The WTO

Five years of reasons to resist corporate globalization

by Lori Wallach and Michelle Sforza

Seven Stories Press, 1999

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INTRODUCTION
by Ralph Nader

... In approving the far-reaching, powerful World Trade Organization and other international trade agreements, such as the North American Free Trade Agreement, the U.S. government, like those of other nations, has ceded much of its flexibility to independently advance health and safety standards that protect citizens. Instead, the U.S. has accepted harsh legal limitations on what domestic policies it may pursue. Approval of these agreements has institutionalized a global economic and political structure that makes every government increasingly hostage to an unaccountable system of transnational governance designed to increase corporate profit, often with complete disregard for social and ecological consequences.

This new governing regime will increasingly provide major generic control over the minute details of the lives of the majority of the world's people. It is not based on the health and economic well-being of people, but rather on the enhancement of the power and wealth of the world's largest corporations and financial institutions.

Under this new system, many decisions affecting people's daily lives are being shifted away from our local and national governments and being placed increasingly in the hands of unelected trade bureaucrats sitting behind closed doors in Geneva, Switzerland. These bureaucrats, for example, are now empowered to dictate whether people in California can pursue certain actions to prevent the destruction of their last virgin forests or determine if carcinogenic pesticides can be banned from their food, or whether the European countries have the right to ban the use of risky biotech materials in their food. Moreover, once the WTO's secret tribunals issue their edicts, no independent appeals are possible. Worldwide conformity or continued payment of fines are required.

At stake is the very basis of democracy and accountable decision-making that is the necessary foundation of any citizen struggle for just distribution of wealth and adequate health, safety, human rights, and environmental protections. An erosion of democratic accountability, and the local, state and national sovereignty that is its embodiment, has taken place over the past several decades.

Multinational companies have shaped the globalization of commerce and finance. The establishment of the WTO marks a landmark formalization and strengthening of their power. In this way, corporate globalization establishes supranational limitations and impinges deeply on the ability of any nation to control commercial activity with democratically enacted laws. Globalization's tactic is to eliminate democratic decision-making and accountability over matters as intimate as the safety of food, pharmaceuticals and motor vehicles, or the way in which a country may use or conserve its land, water, minerals and other resources. What we have now in this type of globalization is a slow motion coup d'etat, a low intensity war waged to redefine free society-democracy and its non-commercial health, safety and other protections-as subordinate to the dictates of international trade-i.e. big business uber alles.

One cannot open a newspaper today without reading about myriad examples of the problems that concentrated power spawns: reduced standards of living for most people in the developed and developing world; growing unemployment worldwide; deadly infectious diseases; massive environmental degradation and natural resource shortages; growing political chaos; and a global sense of despair, not hope and optimism, for the future. Conspiratorial meetings have not been necessary to fuel the push for globalization. Many corporate officials share a common, perverse outlook. To them, the globe is viewed primarily as a common market and capital source. Governments, laws and democracy are inconvenient factors that restrict their exploitation and limit their profit. From their perspective, the goal is to eliminate market barriers on a global scale. From any other humane perspective, such barriers are seen as valued safeguards established to protect a nation's population-that is every nation's laws that foster their economies, their citizens' health and safety, the sustainable use of their land and resources, and so on. In stark contrast, for multinational corporations, the diversity that is a blessing of democracy and that results from diffuse decision-making is itself the major barrier to be bypassed or removed. On rare occasions, promoters of the economic globalization agenda have been frank about their intentions. "Governments should interfere in the conduct of trade as little as possible," said GATT (General Agreement on Tariffs and Trade Director General Peter Sutherland, in a March 3, 1994, speech in New York City where he promoted U.S. approval of the WTO.

Even more alarming is the definition of "trade" these days which is used increasingly to describe a large portion of each nation's economic and political structures. The WTO and other trade agreements have moved way beyond their traditional roles of setting quotas and tariffs. Now these institute new and unprecedented controls over democratic governance. Erasing national laws and economic boundaries to foster capital mobility and "free trade," a term that ought properly to be called corporate-managed trade (since it produces constraints, not freedom, for the rest of us) has led the likes of American Express Cargill, General Motors, Monsanto, Union Carbide, Shell Citigroup, Pfizer and other mega-corporations to rejoice. However, the prospect of global commerce without democratic controls is brewing a disaster for the rest of the world left uniquely vulnerable to unrestrained corporate activity amid declining living, health and environmental standards.

Economist Herman Daly issued an important warning in his January 1994 "Farewell Lecture to the World Bank. " The push to eliminate the nation-state's capacity to regulate commerce, he said, "is to wound fatally the major unit of community capable of carrying out any policies for the common good.... Cosmopolitan globalism weakens national boundaries and the power of national and subnational communities, while strengthening the relative power of transnational corporations. "

The philosophy allegedly behind the globalization agenda is that maximizing global economic deregulation will in itself result in broad economic and social benefits. However, anyone who believes this philosophy or that corporate economic globalization has any underpinnings except maximizing short-term profit, need only consider the case of U.S.-China economic relations. When only human rights were at issue in 1994, the Clinton administration ended the historical linkage between favorable trade status and a country's human rights record. Instead it supported renewal of China's Most Favored Nation (MFN} status. However, in early 1995, when property rights were in question, McDonald's lease and Mickey Mouse's royalties were cause for $1 billion dollars in threatened U.S. trade restrictions against China. This threat resulted in Chinese government policy changes to enforce intellectual property restrictions.

Similarly, economic globalization's primary mechanisms-the WTO and NAFTA-do not target all "fetters" on commerce for elimination. Rather, the agreements promote elimination of restrictions that protect people, while increasing protection for corporate interests. Regulation of commerce for environmental, health or other social goals is strictly limited or challenged. For example, selling products internationally made with child labor is WTO-legal. Proposals to strengthen obsolete or antiquated standards are chilled from the start by the real prospect of a WTO challenge. This leads to a de facto moratorium on efforts to upgrade and create new standards, i.e., self censorship. Labor rights, which were to be included in the Uruguay Round, were entirely left out as inappropriate limitations on global commerce. But regulation of commerce to protect monopolistic corporate property rights-such as intellectual property-was expanded. The right for capital to be invested in any country in any economic sector without conditions was also strengthened.

