WTO decisions: What do they mean?

WTO decisions: What do they mean?
November/December 1999

What do the U.S. Cattlemen's Association, Chiquita Banana and the Venezuelan oil industry have in common? These big business interests were able to defeat hard-won national laws ensuring food safety, strengthening local economies and protecting the environment by convincing governments to challenge the laws at the World Trade Organization (WTO).

Established in 1995, the WTO is a powerful new global commerce agency, which transformed the General Agreement on Tariffs and Trade (GATT) into an enforceable global commercial code. The WTO is one of the main mechanisms of corporate globalization. While its proponents say it is based on 'free trade," in fact, the WTO's 700-plus pages of rules set our a comprehensive system of corporate-managed trade. Indeed, the WTO has little to do with the 18th Century free trade philosophy) developed by David Ricardo or Adam Smith, who assumed neither labor nor capital crossed national borders. Under the WTO's system of corporate-managed trade, economic efficiency, reflected in short-run corporate profits, dominates other values. Decisions affecting the economy are to be confined to the private sector, while social and environmental costs are borne by the public.

Sometimes called the "neoliberal" model, this system sidelines environmental rules, health safeguards and labor standards to provide transnational corporations (TNCs) with a cheap supply of labor and natural resources. The WTO also guarantees corporate access to foreign markets without requiring that TNCs respect countries' domestic priorities. The myth that every nation can grow by exporting more than they import is central to the neoliberal ideology. Its proponents seem to forget that in order for one country to export an automobile, some other country has to import it.

Now the world's transnational companies want more a new "Millennium Round" of further WTO negotiations which would accelerate the economic race to the bottom by expanding the WTO's powers.

But this concept's failure goes beyond this inherent sham: the lose-lose nature of export-led growth was exposed in the aftermath of the East Asian financial crisis of 1998. When the IMF compelled Asian countries to try to export their way out of their crises, the U.S. became the importer of last resort. U.S. steelworkers lost jobs to a flood of steel imports, while workers in Asia remained mired in a terrible depression. The neoliberal ideological underpinning of the corporate managed trade is presented as TINA -"There Is No Alternative" - an inevitable outcome rather than the culmination of a long term effort to write and put into place rules designed to benefit corporations and investors, rather than communities, workers and the environment. The top trade officials of every WTO member country are meeting in Seattle at the end of November. If you haven't bought the public relations campaign on TINA and want to help change the rules, join your fellow citizens on the Road to Seattle and Beyond. To start with, the WTO must assess the effects of its current rules before negotiating new agreements.

What Is The WTO And How Does It Work?
The WTO is the international organization charged with enforcing a set of trade rules including the General Agreement on Tariffs and Trade (GATT), Trade Related Intellectual Property Measures (TRIPS), General Agreement on Trade in Services (GATS), among others. WTG was established in 1995 in the "Uruguay Round of GATT negotiations.

Prior to the Uruguay Round, GATT rules focused primarily on tariffs and quotas. Consensus of GATT members was required to enforce the rules. The Uruguay Round expanded GATT rules to cover what is known in trade jargon as "non-tariff barriers to trade." These are food safety laws, product standards, rules on use of tax dollars, investment policy and other domestic laws that impact trade. The WTO's rules limit what non-tariff policies countries can implement or maintain.

Currently there are 134 member countries in the WTO and 33 nations with observer status. Officially, decisions in the WTO are made by voting or consensus. However, developed countries, especially the so-called QUAD countries (U.S., Canada, Japan and the European Union), repeatedly have made key decisions in closed meetings, excluding other WTO nations. The WTO's lack of democratic process or accountable decision-making is epitomized by the WTO Dispute Settlement Process. The WTO allows countries to challenge each others' laws and regulations as violations of WTO rules. Cases are decided by a panel of three trade bureaucrats. There are no conflict of interest rules and the panelists often have little appreciation of domestic law or of government responsibility to protect workers, the environment or human rights. Thus, it is not surprising that ever)' single environmental or public health law challenged at WTO has been ruled illegal. WTO tribunals operate in secret. Documents, hearings and briefs are confidential. Only national governments are al-lowed to participate, even if a state law is being challenged. There are no outside appeals.

