Globalisation documents; PART 5.
Contents:
26. THE WORLD TRADE ORGANISATION; General comments.
27. THE WORLD TRADE ORGANISATION; Actual cases decided.
20. TAX; CORPORATIONS PAY LITTLE TAX.
Corporations tend to pay little tax. Half the transnational corporations in Australia pay none at all! They will invest where they are not asked to pay much tax. Governments therefore compete against each other to attract corporations, by reducing their tax obligations. This is the reason why governments are dramatically cutting spending, selling public assets, shifting the tax burden to ordinary people (e.g. via "introduction of GST)and impoverishing welfare, health etc services —because globalisation is reducing their capacity to raise tax income.
A major mechanism is transfer pricing. The corporations are able to put artificial prices on items imported to their branches in Australia that are so high that their costs seem to be as high as their earnings, meaning that they seem to make no profit in Australia and therefore do not have a taxable income. Their profits are made to appear in the countries they operate in where the tax rates are lowest.
Globalisation is about increasing the freedom corporations have to do things like this.
"…according to the magazine ‘News Weekly’, 13th JUNE, 1998, 60% of the transnationals operating in Australia pay no taxes to the country and the remaining 40% pay very little.
E. Fayner, Globalisation and the Australian economy", ERA Newsletter, 12, 17, March-April, 2001, p. 4.
55.4% of the multinational corporations operating in Australia paid no tax in 1995-6.
This is an increase from 53.3% the year before.
Transfer pricing by transnational corporations cost Australia hundreds of millions of dollars every year in lost taxation.
15% of corporations said they had no documentation to show that their transfer pricing was acceptable, i.e., not a taxation avoidance device. 420 of the firms surveyed did not reply to the question on how they justified their transfer pricing arrangements.
See Australian Financial Review, Friday 3rd April, 1998.
Saul points out that " the key effect of globalisation has been to shift the tax burden from large corporations onto the middle class. When the income tax rates … can go no higher, this shift is continued through taxes on goods and services". And, you might add, if this is not popular, the government can cut back on health, education and welfare, the very areas where disinterest reigns. And why does globalisation have this effect? Because " Our governments can no longer decide tax levels on resident corporations. They are set arbitrarily by an abstract replacement for government called the global economy. The effective tax rate on large corporations throughout the West is now 13%. I repeat 13%. Raise that rate and they'll leave town".
J. R. Saul, Unconscious Civilisation, 1997.
"Take General Motors Corp., the largest corporation in the US as measured in revenue. It reported $4.61 billion in world-wide
income in its 1998 annual report. "Your company is in better finanaal state than it has been in many years,' Chaiman John F. Smith Jr. assured shareholders in June. But for 1998, the auto maker owed the IRS just $36 milllon–0.8% of its global pre-tax incorne. ..
Globalisation has been a major factor in making this possible. And its possibilities for enabling corporations to outmaneuver national tax authorities has been a principal motivation behind the globalisation campaign. "It creates vast opportunities to shift profits to lower-tax countries, while moving their tax-deductions to the US.
Hotson on Hixon, Sustainable Economics, 7.6, Nov., 1999, p., 125.
Over 300 corporations that made over half a million dollars in profit, paid little or no corporate income tax…
In the 1950s corporations paid 39% of US tax, and individuals paid 61% of US federal tax. In the year 1990-5 corporations paid 19% and individuals paid 81%.
The corporate share of local taxes fell from 45% in 1957 to 16% in 1987.
26% of corporate assets are in tax haven countries.
Only 4% of German tax revenue is raised from corporations.
J. Braithwaite, Centre for .Tax System Integrity, ANU, speaking on ABC BACKGROUND BRIEFING, 27TH MARCH, 2001.
In all countries the tax system is being restructured. Taxes on individuals are increasing. Taxes are becoming more regressive. There is more use of indirect tax, levies, and of lotteries and gambling as sources of state revenue income.
Note that when capital was nationally based it had an interest in paying tax, i.e., to enable development of the nation’s infrastructures. But now that capital is international the incentive does not exist.
"Everywhere the result has been the restructuring of tax regimes in which the working class bears the larger and rising share of tax with capital responsible for a smaller and declining share. The accompanying trend, the growing regressiveness of taxation on wages and salaries, is forcing a greater tax burden on middle and lower incomes and producing a decreasing burden on upper incomes.…the subordinate classes will increasingly be the source of revenue for maintaining the state…" 95
G. Teeple, Globalisation and the Decline of Social Reform, Humanities, 1995
"Their enormous size, economic power, and increased mobility have allowed companies to reduce taxation by playing nations off against each other. Everywhere the result has been the restructuring of tax regimes in which the working class bears the larger and rising share of tax with capital responsible for a smaller and declining share. 95
"…maintenance of the public sector is being disproportionately financed as a tax burden by the working classes rather than..the corporate sector or the rich."
G. Teeple, Globalisation and the Decline of Social Reform, Toronto, Humanities Press, 1995.
55.4% of the multinational corporations operating in Australia paid no tax in 1995-6. This is an increase from 53.3% the year before.
Transfer pricing by transnational corporations cost Australia hundreds of millions of dollars every year in lost taxation.
15% of corporations said they had no documentation to show that their transfer pricing was acceptable, i.e., not a taxation avoidance device. 420 of the firms surveyed did not reply to the question on how they justified their transfer pricing arrangements.
See Australian Financial Review, Friday 3rd April, 1998.
"The process of globalisation under capitalism is generating enormous misery, deprivation and violence."
R. Burbach, "For a Zapatista Style Postmodernist Perspective", Monthly Review, March, 1996, p. 36.
The 1980s marked the end of the effort to reform capitalism, to make it more just.
In the late 1970s there "…was a decline of social rdforfm everywhere in the industrialised nations." 71
Chile was the first market society; i.e., not just an economy but a whole society operating on market principles.
"The idea that politics determines national policies has gradually dissipated, and in its place has come the open assertion that economics is the deciding factor in more and more aspects of society." 3.
Teeple concludes that Export Processing Zones have not earned much, do not employ many workers, yield little or no technology transfer, and cost the host state a lot (e.g., to provide infrastructure.)
G. Teeple, Globalisation and the Decline of Social Reform, Toronto, Humanities Press, 1995.
The world average effective tax rate for corporations is 13%
J. R. Saul, Unconscious Civilization, 1997
A US HOUSE OF REPRESENTATIVES COMMITTEE OF INVESTIGATION FOUND THAT 36 CORPORATIONS WITH SALES TOTALLING $329 BILLION IN A DECADE, PAID ONLY $5 BILLION IN TAX.
M. Rowbotham, The Grip of Death, London, Carpenter, 1998.
Study Finds Resurgence in Corporate Tax Avoidance Date: Wed, 1 Nov 2000
<http://www.ctj.org/itep/corpOOpr.htm> Thursday, October 19, 2000
ITEP's new report examines the U.S. profits and federal income taxes of 250 of the nation's largest and most profitable corporations over the 1996-98 period. Although big corporations ostensibly are supposed to pay 35 percent
-of their profits in taxes, the 250 companies in ITEP's survey paid only 20.1 percent in 1998. That was down from 22.9 percent in 1996, and far below the 26.5 percent that a similar group of large companies paid back in 1988, soon after passage of the loophole-closing 1986 Tax Reform Act.
Forty-one companies actually paid less than zero in federal income taxes inat least one year from 1996 to 1998. In those tax-free years, the 41companies reported a total of $25.8 billion in pre-tax U.S. profits. Butrather than paying $9 billion in federal income taxes at the 35 percentrate, these companies enjoyed so many excess tax breaks that they received $3.2 billion in rebate checks from the U.S. Treasury. Just one company, Texaco, reported $3.4 billion in U.S. profits and $304 million in tax rebates over the three years.
In 1998, twenty-four corporations got tax rebates. These 24companies--almost one out of ten of the companies in the study–reported U.S. profits before taxes in 1998 of $12.0 billion, yet received tax rebates totalling $1.3 billion. The list of big-name companies getting tax rebates in1998 included, among others, Texaco, Chevron, CSX, Pepsico, Pfizer, J.P.
Morgan, Goodyear, Enron, General Motors, Phillips Petroleum and Northrop Grumman.
A hundred and thirty-three of the 250 companies paid effective tax rates of less than half the 35 percent rate in at least one of the three years (and many did it more than once). In the years that these 133 corporations paid such low tax rates, they paid a mere 8.5 percent of their $209 billion in U.S. profits in federal income taxes.
Over the 1996-98 period, petroleum was the lowest-taxed industry in America, with an effective tax rate of only 12.3 percent. In 1998, the tax rate on the 12 big oil companies in the study fell to only 5.7 percent. Only one industry, publishing, paid an effective tax rate of more than 30 percent. The Size of the Tax Breaks Had all 250 companies paid the full 35 percent corporate tax rate on their $735 billion in pre-tax U.S. profits from 1996 to 1998, their federal income.
Taxes would have totalled $257 billion. But instead, tax breaks for the 250 companies lowered their taxes by $26.9 billion in 1996, $31.8 billion in 1997 and $39.3 billion in 1998, for a total of $98 billion in tax savings over the three years.
Almost half of those tax-break dollars went to just 25 companies, each getting more than a billion dollars in tax breaks. General Electric topped the list with $6,9 billion in tax breaks over three years.
CORPORATE WELFARE
Institute on Taxation and Economic Policy, October 19, 2000
Large corporations are theoretically taxed at a 35 percent rate. 250 of the nation's largest and most profitable corporations paid only 20.1 percent of their profits in taxes in 1998, down from 22.9 percent in 1996. Forty-one companies actually paid less than zero in federal income taxes in at least one year from 1996 to 1998. During th years, the 41 companies reported a total of $25.8 billion in pretax U.S. profits. But rather than paying $9 billion in federal income taxes at the 35 percent rate, these companies enjoyed so many tax breaks that they received $3.2 billion in rebate checks from the U.S. Treasury. Just one company, Texaco, reported $3.4 billion in U.S. profits and $304 million in tax rebates over the three years.
http://www.ctj.org/itep/corp00pr.htm
'The IRS (US Federal tax agency) estimates that transfer abuses cost the government $2.8 billion in lost revenue each year. Other estimates are much higher…(some of these) believe that the loss to federal revenue in 1998 was $35.6 billion, with more companies joining the party each year. Tax watchers debate the accuracy of Florida International's lost-revenue estimates, but the study's anecdotal evidence is eye catching. Combing through anonyrnous Customs records, the researchers found $18,000 dot-matrix printers being imported from Japan and $2,000 radial tires from Indonesia, and somebody in the US is exporting $12,000 helicopters and $135 howitzers to South Africa ".
Sustainable Economics, 7. 6. Nov. 1999, p. 125.
Government subsidies to Australian business, 1994-5, $12.5 billion. In addition tax exemptions totalled $7.5 billion.
D. Bryan and M. Refferty, The Global Economy in Australia, Allen and Unwin, 1999.
Business tax has fallen from 46% in 1980, to 36% in 1995-6.
D. Bryan and M. Refferty, The Global Economy in Australia, Allen and Unwin, 1999.
The Washington Institute on Taxatin and Economic Policy found that in 1996-1998 41 US corporations paid less than zero federaol income tax at least one year…while reporting $25..8 bilion in pre-tax profit. They should havbe been paying the standard 35% tax, but actually received $3,2 billion in tax rebate cheques. Texaco reported $3.4 billion in profits but was paid $304 million from the tax department
For the 250 corporations studied tax relief llowcered total tax by $98 billion over three years. Gedneral Electric got $6.9 billion. It appears Microsoft paid no tax in 1999.
