Volume 4, #6 November 24, 1999 POLITICS WITH BITE! CONTACT HELP previous BACK ISSUES next

The WTO Overview

by Geov Parrish

Casual observers can be excused for wondering what all the fuss is about. While local media has been flooded with horror stories about (gasp!) protesters (alternately "crazy" and "zany"), there has been very little ink given to exactly why tens of thousands would be driven to demonstrate on a topic as seemingly arcane as world trade. Why is the WTO important? How will it affect people's daily lives?

It's impossible to summarize the literally dozens of issues encapsulated in the criticisms of the World Trade Organization in our limited space. But here's a quick overview of what the WTO is, what its policies are, and why they should be opposed.

The WTO was created in 1994 as a successor to the GATT, the General Agreement on Tariffs and Trade, that had governed international trade since World War II. The GATT and other so-called Bretton Woods institutions such as the World Bank and International Monetary Fund served for decades as the model by which developed countries dealt with each other and attempted to develop--or, some would say, exploited the natural resources of--the Third World. This was (and is) known as the neoliberal model, and the WTO is firmly based on it.

With the advent some two decades ago, in the U.S., Britain, Germany, and other developed countries, of a powerful new conservatism, came growing acceptance of a free market ideology that has led directly to the WTO. The WTO is markedly different from its previous regime in two important ways. First, its "free trade" agreements require the privatization of a wide array- -everything, really--of public resources. It requires, in the Frist and Third World alike, the logical extension of the neoliberal model: letting the free market make all public policy and control the movement of capital, goods, and services.

Secondly, the WTO includes provisions that make its agreements much more legally enforceable than previous trade agreements. If a jurisdiction's law is found to be "WTO-illegal" and it is not withdrawn, the offending nation faces continuing sanctions equal to the alleged lost value of trade. This is expensive, and especially for poorer countries, this is a powerful incentive to comply.

Generally--unlike statements by free trade proponents from President Clinton on down--critics of the WTO oppose not world trade, but the specific mechanisms by which the WTO governs it. These can generally be broken down into two broad categories: the specifics of sub-agreements on different industries, and the structure of the WTO itself.

The power of the WTO to strike down laws is one of the major objections of WTO critics to the organization itself. It represents usurpation of democratically elected bodies by an undemocratic, unelected body that is almost completely dominated by corporate interests. When a country, usually at the request of a company or industry, lodges a complaint that another country's law is "WTO-illegal" The complaint is then heard by a secret tribunal of corporate lawyers in Geneva. Proceedings are closed to the public. No appeal is possible. So far, in four years, every complaint decided to date has been upheld by the Geneva tribunals.

These include: overturning of a European ban on U.S. hormone-fed beef; overturning of a provision of the U.S. Endangered Species Act that protcted sea turtles from shrimping nets; striking down American and Brazilian programs that underwrote exporting companies; siding with Chiquita bananas (and the U.S.) against a European program that bought bananas from former Caribbean colonies; and a successful challenge of a Canadian provision that banned a particular gasoline additive.

While WTO critics tend to focus on these few examples (hence the hundreds of dancing sea turtles at the Nov. 30 protest), more important, perhaps, are the laws never enacted in the first place. The WTO has had a tremendous chilling effect on jurisdictions. We saw a notable example in Seattle when the city council refused to enact a selective purchasing ordinance in support of pro- democracy forces in Burma. Sure enough, a similar law in Massachusetts is being challenged before the WTO as well as the Supreme Court. The WTO, structurally speaking, is functioning within the U.S. much like a second Supreme Court. It is not a new "world government" in the sense of being able to pass laws on its own, but, like the Supreme Court, can set the standards by which laws are passed, and strike down laws not to its liking.

That's a lot of power for an institution created by and for transnational corporations. The biggest structural concern with the WTO is, quite simply, that transnational corporations are calling the shots and are the primary beneficiaries of its rulings, at the expense of countries that want to protect their environment, food safety, workers' rights, or other public policy values unrelated to profit. The problem with the WTO, in this view, is not that it promotes free trade; it's that it bans any other factors as a legitimate basis for public policy. We are left with a secretive, corporate- dominated, free-market-above-all entity that can trump any national government in its policy-making.

The four-year-old WTO has had virtually no review of the impact of the agreements implemented so far. The Seattle agenda has yet to be announced, but it is expected to include both old business and new proposals. Both existing and proposed free trade agreements have extensive opposition.

