VOL 26 No. 1
In the 1980s, the same ideological and business interests
behind the Thatcher and Reagan “revolutions” opened a second front in
their campaign to create a world in which the role of government would
be shrunk and the fulfillment of basic human rights and needs would be
left to the mercies of markets and corporations.
Their strategy was to transform the 1947 General Agreement on
Tariffs and Trade (GATT) into a powerful new system of global
governance that would fence in the permissible scope of accountable
democratic governance. This new system of global governance was
envisioned to be an instrument to implement one-size-fits-all, within
scores of countries, the policies that would enable corporate rule to
The GATT was a narrowly-cast 20-page trade pact created after
World War II to set tariff rates and quota levels for trade in goods
between countries. Countries met several times a decade for a “round”
of GATT negotiations during which they agreed to cut tariffs or quotas
further. In the United States and some other nations, these new tariff
and quota terms would then be brought to legislative bodies for
approval. However, because the narrowly construed GATT and the notion
of free trade generally enjoyed broad support, these votes in the U.S.
Congress were not controversial.
Press and parliamentarians assumed it was business as usual when
GATT signatories met in Uruguay in the mid-1980s to launch a periodic
round of GATT talks. This lack of scrutiny made these obscure “Uruguay
Round” GATT negotiations an ideal Trojan horse within which an
expansive non-trade policy agenda could be developed and signed, and
that could then be rolled in disguise through legislatures.
The Uruguay Round eventually resulted in the creation of the
World Trade Organization (WTO) in 1995. The WTO totally transformed the
nature and scope of “trade” agreements — replacing a relatively brief
list of objective norms (domestic and foreign goods must be treated the
same, for example) that only applied to trade in goods between
nations. The WTO in contrast sets subjective policy — establishing, for
example, how safe a country may choose to make its food supply through
regulation — and imposed policies on a range of issues reaching far
beyond trade, including patents, investment rules and matters related
to the service sector. Contained within the legislation implementing
the WTO and in the pact’s 900 pages were many Reagan Administration
proposals that already had been specifically rejected by the
then-Democratic Party-controlled U.S. Congress.
During the same period as the GATT Uruguay Round negotiations,
the Reagan administration also proposed negotiating new regional “free
trade agreements.” A U.S.-Canada Free Trade Agreement was launched in
1988 and was replaced by the North American Free Trade Agreement
(NAFTA) in 1994. Like the WTO, NAFTA exploded the boundaries of what
was included in so-called trade agreements. The deals are more
accurately dubbed corporate globalization agreements.
Regulating gov’t, deregulating business
International commercial agreements, like WTO and NAFTA,
include a broad deregulatory agenda, slashing food safety,
environmental and other public interest protections by labeling them
“illegal trade barriers” that must be eliminated.
These pacts also promote commodification of common resources by,
for instance, requiring signatory countries to issue patents on plant
varieties or traditional medicinal plant uses so that the planet’s
natural biodiversity and the common heritage of the planet’s people can
be transformed into tradable units of property for profit.
The WTO and NAFTA rules covering the service sector operate to
transform services like healthcare, education, electricity and other
basic utility essentials into commodities by encouraging broad
privatization and deregulation. The WTO and NAFTA establish a right for
foreign corporations to own, operate or establish an unlimited array
of providers of such critical services, which now are often either
provided by governments or via highly regulated monopolies.
The agreements also create new protections for corporations, for
instance by requiring all signatory nations to establish new
monopoly-style intellectual property rights (patents, copyrights) for a
vast array of knowledge and items — from seeds and plant varieties to
medicines — many of which are otherwise available for unrestricted use.
In exporting the U.S. monopoly patenting system which has contributed
to high drug prices, the WTO and NAFTA’s intellectual property rules
undercut poor countries’ capacity to make essential medicines available
to their populations.
