Saturday, April 14, 2007

World Trade or World Domination?

To its supporters, the WTO is a ray of hope for free trade and growth for even the poorest developing countries. To its detractors, and there are many, it is the enemy of human rights, the environment, labor, and local self-determination. Here are answers to some common questions about the WTO to help you make up your own mind. by Silja J.A. Talvi

SEATTLE--Never mind Y2K. For thousands of activists worldwide, an apocalyptic phenomenon of an entirely different sort threatens the world in the new millenium: the World Trade Organization.

To its opponents, the WTO is the arch-enemy of worker's rights, environmental protection, biodiversity, national sovereignty and local economic control. To supporters, it's a beacon of free trade and beneficial growth, shining a light of hopeful promise into even the darkest corners of the developing world.

And on Nov. 30, it's coming to the US for the first time. The WTO's Third Ministerial Conference in Seattle will be the largest trade meeting ever held in the nation. Thousands of trade ministers and other government officials, including President Clinton, are expected to attend the meeting, which will set the agenda for a new three-year round of international trade negotiations.

Borne along on one side by Armani-clad horsemen of the global economy, the WTO will be weighed down on the other by throngs of disenchanted, dispossessed and altogether displeased dissenters who insist that the pro-corporate, undemocratic nature of the institution portends nothing but misery for the majority of the world's inhabitants.

But just what is this multi-tentacled creature, and why does it make so many people so angry? Herewith, a MoJo Wire primer:

What is the WTO, anyway?
The WTO grew out of GATT, the General Agreement on Tariffs and Trade, a 1948 compact among 23 countries designed to lower tariffs and other barriers to free trade across their borders.

From 1948 to 1994, GATT members came to the global trading table eight times; each time, more members were admitted. International trade boomed as national regulations were gradually diminished -- a process that moved into high gear in the Reagan-Thatcher '80s and has continued to accelerate since. At the last round of GATT talks, emboldened by the 1993 passage of NAFTA, the North American Free Trade Agreement, officials hammered out a radically new framework for international trade that laid the foundation for the WTO. While GATT concerned the literal trade in goods, the new agreements encompassed vast new areas of present and potential economic activity, including agricultural subsidies, banking, intellectual property rights, investment, telecommunications, and the broadly defined category of "services."

To give the expanded rules lasting power, the WTO was established in 1995 to enforce existing trade agreements and serve as a central clearinghouse through which trade relations between countries could be handled. According to the WTO's organizational statement, its objective is to "help trade flow smoothly, freely, fairly and predictably." It currently consists of 135 member nations, which are responsible for more than 90 percent of world trade. Membership brings the huge advantages of relatively unfettered trade in goods, services, technology, and investment capital with other WTO nations.

The WTO Secretariat, based in Geneva, now has 500 staffers. Atop the heap is new Director-General Michael Moore, a former overseas trade minister and one-time prime minister of New Zealand. In his six years in power, Moore and his Labor party have successfully eliminated many agricultural subsidies, cut government social spending, deregulated the labor market, and disempowered labor unions.

Is the WTO a democratic institution?
The organization has always emphasized that its decisions are "democratic," insofar as they are made by the entire membership of nation-states, and usually by consensus. Some developing nations have a seat at the table alongside world powers.

But to a great extent, the wealthier countries dominate decision making. The US, for instance, maintains a small army of permanent negotiators in Geneva - something most WTO member nations can't afford. WTO agreements, says Debi Barker, deputy director of the International Forum on Globalization, while eventually ratified by all member countries, are often decided upon by a small group. Citing a Nov. 6 protest letter written to the WTO by 11 member developing countries, Barker says that smaller nations are growing increasingly frustrated at being left out of important negotiation processes altogether. The IFG also argues that developing nations have been strong-armed into ratifying agreements by way of direct or indirect threats regarding IMF loans upon which many of them depend.

