invisiblegovernment

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Prepared by

The International Forum on Globalization (IFG)

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part one the nature of the system

introduction 1

invisible government 2

the new economy: theory and result 3

the “evolution” of the wto 5

mechanisms of wto governance 7

agreements within the wto 9

the 1999 seattle wto ministerial 11

part twocrucial issues in the wto

the environment 13

Key WTO Agreements with Environmental Effects 14Article I– Most Favored NationArticle III– National TreatmentArticle XI– Elimination of Quantitative Restrictions (Import and Export Controls)Agreement on Technical Barriers to Trade

Environmental Rollback 16Domestic ImplicationsInternational Implications: Multilateral Environmental Agreements

Significant WTO Rulings that Affect the Environment 17Reformulated GasolineThe Shrimp-Turtle CaseTuna-Dolphin I and II

Looking Ahead 19The Status of Multilateral Environmental AgreementsFree Trade in Wood ProductsFree Trade in Water

agriculture, food, and public health 20

The Globalization of Industrial Agriculture 21

The WTO Agreement on Agriculture 22Market Access via Tariff and Non-Tariff MeasuresDomestic SupportsExport Subsidies

contents

Winners and Losers 24

Food Safety and Public Health 25

WTO Rulings Affecting Agriculture, Food Safety, and Public Health 25The Banana CaseThe Beef Hormone CaseDairy ProductsPesticide Residue Levels

Looking Ahead 27The Agreement on AgricultureThe Agreement on Sanitary and Phytosanitary MeasuresThe “Biotech” Agreement

culture 28

The Erosion of Cultural Protections 29

WTO Rulings on Cultural Issues 29Canada’s Attempt to Save Its Magazines

Looking Ahead 30Broadcast DeregulationThe Computer Industry and E-Commerce

intellectual property rights 31

Bad TRIPS—Agreement on Trade Related Intellectual Property Rights 32

WTO Ruling on Intellectual Property Rights 34Patents on Plant Varieties: Advancing the U.S.-Style Patent System

Looking Ahead 34

The Chilling Effect 35Gerber vs. Guatemala’s Infant Health LawAIDS Drugs Denied to HIV-Infected in Thailand and South Africa

finance and investment 36

Agreement on Trade Related Investment Measures (TRIMS) 37

A Brief History of Finance and Investment Rules 37

WTO Challenge 38The Burma Case: Human Rights Affected by Finance and Investment

Looking Ahead 39The Re-Emergence of the Multilateral Agreement on Investment (MAI)

Investor-State Cases 41

conclusion: no new round, turn around 42

references 44

Part One

the nature

of the system

1

E C O N O M I C G L O B A L I Z AT I O N I N V O LV E S the most fun-damental redesign and centralization of the world’spolitical and economic arrangements since the IndustrialRevolution. Yet the profound consequences of thesechanges have been exposed to almost no serious publicscrutiny or debate. Despite the scale of the globalreordering, our elected officials, our educational insti-tutions, and the mass media have made no credibleefforts to describe what is being formulated, to explainits root philosophies and its inner workings, or toexplore its multi-dimensional effects. The occasionaldescriptions offered by the media or government usu-ally come from global corporations or the great newglobal trade bureaucracies, such as the World TradeOrganization (WTO). Because they are the leadingadvocates and beneficiaries of this new order, thevisions they offer are unfailingly positive, even utopian:Globalization will be a panacea for all our ills.

Thus far, the optimism is unwarranted. The single,clearest, most direct result of economic globalization todate is a massive global transfer of economic and politi-cal power away from national governments and into thehands of global corporations and the trade bureaucraciesthey helped create. This transfer of power is producingdire consequences for the environment, human rights,social welfare, agriculture, food safety, workers’ rights,national sovereignty, and democracy itself.

The WTO is the primary rule-making regime of theglobalization process. Its 134 member countries haveceded to it vast authorities and powers that once residedwithin their own bodies politic. In only five years ofexistence the WTO has come to rival the InternationalMonetary Fund as the most powerful, secretive, andanti-democratic international body on earth. It is rap-idly assuming the mantle of a bona fide global governmentfor the “free trade era,” and it actively seeks to broadenits powers and reach.

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Children line up for the latrine in this slum outside the business center of Jakarta, Indonesia. According to the 1999 United NationsHuman Development Report, even though net capital flows have skyrocketed in countries such as Indonesia as a result of economicglobalization, the gap between the rich and poor within such countries has increased by dizzying proportions. The UN report directlyblames the inequalities of the global trading system for the widening gap.

introduction

2

T H E C E N T R A L O P E R AT I N G P R I N C I P L E of the WTO isthat global commercial interests—actually, the inter-ests of global corporations—should always supersedeall others. Any obstacles to the smooth operation andrapid expansion of global corporate activity should besuppressed. In practice, however, these “obstacles” arenational, provincial, state and community laws andstandards that are made on behalf of labor rights, envi-ronmental protection, human rights, consumer rights,local culture, social justice, national sovereignty, anddemocracy. Such standards of nations are viewed bythe WTO and global corporations as impediments to“free trade,” when they are actually national expres-sions of democratic processes within individual coun-tries that reflect local values, cultures, and interests, aswe will see repeatedly throughout this document. TheWTO’s role is to expand the freedom of movementand rights of access for corporations, while diminish-ing the rights and options of nation-states and citizenmovements to regulate commerce for the sake ofhuman beings and nature.

The WTO was formed in 1995 by an agreementamong 125 countries (since expanded to 134) andwas given powers far greater than have ever beengranted to any international body, including the threeprimary characteristics of governments: executive,legislative, and judicial authority.

Operating from Geneva, Switzerland, with anadministrative staff of 500 people, the WTO has nowincorporated within itself more than 20 separate inter-national agreements, including the once-dominantGeneral Agreement on Tariffs and Trade (GATT). TheWTO has full executive authority over all these accords.

The WTO’s legislative authority stems from itsability to strike down the domestic laws, programs,and policies of its member nations and to compelthem to establish new laws that conform to WTOrules. This authority extends beyond the nationalgovernment level, all the way to provinces, states,counties, and cities.

The WTO’s judicial powers are expressed throughits Dispute Settlement Body (DSB). This is comprised

of panels of corporate and trade lawyers and officialswith no education or training in social or environ-mental issues, who preside in secret hearings as finaljudges and arbiters of disputes among members. Asdiscussions of individual cases will show, the ruling ofa dispute resolution panel may have profound impactson workers, society, and nature in all countries.

Unlike other international bodies, including theUnited Nations, the WTO has also been grantedextraordinary enforcement powers. It has the ability todemand compliance from its members, and to coerceand force compliance where necessary by means of avariety of disciplines, penalties, and trade sanctionswhich can be so economically severe that even thelargest nations must yield.

That member nations should have granted suchpowers to an unelected, non-transparent, virtuallyinvisible global body is surprising in itself. But the subrosa manner by which most member nations rapidlyapproved this transfer of sovereign powers was scan-dalous. If the public and the legislative bodies in theUnited States and other countries had been fullyinformed about what was being given away to globalcorporations and their bureaucracies, there is littlechance that we would now have a WTO in anythinglike its current form.

The purpose of this report is to help begin a publicdialogue about the WTO, and to provide some basicinformation about its policies and operating philoso-phies, its inner dynamics and powers, its rulings, andits enormous impacts upon human beings, nature, anddemocracy.

invisible government

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E C O N O M I C G L O B A L I Z AT I O N S E E K S to integrate andmerge the economic activity of all countries on theplanet within a single, homogenized model of devel-opment. Countries with cultures and traditions as variedas those of India, Sweden, Thailand, Brazil, France, orBhutan are all meant to adopt the same tastes, values,and lifestyles, and to be served by the same global cor-porations, fast food restaurants, clothing chains, tele-vision, and films. The homogenous model serves theefficiency needs of the largest corporations, allowing themto duplicate their efforts on an ever-expanding terrain.

The globalization process has some key character-istics: free trade, deregulation, and privatization of as mucheconomic activity as possible, and the rapid commodificationof every remaining aspect of life. These include thefew remaining pristine elements of “the commons,”elements of life that have so far been outside the trad-ing system: culture, fresh water, seeds, and the genet-ic structures of life. All are being privatized and com-modified as part of the globalization project.

The ideological heart of this model is free trade(now often called “trade liberalization”) which demandsthe elimination of national regulations, laws, or tariffsthat slow down corporations and their investments asthey move across national borders. The goal is globalintegration in order to achieve greater and cheaperaccess to scarce resources, new markets, and cheaplabor, wherever they are. More recently, free trade hasalso begun to apply to capital itself (i.e., currency, stocks,etc.), which is now traded at a higher volume thanglobal trade in goods and services. Modern informationtechnology has made it possible to shift unimaginablylarge sums of money instantaneously, across borders,anywhere in the world, at the strike of a computer key.This has already had awful destabilizing effects on somecountries’ economies, and was a precipitating cause ofthe 1997-1998 global financial crisis. (Current free trademodels defy traditional free trade notions as espousedby influential economic gurus Adam Smith and DavidRicardo, whose names are often invoked by free tradeadvocates. Neither Smith nor Ricardo believed thatcorporations should be mobile, or that capital shouldbe permitted to leave its own community.)

The only exception to the present trend towardthe elimination of economic borders applies to labor,which is still mostly not legally free to move at will.A mobile labor force would seriously complicate mat-ters for corporations seeking the lowest possible wagesand wage competition among countries. As it is, manycountries of the world, the United Kingdom amongthem, have begun to advertise that they have the lowestwages in their region.

Another key ingredient of the free trade model isexport-oriented production, based on the theories ofspecialization. Several hundred years of colonial rulehad already created dependence on a few exportcommodities in many countries. Still, until the 1980s,many small countries of the world followed policiesthat sought greater national and regional self-reliance,especially in crucial areas like food production. Someachieved considerable success and long-term stabilityby emphasizing a diverse local economy with a broadindustrial and agricultural base. This was particularlyimportant for food production and security. Tradeactivity remained lively, but mainly in economic areasthat could not easily be satisfied locally.

Local or regional self-reliance, however, is subver-sive to free trade and economic globalization, whichdepend upon hyper-activated economic activity inevery dimension. It is far less economically rewardingfor global corporations when local economies care foror feed themselves than it is to have each country ship-ping a massive volume of commodities across oceans(export) and receiving others (import) on ships thatpass each other in the night. So, during the 1980s and1990s, tremendous pressures were applied to all countries,particularly by the World Bank and the InternationalMonetary Fund, to abandon the idea of self-reliance—it came to be synonymous with “isolationism” and“protectionism”—and to instead specialize in producinga much smaller number of commodities for export.

Threats of boycott and exclusion from the inter-national community were finally effective, and manysmall countries dropped their barriers to foreign invest-ment and entry. Global corporations were then free to

the new economy: theory and result

4

enter, buy out, and otherwisedominate many sectors of thelocal or national economy,including food production. Inagriculture, diversity of foodproduction and an emphasison staple foods to feed localpeople were sacrificed for singlecrop monocultures producingluxury crops for export markets, using massive inputsof chemicals and machines. In the end, self-relianteconomies and communities, small businesses, andsmall farms were undermined by a system that sendsmass-produced manufactured and agricultural goodssteaming around the planet at staggering environmentalcosts in the form of ocean and air pollution, energy con-sumption, and devastating infrastructure developments(new roads, ports, pipelines, dams, and airports).

Much of the pressure to change came packaged inthe form of structural adjustment programs that the WorldBank and the International Monetary Fund forced uponsmall countries. These programs included conditionalitiesfor receiving the loans that would theoretically helpthem make the transition to an export-oriented, freetrade economy. In addition to demanding tariff reduc-tions and opening up to foreign corporate investment,the loan conditions required sharp reductions inspending on social programs such as education, health-care, small business assistance, wage supports, andother social services. Without these supports, poorpeople were suddenly much poorer. In addition, currencydevaluations were advised so as to make the new mono-culture production more appealing for export markets.All of these measures, combined with the pressures toprivatize national industries, left economies that hadbeen relatively self-reliant utterly dependent on andmassively indebted to banks and global bureaucracies, asituation from which they are now trying to find relief.

The rationale for all of these free trade and freemarket theories was that they would produce acceler-ated economic growth because they gave corporationsgreatly expanded access to resources and markets andfreed them from pesky environmental laws and socialstandards. Free trade theorists claimed that the “risingtide will lift all boats,” providing broad economicbenefits to all levels of society. The evidence so far

clearly shows that it lifts only yachts.

All recent research confirmsthat only a small number ofpeople at the top of the globalcorporate pyramid—CEOs ofglobal corporations and a smallnumber in upper management—experience significant bene-

fits from all the growth, expansion, mergers, and consol-idations created by globalization. The gaps betweenthe wealthiest and poorest people in society, andbetween management and workers, have never beenso great as they are today. This comes following aperiod of the most rapid acceleration of global eco-nomic activity in history.

A recent report from the Institute for Policy Studiesshows that American CEOs are now paid, on average,419 times more than line workers. The EconomicPolicy Institute’s 1999 report shows that median hourlywages, when adjusted for inflation, are down by 10percent in the last 25 years. The U.S. Federal Reservereports that the top 20 percent of the U.S. populationowns 84.6 percent of all the wealth in the country.And the wealth of the world’s 475 billionaires is equalto the annual incomes of more than 50 percent of thepeople on earth. Of the 100 largest economies in theworld, 52 are corporations; only 48 are countries. Asfor jobs? The top 200 global corporations of theworld—enjoying the efficiencies of scale and consoli-dation—employ only one-half of one percent of theglobal work force. Lifting all boats indeed.

Meanwhile, according to a UN study, the gapbetween rich nations and poor ones is also expandingbecause of inequities in the global trading system.Third World are beginning to fully understand thatthe rules of globalization are meant to benefit notthem, but only stateless global corporations.

In addition, environmental havoc created from thissystem has reached an unprecedented level. Globaldestruction of habitat and species, expanding ozoneholes, rapid climate change, and other results previous-ly noted are all dramatically exacerbated by a systemdesigned and constructed to place economic valuesand corporate self-interest above all other values.

Free trade theorists claimed that the

“rising tide will lift all boats,” providing

broad economic benefits to all levels of

society. The evidence so far clearly

shows that it lifts only yachts.

5

T H E A D V O C AT E S O F E C O N O M I C globalization try todescribe it as an inevitable process, the result of econom-ic and technological forces that evolved over centuriesto the present form, nearly as if they were forces ofnature. But while global trade activity and free tradeconcepts have existed for centuries, economic global-ization in the modern era is not some kind of accidentof evolution. It emerged directly from a set of institu-tions and rules created on purpose for a specific goal:to give primacy to economic values above all others.

In fact, the modern globalization era has a birthdateand a birthplace: Bretton Woods, New Hampshire,July 1944. That was when the world’s leading econo-mists, politicians, bankers and corporate figures gatheredto determine what to do following the devastation ofWorld War II. They decided that a new centralizedglobal economic system was required to accelerateworldwide economic development, and that the bestinstruments to rationalize that process would be newinstitutions and rules that could offer greater mobilityand new markets to large corporations.

Before Bretton Woods, most international traderules were made through bilateral country-to-countrydeals. Bretton Woods instituted a more concerted globaleffort, led by private enterprises, to invest and developthroughout the world to create a win-win situation:people around the globe would be wealthier and cor-porations would reap profits. To facilitate this approach,new instruments were created that later became theWorld Bank, the International Monetary Fund (IMF),and soon after, the GATT. From 1948 on, the rules ofGATT were the principal regime regulating globaltrade, but it was mainly limited to manufactured goods.

During the following years, business interestsexerted considerable pressure to extend GATT rulesbeyond setting tariffs and quotas for trade in manufac-tured goods to include regulating investment, services,and other areas. GATT member countries met occa-sionally for new “rounds of negotiations” which slowlyexpanded the powers and purview of GATT. The heav-iest push began in the 1970s as corporations based indeveloped, or northern, countries lobbied harder for

access to more unregulated labor and consumer mar-kets and an expanded supply of natural resources. Inresponse to transnational corporations’ needs, traderules began to take on a new, expanded status.

The WTO was not established until 1995, aftercompletion of eight years of transformational negotia-tions under the GATT Uruguay Round. GATT wasthen folded into the WTO, together with numerousother multilateral agreements. The WTO administersthese agreements, facilitates future trade negotiations,and oversees and enforces trade dispute resolution. (Seepage ** for list of agreements included in the WTO.)

Many industry trade groups had direct access tothe government delegations that conducted the GATT/WTO negotiations. In the U.S., over 500 corporationsand business representatives were officially credentialedas security-clear trade advisors. The advisory list readslike a “Who’s Who of Global Industrial Interests,” andincludes groups such as the Chamber of Commerce,numerous Fortune 500 companies, and the BusinessRound Table, as well as lobbying groups from specificindustries seeking their own favors. In stark contrast,no access was given to non-governmental organizations(NGOs) representing the environment, social justiceissues, consumer rights, human rights, democraticsovereignty, or labor.

Developing, or southern, governments also pointto the degree of their exclusion from the negotiatingprocess. The most important negotiations were privatelyheld behind closed doors by a few key industrial nations’trade delegations and business interests. Agreementswere written, and only then presented to Third Worldparticipants as a fait accompli. It was a take it or leave itoffer. If countries decided not to accept the provisions—many of which were strongly biased against thepoorer, smaller nations and favored unfettered entryby transnational corporate interests from the developedworld—they were told they would be abandoned bythe global trading system, and were threatened withreduced access to IMF and other international loans.Fearing that exclusion would be economic suicide, mostdeveloping nations went along with the ultimatum,

the “evolution” of the wto

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but they continue to be unhappy with many of theprovisions to this day. (For a more complete discus-sion of the WTO bias against southern countries,please see Views From The South: Third World Perspectiveson Economic Globalization and the WTO, published by theInternational Forum on Globalization, October 1999.)