By giving up the right to condition investment in a country on certain societal standards, such as not red-lining neighborhoods, or the entry of products into domestic markets in compliance with national rules, countries have damaged whatever leverage they had on corporate behavior. U.S. corporations long ago learned how to pit states against each other in "a race to the bottom" to profit from whatever a state would impose on its citizens the lowest wages, the lowest pollution standards, and the lowest taxes for big business. Often a federal standard would stop such manipulation. Now, through NAFTA and the WTO, multinational corporations can play this game at the global level, pitting country against country. After all, passing off to the public environmental and social costs such as toxic dumping child labor and dictatorial repression against workers is another way for corporations to boost their profits. Workers, consumers and communities in all countries lose; short-term profits soar and big business "wins."

Under the WTO, not only are the minimum levels of living standards and environmental and health safeguards at risk, but also the very principles and processes of democracy by which such standards are fought for and won. Enactment of these so-called "free trade" deals virtually guarantees that democratic efforts to ensure that corporations pay their fair share of taxes, provide their employees a decent living standard or limit their pollution of the air, water and land will be met with the refrain: "You can't burden us like that. If you do, we won't be able to compete. We'll have to close down and move to a country that offers us a more hospitable climate." This sort of intimidation is extremely powerful. Communities already devastated by plant closures and a declining manufacturing base are desperate not to lose more jobs. They know all too well that exit threats of this kind are often carried out.

One of the clearest lessons that emerges from a study of industrialized societies is that the centralization of commerce is environmentally and democratically unsound. No one denies the usefulness of having trade between nations. But societies need to focus more attention on fostering community-oriented alternatives. Very often smaller-scale operations are more flexible and adaptable to local needs and environmentally sustainable production methods. These are also more susceptible to democratic control. Their officers are far less likely to threaten to migrate and more likely to perceive their interests as more overlapping with community interests. Similarly, allocating power to lower-level governmental bodies tends to increase citizen power. Concentrating power in distant international organizations, as the trade pacts do, tends to remove critical decision-making from citizen control. You can talk to your city council representative but not some faceless international trade bureaucrat at the WTO in Geneva. If local or state decisions can be jeopardized by a foreign country's mere charge that their standards are a "non-tariff trade barrier,'' if a country must pay a tribute in trade sanctions to maintain laws ruled to be trade barriers by closed and autocratic foreign tribunals, if a company's claim that the burden that important citizen safeguards would impose causes them to pick up their stakes and move abroad, then standards of living and the all-important underlying standards of justice worldwide will continue to spiral downward. This is what happens when democratic values are subjugated to the imperatives of international trade.

Following the establishment of the WTO, the corporate globalization process and its effects are continuing to exacerbate stagnant economic conditions for most of the world's people. In the U.S., if we do not make the connection between our local problems and the corporate drive for economic and political control, then others will be blamed for these unavoidable and increasing problems. "It's the immigrants!" "It's the welfare system!" "It's greedy farmers or workers!" "It's the regulatory agencies!" "It's the tort system!" Allowing such camouflage of the real causes of society's multifaceted problems means a massive diversion of our focus, dividing people against each other to the benefit of the agenda of mega-corporations.

Thus, what we face now is a race against time: How can citizens most effectively mobilize a reversal of the expanding globalization agenda while they defend our democratic spaces, instincts and institutions from assault? The degree of suppression and subterfuge necessary to continue along the downward path will be hard to maintain in the presence of any vigorous democratic oversight. However, actually reversing NAFTA, the WTO and the push toward globalization will require a revitalized citizen democracy in the United States and movement building across national borders. Replacing the WTO-GATT with a pull-up, not a pull-down, system of global commerce is the goal. The purpose of this pamphlet is to inform citizens about the WTO's five year track record, and to encourage the pursuit of creative democratic alternatives, at every level, to corporate globalization...

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THE WTO'S SLOW MOTION COUP D'ETAT OVER DEMOCRATIC SOCIETY

The World Trade Organization is carrying out a slow-motion coup d'etat over democratic governance worldwide.

Unlike past trade pacts, the WTO (World Trade Organization) and its underlying agreements move far beyond traditional commercial matters such as tariffs, import quotas or requirements that foreign and domestic goods be treated equally. The WTO's provisions set limits on the strength of countries' food safety laws and the comprehensiveness of product labeling policies. They forbid countries from banning products made with child labor. They can even regulate expenditure of local tax dollars (for instance, prohibiting environmental or human rights considerations in government purchasing decisions).

The WTO, established on January l, 1995, as part of the Uruguay Round Agreements of the General Agreement on Tariffs and Trade (GATT) and now with 134 Member countries, has rapidly accumulated a sordid record. Binding decisions from its enforcement tribunals have undermined consumer and environmental protections around the world. And corporations have used the threat of WTO action to roll back, block or chill countless rules designed to benefit workers, consumers and the environment, and to promote human rights and development in the world's poor countries.

This unfortunate outcome could have been predicted. Indeed, it was. When the Uruguay Round was being negotiated, environmental, labor and consumer groups warned that the GATT system, which had existed for decades, was being dramatically recast and expanded in a way that would subjugate core public interest needs-such as accountable governance, environmental protection, health and safety, and human and labor rights-to corporate interests.

Proponents of the Uruguay Round and the WTO dismissed these concerns as ill-informed doomsday prophesies. They promised that the Uruguay Round and the WTO would pose no threat to domestic sovereignty or democratic, accountable policymaking. They also promised enormous economic gains worldwide if the Uruguay Round were implemented: The U.S. trade deficit would decrease by $60 billion in ten years.' Latin American countries would boom and Asian growth would keep pace. Then-U.S. Treasury Secretary Lloyd Bentsen even predicted that passage of the Uruguay Round would result in an additional $1,700 in annual median income per U.S. family. ~

Now, nearly five years later, it is clear that the promised economic gains have not materialized. Not only has the WTO failed to live up to its proponents' promises, but it is wreaking continuing damage to health, human rights, safety and environmental safeguards...