Everyday citizens, in turn, theoretically have a voice through their governments. All of the WTO's discussions and records of trade disputes, however, are closed to the public.

"In reality," says Steven Shrybman, executive director of West Coast Environmental Law in Vancouver, B.C., and author of "The Citizen's Guide to the WTO", the organization "is not accountable to [most] people whose lives are affected by it. Most of them live in developing countries. While they have a seat at the table, they don't even have a tiny scintilla of the resources they need to engage effectively in the complex and myriad functions, disputes, and negotiations under the auspices of the WTO."

Enforcement of WTO trade-dispute resolutions similarly favors the major powers. In theory, the WTO serves as the mechanism through which trade disputes are impartially resolved. When one country challenges another for not complying with WTO regulations, the matter is taken before an appointed, secret panel of "trade experts."

If the trade experts find that a WTO trade agreement has indeed been violated, the WTO has the power to insist that the offending country change its practices or face fines and/or trade sanctions from the injured nation. That, however, hardly makes for a level playing field. If Panama, say, were to impose sanctions on the US, hardly anyone would notice; but US sanctions could cripple Panama's economy.

WTO supporters respond that the organization's consensus-based system prevents this sort of thing from happening. And in fact, the WTO has on occasion ruled in favor of smaller nations in trade disputes with major powers.

But such rulings are hardly the norm. In one highly publicized case, the WTO ruled in January 1999 that the EU could no longer give preferential treatment to banana imports from former colonies in the Caribbean, a decision which is likely to hurt the region's already-impoverished, primarily small-scale banana farmers. Who brought up the complaint? The US -- home base to banana giants Chiquita, Dole, and Del Monte, which control an estimated two-thirds of world banana exports.

The close relationship of corporations to the WTO has become more apparent in recent years. In the months leading up to the Seattle Ministerial, high-profile corporations were courted for hefty sponsorship donations: Boeing and Microsoft were among those who rushed to give a minimum of $250,000 to secure a presence at the opening reception and Ministerial dinner, business conference participation and prominent displays of their corporate materials and logos.

"Anyone who has a trade issue on the table is well-served by having a presence so the (WTO) is reminded of those issues," remarked Fred Benson, Weyerhaeuser's vice president of federal and international affairs, to the Seattle Times in August.

But what's so terrible about global free trade?
Trade is one thing, but unrestricted, worldwide, corporate-dominated trade runs roughshod over the environment, workers' rights, small nations, and local self-determination, critics say.

Lori Wallach and Michelle Sforza, co-authors of Public Citizen/Global Trade Watch's "Whose Trade Organization?" have made a study of the 167 contested trade issues brought to the WTO as of last March. Their conclusion: In every case in which an environmental, health, or food safety law was challenged at the WTO, such laws have been declared illegal barriers to trade. WTO rulings have forced South Korea to lower meat safety rules and the US to weaken its Clean Air Act, to cite just two.

How does the WTO affect workers rights?
On paper, the WTO has almost nothing to do with labor rights. In 1996, at the Singapore Ministerial, WTO member governments declared that the issue of international labor standards fell into the purview of the United Nations' International Labor Organization. At the same meeting member states also declared that "we reject the use of labor standards for protectionist purposes."

But the ILO has only weak enforcement powers. Thus, many critics charge that the WTO has neatly absolved itself of any responsibility to protect labor rights, while reserving the right to challenge labor laws whenever they might present a challenge to liberalized trade.

Trade, of course, can be a powerful force for creating jobs, and for reducing poverty. Indeed, more than 12 million American jobs are now attributed to the export economy. According to one study, one of every four jobs in Washington state are related to international trade.

Why, then, will some of the biggest demonstrations in Seattle be organized by workers and labor unions? Outrage over abusive sweatshop conditions throughout the developing world, for one thing. But laborers in the United States are also feeling the impact of the global economy directly, especially in the aftermath of NAFTA. According to Ron Judd, executive director of the King County Labor Council, the US has lost 537,000 manufacturing jobs in the last 18 months alone as companies continue to move production overseas to places where labor costs are cheaper.