The approval process was no more democraticthan the negotiating process. Many countries gaveapproval to the Uruguay Round, and to the WTO, bysimple executive order; most of their citizens knewnothing about it. Even in the large western, so-calleddemocratic nations, approval was normally obtainedby underhanded secret processes. In Spain, it took amidnight, Christmas Eve, “rump” session of parliamentto gain approval over vast public opposition. A similarprocess obtained in the Philippines. In the UnitedStates, the first lame duck Congress in 14 years wascalled so that retiring and losing representatives couldvote in a special session. Staggering amounts of “pork”were doled out by the Clinton administration. Fewmembers of Congress had even read the agreement.

In fact, in the run-up to the U.S. vote in late 1994,Ralph Nader, leading U.S. consumer advocate, offereda prize of $10,000 to any senators or congressmen whowould sign an affidavit saying they had read the agree-

ment and could publicly answer twelve questionsabout it before they voted. Only one accepted thechallenge and, having read the agreement, changed hisvote from “for” to “against.” So, the members of theU.S. Congress made what could be the most significantvote of their careers—changing global power arrange-ments as never before—without having read whatthey voted on. Neither was the general public madeaware of the agreement’s contents; not even the mediahad access to the draft agreement until a public inter-est group heisted a copy from Geneva and distributedthe draft. But by that time, it was much too late in theprocess to affect the outcome.

After its formation the WTO immediatelyannounced itself as “the biggest reform of internationaltrade since 1948.” Indeed, this was true for two mainreasons. First, the WTO was not limited strictly totrade in goods; it took authority over so-called non-trade-related activity, including foreign investmentrules, intellectual property rights, and domestic regu-latory mechanisms—including local laws, servicessuch as insurance and transport, farm policy, and foodand environmental standards.

Second, unlike GATT, which was effectively abusiness contract between nations, the WTO hasbeen given “legal personality.” It has international sta-tus equivalent to the United Nations, with the addi-tion of having enormous enforcement powers. Whengovernments are ruled to be non-compliant withWTO standards, very significant economic and tradesanctions may result. An offending government canquickly become a pariah.

WTO rulings are so powerful that they takeprecedence over all other international agreements,including labor agreements and multilateral environ-mental agreements (MEAs) such as the Conventionon Biodiversity, the Montreal Protocol on Substancesthat Deplete the Ozone Layer, the Kyoto ClimateChange Accord, and similar accords. Its rulings alsoapply to laws at every level of domestic governance,whether federal, state, regional, or local. It doesn’tmatter whether a law protecting public health is a U.S.law, a California law, or a county law. If it is challengedsuccessfully in the WTO and found to be an “illegalbarrier to free trade” it’s got to go.

The biotech industry claims that genetically engineered foodsare needed to feed a hungry world, but protesters displaying thissign disagree. Does anyone really believe that the invention ofbiotech plants whose seeds are sterile has something to do withstopping hunger? The biotech industry’s goal is not to feed thehungry, only to feed itself.

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I T W O U L D B E D I F F I C U LT to identify any issue ofsocial, economic, health, culture, or environmentalsignificance that is not now strongly affected byWTO rules. These rules are first worked out duringnegotiations among the trade ministries of the mem-ber nations, usually under the strong influence of thetrade delegations from the so-called Quad Powers,that is, the U.S., Canada, Japan, and the EuropeanUnion. Every two years the trade ministers and rep-resentatives of the member nations meet at WTOMinisterial meetings, such as the Seattle meeting inlate 1999, where agreements are formally establishedand the scope of further negotiations is defined.

As with GATT, many existing trade agreements, andthe principles upon which they are based, have beenincorporated into the WTO framework. The sweep and

scope of the subjects that fall under WTO jurisdiction,and their effect on everyone’s daily life, is broad and deep.

Most important, however is the WTO’s DisputeSettlement Body (DSB). This is where a membercountry can go if it decides that another member isnot in compliance with WTO rules. Anyone con-cerned about jobs, labor rights, human rights, healthand safety, forests, endangered species, social justice,democratic processes, or the sovereign rights ofnations should be deeply concerned about the innerworkings of the WTO’s dispute resolution system.

Under the DSB, any member nation can chal-lenge any other member country’s laws if these lawsmight be viewed as impediments to free trade underWTO rules. A final ruling by the WTO means that a

mechanisms of wto governance

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China hopes to become a member nation of the WTO. If accepted, China’s agriculture system and food supply could be threatenedby WTO agriculture policies. Most Chinese farms use intensive organic farming methods so sound that fields are still fertile after 20centuries of use. China feeds 22 percent of the world’s population on only 7 percent of the earth’s arable land.

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country’s existing environmen-tal, food safety, health orother laws must be eliminated,or it must pay perpetual fines,or face severe retaliatory tradesanctions. Even without chal-lenges, WTO policies andagreements, in effect, dictatedomestic farm policies, invest-ment rules, insurance require-ments, government expendi-tures, taxation policies andmore, on national, local andstate levels. To avoid suchchallenges, many governmentshave conformed their laws to WTO rules or, underthe threat of a challenge, have “chilled” possible newlaws. Through such direct and indirect powers, theWTO has assumed the role of a global governing body,promoting trade liberalization, and allowing tradeissues to dominate over all other political, social, andenvironmental concerns.

For example, a consumer organization attemptingto pass a law requiring all genetically modified food,or “Frankenfood,” to be labeled is likely to find thatsuch a law could be ruled a barrier to trade and invest-ment by the WTO. Such a law would then have to beeither discarded, re-written, or “paid” for via trade tariffpenalties or direct payments. Environmental groupsworking at the national level to ban trade in productsthat pose threats to a species quickly learn that lawsthat protect species or ban certain products may alreadyhave been ruled in conflict with WTO rules, and aretherefore invalid under its jurisdiction. Or, those wor-ried that their country’s farming tradition or culture isthreatened and who are encouraging their governmentto assist family farms find, once again, that the policiesand regulations of the WTO will probably have moreimpact on the future of small farms than domesticagriculture policies set by elected representatives.

When a member nation brings a case to the WTO,asserting that another member country is violating aWTO agreement, a three-person dispute resolutionpanel, comprised of trade officials and commercialtrade lawyers from member countries, is convened.Because their only job is to judge whether a country’s

policy is a “barrier to trade”under WTO rules, theseofficials rarely have any train-ing or expertise in the subjectareas about which they areruling: environment, patents,agriculture, or finance. Infor-mation about consequences to,for example, public health ordemocratic sovereignty arenot on the table. Public interestNGOs and any other non-commercial interests are entirelyexcluded from every stage ofthe process. Finally, there are

no conflict of interest rules for the panelists empoweredto judge WTO cases. The only procedural rule includedin the WTO is strict confidentiality of all documentsand proceedings. The entire dispute process is con-ducted behind closed doors; only representatives ofthe trade offices of national governments, often aidedby lobbyists from affected industries, can presentlegal briefs. The public and press are firmly excluded.

Given such a biased structure, it is no surprisethat, in rulings administered to date, the WTO hasinvariably favored the interests of corporate enterpriseover the rights of nations and democratic laws madein the public interest. The WTO has consistentlyruled against environmental, health, and democraticconcerns. Such outcomes are not accidental; the bias-es are built into the process.

Panel decisions can be appealed to a standingseven-member Appellate Body. But only a unanimousvote of all 134 nations can overturn a WTO ruling, apractical impossibility as it would have to include avote from the very party that has just won its challenge.Once a final WTO ruling is issued, a losing countryhas three choices: change its law to conform to theWTO requirements, pay permanent compensation tothe winning country, or face harsh, permanent tradesanctions from the winning country.

The permanent compensation a losing country isrequired to pay is often significant. Substantial penaltiescan be especially painful for developing countries;northern countries can more easily absorb them. Also,

Many industry trade groups had direct

access to the government delegations

that conducted the GATT/WTO

negotiations. ...In stark contrast, no

access was given to non-governmental

organizations (NGOs) representing

the environment, social justice issues,

consumer rights, human rights, demo-

cratic sovereignty, or labor.

a winning country can retaliate by imposing tradesanctions on areas and items that will hurt the losingcountry the most. In other words, it’s not bananas forbananas (see The Banana Case, page 26). For example,the U.S. recently won a challenge against an EU banon imports of beef that have been fed rBGH, a hormonemany people feel is dangerous to human health. TheU.S. retaliatory tariffs against the EU do not target beefproducts, but luxury specialty items like Dijon mustard,prosciutto, fancy cheeses, and other lucrative exportitems crucial to Europe’s traditional agricultural system.

The majority of WTO challenges have been initi-ated by a small number of wealthy industrial nations.The U.S. has been the most aggressive. Of 117 chal-lenges to date, the U.S. has initiated over 50 cases.Although Third World governments are not excludedfrom the dispute resolution process, they rarely havethe resources or staff to mount equal challengesagainst wealthy industrial nations. Third World coun-tries have begun to view the WTO system as stronglybiased against them.

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agreements within the wto

T H E F O L L O W I N G I S A PA RT I A L L I S T of the mostsignificant agreements that have now been incorpo-rated within the WTO.

t h e g e n e r a l a g r e e m e n t o n ta r i f f s a n d t r a d e ⁽ g at t ⁾First established in 1947, a few years after the BrettonWoods meetings, GATT was originally confined toregulating tariffs and quotas for trade in manufacturedgoods. Broadened since then, the rules it establishedfollowing the Uruguay Round of negotiations (1994)now form the core agreement of the WTO. The GATTcontains some of the most important articles controllingthe general principles of the WTO, including: NationalTreatment, Most-Favored Nation, and Elimination ofQuantitative Restrictions (Import and Export Controls).

a g r e e m e n t s r e g u l at i n g ta r i f f s

The WTO now administers 22,500 pages worth ofindividual countries’ commitments on tariffs and tariffreductions on goods and services.

a g r e e m e n t o n a g r i c u lt u r e

Before the Agreement on Agriculture, internationaltrade agreements restricted their purview over agricul-ture to setting quotas and tariffs. Under the WTO,rules on agriculture now affect domestic policies downto the level of domestic supports a nation may give toits farmers, a country’s ability to maintain emergencyfood stocks, and many other areas critical to thelivelihoods of farmers and to food safety and supply.

g e n e r a l a g r e e m e n t o n t r a d e i n s e rv i c e s ⁽ g at s ⁾This is the first multilateral, legally enforceable agree-ment governing international trade in services. It coverssuch areas as banking, insurance, data management,communications, and financial services. Planned talks onGATS include extended rules that would cover the health-care and education sectors. Some parties within theWTO would like to extend GATS rules to specificallyapply to healthcare, education, water (including munici-pal drinking water and waste systems), and other serv-ices traditionally under the purview of domestic gov-ernments. Under the principle of National Treatment,foreign corporations would have completely uninhib-ited access to own and operate these sectors withinany WTO member country.

a g r e e m e n t o n t r a d e - r e l at e d i n t e l l e c t ua l p r o p e r t y r i g h t s ⁽ t r i p s ⁾The Uruguay Round brought intellectual propertyrights —copyrights, trademarks, patents, and biotech-nology issues— into the GATT/WTO system for thefirst time, using the patenting laws of the UnitedStates as its model. This is extremely controversialbecause it permits patenting of some plant and animalforms as well as seeds. Great resistance to this agree-ment is developing in Third World countries. Recently,transnational pharmaceutical corporations haveinvoked TRIPS to stop developing countries fromproviding generic, cheaper drugs for AIDS patients.

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a g r e e m e n t o n t h e a p p l i c at i o n

o f s a n i ta ry a n d p h y t o - s a n i ta ry

s ta n d a r d s ⁽ s p s ⁾

The SPS Agreement covers many aspects of foodsafety—from pesticides and biological contaminants,to food inspection, product labeling, and geneticallyengineered foods. The SPS designates the CodexAlimentarius, an agreement largely authored by foodindustry representatives, to set international foodsafety standards. The SPS also covers animal andplant health.

a g r e e m e n t o n s u b s i d i e s a n d c o u n t e rva i l i n g m e a s u r e s

This agreement sets limits on what governments mayand may not subsidize. It is another area of great con-troversy because of its many loopholes favoringnorthern countries and agribusinesses.

a g r e e m e n t o n t e c h n i c a l b a r r i e r s t o t r a d e ⁽ t b t ⁾This agreement ensures that nations do not have reg-ulations (called “non-tariff barriers”), such as environ-mental laws, that would interfere with trade liberal-ization. It has been used in many dispute cases thathave challenged domestic environmental regulations.

a g r e e m e n t o n t r a d e - r e l at e d i n v e s t m e n t m e a s u r e s ⁽ t r i m s ⁾TRIMS sets forth limitations on what governments cando to regulate foreign investment. Some governmentswant to expand this agreement to introduce a revisedversion of the Multilateral Agreement on Investment(MAI) that would set tighter limits on the ability of anygovernment to control the rate or quality of foreigninvestment.

a g r e e m e n t o n g o v e r n m e n t p r o c u r e m e n t

This agreement sets limits on what guidelines or restric-tions governments are permitted to use when purchas-ing goods. “Domestic content,” domestic owners, orreinvestment laws are some of the areas restricted bythis agreement. The agreement is important becausein some nations government expenditures can be ashigh as one-third of GNP.

Other important WTO agreements with wide rangingimpacts include:

a g r e e m e n t o n a n t i - d u m p i n g

a g r e e m e n t o n t e x t i l e s a n d c l o t h i n g ⁽ at c ⁾

a g r e e m e n t o n s a f e g ua r d s

a g r e e m e n t o n i m p o r t l i c e n s i n g p r o c e d u r e s

ag r e e m e n t o n p r e s h i p m e n t i n s p e c t i o n

a g r e e m e n t o n r u l e s o f o r i g i n

a g r e e m e n t o n c i v i l a i r c r a f t

t r a d e p o l i c y r e v i e w m e c h a n i s m

u n d e r s ta n d i n g o n r u l e s a n d p r o c e d u r e s g o v e r n i n g t h e s e t t l e m e n t o f d i s p u t e s

As traditional, local livelihoods disappear to make way for theglobal economy, former farmers, artisans, and small businessowners must move to already overcrowded cities and find jobs in manufacturing plants such as this. WTO rules give largecorporations the ability to move in and out of countries as theyplease. As a result, a bidding game between countries hoping toattract industry has decreased labor standards, real wages,and job insecurity worldwide.

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T H E D E C E M B E R 1999 W T O Ministerial meeting inSeattle, Washington, the first ever in the U.S., hasheightened attention on the WTO and the largereconomic development model it expresses. Because of the tremendous impact of this powerful body, it iscritical to understand the details of the agreements itadministers and negotiates.

The biannual Ministerial meeting gathers the toptrade officials from all WTO member nations. At Seattle,WTO initiatives and rules that cover areas such asintellectual property rights, pesticides and food safety,agriculture, finance and investment measures, as well ascrucial disputes that involve environmental and otherissues will be discussed.

In addition, many global corporations and leadersof developed countries are pushing to launch a new“Millennium Round” of negotiations, which would openup many new areas for inclusion in the WTO andaccelerate talks in other areas.

This proposed Millennium Round has raised gravefears, particularly among WTO members from devel-oping countries, many of whom have been hard hit

by financial crises in the last year and a half. Theybelieve that further trade and financial deregulationneed to be introduced very slowly and carefully, if atall. Civil society leaders in the developed nations arealso concerned about an agenda that moves too quicklybecause, in light of some current WTO rules and itsrecent dispute settlement decisions, it is evident thatenvironmental, labor, civil, and social issues areinvariably overruled in the interests of corporations.

Matters may be improved if the WTO process canbe made more open, transparent, and democratic, andwhen the publics of all countries are made fully awareof the profound consequences of the WTO rulings.Meanwhile, a strong movement has developed amongNGOs throughout the world that is demanding “Nonew round, turnaround.” They strongly believe thereshould be no expansion of WTO powers and no newround of negotiations. They are calling for a reassess-ment of the entire WTO system, a system many feelcannot be reformed.

the 1999 seattle wto ministerial

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Part Two

crucial issues

in the wto

THE WTO’S RULES, agreements, and dispute resolution

system have had significant effects on the environment,

agriculture, food safety, public health, the world’s

finance and investment systems, human rights, intellec-

tual property, including biotechnology, and even cul-

ture. This section summarizes the effect the WTO is

having on these vital areas.

For the sake of convenience, we have presented WTO

dispute case descriptions under specific categories,

though several have implications for other areas as

well. For example, finance and investment rules often

have profound implications for the environment and

agriculture. We will cross reference where appropriate.

13

Sludge generated by a copper mine in Mount Kinabalu, Borneo—To produce one ton of copper, over 110 tons of soil and rock mustbe extracted. In addition, the heavy metal wastes such as arsenic, cyanide, and lead, pollute ground water, rivers, and oceans. ThirdWorld Resurgence magazine reports that investment liberalization policies, such as those enforced by the WTO, has led to an increasein mineral exploration and mining and creates a climate where countries eliminate or ignore environmental protections in order to attractnew investment.

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E C O N O M I C G L O B A L I Z AT I O N is the number onethreat to the survival of the natural world. Nationalgovernments are losing the ability to regulate theglobalization process and its effects on the environ-ment because WTO rules do not consider the valueof such elements as clean air and fresh water. Instead,corporate values, like profit and expansion, take pri-macy over community values. The job of the WTO is to enforce that primacy and amplify its powers.

