and manipulative ways in which the developed world foisted an international agreement on the developing world.

Notes

1. The use of the term Global South follows the academic convention in referencing developing countries in the Southern Hemisphere. Unless otherwise mentioned, the terms West and Global North, used interchangeably, reference Western Europe, the United States, and Canada. This particular usage is peculiar to this book because of its subject of study—the postcolonial history of North–South trade.

2. The explanations provided here are consistent with Carnegie (2015), Lake (2009), Gowa and Mansfield (2004), Milner and Yoffie (1989), and Krasner (1985). Most, but not all, of them, fall within the purview of strategic trade theory, whereas the exceptions deal with use of trade policy to maximize other national interests.

3. Exemplars include Krugman 1987, Milner 1988, Amsden 1992, and a review in Bagwell and Staiger 2002.

4. Morocco signed a bilateral trade agreement with the United States in 2004, and trade negotiations are ongoing with the EU. Costa Rica was part of the Dominican Republic–Central America Free Trade Agreement (DR-CAFTA) with the United States ratified in 2005. Brunei is part of the TransPacific Partnership agreement signed in 2015.

5. David Lake (2009: 2–9, 58) narrates a different story about international hierarchies: In his hypothesis, the United States has clearly defined interests in the Caribbean to prevent communism. If Lake is correct, then Reagan protected the authoritarian elite rather than the farmers in the Dominican Republic to thwart communism, surely a costly action. It also does not meet Lake’s own criteria of informal empire in the Caribbean and benign rule and the fact that the preferences were revoked three years after the invasion of Grenada to depose a popular leftist government. Throwing 350,000 farmers out of work is not a recipe for containing communism. Lake notes: “Rulers do not command their subordinates to undertake tasks the latter are unwilling to perform for fear of exciting challenges that may reveal the fragile nature of their legitimacy” (66).

6. This book agrees with Lake’s (2009) postpositivist stance that reality can be observed, although our knowledge of it will always be imperfect (63n1).

7. The NTB figures are slightly higher for low- and middle-income countries taken together (not reported here) but much less than the OECD.

8. See, for example, Carothers and de Gramont (2013) and Milner and Tingley (2010). Carnegie (2015) shows that resource rich countries provide foreign aid after making trade concessions to make demands and meet strategic goals. Figure 1.1 provides a counterpoint.

9. Latent variable analysis, originating in psychology, is also known as factor analysis and measures the behavioral effect of latent influences. Statistically, it examines the principal components from the correlation matrix of several variables (see Bartholomew, Knoll, and Moustaki 2011). In this paper, I extract these “factors” from several international indices that might measure some latent paternalism.

10. Instead of taking a position on the qualitative–quantitative divide in social science (see King, Keohane, and Verba 1994 versus Brady and Collier 2004), this book borrows from their critiques of each other to create a mixed-methods strategy. The statistical variables make sense in the context of process tracing that its cases lend to these variables (see George and McKeown 1985 for process tracing). In situating trade theory in a cultural context, the book also traces a Popperian methodology (Popper 2002). Karl Popper notes that, as each stage of history informs the next, it is difficult to predict all future history with grand variables such as class struggles. Therefore he advises piecemeal and historically specific inferential analysis.