The Case Against the WTO
The Progressive magazine, January 2000
In Seattle, we witnessed an event of historic importance:
the first coordinated mass revolt in the United States against
global capitalism in the modern era. No less than that.
Here was an event that united labor unionists, environmentalists,
consumer advocates, human-rights activists, farmers, organic food
lovers, AIDS activists. From Jimmy Hoffa Jr. to the Sierra Club,
from steelworkers to people in sea turtle costumes, thousands
of people took to the streets to denounce the World Trade Organization
We oppose the violence of self-styled anarchists. The breaking
of windows and looting and trashing that went on we cannot condone.
But neither do we condone the violence of the police. Nor do we
condone the suspension of civil liberties in downtown Seattle.
And we insist on pointing out, contrary to the media images,
that the vast majority of the protesters were nonviolent.
The protest proves that if governments leave the people out
of the decision-making process, if governments set up an institution
like the WTO, which favors 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.
This is new for the United States. But it's not new for England
or France or Germany. And it's not new for Indonesia, Malaysia,
South Korea, Argentina, Colombia, Mexico, and dozens of other
Third World countries, which for years have faced the wrath of
multilateral institutions like the International Monetary Fund
(IMF) and the World Bank.
Now, finally, the lash of the slave-masters of the world economy
is coming down on the backs of U.S. citizens, and they are not
liking the feel of it.
Now, finally, Americans understand what it's like to have
a multilateral institution pressure us to weaken our own standards.
Now, finally, Americans are appreciating that when multinationals
call the shots, many of the things we hold precious are in jeopardy.
The fight against the WTO is a crucial one. This agency has
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.
"Since it was created in 1995, the WTO has ruled that
every environmental, health, or safety policy it has reviewed
is an illegal trade barrier," Public Citizen notes in a recent
report entitled "Whose Trade Organization? Corporate Globalization
and the Erosion of Democracy."
The fundamental policy of the WTO is that the laws and regulations
of member countries need to be the least restrictive to trade
as possible. Laws or regulations that protect the environment,
labor rights, food standards, or human rights can be deemed improper
restraints on trade.
If the unelected, three-person WTO panel judging these disputes
rules that they are improper restraints, then the "offending"
country has a choice: Either change its law, or face costly duties
on its own exports.
Here's what this means in practice. On the environment:
In 1996, Venezuela brought a claim against the United States,
alleging that the Clean Air Act unfairly discriminated against
Venezuelan gas imports to the U.S. The Clean Air Act required
foreign gasoline sold in the United States to be no more contaminated
with additives than the average 1990 level of contaminants in
U.S. gas. Venezuela said the law allowed a fraction of U.S. producers
to sell gas with higher levels, and thus claimed it was being
discriminated against. The WTO agreed. It said the United States
either had to dilute EPA standards or pay $150 million in trade
sanctions for not allowing Venezuelan oil with high levels of
contaminants into this country. The U.S. chose to dilute the standards
and allowed the importing of gas that can cause more air pollution
and lung disease.
The U.S. Endangered Species Act prohibits the sale of shrimp
caught in nets that aren't designed to let endangered or threatened
sea turtles escape. The nets kill as many as 55,000 of these turtles
a year. India, Malaysia, Pakistan, and Thailand challenged the
law. And the WTO agreed.
"It was not our task to review generally the desirability
or necessity of the environmental objectives of the U.S. policy
on sea turtle conservation," the WTO judges wrote. "In
our opinion, members are free to set their own environmental objectives.
However, they are bound to implement these objectives in such
a way that is consistent with their WTO objectives."
In other words, you better do what we say-or else.
This prying away of environmental protections may continue.
The United States is trying to use the WTO "nearly to eliminate
tariffs on lumber and other logging products," according
to a story in The Wall Street Journal on November 24. Environmentalists
fear that getting rid of these tariffs "will stimulate so
much demand that logging will intensify in the world's remaining
ancient forests, which they say serve as habitat for complex ecosystems
that otherwise cannot survive intact," the Journal added.
