Trade Body Threatens Democracy
by Chris McGinn
from Pubic Citizen website
The World Trade Organization (WTO) has
been in operation for only three years, but the destructive impact
of its policies on American families may be felt for years to
Created three years ago in January with
the passage of the Uruguay Round of the General Agreement on Tariffs
and Trade (GATT), an international trade pact, the WTO is a powerful
global bureaucracy where unelected trade bureaucrats are empowered
to decide the fate of democratically-achieved laws. If any local,
state, or federal law of a WTO member country is found to violate
the organization's trade rules, the law must be changed, or that
nation could face economic sanctions. With about 35 exceptions,
including China, Russia, and Vietnam, most nations in the world
belong to the Geneva-based WTO.
Taking advantage of WTO rules, corporations
in various countries have gone after a cornucopia provisions;
from measures to eliminate the use of leg-hold animal traps to
laws protecting dolphins from unsafe tuna-catching practices.
Establishment of the WTO was controversial
all over the world as it placed the importance of international
commerce and industry interests before all other values, including
consumer safeguards, environmental and labor protections, food
safety, and human rights.
In the United States, a broad coalition
of environmental, food safety, family farm, labor, and religious
groups opposed the GATT Uruguay Round and the establishment of
the WTO, citing, among other reasons, the threat that the WTO
would pose to U.S. environmental and consumer protection laws.
The negative effects of the WTO are even
worse than critics had originally feared. The WTO's very first
ruling in early 1996 ordered the U.S. to eliminate its Clean Air
Act regulation on gasoline cleanliness. The case proved that the
WTO has the power to weaken U.S. environmental and health protections
enacted by Congress.
At issue was a 1993 Environmental Protection
Agency (EPA) rule on gasoline contaminants that cause health-threatening
air emissions. The regulation required the cleanliness of gasoline
sold in America's most polluted cities to improve by 15 percent
over 1990 levels, and all gasoline sold elsewhere in the U.S.
to preserve at least 1990 levels. The rule was created to ensure
that all gasoline sold in the U.S. met the standards.
The Venezuelan government and oil industry
had fully participated in the original rule-making of the Clean
Air Act when it was open for public comment and input. While many
environmentalists considered the provisions of the Act to be too
weak, the Venezuelan and U.S. oil industries regarded the rules
as too stringent.
Using democratic means provided by U.S.
law, including a federal court challenge, the Venezuelan oil industry
attempted to modify the rules to serve their best interests, but
was unsuccessful. The Venezuelan oil industry then took its case
to the Venezuelan Government, which turned to the WTO. The Venezuelan
government claimed that the U.S. foreign standard pertaining to
so-called reformulated gasoline put Venezuelan domestic refiners
at an unfair disadvantage by requiring that their product meet
the average cleanliness of U.S. domestically refined reformulated
gasoline. This rule was established because foreign refiners did
not maintain the EPA data-keeping requirements that would have
allowed them more discretion in setting standards.
The WTO ruled that the U.S. regulation
on the cleanliness of reformulated gasoline had to be changed
because WTO rules forbid different treatment for foreign producers.
The U.S. government appealed the ruling, which the WTO subsequently
rejected. By spring 1996, the Clinton Administration notified
the WTO it would comply with the ruling by changing the U.S. gasoline
regulation rather than face the alternative: $150 million in annual
trade sanctions. The Venezuelan oil industry had effectively superseded
the democratic decision-making process in the U.S.
The case actualized the worst fears of
environmental groups and other opponents of the WTO. The ruling
required countries to conform to WTO rules: "WTO members
were free to set their own environmental objectives, but they
were bound to implement those objectives only through measures
consistent with its [WTO's] provisions."
In April 1997, the EPA released proposed
rules to implement the WTO order. The new rules, which will allow
more dirty gasoline into the U.S. domestic market, are in fact
identical to an oil industry proposal that the EPA had previously
contended was unenforceable and too costly. The rules were enacted
into law last August. Gas stations in U.S. cities with the poorest
air quality, which used to be required under the Clean Air Act
to sell only the most purified reformulated gasoline, will receive
dirtier gasoline, and residents of these cities will suffer an
increase in air pollution and inevitable damage to their health
and the environment.
Sea Turtles At Risk
The most recent WTO dispute, a challenge
to provisions of the U.S. Endangered Species Act which protect
endangered sea turtles from certain shrimp harvesting methods,
similarly demonstrates how the WTO can circumvent democratic policy
Under U.S. law, shrimp sold in the U.S.
must be caught using "turtle excluder devices" (TEDs)
contraptions which allow sea turtles to escape the otherwise deadly
nets used by shrimp fishers. A TED is a metal grate that fits
snugly within the mouth of a modern fishing net and prevents turtles
from being trapped in the net.
Shrimp nets entangle and kill as many
as 150,000 turtles each year. Inexpensive TEDs can reduce sea
turtle mortality from shrimp trawling by as much as 97 percent.
But India, Malaysia, Pakistan, and Thailand
joined forces to challenge the U.S. law, arguing that WTO rules
prohibit limitations on imports, especially in situations where
limitations are based on the way products are produced. Under
this argument, all shrimp are equal regardless of whether the
shrimp was caught using methods that kill sea turtle sand therefore
must be allowed into the U.S. The argument fails to take into
account the importance of distinguishing the different methods
of production, processing, and harvesting that are essential in
protecting the environment.
"This is one place where the United
States should draw the line and say, `No longer will we allow
the short-term benefits of trade to cause the extinction of a
species,'" says James Spotila, Director of the Center for
Biodiversity and Conservation at Drexel University. "This
is not an economic issue, it is a survival issue for sea life
on this planet," he adds.
The case will be heard this February by
WTO dispute resolution panelists. In this case, the panelists
include representatives from Hong Kong, Germany, and Brazil who
are trade experts with no particular background in science or
species protection. The panelists are not required to obtain scientific
information before rendering their decisions.
The panelist from Brazil, Carlos Cozendey,
is an official with the Brazilian Ministry of External Relations,
Trade Policy Division. He was included in the case despite the
fact that Brazil was previously embargoed by the U.S. for failing
to implement regulations to protect sea turtles from shrimp trawling.
Under WTO rules, the dispute process is completely secret and
not subject to outside appeal. Citizen groups are not allowed
The WTO's decision is expected to establish
a binding precedent concerning the right of countries to implement
species protection laws. An adverse ruling would authorize the
imposition of trade sanctions against the U.S. until the law is
The growing evidence of WTO damage has
spurred an international citizens' movement against the organization
and its rules. Concerned citizens in the U.S. received a boost
last summer. In July, Congress passed a bill sponsored by Representative
Bernie Sanders (I-Vt.) which appropriates $1 million from the
budget of the Department of Commerce to the office of the U.S.
Trade Representative for tracking the effects of WTO challenges
on U.S. local, state, and federal laws.
Public Citizen will continue its work
to educate lawmakers, activists, academics, and the general public
on the WTO's real life threat to our laws.
World Trade Organization