Our purpose ... is to document an insidious shift in decision-making away from democratic, accountable fora - where citizens have a chance to fight for the public interest-to distant, secretive and unaccountable international bodies, whose rules and operations are dominated by corporate interests. Ironically, the U.S., with some of the world's most open, accountable policymaking procedures, is a leader in using the WTO to undercut democratic institutions and mechanisms around the world.

The full magnitude of this new global governance system is yet to be seen because some WTO rules have not taken full effect. But it is clear that the WTO rules have little to do with the 19th century "free trade" philosophies of Adam Smith or David Ricardo. Rather, the rules create a model of corporate economic globalization that would be most accurately dubbed "corporate managed trade."

Now is the time to ask: Whose trade organization is it? It does not appear to belong to or benefit the majority of the world's citizens. The emerging system favors huge multinational companies and the wealthiest few in developed and developing countries.

But permanent entrenchment of this still-emerging system is not a foregone conclusion. Despite the public relations efforts of those who benefit from this arrangement to convince us otherwise, the WTO setup is merely one design; it is not inevitable like the moon's pull on the tides or some other force of nature. Putting into place the WTO and the globalization it implements required its proponents to undertake an enormous amount of planning, public relations and political work. We still have the freedom to oppose the WTO's design, and we still have the power to pursue and develop real alternatives. In other parts of the world, especially in indigenous communities that lack basic resources and access to media, such opportunities do not exist.

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WTO Challenges and Threats Undermine the Public Interest.

The expansive Uruguay Round Agreements' constraints on the ability of governments to maintain public interest regulations are enforced through a freestanding WTO tribunal system empowered to judge countries' laws for WTO-compliance.

Since it was created in 1995, one out of four WTO challenges has involved an environmental, health or safety policy. In each instance the WTO has ruled such policies to be illegal trade barrier that must be eliminated or changed. Nations whose laws were declared trade barriers by the WTO-or that were merely threatened with prospective WTO action-have eliminated or watered down policies to meet WTO requirements. In addition to undermining important policies, this trend has a chilling effect on countries' inclinations to initiate new environmental, human rights or safety laws because they want to avoid WTO challenges.

The very mechanics of the WTO, which are skewed in favor of corporations and trade, pre-ordain this outcome. WTO business is conducted by committees and panels that meet behind closed doors in Geneva, Switzerland. In sharp contrast to U.S. domestic courts and even other international arbitration systems, there is a startling lack or "transparency"-public disclosure and accountability. This leads to overwhelming concentrations of corporate power and influence.

The string of public interest laws ruled against and developing countries are among the biggest losers in this system. Developing countries generally do not have the money and expertise either to bring cases to the WTO or defend themselves before the WTO. Many simply capitulate to corporate threats and amend their laws before the | matter even reaches the WTO...

... The primary problem stems from the fact that countries' domestic policy goals and laws must pass muster with the WTO, which, among other constraints, requires that laws and regulations implementing even WTO-permitted goals prove to be least trade restrictive.

Further, WTO rules prohibit countries from treating physically similar products differently based on how they are made or harvested. For instance, in the eyes of the WTO, tuna caught in dolphin-safe nets can be treated no differently than tuna caught in nets that ensnare dolphins. This is why the Clinton administration worked with some of the Congress' leading anti-environmental members to water down a popular U.S. law designed to prevent dolphins from being killed in tuna nets which was ruled to be a trade violation. This backwards logic also jeopardizes laws banning trade in goods made with child labor or trade with countries where human rights abuses take place.

WTO philosophies also undermine global cooperation on the environment, health and human rights. If a country is a WTO member, its domestic implementation of other international commitments must comply with WTO rules. For instance, the WTO ruled against provisions of the U.S. Endangered Species Act that required shrimpers to protect endangered sea turtles-a law that implemented U.S. commitments under the global environmental treaty called Convention on Trade in Endangered Species (CITES). Now, the U.S. and EU are threatening Japan's attempt to enact laws to implement the Kyoto Treaty on global climate change as WTO-illegal.

WTO rules set a ceiling on safety by making certain international standards the only presumptively WTO-legal standards. Domestic standards on health, the environment and public safety that are higher than international ones must pass a set of stringent tests in order not to be considered trade barriers. Meanwhile, there is no floor o.. health or safety that all countries must meet, there is no requirement that international standards be met, only that they cannot be exceeded.

The cases also clearly show that the WTO system effectively turns the very premise by which some progressive governments have handled environmental, food safety and other human health-related policies on its head. Generally manufacturers are required to prove that a product is safe before it can be sold, and countries do not permit the product to enter the marketplace until the company has submitted the proof. Under WTO rules, however, the burden is completely reversed. Governments must prove that a product is unsafe before they ban it and must clear near impossible procedural and evidentiary hurdles to do so.

With the establishment of the WTO, judgements over such key areas as food safety have been pulled from the hands of domestic legislatures and effectively ceded to the international corporate interests that helped write the WTO rules. Following an adverse WTO ruling, Europe must now absorb $115 million annually in WTO-authorized trade sanctions to maintain a ban on beef containing residues of artificial growth hormones.

Another alarming aspect of this new WTO system is the fact that nations are serving as corporations' servants, agreeing to challenge laws that the corporations oppose. The U.S. went to bat for Chiquita, the banana giant, when it successfully attacked Europe's preferential treatment of bananas from former EU colonies in the Caribbean. The U.S. does not produce bananas for export and most of Chiquita's employees are underpaid farm workers laboring on its vast Central American plantations. The EU has announced that it has no choice but to rescind its preferential treatment, an action that could have a devastating impact on the small, independent banana farmers in the Caribbean.

Often, the mere threat of a challenge suffices. For instance, after the U.S. threatened WTO action, South Korea weakened two food safety laws-one pertaining to the shelf life for meat, the other dealing with fruit and vegetable inspections.

