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The World Trade Organization? Stop World Take Over

William K. Tabb is professor of economics and political science at Queens College and the Graduate Center of the City University of New York. He is the author of Restructuring Political Economy (Routledge, 1999). This article is a revised version of a talk given at a teach-in on Free Trade, Neoliberalism, and the WTO at Queens College on October 4, 1999.

On November 30, 1999, when the World Trade Organization (WTO) opened its third round of ministerial meetings, the three thousand official delegates, two thousand journalists, and other registered observers were greatly outnumbered by the tens of thousands of protesters who came from all over the world to denounce the organization. Estimates of protester numbers ranged to forty thousand, according to the Seattle Times, which told its readers that the demonstrations were larger than those of 1970, when twenty to thirty thousand people (ten thousand according to the Seattle Times) shut down Interstate 5 to protest the Vietnam War. The parallel is appropriate. The still-growing movement in opposition to efforts of institutions such as the WTO to take over the management of the international economy may well be larger than any popular protest movement of the last twenty years or more.

President Clinton, mindful that his vice president’s chances of succeeding him rested in the hands of the Democratic Party’s core constituencies, and that these constituencies were in the streets of Seattle, played a two-faced game. And so did the city’s mayor, mindful that so much of his city supported the demonstrators and their concerns, despite daily newspaper and TV reports drumming away at how important “free” trade was to their prosperity. The president, having first tried to present the issue as a choice between free trade on capital’s preferred terms or no trade at all (the alleged choice of the “Luddites”), instinctively moved to his (by now) threadbare “feel your pain” rhetoric. Environmental and labor rights issues were, rhetorically, to be piously supported, while in fact corporate freedom to pollute and exploit were to be given still greater scope.

The mayor of Seattle, under a similar guise of “concern,” failed to explain why thousands of nonviolent protestors blocking intersections were shot at close range with injury-producing rubber bullets, pepper-sprayed, and teargassed. Nor could they explain why the actions of small numbers of “anarchists” were used to criminalize peaceful protests, and to justify arbitrary arrests of those who refused to yield their right to protest peacefully or who were simply, according to the police, in the “wrong place.” The mayor proudly claimed to have supported free speech while effectively preventing it, just as the president claimed to stand for labor rights and the environment while supporting corporate greed’s full agenda, as he has done consistently through his shameful career.

This attempt to manipulate, or “spin,” the protest was a resounding failure. There can now be no misunderstanding of the strength, or the level of commitment and comprehension, of this emerging radical movement against corporate globalism. In anticipation of the Seattle meeting, some eight hundred grassroots organizations from over seventy-five countries called for resistance to the growing power of corporate greed. The WTO was an appropriate focus, because of its contribution to the concentration of wealth, increasing poverty, and an unsustainable pattern of production and consumption. The organizations charged that the WTO’s rules and procedures are undemocratic, and serve to marginalize further the majority of the world’s people, enmeshed in the instability and social degradation of the process of globalization without social control. In the wake of Seattle, this movement is stronger and more committed, and likely to be even larger and more effective, as well.

Since most citizens do not know what the WTO is, let alone how its actions affect their lives, groups—ranging from the United Church of Christ Network for Environmental and Economic Responsibility to Pax Romana in Thailand, from Green Action in Tel Aviv to Green Library in Latvia, from human rights groups in the Cameroons to the Indigenous People’s Biodiversity Network in Peru, from Pax Christi in Florence to the United Students Against Sweatshops—have been involved in a coordinated effort to present a view of the WTO from below. They have been seeking to show what the WTO means to the lives of the world’s working people, the environment, and the future of all who live on the planet. Seattle was a global lesson.

WTO officials maintain that “what we have here is a failure to communicate,” that the passion in the street was based on ignorance, and illustrated the need for the WTO “to inform and educate” the general public about what it “really does.” What do they really do? One official in the office of the Director General says, “If you think of the place as a bazaar where all the world’s traders get together and haggle, you’re not too far off.” Pretty far, actually. Most of the world’s people are not represented. Their labor is devalued by the transnational corporations (TNCs) who come to haggle and the major powers (pre-eminently the United States), which impose their preferences on the negotiations, or the haggling. Few developing countries have the same level of expertise into the intricacies of the legalisms; some are too poor even to have representatives at these meetings at all. And the developing countries are, in most cases, represented by an elite long since sold out to the center of global capitalism. The rich and powerful set the rules and the rules, not surprisingly, favor the rich and powerful. The haggling is an intra-elite affair but, as a result of popular militancy, a challenge is emerging.