Existing WTO Trade Agreements:

The TRIPS Agreement (Trade-Related Intellectual Property): covers patents, copyrights and trademarks. TRIPS has been enormously controversial in the Third World, particularly in the drug industry's attempts--often successful-- to patent indigenous plants and remedies that peoples in a particular country may have used for generations or even centuries. Most heavily affected by these new monopolies are the countries with the greatest biodiversity--poor countries like India and Brazil without the resources to repeatedly fight New York patent lawyers.

The SPS Agreement (Agreement on Sanitary and Phytosanitary Standards) is the WTO's food safety agreement. Its prohibitions on cautious science and labeling have led directly to the European Union hormone-fed beef standoff. Under SPS countries cannot even internally--let alone in international trade- -adopt standards that require new technology be proven harmless (if King County wanted to adopt standards for produce grown within the county, it could not). Instead, the emphasis is on trade at all costs--including human. The Clinton Administration has also argued that SPS bars labelling with information that might dissuade consumers--for example, whether a product is or is not organic. SPS also has enormous implications for biotechnology and genetically modified foods.

GATS (The General Agreement on Trades and Services) covers almost all economic activity that does not include manufactured goods, raw materials, or farm products. GATS is one of 15 Uruguay Round (WTO's immediate predecessor) agreements enforced by the WTO. GATS has overseen the globalization of the banking, insurance, and data management industries. Further GATS agreements are expected to push hard for the privatization of education, public health, and other services normally associated with the public sector. The Multilateral Agreement on Investments (MAI) is also being proposed as a GATS reform.

The Uruguay Round Agreement on Agriculture set rules on domestic and international agricultural business that have accelerated the huge concentration of corporate agribusiness dominance in supplying the world's food. A tiny handful of companies now have a stranglehold on basic food (corn, wheat, soybean) production and distribution, with particularly disastrous consequences for developing countries which must purchase food from earnings on commodity crops. During the WTO's first four years, food prices have remained steady or increased while wholesale prices for commodities have plummeted to record lows.

New Possible Seattle Agenda Items

Global Free Logging Agreement: The Clinton Administration is pushing hrad for a free trade logging agreement that would abolish developing and developed countries' attempts to protect remaining old growth forests. Such an agreement, viewed as a catastrophe by environmentalists, is estimated to increase global wood products consumption by up to 5% and hasten the destruction of the world's rainforests, contributing to global warming as well. Needless to say, Washington state's politicians have clamored for this allegedly job-creating document, even though it would virtually eliminate remaining wood processing in the state as logs are sent to Japan to be chips and, eventually, disposable chopsticks.

The Multilateral Agreement on Investments (MAI) covers the free flow of investment capital around the world. Ignoring the lessons of the speculation that led to successive crashes in Asia, Russia, and Brazil in 1997-98, the MAI is designed to make fast fortunes at the expense of developing countries attempting to retain capital within their borders. The MAI also contains an extraordinarily dangerous provision which allows corporations themselves, rather than countries, to challenge laws as WTO-illegal before the pro-corporate Geneva tribunal. This would remove the last vestiges of democratic representation from a WTO mechanism which abolishes public policies not made with the goal of profits first. Seattle and King and Snohomish Counties are all on record opposing the MAI due to its threat to local control over laws.

The European Union is promoting a new Competition Policy that would bar any restrictions on transnational corporations trying to enter local markets.

The U.S. also wants new agreements on biotechnology, enabling corporations to patent life forms, and agreements on e-commerce regulation.

The net effect of the WTO's agreements, both those already in place and those proposed for the future, is to give transnational corporations tremendous power at the expense of both local businesses and democratic institutions. The effect is particularly pronounced in the Third World, where corporations are attempting to remove resources (like life forms) indigenous to the country, and can muster legal power the countries cannot afford to battle.

Environmentalists see WTO agreements as contributing to air pollution, global warming, deforestation. and a host of other ills. The freedom of companies to move resources and production from country to country alarms labor, particularly with the lack of any concomitant agreements on worker safety, abolition of child or slave labor, or the right to collective bargaining.

WTO proponents essentially rely on trickle-down economic arguments: the idea that enriching transnational corporations creates jobs and eventually benefits all of us. But the harm to public policies and the rapidly growing gap in income disparity between the very wealthy and everyone else are problems for which free markets offer no solutions. As it now stands, the WTO is making the rules, interpreting the rules, and enforcing the rules, all with a secretive pro-corporate structure unaccountable to any public. The WTO's agenda, quite simply, is to abolish any and all regulation of corporations. The Seattle or Millennial Round is the WTO's latest move to inexorably increase its own power. The WTO must be reigned in, starting in Seattle, before corporations rule the world--and we all lose.

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