Because developing countries generally lack the resources and expertise to defend challenges, threats to the policies can be particularly devastating. However, developing countries haven't been the only losers. Rich countries have seen some of their valuable policies gutted too. The threats of WTO action described in this pamphlet are merely the tip of the iceberg, given that so much of the activity is shrouded in secrecy.

WTO Trend: Commerce Always Takes Precedence.

The overall theme that emerges from reviewing the WTO's record: In the WTO forum, global commerce takes precedence over everything-democracy, public health, equity, the environment, food safety and more. Indeed, under WTO rules, global commerce takes precedence over even small business.

The WTO's manic tilt toward commercial values is perhaps best highlighted by its rules seeking to commodify everything-to turn everything into a form of property-so that it can be bought and sold. For instance, the new system gives patents-and thus exclusive marketing rights-for life forms and indigenous knowledge. Consider what has happened in India, where the indigenous population has used the neem tree for medicinal purposes for generations. After a U.S. importer discovered the tree's pharmaceutical properties, multinational companies from the U.S. and Japan sought and received numerous patents on products made from the tree, leaving the indigenous populations unable to profit from knowledge they have developed over centuries.

Consider, too, the plight of subsistence farmers. Under the WTO's new intellectual property guarantees, a company can obtain ownership rights-literally a patent-over the knowledge and effort of the local farmers who bred and adapted seed over generations. Once a company holds the patent for a particular seed variety, it can force cashless farmers either to pay an annual royalty buy new seeds each year or no longer use the variety, which may be the only one available or effective in that region...

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THE WTO AND THE ENVIRONMENT

The WTO has been a disaster for the environment Threats-often by industry but with government support- of WTO-illegality are being used to chill environmental innovation and to undermine multilateral environmental agreements Already WTO threats and challenges have undermined or threatened to interfere with U.S. Clean Air rules, the U.S. Endangered Species Act, Japan's Kyoto (global warming) Treaty implementation, a European toxics and recycling law, U.S. longhorned beetle infestation policy, EU eco-labels, U.S. dolphin protection legislation and an EU humane trapping law.

Things stand only to get worse, as industry begins to engineer challenges to environmental laws based on the new, stronger anti-environmental provisions developed through the Uruguay Round. A major shift occurred with establishment of the WTO's new rules. Instead of only requiring that domestic and foreign goods be treated equally, the WTO makes value judgements about the level of environmental protection or the sorts of policy goals WTO Members pursue.

Strong Enforcement of Anti-Environmental Rules. The Uruguay Round Agreements added a vast array of new anti-environment, anti-conservation provisions to the existing GATT rules, which themselves had drawn fire from environmentalists. These new rules subject a wider array of hard-won environmental laws to scrutiny as so-called "non-tariff barriers" to trade. ("Non-tariff barrier" is jargon for any law or policy that is not a tariff but affects trade.)

The WTO Agreement on Sanitary and Phytosanitary Measures (SPS) explicitly restricts the actions that governments can take relating to food and agriculture policy, including laws to protect food safety or to protect the environment, human, plant or animal health. As a result, many policies that governments use to avoid or contain invasive species infestations from undermining biodiversity can run afoul of WTO's rules. The WTO Agreement on Technical Barriers to Trade (TBT) requires that product standards-a nation's rules governing the contents and characteristics of products-be made as least trade restrictive as possible and, with extraordinarily limited exceptions, be based on international standards. The WTO Agreement on Government Procurement requires that governments take into account only 'commercial considerations" when making purchasing decisions. The Agreement on Trade Related Aspects of Intellectual Property (TRIPs) requires that WTO Members provide property rights protection to genetically modified plant varieties even though their long-term environmental impacts have not been established. All of these agreements are enforceable, by threat of sanction, through the WTO's dispute resolution system.

While the WTO publicly states its support for the principles of sustainable development in the WTO ("the environment") has been given and will continue to be given a high profile on the WTO agenda"),' the track record suggests an altogether different set of priorities. Indeed, in a revealing attack of candor, then-WTO Secretary General Renato Ruggiero stated that environmental standards in the WTO are "doomed to fail and could only damage the global trading system."

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CLINTON ADMINISTRATION GUTS DOLPHIN PROTECTION

Under amendments to the U.S. Marine Mammal Protection Act (MMPA), the sale by domestic or foreign fishers of tuna caught with mile-long encirclement nets, known as "purse seine" nets, was banned in the U.S. in 1988. Because schools of tuna in the Eastern Tropical Pacific congregate under schools of dolphins, use of the nets killed millions of dolphins in the that region. Over 30 years, seven million dolphins were drowned, crushed or otherwise killed as a result of purse seine tuna fishing.

In 1991, a GATT panel ruled against Section 101(a)(2) of the U.S. MMPA"-which excluded from the U.S. market tuna caught by domestic or foreign fishers using purse seines. The panel interpreted language in GATT's Article III, which prohibits discrimination between products on the basis of where they are produced to also forbid distinguishing between products based on how they are produced. In 1994, a GATT panel again ruled against the MMPA, this time in response to a similar European challenge.

That the embargo was applied to both the domestic and foreign tuna industries was held irrelevant by the GATT. The first panel found that the law was not "necessary" to protect dolphin health because, in the panel's opinion, the U.S. could have attempted to protect dolphins through other measures that would not have violated GATT.

Given that the rulings against the U.S. dolphin-safe law were issued by GATT-and not WTO-panels, they were not automatically enforceable. Indeed, Mexico and the U.S. agreed not to enforce the ruling because they feared it would undermine passage of the North American Free Trade Agreement (NAFTA).

However, by 1995, with NAFTA passed and the WTO in operation, Mexico demanded that the GATT ruling be enforced. With President Clinton anxious to avoid the public spectacle of a dolphin protection law being eviscerated by the WTO, he sent a letter to Mexican President Ernesto Zedillo declaring that the weakening of the standard "is a top priority for my Administration and for me personally." By 1997, over the opposition of the Marine Mammal Protection Act's original congressional champions and a coalition of environmental, consumer and other public interest groups, Clinton succeeded in implementing the GATT order and thus in gutting the law.