Let me review where the WTO came from, how it works, and why protesters want revolutionary change from TNC rule of the world system. Let’s start in Havana in 1948, where most of the world’s leading trading nations met to agree to the formation of an International Trade Organization (ITO). The idea, and the actual text for the proposed organization, came from the United States. The ITO was to impose order on the world trading system, in order to avoid the kind of downward spiral which occurred in the 1930s—a collapse which had threatened the very existence of the capitalist system. Since U.S. corporations had come out of the war without capitalist rivals, they were confident they could prevail in competition with a prostrate Europe. That “free trade” favors the dominant economy was no new discovery, and elements of corporate and financial capital that stood most to benefit prevailed on the executive branch to put forward the ITO. But powerful nationalistic sentiment in the Congress feared loss of U.S. sovereignty to a world government, refused to be bound by an international governance agency which might in the future escape U.S. control, and declined to ratify the ITO treaty.

A preliminary agreement had been reached on the General Agreement on Tariffs and Trade (GATT), intended as a temporary framework until the ITO came into being. With the U.S. refusal to join the ITO, GATT became a permanent fixture. It did not have enforcement powers, it was not formally even an organization. Yet for nearly fifty years, through a series of rounds, it was the forum through which negotiations took place to lower tariffs (taxes on imports which inhibit and, if they are high enough, prevent trade). In retrospect, some market fundamentalist economists and others are glad the ITO did not become functional because it was a creature of its time. In the postwar period, all nations agreed that full employment was a central goal for any international economic agreement, that workers’ rights should be protected, that too much market power and domination by the big corporations should be discouraged through antitrust laws, and that weaker, newly emerging nations were to have preferential treatment to help them overcome the legacy of colonial domination and underdevelopment. All of these principles were part of the ITO framework.

None are part of the WTO, which came into being in 1995, over some congressional opposition (again from those who feared loss of sovereignty). At its first meeting in Singapore in 1996, after passionate discussion about labor rights and environmental protection, it was decided that these were not trade matters and should not be considered by the WTO, nor should special treatment for developing countries be established, but rather phased out to create “a level playing field for all.” Certainly there was to be no provision to control transnational capital, as the developing nations desired in their call for a New International Economic Order at the UN in the 1970s, which the richer countries had resisted. For the WTO, deregulation (and greater freedom for transnational capital to do what it wants, where and when it wants) is the sole agenda.

In the preamble to the WTO, all sorts of lofty ideas and positive intentions are enumerated: that trade should contribute to a rise in living standards, ensure full employment, respect the environment. But there is nothing in its actual operation about any of these issues. In the WTO’s trade policy review mechanism, there is nothing about evaluating the impact of its rules on workers, consumers, or sustainable development. The WTO’s fundamental postulate is that trade and investment liberalization lead to more competition, greater market efficiency and so, necessarily, to a higher standard of living. If factors of production—labor, capital, and land (including environmental assets)—are priced properly, they will be used in the best possible ways courtesy of the Invisible Hand, or so the fable goes.

Other concerns—human rights, labor rights, and environmental concerns—are not the business of the WTO, an organization with the power to coerce national governments. Rather they are relegated to other special-purpose international organizations, with no power over either the TNCs or their governments. This division between the powerful institutions (the International Monetary Fund [IMF], World Bank, and WTO, which deal with the money), and the powerless organizations (which address the concerns that are important to the vast majority of the world’s denizens), permits the agendas of giant corporations to be carried out while an endless blather of “feel your pain” rhetoric plays in the background.

The enforcement of a level playing field is supposed to be ensured through the WTO dispute resolution mechanism, and the enforcement of its judgments by the country that has successfully challenged violators. There is no acknowledgement that poor countries are at a disadvantage in such adversarial legal proceedings, and often do not dare challenge or enforce judgments against more powerful nations because of the leverage the rich have over the poor and less powerful. The process is not one in which the world community uses the collective strength of a democratic majority to enforce rules. Rather, an individualistic, purely formal concept of justice prevails, in which legal equals (who, in reality, are not equals) do one-on-one combat. This system, like the U.S. legal system, effectively eradicates any real challenge to the rich and powerful.

Furthermore, only countries have “standing,” the right to participate in WTO proceedings. Indigenous peoples like the Ogone, who might challenge what Shell is doing to its lands (with the willing participation of the repressive Nigerian government), do not. Nor do the inhabitants of western New Guinea, since standing is only given to governments—like the Indonesian government, which refuses to respect the rights of those in western New Guinea, murders those who protest, and steals their resources, leaving their environment devastated. Nor is there standing in the Non-Governmental Organizations (NGOs), some of which might advance the rights of indigenous peoples or factory workers who are repressed, jailed, and murdered by their governments in the interests of a “good” labor climate for multinationals. The WTO is a forum for trade rights of capital, on terms negotiated by the agencies of governments that represent the interests of capital. No other rights count.

