Seattle Showdown

Citizens stand up to the WTO

by David Moberg

In These Times magazine, November 1999, p22


When the World Trade Organization planned this year's high-level meeting of trade ministers, Seattle must have seemed an ideal location-a major port city built on international trade and home to world-spanning corporations like Boeing and Microsoft. But the global trade bureaucrats are surely now having second thoughts. Tens of thousands of citizen activists-environmentalists, farmers, unionists, advocates for poor countries and a cornucopia of critics of globalization and multinational corporations-are expected to join them at the end of November, engaging in everything from teach-ins and mass rallies to civil disobedience and an eight-hour shutdown of ports on Puget Sound.

In the throng will be people like 48-year Gerald Gunderson, a Steelworker at a Milwaukee chain factory and member of the Wisconsin Fair Trade Campaign. Gunderson helped stop-for now-a multinational mining venture that threatened to pollute Wisconsin rivers and lakes prized by fishermen and the Chippewa tribe. "I would like to see the WTO just stopped entirely," he says. "I don't think it can be reformed until people affected by institutions like the WTO have representation proportionate to their numbers."

Launched in 1995, the World Trade Organization has become a lightning rod for critics of global corporations, whether they're concerned about threats to democracy, national sovereignty, genetically modified food or workers rights. In the name of promoting free trade, the WTO serves to codify the rules of the global economic game in ways that strengthen the hand of multinational corporations. In its first four years, the critics' worst fears were reinforced by decisions that consistently elevated increased trade above all other interests. The WTO, however, is a zealous handmaiden of corporate globalization, not the root cause of threats to the environment, public health or the well-being of working people. While it gives legal force and legitimacy to corporate global interests, stopping the WTO-as many protesters would like-is, at best, a first step toward creating rules for the global economy that tame corporate power and protect popular aims and democratic processes.

Compared to the General Agreement on Tariffs and Trade (GATT) that preceded it, the WTO has more power- decisions of its dispute panels are binding and a consensus of all 134 member governments is needed to block them (previously consensus was needed to enforce obligations). It also covers far more than tariffs and trade in goods. The WTO agreement ventures into protection of intellectual property rights and investments, freeing trade in services and elimination of non-tariff trade barriers. While countries frequently use non-tariff devices to unfairly restrict foreign competition, many legitimate environmental and public health regulations also may incidentally restrict trade.

Yet in the world according to the WTO, trade is supreme and unrestricted commerce is the highest value. For example, the WTO overturned U.S. regulations to promote cleaner gasoline on a challenge from Venezuela and ruled against another U.S. requirement that all shrimp fishing boats use a device to prevent harm to endangered sea turtles. In an ongoing controversy, the WTO ruled that the European Union could not ban beef containing artificial hormone residues on the grounds that there was not sufficient scientific evidence. So far, according to Lori Wallach and Michelle Sforza of Public Citizen, "no democratically achieved environmental, health, food safety or environmental law challenged at the WTO has ever been upheld. All have been declared barriers to trade."

The WTO also casts a shadow over governmental policies far beyond its actual decisions, which are made by panels of experts with a strong bias in favor of free trade and often very little knowledge about other issues affected by their rulings. Frequently, governments have retreated from a policy simply because another country has threatened-or may threaten-to file a WTO complaint. For example, Guatemala abandoned a policy, modeled on UNICEF recommendations, prohibiting any words or images that suggested baby formula was as good as breast-feeding. Gerber, whose label includes a fat, smiling baby, threatened a trade protest on the grounds that the law infringed on its trademark. In their book Whose Trade Organization? Wallach and Sforza note that threats of WTO action have scuttled South Korean food safety laws and weakened European bans on cruelly trapped fur. Threats also led to the defeat of Maryland legislation to boycott goods from Nigeria because of its human rights record (after the European Union and Japan had challenged a Massachusetts law prohibiting state purchases of goods from Burma) and to the veto by California Gov. Gray Davis of a law giving preference to local goods and services. The United States has threatened to go to the WTO over a Danish ban on lead in many products, South African efforts to provide AIDS drugs more cheaply, and Japanese measures to comply with the Kyoto climate change accord.