"Indeed, the Clinton Administration recently issued a report
that acknowledges the tariff measure would adversely affect some
of the forests.... Logging would jump significantly in places
such as Indonesia and Malaysia, where virgin forests are already
On food and safety:
The WTO ruled in 1997 in favor of U.S. 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.
The United States has threatened to take Denmark to the WTO
for proposing a domestic ban on lead compounds in pigments and
chemical processes to reduce the threat to children's health.
Sometimes, the threat itself is enough to coerce an other
country to lower its standards. The United States threatened to
take South Korea to the WTO in 1995, saying it had too stringent
regulations on fruit inspections and too short a shelf life for
meat products. Rather than spend the money to fight the challenge,
South Korea capitulated, reducing inspection time from twenty-five
days to five days and upping the shelf life for meat products
from thirty to ninety days.
Canada took France to the WTO last year to protest France's
ban on products containing asbestos. Canada is the second largest
asbestos producer in the world. The WTO has yet to rule on this,
but what's a little asbestos among friends?
Now the United States is pushing the WTO to rule against countries
that impose restrictions on bioengineered foods or even wish to
put labels on such foods so that consumers can know what they
are eating. The Clinton Administration considers such things to
be a restraint on trade.
The United States threatened to take South Africa to the WTO
because Nelson Mandela passed a law that enabled South African
companies to produce cheap AIDS drugs if they pay royalties to
the drug developers. The Clinton Administration, in the person
of Al Gore, went to bat for the U.S. pharmaceutical companies,
which didn't like Mandela's law. "Obviously, the Vice President's
got to stick up for the commercial interests of U.S. companies,"
one of Gore's senior aides said at the time. (Gore has since modified
his position after vigorous protests by consumer groups and ACT-UP
earlier this year. And at Seattle, Clinton agreed to give ground
on the marketing of pharmaceuticals.)
On human rights and labor rights:
In 1996, Massachusetts passed a law banning state contracts
with companies that invest in or trade with Burma because of that
country's abysmal human rights record. Japan and the EU challenged
that law before the WTO, claiming it was an impermissible restraint
on trade. (A U.S. court threw out the law, saying it was interfering
with the foreign policy of the U.S. government; the Supreme Court
just agreed to review that opinion.)
In 1998, Maryland was considering a similar bill to prevent
state contracts with companies doing business in Nigeria. The
Clinton Administration prevailed on the state legislature to drop
it because the United States was concerned about losing a challenge
at the WTO.
China is now well on its way to becoming a member of the WTO,
despite its horrible human rights record and labor repression.
These are "externalities" that do not concern the WTO.
So, too, is child labor. A country can exploit child labor
and still be in the WTO and compete against other countries that
have long since abolished it. In fact, under current rules, if
the United States were to enact a bill by Senator Tom Harkin,
Democrat of Iowa, banning the import of goods made by child labor,
the United States would be vulnerable to a challenge before the
Conceivably, even living wage ordinances passed by municipalities
or states could be construed as restraints on trade and challenged
before the WTO.
Clinton, in his usual weather-vane manner and with an eye
on Al Gore's political base, came to Seattle, condemned child
labor, advocated more openness in WTO proceedings, and praised
the idea of incorporating tough labor standards into the WTO.
But his proposals didn't fly with many developing nations, which
sensed that Clinton was pulling the rug out from under them.
Proponents of free trade, such as Thomas Friedman of The New
York Times, say that it's "a fool's errand" to pressure
the WTO to impose sanctions on labor, environmental, or other
non-economic issues. Their argument is that these standards would
dampen international trade, reduce living standards around the
world, and potentially lead to trade wars.
But they are wrong on several counts.
First, the benefits of free trade are overblown, especially
in the developing world. "In almost all developing countries
that have undertaken rapid trade liberalization, wage inequality
has increased, most often in the context of declining industrial
employment of unskilled workers and large absolute falls in their
real wages, on the order of 20 to 30 percent in Latin American
countries," according to a report by the U.N. Conference
on Trade and Development. The crash two years ago in the Asian
economies, "caused in part by the very investments and financial
service sector deregulation that WTO rules intensify," has
taken a terrible toll, Public Citizen's report adds. In South
Korea, for instance, "the crisis has quadrupled unemployment
and precipitated a 200 percent increase in absolute poverty."
