Steps Toward a Corporate State
Rachel's Environment and Health Weekly, #694,
April 27, 2000
Governments in the U.S. -- federal, state, and local -- together
spend more than a trillion dollars of taxpayers' money per year.
That's a thousand billion dollars each year, representing roughly
1/6 of total U.S. Gross National Product. By any measure, it is
a huge sum of money.
Many people concerned about the decline of their communities
have begun to realize that government purchasing (often called
procurement) has great potential for promoting environmental and
social sustainability -- a potential that has barely been tapped.
By spending money strategically, governments can
** reduce environmental damage by (for example) purchasing
recycled materials; 48 out of the 50 states in the U.S. have laws
directing state agencies to purchase recycled materials.
** create jobs in local communities and strengthen regional
economies by purchasing from local firms;
** assist women-owned businesses, minority-owned businesses,
or businesses that avoid the use of environmentally-destructive
products such as tropical hardwoods, plastics, chlorinated solvents,
or unnecessary pesticides;
** promote fair labor practices. Dozens of cities and counties,
including Pittsburgh, Pa., Cleveland, Oh., and San Francisco,
Ca. have local ordinances banning purchase of products made in
sweatshops. Similarly, two dozen U.S. cities now require companies
doing business with the city to pay their workers a "living
** reward firms that adopt innovative technologies, such as
chlorine-free chemistry, solar power, or non-toxic cleaning compounds.
In sum, government purchasing policy offers citizens an opportunity
to make both governments and corporations accountable to taxpayers.
Citizens can use government purchasing policy to guide their regional
economy onto the path most likely to improve their quality of
life. To put it another way, government purchasing offers citizens
an opportunity to impose human values on their local and regional
Now, however, some of these U.S. laws have been declared illegal
by the World Trade Organization (WTO), headquartered in Switzerland,
and many similar laws are now under attack by corporations. It
is crystal clear that the combined corporate power of Japan, Europe
and the U.S. is now aiming to make government purchasing policy
off-limits to democratic decision-making.
Despite the anti-WTO protests in Seattle last fall, the WTO
has not changed in any fundamental way. It is a powerful new system
of world governance, designed and run by corporate lawyers who
are not elected, who do not answer to the people they govern,
and who make decisions behind closed doors. Their decisions are
binding and can only be appealed once, to a three-member tribunal
composed of other WTO bureaucrats, who are themselves usually
To a historian, it seems reasonable to conclude that the WTO
and the "free trade" policies it was set up to enforce
are the most direct threat to democracy and popular sovereignty
since the rise of the corporate state under National Socialism
in Germany in the late 1930s.
The corporate media in the U.S. describe the purpose of the
WTO as "globalization" -- a term so vague that it is
meaningless. The media never say so in plain language but the
overarching goal of the WTO (and of "free trade" policies
in general) is to diminish the power of governments, and thus
to reduce governments' capacity to influence the behavior of transnational
corporations. The WTO was set up as a forum in which transnational
corporations can challenge and effectively repeal restrictions
imposed upon them by nations (or by sub-governments within nations).
In other words, rather than "globalization," the real
purpose of the WTO is "global corporatization" -- increased
corporate control over all the nations and economies of the world.
Created by international treaty in 1995, and now boasting
134 nations as members (nations that are not members can be iced
out of international trade), the WTO has written 700 pages of
rules which add up to an enforceable commercial code governing
markets and trade world-wide -- a code enforceable not by nation-states
but by the WTO itself. One of those rules is called the Government
Procurement Agreement (GPA).
The GPA basically says that governments can set standards
for the PERFORMANCE of purchased materials but cannot set standards
based on METHODS OF PRODUCTION. Therefore, government purchasing
policies cannot discriminate against materials produced by child
labor or slave labor, for example. Likewise, requiring that items
be manufactured from recycled materials would be prohibited under
Thus the GPA provides one more way for corporations to strike
down laws that curtail their freedoms. Corporations in the European
Union, Canada, and Japan have been complaining for at least a
decade that many U.S. laws are "illegal barriers to trade"
meaning barriers to corporate freedom. If such laws can be
struck down in the U.S., they can be struck down anywhere because
the U.S. is the 900 pound gorilla within the WTO. To avoid enraging
the gorilla, foreign corporations have been moving cautiously,
looking for a strategic opportunity to strike. Now the GPA has
provided an opportunity for the first step.