In Part One we illustrated how export-led pro-duction, specialization, deregulation, privatization,and hyper growth all effectively conspire to increaseresource extraction, increase waste generation anddisposal problems, and to advance the commodificationof all elements of life. In addition, globalization isinherently destructive to the natural world because it

requires that products travel thousands of miles aroundthe planet, resulting in staggering environmental costsin the form of unprecedented levels of ocean and airpollution from transport, increased energy consumptionand fossil fuel emissions (furthering climate change),increased use of packaging materials, and devastatingnew infrastructure developments —new roads, ports,airports, pipelines, power grids—often constructed informerly pristine places.

The last of the planet’s forest resources are rapidlybecoming direct victims of the globalization processas national governments and local communities find itincreasingly difficult under WTO agreements toretain laws that control the scale or speed at whichtrees are cut down for foreign markets. This hassevere implications not only for forests themselves

the environment

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but also for the earth’s airquality, for climate change,and for the survival of theearth’s biodiversity. Evenefforts to make laws that pre-vent the export of raw logs toprotect domestic processingjobs have come under attack from global corporationsand trade bureaucracies. A new “free trade agreementon wood products,” which consists of new rules beingintroduced into various WTO agreements, will makematters far worse if passed. (Please see Free Trade, FreeLogging, How the World Trade Organization UnderminesGlobal Forest Conservation, published by the InternationalForum on Globalization, October 1999.)

Similar pressures are now being applied tofisheries and wildlife protection measures such as theU.S. Endangered Species Act (ESA) and the MarineMammal Protection Act (MMPA), auto emission stan-dards, and pesticide controls. This is happening at atime when the increased use of resources raises thepressure on the earth’s “sink” capacities—its ability toabsorb and dispose of waste. Given the current climatechange, atmospheric ozone depletion, ocean pollution,dwindling supplies of clean fresh water, habitat loss,and species extinction, the WTO is pursuing a courseof action that will bring on a global environmentalcollapse.

A more subtle effect of globalization is that theenvironmental costs of trade liberalization have beenstructurally externalized. While corporations aregiven almost unrestricted access to exploit naturalresources and to bring in polluting industries, meas-ures that would require them to prevent pollution andto clean up or restore the exploited areas are consid-ered barriers to trade, leaving the costs of cleanupexternalized, i.e., placed upon citizens rather thancorporations.

Much of the cost is diverted to poor people ofthe Third World. Martin Khor of the Third WorldNetwork, comments, “Their resource base is destroyedby chemicals or modern technology; their forests andlands are taken away because of ‘development proj-ects’; their water resources are polluted by industrialwastes; their rich diversity of trees and plants is turned

to desert and sand; theirfishery resources are scoopedout of existence; and theirhardy seeds are taken away tobe replaced by hybrid vari-eties that are more susceptibleto pests.”

key wto agreements with environmental effects

T H E R E I S N O E N V I R O N M E N TA L A G R E E M E N T, per se,within the WTO; however, most aspects of the WTOadversely affect the environment and constrain therights of individuals and governments to maintainenvironmental rules or standards.

The key elements that combine to mitigate againstenvironmental as well as other protections, derivefrom the General Agreement on Tariffs and Trade thatis now embodied within the WTO as its core agree-ment. These are articles I, III, XI, and XX.

a r t i c l e i ‒ m o s t favo r e d n at i o nt r e at m e n t ⁽ m f n ⁾A RT I C L E I S AY S that any favorable treatment grantedto products from one country “shall be accorded allother contracting parties.” In other words, this ruleprohibits governments and citizens from setting stan-dards that favor goods that have been produced, forexample, in a more environmentally sustainable man-ner. Under MFN, a country cannot place restrictionson the import of “like” products such as shrimp, basedon the way the shrimp was caught or produced. Thesame rule could apply to imported forest products—i.e., a country could not favor products harvested in asustainable manner. This rule also contradicts provi-sions of several multilateral environmental agreements(MEAs) which allow discrimination against countriesnot following these agreements.

a r t i c l e i i i ‒ n at i o n a l t r e at m e n t

A RT I C L E I I I S AY S that foreign products “shall beaccorded treatment no less favorable” than local ordomestic products. National Treatment restricts nationsfrom favoring domestic goods that may be produced ina more safe, humane, or environmentally friendlymanner. An example of how National Treatment has

The WTO has consistently ruled

against environmental, health, and

democratic concerns.

been applied may be found in the pre-WTO GATTruling on a U.S. law that banned the importation oftuna caught by fishing practices lethal to dolphins.The GATT panel said that no distinction could bemade between process and product. This means thattuna caught by processes that kill dolphins and tunacaught in a way that does not harm dolphins mustbe treated equally as “like” products.

a r t i c l e x i ‒ e l i m i n at i o n o f q ua n t i tat i v e r e s t r i c t i o n s

⁽ i m p o r t a n d e x p o r t c o n t r o l s ⁾U N D E R T H I S A RT I C L E , W T O member countries can-not limit imports or exports of resources or productsacross their borders. This rule effectively eradicates anation’s right to allocate its natural resources. Thenullifying effect of Article XI on measures such as anexport ban on raw logs or a prohibition against tradein endangered species makes it clear why there is greatconcern for the environment under WTO jurisdiction.

a r t i c l e x x ‒ g e n e r a l e xc e p t i o n s

D E F E N D E R S O F T H E W T O agreements often cite theGeneral Exceptions of GATT Article XX as evidencethat human and environmental concerns are protect-ed. The article reads:

...nothing in this Agreement shall be construed to prevent theadoption or enforcement by any contracting party of measures:

b) necessary to protect human, animal or plant life or health;...

g) relating to the conservation of exhaustible natural resources ifsuch measures are made effective in conjunction with restrictionson domestic production or consumption;

When Article XX has been invoked, trade disputepanels have always found reasons why it did not apply.When a WTO panel ruled that part of the U.S. ESAwas GATT-illegal, they noted that Article XX excep-tions are “limited and conditional.” (See SignificantWTO Rulings below.)

t h e a g r e e m e n t o n t e c h n i c a l b a r r i e r s t o t r a d e ⁽ t b t ⁾T H I S I S A “S TA N D A L O N E” A G R E E M E N T, i.e., it is notpart of GATT but instead is a separate agreement thatis part of the WTO.

The WTO’s complex and detailed TBT agreement

basically ensures that no “non-tariff barriers,” such asenvironmental laws, interfere with trade liberalization.It is one of the tools used to lower the bar on envi-ronmental standards.

Under the TBT agreement, a nation must be pre-pared to prove, if challenged, that its particular environ-mental standard is both “necessary” and “the least traderestrictive” way to achieve the desired conservationgoals. (These criteria also apply to other areas such as food safety and health standards.) Incredibly, thismeans that a country must now bear the burden ofproving a negative—that no other measure consistentwith GATT/ WTO is reasonably available to pro-tect environmental (or social, cultural, labor, et. al.)concerns. For example, in the Shrimp-Turtle Case, theWTO ruled that the U.S. ban against the import ofshrimp caught without using a device designed to

15

Washington State—These are clearcut private timber lands bor-dering the Gifford Pinchot National Forest. Proposed WTOinitiatives to further reduce or eliminate tariffs on wood productswould, according to the forest industry’s own consultants, “allowa 3-4 percent increase in consumption.” Such an increase willbe devastating to the world’s few remaining pristine forests.

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save endangered turtles was not the “least traderestrictive” way to enforce its environmental law. Thisis only one of the several WTO tests that environ-mental and conservation measures have failed to meet.The result is that the U.S. must now allow all shrimpthrough its borders, regardless of how it was caught,or face severe penalties.

The fact that “least trade restrictive” is unclearand open to arbitrary determination by WTO panels,leaves countries second-guessing. This, in turn, cre-ates a “chilling effect” on environmental standards;countries, especially smaller, weaker ones, tend toavoid even enacting standards in the first place, forfear of expensive, difficult challenges by anothercountry (Please see Gerber vs. Guatemala’s Infant HealthLaw and AIDS Drugs Denied, page 35.)

environmental rollback

W T O A G R E E M E N T S H AV E A L R E A D Y rolled back yearsof hard-won environmental gains made by individualcountries through national legislation and internation-ally through MEAs. Even measures agreed upon asrecently as the 1992 Rio Summit are being rolled back.

d o m e s t i c i m p l i c at i o n s

T O D AT E, I N E V E RY D I S P U T E C A S E that has chal-lenged a domestic environmental regulation, theWTO has ruled against the environment. Its very firstruling, in fact, seriously weakened a part of the U.S.Clean Air Act. In 1997,as a result of this ruling, theU.S. Environmental Protection Agency (EPA) changedsome of its clean air rules to allow dirtier gasoline as a result of this ruling. In addition, the WTO ruledagainst provisions of the U.S. Endangered SpeciesAct; the U.S. is now considering ways to change itslaw to comply with the WTO. (See WTO Rulings onnext page.)

Further, in order to advance trade liberalization,commercial interests advising governments say thatthey must have a system in which rules are consistentfrom country to country. However, instead of settingeven minimum standards for environmental rights andresponsibilities, WTO agreements and dispute rulingseffectively place a limit on how high these standardscan be. This ensures that environmental regulationssink down to the lowest common denominator, result-ing in a downward harmonization of global environmentalstandards.

i n t e r n at i o n a l i m p l i c at i o n s : e f f e c t s o n m e a s

P R O P O N E N T S O F E C O N O M I C G L O B A L I Z AT I O N andits institutions like to argue that MEAs are evidencethat environmental concerns continue to be addressed.However, MEAs are, in effect, voluntary agreements.No body has the power to enforce the provisions ofagreements such as the Convention on BiologicalDiversity (CBD), the Montreal Protocol on Substancesthat Deplete the Ozone Layer, the UN FrameworkConvention on Climate Change, or the Conventionon International Trade in Endangered Species of WildFauna and Flora (CITES). (Although both the MontrealProtocol and CITES authorize use of trade sanctions,

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Led by the U.S., some nations are proposing that the WTOoffer global corporations further rights and access to domesticfresh water sources and water systems, including the commercialoperation of municipal drinking water systems.

there are no mechanisms tochallenge or significantlyenforce whether countries fol-low the rules of these agree-ments.) In stark contrast, theWTO has a broad range ofenforcement mechanisms,including the power toimpose economic penaltiesagainst member nations ifthey do not follow its rules.

In fact, when MEAs do sanction the use of trademeasures, WTO rules often conflict with these obli-gations. For example, CITES may disallow trade in aspecies from one area while permitting trade in thesame species from another geographic area. The BaselConvention restricts international trade in hazardouswastes, but doesn’t seek to regulate domestic trade.These two agreements contradict, respectively,GATT/WTO Most Favored Nation and NationalTreatment rules by providing more favorable treat-ment to trade from specific regions or to domestictrade. Many of the MEAs also discriminate betweenthe production and process methods of “like” prod-ucts. However, this also is against WTO rules. Theability to choose a product based on how it was pro-duced and processed is one of the central ways to helpencourage sustainable, safe environmental policies.

Furthermore, the rules of the CBD, signed at theEarth Summit in Rio, are being undermined by theWTO at three levels. First, the CBD was formed topreserve biodiversity and to protect species fromextinction, yet global free trade promotes industrialagriculture and forestry, which emphasize monocul-tures; this destroys biodiversity and pushes millions ofspecies to extinction. (This is a very serious matter.Scientists tell us that as many as 100 species becomeextinct each day. If present trends continue, the worldwill probably have lost up to two-thirds of its plant andanimal species by the second half of the next century.This rate of extinction is far more rapid and extensivethan at any other time in the planet’s history.)

Second, the CBD calls for protection of indige-nous knowledge. However, the Trade RelatedIntellectual Property Rights (TRIPS) agreement pro-

motes the patenting of indige-nous knowledge by corpora-tions, a process that is some-times called “biopiracy.” Therecent U.S.-India TRIPS dis-pute at the WTO has forcedIndia to recognize a new for-eign patent system based onbiopiracy that grants exclusivemarketing rights to global

pharmaceutical and agrochemical corporations.(Please see Intellectual Property Rights, page 31.)

Third, the CBD contains provisions for an interna-tional Biosafety Protocol intended to prevent biohazards,specifically potential hazards related to geneticallyengineered plants and food. This international envi-ronmental agreement was undermined recently duringthe final negotiations in Cartagena, Columbia, by theU.S. and other countries with commercial interests ingenetically engineered foods. These countries threat-ened to use WTO rules and agreements against theProtocol.

significant wto rulings that affect the environment

S I N C E I T S I N C E P T I O N, the WTO has made signifi-cant rulings that have affected the right of membergovernments to establish environmental laws andsafety regulations to protect their own citizens. In allcases, the interests of commerce have prevailed overthe health of the natural world and human welfare.

The following brief summaries of a few key rulingsillustrate the WTO’s approach to environmental issues.It should be remembered that because the effects ofglobalization are so pervasive and far-reaching, environ-mental consequences also result from rulings discussedlater in the agriculture and intellectual property sections.

United States Regulations on Reformulated Gasoline Cleanliness Challenge by Venezuela and Brazil against the U.S. [Cases WT/DS2 and WT/DS4]T H E G A S O L I N E C L E A N L I N E S S C A S E was the WTO’sfirst ruling. It dealt a direct blow to a 1993 EPA rulewhich required gasoline refineries, both foreign anddomestic, to make cleaner gas in an effort to reduce air

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...instead of setting even minimum

standards for environmental rights and

responsibilities, WTO agreements and

dispute rulings effectively place a limit

on how high these standards can be.

pollution. In order to design regulations that wereeffective and economically feasible, the EPA opted for aprogram that allowed gradual improvement based on pastperformance. Where past performance could not bereliably ascertained, a refinery’s baseline was set to matchthe actual 1990 performance data of all oil refineries.Thus, some domestic and foreign producers were treatedidentically, some domestic producers were held to higherstandards than foreign suppliers, some to a lower one.

The rule was set to expire in 1998, giving refinersfive years to bring baseline standards up to a single clean-liness target. However, in 1996 a WTO dispute paneland, later, an appellate body decided the U.S. rulescould be “discriminatory” because the gradual phase-inviolated GATT’s National Treatment rule despite thefact that the EPA rule was being applied equally to someU.S. producers. As a result, the EPA, which administersthe Clean Air Act, has been forced to re-write its stan-dards to allow dirtier gasoline. One of the end resultswill be an increase in health problems in the U.S.

Both the original WTO dispute resolution paneland the appellate body also ruled that the U.S. hadfailed to prove that it had used the “least trade restric-tive” measures to enforce its standard.

The Shrimp-Turtle Case Challenge by India, Malaysia, Pakistan and Thailand against the U.S. [Case WT/DS58] T H E U.S . E S A requires domestic and foreign shrimpfishermen to catch shrimp by methods that do not killendangered sea turtles. The ESA bans shrimp prod-ucts from countries that do not use “turtle excluderdevices” (TEDS). In 1998, the WTO ruled that U.S.laws created to protect turtles violated WTO rules,including the principle of National Treatment. TheU.S. now has until December 1999 to comply withthe ruling. One proposed solution was that the U.S.will only be allowed to target individual shrimpers’boats. The likely outcome of that will be to encour-age “shrimp laundering,” where shrimp that are har-vested on boats without TEDs are transferred to boatswith TEDs and passed off as “turtle-friendly” forimport purposes.

This solution also means that many financial andadministrative costs—hiring more border inspectionpersonnel, training for officials to inspect boats—become the burden of countries that wish to protectenvironmental standards. Previously, the burden ofproof was on the exporting commercial interests.

Many environmentalists, especially those fromthe South, point out that this dispute does not get tothe heart of the matter. It fails to address the non-sus-tainability of industrial shrimp fishing. Small fisher-men in both the North and the South have been har-vesting shrimp for many years with little damage toother aquatic life. Sea turtles became threatened onlywhen large, industrial fishing vessels came onto thescene. Although TEDS may save turtles, the continu-ation of industrial trawling is what destroys millionsof marine species, along with the livelihoods of mil-lions of traditional small-scale fishermen.

Tuna-Dolphin I and II Challenge by Mexico and the European Union against the U.S.T W O C A S E S S U C C E S S F U L LY C H A L L E N G E D the U.S.MMPA ban on the importation of tuna caught bymethods that capture and fatally injure thousands of

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Nets used by industrial shrimp trawlers were responsible for theslaughter of an estimated 150, 000 sea turtles worldwide in 1998.In that same year, the WTO ruled against a provision of theU.S. Endangered Species Act requiring that all shrimp sold inthe U.S. had to be harvested using a turtle extruder device (TED),which allows sea turtles to escape capture from fishing nets.

An even larger issue, however, is that sea turtles were onlythreatened with extinction when large, industrial fishing vesselscame onto the scene, endangering not only marine species, butthe livelihoods of traditional small-scale fishermen.