No taxation but so much representation", Ecologist,, 30, 9, Dec.Jan 200-2001, p. 9.
A recent study (1990) of the US Congress found that more than half of about 40 foreign firms surveyed had paid virtually no taxes over a ten-year period (Dicken, 1992, p. 391). In 1987, a boom year, it was found that 59 per cent of foreign corporations reported no profits in the US and paid no tax. Over the last three years their revenue had gone up by 50 per cent but taxes paid by only 2 per cent (Barnet and Kavanagh, l994, p. 345). Clearly multinationalization of production is providing corporations with plenty of opportunity for tax avoidance. 44.
According to a study by Australian tax authorities 'billions of dollars' are being lost in revenue to MNCs. Deductions for interest payments and transfer pricing policies account for most of the revenue loss in Australia. Thus during l993 - 4, 60 per cent of the MNCs (both foreign and Australian) claimed to have made no profits and paid no taxes (CCPA, 1997, p. 3).
All of these developments contribute, perhaps substantially, to the erosion of the tax base. While national governments are aware of the issues involved and the OECD has been studying aspects of taxation for some time, nothing concrete has emerged so far. Apparently the governments of OECD countries have 'shown no appetite to address the broader question of what globalization is doing to the overall integrity of their tax bases. 45
R. Mishra, Globalisation and the Welfare State, Elgar, 1999.
Three decades ago, corporations paid about a quarter of all U.S. Federal taxes.
Now the corporate share is down to approximately 10 percent. The nominal tax
rate on corporations is 35 percent, but the effective tax rate on big corporations
is approximately 21 percent, according to the Washington, D.C.-based Citizens
for Tax Justice (CTJ). A 2000 CTJ study of the 1998 income tax payments of 250
of the largest corporations determined that two dozen had negative federal income
tax payments - meaning the received rebate checks from the U.S. Treasury.
Led by General Electric, which finagled just under $7 billion in tax breaks
in 1998, at least 25 corporations, including Ford, First Union, AT&T, Bell
Atlantic, Merck, Microsoft, Bristol Myers-Squibb and Exxon - exploited tax loopholes
to gain at least $1 billion in tax breaks, according to CTJ.
… Governments reduce business taxes to ensure tax competitiveness to attract
transnational corporations and international finance, while the average tax
of workers rises to balance the budget.
T. Fotopoulos,"Globalisation , the reformist left and the anti-globalisation movement, Democracy and Nature, 7, 2, July 21001.p.249.
The Australian Tax Office in 1996 reported to the Prime Minister that 100 people were avoiding $100million in tax.
Packer’s Consolidated Press Holdings made $614 million in two years to 1998, and paid no tax. The 1998 profit was $385, but no tax was paid. 66
According to the Matthews inquiry into tax, "…paying tax has become voluntary for the wealthy." 102
L Aarons, Casino Oz, Goanna Books, 2000.Tax concessions, subsidies etc to US corporations in 2000 was estimated at $195 billion.
Murdocks Newscorp made profits of 1.4 billion pounds in 1995-6 but paid no corporation tax.Source unknown.
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The difference between the declared profit of a transnational corporation subsidiary and its real profit can be considerable. In Colombia for example the overcharging of drugs by foreign owned companies meant that corporation subsidiaries reported a 6 per cent profit to the Colombian government, whereas the real profit was over ten times higher. While the extent of transfer pricing is unknown -- transnational corporations are unlikely to give details in their balance sheets and observers find difficulty obtaining evidence – the practice appears to be widespread.
J. Madley, Big Business Poor People, p. 141.
55.4% of the multinational corporations operating in Australia paid no tax in 1995-6. This is an increase from 53.3% the year before.
Transfer pricing by transnational corporations cost Australia hundreds of millions of dollars every year in lost taxation.
15% of corporations said they had no documentation to show that their transfer pricing was acceptable, i.e., not a taxation avoidance device. 420 of the firms surveyed did not reply to the question on how they justified their transfer pricing arrangements.
See Australian Financial Review, Friday 3rd April, 1998.
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• Under the current draft of the MAI, investors and companies will have the right to sue governments for losses caused by environmental or health legislation, as in the case with Ethyl Corporation and Canada.
• The MAI draft text would also grant "Most Favored Nation" status to corporations and investors from all signatory countries. Governments would not be able to pick and choose with whom they would do business based on human rights, environmental, labor, arms control, or other concerns…governments would have to treat foreign investors and multinational corporations as well or better than domestic companies. Tax incentives and laws designed to grow small, domestic businesses could be challenged because such laws discriminate against foreign inv estors and corporations.
In awarding contracts for health and social services, such as garbage collection or water and sewage, local governments couldn't favour local companies and non-profit organizations wlthout the fear of being sued under the MAI.
MAI free zones, Yes! Spring, 1999, p. 532.
• The MAI also prohibits local, state, and federal governments from setting up "performance requirements" under which foreign investors are required to operate to protect the interests of the country's citizens. Such requirements might include: hiring a minimum number of local people in a foreign firm, reinvesting a minimum amount in the local community, or using a certain percentage of domestic products
• Finally, if a country decided that the MAI wasn't in its best interests it would still be bound to MAI obligations for 20 years.
The MAI proposal "...prohibits governments from making new laws which interfere with the right of capital to free investment here and when it likes, and rolls back existing restrictions on capital...Nations would lose control over their economies and could be sued for interfering with transnationals...."...Capital is attempting to create an international regime with powers unaccountable to elected governments." (p. 7.)
W. Tabb, "Progressive globalism", Monthly Review, 50, 9 , 1999.
Under the MAI "...we would create a situation for the world where all countries then are obliged by law to give up their govoernmental powers to regulate the inflow and outflow of foreign funds...and so give up their powers to be able to regulate the activities of these investors when they are in the country..."
M . Khor, The Asian tiger economic meltdown", Monetary Reform, Fall/Winter, 1998/1999, p . 23.
And the MAI is protect their rights to exploit children, maintains we commit environmental atrocities without fear that can be barred entry into any country for those reasons.
… the MAI has written into its detailed draft articles the rights of transnational corporations:
• to export their commodities or services across all borders to other societies' markets with no conditions attached;
• to unilaterally purchase and own any structure or productive capacity of any other signatory nation with no requirement to sustain its viability, employ or location in the home country;
• to own any saleable natural resource of other countries and to have national right to any concession, licence or authorization to extract its oil, forest, mineral resources with no obligation to sustain these re or to use them in the interest of the host society
• to bid for and own any privatized public infrastructure, social good or cultural transmission without of foreign control permitted by law;
• to have access to any domestic government grant, loan, tax incentive or subsidy with the same rights domestic firm, with no means test, locale requirement, or public-interest distinction permitted;
• to be free of any and all performance requirements of job creation, domestic purchase of goods, import/export reciprocation, and technology or knowledge tr the host society.
P. Hellyer, The Evil Empire, Toronto,1997.
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23.THE ROLE OF THE STATE IN GLOBALISATION.
"The obstacle is not the ability of nations to control capital – most governments lack the will to do so; they do the bidding of the owners of big capital." 118
L Aarons, Casino Oz, Goanna Books, 2000.
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24. THE WORLD BANK AND INTERNATIONAL MONETARY FUND.
When a country finds itself with a serious debt problem the World Bank and IMF will initiate reschedule repayments and arrange new loans…on condition that a Structural Adjustment Package is accepted. The package typically involves cutting state spending in order to enable debt repayment, which means the reduction in spending on the poorest. It involves the promotion of exports (to rich countries , which rich countries like, devaluation of the currency, which makes their exports cheaper and their imports (from us) more costly. Public enterprises are to be privatised (which enables foreign corporations to buy them cheaply). Above all the economy has to be moved towards free market principles…which again enables foreign corporations to take over more of the resources and firms and markets.
There is a huge amount of evidence showing that these drastic reorganisations have now been inflicted on more than 100 countries, with catastrophic effects on billions of people. SAPs are among the main devices enabling the rich to plunder poor countries. (See Third World COLLECTED DOCUMENTS. SAPs.)The reasoning derives from conventional economic theory, whereby outlays have
to be cut and earnings raised if debt is to be paid off.
There is no debate about the justice of the debt in the first place and whether
it should be written off, or why debt repayment should be of supreme importance,
regardless of consequences for the people and their ecosystems. However, the
evidence is that SAPs do not work, even in conventional terms; they do not result
in solution of debt problems or restore economies to normal performance. They
are however a fabulous bonanza for the rich in this world; the rich countries
and their corporations have much greater access to the country’s wealth
Stiglitz watched, largely helpless, as the IMF and US Treasury, in a kind of
institutional and intellectual lockstep, imposed needless suffering on millions
of ordinary people in East Asia and Russia through free-market "shock"
programs, forcing massive economic adjustment, centring on making countries
keep their financial systems as open as possible to inflows and outflows of
private capital….all to promote Wall Street and the US Treasury's aim of
creating one single global financial market in which the overriding concern
of every government is to keep its financial system open to international finance,
whatever the domestic cost. Those at the top have benefited hugely, while creating
a system that is massively unfair."
A realist's view of the shift in global economy, by Will Hutton, The Age Business, 10 July 2002, page 4
(Alarge amount of material will be located here soon.)
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GETTING CONTROL OF "INTELLECTUAL" PROPERTY.
Central in the moves being made at the WTO level is the effort to have "intellectual property rights" established. These are rules to protect corporations, despite the fact that the WTO and corporate push to dominate the world economy is based on the ideology of freedom for markets and the importance of eliminating protection!
These rights have been built into various trade agreements, including NAFTA "They impose protectionist rights in favour of corporations of an extreme kind....They effectively grant a pharmaceutical corporation the right to control a product for about forty years."...and "...they bar other countries...from finding smarter ways to make the same product..." This was permitted under earlier patent rules. The earlier rules were process patents, not product patents; i.e., an inventor or company could patent its process for making something, but not the product.
N. Chomsky, "Whose world order?" Sustainable Economics, 8, 3, M ay 2000. p. 56.
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26. THE WORLD TRADE ORGANISATION;
General critical comments. (25 pages)
The WTO involves introduction of new rules governing trade between nations. These rules make freedom of trade from regulation by governments into the supreme and almost sole principle. This is greatly in the interests of the transnational corporations and banks, and the richest countries, but it means devastation for many poor people, workers and regions because protection for them will be eliminated. All will have to compete against each other in the one unified global market place, meaning that workers in rich countries will be competing against wages paid in the poorest countries, etc.
These notes include items on GATT, the previous trade system which the WTO has recently replaced.
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Note that the rules prevent the banning of something unless it can be proved that it is not safe; it is not possible to ban something because you think it could be a problem and would prefer not to take the risk. A major case was where the EU tried to ban importation of hormone treated beef, but the STO authorised a $116 million penalty on the EU. 222
This means that Genetically Modified crops and foods could not be banned on the fear that they might be problematic. 226.
C. Hines, Localisation; A Global Manifesto, London, Earthscan, 2000.
"Under the World Trade Organisation it becomes illegal for a country to put barriers in the way of free trade, even if it considers that trade potentially hazardous for its people. Laws to safeguard the environment, health and safety standards, human rights or local economies are liable to be declared illegal..."