These trade agreements established new rights for foreign
investors to operate, while limiting governments’ authority to set the
terms of such foreign investment to ensure that it benefits residents
of the host country — not just the foreign investor. For instance, the
special privileges granted foreign investors under NAFTA forbid
countries from using capital controls to avoid currency crashes during
economic crises, even though such policy instruments have proven time
and again to be vital for avoiding economic meltdowns. Both NAFTA and
the WTO contain foreign investment protections that forbid governments
from using the policies — such as requiring that manufactured goods
include a percentage of domestic content, or that a percentage of
products be exported — that were essential components of the industrial
policies employed by the fast-growing Asian economies. Indeed, no
country has moved from poverty except by employing the very policies
forbidden by WTO and NAFTA. Thus it is not surprising, if horrifying,
that grinding poverty has worsened in many developing countries that
followed the WTO/International Monetary Fund model most faithfully,
while countries like China, Vietnam and Malaysia that have either
remained outside the WTO or selectively implemented its terms, have
grown dramatically, bringing many to a better standard of living.
In yet another torturous twist, NAFTA and the WTO protect
subsidies given to agribusiness for exporting commodities, while
certain domestic subsidies to support small farms or ensure food
sovereignty are characterized as “illegal trade distortions.”
All of these new corporate rights are enforced by a new,
powerful and binding dispute resolution system unlike anything from any
past trade agreement or included in environmental, human rights or
other treaties. A key WTO provision requires nations to “ensure
conformity of their laws, regulations and administrative procedures” to
the WTO’s terms.
Any national or local policy of a WTO or NAFTA signatory nation
that falls outside WTO or NAFTA’s terms — even if it has nothing to do
with trade per se
— is challengeable as an “illegal trade
barrier” before a WTO or NAFTA tribunal. These panels are comprised of
three trade officials meeting behind closed doors. Nations whose
policies are judged not to conform to WTO or NAFTA rules are ordered to
eliminate them or face permanent trade sanctions.
A corporate bill of rights
While both WTO and NAFTA represent an audacious power grab,
many of the rules of NAFTA are considerably more extreme than the rules
of the WTO.
Because WTO negotiations included scores of countries —
including some progressive European nations and many large developing
countries such as India and Brazil — it was possible to generate a
critical mass of push-back against some of the most extreme proposals
emanating from the Reagan administration.
In contrast, the power imbalance inherent in the U.S.
relationship with Mexico and Canada meant that NAFTA was more of a
dictation than a negotiation, and the first Bush Administration was
able to insert into NAFTA the most complete and extreme version of the
corporate-friendly agenda it favored. NAFTA is considered the gold
standard for mechanisms furthering corporate globalization because it
includes service sector privatization and deregulation, government
procurement deregulation and foreign investor protections that go well
beyond the WTO’s rules on these issues.
For instance, NAFTA requires signatory countries to provide
foreign investors a much more expansive list of new privileges than is
required under WTO rules, including privileges that extend beyond the
property rights guaranteed by the U.S. Constitution. NAFTA gives
foreign investors the right to be compensated for the costs domestic
environmental or health regulations applicable to all businesses might
pose to their expected future profits, for example.
Under NAFTA, foreign corporations and investors are empowered to
privately enforce these new privileges and rights — where the WTO
renders all disputes between governments. NAFTA contains a mechanism
allowing foreign investors to sue signatory governments in private
NAFTA tribunals demanding cash compensation for government policies
that do not satisfy the NAFTA-guaranteed minimum standard of treatment
for foreign companies.
Neither Congress nor the public must be given notice of these
NAFTA investor cases, so it is unclear how many have been filed.
However, more than 40 cases are known to date and several have been
In one case, the government of Mexico paid Metalclad, a U.S.
toxic waste company, $16 million in damages after a NAFTA tribunal
ruled that a Mexican municipality’s refusal to grant a construction
permit for a toxic waste treatment facility in an environmentally
sensitive area violated Metalclad’s NAFTA investor rights.
In another case, Canada paid the U.S. corporation Ethyl $12
million in compensation and reversed a ban on a toxic gasoline additive
called MMT after Ethyl filed a NAFTA challenge.