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dolphins each year. Becauseboth of these cases occurredunder GATT rules before theWTO was created, the U.S.was able to partially blocktheir adoption. If the issue isbrought forward under theexisting WTO/GATT rules,the U.S. would most likelylose again and be forced tochange the MMPA.

looking ahead

W I T H O U T S O M E R E A L

C H A N G E S, indeed reversals, inWTO policies, the environ-ment will continue to degradeworldwide. However, theWTO is currently focused onweakening or eliminating mostenvironmental protectionmeasures at the national andinternational level, and efforts are underway toincrease unrestricted global trade in wood productsand fresh water, to name just two areas of concern.

t h e s tat u s o f m u lt i l at e r a l e n v i r o n m e n ta l a g r e e m e n t s

M A N Y E N V I R O N M E N TA L O R G A N I Z AT I O N S around theglobe as well as some member nations would like for-mal clarification of the relationship between MEAsand the WTO, and in particular, would like MEAs tobe considered in dispute cases. WTO panels do notgenerally consider or consult existing MEAs to pro-vide guidelines for their decisions. To date, a WTOstudy group on trade and environment has beenfocused more on how to get environmental measuresout of the way of trade rather than on how to safe-guard enforcement of the MEAs.

f r e e t r a d e i n wo o d p r o d u c t s

A N E W “F R E E T R A D E A G R E E M E N T on wood prod-ucts,” is being pushed aggressively by the U.S. underthe Advanced Tariff Liberalization (ATL) initiative.Although forest protections are already being eliminat-ed under current WTO rules, the ATL and additionalrules being introduced into other WTO agreements

would further accelerate theelimination of all tariffs onwood products worldwide.Forest protection groupsprotest that such initiativeswould result in a sharplyincreased rate of deforesta-tion, declining health in glob-al forests, a significantdecrease in environmental pro-tections for forests, and anincrease in invasive species.

f r e e t r a d e i n wat e r

C U R R E N T LY, T R A D E I N B U L K

F R E S H WAT E R is under thedisciplines of GATT. Already,several corporations around theglobe have begun prospectingfor fresh water reserves andhave made agreements withvarious countries to begindrawing water from lakes and

rivers to be transported across oceans in scrubbed outoil tankers or giant floating bladders. (Please see BlueGold: The Global Water Crisis and the Commodification of theWorld’s Water Supply, published by the InternationalForum on Globalization in June 1999.)

Some nations, led by the U.S., are now proposingthat another WTO agreement, the GATS, shouldoffer foreign corporations further rights and access todomestic water and water systems, including the com-mercial operation of municipal drinking water systems.Other countries want to ensure their right to deter-mine environmental policy, including protecting theirwater.

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...globalization is inherently destructive

to the natural world because it requires

that products travel thousands of miles

around the planet, resulting in stagger-

ing environmental costs such as

unprecedented levels of ocean and air

pollution from transport, increased

energy consumption and fossil fuel

emissions (furthering climate change),

increased use of packaging materials,

and devastating new infrastructure

developments—new roads, ports, air-

ports, pipelines, power grids—often

constructed in formerly pristine places.

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Sugar cane harvesters in Luxor, Egypt—Instead of growing food to feed local populations, the lending policies and global trade rulesof many international institutions and agreements encourage developing countries to grow more and more monocultures (i.e., one crop)of luxury items, such as sugar cane, for export. This system leads to over production which, in combination with unstable currencyrates, results in dramatic price drops in luxury item commodities. For example, in 1998, the price paid to many developing countriesfor sugar cane dropped 38 percent.

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ALTHOUGH TRADE IN AGRICULTURAL goods has beengoing on for centuries, small-scale, family farmers haveprovided food for themselves and their communities formillennia. Even today, about half of the world’s peoplestill live on the land, growing food for their familiesand communities. However, things are changing rapidly.The self-reliant system that emphasizes local productionfor local consumption is being taken over by a new,globally industrialized agriculture system that is central-ized and controlled by giant agribusiness corporations.Farmers are being driven off their traditional lands,communities are being decimated, and hunger is onthe rise. In the South, as global corporations operateever larger farms, they replace staple food productionwith monocultures of luxury items for export markets.

And, all around the globe, they replace people on theland with machines and chemicals, leaving once self-sufficient farmers landless, jobless, and often homeless.

The elimination of self-sufficient, small-scalefarming is usually explained away as an uncontrollableevolutionary step toward “progress.” This is not so;the globalization of industrial agriculture has beendeliberate and conscious. Global institutions such asthe WTO have created rules that explicitly favor large-scale, heavily industrialized export-oriented systemsof production. As Eugene Whelan, former Canadianfederal agriculture minister, observed, “These dealsaren’t about free trade. They’re about the right ofthese guys [corporate agribusinesses] to do businessthe way they want, wherever they want.”

agriculture, food, and public health

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the globalization of industrial agriculture

T H E W T O A D M I N I S T E R S and enforces several agree-ments affecting agriculture. All of them serve the pur-poses of global agribusinesses. Before the WTO,international trade agreements such as GATT limitedtheir role in agriculture mainly to setting quotas andtariffs. But as huge agribusinesses became more intenton capturing larger markets, the industry began to pushhard for further liberalization in agriculture throughinternational trade instruments. Then, the UruguayRound of GATT produced agreements that greatlyexpanded its rule over more aspects of agriculture whilelimiting the power of national governments to protecttheir own farmers, consumers, and natural resources.

Globally industrialized agriculture not only drivessmall farmers off the land, it also creates terrible inse-curities and dependencies for those that remain. Insteadof dealing with local trade, farmers are now subject tomarket forces generated by giant, vertically integratedglobal corporations powerful enough to influence bothsupplies and prices at every level of agricultural activi-ty. The result is enormous price volatility. Farmers areselling to an increasingly centralized monopoly of foodcorporations that can play both the domestic and worldmarkets using one group of farmers against another ininternational pricing games. Since WTO policies haveentered the picture, global prices for the world’s majorcrops, such as corn, soybeans, wheat, cotton, and ricehave reached their highest and lowest levels in the last20 years. The years of low prices have ruined millionsof farmers. The years of high prices have hurt poorer,developing countries that have become reliant on foodimports, causing malnutrition and starvation.

Even relatively sophisticated family farmers indeveloped countries find that they cannot compete withthe huge capital outlays agribusiness can make, nor dothey receive the preferences and subsidies that favoragribusiness under global trade rules. As a result, recordnumbers of farmers are being driven off of lands that havebeen nurtured and maintained by families and commu-nities for generations. In southern countries, millionsof farmers have been displaced, resulting in massivemigrations into already overcrowded cities. Accordingto USDA, over 50,000 family farms have disappearedover the last five years.

Throughout the centuries, traditional farmers havedeveloped and protected a treasury of seeds and plantsadapted to local conditions. In India, farmers developedmore than 200,000 varieties of rice; Chile boasts hun-dreds of varieties of potatoes; in Zimbabwe there arenumerous varieties of maize. This wealth of agriculturalbiodiversity is being lost in the conversion to mono-culture, or single, crops. Scientists fear that futureadaptation to both natural and manmade disasters suchas climate change, flooding, desertification, and theglobal transport of pest species is greatly threatenedas the gene pool for crops becomes seriously depleted.

The new agriculture system is also contributingto nutritional deficiencies among many populations.Because industrial agriculture is dominated by westerncorporations it promotes a western diet. But people indeveloping countries often cannot afford the fullrange of a western diet, especially meat. The westernfood they can afford is not always as nutritious or cul-turally desirable as the varied traditional food cropsdeveloped over time. In India, for example, traditionalgrains such as sorghum, finger millet, and barnyardmillet have a higher protein content than the varietyof wheat grain used in the North, yet these ancientgrains of India are in danger of being wiped out as aresult of WTO policies that favor agribusiness farmsand industrial monoculture.

In addition to causing malnutrition, hunger isexacerbated by this global food production system.Around the world, over 800 million people go hungryevery day. Athough food production has increased inthe East Asian countries that participated in industrialagricultural policies encouraged by institutions suchas the World Bank, hunger has dramatically increased.Countries that were formerly food self-sufficient arenow growing export crops—many of them high-valueluxury items such as exotic plants and flowers, cottons,exotic fruits and vegetables for export to wealthycountries. As a result, food production for local con-sumption declines.

The environmental consequences of large-scaleindustrial agriculture are extreme because it requiresheavy chemical and pesticide use, depletes the soil,increases water usage, and uses large fuel-consumingmachinery, adding to emissions of climate-changing

gases. The average plate of food that Americans noweat has traveled some 1,500 miles from source to table,solely because it benefits the corporate actors who sitat the hub of the process. The international transportrequired by a globalized agriculture system dramaticallyincreases the need for new infrastructure—more roads,pipelines, and airports—which is usually destructiveto the environment, as well as requiring a greater useof fossil fuels. The tremendous growth in ocean ship-ping increases ocean pollution and brings wave afterwave of invasive species— bacteria, parasites, viruses,insects and animals—that hitch rides on trucks,planes, or ships headed for new locales.

Another environmental consequence of the newsystem is an increased dependence on biotechnology(i.e. genetically modified organisms). This not onlyshrinks the crop gene pool further, but there is growingevidence that genetically modified crops produce a newkind of “genetic pollution” as the genetically modifiedtraits spread to neighboring crops and weedy relativesthrough cross pollination. In the case of plants alteredto be pest-resistant this new kind of pollution hasalready been shown to kill untargeted insects. Thismay lead to irreversible changes in plant and animalgenetic structure and in ecological balances.

the wto agreement on agriculture

T H E A G R E E M E N T O N A G R I C U LT U R E (A O A) intro-duced agriculture into GATT for the first time. TheAOA was finalized in 1993 through the Blair HouseAccord, which was negotiated between the EU andthe U.S. The two superpowers had come to realizethat in their efforts to out-compete one another forexport markets, the tremendous subsidies they weregiving to their respective agriculture sectors were cre-ating a lose-lose situation for both countries. (At onepoint, close to 80 percent of the EU’s budget wasgoing to support agricultural programs.) They decid-ed to initiate the insertion of the AOA into GATT toprovide a global framework for price support reduc-tions and other measures. But other countries, espe-cially small southern countries, viewed the agreementas biased and accepted it only under pressure.

Trade representatives from the North say that theAOA offers concessions to the South by lifting quotasand reducing some tariffs on developing countryexports such as palm and coconut oils. However, such“concessions” mainly benefit huge corporate agribusi-nesses in the South. For example, the limited gains ofMalaysian palm oil plantations and Philippine coconutoil exporters are badly offset by the tremendous harmdone to local small farmers who do not have politicalclout and are seriously harmed by northern imports.

As Walden Bello, director of Focus on the GlobalSouth, points out: “The quid pro quo of having greatermarket openings for export products such as palm oiland coconut oil to the North unfortunately means aneven greater access in the South of northern rice andcorn, mostly affecting small farmers in Asia.”

The AOA is one of the most complicated WTOagreements, and its rules overlap with many elementsof other WTO agreements. With that caveat, here is adescription of some of the main areas the AOA governs.

m a r k e t a c c e s s t h r o u g h ta r i f f a n d n o n - ta r i f f m e a s u r e s

TA R I F F S A R E TA X E S on the value of imported goods.Countries have traditionally used tariffs to control thequality and volume of imported goods in order to helpensure that domestic producers are not put out ofbusiness by imports. Free traders consider tariffs out-

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Palm oil plantation in Sabah, Borneo—The 1997 fires thatengulfed Southeast Asia in a cloud of smoke half the size of theU.S. were mainly caused by plantation companies, which ille-gally use fire to clear forests to make way for palm oil planta-tions. WTO agricultural provisions have benefited large palmoil exporters and encouraged expansion of plantations. Smallfarmers in Indonesia, however, have been decimated by WTOpolicies that give Northern agribusiness more access to the South.

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rageous and subversive becausethey inhibit the freedom of cor-porations to enter any marketat any time. Most people inThird World countries dependon agriculture. They produceprimarily for subsistence andsell small surpluses at localmarkets. These markets haveendured over centuries. TheWTO’s removal or reductionof tariffs allows cheap subsidized products to flooddomestic and local markets, thus displacing smallfarmers and destroying their way of making a living.For example, during the last five years, subsidizedmeat exports from Europe have helped to wipe outthe pastoral economies and cultures of West Africa.Reduction of tariffs on soybeans exported from theU.S. to India have destroyed the entire oil seed andedible oil seed economy of the country, affecting thelivelihoods of millions of people.

Non-Tariff Measures are mechanisms that countriesuse to promote positive social, consumer, or environ-mental goals. For example, a country may limit theamount of pesticide residues allowed on fruits or veg-etables, or it may discourage tuna fishing by meansthat kill dolphins. Examples of non-tariff measuresspecific to agriculture include supply managementprograms, emergency food stocks, and import controls.Non-tariff measures may also be used to prevent tradewith countries with bad human rights records. Manycountries did this with the former apartheid regime ofSouth Africa and are doing it with Burma (Myanmar)now. Under the WTO, such measures are consideredunfair barriers to trade and must be eliminated.

Supply Management. Before the WTO existed, mostcountries maintained a balance between supply anddemand with a system in which farm marketing boardsnegotiated collective prices for products with bothdomestic and foreign buyers. In order to create stableprices, marketing boards also regulated supply to avoidoverproduction. This system is being dismantled throughthe WTO’s agenda of prohibiting import and exportcontrols, leaving nations and farmers more vulnerableto the actions of larger nations, huge vertically integrat-ed corporations, and to currency or price speculation.

For example, the resultingcheap imports take away thenegotiating leverage of farmmarketing boards.

Emergency Food Stocks.Other WTO provisionsundermine a country’s capaci-ty to maintain government-controlled emergency foodstocks. Before the WTO,many countries kept emer-

gency food stocks to prevent famine in times of cropfailure or drought. Now, countries with crop failure areexpected to buy what they need on the open market.However, prices in the open market in a globalizedeconomy are extremely violatile. Therefore, when ashortage occurs in staple foods such as rice, corn, orgrain, prices for these commodities will often bemuch too high for poorer nations. As a result, thehungry go unfed.

Import Controls. WTO rules call for a phase out ofgovernments’ rights to apply quantitative import con-trols. Before this regulation, a country could use importcontrols to stop foreign products from flooding itsmarket at prices that could wipe out domestic produc-tion and farmers. Today, the rules say that import quotasor controls must be transformed into tariffs, but thisgives a large advantage to transnational agribusinesses.While it is hard for multinational corporations to vio-late import quotas, they can afford to pay tariffs andthus continue to gain access to foreign markets, elimi-nating small, domestic farmers. Poorer countries don’thave the resources to subsidize farmers. So, onceimport quotas are banned, small farmers are left total-ly unprotected.

d o m e s t i c s u p p o r t s

WTO RULES EFFECTIVELY REDUCE or eliminate domes-tic agricultural price supports, a mechanism countrieshave long used to protect their farmers. In addition toprotecting an important economic sector, farm pricesupports were a way of sheltering traditional livelihoods,small communities, and local culture. For example, inthe U.S., the government used to give farmers paymentsand set loan rates that would maintain a stable pricefor certain commodities. This ensured that farmers

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Farmers are selling to an increasingly

centralized monopoly of food corpora-

tions that can play both the domestic

and world markets using one group of

farmers against another in international

pricing games.

would receive adequate compensation for their crops.With meaningful price supports draining away, millionsof farmers from both the North and South have beenforced to sell their lands to large agribusinesses and-move off their lands to already overcrowded urban areas.

During the Uruguay Round of GATT, trade nego-tiators claimed that reducing or eliminating price sup-ports would especially benefit developing nationsbecause they could not afford to support their farmersas much as northern governments could. Southerncountries argue that the way the WTO reduced pricesupport systems actually did little to level the playingfield. One reason is that the percentage reductions innorthern countries were pegged to 1986 levels, a yearthat the U.S. and Europe gave their biggest subsidiesever. With 1986 as the baseline, northern countriessustained a tremendous economic advantage. In prac-tice, direct payments in the U.S. have risen to $15.3billion, a 50 percent increase above the level of pay-ments during the time of the Uruguay Round negotia-tions. However, these payments were based on 1990-95 production levels, not on current production levels,and therefore did not address the dire situation thatmost U.S. farmers are currently experiencing as resultof the implementation of WTO provisions. This “de-linking,” or “de-coupling” of payments from actual

production levels has further increased inequitiesbetween small and large farms.

Another critical factor is that many farmers fromdeveloping countries never received government pricesupports large enough to enable them to purchase theexpensive equipment that would make them competitivewith agribusinesses operating in northern countries.Again, the result is that the North maintains the mar-ket advantage.

Family-Farm Support Programs. These programs areanother kind of domestic support. Current WTOrules now limit the rights of governments to takeactions (such as tax shifts) to support family farmers.One result has been the massive growth of corporate-owned, industrial-style livestock facilities and thegeneral take-over of agriculture by huge transnationalcorporations that are subsidized by other means suchas export subsidies or foreign investment insurance(see below).

e x p o r t s u b s i d i e s

T H E W T O R E S T R I C T S S U P P O RT to family farmers andother local producers. However, it maintains and evenincreases a variety of subsidies for exports. As a result,many countries now provide higher financial supportsfor companies involved in exports, or foreign invest-ments. In the U.S., the taxpayer-supported OverseasPrivate Investment Corporation provides vital insuranceto U.S. companies investing overseas, a significantsubsidy that reduces risk for these companies andlowers costs. Such subsidies have led, in turn, to anincrease in “export dumping,” as companies are ableto sell products abroad at prices below their actual costof production. Ironically, the WTO has rules that bandumping, but by permitting export subsidies, it handscorporations the loophole they need to circumventthe ban, to dump products at below cost, and to driveout smaller competitors, usually in smaller countries.

winners and losers

T H E W I N N E R S, whether from the North or the South,are large industrial agriculture corporations; the losersare small family and subsistence farmers. For example,though U.S. pork exports went up by 27 percent in1998, and large food processors had record profits,prices paid by processors to small hog farmers fell by

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San Joaquin Valley, California—Large-scale industrial agri-culture systems require huge amounts of inputs such as heavychemical and pesticides, huge amounts of water, and fuel-con-suming machinery. In the U.S., 2 billion pounds of pesticide areinjected into the environment each year contributing to pollutedwater and air, and soil depletion.

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over 200 percent. In India in1996, Cargill and Continental,two giant grain traders, boughtwheat at $60 to $100 per tonfrom Indian farmers and sold it at$230-$240 per ton in the inter-national market. Indian farmerswere deprived of millions inexport earnings because of theconcentrated power of fivemajor grain merchants.

