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is found to be "WTO-illegal" and it is not withdrawn, the offending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
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.