N. Tanczos, (Green MP), "Melbourne and S11", The Evening Post, (New Zealand), 16th Sept, 2000.
The WTO proposals "...would effectively be the end of macroeconomic policy-making or long-term structural development planning." "Developing countries would essentially lose their economic sovereignty."
The Editors, Third World Resurgence, 108/109, 1999, p. 1.
The proposed agreement on agricultural trade:
Agriculture is still the primary source of livelihood for quarters of humanity, and is as much a cultural activity economic one. The AOA is a rule-based system for liberalisation of agriculture that was pushed by the
States and its global agribusiness corporations. Its effects impose global competition on the domestic farm undermining the viability of small farms that are unable to compete with cheaper imports. As a result, it will drive most of the small farmers off the land and ensure that agriculture is controlled by global corporations. In so doing, it will constitute the biggest refugee creation program in the world…
V. Shira, "The threat to Third World farmers", Third World Resurgence, 2000, p. 39.
"The WTO was put in place following the signing of a 'technical agreement' negotiated behind closed doors by bureaucrats. Even the heads of country level delegations to Marrakesh in 1994 were not informed regarding the statutes of the World Trade Organisation which were drafted in separate closed sessions by technocrats."
"...the process of actual creation of the WTO...is blatantly illegal'...a 'totalitarian' inter-governmental body has been casually installed in Geneva, empowered under international law with the mandate to 'police' country level economic and social policies, derogating the sovereign rigs of national governments."
"...the articles of the WTO are not only in contradiction with pre-existing national and international laws, they are also at variance with The Universal Declaration of Human Rights."
M. Chossudowsky, Seattle and Beyond; Disarming the New World Order." Economic Reform Australia Newsletter, 25th Nov., 1999.
The 137 nations that are members of the WTO have already agreed to open up all of their service sectors to free trade laws.WTO free trade laws have struck down health, food safety and environmental laws in dozens of countries.…our governments (are) negotiating away our most basic rights when almost no one knows about it and no one voted for it…"
The WTO contains no minimum standards to protect labour, human rights, social or environmental standards…
"…every time but one that the WTO has been used to challenge a domestic health, food safety, fair trade or environmental law, the WTO has won.
Over the past six years, the operations of the WTO show that it has become the most powerful, secretive and anti-democratic body on earth, rapidly assuming the mantle of a global government and actively seeking to broaden its powers and reach…
M. Barlow, A GATS Primer, 20th March, 2001, Era Email Newsletter, 22/3/2001.
It's your consumer and environmental standards that have to prove they're not trade restrictive. And the decision maker is not your court. The decision maker is not your Parliament. The decision maker is a secret tribunal under the World Trade Organization in Geneva, Switzerland, from which all citizens and press are excluded, and for which there is no independent appeal. And if you lose, you will have to either repeal your law or pay economic fines to the winning country.
Gold mining, for instance, uses cyanide. If Canada banned the substance, it would seriously affect the profits of foreign mining interests. Under the MAI, the foreign companies could sue the government in an international court.
For decades, Ottawa has been forging laws to protect culture–our own magazines, books and films. But the WTO recently ruled magazines are a business that should be open to competition. Canada must strike down its laws.
"Open for business; MAI", from CBC script, 10th Dec., 1997.
The new World Trade Organization established by the Uruguay ' Round of GATT is designed, in effect, to serve as a global governing body for transnational corporate interests. The WTO will have both legislative and judicial powers and a mandate to eliminate all barriers to international investment and competition. Under the WTO, a group of unelected trade representatives will act as a global parliament with the power to override economic and social policy decisions of nation-states and democratic legislatures around the world.
R.Clarke, "Mechanisms of corporate rule", in J. Mander and E. Goldsmith, Eds., The Case Against the Globa1 Economy, 1996, p. 301.
The World Trade Organisation and its agreements do not serve the interests of developing countries, they serve those of the developed world, and the USA in particular. …
From the free market paradigm that underpins it, to the rules and regulations set forth in the different agreements that make up the Uruguay Round, to its system of decision-making and accountability, the WTO is a blueprint for the global hegemony of Corporate America.
W. Bello, "WTO —Serving the wealthy not the poor", ", The Ecologist Report, Globalising Poverty, Sept., 2000. P. 36
Whose interests are they serving? "The interests of the economy' we are told. But what concrete reality lies behind that abstraction? Why benefits? Overwhelmingly it is transnational capital - not labour, not small business, not peasant farmers, not the environment.
H. Daly, on IMF, WTO and World Bank., in ", The Ecologist Report, Globalising Poverty, Sept., 2000,
"Local policies aimed at rewarding companies who hire local residents, use domestic materials, or adopt environmentally sound practices are essentially illegal under the WTO."
Top 10 reasons to oppose the World Trade Organisation, Sustainable Economics, 8. 2. March 2000, 33-34.
Any WTO Member may challenge any U.S. Iaw as an illegal trade barrier before-a WTO tribunal in Geneva. The tribunal has the power to approve sanctions against countries that refuse to remove laws that are deemed GATT-illegal. Such decisions are made by officials of other countries and by lobbies that have no accountability requirements.
The concept of non-tariff barriers being illegal gives corporate interests a powerful tool to undermine safety, health, or environmental regulations they do not like. For example, right now, pesticide manufacturers and wine importers are using GATT and NAFTA to claim that the United States cannot institute a planned ban of the carcinogenic fungicide Folpet.
R. Nader and L. wallach, G8TT, NAFTi: and the subversion of the democratic process , in J. Mander and E. Goldsmith, Eds., The Case Against the Global Economy, 1996, p. 97.
It's a very neat arrangement. European corporations target U.S. Iaws they do not like. U.S. corporations target European laws they do not like.
Then European and U.S. corporations attack Japanese laws and vice versa –the process can go on until all laws protecting people and their environment have either been reversed or replaced by weaker laws that do not interfere with the immediate interests of the corporations.
…the trade advisory committees on timber, chemicals, and other key environmental and consumer interests have exclusively business representatives.
R. Nader and L. wallach, G8TT, NAFTi: and the subversion of the democratic process , in J. Mander and E. Goldsmith, Eds., The Case Against the Global Economy, 1996, p. 97.
Control by corporations: Their staff make and administer the rules.
During the GATTtalks, for example, representatives from the TNCs chaired and staffed all of the 15 advisory groups set up by the Reagan administration to draw up the US negotiating position. Likewise, in Europe, it was the heads of Fiat and Philips who drafted the original proposal for the European Single Market.
The Editors, "Denying the global a home, " The Ecologist, 26, 4, July/Aug., 1996, p. 123.
The convention, attended by more than nine hundred representatives of peoples,' movements, produced the 'Declaration of Indian People against the WTO' which states that "We, the people of lndia, hereby declare that we consider the WTO our mortal enemy, This unaccountable and notoriously undemocratic body called the WTO has the potential not only to suck the sweat and blood of the masses of two-thirds of the world, but has also started destroying, our natural habitats and traditional agricultural and other knowledge systems ... converting us into objects of Transnational Corporations' economy of consumerism. The WTO will kill us unless we kill it"
Peoples' Global Action - From Freedom, 23 May 1998
The Uruguay Round Agreements have functioned principally to prise open markets for the benefit of transnational corporations at the expense of national economies, workers, farmers and other people; and the environment.
In addition, the WTO system, rules and procedures are undemocratic,
untransparent and non-accountable and have operated to marginalise the majority of the world's people
STATEMENT FROM MEMBERS OF INTERNATIONAL CIVIL SOCIETY OPPOSING ROUND OF TRADE NEGOTIATIONS
Under the old GATT rules, there had to be unanimous approval of all GATT's contracting parties before trade sanctions were imposed on a GATT nation by the other nations. Under the new WTO rules, the determinations by WTO tribunals become automatically binding. This holds unless all Member countries vote to stop the decision within ninety days. This is another case where antidemocratic procedural rules determine much of the outcome; the obvious result is that few, if any, tribunal decisions would ever be voted down unanimously. This requirement of consensus to stop the action of an international institution rather than to authorize it is uniquely empowering for the WTO; it means its bureaucratic decisions will be honored and feared, thus further intimidating any resistant strains among nations.
R. Nader and L. Wallach, GATT, NAFTA and the subversion of the democratic process , in J. Mander and E. Goldsmith, Eds., The Case Against the Global Economy, 1996, p. 104.
"Approval of World Trade Organisation etc… agreements has institutionalized a global economic and political situation that places every government in a virtual hostage situation, at the mercy of a global financial and commercial system run by empowered corporations. This new system is not designed to promote the health and well-being of human beings but to enhance the power of the world's largest corporations and financial institutions.
Under the new system, many decisions that affect billions of people are no longer to be made by local and national governments but instead, if challenged by any WTO Member nation, would be deferred to a group of unelected bureaucrats sitting behind closed doors in Geneva. The bureaucrats can decide whether or not people in California can prevent the destruction of their last virgin forests or determine if carcinogenic pesticides can be banned from their food; or whether European countries have the right to ban the use of dangerous biotech hormones in meat. Moreover, once these secret tribunals issue their edicts, no external appeals are possible; worldwide conformity is required. A country must make its laws conform or else face perpetual trade sanctions.
At risk is the very basis of democracy and accountable decision making that is the necessary undergirding of any citizen struggle for sustainable, adequate living standards and health, safety, and environmental protections. The decline of democratic institutions in favour of deepening multinational corporate power has taken place in Western nations over the past several decades; but the establishment of the World Trade Organization (WTQ) marks a landmark formalization, strengthening, and politicalization of this formerly ad hoc system.
Best described as corporate globalizatlon, the new economic model establishes supranational limitations on any nation's legal and practical ability to subordinate commercial activity to the nation's goals. The objective is to overrule democratic decision making on matters as intimate as food safety or conservation of land, water, and other resources…
From the corporate perspective, a good new system eliminates barriers to trade on a global scale, whereas from any other perspective, such barriers –that is, any nation's laws that foster economic well-being, democratic processes, worker and citizen health and safety, and sustainable use of resources–are seen as valued safeguards on unfettered, harmful business activity. From a corporate perspective, the diversity that is a blessing of democracy is itself the major barrier.
The Wall Street Journal was more direct. After the agreement was signed, the Journal editorialized that GATT "represents another stake in the heart of the idea that governments can direct economies. The main purpose of GATT is to get governments out of the way so that companies can cross jurisdictions (i.e., national boundaries) with relative ease. It seems to be dawning on people . . . that government is simply too slow and clumsy to manage trade." Should it be corporations, then?
What makes such statements especially alarming is that what is being characterized as "trade" these days includes the workings of a large portion of each nation's economic and political structures. GATT and other trade agreements have moved beyond the traditional roles of setting quotas and tariffs and are instituting new and unprecedented controls over investment flows, innovations, public assets, and democratic governance. Undermining national and local laws and erasing economic boundaries via capital mobility and "free trade" have caused the likes of Monsanto, Pfizer, Citicorp, General Motors, Cargill, Shell, and other corporations to rejoice. But the prospect of global commerce without democratic controls suggests impending disaster for everyone else in the world.
R. Nader and L Wallach, "GATT, NAFTA and the subversion of democratic process", In J. Mander and E. Goldsmith, The Case Against the Global Economy, 1996, 93-95.