The AFL-CIO is pushing the WTO to take several concrete steps to protect workers' rights, including a review of the impact of trade liberalization on labor; adopting enforceable rules on minimum wage guarantees, workplace safety, and the right to unionize; and assurance that trade rules do not override domestic human- and labor-rights regulations. The Teamsters have taken an even stronger stance, demanding that the WTO make all nations involved in trade pacts abide by basic standards for wages and working conditions.

To the International Forum on Globalization, the WTO's whole approach to the global economy signifies a deeper issue: "When you make capital mobile, and [when] labor isn't mobile, that's an intrinsic, systemic [problem] of economic globalization of which the WTO is an instrument," says Barker.

What about the environment?
Last week, President Clinton moved to stem widespread criticism from environmentalists by announcing that his administration will work to assess the environmental impact of WTO agreements, get input from environmental groups, and provide technical help to developing countries trying to protect their natural resources. The WTO, for its part, has stepped up efforts to dispel what it has called a misunderstanding that "commercial interests take priority over environmental protection" in the agreements of the organization. It claims that there has been no conflict between WTO agreements and international environmental agreements.

But critics say that WTO decisions on trade have undermined important environmental safeguards. Shrybman cites the Biosafety Protocol of the UN Convention on Biological Diversity as an example. Last February, more than 140 nations met in Colombia to complete the Biosafety Protocol, the result of seven years of international effort toward a policy to protect the public from the potential health and environmental threat of genetically modified organisms.

The protocol was intended to give governments the right to consent to or to refuse shipments of genetically modified foods. But, as Global Trade Watch's Wallach and Sforza have documented, the US-led "Miami Group" consisting of several major exporters of genetically modified organisms blocked adoption of the protocol, citing conflicting trade obligations under the WTO. (See also "Hot Button: Genetically Modified Foods")

The US' own environmental and endangered-species laws have suffered more direct harm. In January 1996, in response to a challenge launched by Brazil and Venezuela on behalf of their domestic oil industries, the WTO ruled that 1990 US Clean Air Act regulations requiring cleaner gasoline constituted an unfair trade barrier. Buckling under pressure, the EPA amended its own regulations to allow Venezuelan and Brazilian fuel with higher amounts of pollutants into the US.

In 1998, shrimp producers from Malaysia, Thailand, Pakistan, and India demanded -- through their governments -- an end to the US embargo on shrimp from countries that didn't use devices on their nets which protect endangered sea turtles. The WTO sided with the shrimp producers, and against the Endangered Species Act.

How about local food production?
The global economy has displaced countless subsistence farmers while boosting the corporatization of food production, as free-trade policies have helped to bring down export prices on food products. But the WTO's rationale is straightforward: Free trade ultimately benefits everyone, even if it means that workers and producers must "adjust" when trade barriers are lowered.

While many European, Asian, and North American countries have indeed seen significant economic benefits from free trade, the impact of trade liberalization for developing countries has been far more negative than the WTO cares to admit. A recent United Nations Commission on Trade and Development report shows that the share of world exports and imports has, in fact, fallen sharply among the poorest countries in recent years. Rapid liberalization of trade and the removal of trade barriers has often forced producers in developing countries to compete with -- and lose to -- more sophisticated and industrialized foreign manufacturers. UN Council on Trade and Development has also found that those countries which have pursued rapid trade liberalization have seen phenomenal increases in wage inequalities at home.

"The answer that this global economic model offers for all problems is growth , and in particular, growth in trade," says Shrybman. "That makes sense only if you think the planet is infinite in its capacity to provide us with energy -- and it obviously isn't. It's telling us, in no uncertain terms, that it's had more than it can endure. More and more consumption by more and more people of more and more things just isn't a viable prescription."