The General Agreement on Tariffs and Trade (GATT), which entered into force in 1948, initiated several successive rounds of tariff reductions. These rounds resulted in industrial tariffs being reduced by 90, from an average of 40 to just 4 per cent following the Uruguay Round, and reduced or eliminated numerous other barriers to trade.
The World Trade Organization (WTO) is the forum for negotiating, administering, and enforcing a set of agreements to reduce barriers to trade among 134 member countries. The philosophy behind the globalization agenda is that maximizing global economic deregulation will in itself result in broad economic and social benefits. The central operating principal of the WTO is that commercial interests should supersede all others. Any obstacles in the way of operations and expansion of global business enterprise must be subordinated.
In practice, these “obstacles” are usually policies or democratic processes that act on behalf of working people, labour rights, environmental protection, human rights, consumer rights, social justice, local culture, and national sovereignty. Local interests are no longer a valid basis for local laws under the WTO regime. The interests of international trade, which are primarily the interests of transnational corporations, take precedence.
Unlike the International Labour Organization (ILO) conventions, or multilateral environmental agreements, the WTO rules can be enforced through sanctions. This gives the WTO more power than any other international body. The WTO’s authority even eclipses national governments. In fact, the member nations at the WTO are often serving as mere unpaid lawyers for the largest companies in their land, i.e. they agree to challenge laws that the corporations oppose.
Lets see how the WTO operates. Once a challenge is made, a WTO tribunal, meeting in secret, with no accountability to outside authority, rules on the question. If the tribunal rules against a country, its government must either change its laws, pay compensation to the complaining country or countries, or face trade sanctions from other member countries. Tribunals have no guarantee of impartiality or economic disinterest of decision-makers. There is no required disclosure of potential conflicts of interest. All documents, transcripts, and proceedings are secret. Media can’t sit in and observe the proceedings. And there is no outside appeal or review available. The WTO text lists qualifications for dispute tribunal members that ensures they will represent only a “trade uber alles” perspective. The qualifications primarily include experience in a country’s trade delegation or experience as a lawyer on a past trade dispute.
Such qualifications produce panelists with a uniformly pro-trade perspective. There is no mechanism to expose such panelists to any alternative perspectives or expert opinions on environmental, health, labour, consumer, or human rights issues. The WTO tribunal rules also forbid identification of panelists who have supported particular positions and conclusions, adding an additional layer of secrecy and lack of accountability.
Under yet another WTO provision, a law of a member nation can be challenged if “the attainment of any objective (of the WTO) is being impeded” by the existence of the law. The vagueness of this provision makes it possible to “smuggle” into the WTO’s grasp many national laws that would seem to be free of any implications for trade.
A government that has lost a WTO case has no recourse to appeal outside of the WTO. Once a final WTO ruling is issued, losing countries have only three choices: change their law to conform to the WTO requirements, pay permanent compensation to the winning country, or face trade sanctions.
The WTO is being used by corporations to dismantle hard-won local and national environmental protections, which are attacked as “barriers to trade.” The very first WTO panel ruled that a provision of the US Clean Air Act, requiring both domestic and foreign producers alike to produce cleaner gasoline, was illegal. The claim was lodged by Venezuela and the US lost.The WTO declared illegal a provision of the US Endangered Species Act that requires shrimp sold in the US to be caught with an inexpensive device allowing endangered sea turtles to escape. The challenge was brought by India, Pakistan, Malaysia, Thailand etc, and the US lost.
In 1997, the WTO ruled in favour of US beef and biotech industries and against European nations that wanted to ban artificial-hormone-treated beef. As a result, the EU was hit with $116 million in tariffs on its goods. The WTO told Japan that it had to face sanctions if it didn’t lift its import ban on certain fruits that might bear dangerous insects, even though to get rid of those insects Japan needed to use heavy doses of harmful pesticides. Obviously consumer groups don’t like the WTO because of its power to invalidate laws safeguarding food. The Trade Related Aspects of Intellectual Property (TRIPs) establishes enforceable global property rights and requires all 134 WTO members to enact domestic legislation to enforce these new rights. 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.