"Essentially, any local or national health, safety or environmental standards that exceed international standards set by an unelected body...may be challenged as trade barriers." P. 8.
"This already means that Australia will be forced to accept food imports with higher levels of DDT residue than previously held to be safe for human consumption under Australian law.' P. 10 _
But throughout product regulation, corporate regulation, selective investment and contracting the GATT/WTO reverses the power of cornmunities to control their own fate vis a vis trade and their resource use
R. Kennedy, "Trade and environment ", Essence,
Autum, 1995.
The trade agreements are about removing rules which protect people and the environment, but adding rules which protect corporations:
GATT and NAFTA do not target for elimination all "fetters" on commerce. Rather, the agreements promote the elimination of restrictions that protect people but increase protection for corporate interests. For instance, the regulation of commerce to protect environmental, health, or other social goals is strictly limited, and labor rights, including prohibitions on child labor, were entirely left out as inappropriate limitations on global commerce. On the other hand, the protection of corporate property rights (such as intellectual property) received expanded monopoly power.
The right to invest capital in any country without local restrictions or conditions was also strengthened.
R. Nader and L. Wallach, "GATT, NAFTA and the subversion of the democratic process", in J. Mander and E. Goldsmith, The Case Against the Global Economy, 1996, 95-96.
The WTO s global health and safety standards relating to food are set by a group known as the Codex Alimentarius Commission, or Codex. It is an intergovernmental body established in 1963 and run jointly by the UN Food and Agriculture Organization (FAO) and the World Health Orrganization (WHO) to establish international standards on things such as pesticide residues, additives, veterinary drug residues, and labeling. Critics of Codex observe that it is heavily influenced by industry and has tended to harmonize standards downward. For example, a Greenpeace USA study found that Cadex safety levels for at least eight widely used pesticides were lower than current U.S. standards by as much as a factor of twenty-five.'° The Codex standards allow DDT residues up to fifty times those permitted under U.S. law."
Governmental delegations to Codex routinely include non-governmental representatives, but they are chosen almost exclusively from industry. One hundred forty of the world s largest multinational food and agrochemical companies participated in Codex meetings held between 1989 and 1991. Of a total of 2,587 individual participants, only twenty-six came from public-interest groups. Nestle, the world s largest food company, had thirty-eight representatives. A Nestle spokesperson explained, "It seems to me that governments are more likely to find qualified people in companies than among the self-appointed ayatollahs of the food sector."
K. Korten, When Corporations Rule the World, 1995, p. 179.
The secret proecess:
The binding provisions that define the WTO's functions and scope do not lncorporate any environmental, health, labor, or human rights considerations. …
Disputes are not decided by democratically elected officials or their appointees but by secret tribunals of foreign-trade bureaucrats from a preset roster. Only national government representatives are allowed to participate in the dispute resolution process. State and local government representatives (such as a state attorney general), citizens, and the press are locked out.
• All documents, transcripts, and proceedings are secret.
• No media and no citizens can sit in and observe the proceedings. And there is no outside appeal or review available.
R. Nader and L. Wallach, GATT, NAFTA and the subversion of democracy", in J. Mander and E. Goldsmith, The Case Against the Global Economv, 1996, p. 102.
In the crucial decision making meetings between 1989 and1991 251 of the participants were from industry and only l% from the public. P 11
Central in the trade agreements is the rule that countries must not give to their own people any rights that are not allowed to foreign investors; it is not acceptable for a country to favour its own people.
It will be possible for a transnational corporation exporting paper or aluminium to challenge as an interference with free trade any recycling practice assisted by government, because these affect the supply and price of recycled paper and aluminium on sale within the country, and thus affect the transnational's chances of selling its product within the country.
If any country wants to set higher standards than the level agreed by the trade officials, it will have difficulty doing so. These will be challenged as interfering with free trade. Thus countries will not be able to set high standards to protect their citizens from pollutants in foods being imported; the standards will be driven down to the lowest acceptable to the trade authorities... to those which suit the corporations doing the exporting.
These provisions can be challenged, but penalties will automatically automatically be imposed unless all parties, i.e., nations involved in the agreements agree not to impose them. "Such a consensus is virtually impossible to arrive at; the diplomacy required to get 125 countries to agree to anything is beyond the scope of most countries..."
"If a panel decided that a domestic law is in violation of WTO trade rules it may recommend that the offending country changes its law. Countries are then expected to do so within a prescribed period. If not, trade sanctions may be applied to enforce free trade...
Y. Bello, Toward a people's Pacific", Essence, Autumn, 1995.
"... free trade policies work against the interests of the vast majority of producers and consumers --in both North and South -by systematically dismantling locally-based economies."
E. Goldsmith, et al., The Future of Progress, Green Books 1999 5, p. 21.
This collection of essays"…shows how the free trade agreement between the USA and Canada has, in two years, destroyed to autonomy of Canada, moved many of its jobs South, and made useless the hard built cross nation infrastructure which held Canada together and made possible its unique national health and other social services. It shows how the deepening bilateral economic arrangements with Mexico has increased abuses on freedoms and the rights to organize workers in Mexico.
John Wiseman on Canada
IMAGINE THE REACTION. In the name of free trade Australia signs an agreement with Japan which guarantees Japanese corporations a fixed share of Australian energy and water resources regardless of Australian shortages or changes of government. The agreement, which also includes Indonesia, forbids any Australian government 'discrimination' against Japanese or Indonesian trade or investment. This means no tariffs, no foreign investment controls and no 'hidden subsidies' for Australian industry. 'No hidden subsidies' means bringing Australian environmental regulations, health and safety standards, industrial relations, health insurance and education systems into line with those in Japan or Indonesia.
This recipe for deliberately undermining national sovereignty may sound bizarre. But this is just part of the price Canadians have paid for signing the Free Trade Agreement (FTA) with the United States in 1988 and the North American Free Trade Agreement (NAFTA), including Mexico, in 1994. At a time when APEC and free trade are all the rage in Canberra it is timely to look at the bitter Canadian experience of NAFTA.
The most important feature of NAFTA is that it is not primarily a free trade agreement. It certainly tears down Canadian and Mexican trade barriers while leaving the United States with plenty of room to control imports. But the real purpose of NAFTA is to create a 'free investment agreement' or corporate bill of rights guaranteeing the unrestricted and unregulated mobility of capital. As Maude Barlow (President of the Council of Canadians) has argued, it lays the foundations for 'an alternative non-elected continental governing structure'.
Signatories to NAFTA are expressly forbidden from discriminating against foreign investment. This means far more than just the removal of tariffs and restrictions on the movement of finance and investment capital. It means that governments are forbidden from constructing tariff barriers such as subsidies or regulatory standards that might benefit national companies or limit the investment and trade decisions of domestic and foreign corporations. Preference arrangements designed to assist local industries and employment are forbidden. All public sector enterprises must operate commercially and be open to private competition. Once a function or service is privatized it must be governed by NAFTA rules forbidding national subsidies. Privatised enterprises cannot be returned to the public sector without compensation to companies which are, or even might be, involved in the area.
Over 550,000 Canadian workers have lost their jobs since the FTA was signed in 1988 and much of the new employment growth has been in low-paid, part-time and casual jobs. Whiie NAFTA supporters blame the recession it is now clear that Canada has staggered into a much slower recovery than the United States. Surveys of Canadian and US employers show that NAFTA has been their major justification for relocating investment and jobs from Canada to Mexico and the United States.
NAFTA has served as a powerful justification for tax cuts, expenditure cuts, privatization and the rapid dismantling of the Canadian welfare state with over $25 billion chopped out of social policy expenditure in the last five years. After all, as the Chairperson of the Canadian Manufacturers Association recently argued, 'All Canadian governments must test all their polices to determine whether or not they reinforce or impede compentlveness. If a policy is anti-competitive, dump it ... The social programs we've come to depend on ... we're going to have to abandon. We're going to be shutting down hospitals like it or lump it'.
NAFTA has also laid the foundations for an unprecedented assault on Canadian health and safety standards and environmental regulations, as US and Canadian corporations have successfully argued that such regulations are an infringement of free-trade and corporate rights. This argument has been successfully used to challenge and overturn recycling measures, acid rain prevention programs, asbestos safety standards, safety regulations and salmon and herring conservation programs .
Monsanto reilied on NAFTA's anti-regulation provisions to overcome controls on the introduction of rBGH genetically engineered hormones in dairy cattle. Philip Morris blocked the introduction of plain packaging for cigarettes as an infringement of corporate rights.
Bans on export controls have been successfully used to overcome opposition to the construction of vast new oil and gas pipeline systems and the export of raw timber. National energy subsidies are still allowed for military purposes and for oil and gas exploration. Subsidies for the development of renewable energy are not permitted.
In a few short years of deregulated fishing the vast cod resources of the Grand Banks have disappeared and the cod are now virtually extinct. The fishing communities of Newfoundland and the Maritime Provinces have been told that it is becoming impossible for employment or services to be maintained in these areas. They will simply have to move. Perhaps, as one senior public servant recently suggested, they should learn Spanish, reduce their expectations and take up fishing in the Gulf of Mexico.
For many citizens of Canada, the United States and Mexico, free trade in the post-NAFTA world has meant learning to survive in a 'race to the bottom' in which corporations attempt to play off workers and communities against each other by lowering wages and reducing working conditions, all in the name of flexibility and competitiveness. It appears that the great god of 'international competitiveness' requires the sacrifice of many citizens and geographical regions deemed uncompetitive and therefore expendable.
John Wiseman on Canada’s biter esperience in the free trade-wars, Arena Magazine, April — May, 1995.
WTO rulings can force governments to abandon their standards:
…any member country can challenge, through the WTO, any law of another member country that it believes deprives it of benefits it expected to receive from the new trade rules. This includes virtually any law that requires imported goods to meet local or national health, safety, labor. or environmental standards. Unless the government against which the complaint is lodged can prove to the satisfactionof the WTO panel that a number of narrowly restrictive provisions have been satisfied, it must bring its own laws into line with the lower international standard or be subject to perpetual fines or trade sanctions. The WTO's goal is the "harmonization" of international standards. Relguations requiring that imported products meet local standards on such matters as recycling laws, use of carcinogenic food additives auto safety requirements, bans on toxic substances, labelling, and meat inspection could all be subject to challenge. The offending country must prove that a purely scientific justification exists for its action. The fact that its citizens simply do not want to be exposed to the higher risk accepted by lower WTO standards isn't acceptable to the WTO as a valid justification.
Conservation measures that restrict the export of a country's own resources–such as forestry products, minerals, and fish products could be ruled unfair trade practices, as could requirements that locally harvested timber or other resources be processed locally to provide local employment. Cases may also be brought against countries that attempt to give preferential treatment to local over foreign investors or that fail to protect the intellectual property rights (patents and copyrights) of foreign companies. Local interests are no longer a valid basis for local laws under the new WTO regime. The interests of interational trade, which are primarily the interests of transnational corporations, take precedence.
When a challenge to a national or local law is brought before the WTO? the contending parties present their case in a secret hearing before a panel of three trade experts–generally lawyers who have made careers of representing corporate clients on trade issues. There is no provision for the presentation of alternative perspectives, such as … briefs from non-governmental organizations, unless a-given panel chooses to solicit them. Documents presented to the panels are secret except that a government may choose to release its own documents. The identification of the panelists who supported a position or conclusion is 'explicitly forbidden' The burden of proof is 'on the defendant to prove that the law in question is not a restriction of trade as defined by the GATT.
