The following is mirrored from its source at:
http://www.observer.co.uk/business/story/0,6903,473205,00.html
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Necessity test is mother of GATS intervention
The World Trade Organisation has plans
to replace that outmoded political idea: democracy
by Gregory Palast
gregory.palast@observer.co.uk
OBSERVER (London)
Sunday April 15, 2001
Trade Minister Dick Caborn says `nothing' all day, and this keeps
him very, very busy. Caborn is busy reassuring the nation that
nothing in the proposed General Agreement on Trade in Services
(Gats) threatens Britain's environmental regulations. Nothing in
Gats permits American corporate powers to overturn UK health and
safety regulations. Nothing in Gats, which is part of the World
Trade Organisation regime, threatens public control of the
National Health Service. The official statement of what Gats
doesn't do goes on for pages and pages.
So I've been perplexed by Caborn and his EU sidekick, Pascal Lamy,
rushing to Geneva and Washington and God knows where else to argue
over the wording of rules that do nothing, change nothing and mean
nothing.
But then last week `something' came through on my fax machine. And
this confidential document from the WTO Secretariat, dated 19
March, is something indeed: a plan to create an international
agency with veto power over parliamentary and regulatory
decisions.
When Winston Churchill said that `democracy is the worst form of
government except all those other forms that have been tried from
time to time' he simply lacked the vision to see that in March
2001, the WTO would design a system to replace democracy with
something much better: Article VI.4 of Gats. And this unassuming
six-page memo, now modestly hidden away in secrecy, may one day be
seen as the post-democratic Magna Carta.
It begins by considering the difficult matter of how to punish
nations that violate `a balance between two potentially
conflicting priorities: promoting trade expansion versus
protecting the regulatory rights of governments'.
Think about that. For centuries Britain, and now almost all
nations, has relied on elected parliaments, congresses, prime
ministers and presidents to set the rules. It is these ungainly
deliberative bodies that `balance' the interests of citizens and
businesses
Now kiss that obsolete system goodbye. Once Britain and the EU
sign the Gats treaty, Article VI.4 of that treaty, the Necessity
Test, will kick in. Then, as per the Secretariat's secret
programme outlined in the 19 March memo, national parliaments and
regulatory agencies will be demoted, in effect, to advisory
bodies.
Final authority will rest with the Gats Disputes Panel to
determine whether a law or regulation is, in the memo's language,
`more burdensome than necessary'. And Gats, not Parliament, will
decide what is `necessary'.
As a practical matter, this means nations will have to shape laws
protecting the air you breathe, the trains you travel in and the
food you chew by picking not the best or safest means for the
nation, but the cheapest methods for foreign investors and
merchants.
Let's get down to concrete examples. The Necessity Test has
already had a trial run in North America via inclusion in Nafta,
the region's free trade agreement. Recently, the state of
California banned a petrol additive, MBTE, which has contaminated
water supplies. A Canadian seller of the `M' chemical in MBTE
filed a complaint saying the rule failed the Necessity Test.
The Canadians assert that California could simply require all
petrol stations to dig up their storage tanks and reseal them --
and hire a swarm of inspectors to make sure it's done perfectly.
The Canadian proposal might cost Californians a bundle and would
be impossible to police. That's just too bad. The Canadian
proposal is the least trade-restrictive method for protecting the
water supply. `Least trade-restrictive' is Nafta's Necessity Test.
If California does not knuckle under, the US Treasury may have to
fork out $976 million in compensation to the Canadians.
The Gats' version of the the Necessity Test is Nafta on steroids.
Under Gats, as proposed in the memo, national laws and regulations
will be struck down if they are `more burdensome than necessary'
to business. Notice the subtle change. Suddenly the Gats treaty is
not about trade at all, but a sly means to wipe away restrictions
on business and industry, foreign and local.
So what `burdensome' restrictions are sitting in the corporate
cross-hairs? The US trade representative has already floated
proposals on retail distribution. Want to preserve Britain's green
belts? If some trees stand in the way of a Wal-Mart superstore,
forget it. Even under the current, weaker, Gats, Japan was forced
to tear up its own planning rules to let in the retail monster
boxes.