The immediate issue is the country called Myanmar, formerly
known as Burma. It is widely acknowledged that the military dictatorship
in Burma suppresses political opposition, tortures and murders
its opponents, harnesses the populace into slave labor battalions
(sometimes to work for U.S. corporations that have invested heavily
in Burma, such as Unocal) and generally violates universally-recognized
Borrowing a technique that was used by 23 U.S. states in the
fight to end apartheid in South Africa, a dozen U.S. cities passed
local ordinances in 1995-1996 preventing local government from
doing business with companies doing business in Burma. (Other
U.S. cities have similar laws aimed at punishing dictators in
Nigeria, Tibet, Indonesia and Cuba.) In 1996, the state of
Massachusetts passed a "Burma law," and this got the
attention of corporations world-wide. (Although the GPA explicitly
binds states and does not explicitly bind municipalities, there
is widespread understanding that municipal laws will be challenged
under WTO rules. For example, when Maryland tried to pass a law
preventing state government from signing any contracts with the
government of Nigeria or with any firms doing business in Nigeria,
the Clinton administration opposed the legislation in testimony
before the Maryland legislature, saying, "All state AND LOCAL
sanctions are perceived to violate the rules, they can cause counterproductive
disagreements.... [W]e would like to work with you to ensure that
we don't expose ourselves to a potential WTO challenge.")
In 1998, Japan and the European Community (EC) each filed
a formal complaint with the WTO, seeking to overturn the Massachusetts
Burma law, basing their objection on Section XIII.4(b) of the
GPA. However, a group of 550 U.S. corporations calling themselves
the National Foreign Trade Council beat them to the punch and
sued Massachusetts in a state court, arguing that the Constitution
reserves foreign policy decisions to the Executive Branch of the
federal government. Predictably the Clinton/Gore administration
sided with the corporations against Massachusetts. The state court
and a federal appeals court both ruled against Massachusetts.
"If such a ruling had come out a decade ago," said
Massachusetts representative Byron Rushing, who sponsored the
Massachusetts law, "Nelson Mandela might still be in prison
today." Now the U.S. Supreme Court will decide the issue.
However, the European Community and Japan have announced that,
if the Supreme Court rules incorrectly, they will ask the WTO
to overrule the U.S. Supreme Court. The corporate rulers of Europe,
Japan and the U.S. agree on this: the public has no right to impose
moral standards on economic activity. The economy is not subject
to democratic control. The Government Purchasing Agreement is
where they are making their stand, campaigning to diminish the
vestiges of democracy wherever they remain.
The good news is that this corporate assault on democracy
offers unprecedented opportunities for getting the public involved.
Nearly everyone can see that taxpayers have a basic right to spend
their money as they see fit. With a modest amount of information,
people can see the good that can come from well-crafted government
purchasing policies. Such policies allow people to improve their
local and regional economies, while rebuilding peoples' confidence
that government can serve their needs. Lastly, the WTO assault
on government purchasing makes it possible for people to understand
what "free trade" and the WTO are really about -- they
are really about removing the last remnants of popular sovereignty
and substituting, in their place, the elements of a corporate
Thus this brazen corporate campaign offers us all many opportunities
to take the offensive, to re-assert control over our regional
For legal technical assistance on government purchasing policies,
contact Robert Sturmberg, Harrison Institute for Public Law, Georgetown
University Law Center, Washington, D.C.; phone 202-662-9600. See
http://www.law.georgetown.edu/clinics/- hi/ (omit the hyphen).