After a US importer discovered the ‘neem’ tree’s pharmaceutical properties, multinational companies from the US and Japan sought and received numerous patents on products made from the Neem tree, leaving the indigenous populations of India and Pakistan unable to profit from the 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 to buy new seeds each year or no longer use the variety, which may be the only one available or effective in that region.
The WTO rules put the “rights” of corporations to profit over human and labour rights and encourage a ‘race to the bottom’ in wages by pitting workers against each other rather than promoting internationally recognized labour standards. That theory says that if your work force is cheaper than your neighbour’s, then you should keep wages low and lure companies there to exploit your workers. The WTO has ruled that it is illegal for a government to ban a product based on the way it is produced, such as with child labour.
Developing countries are prohibited from creating local laws that developed countries once pursued, such as protecting new, domestic industries until they can be internationally competitive. The WTO even seeks to privatize essential public services such as education, health care, energy and water,and to run these for profit rather than the public good. This, it is feared, will lead to further exploitation of these natural resources.
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. We have, as evident, a global system of the multinationals, by the multinationals, and for the multinationals.
There is, however, a constant international backlash against the WTO. In Seattle, in 1999, the world witnessed an event of historic importance: the first coordinated mass revolt in the United States against global capitalism in the modern era. The Los Angeles Times opined: “On the tear gas shrouded streets of Seattle, the unruly forces of democracy collided with the elite world of trade policy. And when the meeting ended in failure ... the elitists had lost and the debate had changed forever.”
The protest proved that if governments leave the people out of the decision-making process, if governments set up institutions like the WTO, which favour the rights of multinational corporations over everybody else’s, at some point people aren’t going to take it anymore. They’re going to say enough is enough, and they’re going to rise up. That’s exactly what happened in Seattle and in Cancun.
Those who oppose the WTO believe that the fight against the WTO is a crucial one because this is an agency with enormous power, and it uses that power to penalize countries that do anything that could be even remotely construed as standing in the way of free trade. This fight, it can be argued, becomes more justified when the outcome of Cancun (2003) is looked into. When the US asks for incentives to eliminate such subsidies in agriculture which it vehemently opposes in third world countries, and countries like Pakistan are disgruntled to see a clumsy approach over adhering to an agreed timeframe to abolish the textile quotas, the prospects of full fledged implementation of WTO regime look far off.
In short, the WTO is sadly observed to be a body protecting corporate ownership and monopoly over the patenting of plants, processes, seed varieties, drugs, software, and all capital, fostering its exchanges of goods despite any ill effects, and breaking down any protections of labour, the environment, health and safety, that might limit corporate profit making. This flawed institution, however, is a bitter reality of the day. Therefore, instead of asking for a world without the WTO, the way forward should be to restructure it. If core labour rights, environmental protections, and what the Europeans refer to as a “social clause” was inserted into the WTO’s mandate and practice, it could be transformed to a democratic and transparent body, accountable to citizens of the entire world instead of to corporations.
We should reorient international financial institutions from the imposition of a bigoted austerity and destructive forms of development to support for labour rights, environmental protection, and rising living standards. Wealthy countries should write off the debts of the most impoverished countries and create a permanent insolvency mechanism for adjusting the debts of highly indebted nations.
Regulatory institutions should be used to help establish public control and citizen sovereignty over global corporations and curtail corporate evasion of local, state, and national law, such as establishing a binding Code of Conduct for Transnational Corporations that includes regulation of labour, environmental, investment, and social behaviour. This means renegotiating WTO, NAFTA, and all other agreements regulating international trade. This means reorientation of trade so that it becomes a mean to just and sustainable development. The sooner a broad based ‘correction’ is brought into this flawed institution of WTO, the better it would be for the world peace and development.