When a panel decides that a domestic law is in violation of WTO rules, it may recommend that the offending country change its law. Countries that fail to make the recommended change within a prescribed period face financial penalties, trade sanctions or both. Under the proposed rules, the recommendations of the review panel are automatically adopted by the WTO sixty days after presentation unless there is a unanimous vote of WTO members to reJect them. This means that over 100 countries including the country that won the decision, must vote against a panel decision to overturn it, rendering the appeals process virtually meaningless.
As was GATT, the WTO is a trade organisation and its mandate is to eliminate barriers to international trade and investment.
D. Korten, When Corporations Rule the World, Kumarian Press174-177.
Free trade zones such as APEC–an Asian zone supported strongly by the Australian Government–and the North American Free Trade Agreement (NAFTA) are supposed-to bring wondrous economic benefits to us all, but the evidence suggests otherwise.
In the two years since the implementation of NAFA, the circumstances of workers, farmers and women, as well as environmental conditions, in Mexico and the United States have deteriorated, according t a sdy released by non~government organzations in both countries.
The evidence shows that instead of engendering sustainable
development, NAFTA is leading our countries down a path of inecreasing inequality
and environmental destruction…Unemployment doubled in Mexico between
September 1994 and "September 1995, and the purchasing power of the average
Mexican wage fell by 54%. At least 334 US firms have moved to Mexico, many in
highly polluting industries, the study said. Rural communities in both countries
are suffering under NAFTA, according to the report. Mexican production of basic
grains has fallen over the past two years as the market is flooded with grain
imports from the USA. In the United States, nearly 40 per cent of NAFTA-related
job losses have been in rural communities, particularly in low-wage manufacturing.
The study documents the fact that women on both sides of the border have borne the brunt of NAFTA. In the United States, the largest number of NAFTA-related ~ losses has been in the electronics and apparel industries both of which employ high numbers of women. In Mexico the booming 'maquiladora' assembly plants along the border prefer to employ wornen because they are paid less and are perceived as more submissive. The beneficiaries of NAFTA are the large US corporations that take advantage of cheap labour'' said Sarah Anderson of the IPS "while the people NAFTA was supposed to help, North American workers, are worse off because of the treaty.
Frontline, 31, Jan., 1996, p. 15.
Paradoxically the preservation offood security, the protection of knowledge and the collective use of biodiversity, the sustainable use of the ecosystems and the existence of fair and equitable systems for the distribution of the benefits obtained from natural resources, are today considered to be limitations on trade.'
A. Gonzales' "Free trade area of the Americas", Third World Resurgence, 93, 1998, p. 13. -
"Liberalisation" of Philippine agriculture has resulted in increased US grain exports:
Since the mid-1980s, agriculture in the Philippines has been opened to foreign competition under successive liberalization programmes.
In 1987, as part of the country's structural adjustment programme, the government opened trade in wheat to the private sector and began to reduce import restrictions which are now negligible. As a result, imports of wheat have doubled to over two million tonnes.
Quantitative restrictions on rice and maize imports were reduced after 1989, leading to a surge in imported maize in 1990, primarily from China, Thailand and the US.
Much of the imported wheat comes from the United States, which has systematically been cultivating the Philippines as a lucrative agricultural export market in recent years…
(The government is also boosting export cropping.)
The plan's overarching aim is to reduce the five million hectares currently planted to the two main food staples, rice and maize, to just under two million hectares, and to divert the remaining three million hectares into the cultivation of cash crops and livestock production.
The Philippines' government acknowledges that further import liberalization will result in a loss of livelihoods in the staple food sector for at least 35,000 households.
The Ecologist, 26, 4, July/Aug., 1996, p. 172.
Under the WTO, the race to the bottom is not only in standard of living, environmental, and health safeguards but in democracy itself. Enactment of the free trade deals virtually guarantees that democratic efforts to make corporations pay their fair share of taxes, provide their employers a decent standard of living, or limit their pollution of the air, water, and land will be met with the refrain, "You can't burden us like that. If you do, we won't be able to compete. We'll have to close down and move to a country that offers us a more hospitable climate.', This message is extremely powerful–communities already devastated by plant closures and a declining manufacturing base are desperate not to lose more jobs.
R. Nader and L. Wallach, "GATT, NAFTA and the subversion of democracy", in J. Mander and E. Goldsmith, The Case Against the Global Economy, 1996, p. 107.
"By setting up the WTO, countries and governments discovered that they had set up a legal system that enshrined the priority of free trade above every other good — above the environment, justice, equity and community."
This article refers ;to the supply of aids drugs from Argentina for one quarter the price charged by the giant drug co Glaxo, under TRIPS protection.
G. Palast, "Keep taking our tablets", Third World Resurgence, 120/121 2000, p. 29.
GATT, WTO and the NAFTA agreement also give top priority to corporate investor and intellectual property rights, to which all other considerations must give way....In these agreement...TNCs have no responsibilities and none can be imposed on them. p. 5.
E. S Herman, "The Threat of Globalisation", Economic Reform Australia Newsletter, 2nd Dec., 1999.
"Any country that decides, for example, to ban the export of raw logs as a means of conserving its forests, can be charged under the WTO by member states on behalf of their corporations for obstructing the free flow of trade and investment."
Tony Clarke, "Twilight of the corporation", The Ecologist, 29, 2. May/June, 1999, p. 160.
About 799 organisations from 73 countries are fighting against the WTO proposals late in 1999. They claim "...the WTO has worked to prise open markets for the benefit of transnational corporations at the expense of national economies, workers, farmers and other people.
There is no discussion of rules preventing corporations from engaging in unacceptable practices, such as"...secret agreements and cartels, dumping and transfer price manipulation, speculation and insider dealing, financial crime, tax evasion and money laundering, spying and piracy, surveillance and exploitation of workers, banning trade unions, plundering and embezzlement of collective resources and common property, endemic corruption of economic channels ..."
--------------
"By setting up the WTO, countries and governments discovered that they had set up a legal system that enshrined the priority of free trade above every other good — above the environment, justice, equity and community."
This article refers to the supply of aids drugs from Argentina for one quarter the price charged by the giant drug co Glaxo, under TRIPS protection.
G. Palast, "Keep taking our tablets",Third World Resurgence, 120/121 2000, p. 29.
A trade tribunal has begin to consider a claim that the US must pay a foreign investor almost $1 billion because California attempted to prevent water contamination from one of it products. The Canadian corporation Methanex says the plan to remove the toxic chemical MTBE from California petroleum violates the North American Free Trade Agreement. The corporation claims it will lose $970 million in profits if California bans the substance.
The Governor of California had decided that the additive must be taken out of sale by 2003 after studies showed that it may cause cancer and other problems in humans.
In a similar case decided earlier a tribunal ordered Mexico to pay $16.6 million to a Californian company after Mexican governments had refused to allow the company to operate a hazardous waste facility near dwellings. NAFTA tribunals meet behind closed doors, with no public participation.
Environment News Service, Sept 11 ,2000.
The world's trade representatives are "...unelected, unaccountable corporate goons deciding world government policy in the name of 'free trade'. These are the peopled running and operating the WTO. With their hands in the pockets of the various multinational corporations, they have succeeded in establishing a New World Government based on profit. This is a government of and for the corporations..."
M. Reichl, The WTO and Education. ERA Email Newsletter, 5th Sept, 1999.
"Last week, the WTO rued that the EU must drop an 11 year ban, imposed to safeguard health, on US beef treated with hormones."
Re food etc standards, "The WTO makes the world observe these standards and no other. A democratically elected government cannot choose to set tougher ones to protect is people. If it tries, the WTO can rule the measure illegal and hit the country with punitive sanctions."
The WTO "...is also forcing developing countries to introduce rules which could enable multinationals to patent foods and natural medicines that their people have used for centuries; one US company has 'patented' basmati rice. poor people may thus be forced to pay for products they have traditionally used."
How free trade devastates Third World producers; "Under the trade rules...the Philippines is importing American corn that is far cheaper than its local equivalent. As a result, says Oxfam, half a million poor Filipino farmers risk losing their livelihoods."
Note that this corn is being exported from American farmers who are heavily subsidised! Each American corn farmer is subsidised $29,000 p.a. This is 100 times the annual income of a Filipino farmer. The protection on the Filipino farmers is removed because it is an "interference with free trade".
"Aren't such subsidies an impediment to free trade? The WTO seems to have a selective view. While Third World countries are forbidden to subsidise their crops, Western nations quintupled their agricultural subsidies from $47 b to $247 b in the first four years of the WTOs existence."
"The hidden tentacles of the world's most secret body", Sunday Independent, London, 17th July, 1999, In Economic Reform Australia Email Network, 12th August, 1999.
"For more then 20 years the European Union has helped small West Indian banana growers to scratch a living by favouring imports of their fruit. ..they cannot compete with cheaper fruit grown on giant estates in Latin America by big US companies such as Chiquita. The EU scheme gives them a chance, while not doing much to affect world trade. The US government has challenged the arrangement (...coincidentally following a $500,000 donation by Chiquita to the Democratic Party...) The WTO upheld the complaint, ordered the EU to stop its help, and authorised the US to start a trade war by penalising imports of a host of European goods...The EU backed down. Experts expect the unemployed farmers to switch to growing cocoa and marijuana for smuggling into the US."
"The hidden tentacles of the world's most secret body", Sunday Independent, London, 17th July, 1999, In Economic Reform Australia Email Network, 12th August, 1999.
Laws to safeguard the environment have fallen prey to free-trade rules...the WTO stopped the US cutting air pollution by cleaning up petrol, and the grounds that this would discriminate against producers of dirtier oil, such as Venezuela. This overruled a vote in the US Congress and forced the Administration to change its Clean Air Act."
"The WTO stopped the US requiring nations from which it bought shrimps to bring in regulations to ensure that their boats did not catch critically endangered set turtles."
"The hidden tentacles of the world's most secret body", Sunday Independent, London, 17th July, 1999, In Economic Reform Australia Email Network, 12th August, 1999.
…the WTO and the "free trade'' policies it was set up to enforce are the most direct threat to democracy and popular sovereignty since the rise of the corporate state under National Socialism in Germany in the late 1930s…
… the overarching goal of the WTO (and of .'free trade' policies in general) is to diminish the power of governments, and thus to reduce governments' capacity to influence the behavior of transnational corporations. The WTO was set up as a forum in which transnational corporations can challenge and effectively repeal restrictions imposed upon them by nations (or by sub-governments within nations). In other words, rather than "globalization," the real purpose of the WTO is "global corporatization" -- increased corporate control over all the nations and economies of the world.
Created by international treaty in 1995, and now boasting 134 nations as members (nations that are not members can be iced out of international trade), the WTO has written 700 pages of rules which add up to an enforceable commercial code governing markets and trade world-wide -- a code enforceable not by nation-states but by the WTO itself. One of those rules is called the Government Procurement Agreement (GPA).[4]
The GPA basically says that governments can set standards for the PERFORMANCE of purchased mate but cannot set standards based on METHODS OF PRODUCTION. Therefore, government purchasing policy cannot discriminate against materials produced by child labor or slave labor, for example. Likewise, requiring that be manufactured from recycled materials would be prohibited under the GPA.