By the fall of 1999-for the first time in over a decade-tuna caught with purse seines will be back on the U.S. market.

The precedent set in the GATT panel's ruling has serious widespread implications. It forbids countries from distinguishing among different production methods even if this is done to further a legitimate social or environmental goal. For example, under such reasoning, prohibiting the use of fur harvested by clubbing of harp seals could be GATT-illegal. Similarly, policies banning products involving child labor or even slave labor could be prohibited by the WTO.

Then in 1998, a WTO panel ruled against provisions of the U.S. Endangered Species Act allowing sale of shrimp in the U.S. only if the shrimp are caught in nets equipped with turtle excluder devices. This law applied to U.S. and foreign fishers and implemented U.S. obligations under the global environmental treaty called CITES {Convention on International Trade in Endangered Species).

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EUROPEANS WEAKEN BAN ON CRUELLY TRAPPED ANIMALS

The European Union has long been concerned with animal welfare issues and has enacted progressive anti-cruelty laws relating to farming, animal transport and slaughter practices. In 1991, the EU tried to extend this tradition to fur trapping but encountered threats of a WTO-challenge by the U.S. and Canada that ultimately undermined the new proposal.

The EU prohibited the use in Europe of steel jaw leg-hold traps for 13 fur bearing animals as of 1995. Importation of such pelts would be banned starting in 1995 unless the exporting country forbid the use of painful steel jaw leghold traps or met other humane trapping standards.

North American and Russian trappers and furriers contended that these laws and rules constituted unfair trade barriers, intended to affect foreign practices (few of the species covered by the EU law were native to Europe) and discriminating against imports based on the way they were produced abroad.

After an extended period of U.S. WTO saber rattling, the EU struck a weak deal with the U.S. The proposal allowed a six-year phase-out of steel jaw leg-hold traps while the United States continues to export fur to Europe.' Animal welfare advocates argued that the language in the U.S.-EU agreement is sufficiently vague as to make it unenforceable.

In the future, the threatened WTO action and subsequent weak agreement could have implications for other policies concerning humane treatment of animals, such as slaughter rules, transport and testing of consumer products on laboratory animals, and fur farming techniques.

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THE WTO, FOOD SAFETY STANDARDS, AND PUBLIC HEALTH

U.S. regulatory agencies have intervened in the market to save the lives of millions of Americans who otherwise would have been exposed to dangerous food, products and work environments.' But in their blind pursuit of increased trade volumes, new WTO rules are undermining key food safety, public health, and plant and animal health policies in the U.S. and elsewhere.

In addition to successful WTO challenges to the EU's ban on artificial beef hormone residues in meat and several other countries' quarantine laws, threats of WTO action have led South Korea to weaken two food safety rules. Outstanding WTO threats include U.S. charges against a Danish ban on lead in many products and on a Europe-wide policy on toxins in children's teething rings.

Meanwhile, WTO requirements to "harmonize," different national standards toward uniform international standards have led the U.S. to declare company-inspected beef from Australia equivalent in safety to U.S. government inspected meat. These imports can enter the U.S. labeled as if they met the U.S. law.

Finally, the WTO empowers assorted industry-influenced international organizations to set standards presumed to comply with WTO rules.

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THE WTO INSISTS EUROPE ACCEPT ARTIFICIAL HORMONE-TREATED BEEF

In a major defeat for health and safety policies based on the premise that potentially dangerous substances should be proven safe before they are marketed, a WTO panel ruled in 1997 against an EU ban on artificial hormone-treated beef.

Since 1988, the EU has banned the sale of beef from cattle treated with artificial hormones and has applied the ban in a nondiscriminatory fashion to both domestic and imported beef products. Exposure to the artificial hormones themselves have been linked to cancer and premature pubescence in girls, although the risk to humans of artificial hormone residues in the meat they consume has yet to be conclusively measured. Rather than trying to assess a tolerable amount of an indeterminable risk or waiting for negative human health affects to accrue over time, the EU chose to eliminate public exposure to the risk altogether.

The U.S. beef and biotechnology industries have long opposed this EU policy. In January 1996, the U.S. challenged the ban at the WTO. In 1998, a WTO panel ruled that the beef hormone ban was an illegal measure under SPS rules in part because it was not based on a WTO-approved risk assessment." The WTO Appellate Body affirmed the original panel's decision, and the EU was ordered to begin imports of U.S. artificial hormone-treated beef by May 13, 1 999.

After the EU refused to comply with the WTO panel ruling by the May 1999 deadline, the WTO on July 12, 1999, approved a U.S. request to impose retaliatory sanctions against European-made products.

In its beef hormone ruling, the WTO effectively declared that food safety regulations enacted in advance of scientific certainty were not allowed. The WTO in effect attempted to eliminate from the standard-setting process such factors as the cultural values, attitudes and priorities of individual societies, as well as the desire to shield people from unnecessary exposure to potentially dangerous substances. The WTO ruling in this case poses a direct challenge to one of the pillars of contemporary public health policy, the Precautionary Principle. Under this principle, potentially dangerous substances must be proven safe before they are put on the market

The WTO stood the Precautionary Principle on its head, shifting-from the manufacturer to the government-the burden of proof that a product is safe. Under the WTO rule, government must scientifically prove a product is dangerous before it can regulate that product. By rejecting a popular consumer safeguard solidly grounded in the Precautionary Principle, the WTO made a powerful statement about its priorities.

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WTO INTELLECTUAL PROPERTY RIGHTS, ACCESS TO MEDICINES AND PATENTS ON LIFE

Intellectual Property Rights, or IPRs, bestow ownership rights and legal protections on ideas, artistic creations (such as novels, music and films), technological innovations and marketing tools (logos and trademarks, for instance). The WTO Agreement on Trade Related Aspects of Intellectual Property (TRIPsl establishes enforceable global property rights and requires all 134 WTO Members to enact domestic legislation to enforce these new rights.

