WTO: The global enforcer
The World Trade Organization (WTO), the new "governing"
structure [of GATT], was crafted at the end of the Uruguay Round
negotiations [in the Fall of 1994] to organize and enforce this
new system of limits on every nation's laws and policies. The
new global agency was not in the original plans for the Uruguay
Round when its terms of reference were agreed upon in 1986. The
WTO was hatched to provide a global executive branch that would
judge a country's compliance with the rules, enforce the rules
with sanctions, and provide the legislative capacity to expand
the rules in the future.
The WTO gives the trade rules both a permanent organizational
structure (powers that GATT did not have) and the kind of "legal
personality" enjoyed by the U.N., the World Bank, and the
I.M.F. The binding provisions that define the WTO's functions
and scope do not incorporate any environmental, health, labor,
or human rights considerations. Moreover, there is nothing in
the institutional principles of the WTO to inject any procedural
safeguards of openness, participation, or accountability. The
WTO provides no mechanism for nongovernmental organizations to
participate in its activities and, in several key provisions,
requires that documents and proceedings remain confidential.
The WTO "dispute resolution system" is the mechanism
that enforces WTO control over democratic governance. Disputes
are not decided by democratically elected officials or their appointees
but by secret tribunals of foreign-trade bureaucrats from a preset
roster. Only national government representatives are allowed to
participate in the dispute resolution process. State and local
government representatives (such as a state attorney general),
citizens, and the press are locked out.
For U.S. citizens, the notion of delegating "judicial"
review to forums that do not have the procedural safeguards of
the U.S. federal and state judicial systems is troubling. Trade
dispute panels, whether in the WTO, NAFTA, or I988 Canada-U.S.
Free Trade Agreement, share highly problematic traits:
1 - Tribunals have no guarantee of impartiality or economic disinterest
of decisionmakers.
2 - There is no required disclosure of potential conflicts of
interest. (In a recent timber dispute under the Canada-U.S. Free
Trade Agreement, two of the five members of the panel were attorneys
from firms representing Canadian lumber interests directly affected
by the case.)
3 - All documents, transcripts, and proceedings are secret.
4 - No media and no citizens can 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, labor,
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.
Ironically, the only specific procedural requirement for WTO tribunals
is that they be conducted in secret. Unlike complaints, briefs,
and affidavits in the U.S. court system, documents presented to
the WTO tribunals are kept confidential. Thus it is only as a
result of a Public Citizen lawsuit that the U.S. Trade Representative
(USTR) must finally release the U.S. submissions to the GATT panels.
Even so, these submissions are censored by USTR officials in order
to conceal the arguments of the other party. Documents from other
parties in the dispute are still not available. So, if a state
law were to be challenged, governors or state attorney generals
would only have access to those documents or proceedings that
the federal government chose to make available.
The old rules and the new
A comparison of the rules of the old GATT and the recently established
WTO reveals much about the intentions of the people who created
the system. At nearly every turn, with nearly every rule, the
clear intention is to diminish if not eliminate the democratic
process, not only in the internal operations of the GATT bureaucracy
and the WTO but also among Member nations. The new rules clearly
favor the largest, most developed, and most powerful nations.
Here are some examples of those rules:
1 - Unlike the old rules of GATT, the new WTO requires that all
members agree to be bound by all the Uruguay Round accords. The
old GATT rules did not require this all-or-nothing standard. From
a trade perspective, this rule seems a good idea because it eliminates
free riders- countries that do not accept certain provisions but
benefit from other countries' compliance. But from the point of
view of democracy, the rule forces many countries, usually small
ones, to accept trade in areas that might be undesirable in the
long run. Their choice is to agree or to forfeit participation
in the world trade system. Such all-or-nothing international laws
are very rare, because they pose choices incompatible with national
sovereignties.
2 - When countries join the WTO, they authorize the WTO to conduct
ongoing negotiations on WTO provisions; many may never be submitted
for approval by any elected legislatures. Only a simple majority
vote is required to initiate these WTO negotiations; under the
old GATT that vote had to be unanimous. Thus the new rules lead
to a higher potential for coercion of small nations by larger
ones.
3 - Perhaps the most ominous change is this one: WTO rules and
restrictions are now enforceable as regards all existing federal,
state, and local laws, and future laws too. As the text says,
"Each Member shall ensure the conformity of its laws, regulations
and administrative procedures with its obligations as provided
in the annexed agreement." So, U.S. law and the laws of every
other nation must "conform" to the WTO and each other.
Perhaps with this provision in mind, the Clinton administration
announced that all future U.S. environmental proposals would be
put through trade reviews that ensured their compliance with U.S.
trade obligations. In effect, the administration voluntarily sacrificed
U.S. sovereignty.
4 - 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.
5 - One additional point of difference concerns the WTO's attack
on its Members' democratic and sovereign decision making: Under
the old GATT rules, there had to be unanimous approval of all
GATT's contracting parties before trade sanctions were imposed
on a GATT nation by the other nations. Under the new WTO rules,
the determinations by WTO tribunals become automatically binding.
This holds unless all Member countries vote to stop the decision
within ninety days. This is another case where antidemocratic
procedural rules determine much of the out come; the obvious result
is that few, if any, tribunal decisions would ever be voted down
unanimously. This requirement of consensus to stop the action
of an international institution rather than to authorize it is
uniquely empowering for the WTO; it means its bureaucratic decisions
will be honored and feared, thus further intimidating any resistant
strains among nations. Under the old GATT, the opposite rule applied:
Decisions were not adopted unless all countries agreed; any single
country had the right to block a GATT ruling and thus maintain
greater autonomy.
