================== Electronic Edition ==================
RACHEL'S ENVIRONMENT & HEALTH NEWS #674
---October 28, 1999---
HEADLINES:
THE WTO AND FREE TRADE--PART 2
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The WTO and Free Trade--Part 2
In the U.S. (though not in Europe), a liberal is a person "who
believes in a society that taxes the well-off and uses the
proceeds to help the poor and unlucky."[1] In the U.S., liberalism
is the political philosophy that expresses those ideas.
On the other hand, the "liberalization" of an economy (or
"neo-liberal" economic policy[2]) has nothing to do with
liberalism or being a liberal in the U.S. sense of that term.
Liberalization means (according to the big Merriam-Webster
dictionary) "to free from official control." That is what
"neo-liberal" economics is about -- removing societal controls
from markets. The goal of "liberalization" today is "global free
trade." (See discussion in REHW #673 last week.)
Global free trade is a utopian goal, meaning that it embodies an
impossible ideal: to remove all restrictions from markets. Free
trade is utopian because it runs counter to the way humans have
always behaved. When humans develop markets, they impose all kinds
of restrictions on those markets.
U.S. history provides an excellent example of typical market
restrictions and interventions. From the beginning, the U.S.
developed its industrial base behind a wall of high tariffs (taxes
on imported goods) to protect weak domestic industries against
competition from Europe. Starting in the 18th century the federal
government subsidized the construction of roads and later
railroads. The western territories were taken from their original
inhabitants with help from a host of government subsidies -- the
government conducted land surveys; organized citizen militias and
paid bounties for Indian scalps; promoted mineral exploration; and
encouraged settlement by offering free land. Like every other
country on Earth, the U.S. has always restricted and shaped market
activity to promote its own particular societal goals.
Now supposedly things are going to change. For the past 25 years,
a bi-partisan financial and political elite has made it a key goal
to impose "free trade" on the U.S. and on the rest of the world --
to try to force every country in the world to remove restrictions
from their markets. ("Structural adjustment" is the name for this
activity when it is imposed on countries outside the U.S. by
organizations like the World Bank and the International Monetary
Fund.) After 25 years of evangelical effort, the utopian goal of
"global free trade" has become a kind of civil religion in the
U.S. People who favor international trade but not "global free
trade" are stigmatized by the NEW YORK TIMES and the WALL STREET
JOURNAL as "isolationists" or worse. Both major political parties
are dominated by global free trade advocates -- Al Gore, Bill
Bradley, George W. Bush, and Steve Forbes are all avid believers
in global free trade. No choice here.
As we will see, the main proponents and beneficiaries of free
trade are transnational corporations such as Gerber Foods,
Chiquita, Kodak, Monsanto, Microsoft, the asbestos manufacturers,
the lead industry, the major magazine publishers, and so on.
Slowly, starting in the early 1970s, it dawned on the executives
of these transnationals that the gospel of "free trade" -- if
widely accepted -- could give them relief from the main factors
that were causing their profits to stagnate. Those factors were
(and still are):
1. insufficient consumer demand for their products;
2. the high cost of labor;
3. the high cost and scarcity of raw materials;
4. societal standards requiring openness and public
accountability;
5. laws respecting the rights of workers;
6. legal protections for the natural environment.
As we will see, free trade doctrine and law now provide relief
from each of these problems.
In carrying out their "global free trade" campaign over the past
25 years, the corporations didn't act alone. They funded other
institutions that developed the rationale for global free trade
and then spread the word -- new strategic organizations like the
Business Roundtable, think tanks like the Heritage Foundation and
the Cato Institute, private philanthropies like the Olin and
Richardson Foundations, universities (mainly University of Chicago
with help from scholars based elsewhere), and publications like
NATIONAL REVIEW. Together these organizations developed a vision
that emphasized maximum freedom -- a version of 19th century
libertarianism expressed in the language of individual liberty but
implemented as freedom from market restrictions, libertarianism
for corporations. The new libertarian gospel successfully blended
"global free trade" with the promise that U.S. institutions --
because of their inherent superiority -- are destined to spread
worldwide. This gave "global free trade" a patriotic coloring AND
made its future seem inevitable and irresistible.
Armed with the utopian vision, corporate lawyers began patiently
re-working a group of existing international organizations, among
them the World Bank, the International Monetary Fund, and the
General Agreement on Tariffs and Trade (GATT). But they needed
something new. They needed an agency with legal standing
equivalent to that of the United Nations but one that wouldn't
have to conduct its business in a fishbowl and wouldn't be subject
to fickle popular controls. So over a decade they morphed an
existing institution -- the GATT -- into a new agency with the
needed characteristics. They called it the World Trade
Organization (WTO) and it sprang to life in January, 1995. The WTO
now has legal standing equivalent to the United Nations, but it
operates largely in secret. It holds its meetings at undisclosed
locations and times in Geneva, Switzerland, and makes decisions
behind closed doors based on pleadings, evidence, and expert
testimony that are confidential. Non-governmental organizations
cannot submit documents to the proceedings, nor witness
deliberations. WTO decisions are binding, world-wide.
WTO judges are trade bureaucrats, usually corporate lawyers. There
are no rules preventing them from having conflicts of interest in
the matters they decide. There is no appeal to any outside
organization; WTO rulings can only be appealed to another panel
within the WTO itself. The WTO enforces its own rules by imposing
sanctions against rule-breakers. Any country that breaks the rules
repeatedly will find itself shunned, locked out of world commerce,
without anyone to buy from or sell to at competitive prices. The
WTO has no army but it has real power. (Of course the military
apparatus of the developed countries, especially the U.S., is the
ultimate enforcer of WTO decisions, though it is definitely not
considered polite to mention this.) At present, the WTO is the
closest thing we have to a world government but it is explicitly
designed to serve the interests and needs of transnational
corporations, not of people.