Citizens and consumers are also losers. In the U.S.,consumer food prices have risen 7.6 percent over thepast three years. However, prices paid to farmers havefallen as the the price of commodities such as wheat,corn, and cattle purchased by giant food processingcompanies have dropped almost 11 percent. This is yet another indication that large food distributors aremaking money, while farmers are receiving lowerprices for their commodities and consumers are payinghigher prices. In developing countries, increased foodprices can mean hunger and starvation.

food safety and public health

P U B L I C H E A LT H A N D F O O D S A F E T Y are also greatlyaffected by WTO rules, especially by the Agreementon the Application of Sanitary and PhytosanitaryMeasures (SPS). The SPS covers many aspects of foodsafety—from pesticides and biological contaminants,to inspection, product labeling, and biotechnology(i.e., genetically engineered foods). The SPS desig-nates the Codex Alimentarius, a previously voluntaryagreement heavily influenced by food industry repre-sentatives, to provide international food safety stan-dards. The standards it controls include establishing“safe” levels of pesticides in foods, deciding the levelsof artificial hormones allowed in milk and meat, andother such issues.

Under WTO rules, Codex standards set a ceiling,not a floor, on the level of safety a country can enforce.In other words, countries are not required to have min-imum food safety and health standards, but they canbe penalized for setting standards that are higher thanSPS and Codex standards. Thus, Codex still permitsDDT residues on grains, dairy, and meat. A U.S.

Government AccountingOffice study found that onlyhalf of Codex standards wereas protective to health as U.Sstandards. The result is adownward harmonization offood and health standardswith potentially devastatingconsequences for public health.

Many countries base theirfood safety and health regula-

tions on the precautionary principle, reasoning that it isbetter to err on the side of safety than to find out manyyears later that, indeed, a certain product or pesticidewas harmful or deadly. The precautionary principle isa measure in the Rio Declaration on Environment andDevelopment that states: “Where there are threats ofserious or irreversible damage, lack of full scientificcertainty shall not be used as a reason for postponingcost-effective measures to prevent environmentaldegradation.” For example, the U.S. system for phar-maceutical approval is based on the precautionaryprinciple. By taking precautionary steps with respectto possible risks from the use of thalidomide, the U.S.avoided a potentially disastrous epidemic of birthdefects. (Thalidomide is estimated to have been respon-sible for deformities in more than 10,000 babies incountries that approved its use.)

In the Beef Hormone ruling, the WTO summarilydismisses the precautionary principle (see BeefHormone case on the next page). This is a particularlyalarming decision. The WTO now requires govern-ments to prove that something is unsafe in order tokeep it off the market, instead of requiring industry toprove that something is safe in order to put it on themarket.

wto rulings affecting agriculture, food safety and public health

T H E M A J O R I T Y O F C A S E S before the WTO are relat-ed to agriculture. To date WTO rulings have goneagainst member countries’ efforts to safeguard theircitizens’ health and well-being and to set agriculturepolicies that protect their farmers and consumers.

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The WTO now requires governments

to prove that something is unsafe in

order to keep it off the market, instead

of requiring industry to prove that

something is safe in order to put it on

the market.

The Banana Case Challenge by the U.S., joined by Guatemala, Honduras, Mexicoand Ecuador, against the European Union [Case WT/DS31]I N S E P T E M B E R 1997, a WTO panel ruled that theEuropean Union (EU) was giving preferential accessto bananas produced by former colonies in theCaribbean. This arrangement had been previouslynegotiated between the EU and its former Africanand Caribbean colonies under the Lomé Treaty.

The U.S., which does not produce any bananas,brought this case against the EU on behalf of theU.S.-based Chiquita corporation, formerly known asUnited Fruit. Chiquita produces bananas in LatinAmerica on huge plantations that are notorious forexploiting cheap farm labor and using environmentallydamaging techniques. In the Caribbean, which Europeis favoring, banana producers tend to be small-scalefarmers who own and work their own land (an averageof three acres), often incurring higher production costs.

This was a very divisive case within the WTObecause of its economic, social justice, and environmen-tal dimensions. At one point, the U.S. began implement-ing a threat to impose sanctions on more than $500mof EU exports, nearly setting off a trade war. The EUeventually said that it would comply with the ruling butit is still negotiating with the U.S. over settlement terms.

The Beef Hormone Case Challenge by the U.S. and Canada against the European Union[Cases WT/DS26 and WT/DS48]T H E E U has banned the non-therapeutic use of hor-mones in its food industry, citing many studies thatindicate that hormones, particularly implants of pelletscontaining estradiol, could cause cancer. Followingthe challenge by the U.S. and Canada, citing theonerous provisions of the SPS Agreement and otherWTO rules, the WTO ruled against Europe’s ban.

The WTO panel demanded scientific certaintythat hormones cause cancer or other adverse healtheffects, thus eviscerating the precautionary principleas a basis for food safety regulations. This ruling hasfrightening implications for the ability of govern-ments to set high standards to protect public health.It means that European consumers and governments areforced to accept imports of beef raised with hormonesor be penalized with harsh trade sanctions. Publicopinion in Europe is strongly demanding defiance ofthis WTO ruling. The U.S. and Canada have producedlists of exports important to Europe, including luxuryitems such as prosciutto, cheeses, and Dijon mustard,among other things, on which they intend to slap 100percent tariffs if the EU fails to comply. These retalia-tory measures will total more than $125m.

Dairy Products Challenge of the U.S. (New Zealandreserved the right to join) against Canada [Case WT/DS103/1] T H E W T O R U L E D that Canada’s system of pricing itsdairy exports at lower rates than its domestic milk isan illegal export subsidy and must be remedied. Theruling also ordered Canada to allow an increase inforeign access to its domestic market.

Canadian farmers contend that although the rulingdoes not directly attack Canada’s supply managementsystem for milk, it will be difficult to maintain this sys-tem while being forced to accept more imported milk.

Pesticide Residue Levels Challenge by the U.S. against Japan [Case WT/DS/76/1]T H E U.S . H A S A L S O successfully challenged Japan’shealth-related pesticide residue testing requirementsfor agricultural imports. In November 1998 and againin February 1999 (on appeal), the WTO ruled thatthese public health requirements violate internationaltrade rules because Japan’s standards are higher than

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In 1996, the European Parliament, with strong public support,unanimously voted to ban the sale of beef treated with artificial,growth-promoting hormones that have been linked to cancer andpremature pubescence in girls. However, the U.S. governmentchallenged the ban at the WTO and in 1998, the WTO ruledagainst Europe.

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WTO standards. Therefore,Japanese citizens must nowaccept fruit and other productsthat contain a higher level ofpesticide residue than theirown national legislation andpublic deemed to be safe.

(Also see Gerber vs. Guatemala’sInfant Health and AIDS DrugsDenied to HIV-Infected, page 35,for other ways the WTO hasseriously impacted public health.)

looking ahead

F U T U R E N E G O T I AT I O N S about the WTO’s role inagriculture are likely to center around the desire oflarge, developed countries, on behalf of large agri-business, to expand WTO authority. Smaller countriesare pushing to slow the expansion and assess the effectsthe WTO has already had. Key areas of conflict can beexpected around the Agreement on Agriculture, Agree-ments Regulating Tariffs, the TRIPS Agreement, andagreements that include food safety and biotechnology.

t h e a g r e e m e n t o n a g r i c u lt u r e

WHILE THE EU, JAPAN, CANADA, and other developednations are leading the charge for a new round of mul-tilateral negotiations that will focus largely on agricul-ture, most developing countries are still reeling fromthe effects of the last negotiations that resulted in theAOA. They have had to change national policies andlaws to open up their economies further to foreigngoods and services. Because their local firms are usuallysmall and do not receive subsidies at the level of north-ern countries (if they receive subsidies at all), they havebeen unable to compete successfully with the big com-panies based in the developed nations. These countriesare resisting further expansion of WTO jurisdictionover export subsidies, supply management controls,price controls, and many other issues.

Concurrently, family farmers and small agricultureproducers in northern countries have also been wipedout by the last five years of WTO agriculture policies.Many from both the North and the South want to takemuch of the jurisdiction over agriculture policies outof the WTO.

India and many Africannations are calling for anexemption from some of theAOA rules on the grounds thattheir food security is threat-ened. Meanwhile, countriessuch as Norway, Japan, andKorea are trying to broadenthe scope of the discussionand introduce the concept ofmultifunctionality—the inter-relationship between agricul-

ture, the environment, culture, and other areas—intothe WTO.

t h e a g r e e m e n t o n s a n i ta ry a n d p h y t o s a n i ta ry m e a s u r e s

A S T H E B E E F H O R M O N E and the Japanese pesticidecases clearly demonstrate, countries have been pun-ished for protecting their citizens with food safetyand health standards higher than those allowed bythe SPS and Codex. The SPS Agreement does notsafeguard any country’s right to adopt and implementmeasures it sees fit to protect human, animal andplant life or health. As a result, some member nationswould like to remove SPS constraints to ensure thesovereign right of nations to enact standards to pro-tect their citizens.

t h e “ b i o t e c h a g r e e m e n t ”T H E U.S . G O V E R N M E N T wants to negotiate what isknown as a “stand alone” accord at the WTO that willforce countries to accept exports of genetically engi-neered (GE) foods. The insistence on a separate agree-ment, rather than simply inserting provisions into anexisting agreement, is an indication of the importanceof the subject to the U.S. biotech food industry.

Under the proposal currently being discussed,biotech food corporations would agree to voluntary,not mandatory, labeling in exchange for member coun-tries agreeing to open their markets to GE foods. Alsounder this proposal, governments would have the bur-den of proving that a GE product is unsafe before theycan ban or restrict it, instead of requiring manufacturersto prove that their product is safe. Once again, this pro-posal reverses the spirit of the precautionary principle.

As Eugene Whelan, former Canadian

federal agriculture minister, observed,

“These deals aren’t about free trade.

They’re about the right of these guys

(corporate agribusinesses) to do busi-

ness the way they want, wherever they

want.”

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Hambukusbu baskets woven by women in Okavango, Botswana—Traditional livelihoods and arts are rapidly disappearing as theglobal economy peddles its chain stores, franchised food, and mass-produced wares around the world. Such cultural homogenizationdestroys the rich history, diversity, and beauty of many cultures.

T O A N Y O N E W H O H A S T R AV E L E D the globe, it isobvious that diversity of culture is disappearing.Communities in Asia, or Europe, or California arequickly beginning to look more alike than different,as all are immersed in an increasingly homogenizedlifestyle dominated by the cultural products of westernnations that are flooding the world. People are seeingthe same television and films, wearing the same clothes,eating the same franchised food and, increasingly, aremotivated by the same consumer values. The argumentis that most countries of the world want to becomelike the U.S., and so seek to emulate the kinds of val-ues and behaviors they see in American and otherwestern countries.

Others argue that the western cultural cloningnow underway is the direct result of nearly a century

of deliberate corporate intrusion into other nations,particularly into smaller, poorer countries that lackthe resources to counter such influence. Corporateadvertising blankets the globe with images that glori-fy western taste, dress, food, and lifestyle. It is worthnoting that 70 percent of television programming inthe world is imported from the U.S. Similar statisticsprevail in most other areas of communications. InCanada, for example, 85 percent of magazines on news-stands are American, a fact that has caused a WTOdispute between the two countries. Traditional valuesand cultures different from those of the West areviewed as backward, out-of-date, and totally withoutvalue in the modern world unless they can be com-modified for tourist consumption.

Even so, most countries view culture as their rich-

culture

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est heritage, without whichthey have no roots, history, orsoul. Many nations, feelingthat the right to protect theircultural diversity is as impor-tant as preserving biologicaldiversity, strenuously attemptto resist, or at least control,the import of foreign cultureinto their own domains. Theybelieve that culture should notbe a tradable commodity; thatit is not the same as steel orcomputer parts, and that tradeagreements should have no say in a nation’s attemptsto regulate cultural imports of any kind. Such resist-ance is particularly strong in France, Canada, India,China, and some Muslim countries. They recognizethe profound consequences of free trade in culturalproducts and are clinging to every protection theycan muster. Some citizens in the U.S. are also con-cerned about the continued advancement and “corpo-ratization of culture” and view the WTO as a toolthat perpetuates this process.

The mainly U.S.- based entertainment-industrialcomplex, in contrast, views culture as big business tobe vigorously advanced at the WTO. Mass producedproducts of American popular culture are one of thecountry’s biggest exports. This industry combines gianttelecommunications companies, movie studios, televi-sion networks, cable companies, and the Internet work-ing together in a complex web that includes publishing,films, broadcasting, video, television, cable and satel-lite systems, mega-theater productions, music record-ing and distribution, and theme parks.

the erosion of cultural protections

R E S I S TA N C E T O F O R E I G N cultural domination is notnew, countries have been endeavoring to save theircultures for decades. In the 1920s, European countriesresorted to screen quotas to protect their film industriesfrom the influx of American movies. At the GATTTokyo Round in the 1970s, the U.S. complained thatat least 21 countries were protecting their film andtelevision industries. The issue re-emerged at the

GATT Uruguay Round in the1980s, leading to an agreementthat subjected cultural productsto the same trade disciplines asbananas, cars, or heavy equip-ment. These agreementsinclude investment rules thatstipulate that foreign corpora-tions and their products mustbe given the same treatment asdomestic companies (NationalTreatment), and that countriescannot set quantitative restric-tions (quotas). This leaves

Disney Corporation, Time-Warner, or Rupert Murdoch’svarious enterprises free to enter any country and cul-ture and to dominate its publications, television, films,music, video, and computers.

There are two small exceptions in GATT. Oneallows a country to establish or maintain some screenquotas under very limited conditions, and a secondgeneral exception (under Article XX) stipulates thatnations may take measures to protect national treasuresof historic or archaeological value. Disney may not beable to buy the Eiffel Tower, but it can overtake theFrench film industry. Mitsubishi may not be allowed topurchase Mt. Rushmore, though it just might buy CBS.

wto rulings on cultural issues

A LT H O U G H T H E R E H AV E B E E N several complaintsconcerning culture at the WTO since 1995, only onecase has been resolved to date. That is the disputebetween Canada and the U.S. over the Canadian maga-zine market. A 1996 case in which the U.S. complainedthat Turkey’s taxation of revenues generated from for-eign films was a barrier to trade was resolved betweenthe two parties in 1997 without a WTO ruling.

Canada’s Attempt to Save Its Magazines Challenge by the U.S. against Canada [Case WT/DS31]CURRENTLY, 85 PERCENT of all magazines available atCanadian newsstands are American. In an effort to pro-tect its own magazines, Canada gave favorable postagerates to certain Canadian periodicals and introduced atax law that gave an incentive to Canadian advertisers toplace ads with domestic, instead of foreign, magazines.

Many countries...strenuously attempt to

resist, or at least control, the import of

foreign culture into their own domains.

They believe that culture should not be

a tradable commodity...that trade

agreements should have no say in a

nation’s attempts to regulate cultural

imports of any kind.

In 1997, the WTO ruled that Canada’s measureswere in violation of GATT. Canada has been forcedto comply and has eliminated both the favorablepostage rates for Canadian periodicals and the tax.

Other cases related to culture are before the WTO.

1. A complaint by the European Community (EC)that the U.S. permits the playing of radio and televi-sion music in public places without the payment of aroyalty fee; the EC compensates its artists for such use.

2. A U.S. claim that a number of TV stations inGreece regularly broadcast copyrighted motion pic-tures and television programs without the authoriza-tion of copyright owners.

3. An EC allegation that Canada gives more favorablepricing for Canadian movie distribution than it givesto movies produced in EC countries.

looking ahead

THE PROPOSED WTO Millennium Round would launchnew negotiations in the telecommunications sector,

which includes all emerging technologies. If that roundtakes place, chances are that several global corpora-tions will be working to make sure that every timeyou turn on your computer, the WTO will be thereto ensure that the ownership, operation, and regula-tion of just about everything you do comes underWTO rules and is open to investment and control by global corporations.

b r o a d c a s t d e r e g u l at i o n

TA L K S O N B R O A D C A S T D E R E G U L AT I O N would alsobe on the table. WTO documents reveal that the pro-posed discussion would include “access and reciprocityto domestic and foreign markets.” This would openup the airwaves to takeover by global communications/entertainment corporations. It could also force countriesto abandon subsidies to and domestic requirementsfor public broadcasting, such as National Public Radioin the U.S., or the Canadian Broadcasting Service.Ironically, the push for this deregulation is comingfrom U.S. corporations, even though the U.S. gov-ernment has protected segments of its own broadcast-ing sector in both NAFTA and the WTO as being“essential to national security.”

t h e c o m p u t e r i n d u s t ry a n d e - c o m m e r c e

I N A N O T H E R A R E N A, the computer industry in theU.S. and other developed countries is calling forWTO negotiations to establish global rules on e-commerce, (selling and purchasing products on theInternet) in the hope of forcing countries to give uptheir right to tax or otherwise regulate commerce onthe web. This would provide an advantage to largecorporations for two reasons: (1) businesses that havephysical locations (your local bookstore, market, etc.)would still have to pay local, state, and national salestaxes, and (2) full-time Internet access can be tooexpensive for individuals and smaller businesses. Inaddition to the access charges (which are projected togo highter due to the industry’s push to de-regulate) itis expensive to advertise a website and to providesecurity for financial transactions, not to mention thecosts of adding a shipping and handling departmentto fulfill electronic orders. Thus, small proprietors areless able to compete.

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Sahel, Africa—Hollywood comes to a remote village near you:The number of television sets per 1,000 people worldwide almostdoubled between 1980 and 1995. And the spread of global brandslike Nike and Sony, is setting new social standards from Delhito Warsaw to Rio de Janeiro.