The Government assures us that nothing threatens its right to
enforce laws in the nation's public interest. Not according to the
19 March memo. The WTO reports that, in the course of the
secretive multilateral negotiations, trade ministers agreed that a
Gats tribunal would not accept a defence of `safeguarding the
public interest'.
In place of a public interest standard, the Secretariat proposes a
deliciously Machiavellian `efficiency principle': `It may well be
politically more acceptable to countries to accept international
obligations which give primacy to economic efficiency.' This is an
unsubtle invitation to load the Gats with requirements that rulers
know their democratic parliaments could not otherwise accept. This
would be supremely dangerous if, one day, the US elected a
president who wanted to shred air pollution rules or, say, Britain
elected a prime minister who had a mad desire to sell off the rest
of his nation's air traffic control system.
How convenient for embattled chief executives. What elected
congresses and parliaments dare not do, Gats would require. Under
the post-democratic Gats regime, the Disputes Panel, those Grand
Inquisitors of the free market, will decide whether a nation's law
or a regulation serves what the memo calls a `legitimate
objective'.
While parliaments are lumbered with dated constitutional
requirements to debate a law's legitimacy in public, with public
evidence, and hearings open to citizen comment, Gats panels are
far more efficient. Hearings are closed. Unions, as well as
consumer, environmental and human rights groups, are barred from
participating -- or even knowing what is said before the panel.
Is the 19 March memo just a bit of wool-gathering by the WTO
Secretariat? Hardly. The WTO was working from the proposals
suggested in yet another confidential document also sent to me by
my good friend, Unnamable Source. The secret memo, `Domestic
Regulation: Necessity and Transparency', dated 24 February, was
drafted by the European Commission's own `working party', in which
the UK ministry claims a leading role.
In a letter to MPs, Trade Minister Caborn swears that, through the
EC working party, he will ensure that Gats recognises the
`sovereign right of government to regulate services' to meet
`national policy objectives'. Yet the 24 February memo,
representing the UK's official (though hidden) proposals, rejects
a nation's right to remove its rules from Gats jurisdiction once a
service industry is joined to the treaty.
Indeed, the EC document contains contemptuous attacks on nations
claiming `legitimate objectives' as potential `disguised barriers'
to trade liberalisation. Moreover, there is a codicil that
regulation must not be `more trade restrictive than necessary',
ready for harvesting by the WTO Secretariat's free market
fanatics.
Not knowing I had these documents in hand, Caborn's office this
week maintained that Gats permitted nations a `right to regulate
to meet national policy objectives'.
I was not permitted to question the Trade Minister himself.
However, the Caborn letter to MPs admits that his pleasant
interpretation of Gats has not been `tested in WTO jurisprudence'.
This is, after all, the Minister who, with his EU counterparts,
just lost a $194 million judgment to the US over the sale of
bananas.
Now, I can understand how Caborn goofed that one. Europe argued
that bananas were a product, but the US successfully proved that
bananas were a service -- try not to think about that -- and
therefore fall under Gats.
And that illustrates the key issue. No one in Britain should
bother with what Caborn thinks. The only thing that counts is what
George W Bush thinks. Or, at least, what the people who think for
Bush think.
Presumably, Caborn won't sue the UK for violating the treaty. But
the US may. In a way it already has. Forget Caborn's assurance --
we need assurance from President Bush that he won't use Gats to
help out Wal-Mart -- or Citibank or Chevron Oil.
The odd thing is, despite getting serviced in the bananas case,
Caborn and the Blair government have not demanded explicit
language barring commerce-first decisions by a Gats panel.
Instead, the secret 14 February EC paper encourages the WTO's
Secretariat to use the punitive form of the Necessity Test sought
by the US.
So there you have it. Rather than attack the rules by which
America whipped Europe, Caborn and the EC are effectively handing
George Bush a bigger whip.
Guardian Unlimited © Guardian Newspapers Limited 2001