WTO and Free Trade
Rachel's Environment & Health Weekly
#674 October 28, 1999
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." 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) 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."
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. 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
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.