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T H E A R E A O F I N T E L L E C T U A L property rights (IPRs)has become one of the great battlegrounds wherewestern industrial nations, acting on behalf of theircorporations, battle southern countries attempting topreserve their genetic resources, traditional livelihoods,and even to provide cheap life-saving drugs to theircitizens. It’s also, unfortunately, one of the least well-reported and most confusing of all the trade areas,though one of great import.

An IPR is a claim to a discovery or an inventionwhich is rendered through a system of patents, copy-rights, trademarks, or the granting of exclusive mar-keting rights. The WTO agreement that sets regula-tions for a system of IPRs is called the Agreement onTrade Related Intellectual Property Rights (TRIPS). In1996, the World Intellectual Property Organization

(WIPO), formerly an independent organization,wasbrought under the jurisdiction of the WTO. Thisgives the WTO another means to claim the authorityto rule on patents, trademarks, and copyright law.

Before the WTO existed, individual countriesmade their own decisions about whether to grant IPRprotections and at what level. Governments grantedintellectual property rights to reward inventors andother creative people the exclusive rights to use andsell the products of their creativity and innovation.This was based on the belief that people had a rightto profit from their own creativity and to foster tech-nological growth by providing motivation for innova-tion. The U.S., for example, grants patents for a cer-tain period (generally up to 21 years) which allow thepatent holder exclusive rights to develop and market

intellectual property rights

A plant pathologist displays neem oil—Neem, a beautiful tree native to India, has been used in India for centuries as a natural pesticideand for a variety of medicinal uses. Under the guise of intellectual property rights, this heritage is being stolen. In the last few years,over a dozen U.S. patents have been granted to large U.S. and Japanese firms for neem-based products.

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an invention. Most IPR patentholders are large corporationseven if the first patent claims aremade by university scientists.

Unfortunately, most peoplein developed countries haveheard about the battle overIPRs entirely in terms of theflood of bootleg software, CDs,clothing, and other counterfeitproducts produced in somedeveloping countries. Mean-while, much graver aspects ofIPRs receive no attention. Besides globalizing IPR sys-tems, the WTO has also introduced patents on livingmaterial, including plants, animals, genes, cells, andgenetically manipulated organisms.

Unlike the U.S., most countries in the world donot grant patents on life forms such as plants, animals,and microbes, or on pharmaceuticals because of ethi-cal, cultural, religious, and socioeconomic concerns.Many southern countries oppose patenting crucialelements of the “commons”—seeds, plants, and otherliving resources necessary for food and health—believing that they should be freely available. Forcenturies, the commons have been clearly understoodto be part of the cultural, spiritual, and biological inher-itance of all people. The belief is that such things shouldnot be turned into commodities to be sold only tothose who can pay for them. In contrast, there are nocommons under the system promoted in the WTO.Virtually all life forms and resources are available forcorporate ownership.

The United States and most of the developednations find the southern resistance to patenting ofthis kind of intellectual property outrageous to theprinciples of free trade and a major inhibitor of therights and prerogatives of global corporations. Informingthe outrage is the fact that the last reservoirs of theplanet’s genetic and biological reserves are in the South.According to the World Resources Institute, more thanhalf the world’s remaining plant and animal specieslive in the rainforests of the Third World. Of 120active compounds now used in modern medicines, 75percent were derived from the traditional knowledge

of indigenous and ThirdWorld peoples. Fewer than adozen are synthesized by sim-ple chemical means; the restare directly extracted fromplants and then purified.Biotechnology corporationsare fighting fiercely for accessto genetic reserves and theability to claim patents onplant and animal life.

By controlling livingresources through patents, the

biotech industry is trying to replace the natural econ-omy through which hundreds of millions of peoplehave long derived their food and medicine directlyfrom nature. Genetically engineered, patented organ-isms and products force the world’s people to dependon corporations for basic needs.

bad trips‒trade related intellectual property rights

WITH TRIPS, T H E W T O is able to give corporations agreat deal of help. The agreement privatizes some lifeforms under transnational corporate control, creatingmonopolies over basic tools of life such as seeds. TRIPSgives foreign corporations the right to take traditionalindigenous seed varieties, including those that have beendeveloped by small farmers over centuries, “improve”them by minor genetic alteration, and then patent them.These corporations then have the exclusive right tosell the patented seeds to the communities that onceowned them in common and used them freely. Southerncountries call it “biopiracy,” and there have been massdemonstrations, most notably in India, to express out-rage about it. In 1995, a mere 24 of the 1,500 seedcompanies in the world already held a combined mar-ket share of over 50 percent.

Ironically, the argument that industrial countriesmade for globalizing an IPR system was that technolog-ically altered materials should be part of the “commonheritage of humankind.” This argument rests on aninherent double standard: materials created and devel-oped from generations of innovation by farmers andindigenous people in the South were common heritage,

Many southern countries oppose

patenting crucial elements of the “com-

mons”—seeds, plants, and other living

resources necessary for food and health

—believing that they should be freely

available. In contrast, there are no

commons under the system promoted in

the WTO.

and thus northern corporations had free access. Yetthe benefits derived from this common heritage arecorporate property and protected by patents.

In contrast, many southern countries do not his-torically extend patents to pharmaceuticals, which areusually derived from traditionally used local plantsand are considered to be part of the commons. Thisprevents monopoly control by foreign corporations,which in turn helps to assure low-cost medicinalproducts and local production.

The negotiations over TRIPS are among the mostappalling examples of the way global corporationsinfluence and dominate global trade policy and agree-ments. The framework for the TRIPS agreement wasdirectly shaped by a lobbying group called theIntellectual Property Committee, a coalition of 12major U.S. corporations: Bristol Myers, DuPont,General Electric, General Motors, Hewlett Packard,IBM, Johnson & Johnson, Merck, Monsanto, Pfizer,Rockwell and Warner. In addition, a group of eco-nomic organizations in Japan called Keidanren, andthe Union of Industrial and Employees Confederations,the official representative for European business andindustry, had direct access to the negotiators andhelped mold the agreement. Not one person from anyNGO of any country was involved in developing theagreement or even permitted to comment.

Southern countries were uniquely unified in theiropposition to adopting a U.S.-style patent system. As reported in Third World Resurgence (January 1992),“Developing countries objected to the inherent unfair-ness in having to give their genetic resource materialsfreely when these were being used for developingbiological materials which were then subject to prop-erty rights. The common heritage of mankind, takenfreely from the South, was now returned as a com-modity at a price.”

At the end of the negotiations, the TRIPS agree-ment represented a triumph for the U.S. and transna-tional corporations. The agreement significantly limitsthe rights of countries to set their own domestic poli-cies in this area. The South did win a few concessionson the issue of the patenting of life forms. The 1994TRIPS agreement requires that countries allowmicrobes (bacteria, etc.) and processes for the pro-

duction of genetically altered plants and animals to bepatented. However, countries do not have to grantpatents to animals.

The TRIPS agreement allows countries to set uptheir own alternative, or sui generis, system for patentingplant varieties. (Sui generis is a Latin term that means“of its own kind of class.”) Developing countries haveuntil January 1, 2005, to develop an acceptable systemfor plant variety protection that will be compliant withTRIPS. However, what constitutes an alternative sys-tem that is compliant and acceptable with TRIPS isundefined, and many countries fear that their sui generissystems will be challenged by, most likely, the U.S.

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Rain forests, mainly located in Third World countries, coveronly 7 percent of the planet yet contain 50 percent of the world’sspecies of plants and animals, including thousands of medicinalplants that are only found in rain forests. Within this century,nearly half of these forests have been destroyed. At currentdeforestation rates, rain forests in Asia will totally disappear inonly ten years.

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wto ruling on intellectual property rights

T H E N O RT H E R N E A G E R N E S S for all nations to adopt aU.S.-style system of patenting is illustrated by aWTO challenge that the U.S. brought against India.The U.S. has brought similar cases against severalother nations claiming that they are not implement-ing WTO patent rules quickly enough. To date, theWTO has only ruled on the India case.

Patents on Plant Varieties: Advancing the U.S.-Style Patent System Challenge by the U.S. against India [Case WT/DS50]I N D I A’S C U R R E N T L AW deliberately excludes plantsand animals from patenting in order to maintain localcontrol over these life forms. This helps to maintainlow prices for some products such as pharmaceuticals.

Under the current TRIPS, however, developing coun-tries must, by the year 2005, provide some form ofpatent protection for plant varieties that is GATT-compliant, i.e., that allows foreign companies theright to patent local plant varieties.

The basic complaint by the U.S. was that Indiahad violated its TRIPs obligations by not moving fastenough toward compliance. The WTO concurred,even though its own deadline for compliance is 2005.India has been forced to grant market monopolies tocorporations on the basis of patents granted by anyother country in the world as a result of this WTOruling.

looking ahead

S O M E P R O V I S I O N S of the TRIPS agreement that areup for review include agreeing upon a definition oflife forms (to be able to determine exactly what canbe patented) and a review of what kinds of sui generissystems for protecting plant varieties will be consideredWTO compliant. Meanwhile, the U.S. continues toexert heavy pressure to allow all plants and animals tobe patented, giving these life forms over to the con-trol of global corporations. In addition, TRIPS negoti-ations and initiatives will greatly affect the directionand the speed at which the biotech industry develops.

It is not an overstatement to say that the 1999review of the plant variety protections could deter-mine both the future of the world’s food and pharma-ceutical supply, as well as the shape of global agricul-ture. If the U.S. position prevails, countries will beforced to allow transnational corporations to patentvirtually all of their biodiversity, including food crops.Hundreds of millions of farmers will lose control oftheir own seeds and be forced to buy patented seedsfrom corporations for each year’s harvest. In poorcountries, this could force untold numbers of farmersoff their land.

During forthcoming TRIPS reviews, many coun-tries will call for an exclusion of all life forms frompatentability. Groups across the world are demandinga total freeze on TRIPS until it is fully reviewed andamended by WTO members in the TRIPS Council.

Child with AIDS, Wat Phrabatnamphu AIDS hospice, Lopuri,Thailand—The U.S. threatened to challenge Thailand at theWTO because Thai companies began making AIDS-relateddrugs available at a fraction of the cost charged by U.S. drugcompanies. Because of this threat, Thailand, which depends onthe U.S. for 25 percent of its exports, stopped manufacturing itscheaper drugs.

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the chilling effect

M O R E A N D M O R E F R E Q U E N T LY, proposed nationallaws are never put into effect, or are weakened,because another nation threatens a WTO challenge tothe proposed law or its implementation. Developingcountries are especially vulnerable to such threats bymore affluent developed nations, which have moreresources, both legal and monetary, to take a case tothe WTO. The successful effort of the U.S. to com-pel India to comply with WTO rules before its owndeadline has already been described. Large countriesalso attempt to force smaller countries not to use thefew protections they have managed to win for them-selves within WTO rules. This is often called thechilling effect, but it looks a lot like bullying.

g e r b e r v s . g uat e m a l a ’ s i n fa n t h e a lt h l aw

IN ONE WELL-KNOWN CASE, TRIPS was used to thwarta law designed to protect infant health in Guatemala.In accord with recommended World Health Organization(WHO)/United Nations International Children’sEmergency Fund (UNICEF) guidelines, Guatemala hadbanned claims on packaging that equated infant formulawith healthy, fat babies in order to encourage mothersto breast feed infants. Gerber Products Company (babyfood) induced the U.S. State Department to threatena WTO challenge of this regulation, arguing thatGerber had an intellectual property right under theWTO TRIPS agreement. Under threat of challenge,Guatemala revised its law and now allows labelingthat actually violates the WHO/UNICEF guidelines.

a i d s d r u g s d e n i e d t o h i v - i n f e c t e di n t h a i l a n d a n d s o u t h a f r i c a

I N A N O T H E R C A S E, the U.S. pharmaceutical industryis attempting to stop South Africa and Thailand fromdeveloping their own versions of AIDS drugs that canbe sold at a fraction of the usual price. TRIPS guaran-tees a 20-year patent for drugs. However, over objec-tions from developed nations, Article 31 was insertedinto TRIPS to provide a way for countries to overridethe patent through a “compulsory license” clausewhich allows a government to grant local companiesa license to produce a drug in cases of health emer-gencies. (The clause also states that the patent holdermust be given “adequate remuneration.”)

South Africa and Thailand, both areas hard hit bythe AIDS virus, have used this clause to begin to manu-facture AIDS-related drugs. For example, U.S.-basedPfizer used to charge $14 for a daily dose of fluconazole,an antibiotic that can fight off a fatal form of meningitiscontracted by one in five AIDS sufferers in Thailand.Recently, three Thai companies began making the drugat a cost of just over $1 per daily dose. Likewise, themonthly cost of the AIDS drug zidovudine has comedown from a prohibitive $324 in 1992 to $85 in 1995.

The U.S. threatened Thailand with trade sanctionsunder the WTO. Twenty-five percent of Thai exportsgo to the U.S. The Thai government has now bannedcompulsory licensing even though it has a genuinehealth emergency and the right to compulsory licens-ing under Article 31.

In 1997, the South African government proposednew legislation to allow compulsory licensing. TheU.S. government is now arguing with South Africa todiscourage such a move from becoming law.

U.S. pharmaceutical companies claim that thedrugs are so expensive because they have spent enor-mous sums of money on research and development.They neglect to mention that some of the mostimportant AIDS drugs were discovered by researchersin the U.S. National Institutes of Health and byresearchers in other facilities whose budgets are sup-plemented with government grants. Their discoverieswere then handed over to corporations that producethe drugs and reap the profits.

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Arguing that Gerber had an intellectual property right under theWTO TRIPS agreement, the U.S. threatened to challenge aGuatemalan law that banned packaging equating infant formulawith healthy, fat babies in order to encourage mothers to breastfeed infants. Under such a threat, the Gerber label prevailed.

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Deregulation of banking and financial markets, aided by WTO rules, enable instantaneous worldwide money transfers. With thesplit-second click of a button, incomprehensibly large amounts of money shift from country to country and can create massive eco-nomic breakdowns resulting in human hardship for millions and ecological disaster around the world.

A L L T O O O F T E N, activists, policy makers, and themedia leave investment issues to the investors, findingthe subject too boring or too complicated to pursue.This is a mistake. Finance and investment rules ultimatelyaffect almost every facet of life. While few are payingattention, the WTO is steadily expanding its reach. Itis critically important to understand and control eco-nomic rights in order to maintain important environ-mental, social, democratic, and cultural rights.

Historically, nations have regulated foreign invest-ment in order to benefit the economic and socialdevelopment of their own countries. Governmentsoften want foreign investors to satisfy certain conditions,or performance requirements. These requirements mightinclude hiring a certain percentage of local employ-ees, or minorities, or women; purchasing inputs formanufacturing from domestic producers; or balancing

exports and imports. Other types of performancerequirements might require foreign investors to deposita percentage of their investments in domestic banks,restrict the percentage of profits that can be “repatriated”to a corporation’s home country, place host countrycitizens on boards of directors, or transfer technologyin exchange for the privilege of being allowed to investin the host country. GATT’s Trade Related InvestmentMeasures (TRIMS) changes all that. It provides theframework to restrict or eliminate nations’ rights todetermine domestic finance and investment policy,including settings performance requirements.

agreement on trade relatedinvestment measures ⁽trims⁾T H E C U R R E N T T R I M S A G R E E M E N T covers conditionson trade-related investments in goods (e.g., clothing,

finance and investment

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apples, iron ore, etc.). In otherwords, if a government wishesto regulate the import of rawmaterials or the export of goods,TRIMS has rules that restrict acountry’s abilities to control theconditions of such investments.

For example, TRIMScurrently restricts a country’sability to impose local content standards. A host countrycan no longer require a foreign corporation to uselocal materials or labor. If an auto manufacturer wantsto produce cars in a foreign country, that country canno longer require the corporation to use a certainpercentage of local content whether it be steel, anauto part, etc.

At this time, TRIMS does not cover non-trade-relatedinvestments. A law that restricts repatriation of profitsis considered to be a non-trade-related investment rule,as are many of the other performance requirementsdescribed above. TRIMS also does not include invest-ment in services. Services, under TRIMS, generally meansservices such as banking and insurance. Other WTOagreements, such as the General Agreement on Tradeand Services (GATS), do cover “services,” and indus-trial nations are pushing to extend services to includeeducation, healthcare, and municipal water or wastedisposal systems, which would open up these sectorsto foreign investment.

Although TRIMS does not explicitly eliminate allperformance requirements or stop governments fromdetermining who can provide public services, it hasalready seriously affected the ability of countries tocontrol finance and investments within their borders.For example, prior to the TRIMS negotiations, theCanadian government eliminated its Foreign InvestmentReview Act, which set requirements and other invest-ment criteria for foreign corporations doing businessin Canada. The Canadian government did this toensure that it would not be in a compromised positionduring the talks. This is only one of several instancesin which TRIMS has “chilled” domestic finance andinvestment regulations.

Not surprisingly, the WTO is quickly moving toenlarge its domain to include both non-trade-related

investment measures andinvestment in services. Afterthe defeat of the MultilateralAgreement on Investment(MAI) at the Organization forEconomic Cooperation andDevelopment (OECD) inspring 1998 (discussed below),several industrial countries

stepped up their efforts to include many aspects of thedefeated MAI within TRIMS and other WTO agree-ments such as GATS. Given its existing policies, theWTO’s desire to expand its control over the invest-ment rules of individual countries does not bode wellfor those concerned with the environment, humanrights, labor rights, consumer rights, public health,and other areas. A truly worrying example of how theWTO’s investment regulations can limit citizens’ rightscan be found in a case brought before the WTOinvolving Burma that could decide whether a membernation still has the right to use economic sanctions toprotest human rights violations (see next page).

a brief history of finance and investment rules

A S FA R B A C K A S 1955, GATT member countriesadopted the International Investment for EconomicDevelopment resolution that began to weaken anindividual country’s control over the activities of for-eign corporations that invested within its borders.This resolution urged greater protection and securityfor foreign investment through the negotiation ofbilateral investment agreements. These agreementsencroached upon some countries’ abilities to controltheir own economic development because larger pow-ers were able to get concessions from small countriesas a condition of investing. However, the scope ofthese agreements was limited by their bilateral nature.