The level of IPR protection required by the TRIPs Agreement is extremely high-higher than most WTO Members had in place before implementing the Uruguay Round Agreements-and broad in its scope, covering pharmaceuticals, agricultural chemicals, plant varieties and seed germplasms, including those resulting from generations of plant breeding and traditional remedies, microorganisms and much more. The WTO TRIPS Agreement, instead of promoting "free trade" established a 20-year monopoly marketing right for patent holders. This WTO rule required the U.S. to extend its patent protections from 17 to 20 years, a move which was conservatively calculated to cost U.S. consumers $6 billion given the delay in availability of generic versions of many medicines.'

The WTO TRIPs Agreement: Developing Country Access to Food and Medicine. The TRIPs Agreement has created a firestorm of protest in the developing world. Many developing countries have traditionally excluded food and medicine from their IPR laws in order to ensure that these basic necessities are accessible and affordable and not subject to private monopoly control. Under the TRIPs Agreement, however, what was once in the public domain-food and medicine-must now be privatized through global patent law. From the perspective of many in the developing world, where food shortages and disease threaten the population on an ongoing basis, WTO TRIPs protections for corporate property rights outrageously undermine the ability of governments to respond generally to basic public needs and specifically to public health crises.

The WTO TRIPs Rules Endanger Food Security. The TRIPs Agreement further undermines precarious worldwide food security by exacerbating food and seed access and distribution problems. One provision requires that WTO Members protect agribusiness ownership over plant varieties, including seeds. This requirement provides dramatic new tools to consolidate the power of large seed and biotechnology manufacturers by shifting ownership and control of seed stocks away from farmers.

When corporations patent seeds, local farmers must pay annual fees to use the seed type, even if the seed was the product of breeding conducted over generations by the very ancestors of the farmers themselves. So far, patents have been awarded on varieties of soybeans, corn and canola. Subsistence farmers can ill-afford to pay the cost of purchasing seed each year. On the other hand, the TRIPs Agreement contains no protections for indigenous communities that have been planting and crossbreeding strains for centuries to develop that perfectly adapted variety that a bioprospector can collect and have patented to some distant corporation.

Monopoly ownership over crop varieties as encouraged by the TRIPs Agreement has also been linked to the spread of "mono-culture agriculture." Aggressive marketing of the products protected by intellectual property rights can lead to the spread of the same variety of crop or livestock worldwide and to the displacement of hundreds of local varieties of crops and breeds of livestock. Monocultures are dangerously unstable ecosystems that have lost their diversity and hence their resistance against pests, diseases and environmental stresses. The deadly Irish potato famine resulted in part from mono-cropping. The potato blight was able to move from field to field throughout the country because of reliance on one variety of potato, the lumper.

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The TRIPs Agreement, Pharmaceuticals and Health.

THREAT l: U.S., GERBER TRADE THREATS PRESSURE GUATEMALA TO WEAKEN INFANT FORMULA LAW

In an attempt to reduce its infant mortality rate, Guatemala passed a law and issued regulations in 1983 designed to encourage new mothers to breast feed their infants and to fully understand the health threats to their babies of using infant formula as a substitute for breast milk. The law, which implemented the terms of the WHO/ UNICEF Code on Marketing of Breast-Milk Substitutes included prohibitions on the use of words like "humanized breast milk" or "equivalent to breast milk." To be accessible to illiterate people, the WHO/ UNICEF Code and Guatemala's regulations also included prohibitions against visual depictions of infants that "idealize the use of bottle feeding.

One infant formula producer, Gerber Food (Gerber), bridled at the Guatemalan law and its regulations because the company's trademarked logo includes the picture of a pudgy infant, the "Gerber Baby." Shortly before the Uruguay Round's effective date, a Gerber vice president wrote to Guatemala's president, implicitly threatening some form of trade sanctions. The dispute pit a nation trying to protect its most vulnerable citizens, its newborns, against a transnational food producer (motto: "Babies are our business". insistent not only on selling infant formula but in marketing its products in a manner that Guatemalan law deemed misleading.

According to UNICEF, 1.5 million infants die each year because their mothers are induced to replace breast feeding with artificial breast milk substitutes. UNICEF reports that the major cause of death is fatal infant diarrhea caused by mothers in poor countries mixing the infant formula with unclean water. UNICEF attributes the fact that only 44% of infants in the developing world (even less in the industrialized countries) are breast-fed to the relentless promotion of breast milk substitutes.

With the prominent exception of U.S.-incorporated Gerber, all of Guatemala's domestic and foreign suppliers of infant formula and other breast milk substitutes made the necessary changes to their packaging to comply with the Guatemalan law. Guatemalan infant mortality rates dropped significantly after the law passed, and UNICEF held up Guatemala as a model of the Code's success in its literature.

But Gerber refused to comply with the Guatemalan law, warning that Guatemala would likely face a WTO challenge if it did not repeal the rule. In fact, a special public health exception in the TRIPS agreement probably would have safeguarded Guatemala's actions.

But Guatemala had no in-house expertise on the question of the WTO legality of its implementation of the WHO/UNICEF Code. By 1995, Gerber's threats of WTO action, taken seriously by the Guatemalan government at home and at its Washington embassy, succeeded. Guatemala changed the law so that imported baby food products would be exempt from Guatemala's stringent infant food labeling policy.

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PHARMACEUTICAL INDUSTRY THREATENS WTO CHALLENGE OVER SOUTH AFRICAN MEDICINE LAW

The TRIPs Agreement requires WTO Member countries to have in place 20-year IPR protections for pharmaceutical prices by 2005. Patents give pharmaceutical companies the exclusive right to market a particular medication. However, the TRIPS agreement does contain important caveats-such as permitting compulsory licensing and parallel imports-designed to allow governments to modify some patent holders' rights in the name of promoting public welfare. Under compulsory licensing, governments require patent holders to license drugs or other goods to competing manufacturers in exchange for royalty payments to the drug's developer. Parallel importing is the practice of importing goods through wholesalers or other third-party intermediaries from countries where goods are cheaper, rather than buying directly from the manufacturer.