Critics contend that when the WTO presents governments with the choice of changing its laws or submitting to punitive tariffs on its exports, it threatens national sovereignty. But the fundamental challenge to national sovereignty really comes from global corporations and markets. Any international agreement represents a partial surrender of sovereignty in exchange, in theory at least, for some greater good. A "world trade organization" should manage trade in the interests of human rights, environmental protection, local economic development and other ends. Indeed, the Havana charter of the WTO proposed at the close of World War 11 defined its mission to include protection of workers rights and other social goals. But in forming the current WTO, governments surrendered their power to regulate corporations and markets and acceded to what Wallach and Sforza call "corporate managed trade." "The WTO is the creation of states, so it hasn't escaped the power of states," argues Mark Levinson, chief economist of UNITE, the needle trades union. "It's an expression of the enormous power of business acting through states. It reflects the imbalance in global politics."

When the trade ministers meet in Seattle, the major issue will be expansion of the WTO through a new round of negotiations. WTO members have already agreed to discuss issues of agriculture and trade in services that were left over from the seven-year-long Uruguay round that concluded in 1994. The European Union and Japan have proposed a broad "millennial round" that would put most issues on the table, permitting countries to trade off special interests. The United States wants a narrower focus, with the hope of reaching early agreements on some issues, including ending agricultural subsidies, reducing industrial tariffs and restrictions on services (with greater privileges for private corporations to compete in traditionally public areas of education and health care), and protection of Internet business from any tariffs or restrictions. Many developing countries are resisting a broad expansion. They argue that they haven't yet benefited significantly from earlier trade liberalization. Many of them want an assessment of progress so far and faster reduction of barriers to trade in their products, such as the already scheduled phase-out of quotas on apparel and textiles.

There are serious differences on nearly all of these issues. Europe and Japan, like many developing countries, want the WTO to recognize that agriculture is "multifunctional"- producing food and fiber but also preserving rural social structure, protecting the environment and guaranteeing food security. The United States and other big agricultural exporters argue for a purely commercial approach, eliminating the subsidies that are a major part of European and Japanese agricultural policies. While environmentalists and family farm advocates in the United States admit that existing subsidies often contribute to overproduction or harmful practices, they argue that a free-market, export-oriented approach to agriculture is bad for small farmers, peasants in developing countries and the environment.

While it is likely that there will be further liberalization of trade in services, there is strong resistance from citizen groups, labor unions and some countries to the continued pressure for privatization of public services. Liberalization of trade in services also runs up against national policies to protect and develop local cultures. In resistance to the global cultural juggernaut of U.S. entertainment and mass media multinationals, the European Union-with France pushing hardest-wants WTO protections for "cultural diversity." For its part, the United States favors much stronger protection for multinational service companies and their investment rights, but unlike the European Union, it has been reluctant to push within the WTO for a broad deal like the Multilateral Agreement on Investment (MAI), which was under negotiation among the rich countries of the Organization for Economic Cooperation and Development. The MAI collapsed last year due to internal OECD disputes and global citizen group pressure.

Other issues, including some relatively new items, are equally contentious. The European Union is urging the WTO to adopt rules on competition policy, but the United States fears that a weak, lowest-common-denominator vision of antitrust policy would emerge and that the Europeans and Japanese, with support from many developing countries, primarily want to cut back on "anti-dumping" actions. The United States has relied on penalties against countries that sell below cost and disrupt industries, such as steel products "dumped" in the United States by crisis-wracked economies over the past two years. On the other hand, the United States will be pushing for new protections for biotechnology and intellectual property in genetically modified organisms. There will be strong resistance from some developing countries- which accuse multinational corporations of "biopiracy" of their natural resources and traditional crop strains. These nations will probably be supported by Europe, where there is much popular resistance to genetically modified "Frankenfoods."