For further information about best practices in government purchasing
policies, get in touch with Sustainable America, 42 Broadway,
Suite 1740, New York, NY 10004-1617; phone: 212-269-9550; see
 Ralph Nader, Eleanor J. Lewis and Eric Weltman, "Shopping
for Innovation," AMERICAN PROSPECT No. 11 (Fall 1992), pages
unknown. Available at www.prospect.org/archives/11/11lewi.html.
 Only Alabama and Wyoming have no such laws. See: Alaska
Stat. 36.30.337 (Michie 1998); Cal. Pub. Cont. Code 12310 (West
1998); Del. Exec. Order 82 (1990); Fla. Stat. Ann. 287.045 (West
1998); Haw. Rev. Stat. 103D-1005 (1997); 415 Ill. Comp. Stat.
20/3 (West 1998); Ind. Code 5-22-15-16 (Michie 1998); Iowa Code
Ann. 216B.3 (West 1997); Kan. Stat. Ann. 75-3740b (1997); Ky.
Rev. Stat. Ann. 45A.520 (Banks-Baldwin 1998); La. Rev. Stat. Ann.
30:2415 (West 1998); Me. Rev. Stat. Ann. tit. 5, 1812 (West 1997)
(recycled materials other than paper); Md. Code Ann., State Fin.
& Proc. 14-402 (1998); Minn. Stat. Ann. 16B.121 (West 1998);
Miss. Code Ann., 49-31-7 (1998); Mo. Ann. Stat. 34.031 (West 1997)
(recycled solid waste materials); Mont. Code Ann. 75-10-806 (1997);
Neb. Rev. St. 81-15,159 (Michie 1998); Nev. Rev. Stat. 386.417
(1997); N.H. Rev. Stat. Ann. 21-I:11 (1997); N.M. Stat. Ann. 13-1-135.1
(Michie 1998); N.Y. Pub. Auth. Law 2878- a (McKinney 1998); N.C.
Gen. Stat. 130A-309.14 (1997); Ohio Rev. Code. Ann. 125.082 (West
1998); Okla. Stat. Ann. tit. 74, 85.53 (West 1998); Or. Rev. Stat.
279.570 (1997); R.I. Gen. Laws 37-2-76 (1997); S.C. Code Ann.
44-96-140 (1997) (recycled and recyclable materials); S.D. Codified
Laws 5-23-41 (Michie 1998); Tex. Health & Safety Code 361.426
(West 1998); Vt. Stat. Ann. tit. 3, App. Ch. 7, Exec. Order 24-86
(recycled materials and nonwasteful packaging); Wash. Rev. Code
Ann. 43.19.A.005 (West 1998) W. Va. Code 20-11-7 (1998); Wis.
Stat. Ann. 16.72 (1998).
 See www.consumerscouncil.org/ccc/policy/amic2599.htm.
 The text of the Agreement on Government Procurement is
available at www.wto.org/wto/govt/agreem.htm.
 The latest (63-page) version of the EU's complaint can
be found in PDF format at http://europa.eu.int/comm/trade/pdf/-
usrbt99.pdf (omit the hyphen).
 U.S. Department of Labor, Bureau of International Labor
Affairs, REPORT ON LABOR PRACTICES IN BURMA (Washington, D.C.:
U.S. Department of Labor, September 1998). Available at www.dol.gov/dol/ilab/public/media/reports/ofr/burma/main.htm.
 David E. Sanger, "Unocal Signs Burmese Gas Deal;
U.S. May Ban Such Accords," NEW YORK TIMES February 1, 1997,
 Quoted in Lori Wallach and Michelle Sforza, WHOSE TRADE
ORGANIZATION? CORPORATE GLOBALIZATION AND THE EROSION OF DEMOCRACY
(Washington, D.C.: Public Citizen, 1999), pg. 188.
 Linda Greenhouse, "Justices Weigh Issue of States'
Making Foreign Policy," NEW YORK TIMES March 23, 2000, pg.
 Carey Goldberg, "Limiting a States's Sphere of Influence,"
NEW YORK TIMES November 15, 1998, pg. A22.
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RACHEL'S ENVIRONMENT & HEALTH WEEKLY #694, April 27, 2000
Environmental Research Foundation
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