Thus the GPA provides one more way for corporations to strike down laws that curtail their freedoms…
The corporate rulers of Europe, Japan and the US agree on this; the public has no right to impose moral standards on economic activity. The economy is not subject to democratic control. The Government Purchasing Agreement is where they are making their stand, campaigning to diminish the vestiges of democracy wherever they remain.
Greenleap Newsletter, 9th May, 2000.
For the WTO, deregulation (and greater freedom for transnational capital to do what it wants, where and when it wants) is the sole agenda.
Furthermore, only countries have "standing", the right to participate in WTO proceedings. Indigenous peoples like the Ogone, who might challenge what Shell is doing to its lands (with the willing participation of the repressive Nigerian government), do not. Nor do the inhabitants of western New Guinea, since standing is only given to governments–like the Indonesian government, which refuses to respect the rights of those in western New Guinea, murders those who protest, and steals their resources, leaving their environment devastated.
Nor is there standing in the Non-Governmental Organizations (NGOs), some of which might advance the rights of indigenous peoples or factory workers who are repressed, jailed, and murdered by their governments in the interests of a "good" labor climate for multinationals. The WTO is a forum for trade rights of capital, on terms negotiated by the agencies of governments that represent the interests of capital. No other rights count.
The U.S. Trade Representative is pushing (on behalf of the U.S.'s giant HMOs) for the right to compete with European : ~ national health systems to provide medical care, which would lead to the destruction of the current (and far superior) health care systems that exist in much of Europe. Other suits include one by a U.S. parcel and letter delivery service against European government "monopoly" postal services, which would
have a similar impact on the right of democratically elected governments to make their own decisions about how their mail is delivered.
he United States challenged Japan's pesticide-residue testing requirements for agricultural imports. In 1998 and again in 1999, the WTO ruled that Japan's standards are higher than WTO standards
I for pesticide residues; hence, the Japanese must now accept higher levels of pesticide. Guatemala followed WHO/UNICEF guidelines in banning packaging that equated infant formula with healthy babies, but Gerber Corporation got the U.S. State Department to argue that this interfered with Gerber's intellectual property rights, and to threaten a challenge under WTO. Consequently, Guatemala now allows labeling in this area that goes against WHO/UNICEF guidelines. The WTO, on behalf of the Clinton government, tells Europeans they cannot keep out beef with artificial hormones because they cannot prove, to the WTO's satisfaction, that it is a health risk. In the past, it would have been producers who had to prove that their products were safe, and up to democratically accountable, elected representatives to decide. Under the WTO, it is governments that must offer conclusive proof. Thus transnationals get their way before WTO dispute settlement panels, which meet in secret
and from which NGOs and other interested parties that are
not nation-states are banned. One of the last big measures of the preceding Conservative government had been to privatize the railways, despite the fact that only 15 percent of the population supported such a measure.
W. Tabb, "The world trade organisation; Stop world takeover", Monthly Review, 51.8 Jan, 2000.
Extracts from a NGO statement, endorsed by hundreds of organisations.
It is inappropriate and unacceptable for social rights and basic needs to be constrained by WTO rules. Thus WTO Agreements must not apply to issues critical to human or planetary welfare, such as food and water, basic social services, health and safety, and animal protection. '
In particular, areas such as health, education, energy and other basic human services must not be subject to international free trade rules. We demand the removal of the Trade-Related || Intellectual Property Rights Agreement (TRIPS) from the WTO. There is no basis for inclusion of intellectual property claims in a trade agreement.
. The patenting of life forms must be prohibited in all national and international regimes. Measures taken to promote and protect food security and sovereignty, subsistence farming, humane farming practices and sustainable agriculture must be exempt from international free trade rules. There must be a prohibition on export subsidies and other forms of dumping of agricultural products, especially on Third World countries. The trading system must not undermine the livelihood of peasants, small farmers, artesanal fishers and indigenous peoples. The WTO Trade-Related Investment Measures (TRIMS) Agreement must be eliminated. All countries and especially Third World countries must have the right to use policy options (such as local content policy) to increase the capacity of their own productive sectors, especially small and medium enterprises.
Actions taken to implement multilateral agreements dealing with the environment health, development, human rights, safety, indigenous peoples' rights, food security, women's rights, workers' rights and animal welfare cannot be challenged at or undermined by the WTO. The
WTO operates in a secretive, exclusionary manner that shuts out most Third World country members and the public. It is dominated by a few powerful governments acting on behalf of their corporate elites.
The WTO dispute settlement system is unacceptable. It enforces an illegitimate system of unfair rules and operates with undemocratic procedures. It also usurps the rulemaking and legislative role of sovereign nations and local governments. The use of structural adjustment conditionality to force trade liberalisation in Third World
countries and elsewhere must be stopped.
The world trade rules are "… a grubby set of global guidelines drawn up at the behest of the powerful for the benefit of the powerful." X
C. Hines, Localisation; A Global Manifesto, London, Earthscan, 2000.
"…the implications and consequences of the founding of the WTO had become as clear to large numbers of people as a robbery carried out in broad daylight.
W. Bello, From Melbourne to Prague, in ERA Email Newsletter,
2, 15,
Nov. Dec. 2000.
By setting up the WTO countries and governments discovered that they had set up a legal system that enshrined the priority of free trade above every other good - above the environment, justice, equity and community.
"The ratification of the FTAA simply means that everything
in the Americas, must be privatized, everything must be for sale, everything
must be on the block for acquisition by foreigner investors."
The major powers want unrestricted access to the industries and resources of
the minor powers and of the developing countries. That is what it's all about.
The ratification of the FTAA simply ,means that everything in the Americas must
be privatized, everything must be for sale, everything must be on the block
for acquisition by foreigner investors. Now certainly that has been Canada's
experience with the Free Trade Agreement and NAFTA.
Since the Free Trade Agreement was signed, 13,000 Canadian companies have been
sold to foreigners—10,000 of those to our cousins south of the border.
And we are losing between 5-6 companies on average every day.
Once again, the so-called benefits of the free market are not trickling down.
They are not available to the people who really need them. Instead, the benefits
are gushing up to the people who already have more than they need.
How US self-interest scuttled a satisfactory world trade
system immediately after World War II.
(At the crucial talks in 1945 to set up a new world trade system Keynes put
forward a sensible proposal that would have avoided trade leading to huge debts
and inequalities between nations. The Americans prevented its adoption, and
insisted on a system that enabled them to take most of the world’s trade.)
The WorId Bank was intended to aid post-war reconstruction, especially in poorer
countries, by providing them with loans for development. The IMF came into existence
a year later, in 1945, with the purpose of providing an international reserve
of money, a kind of financial pool, upon which all member countries could call,
whether rich or poor, should they find themselves in temporary payment difficulties
due to a deficit in their trade account. …Trade imbalances leading to creditor
and debtor countries had always been acknowledged as the major cause of trading
wars and attendant financial chaos. The issue of the balance of trade was highlighted
by the contrast between the two main schemes proposed at the Conference.
Keynes argued that it was basic to any constructive foundation of international
trade that there be a mechanism to ensure that imbalances were redressed. He
also acknowledged the complete irrationality of the situation whereby a creditor
nation, in supplying other nations with real wealth, only receives in turn money
which is of no value unless it is spent. He proposed a new, neutral unit of
international currency, namely the 'Bancor' and a new institution - the International
Clearing or Currency Union (I.C.U.). All international trade would be measured
in Bancors. Exporting would accrue Bancors, whilst importing would expend Bancors.
Nations were expected to maintain, within a small percentage, a zero account
with the I.C.U. This would indicate that they had an overall equivalence of
imports and exports.
The key feature of Keynes' proposal was that it placed an equal obligation on
debtor and creditor nations to maintain a balance of trade.The American Delegation
refused to accept in any way the principle of redressing trade imbalances. America
was a creditor nation, exporting far more than she imported. The main concern
of its Delegation was to ensure a continuing favourable balance of trade for
the USA. America was faced with the problem of how to mature into a productive
but stable ground level equilibrated economy.
As a creditor nation with a large export surplus, yet still refusing to take
full payment in goods and instead accumulating gold, the United States had made
any general international system unworkable. Their official proposal was for
international trade to be conducted as a completely free market. ..
Despite the clear unease felt by other national delegates at the American proposal,
the US delegation held both a decisive number of votes and great political influence.
Keynes' Clearing Union had been rejected shortly before the Conference. With
the Clearing Union abandoned the US proposal was given full consideration at
the conference, which Keynes agreed to chair in the hope of being able to improve
the American scheme.
The Americans proposed that a 'Stabilisation Fund be set up and to which all
nations would contribute according to the size and strength of their economies.
The fund would thus hold reserves of all national currencies. Any nation that
found, that as a result of a continuing trade deficit that its domestic economy
was suffering, could borrow from the fund. Thus the IMF was born, as a pool
of funds intended to tide debtor nations over temporary difficulties in their
trading account.
A second institution would also be set up, namely, an international 'bank' with
the purpose of lending money of the required denominations to underdeveloped
nations, or those needing to borrow to rebuild their shattered economies after
the war. Thus was born the World Bank, the International Bank for Reconstruction
and Development. Therefore by choosing gold, the dollar was effectively made
the international unit of account. This position received overwhelming confirmation
when gold convertibility was unilaterally ended by the US in 1973.
Keynes' name has become almost synonymous with the Bretton Woods Agreement.
After his own elegant and infinitely superior system had been thrown out, he
tried to ensure that the crudity of the American proposal was improved. ..
In Britain there was a great deal of informal dissent about the agreement, but
Parliament had been informed that a condition of the latest US war loan to Britain
was acceptance r of the conference proposal, and this was duly carried. The
Keynesian proposals would have far more benefitted the American people, but
they were not at the conference. It was US politicians and powerful commercial
interests who insisted upon institutions and a trading framework that have persistently
secured their commercial and political advantage and which have been open to
their ongoing influence. The Keynesian proposals were based on an entirely different
philosophy of trade - the concept of trade for mutual benefit.
Unpayable debt was the predicted consequence of the Bretton Woods agreement.
In the bitter trade wars which did ensue, nations were lead into a desperate
competition for world markets. As they are drawn ever deeper into debt, Third
World countries have been obliged to submit to the demands of free-market, deregulatory
economic policies, forced to cut or abandon spending on education, health and
welfare, end support for domestic industry, produce food for export instead
of home consumption, and sell their businesses and factories to Western buyers.
With the unrepayable debts of the developing nations mostly denominated in US
dollars, two-thirds of the planet now finds itself subject to American corporate,
financial and economic imperialism whilst the US enjoys an unearned income from
overseas poverty
Editorial, "An era of error ends in terror", ERA Newsletter, 2, 21, Nov-Dec, 2001
The FTAA, NAFTA and (soon) the GATS are the ways used by
politicians to fence off the civil commons for private gain by a select few
instead of creating ways that the planet's resources can be shared equitably
and sustainably. The Third Way also leaves market forces in charge.
H. Wiseman, Fencing in the civil commons, Monetary Reform, 1, p. 64.
"Free" trade is not fair trade; it benefits strong nations at the
expense of weaker ones, and rich interests at the expense of the rest of, circumventing
what little democratic sovereignty we have been able to achieve.