In the last of the GATT negotiations, the 1986 to 1994 Uruguay Round, U.S. service industries (such as Federal Express, American Express, and other financial and business service firms seeking to speed up their penetration of global markets) were successful in having the U.S. delegates insist on the forced opening of foreign markets to their products. The U.S. Department of Commerce established formal consultation committees; these have subcommittees for different sectors, whose representatives tell the government negotiators what they want out of the negotiations. The result was a precedent-setting General Agreement on Trade in Services (GATS). The United States Council on International Business, with a membership of over three hundred U.S.-based TNCs, law firms, and business associations, put pressure on for a trade related intellectual property (TRIPs) agreement, since so much of TNC profits come from this area. They demanded and got trade related investment measures (TRIMs), which assured that other countries would not discriminate in favor of their home industries, making it harder for U.S. TNCs to penetrate their markets.

Other powerful lobbying groups put pressure on European negotiators (like the European Round Table, where their chief executives sit). The Transatlantic Business Dialogue, a forum where chief executives from Europe and the United States amicably attempt to work out their differences, helps the proceedings along. Absent from these backroom gatherings are small businesses, consumer groups, labor, and most of the world’s governments. By the time the WTO meets to consider a topic, it has been well worked over at meetings from those held by the Trilateral Commission to the annual power gathering in Davos, Switzerland, where the great and not so good meet to develop positions which formal international organizations then adopt.

Governments have deferred to transnational capital’s demand that no country be allowed to discriminate against its products and investments. It would like the right to sue directly any government which attempts to do so (that is part of what proposed multilateral agreements on investment [MAIs] are about), but as of now must act through the agency of its home government. Already such corporate rights are the basis of suits like the one against the state of Massachusetts, about a statute forbidding the government to purchase goods made by companies doing business in Burma. The law convinced such companies as Apple and Eastman Kodak to stop doing business with this repressive military-dominated state. Japanese and European firms preferred to sue Massachusetts for violating the WTO’s non-discrimination laws with regard to government purchases. Under such rules, the effective local and national government boycotts against apartheid in racist South Africa would not have been allowed.

The U.S. Trade Representative is pushing (on behalf of the U.S.’s giant HMOs) for the right to compete with European national health systems to provide medical care, which would lead to the destruction of the current (and far superior) health care systems that exist in much of Europe. Other suits include one by a U.S. parcel and letter delivery service against European government “monopoly” postal services, which would have a similar impact on the right of democratically elected governments to make their own decisions about how their mail is delivered.

In another case, U.S. environmental laws were successfully challenged, forcing the United States to dilute protective measures. Under U.S. law, tuna caught with nets designed in a way that caused them to kill numerous dolphins in the process could not be sold in this country. But this was an “unfair trade practice.” The WTO does not care how the tuna is caught, or if shrimp is caught in a way that kills giant sea turtles, or whether a product is made using child labor, and so cannot be a consideration for member governments.

Clinton’s government has been quick to use the WTO to lower environmental and health standards around the world on behalf of the great corporations it serves. The United States challenged Japan’s pesticide-residue testing requirements for agricultural imports. In 1998 and again in 1999, the WTO ruled that Japan’s standards are higher than WTO standards for pesticide residues; hence, the Japanese must now accept higher levels of pesticide. Guatemala followed WHO/UNICEF guidelines in banning packaging that equated infant formula with healthy babies, but Gerber Corporation got the U.S. State Department to argue that this interfered with Gerber’s intellectual property rights, and to threaten a challenge under WTO. Consequently, Guatemala now allows labeling in this area that goes against WHO/UNICEF guidelines. The WTO, on behalf of the Clinton government, tells Europeans they cannot keep out beef with artificial hormones because they cannot prove, to the WTO’s satisfaction, that it is a health risk. In the past, it would have been producers who had to prove that their products were safe, and up to democratically accountable, elected representatives to decide. Under the WTO, it is governments that must offer conclusive proof. Thus transnationals get their way before WTO dispute settlement panels, which meet in secret and from which NGOs and other interested parties that are not nation-states are banned.

The rights of corporations now include what is called biopiracy: stealing genetic materials and traditional knowledge from indigenous communities and patenting them. Such intellectual theft has become increasingly prevalent. Yves St. Laurent, after importing a particular flower (Cananga odorata or, as it is known in the Philippines, where it is grown, ilang-ilang), set up its own plantations in Africa and secured a patent on the perfume derived from the native Filipino species. In another instance, India’s neem tree is the source of thirty-five patents, mainly for the pesticide properties of the plant. Local users who have long known and benefitted from the tree’s properties get nothing for the appropriation of this knowledge by European and U.S. firms.

Under the TRIPs agreement, all knowledge is declared property and someone must own it. There are now “inventors” of micro-organisms (who own both the micro-organisms and the rights pertaining to them). Plant-derived sweeteners long nurtured by Indian farmers and painkillers developed in China have been stolen by TNCs. We are also seeing major steps to patent seeds, reducing the biodiversity of agriculture.