Governments adopt parallel importing policies because pharmaceutical prices can vary wildly among countries. For instance, the antibiotic Amoxicillin costs 50 cents a tablet in South Africa compared to 4 cents each in neighboring Zimbabwe.

Despite these important public health provisions included in the TRIPS, the international pharmaceutical industry, with assistance from the Clinton administration, has tried to use TRIPS to reverse the effort by former South African President Nelson Mandela to make health care and medicines more accessible for South Africans. The South African Medicines Law, enacted in 1997 but not yet fully implemented, would encourage the use of generic drugs and prohibit pharmaceutical companies from paying doctors bounties for prescribing their products (already illegal in the U.S. under anti-kickback laws). Most notably, it would institute parallel importing and permit compulsory licensing as a means to control pharmaceuticals costs.

The South African and U.S. pharmaceutical industries present a united front in opposition to the South African law with the head of the South African Pharmaceutical Manufacturers' Association (PMA) having threatened the South African government with a WTO challenge.

The U.S. government joined them, undertaking a "full-court press" against the South African law, in the words of a State Department memo. High level officials, including Vice President Al Gore, repeatedly raised the issue with South African policymakers. The U.S. imposed or threatened to impose trade and other sanctions against South Africa.

South Africa, however, refused to back down. A pressure campaign, led by AIDS activists who realized how South Africa's efforts to lower drug prices could help make AIDS medicines available to South Africa's skyrocketing population of people with HIV/AIDS, forced the U.S. to back off of its threats against South Africa. It remains to be seen whether the U.S. will respect other countries' right to use compulsory licensing and parallel imports.

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THE WTO AND DEVELOPING COUNTRIES

At the conclusion of the Uruguay Round negotiations in 1994, developing countries were promised they would experience major gains as industrialized countries lowered and eventually eliminated tariffs on such items as textiles and apparel and cut agricultural subsidies that enabled them to dominate world commodity markets.

Yet contrary to this rosy scenario, after nearly five years of the WTO, the share of the pie for most of the world's population living in developing countries got smaller, and that smaller portion was divided even less equally among individuals.

First, the Least Developed Countries' (LDCs) share of world exports and imports has fallen sharply since the Uruguay Round, according to the United Nations Commission on Trade and Development (UNCTAD).' According to UNCTAD, as a result of the implementation of the Uruguay Round accords, the world's poorest nations-the 47 least developed countries-will lose an estimated $163 billion to $265 billion in export earnings while paying $145 million to $292 million more for food imports.

UNCTAD concludes that LDCs continue to be marginalized in world trade not because of any resistance to openness but because of their inability to expand productive capacity. Uruguay Round Agreements that transformed core components of economic development policy into trade law violations will compound this problem. For instance, the prohibition on some tariffs for imported manufactured goods being sent to poor countries forces nascent industry to compete with vastly more productive foreign manufacturers, thus stunting domestic industrial development in the LDCs.

Second, as developing countries have deregulated and opened up their economies under the orders of the International Monetary Fund (IMF) and in line with the policy prescriptions of WTO proponents, most have seen sharp declines in their rates of growth.

Third, while the world's largest corporations have generated record earnings, income inequality has increased between and within countries since the WTO's implementation. As mentioned earlier, the income gap between the fifth of the world's people living in the richest countries and the fifth in the poorest was 74-to-1 in 1997, up from 60-to-1 in 1990 and 30-to-1 in 1960

Uruguay Round Agreements Include Provisions Especially Threatening to Developing Countries. The WTO didn't create world poverty, of course, and it can only be given a small share of the blame for the worsening trends that date back a decade and a half prior to the WTO's establishment. But several specific concepts and provisions in the Uruguay Round package have made things worse economically for developing countries.

Systematic Tariff Escalation Promotes "Rip and Ship" Natural Resources Use. Uruguay Round tariff schedules provide for the escalation of tariff rates as value is added to a product. The tariff rate increases with processing and manufacturing, thus, the lowest rate is for a raw commodity.

This Uruguay Round feature is one reason developing country WTO critics say the Uruguay Round promotes economic "recolonization" of developing countries that only recently gained political independence. Tariff escalation creates an incentive for "rip and ship" natural resource exploitation in poor countries. Exports facing tariff escalation and the WTO's ban on the use of high tariffs to protect infant industries in developing countries from competing imports produced by more established firms in rich countries discourages LDCs from further industrialization. Thus, furniture produced in a developing country from that country's tropical wood and exported for sale in a developed country faces a relatively high tariff. Raw tropical timber logs shipped into the rich country face relatively lower tariffs, and when the furniture is produced in the rich country from that wood, it faces no additional tariff mark-up.

Under the Uruguay Round tariff schedule, by 2000, tariffs are to be eliminated in many commodities that currently represent a substantial export income for the world's poorest countries. These include coffee, tea, cocoa beans, metal ores, cotton, gold, diamonds and fresh vegetables.

Falling Commodity Prices Undermine Food Security. Primary commodity prices already have fallen by 25% since 1995, the year the WTO went into effect, and now are at historic lows. 8 Compounding the problem of lower export earnings caused by plunging commodity prices is the fact that least developed countries have become net importers of food and therefore must have a steady stream of foreign exchange simply to finance the imports needed to feed the population.

The Uruguay Round Agriculture Agreement prohibited numerous internal support programs and import controls that developing countries typically use to protect small producers and encourage self-sufficiency in food production while permitting continuing export subsidies. With small local producers no longer shielded from the subsidized agricultural commodities of the U.S. and particularly the EU, the Uruguay Round creates increased dependency on imported staples like wheat and corn.

U.S. ATTACKS CARIBBEAN BANANAS FOR CHIQUlTA

The Lome Convention between the EU and its former colonies in Africa, the Caribbean and the Pacific (ACP countries) establishes preferential tariffs and sets aside some portion of the EU market for the ACP countries for a set list of products." This regime is considered indispensable for the economic and political stability of the ACP countries. The EU negotiated a waiver for the Lome Convention for Uruguay Round Most Favored Nation (MFN) tariff requirements. In 1996, the U.S. government, on behalf of the U.S. corporation Chiquita Brands International (Chiquita), challenged the EU policy under the Lome Convention of setting aside a portion of its banana market for Caribbean Island producers.