M. Parenti, The WTO and the end of democracy, Monetary Reform, 11, 2001, 17-22.
Whatever pollution, degradation, overloading, exhaustion or destruction of local or planetary ecosystems occurs, and however irreversibly devastating in consequences to human and biodiverse life these damages from corporate extractions, effluents, and 'commodities, there is not one binding article in any transnational trade treaty or agreement (excepting intra-European) which protects or seeks to protect any human or environmental life condition or good.
What we have is an international coup d'etat by finance capital over the nations of the world. Designed to leave the world's economic to the tender mercy of bankers and multinational corporations, globalization is a logical extension of imperialism, a victory of empire over republic, international finance capital over democracy.
J. McMurtry, Meta program for corporate rule, Monetary Reform, Aug., 2001, 65-69
Elected by no one and drawn from the corporate world, these panelists meet in secret and can have investment stakes in the very issues they adjudicate, being limited by no conflict-of-interest provisions. Their function is to allow the transnational companies to do whatever they like without any restraints or regulations placed on them by any country. Not one of GATT's 500 pages of rules and restrictions are directed against private business; all are against governments. Signatory governments must lower tariffs, end farm subsidies, treat foreign companies the same as domestic ones, honor all corporate patent claims, and obey the rulings of a permanent elite bureaucracy, the WTO. Should a country refuse to change its laws when a WTO panel so dictates, the WTO can impose fines or international trade sanctions, depriving the resistant country of needed markets and materials.
Acting as the supreme global adjudicator, the WTO has ruled against laws deemed
"barriers to free trade." It has forced Japan to accept greater pesticide
residues in imported food. It has kept Guatemala from outlawing deceptive advertising
on baby food. It has eliminated the ban in various countries on asbestos, fuel-economy,
and emission standards for cars. And it has ruled against marine-life protection
laws and the ban on endangered species products. The European Union's prohibition
on the
importation of hormone-ridden U.S. beef had overwhelming popular support throughout
Europe, but a three-member WTO panel decided the ban was an illegal restraint
on trade. The decision on beef put in jeopardy a host of other food import regulations
based on health concerns. The WTO overturned a portion of the U.S. Clean Air
Act banning certain additives in gasoline because it interfered with imports
from foreign refineries. And the WTO overturned that portion of the U.S. Endangered
Species Act forbidding the import of shrimp caught with nets that failed to
protect sea turtles.
M. Parenti, WTO and the end of democracy, Monetary Reform, 11,2001, 17-22
…national government parties which act in these matters solely on behalf
of transnational corporate access to foreign markets and resources with no barriers
no binding regulation yet protects any right but that of transnational corporate
investors, and not one article of any already signed international covenant
or treaty protecting human rights, labor or the environment is binding on any
part of any one of these unprecedentedly enforced "agreements". Indeed,
the Kyoto Treaty on climate endangering gases, the Montreal Protocol on ozone-depleting
chemicals and emissions, the Basel Convention on trans-boundary pollutants as
well as the entire body of established international solemn agreements and covenants
on human and labour rights have been consistently overridden by transnational
corporate practices or the explicitjudgements of WTO trade panels.
…the public across the world are obliged to pay all the cots of negotiating,
instituting and enforcing these absolutism prescriptions to the world's nations,
and are forced also to pay all the fines and trade penalties imposed on their
own elected governments for legislating ,democratic or environmentally protective
policies which are deemed to conflict with this unaccountable transnational
regulatory regime.
Any alternative mode for production or distribution of any price able good—socially
owned or controlled, publicly subsidized or assisted domestically, self-sufficient
or cooperative, or declared without genetic
modification or corporate additive—is made illegal under transnational
trade regulations. If any society or government is resistant, its
economy is denounced through state finance and trade offices and global mass
media as "non-competitive", "protectionist", "monopolist"
or "communist", and attacked.
There is within the global corporate system no requirements
of any kind, theoretical or practical, to recognize any life need of anyindividual
(e.g., nourishing food) or society (e.g. non-toxic air) as rightful, or as a
priority, or as an issue of choice within this system, however massive and extreme
the gap between lifedeprivation and over-consumption grows.
J. McMurtry, "Meta program for corporate rule, Monetary Reform, Aug, 2001, 63,65-9.
WTO efforts to prohibit exchanges of seed etc between farmers.
(Source not known)
Third World in the 1980s and early 1990's, when structural adjustment programs
were imposed on over 70 developing countries. After over 15 years, there were
hardly any cases of successful adjustment programs. What structural adjustment
had done, instead, was to institutionalize stagnation in Africa and Latin America,
alongside rises in the levels of absolute poverty and income inequality.
However, under Jim Wolfensohn's command, the World Bank seemed likely to escape
the massive damage sustained by its sister institutions -until the US Congress'
Meltzer Commission in I February of this year. After exhaustively examining
documents and interviewing all kinds of experts, the Commission came to the
devastating conclusion that with most of its resources going to the better off
countries of the developing world, and with the astounding 65-70 per cent failure
rate of its projects in the poorest countries, the World Bank was irrelevant
to the achievement of its avowed mission of global poverty alleviation.
B y signing on to the Agreement on Agriculture (AOA), developing countries had
agreed to open up their markets while allowing the big agricultural superpowers
to consolidate their system of subsidized agricultural production.
By setting up the WTO, countries and governments discovered that they had set
up a legal system that enshrined the priority of free trade above every other
good. The perverse intellectual-property-rights system that treats plants and
seeds as corporate inventions is transforming farmers' highest duties—to
save seed and exchange seed with neighbours—into crimes.
Further, seed legislation forces farmers to use only "registered"
varieties. Since farmers' varieties are not registered, and individual small
farmers cannot afford the costs of registration, they are slowly pushed into
dependence on the seed industry.
Josef Albrecht is an organic farmer in the village of Oberding in Bavaria. Not
satisfied with commercially available seed, he developed his own ecological
varieties of wheat. Ten other organic farmers from neighbouring villages also
used his wheat seeds. In 1996, the Upper Ba
varian government fined Albrecht because he traded in uncertified seed.
In Scotland, many farmers grow and sell seed potato. Until the early 1 990s,
they freely sold seed potato to other seed-potato growers, to merchants, and
to farmers. In the 1 990s, these sales became illegal.
The farmers also started to sell non-certified seed directly to English farmers.
The seed industry claimed they were losing £4 million in seed sales through
this direct trade between farmers.' In February 1995, the British Society for
Plant Breeders sued a farmer from Aberdeenshire, who was forced to pay £30,000
in compensation to cover royalties lost to the seed industry by direct farmer-to-farmer
exchange.
In the United States, direct farmer-to-farmer exchange is also illegal, as established
by a case filed by the Asgrow Seed Company, now owned by Monsanto, against Dennis
and Becky Winterboers. The Winterboers are farmers who own a 500-acre farm in
Iowa. Since 1987, the Winterboers have derived a sizable portion of their income
from selling their crops to other farmers to use as seed. In 1995, Asgrow (which
has plant-variety protection for its soybean seeds) sued the Winterboers on
the grounds that this direct trade violated the company's property rights. The
court ruled against the Winterboers, and the Plant Variety Act, which the Winterboers
had hoped would protect sales between farmers, was amended. The 1994 amendrnent
established an absolute monopoly for the seed industry, making farmer-to-farmer
exchanges and sales illegal.Canada‚s Prime Minister, Brian Mulroney, signed
the Free Trade Agreement in 1988 with a majority of the voters opposing it
already societies cannot protect their natural resources for their own peoples‚
use. Under the new transnational rules, such policies are illegal because they
infringe the „national treatment‰ rights of foreign corporations.
According to these undebated rules, even the most popular governments cannot
legislate anything that might diminish the expected profits of foreign corporations
including by environmental laws
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ERA Email Network, author and source not recorded.
________________________________________________________________________
27. THE WORLD TRADE ORGANISATION; Actual cases decided. (12 pages.)
There have been several notorious cases where governments or groups have tried to ban the importation of something that is undesirable, but have been prevented from doing so by the WTO on the grounds that this would be to interfere with the freedom of trade.
Sea turtles can live to 80 years and weigh 1400 lb. 125,000 are killed each night by shrimp and other fish netting. At least four of the existing species face extinction.
The US Congress placed a limitation on the importation of shrimp from nations which have not taken steps to protect turtles. A number of notions complained to GATT and to the WTO "...on the grounds that the US was forcing its environmental ideals on others and violating the rules of the free trade regime. The WTO agreed."
"The purpose of the agreement is free trade and nothing can stand in the way of this overriding goal.
"Financial liberalisation and crisis have been good for transnational capital, making it easier for financial imperialism to penetrate and control developing economies."
W. A. Tabb, "Turtles, Teamsters and Capital's Designs", Monthly Review, July-August, 2000, p. 38
"…the European Union has banned beef raised with artificial growth hormones. …
The WTO recently ruled that this public health law is a barrier to trade and should be abolished. The EU has to rollback its ban or pay stiff penalties. Under the WTO, governments can no longer act in the public interest."
"Free trade is not working for the majority of the world."
Top 10 reasons to oppose the World Trade Organisation, Sustainable Economics, 8. 2. March 2000, 33-34.
The WTO "…has ruled that it is illegal for a government to ban a product based on the way it is produced (i.e., with child labour, and governments cannot take into account the behaviour of companies that do business with vicious dictatorships such as Burma."
The WTO is being used by corporations to dismantle hard-won environmental protections, (these are called) barriers to trade."
"Recently the WTO declared illegal a provision of the Endangered Species Act that requires shrimp sold in the US to be caught with an inexpensive device that allows endangered sea turtles to escape. The WTO is currently negotiating an agreement that would eliminate tariffs on wood products, which would increase the demand for timber and escalate deforestation."
Top 10 reasons to oppose the World Trade Organisation, Sustainable
Economics, 8. 2. March 2000, 33-34.
The dolphin case:
… a 1991 ruling in which a WTO panel overturned a U.S. prohibition on imports of tuna from countries whose fleets used such methods as purse seine net fishing that kill large numbers of dolphins. It was a preposterous ruling, in effect outlawing the use of any trade measures to protect the environment or to conserve species.
B. Nova and M. Sforza-Roderick, "Worse than NAFTA", in T. Schroyer, Ed., Towards a World That Works, 1997, p. 29.
In February, 1999, the World Bank told the mayor of Cochabamba that if | the city did not privatise its water system it would not receive another cent | of financial assistance for local water development. Then, after judging the resulting Misicuni privatisation project financially unviable, the Bank proceeded to back it anyway, insisting on water pricing that would | cover the excessive costs, and guarantee that Bechtel would earn a 16% profit.
Water~prices for many locals tripled, meaning some people were paying 20% of their income for water. In a scenario impossible to parody, people not even hooked up to the system were told that they would have to put metres on their private wells and pay Bechtel for the water they drew. The resulting citizens' revolt shook the Bolivian government. It led to a week of protests, general strikes, and highway blockages which brought major areas of the country to a virtual standstill. The government caved and told Bechtel to leave. The privatisation was reversed and the water system handed over to the town.
But Bechtel had not given up. Apparently anticipating trouble, Bechtel made moves before its expulsion that guaranteed it access to one of the world's 1,500 powerful Bilateral Investment Treaties (BIT). These treaties - mini-MAIs with all of the intrusive power of the failed Multilateral Agreement on Investment - allow corporations to sue governments directly. And Bechtel, knowing that Bolivia had such an agreement with Holland, transferred its holding company from the Cayment Islands to Holland. It is now using the BIT to sue Bolivia for US $40-million.