Second, many nations may serve their own people better by
shielding some of their basic industries and subsidizing the essential
items their citizens need: food, shelter, and fuel. But Third
World countries have been losing their right to economic sovereignty
ever since the IMF and the World Bank effectively took over their
economies, transformed them into export-oriented platforms, and
enforced the hoary theory of comparative advantage. That theory
says that if your work force is cheaper than your neighbor's,
then you should keep wages low and lure companies there to exploit
And third, the risks of a trade war are exaggerated. The United
States is by far the biggest economy in the world, and countries
are going to want to trade with us, whether we insist on protecting
the environment or not, whether we ban goods made with child labor
or not, whether we insist that workers get paid a living wage
The issue is not globalism versus isolationism. For what we
have today is not globalism but corporate globalism. The rules
of the world economy serve the interests of the multinational
companies; they do not serve the interests of the vast majority
of the people on this planet.
Member nations at the WTO are often serving as mere unpaid
lawyers for the largest companies in their land. For instance,
Chiquita didn't like the EU's preferential purchasing of bananas
from former European colonies, so the Clinton Administration filed
a complaint at the WTO against the EU. The business of America
is not the business of Chiquita, but in the WTO, it sure is. Public
Citizen notes, incidentally, that "the Clinton Administration
filed a WTO complaint on bananas-a crop the U.S. does not grow
for export-days after the U.S.-based multinational Chiquita gave
$500,000 to the Democratic Party."
We have, in short, a global system of the multinationals,
by the multinationals, and for the multinationals.
There are several alternatives to this setup. Pat Buchanan
offers the traditional isolationist one, replete with all the
nativist rants about U.S. supremacy, the horrors of one-world
government, and the thinly veiled prejudices against Jews and
Third World people.
But much as the likes of Tom Friedman try to toss all WTO
critics into the same hot tub with Pat Buchanan, most of us don't
want any part of him.
Progressive critics of corporate globalism tend to fall into
three camps: institutionalists, confrontationalists, and localists.
Institutionalists, like those in the new leadership of the
AFL-CIO, want to reform bodies like the WTO so that they will
include labor rights, human rights, and environmental protections
in their rule-making. They want a regulated system of world trade
so long as it is more responsive.
But many activists doubt that an institution like the WTO
will ever adequately meet these demands. "When the WTO was
established," says Lori Wallach, director of Public Citizen's
Global Trade Watch, in the December 6 issue of The Nation, "many
environmentalists pushed for an environmental working group in
the WTO. They got one, and after five years, many of its most
energetic proponents are now saying that this working group has
turned into a trade-dominated entity where environmental laws
are studied not to safeguard them but rather to figure how to
get rid of them."
Many activists conclude that rather than vesting our hopes
in global bodies like the WTO, we should instead organize our
own forces and rely on international labor strikes or boycotts
to ensure that our rights are honored. "Labor should be taking
on the multinationals on a worldwide scale," says Kim Moody
of Labor Notes in that same issue.
Progressive localists contend that the answer is not so much
in building a global movement as it is in ensuring the sustainability
of local economies, whether in regions of the First World or in
countries of the Third. These critics, from Wendell Berry to Walden
Bello, put more faith in developing small, healthy, and largely
Whether we identify as progressive internationalists, confrontationalists,
or localists, we all insist that the current rules and institutions
of the world economy- embodied by the WTO, the IMF, and the World
Bank-are undemocratic and unjust. These institutions have turned
free trade into a golden calf.
But we don't have to worship that golden calf. And as the
protests in Seattle showed, there are thousands upon thousands
of people willing to take to the streets to make clear that there
are things more important than profit, things more important than
They have struck at the hollow core of capitalism, and they
will strike again until their legitimate concerns are addressed.