In the Philippines, MASIPAG (a farmer-led, community-managed effort on breeding and conservation of rice and vegetables) stands opposed to the notion that seeds are anonymous “genetic resources,” free to transnational agribusiness corporations. They are trying to preserve farmers’ rights to freely exchange seeds and share knowledge and resources. All over the world such Davids are standing up to TNC Goliaths. Thanks to such organizations as GRAIN (Genetic Resources Action International, in Barcelona, Spain), the Transnational Institute in Amsterdam, and other watchdog groups with Web sites, as well as the writings of public interest lawyers, we are informed about what free trade means for people around the world.

Not only is biodiversity, a common inheritance of humanity, in grave danger of being stolen, but efforts to patent seeds and increase monopoly rents charged to farmers will raise food prices and lower farm incomes. Monsanto, an adviser-participant in the Intellectual Property Committee during GATT and WTO negotiations, is attempting to link the sales of its seeds and pesticides by bundling products and forcing users to allow inspection of their fields, so that Monsanto can see that they are conforming to company demands. The firm is also among those fighting European efforts to keep out their genetically engineered agricultural products, using the WTO machinery.

But now many concerned and intelligent folk have come to protest the power of an unelected and undemocratic WTO to make decisions about what is and is not allowed, not just in food products, but also in basic matters of what is private or public. Such concerns have produced a broad opposition to the WTO’s power and its modus operandi of putting corporate profits above all other considerations. The battle continues—this David and Goliath struggle between the WTO, the TNCs, and the most powerful governments in the world against the grassroots consumers and producers and those environmental and labor rights groups who help advance their demands. U.S. organized labor has taken notice, and (as shown in Seattle) started to move beyond narrow nationalist concerns toward notions of global solidarity. And now the big guys are worried; squeals of rage rise from the editorial page of The Economist.

The grassroots campaigns against Nike, the giant athletic wear company, have been very effective. It helps that, when the press goes to investigate claims by labor rights activists, reporters are detained and sometimes jailed. Reporter Mark Clifford was jailed in Indonesia, and got a feel for what life is like for working people in TNCs’ subcontractor plants. Clifford’s story in Business Week was titled, “On the Inside, It’s Hell” and detailed the wages and working conditions activists had struggled to publicize. Similar stories have run in the New York Times, the Washington Post, and elsewhere. Labor rights groups are turning the spotlight on Nike, the Gap, Disney, and other exploiters.

Legal challenges by public interest lawyers to Texaco’s despoiling of the Oriente (a part of the Amazon basin in Ecuador) in U.S. courts have begun to get prominent coverage and worry other TNCs. Texaco, of course, says it met all Ecuadorian government regulations. But, according to environmental activists, Texaco has polluted and then abandoned a rainforest that has long sustained human life, leaving a looming medical disaster for the region’s residents.

Through public relations campaigns and legal challenges, as well as large, visible demonstrations such as the one in Seattle, a protest movement is gaining momentum, challenging the dominance of transnational capital and the agencies that do its bidding. Free trade is increasingly seen as antithetical to fair exchange, basic human rights, good working conditions, adequate levels of compensation, environmental protection, and the equitable sharing of the common inheritance of humanity.

The WTO believes it faces a public relations challenge. It surely does. But much more than that, it faces an informed grassroots movement whose numbers are growing. The more citizens find out about the values the WTO fosters and the policies it defends, the more the opposition will grow. One spokesperson for the WTO dismisses critics as doing more harm than good. “To say that the WTO is harmful is literally to say that the world would be better off without a multilateral set of rules on trade,” he said. “It’s manifest nonsense. Nobody could seriously defend that position.” But of course those who opposed the WTO in the streets of Seattle and in other venues are not against rules governing the global economy. Indeed, they want rules—rules to control rapacious capital. It is not a choice of their rules or no rules. The movement is putting an alternative set of rules on the table.

What the popular movements object to, and the WTO understands this well, is that the rulers now make the rules, and that the rest of us are forced to obey them. The challenge is in fact to the entire framework of trade, which the WTO portrays as maximizing self-interest through economic exchange; it is, in fact, a trade regime which maximizes the interests of the giant corporations. It does so by eliminating state-imposed barriers that now, to a limited extent, restrain the TNCs. Stronger laws are needed in the interest of values endorsed by the vast majority of the world’s citizens. Those who understand that these trade-liberalizing practices do damage to human dignity, social justice, and sustainable development must reject the WTO’s claim that their rules are the best rules (let alone the only possible rules). They are not, and there were tens of thousands of Davids and Davidas in the streets of not only Seattle, but London, Paris, and many other places in demonstrations, in teach-ins, and other forms of movement-building resistance. Goliath, watch out: real people’s power is powerfully stirring and the grassroots are in determined movement.