Not even international environmental and human rights treaties
are free from these attacks: in another case, a U.S. corporation called
S.D. Meyers received millions in compensation after a NAFTA tribunal
ruled that Canada’s implementation of the Basel Convention, an
international treaty on the handling of toxic waste, had limited S.D.
Meyer’s business opportunities in PCB toxic waste disposal trade.
In pending actions, a Canadian tobacco company has challenged
the tobacco settlements made by assorted U.S. states as a disadvantage
to their expected market share in the United States. And a Canadian
mining company has just filed a claim for $300 million against the U.S.
government because California denied it a permit to dig an open-pit
mine on land deemed sacred by a California Indian tribe.
Meanwhile, an array of U.S. health and environmental policies
have been weakened to meet WTO or NAFTA rules: imported meat is now
permitted even if the foreign plants in which it is processed do not
meet U.S. safety standards; U.S. Clean Air Act regulations,
dolphin-safe tuna labeling and Endangered Species Act have all been
successfully attacked in trade tribunals — meaning dirtier gasoline was
allowed for sale in the most polluted cities and that dolphin-safe
labels on tuna cans no longer means no dolphins were killed in the tuna
The power of obfuscation
How could such a far-reaching rewrite of domestic policy have
been sneaked past the public, press and Congress? The WTO and NAFTA
were designed by corporate lobbyists purposely to be inaccessible. The
agreements were negotiated in closed sessions where corporate leaders
act as official advisors to governments. For instance, when the WTO and
NAFTA were negotiated, over 500 corporate representatives were
operating as official U.S. trade advisors. These presidential
appointees have security clearance and are allowed to attend
negotiations and have access to the confidential negotiating texts. The
agreements are written in “GATTese,” a language understood only by
trade lawyers. In the early 1990s, when the WTO and NAFTA votes
occurred, attempts by groups such as Public Citizen to warn about these
pacts’ true implications were dismissed as simply unbelievable.
If such an autocratic, anti-democratic governance system had
been imposed over elected governments around the world by force, human
rights monitors and UN inspectors would have been dispatched.
Instead, the NAFTA and WTO’s silent slow motion coup d’etat
against democratic governance everywhere will be reversed only by citizen activism and campaigning.
There is resistance to expanding the WTO/NAFTA model — abroad
and in the United States, only the most visible manifestation of which
were the protests in Seattle at the 1999 WTO Ministerial Meeting. The
reasons for resistance are clear: In 2005, 10 years since the WTO and
NAFTA, U.S. wages have remained flat. A $600 billion trade deficit puts
the United States in a precarious position of depending on foreign
investment to keep the already-falling dollar from crashing. Meanwhile,
the export of high-paying jobs with health and benefits in fields such
as tax preparation, medicine and law is on the rise, with even
conservative estimates indicating a loss of at least another three
million jobs over the next decade.
It would be one thing if the decline in the U.S. standard of
living contributed to improving the conditions for the majority of the
world’s population living in poor countries. However, the WTO/NAFTA
model is a lose-lose with wealth extracted by supercorporations from
both rich and poor countries’ workers, farmers and small businesses.
If progressive forces are able to defeat a proposed deal to
expand NAFTA to Central America — the Central American Free Trade
Agreement (CAFTA), signed in May 2004 but not approved by Congress
because of a dearth of support — the era of “trade agreements” being
hijacked to impose a retrograde corporate agenda worldwide may be over.
Of the Bush administration’s second-term priorities, CAFTA
remains one that does not enjoy even widespread support among
Republicans. Its rejection could spell the end of the even more
astounding proposal to expand NAFTA to 31 nations in a Free Trade Area
of the Americas. There is momentum to restrain corporate rule, yet only
the energy and will of engaged citizens at home and abroad can make
2005 the year the turnaround begins.
Lori Wallach is Director of Public Citizen's Global Trade Watch and co-author with Patrick Woodall of
Whose Trade Organization? A Comprehensive Guide to the WTO.
In any business agreement there are many issues behind them.Because every one have their individual thinking.So any partners must should follow the rules including the agreement which the partners already agreed and did signature.ReplyDelete