The WTO was created by international treaty; 134 nations have now
signed on. Representatives of the 134 nations are meeting in
Seattle, Washington November 29-Dec. 3 to discuss ways to expand
the WTO's power even further. But there is now almost 5 years of
WTO history to scrutinize and based on this history,
representatives of labor, human rights, environment and community
development organizations will journey to Seattle for a peaceful
"Protest of the Century" to express their displeasure with the
WTO. They want the WTO opened up to public examination before any
consideration is given to expanding the WTO's power. (To learn
more about protest-related activities, telephone 1-877-786-7986.)
The WTO serves the needs of corporations very effectively. To
begin with, those who can afford to lodge a complaint with the WTO
almost always win. Of 22 cases brought before the WTO in the last
5 years, 19 have been settled in favor of the party bringing the
challenge. This means that big companies that can get their
government to go to bat for them have a major advantage over small
companies and small nations.
Example: The current accepted approach to environmental protection
is called "pollution prevention" or "clean production." Pollution
prevention is the highest stated goal of U.S. Environmental
Protection Agency. It means not creating dangerous pollution in
the first place -- often by banning dangerous substances. For
example, the U.S. has banned lead from gasoline and DDT from
farming because the U.S. concluded in the 1970s that there was no
safe way to "manage" such substances after they were created.
Now the WTO has declared such product bans illegal. WTO rules
forbid banning toxic substances -- the WTO only allows toxics to
be regulated using risk assessment. Thus the WTO is an effective
hammer for breaking apart the modern structure of environmental
protection and returning the world to older "end of pipe"
pollution controls. Large corporations had little difficulty
meeting "end of pipe" regulations defined by "risk assessments."
Under this older system, corporate experts and lawyers could
usually battle regulatory officials to a standstill. Furthermore,
the "end of pipe" system favored large corporations over small
ones because big companies could afford the experts and lawyers to
make the system work for them. Bans are a different kettle of fish
-- once a ban is enacted, there is no "wiggle room" for corporate
experts and lawyers. Product bans affect large and small
businesses alike, removing the advantage that large corporations
enjoyed under the "end of pipe" system.
Now the European Union has announced its intention to ban
electronic products that contain lead, mercury, cadmium,
hexavalent chromium and halogenated flame retardants by the year
2004.[3,pgs.30-32] [4] The EU also intends to require that 5% of
the plastics in electronic components must be recycled, and
further the EU intends to make electronics manufacturers
responsible for their products from cradle to grave -- the
manufacturer retains responsibility for ultimate disposal. (Such
approaches are being used successfully in Germany today.)
Acting on behalf of the American Electronics Association (IBM,
Motorola, Microsoft, Raytheon, etc.) the Clinton/Gore
administration immediately filed an aggressive challenge to the
EU's proposal. The EU proposal is WTO-illegal for many reasons,
the U.S. says. And the U.S. is almost certainly right.
If the U.S. wins the electronics dispute, which seems very likely,
Congress will not have to raise these issues because the EU's
attempt to impose pollution prevention on the electronics industry
will have been declared illegal by bureaucrats in Geneva,
Switzerland, and their decision will override U.S. (and European
Union) law.
Thus the WTO is an excellent vehicle for ridding the world of
product bans for pollution prevention. The electronics giants
don't even have to fight this battle themselves -- the free trade
enthusiasts within the U.S. government, led by environmentalist Al
Gore, are fighting it for them. For corporations, "global free
trade" as embodied in the WTO is a dream come true.
And this is just the beginning. More next week.
--Peter Montague
(National Writers Union, UAW Local 1981/AFL-CIO)
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1. Economist Paul Krugman defines a liberal this way in PEDDLING
PROSPERITY (New York: W.W. Norton, 1994), pg. xiv. ISBN
0-393-03602-2. In Europe, on the other hand, a liberal is one
who believes in free trade; see Godfrey Hodgson, THE WORLD
TURNED RIGHT SIDE UP (Boston: Houghton Mifflin, 1996), pg.
11.
2. "Neo-liberals" are people who are working to liberalize
economies in modern times. The first people who worked to
liberalize economies were men like Adam Smith (THE WEALTH OF
NATIONS, 1776) who worked in the late 18th century to replace
the economic system called mercantilism which had imposed
strict governmental controls over economic activity.
3. Lori Wallach and Michelle Sforza, WHOSE TRADE ORGANIZATION?:
CORPORATE GLOBALIZATION AND THE EROSION OF DEMOCRACY
(Washington, D.C.: Public Citizen, Inc., 1999). ISBN
1582310017; telephone (202) 588-1000.
4. Jim Puckett, WHEN TRADE IS TOXIC: THE WTO THREAT TO PUBLIC
AND PLANETARY HEALTH (Seattle, Washington: Asia Pacific
Environmental Exchange and Basel Action Network, 1999).
Electronic version available after November 4 from the BAN
website at www.ban.org. For a printed version contact
jpuckett@ban.org. It will be mailed to you if you can send a
donation to Basel Action Network (online donation) or by
mailing a check donation to: Basel Action Network, c/o Asia
Pacific Environmental Exchange, 1827 39th Ave. E., Seattle,
WA. 98112.
Descriptor terms: world trade organization; wto; bans; pollution
prevention; structural adjustment; free trade; gatt; nafta;
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