In the 1980s, the International Chamber ofCommerce (ICC), many of whose members are GlobalFortune 500 transnational corporations, began todemand a new set of investment rules under GATT.These new rules were designed to free the movementof foreign capital and investment around the world,unfettered by government regulation. The ICC madetwo arguments with far-ranging implications: (1) that

It is critically important to understand

and control economic rights in order to

maintain important environmental,

social, democratic, and cultural rights.

governments should not have the right to regulateforeign investment through performance requirements,and (2) that foreign-based corporations had a right toreceive security for their investments from the coun-tries in which they invested.

Soon, the U.S., Japan, and several European gov-ernments proposed provisions intended to limit thepower of governments to set performance requirementsand other investment regulations. These provisionswere known as the Multilateral Investment Agreement(MIA). Many developing countries steadfastly opposedthis proposal. They were concerned that such provi-sions would inhibit them from determining and meet-ing the economic development priorities of their ownpeople and would instead allow foreign corporations,de facto, to dictate economic policy. Worse, some pro-posed provisions actually gave certain investment

rights only to foreign corporations, putting domesticbusinesses at a distinct disadvantage.

Although many developing nations stronglyobjected to several of the investment measures theindustrial countries wanted to include, the currentTRIMS agreement was finally adopted by membernations. As a result of the dissension, a two-trackapproach emerged from the Uruguay Round of GATT:(1) the adoption of Trade Related Investment Measures(TRIMS); and (2) a WTO working committee wasformed to “explore,” and keep alive, the developmentof the MIA that covers non-trade-related investmentmeasures and services.

wto challenge

The Burma Case: Human Rights Affected by Finance and Investment Challenge by the European Community (EC) and Japan against the U.S. [Case WT/DS88/1]I N 1996 T H E S TAT E of Massachusetts enacted aselective purchasing law that bars companies that dobusiness with Burma (Myanmar) from bidding forlarge public contracts in Massachusetts. The ECargued that, under WTO rules, including TRIMS, theMassachusetts restriction is unfair “to the trade andinvestment community,” and that it breaches currentWTO rules on government procurement.

Massachusetts questions whether doing businesswith a brutal military regime is fair and has cited U.S.Department of State reports that “...soldiers havecommitted serious human rights abuses, includingextra judicial killing and rape.” International tradeunions recently accused the EC of “crimes againsthumanity” by trying to force Massachusetts to end its boycott.

Similar economic sanctions were used in the anti-apartheid movement in the U.S. in the 1980s andhave been credited for hastening the transition todemocracy in South Africa. Should the Massachusettslaw be struck down, the efforts of any social justicemovement advocating government sanctions againstcriminal regimes will be severely hampered. The mereexistence of this WTO challenge has alreadysquelched other efforts to use economic sanctions touphold human rights. Hoping to avoid trouble in the

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An anti-apartheid protest in September 1989, Cape Town,South Africa—In 1997, Japan and the European Communitychallenged a Massachusetts law that banned companies doingbusiness in Burma (Myanmar) from bidding on large publiccontracts. If similar economic sanctions were disallowed duringthe South African apartheid regime, Nelson Mandela might stillbe in jail.

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WTO, in 1998 the U.S.Administration actively lob-bied the Maryland state legis-lature to stop the adoption ofa selective purchasing lawagainst Nigeria. The proposalsubsequently lost by one vote.

Two U.S. federal courtsrecently ruled that theMassachusetts’ law was anunconstitutional intrusion onthe federal government’s for-eign-policy powers and citedthe WTO complaint filed bythe EC and Japan. The U.S. cases were filed by theNational Foreign Trade Council (NFTC), which repre-sents 580 companies, including many of the biggestU.S. multinationals. Papers filed in federal courts by theNFTC suggested that 346 companies were affected,including Apple computer. The case in now headedfor the U.S. Supreme Court.

The federal court rulings, together with theAdministration’s lobbying effort in Maryland, serious-ly call into question the U.S. government’s willing-ness to act on its legal obligation to vigorouslydefend the Massachusetts law against the EC-Japanchallenge, which is currently suspended pending theoutcome of the domestic case.

“If the actions of Massachusetts, which put thehuman rights of the Burmese people above the inter-ests of a few multinational companies, do not complywith WTO rules, then the WTO rules need changing,not the actions of Massachusetts,” said Bill Jordan,general secretary of the International Confederationof Free Trade Unions.

looking ahead

E L E M E N T S C O N TA I N E D in previous MAI and MIAproposals are expected to re-emerge in future WTOnegotiations. While the developing countries will beopposing further liberalization of investment rules,the larger, richer nations would like to extend meas-ures that protect transnational corporations investingaround the globe.

t h e r e - e m e r g e n c e o f t h e m u lt i l at e r a la g r e e m e n t o ni n v e s t m e n t ⁽ m a i ⁾A S A L R E A D Y N O T E D, when it became clear during theUruguay Round that MIArules would not be part of the TRIMS agreement, theEuropean Union, backed byJapan and Canada, formed aWTO working committee onthe MIA. In the meantime,believing that oppositionfrom developing countries in

the WTO would result in a weak, compromise agree-ment, the U.S. led an initiative for a MAI at the OECD.The U.S. hoped that ratification at the OECD wouldmake it easier to negotiate a stronger agreement inthe WTO a few years later. Thanks to the efforts ofhundreds of NGOs throughout the world, the MAIwas eventually defeated at the OECD. However, sev-eral industrial countries are still pushing for the WTOto adopt MAI-like measures.

The newly developing MIA/MAI-type of agree-ment (whatever it will finally be called) would mostlikely be initiated at the proposed Millennium Round.Such an agreement would extend the WTO’s purviewto include non-trade-related investment measures aswell as investment in services. In other words, govern-ments would no longer have the right or power toregulate the entry, behavior, and operations of foreign-based corporations in their own economies.

Given the terrible hardships that millions of people in many developing countries experience as a result of the 1997-1998 financial crises, the Southremains opposed to further liberalized investmentrules. However, northern governments, especiallyJapan and the European Union, continue to advocatefor stronger, more expansive investment provisions.The U.S. supports this and will also launch newinvestment treaty negotiations at the OECD andother global institutions.

Industrial countries are pushing for the followingmeasures to be within the WTO.

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A truly worrying example of how

WTO’s investment regulations can

limit citizens’ rights can be found in a

case brought before the WTO involv-

ing Burma that could decide whether a

member nation still has the right to use

economic sanctions to protest human

rights violations.

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◆ Investor-State Mechanism.This mechanism gives foreign-based corporations the right tosue the governments of theirhost countries directly. Thisright has already been putinto practice under NAFTAwhen U.S.-based EthylCorporation sued Canadabecause of its ban of a knownneurotoxin gasoline additive,MMT. Ethyl argued that theban was an “unfair taking”;Canadian government attor-neys believed that Canadawould lose under NAFTA law and advised settlement.Canada awarded the corporation $13 million in dam-ages and repealed its ban on MMT. This measure is adirect assault on the sovereignty of nations and removetheir abilities to control local economies. (Please seeInvestor-State Cases on next page.)

◆ Elimination of Performance Requirements.Governments would no longer have the right toimpose performance standards or requirements oncorporations doing business on their soil (e.g., localhiring quotas, labeling of products, natural resourceexport quotas, etc.).

◆ Investment Protection for Corporations. Foreign-based corporations would have “full and constant pro-tection and security,” particularly “protection fromstrife.” Governments would be expected to protectforeign investors from their own citizens in case ofpublic protests, and to compensate corporations fordamages.

◆ Subsidies Code. A subsidies code is likely to restrictgovernments from granting subsidies to domesticbusiness enterprises or to require that such subsidiesbe equally available to foreign-based corporationsoperating within their countries.

◆ Public Enterprises Limits. When a government ownsa hydro-electric plant and provides lower electricityrates to domestic industries in order to stimulate localbusiness, this is known as cross-subsidization. Cross-subsi-dization to help local businesses would be prohibited.

◆ Unregulated FinancialTransfers. Governments wouldbe prevented from attemptingto regulate the flow of capitalin and out of their countries,by “speed bump” measures, e.g.,local bank deposit requirementsintended to control fly-by-night portfolio stock invest-ments and to protect countriesfrom currency flight or specu-lation, which can, as demon-strated during the 1997-98financial crises, devastatesmaller countries .

◆ Broader Expropriation Rules. The definition of“expropriation” would expand beyond the takings ofphysical assets such as buildings, equipment, land,etc. to encompass public policies (such as publichealth laws) and programs, including taxation, as thebasis for claiming compensation. Expropriation wouldeven include allowing corporations to claim damagesdue to lost profits from a planned but unrealizedinvestment. (See Investor-State Cases, Ethyl/MMT.)

◆ Rollback Measures. Signatory governments wouldagree to alter or eliminate any laws, policies, or pro-grams that do not conform with the new investmentrules; this includes a “standstill” clause that preventsthe adoption of any new non-conforming laws.

◆ Constrain All Levels of Government. All of the newinvestment rules would directly apply not only to thenational governments which are signatories to thedeal, but also to state, provincial, county, and munici-pal governments, which have taken no part in thenegotiations.

◆ Lock-in Provisions. Signatory governments wouldbe locked into the new investment rules for at least a20-year period, with no provisions for withdrawal orabrogation without severe penalties regardless ofdrastic changes in local or international economicconditions.

Some nations, led by the U.S., are now

proposing that another WTO agree-

ment, the GATS, should specifically

offer foreign corporations further rights

and access to domestic water and water

systems, including the commercial

operation of municipal drinking water

systems.

investor-state cases

O N E O F T H E M O S T C O N T R O V E R S I A L MAI-like provi-sions in TRIMS is the investor-state mechanism whichallows foreign based corporations to sue national gov-ernments directly for alleged violations of investmentrules. The original formulation of this investor-statemechanism is found in chapter 11 of NAFTA.Amazingly, this rule allows corporations to claim“expropriation” due to lost profits from a planned butunrealized investment. The following are some recentexamples of NAFTA challenges whereby foreign-based corporations have sued national governments.Such actions will become more frequent if similarinvestment rules are incorporated in the WTO.

In 1998, the Ethyl Corporation, a U.S.-basedchemical company, sued the Canadian governmentfor $250 million (under chapter 11 of NAFTA) forplacing a ban on the sale of its product, a manganesegas additive, MMT. MMT is known to be a neurotox-in that can cause brain damage. Part of Ethyl’s suitclaimed “lost profits.” Advised that it might lose thecase and thereby set a precedent, the Canadian gov-ernment settled with Ethyl Corporation, paying Ethyl$13 million as compensation for damages and with-drawing its ban on MMT. The additive is banned inEurope and California for the same environmentaland health reasons as it was in Canada.

In 1997, the Metalclad Corporation, a U.S.-basedwaste disposal company, sued the Mexican state ofSan Luis Potosi for $90 million in lost profit (underNAFTA) because it prohibited the company fromre-opening a plant which had been declared to be anenvironmental hazard in the region. While the Metal-clad case is still pending before NAFTA, it should benoted that the $90 million being sought by the com-pany is more than the combined annual income ofevery family in the county where the company’s plantis located.

S.D. Myers, a U.S.-based waste disposal company,is suing the Canadian government under the NAFTAinvestment rules for lost profits incurred because Canadabanned the cross-border export of PCB wastes for ayear and a half. S.D. Myers is claiming $15 million inlost profits. The case is still pending.

In the fall of 1998, the Sunbelt Water Company,which is based in Alaska, launched a suit against theCanadian government for $400 million under theNAFTA investment rules because British Columbiaenacted a moratorium on the export of fresh water.According to Sunbelt, the investment rules in NAFTAallow the corporation to be a major “stakeholder inthe national water policy of Canada.”

In September 1999, Loewen Group, a largeCanadian funeral corporation, filed a NAFTA lawsuitagainst the U.S. government, seeking $750 million indamages because of what it claimed was unfair treat-ment by a local jury in a Mississippi state court. Inthat case, Loewen had been convicted of fraudulentlytrying to corner the regional funeral market and wasfined $500 million—but instead of appealing the casethrough the U.S. legal system, Loewen made an endrun to NAFTA and subsequently settled out of court.

The Vancouver-based Methanex Corporation fileda $970 million NAFTA lawsuit in June 1999 againstCalifornia’s plan to ban MTBE, the gasoline additivethat is blamed for polluting the state’s groundwater.MTBE, a suspected carcinogen, has contaminated thedrinking water supplies of at least 300 California cities.

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Walker Lake, Canada—Under NAFTA investment rules, a U.S.-based corporation is suing the Canadian province of BritishColumbia for recently placing a moratorium on the export offresh water. The company claims that NAFTA allows it to bea major “stakeholder in the national water policy of Canada.”The U.S., Europe, and Japan would like similar investmentrules to be included within the WTO.

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I N I T S F I V E S H O RT Y E A R S of existence, the WTO hasgained unprecedented powers, powers that threaten thebasic freedoms of democratic societies and the rightsof communities to control their environments, health,cultural, and social conditions. Because it controls anddefines the global rules of commerce, the WTO hasproduced shocking and unexpected political outcomes.It has also impacted many of the internal politicalprocesses of member nations at every level of govern-ment from the national level down to provinces, states,counties, and municipalities. All must now conformtheir political choices to the rulings of WTO tribunals.

The WTO intrudes into the affairs of nationalgovernments for the clear purpose of transferringmany real powers of governance away from the con-trol of countries and their citizens to global corpora-

tions and the bureaucracies that serve them. The ulti-mate goal is to permanently codify trade issues andcorporate profits making them the primary standardsof a new form of global governance. As the formerDirector-General of the WTO, Renato Ruggiero, hassaid, the WTO is forming “the new constitution forthe next millennium.”

As we have seen, the WTO has steadily expand-ed its purview well beyond that of its predecessor, the GATT. It has brought under its power many newaspects of agriculture and investment, as well as intel-lectual property rights, thus giving global corpora-tions greater control of seeds, food, farming, and bio-diversity. Now, global corporations are pushing hardto expand the WTO mandate even further via theproposed new Millennium Round of negotiations.

conclusion: no new round, turn around

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Citizen movements around the globe are rising up to protest recent international institutions and agreements, such as the WTO (or,as in this photo, the World Bank), that are rapidly implementing policies that place economic values higher than social, democratic,and environmental values.

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In addition to the important and frightening powergrabs in food and public health standards, telecom-munications, forestry, and other areas that havealready been discussed, new drives are being made toextend WTO oversight in the areas of competition (fur-ther favoring large global corporations over smaller,local businesses); government procurement (to open up for-merly sacred areas such as education, healthcare, andpublic broadcasting to foreign corporations); andmore control of investment (including the re-emergenceof MAI/MIA agreements).

These and many other moves to expand the pow-ers of the WTO come at a moment when, around theworld, governments and their citizens are reelingfrom the results of the Uruguay Round of negotia-tions. Southern countries are particularly concernedbecause they are just beginning to deal with the waysthat the formation of the WTO has led to the loss oflivelihood for millions of small farmers and businesspeople, the harmful transformation of traditional waysof life, the destruction of native biodiversity, and thepervasive damage to local economic systems thathave been invaded by dominant corporate and finan-cial enterprises. They strongly argue that this is thewrong time to burst into yet another round in whichthe largest and wealthiest countries, with their hugeentourages of industry-funded lobbyists, plan to bringa vast number of changes to the table.

Meanwhile, informed and concerned activists inthe North, and some governments too, are similarlywary of an expanded and more powerful WTO, hav-ing already observed the radical way that environ-mental, public health, food safety, and labor standardshave been ratcheted downward while the dramaticgaps between the richest and poorest segments ofsociety have expanded. More than 1,200 organiza-tions around the world have signed a statementdemanding “no new round” of negotiations, callinginstead for an assessment round to review the effectsthat WTO policies have had to date.

what next?

S H O U L D T H E W T O B E S C R A P P E D? Replaced by somenew institution? Is it salvageable at all? These questionsare being vigorously discussed outside the circle of

WTO ministers by thousands of NGOs all over theworld, all of whom find the WTO seriously flawed.

At one end of the spectrum, some still argue forreforming the WTO by including, for example, laborand environmental standards and making its proceed-ings more transparent and democratic. Another groupwants to reframe the WTO agenda to help close theeconomic and power gaps between North and South.They believe that the strong economy of the North isbuilt upon the colonialist policies of the past, and thatWTO rules controlling the exploitation of resourcesare merely extensions of old policies that favor theNorth. Still others say that the main points now areto prevent further expansion of the WTO into newterrain and to remove certain areas from its controlsuch as agriculture, intellectual property rights, water,and all elements of the commons, including thegenetic structures of life.

Then there is a large, ever growing group that feelsthe WTO, like the International Monetary Fund andthe World Bank, cannot be reformed; that it is inher-ently destructive to the environment, democratic socialprocesses, and equity. Far better, this line of thinkingholds, would be to advocate for economic systems thatmove real powers and control away from the globalcenter and back to local institutions where there is agreater chance for democratic representation andenvironmental, social, and cultural sustainability.

Advocates of globalization continue to argue thatthere is no viable alternative, and that it is Utopian to oppose this inevitable process. But what is trulyUtopian is to say that a development model thatdefies nature’s limits, marginalizes millions of people,and destroys economic and social equity can possiblysurvive for very long.