The international labor movement has long argued for the inclusion of a "social clause" that would protect core labor rights, but the WTO always has insisted that worker protection was the province of the International Labor Organization, which has no enforcement power. (By contrast, the WTO aggressively protects intellectual property rights, even though an international group already covered that issue.) The United States is obliged by law to push for labor rights protection and the European Union-in an about-face from four years ago in Singapore-now endorses WTO protection of labor rights (thanks largely to a change of government in Germany). There will be a push again for a WTO "working party" to discuss labor issues, which at the very least could become part of the periodic WTO review of each member country's trade policy and could lead to trade sanctions for core labor rights violations (such as freedom of association and prohibition of child labor).

Labor rights are at the heart of another big issue before the WTO-the admission of China as a member. At this point, the United States is the main obstacle, but the Clinton administration desperately wants a deal to admit China in time for Seattle without any protection for Chinese workers rights. A near-deal last spring was scuttled because of swirling scandals about alleged spies, contributions to Clinton's 1996 campaign and continuing protests over human rights abuses. The United States claimed that China had made substantial commercial concessions, but now China has retreated, and it will be hard for Clinton to agree to a deal weaker than the one abandoned last spring.

Although the International Trade Commission claims that the United States would gain overall from China's entry into the WTO, critics contend that the ITC grossly underestimates the likely shift of manufacturing to China once corporations feel more legally secure. They point out that job loss to Mexico in just the first five years after NAFTA was eight times greater than the projected "long-term" job loss that the ITC had forecast. Critics also maintain that China has not lived up to past trade agreements and that its suppression of labor rights is an illegal subsidy to businesses there. If China is admitted without an agreement to protect core labor rights, the prospect of the WTO ever protecting labor rights grows very dim.

Major environmental groups also want changes at the WTO. They argue that countries should be allowed to follow a "precautionary principle" in environmental and health legislation and that the WTO should "harmonize" international differences by establishing floors for protection rather than ceilings. Environmentalists also want countries to be able to use trade sanctions to enforce international environmental agreements and to distinguish among products based on how they are produced.

While the governments of developing countries (but typically not their labor and citizen movements) often view labor or environmental rules as "protectionist," they often agree with non-governmental organizations from rich countries on the need to open up the WTO to public scrutiny and involvement, including helping poor countries better defend their interests. Most also want the WTO to adopt moratoriums on many actions or most expansion until its record can be assessed.

While critics of the WTO agree broadly on many of its shortcomings, they have increasingly split-often in a nasty, divisive way-over whether the WTO can be reformed or simply should be abolished. Some hard-line critics who call for an end to the WTO have been harshly assailing the AFL-CIO and major environmental organizations for failing to do the same. Even within the labor movement, some union leaders doubt that the WTO will ever seriously address labor rights. But this misguided dispute threatens the citizen movement against the WTO at the very moment it is beginning to nave some serious impact.

Undemocratic as the WTO may be, it is the creation of governments, and most of the powerful players are democracies. The triumph of corporate trade priorities at the WTO simply reflects the political power that corporations have in those governments and the inability of critics of globalization to move beyond defensive criticism toward an alternative model for a more democratic global economy. Unless the labor, environmental and citizen groups can work together to change individual government policies, there is little chance of them either reforming or abolishing the WTO.

With or without the WTO, there will be international trade, and there will be some kind of trading rules. Will it be politically easier to launch a completely new organization than to radically reform the WTO? Now, the best prospect for citizens and workers is to band together to throw sand in the gears of the machinery consolidating corporate power and the tyranny of the free market. But the long-range issue is citizens gaining power to make sure that the rules of global trade and investment serve the needs of workers, the environment and communities around the world.

World Trade Organization