Once a final WTO ruling is issued, losing countries have a set time to implement one of only three choices: change their law to conform to the WTO requirements, pay permanent compensation to the winning country, or face non-negotiated trade sanctions. The U.S. official position is that ultimately, laws must he changed to be consistent with WTO policy.

The WTO'S Record, Threats To Democracy, Health, And The Environment
When the WTO was created, concerned citizens and public interest organizations warned that the combination of the WTO's pro-industry rules and powerful enforcement would pose a threat to laws designed to protect consumers, workers, and the environment. Almost five years later, there is a clear record:the cases settled under WTO rules show the WTO's bias against the public interest.

The Clean Air Case:
CASE: On behalf of its oil industry, Venezuela challenged a U.S. Clean Air Act regulation that required gas refiners to produce cleaner gas. The rule used the 1990 actual performance data of oil refineries required to file with EPA (mostly U.S. refineries) as the starting point for required improvements for refineries without reliable data (mostly foreign). Venezuela claimed this rule was biased against foreign refiners and took the ease to the WTO.

RESULT: A WTO panel ruled against the U.S. law. In 1997, the EPA changed the clean air rules to give foreign refiners the choice of using an individual baseline (starring point). The EPA acknowledged that the change "creates a potential for adverse environmental impact.
IMPLICATION: Refiners from Venezuela and other countries will use the individual baseline option only if it gives them a weaker starring point, and thus lets them sell dirtier gasoline in the U.S., which would deteriorate air quality. The WTO gives businesses a special avenue to challenge policies, like the Clean Air rules, which have withstood domestic challenges.

The Beef Hormone Case:
CASE: The U.S. challenged a European Union ban on the sale of beef from cattle that have been raised with certain artificial growth hormones.

RESULT: In 1998, a WTO appellate panel ruled against the EU law, giving the EU until May 13, 1999 to open its markets to hormone-treated beef.

IMPLICATION: The ban on artificial hormones applies equally to European farmers and foreign producers. If European consumers and governments are opposed to the use of artificial hormones and are concerned about potential health risks or want to promote more natural farming methods, they should have the right to enact laws that support their choices. Instead, the WFO empowers its tribunals to second-guess whether health and environmental rules have a "valid" scientific basis.

The Shrimp and Turtle Case
CASE: Four Asian nations challenged provisions of the U.S. Endangered Species Act forbidding the sale in the U.S. of shrimp caught in ways that kill endangered sea turtles.

RESULT: In 1998, a WTO appellate panel decided that while the U.S. is allowed to protect turtles, the specific way the U.S. tried to do so was not allowed under WTO rules. The U.S. government is now considering ways to change the law to comply with WTO.

IMPLICATION: It is possible to catch shrimp without harming turtles by fitting shrimp nets with inexpensive "turtle excluder devices." U.S. law requires domestic and foreign shrimp fishermen to use turtle-safe methods. The goal of saving turtles could be undercut by the WTO's second-guessing of how U.S. policy should be implemented, given the most inexpensive, effective means has been ruled WTO-illegal.

What's Up For The WTO In Seattle
When the WTO countries meet in Seattle, they will finalize a "Ministerial Declaration" that will announce the future WTO agenda. At the end of the previous Round, WTO members agreed to form committees to consider agriculture, services and intellectual property rights (now called the "built-in agenda"). Now some countries want to add investment (the MAI), procurement and competition policy, calling for the launch of a "Millennium Round" of negotiations. What-ever future negotiations might be agreed, further deregulation favoring private interests can be anticipated. The European Union wants to launch a Millennium Round at Seattle. The U.S. favors the more limited built-in agenda. Some developing countries are strongly opposed to further negotiations since deregulation and privatization have hurt them. They oppose a new Round and call for a turn-around of the WTO, a theme which is being echoed by a growing consensus of activists worldwide, see www.xs4all.nl/~ceo/

This article was reprinted by permission from the Oct. 1999 Student Insurgent, Eugene, Oregon. It is part of Public Citizen's Guide to the WTO. Public Citizen can be reached through their website at www.citizen.org.