I N A N Y C A S E, we believe that whether they favorreform or dissolution, most of the groups currentlyseeking change agree on approximately the followinglist of reform conditions for the WTO:

O N E Complete transparency in and public accounta-bility for WTO decision making.

T W O Full participation by NGOs in the dispute res-olution process, including NGO representation on

Bello, Walden. “Rethinking Asia.”Eastern Economic Review, June 24, 1999.

Borotsik, Rick. “Canada Should TakeWTO Dairy Ruling Seriously As WeApproach Trade Talks.” Press Release,Ottawa, March 18, 1998.

Brasher, Philip. “Food taking biggerbite out of the bank: Grocery costscontinue to rise despite slumping cropprices.” Agweek, July 19, 1999.

Brown, Kevin, Sathnam Sanghera, andDavid Owen. “European exporters con-fused by war of words.” Financial Times,April 8, 1999.

Bueckert, Dennis. “Research LinksBreast Cancer, Beef Hormones.” TheHalifax Herald Limited, July 31, 1999.

Chossudovsky, Michel. “The causes ofglobal famine.” Third World Resurgence,No 64.

Christison, Bill. “Family Farms and U.S.Trade Policy.” In Motion Magazine,Http://www.inmotionmagazine.com,August 22, 1999. Speech presented tothe Confederation of Paisans, Brussels,March, 1998.

Cohen, M, and M. Hiebert. “Wherethere’s smoke.” Far Eastern EconomicReview, February 10, 1997.

resources

WTO judicial panels and the right to appeal decisions.

T H R E E One country, one vote in all WTO processesand decisions to replace the current consensus systemthat is dominated by the coercive methods of a fewpowerful countries.

FOUR Remove elements of the commons such as water,seeds, genes, etc., from the purview of the WTO.

F I V E No expansion of WTO powers or areas ofauthority.

S I X No Millennium Round.

SEVEN Begin an Assessment Round with full democrat-ic participation by all segments of society to make acomplete assessment of the effects of the WTO to date.

E I G H T Convene a new Bretton Woods meeting—aninternational convention with all segments of societyat the table—to work out ways to reform the WTOso that it reflects a radically different hierarchy of val-ues that places democracy, social equity, ecologicalsustainability, cultural and biological diversity, andnational and regional economic and food securityabove the welfare of global corporations.

Such changes would create a truly viable consti-tution for the next millennium.

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Mother with a child outside a dispensary near Marrakesh—As rural settlements are being abandoned and neglected, manycities are unable to provide adequate housing, food, sanitation,work and other essential services for all the people. WTO policiestend to favor industrial society instead of rural communities.

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Das, Bhagirath Lal. “Proposed specificchanges needed in WTO AgriculturalAgreement.” Third World Resurgence, No100/101.

_____. The World Trade Organization: AGuide to the Framework for InternationalTrade. Penang: Third World Network,1999.

de Jonquiéres, Guy, and Gerard Baker.“US begins sanctions as EU banana dis-pute deepens.” Financial Times, March 4,1999.

Dunne, Nancy. “Outcome seen asopportunity for reform.” Financial Times,April 8, 1999.

“EU Accused of Condoning ‘Pariah’Burma with WTO Action.” AgenceFrance Presse International, September 21,1998.

European Commission. Draft Submissionto the 113 Committee, New Round Preparation,Public Procurement. Brussels: EuropeanCommission, January 15, 1999.

_____. WTO New Round: Trade andInvestment. Brussels: EuropeanCommission, December 15, 1998.

Fairclough, Gordon, and DarrenMcDermott. “Fruit of Labor: TheBanana Business is Rotten, So Why DoPeople Fight Over It?” The Wall StreetJournal, August 9, 1999.

Fugazzotto, Peter, and Todd Steiner.“Slain by Trade: The Attack of theWorld Trade Organization on SeaTurtles and the US Endangered SpeciesAct.” Sea Turtle Restoration Project, EarthIsland Institute July 1998.

Gardner, Gary, and Payal Sampat.“Forging s Sustainable MaterialsEconomy.” In State of the World 1999, AWorldwatch Institute Report onProgress Toward a Sustainable Society.New York: W.W. Norton & Company,Inc., 1999.

Inter-American Development Bank.Http://www.iadb.org.

International Center for TechnologyAssessment. “Exceptions to PatentingUnder Trips.” International Center forTechnology Assessment, 1999.Photocopy.

Iskandar, Samer. “US-Europe bananadispute nears end.” Financial Times, April8, 1999.

Kerwin, Anne Marie. “U.S. magazines’trade war with Canada heats up.”Advertising Age, October 26, 1998.

Kilman, Scott. “Bugs May Resist NewCrops Faster Than Expected.” The WallStreet Journal, August 5, 1999.

Kinsman, John. Testimony at USTRHearing on World Trade OrganizationNegotiations, June 8, 1999.

Lappé, Frances Moore, Joseph Collins,and Peter Rosset. World Hunger: TwelveMyths. New York: Grove Press, 1998.

Mander, Jerry, and Edward Goldsmith,eds. The Case Against the Global Economy:and for a Turn Toward the Local. SanFrancisco: Sierra Club Books, 1996.

Martin, Glen. “Gene-Spliced CornImperils Butterfly.” San FranciscoChronicle, May 20, 1999.

National Foreign Trade Council v.Charles D. Barker. United StatesDistrict Court. District ofMassachusetts. Civil Action No. 98-CV-10757-JLT, July, 27 1998.

Peng, Khor Kok. “The GlobalEnvironment Crisis: A Third WorldPerspective.” The ConsumersAssociation of Penang, Malaysia, 1992.

Rural Advancement FoundationInternational. “The Life Industry 1997:The Global Enterprises that DominateCommercial Agriculture, Food andHealth.” Rafi Communique, Nov./Dec.1997.

Sanger, David E. “World Trade GroupOrders U.S. to Alter Clean Air Act.”New York Times, January 18, 1996.

Scoffield, Heather. “WTO hits Canadaon dairy export pricing.” The Globe andMail, March 18, 1999.

Shiva, Vandana. Mustard or Soya? TheFuture of India’s Edible Oil Culture. NewDelhi: Navdanya, 1998.

_____. Globalization of Agriculture and theGrowth of Food Insecurity. New Delhi:Research Foundation for Science,Technology and Natural ResourcePolicy, 1996.

_____. Biopiracy: the Plunder of Nature andKnowledge. Boston: South End Press,1997.

Shrybman, Steven. The World TradeOrganization: A Citizen’s Guide. Ottawa:The Canadian Centre for PolicyAlternatives, Toronto: James Lorimer &Company Ltd., 1999.

Suzman, Mark, and Michael Smith.“US to apply sanctions over EU meatban.” Financial Times, July 13, 1999.

Third World Network “Social &Environmental Impact of Mining in theThird World.” Third World Resurgence,No. 93.

Third World Network. New WTO roundwith new issues will marginalize the South.Third World Economics: Trends andAnalysis, No. 200, 1999.

United Nations DevelopmentProgramme. Human Development Report1999. New York: Oxford UniversityPress, 1999.

Wallach, Lori. “U.S. Preparations forthe World Trade Organization’s 1999Ministerial Meeting.” Testimony sub-mitted to U.S. Trade Department.Washington, D.C.: Public Citizen,May 14, 1999.

Wilson, E.O. The Diversity of Life. NewYork: W.W. Norton & Company, Inc.,1992.

World Trade Organization. Http://www.wto.org, Geneva, Switzerland.

“World Trade Threatens Massachusetts.”Earth Island Journal, Vol. 12, Issue 4,1997.

“WTO Drawn Into a Row over Anti-Burma Law.” Financial Times, September10, 1998.

Yoon, Rol Kaesuk. “Altered Corn MayImperil Butterfly.” New York Times, May20, 1999.

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resources

INVISIBLE GOVERNMENTThe World Trade Organization—Global Government

for the New Millennium. [A Primer] Authors: Debi Barker and Jerry ManderThis primer is a basic briefing on the powers, structure, rules, pow-ers, and values of the World Trade Organization (WTO), and theagreements it encompasses. It includes a brief description of economicglobalization—the engine driving the creation of global agreementsand institutions such as the WTO. Also included is a history ofpost-Bretton Woods free trade institutions, leading up to the WTO,as well as thorough explanations of WTO agreements and proce-dures. Analyses of the WTO regime and case studies are includedconcerning major recent decisions on: environment, agriculture, intel-lectual property rights, culture and investment. 50 pages.

TEN THREATS FROM THE WTO ON THE WORLD’S FORESTS

The Globalization of Industrial ForestryAuthor: Victor Menotti, Chair of the IFG Environment

CommitteeThis is a comprehensive look at the way WTO rules are accelerat-ing the destruction of the planet’s last pristine forests. Included areanalyses of the giant timber corporations’ role in the creation of theWTO rules, and how they will benefit from them. Considerable dis-cussion on the new proposed “Free Trade in Wood Products” provi-sions. 50 pages.

VIEWS FROM THE SOUTHThe Effects of Globalization and the WTO

on Third World Countries. Authors: Martin Khor, Vandana Shiva, Walden Bello,

Oronto Douglas, Sara Larrain, Anuradha Mittal. Forward by Jerry Mander. Editor: Sarah Anderson.A rare chance for a comprehensive perspective on the WTO fromsome of the leading voices from the South. Martin Khor(Malaysia), Vandana Shiva (India), Walden Bello (Thailand),Oronto Douglas (Nigeria) and Sara Larrain (Chile), as well asAnuradha Mittal (India and the U.S.) debunk the idea that globalinstruments have been designed to benefit the interests of the ThirdWorld or the poor. In fact, exactly the opposite is the case as theSouth bears extra burdens from the rules of trade. 100 pages.

BY WHAT AUTHORITY? Unmasking and Challenging the Legitimacy of Global

Global Corporations in their Assault on Democracy through the World Trade Organization.

Author: Tony Clarke, Chair of the IFG Committee on Corporations.

This pamphlet looks at the specific corporations that are designingthe new rules of trade, specifically, WTO rules. A sector by sector

analysis (food, public health, fresh water, public education publicbroadcasting, forestry, etc.) reveals exactly which corporations arebenefiting from some specific WTO policies. 15 pages.

THE MULTIPLE IMPACTS OF ECONOMICGLOBALIZATION ON THE ENVIRONMENT

(A Special Report of the IFG Environment Committee). General Editor: Simon Retallack This is the first full-scale study identifying the hundreds of waysthat economic globalization has intrinsic negative effects on the environment. The study examines impacts on forests, agriculturalsystems, water, global climate, ozone depletion, public health, miner-al resources, and other areas. The report concludes that most of theseeffects are unavoidable in an export-oriented free trade system thatplaces development above environmental protection. 150 pages.$12.00

BLUE GOLD The Global Water Crisis and the Commodification of

the World’s Water Supply. Author: Maude Barlow, Chair, IFG Committee on the

Globalization of Water.The “wars of the next century will be about water,” according to onefigure from the World Bank, and this is the first major study andreport to explain why this will be. The report discusses howNAFTA, GATT and the WTO have instituted rules that haveresulted in a major global water crisis. Emerging policies from manygovernments and global agreements and institutions will likely makethe problems worse. As this report discusses, the privatization of theworld’s fresh water and its subsequent shipment around the world incommercial tankers to service high tech industry and industrial agri-culture have very grave social and environmental consequences.

AFTER THE WTO Turning Away from Failure—A Special Report on

New Rules for a Citizens’ Millennial Agenda. Editor: John Cavanagh, Chair, IFG Committee on

Global Finance.This publication is an analysis of the systemic aspects of the currentmodel of economic globalization as implemented by the WTO andother international trade agreements and institutions. Until now, therules of global (and even domestic) commerce have been set bytransnational corporations and the global trade bureaucracies thatserve their purposes. This special report discusses potential alterna-tives to current policies based on principles of de-centralization andlocalization that put human beings, equity, democracy, publichealth, and the environment ahead of profits of global corporations.What should be retained of current institutions? Who should be atthe table? How will citizens control the agenda now controlled bycorporations? How will change be achieved? 45 pages.

new publications

the International Forum on Globalization presents

Economic Globalization and the

Role of the World Trade Organization

Teach-Inbenaroya hall 3 rd avenue & universit y street seat tle, washington

he international forum on globalization presents a teach-in on the social, polit-ical, cultural and environmental effects

of economic globalization, and the worldtrade organization (wto). For the first time,the United States is hosting the bi-annualMinisterial meeting of one of the world’s mostpowerful, secretive, undemocratic and dangerousbodies: The World Trade Organization. As theprincipal rule-making bureaucracy of corporate-driven economic globalization, the WTO isquickly emerging as a bonafide global govern-ment for the “free trade” era.

The WTO’s primary mandate is to diminishthe regulatory powers of nation-states and localcommunities—particularly our rights to makelaws about public health, food safety, environ-ment, labor, culture, democracy and sovereign-ty—while increasing the powers and freedoms ofglobal corporations to act without any controls.The WTO’s decisions affect everyone and everyarea of daily life. Please join us in Seattle on theweekend of November 26 and 27, at BenaroyaHall, just three days prior to the WTO Ministerial.

The sponsor of this event, the InternationalForum on Globalization, is an alliance of morethan sixty economists, activists, scholars and non-profit organizations from more than twenty coun-tries. We have joined together specifically to pres-ent information to the public about the full conse-quences of economic globalization and its drivinginstitutions. Prior large teach-ins have been heldin New York City; Washington, D.C.; Berkeley,California; Toronto, Canada; Santiago, Chile;London, England; and Lyon, France.

T

see other sidefor schedule of events ➛

For More Information on this and other related events contact

the IFG at 415-771-8094; or write to 1555 Pacific Avenue

San Francisco CA 94109 web: www.ifg.org email: ifg@ifg.org

Friday Night, November 26, 1999▲ Session One: 7:00 p.m. - 10:00 p.m.

the multiple impacts of economic globalizationOPENING NIGHT. Broad presentations on the big picture:economic globalization’s grave effects on nature, culture,workers, human rights, sovereignty, and democracry. Maude Barlow Council of Canadians, CanadaJohn Cavanagh Institute for Policy Studies, U.S.Susan George Transnational Institute, FranceMartin Khor Third World Network, MalaysiaDavid Korten People-Centered Development Forum, U.S.Jerry Mander International Forum on Globalization, U.S.Vandana Shiva Research Foundation for Science,

Technology and Ecology, IndiaLori Wallach Public Citizen, U.S.

Saturday Day, November 27, 1999▲ Session Two: 8:30 a.m. - 6:30 p.m.

a day-long series of panel discussionsPresenting focused panels on: Biotechnology; GlobalFinance/ Investment; Effects on Forests, Rivers, Oceans;Labor Rights; Corporate Power; Agriculture and FoodSafety; as well as a special panel on an alternative Citizens’Millennium Agenda. A partial list of speakers include:Herman Daly University of Maryland, U.S.Richard Grossman Program on Corporations,

Law and Democracy, U.S.Mae-Wan Ho Institute of Science for Society, U.K.Jeremy Rifkin Foundation on Economic Trends, U.S.Mark Ritchie Institute for Agriculture and Trade Policy, U.S.Anita Roddick The Body Shop,U.K.Hassan Sununu Organization of African Trade

Union Unity, GhanaHassan Yussuff Canadian Labour Congress, Canada

added event: day on agriculture

thursday, december 2, 1999, 9 a.m. - 6 p.m.At United Methodist Church, 811 5th Avenue, SeattleA free all day special event focused on the full impacts ofthe globalization of industrial agriculture from the point ofview of farmers, consumers, food safety, world hunger, pub-lic health, and the environment. Much discussion will con-cern biotechnology and its effects.This event is presented by the International Forum on Foodand Agriculture (a division of IFG); the Institute forAgriculture and Trade Policy; and Public Citizen

Saturday night, November 27, 1999▲ Session Three: 8:00 p.m.- 11:00 p.m.

special event: views from the southA rare opportunity to hear a roundtable discussion featur-ing the most prominent voices of Third World opposition tothe new instruments of re-colonization: globalization, theWTO and transnational corporations. Mainstream mediararely cover these viewpoints, but it has been the South thathas borne the extra burden from corporate-led globalization.Featured speakers: Agnés Bertrand Observatoire de la Globalisation

Economique, FranceBrent Blackwelder Friends of the Earth,U.S.Tony Clarke Polaris Institute,CanadaHerman Daly University of Maryland, U.S.Kevin Danaher Global Exchange, U.S.Patti Goldman Earthjustice Legal Defense Fund, U.S.Yao Graham Third World Network, GhanaRichard Grossman Program on Corporations,

Law and Democracy, U.S.Randall Hayes Rainforest Action Network, U.S.Colin Hines Protect the Local, U.K.Mae-Wan Ho Institute of Science for Society, U.K.Danny Kennedy Project Underground, U.S.Andrew Kimbrell Int’l Center for Technology

Assessment, U.S.Tim Lang Center for Food Policy, U.K.Anuradha Mittal Institute for Food & Development

Policy, U.S. & IndiaPat Roy Mooney Rural Advancement Foundation

International, CanadaDavid Morris Institute for Local Self-Reliance, U.S.Meena Ramen Consumers Association of Penang,

MalaysiaJeremy Rifkin Foundation on Economic Trends, U.S.Mark Ritchie Institute for Agriculture and

Trade Policy, U.S.Anita Roddick The Body Shop,U.K.Peter Rossett Institute for Food and Development

Policy, U.S.Barbara Shailor AFL-CIO, U.S.Steven Shrybman West Coast Environmental Law

Association, CanadaHassan Sunmonu Organization of African Trade Union

Unity, GhanaDavid Suzuki Suzuki Foundation, Vancouver, B.C.Hassan Yussuff Canadian Labour Congress, Canada

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