Thus the Bush administration was able to freeze an old GATT tribunal
ruling against the Marine Mammal Protection Act, which prevented
the import of Mexican tuna caught in a manner that also killed
dolphins. A GATT tribunal called that an illegal trade barrier,
but Bush, under massive public pressure, was able to veto the
ruling by the requirement of unanimity. The new WTO removes all
countries' veto power and effectively their ability to maintain
laws that protect people or the environment from WTO challenge.
As mentioned above, the WTO rules require that Members' future
laws also comply with WTO rules. So WTO Member countries are now
required, when promulgating new federal, state, or local laws,
to take into account whether or not the new law will conform with
WTO rules. Thus the WTO has a chilling effect on policies that
are now being written and rewritten with the fear of a future
WTO challenge in mind. In some cases, such as a I994 child labor
law proposed in the U.S. Senate, conflict with the WTO was a primary
weapon used to squash the bill's progress. To avoid the time and
expense of later having to defend a law against a WTO charge,
countries can use regulatory discretion, annual budgets, or legislative
reauthorization to alter democratically achieved laws to meet
WTO rules.
Another example of the WTO's effect occurred in the I995 New York
State budget. Buried in the voluminous state legislation was a
list of laws to be eliminated because they conflicted with the
rules of the WTO. The list included a tropical timber procurement
ban, a law requiring that state contractors only purchase from
Northern Ireland companies that maintain certain human rights
standards (called the MacBride Principles), and a small preference
for New York-produced food. Luckily, an enterprising reporter
discovered the provisions. The embarrassing revelations and the
outrage they generated ultimately forced New York Governor Pataki
to withdraw the provisions-at least for the moment. However, such
stealth rollbacks of democratically supported policies undoubtedly
lurk in other state-level proposals, and the provisions could
be tucked into some other bulky state legislation later.
As a legal matter, the WTO's rules and powerful enforcement mechanism
promote downward harmonization of wages, environmental, worker,
and health standards and the undermining of democratic procedures
and policies. However, in practice, the race to the bottom set
off by the WTO is even more devastating than the sum of the WTO's
provisions. Both NAFTA and GATT have actual provisions requiring
harmonization of environmental, safety, food, and other standards.
For instance, under NAFTA, the trucking industry is working through
a land transportation harmonization committee to get an increase
in truck weights and lengths for all North American trucks. Such
a move would lower U.S. safety standards through the back door.
By giving up the right to make investment in a country conditional
on certain standards or the entry of products into domestic markets
conditional on compliance with national rules, countries have
eliminated 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 whichever state
would offer the most miserable wages, the most lax pollution standards,
and the lowest taxes. Now, via NAFTA and GATT, multinational corporations
can play this game at the global level. After all, externalizing
environmental and social costs is one way to boost corporate profits.
Paying child laborers slave wages in some countries may increase
a U.S. firm's bottom line. It is a tragic lure that has its winners
and losers determined before it even gets underway: Workers, consumers,
and communities in all the countries lose, short-term profits
soar, and the corporation "wins."
Under the WTO, the race to the bottom is not only in standard
of living, environmental, and health safeguards but in democracy
itself. Enactment of the free trade deals virtually guarantees
that democratic efforts to make corporations pay their fair share
of taxes, provide their employers a decent standard of living,
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 message 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 threats of
this sort are often carried out.
Stopping Globalization
One of the clearest lessons that emerges from a study of industrialized
societies is that highly centralized commerce is environmentally
and democratically unsound. Some international trade is useful
and productive, while other global trading favors corporate advantages
over those of workers, consumers, and the environment.
But societies need to focus their attention on fostering community-oriented
production. Such smaller-scale operations are more flexible and
adaptable to local needs and environmentally sustainable production
methods. They are also more easily subjected to democratic control,
less likely to threaten to shift their operations abroad, and
more likely to perceive their interests as overlapping with community
interests.
Similarly, allocating power to reachable governmental bodies tends
to increase citizen power. Concentrating power in international
organizations, as the trade pacts do, tends to remove critical
decisions from citizen control. You can talk to your city council
representative but not to some faceless international trade bureaucrat
in Geneva, Switzerland.
If a foreign country's simple cry of "nontariff trade barrier"
can jeopardize local or state laws, if a country must pay a bribe
in trade sanctions to maintain its own laws, if a company claims
that the burden of citizen safe guards are so great that it will
pick up stakes and move elsewhere, then global living standards
will continue to spiral downward.
In the United States, where most wages are at their lowest level
in real terms since President Johnson initiated the war on poverty
in 1964, a major swath of the American population is working harder
to earn less. Polling continues to show a growing "anxious"
class. A sense of despair and loss of control is at least part
of the explanation for the tumultuous electoral behavior of the
past two U.S. federal elections. This new anxious class is politicized
and looking for answers.
We must make the clear connection between our local problems and
the multinational corporate drive for economic and political globalization.
If we don't, then others will blame these increasing problems
on other causes. "It's the immigrants!" "It's the
welfare system!" "It's greedy farmers or workers!"
Allowing the camouflage of the real causes of these multifaceted
problems means that citizens are divided against each other to
the benefit of the corporate agenda.
We now face a race against time: How will citizens reverse the
devastating globalization agenda while democratic options and
institutions are still available? The degree of suppression and
subterfuge necessary to continue to globalize will be hard to
maintain in the presence of any democratic oversight. To obtain
this oversight and to actually reverse NAFTA, GATT, and the push
to globalization will require a revitalized citizenry here and
abroad. There will be no dearth of provocations.
World
Trade Organization