While most of the world's bananas are grown for Chiquita, Del Monte and Dole on large Latin and Central American plantations that rely on cheap farm labor, Eastern Caribbean banana producers, in contrast, tend to be smallscale farmers who own and work small plots of mountainous land and whose production costs are therefore higher.

Bananas are central to the economic and political stability of several small Caribbean island nations, where mountainous terrain and limited arable land make cultivation of other legal cash crops impossible. The ACP countries most dependent upon the Lome Convention banana regimes include the Windward Islands nations of St. Lucia, Dominica, St. Vincent and the Grenadines, where banana production accounts for between 63% and 91% of export earnings.

The U.S. filed its challenge against the EU even though it does not produce a single banana for trade. Some speculate the decision to mount the WTO challenge-which ultimately proved successful-was due to the large campaign contributions that Chiquita and its chairman Carl Lindner have made to both major parties.

When the EU delayed the WTO-ordered elimination of its Caribbean banana program, the U.S. in March 1999 imposed trade sanctions against the EU worth $190 million annually. t6

If the EU decides to lift is protections for the Caribbean banana producers, the Caribbean banana economy will collapse completely. There is widespread acknowledgment that one consequence of such a collapse would be a surge illegal drug cultivation and trafficking.

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HUMAN AND LABOR RIGHTS UNDER THE WTO

The Uruguay Round Agreements, when taken as a whole, create a system of global commerce shaped to serve large multinational corporations with the resources to move production around the world and to provide goods and/or services to numerous markets simultaneously. The rights of workers are completely ignored, except to the extent that government policies promoting workers' rights are considered barriers to trade and therefore are subject to attack under WTO rules.

Similarly, differential treatment of countries based on their human rights records is explicitly forbidden. Thus, the sort of sanctions requested by South African leaders in the struggle against apartheid would have seriously conflicted with the current WTO rules. Already one U.S. state's selective purchasing law against the Burmese military dictatorship has been challenged under WTO rules.

No Labor Rights at the WTO. The WTO Trade Related Investment Measures (TRIMs) rules encourage the spread of export processing zones (EPZs), where global manufacturing firms import most of their components from overseas subsidiaries and pay production workers starvation wages to assemble the products for export for sale in rich markets.

The low-wage EPZ scenario is promoted by a combination of WTO rules that forbid the sorts of countermeasures governments would need to take to ensure both labor rights protections and more diversified production. For example, the WTO TRIMs Agreement forbids developing country governments from requiring that a certain portion of a product's content be procured domestically. Doing so would create more jobs besides those needed to simply assemble products to export to rich countries. Nor do WTO rules permit importing countries to close their borders to goods made in factories or countries where worker rights are violated.

The prospects for rectifying the WTO's bias against workers vis-a-vis multinational corporations through any reform of the WTO are slim. In 1994, during the Uruguay Round negotiations, the U.S. and France had suggested that a "social clause" should be included in the WTO.' These half-hearted efforts failed, as have all subsequent efforts.

In any case, many non-governmental organizations most involved with globalization issues actually view the notion of a WTO "social clause" as useless and politically damaging at best, and as a dangerous distraction from the WTO's real problems, at worst. The basic argument of these groups is that without actually changing or eliminating the numerous core WTO principles and rules that undermine the public interest, adding pro-labor or other language is like putting a bandage over gangrene. The same damage will continue unabated, but it might draw less attention in the short term.

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DEMANDS AND CONCLUSIONS

The Uruguay Round and WTO have failed the most conservative of tests: to do no further damage. Instead, in the key areas of public health, enforcement protection, economic development and food security, conditions have seriously deteriorated as a direct result of WTO rules.

What is truly alarming is that for many developing countries, fallout from the harshest of the WTO rules is still to come, because the rules have multi-year phase-ins and are not yet fully implemented. In an acknowledgment of the damage already done by WTO rules, many developing countries' governments and non-governmental organizations oppose the European call for a new and comprehensive round of WTO talks and instead have called for a "turnaround" to undo the damage being wrought by the current WTO regime.

Indeed, there are indications of serious problems in virtually every key area where the U.S. and other governments promised their citizens WTO benefits. The world has been buffeted by unprecedented global financial instability. Income inequality is increasing rapidly between and within countries. Despite efficiency and productivity gains, wages in numerous countries have failed to rise, while commodity prices are at an all-time low, causing a decrease in the standard of living for a majority of people in the world.

The WTO's built-in bias against public participation has made the institution a perfect venue for industry and governments to pursue agendas that would fail in open democratic forums. One WTO bureaucrat admitted this to the Financial Times, stating the WTO "is the place where governments collude in private against their domestic pressure groups.

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CONCLUSION

In its short five years of existence, the WTO has had wide-ranging impacts on jobs, wages and livelihoods and on international and domestic environmental, health and food safety protections, as well as on economic development, human rights and global trade and investment. These impacts have not been systematically studied nor have they been well covered in the press. As a consequence, most people around the globe lack an awareness that their lives, livelihoods, food and environment-indeed, their very futures-are being shaped by a powerful new institution.

The WTO is not just about trade and distant economic trends. Rather, it serves as the engine for a comprehensive redesign of international, national and local law, politics, cultures and values. Given how directly and personally this redesign is affecting us all, we hope this pamphlet contributes to public awareness about the WTO and the important choices we face about globalization.

Despite massive public relations efforts to convince us otherwise, there is nothing inevitable about the model of corporate economic globalization by which our world is now being redesigned. Rather, years of planning, lobbying and effort by the few powerful interests who benefit from this model have led to its development and implementation.

There are other models that would result in a more equitable, safe, ecologically sound and democratically accountable society. The question is how the majority of people worldwide who are being ill-served by the status quo can best inform and organize ourselves to make the change.

World Trade Organization (WTO)

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