M. Dobbin, Water: Right Or Commodity, The National Post, Financial Post Sedction, 8th Feb., 2001; Canada. Reported in ERA Email Network Newlsetter, 134, Feb., 2001.
In April of 1997, the US-based Ethyl Corporation sought $251 million in damages in a lawsuit against the Canadian government over their ban of methylcyclopentadienyl manganese tricarbonyl (MMT).
MMT is a fuel additive that is mixed with gasoline to prevent engine knocking. Many scientists believe that the manganese portion of MMT is a dangerous neurotoxin that can / cause nerve damage leading to psychosis, ,. memory loss, and death. MMT has also been known to damage automobile emission control systems.
… MMT is banned in some US states and simply not stocked in others because of its dangerous properties. After a long debate the Canadian parliament voted to ban the import and interprovincial transport of MMT.
Ethyi Corporation retaliated immediately by suing the Canadian government before a NAFTA tribunal for the "expropriation" of its assets - the profits it was denied because of the ban - and for the damage such a lawsuit and even the mere debate over the issue would do to its reputation. When the Canadian government realized that its MMT ban would be ruled illegal under NAFTAs rules, they settled with Ethyl Corporation in July of 1998. Canadian taxpayers paid the company $20 million in damages, and the government was forced to announce that MMT "poses no health risk."
YES! A Joumal of Positive Futures ~ Spring 1999
"Last week the UK forbade the sale of asbestos. Canada, which mines asbestos, will use the WTO to force us to life the ban."
""...the US sought to oblige Europeans to eat beef contaminated with six … hormones, one of which has been identified as a potent cause of cancer in children. Europe refused, so the WTO allowed the US to levy $160 million worth of sanctions."
Methanex corporation is suing the Californian government for nearly $1 billion in damages because the government directed that an additive be removed. The additive has been linked to health disorders in animal studies and the US Environmental Protection Agency regards it as a possible cancer causing agent.
ERA Email Network, 4th July, 1999.
In 1997 the US tried to ban sale of petroleum imported from Venezuela containing a toxic additive. The exporting corporation got the Venezuelan government to challenge this action in the WTO, forcing the US Environmental Protection Agency to back down and change its standards for air quality in the US.
Similarly the US Endangered Species act was used to ban imports of shrimp caught in ways that kill sea turtles, unless devices that enable the turtles to escape were used. The WTO ruled that this was not permitted.
From The Global Futures Bulletin, 117, 2000.
One of the key problems of economic globalisation in its current form is the erosion of national, sub-national and community political sovereignty - that is, the right to self-determination.
Some recent cases include:
Ethyl Corp (US) sued Canada for banning Ethyl's fuel additive MMT (because it was shown to be a health risk and also clogged catalytic converters). Canada repealed the ban, publicly apologised, and paid US$13m to avoid the US$251m lawsuit.
Methanex Corp (Canada) is suing the US for US$970m because California banned MTBE fuel additive. MTBE has been showing up in groundwater with studies showing a link to cancer.
Metalclad Corp (US) sued Mexico for US$90m (was awarded US$16.7m in Aug 2000) because residents of San Luis Potosi refused to allow construction of a toxic waste plant. Michelle Swenarchuk of the Canadian Environmental Law Association says 'This case is a terrible example of how necessary environmental controls can become near impossible for local communities.' [1] The Mexican Govt will appeal in a neutral court (in BC, Canada).
S.D. Myers Inc (US) which incinerates PCBs is suing Canada for US$20m in lost business because Canada imposed a ban on the export of PCBs (as obligated to do under the Basel convention) [2]. S.D. Myers is suing under the UN Commission for International Trade and Law (UNCITRAL).
Loewen Group (Canada) funeral business is suing the US for $725m because, and even though, it was found guilty of fraud by a Mississippi civil court (arguing the verdict was an unfair burden on i business).
Sun Belt Water Inc (US) is suing Canada for US$220m after British Columbia enacted a moratorium on the export of water that invalidated a 1991 water contract Sun Belt had signed with a Canadian firm [3]. (They argue that the Canadian firm was awarded compensation while they were not).
Pope & Talbot (US) is suing Canada for imposing restrictive logging export quotas and is seeking US$507m in damages
Other cases include:
The US is using the WTO to prevent the EU banning the importation of (US) Bt hormone-treated beef, and against Japan's rigorous fumigation process on imported fruit [5] (the latter may be little more than a trade barrier in disguise, but the former is based on strong publi concerns and scientific doubt regarding the safety of Bt beef).
The US in turn has been challenged by Venezuela through the WTO for its high environmental standards for petrol (gasoline), as well as its ban on tuna where dolphin-safe fishing techniques have not been used, and shrimps where techniques safe for endangered Asian turtles have not been used.
A US federal judge overturned a ban by Massachusetts state government on buying products from companies that do business with Burma after pressure by the EU, Japan and ASEAN via the WTO process [6].
US baby food and infant milk formula manufacturer Gerber ('Babies Are Our Business') threatened to take the Guatemalan government to the WTO over a law which: - prohibited labels depicting idealised healthy chubby babies - required labels to include a statement that breast-feeding is nutritionally superior. - prohibited free samples of infant formulae - prohibited marketing to young mothers in the hospital.
The Guatemalan government backed down. Only 44% of infants in the developing world are breast fed [7]. Advertising implying that infant formula is superior to breast milk is responsible for the deaths of 1.5m infants each year due to diarrhoea from the use of contaminated water in preparing infant formula, according to UNICEF [8]. The Guatemalan law can be seen as an extension of the WHO 'Code on Marketing of Breast-Milk Substitutes'.
"In reality...in the past five years the WTO has contributed to the concentration of wealth in the hands of the rich few, increasing poverty or the majority of he world's population, and unsustainable patterns of production and consumption.". The agreements "... have functioned principally to prise open markets for the benefit of transnational corporations at the expense of national economies, workers, farmers and other people and the environment."
This is from the conclusions of the International Civil Society Opposing a Millennium Round or a New Round of Comprehensive Trade Negotiations, signed by representatives from more than 800 non-government organisations.
The editors, "No new round, instead turnaround!", Third World Resurgence, 108/109, p. 17, 1999.
In 1998 US company sued the Canadian government because it banned the export of Canadian water to California, on the grounds that the ban contravened NAFA rules. Thus the free trade agreement gives the company the right to decide Canada's national water policy. The company is seeking $400 million in damages.
"The WTO, which contains no minimum standards to protect the environment, labour rights, social programs or cultural diversity, has already been used to strike down a number of key nation-state environmental, food safety and human rights laws. Recently, US laws to protect endangered Asian sea turtles from shrimp nets and dolphins from drift nets have been successfully challenged at the WTO."
"...measures such as food subsidies, control of land speculation, agrarian reform and health and environmental standards can be challenged as 'illegal' under the MAI. This same illegality is extended to community control of forests, local bans on use of pesticides, clean air standards, limits on mineral, gas and oil extraction, and bans on toxic dumping."
M. Barlow, "Global rules could paralyse us", ERA Email Network, 2nd Sept., 1999
Indonesia proposed to ban the export of rattan, which is a very important forest product. It is getting scarcer and Indonesia wanted to retain rattan for domestic use. This of course is welcomed by environmentalists who do not want to see the depletion of forest resources. Immediately, however, the United States and the European Community criticised the Indonesian government and said that the export ban was against the principle of free trade. They accused the Indonesian government of taking protectionist steps, and threatened retaliation.
E. Goldsmith, "Development Fallacies", in E. Goldsmith et al., The Future of Progress, London, Green Books, 1995, p. 46.
Part of Denmark's returnable-bottle law was declared a violation of free trade by I the European Court of Justice. .`
Exporting countries that "mine" the environment have an economic advantage over countries adopting environmental policies that promote sustainable development. Yet the GATT staff asserts 'It would not seem desirable for any country to adopt measures designed to stem such flows of investment and trade as might result from international differences in pollution control norms."
Governments argue that their citizens support unfettered free trade. But in 1989 almost three in five Canadians voted against the free trade agreement in a virtually single issue national election, but their vote was split between two parties. In 1988, 60 percent of Mexicans voted for a presidential candidate vigorously opposed to the 3 free trade policies of the existing government, but Mexico's ruling party refused to abide by the results of that election.
D. Morris, Free trade purism imperils meaningful democracy, St Paul Pioneer Press, 7..5. 1990.
The case ofEthyl Corp. suing the Canadian government for revoking its right to market the fuel additive MMT is a case in point. The Canadian government decided to ban MMT on public health grounds, but was forced to pay Ethyl Corp. $13m in compensation *and* back down on its decision to ban the product. This is an outrageous assault on national sovereignty.
In August 1991 a GATT dispute committee ruled that a US law bann~ng imports of yellow-fish tuna from Mexico was contrary to international trade rules. The ban had been imposed as a punitive measure to prevent the death of dolphins who swim above the tuna and get caught in the Mexican industry's drift nets. This was the first test of whether environmental considerations, extending beyond a country's jurisdiction, can be a factor in restricting imports. The GATT's answer was no.
. One trade dispute presently before NAFTA closed door dispute settlement panel foretells of things to come. Ethel Corp in the US makes a gasoline additive which contains manganese. There is enough danger that this element inhibits pollution control devices in cars that a law was passed forbidding its use in Canada. Through NAFTA Ethyl Corporation is suing the Canadian Government for $251 million for business lost due to this law. NAFTA has the power to declare our law illegal so we would either have to repeal it or pay the quarter billion dollars in damages to Ethel Corporation.
WTO restrictions on environmental labelling schemes: -
Europe has devised a scheme giving buyers information on ecological aspects of the products they might purchase, on labels to do with paper products. This will not be implemented because the US Paper ~-Manufacturers Association says it will get the WTO to reject it..
The Canadian government has asked the WTO to confirm that all ecolabelling schemes pointing to sustainability differences, e.g. how the wood was produced, are illegal under WTO rules. This probably means ~n aid organisation could not use a label saying this product was produced in ecologically acceptable ways, or that product comes from a peasant producers' coop and will benefit poor people. Any such labelling will be judged as an interference with the right of other companies to free trade.
K. Watkins, "Goods for some are bad for others", in T. Schroyer, ed., Towards a World That Works, 1997, p. 31.
The Ethyl Corporation of Virginia which makes an additive called MMT which is being added to gasoline was ruled a health hazard in_ the United States and was banned in the State of California. When the Canadian government banned MMT–the transportation of MMT in Canada–Ethyl, now of Virginia, has launched a $347 million lawsuit against the Canadian government for daring to ban their product.
The second case under NAFTA that is going forward is the Metalclad Corporation of California which bought a toxic waste dump in Mexico–thought it would be a tremendously advantageous paying proposition. The Mexicans took machetes in their hands and shut the toxic waste dump down. And Metalclad Corporation is now suing the Mexican government for the right to reopen their toxic waste dump under the NAFTA provision. And this is same NAFTA provision which is expanded into the MAI.
"The MAI in question, Monetary Reform Magazine, Winter 1997_1998, p. 27.
B. Coote, The Trade Trap, Oxfam, 1992, p. 119.
Impeding AIDS prevention - -
AIDS is set to kill one in four people in Black Africa, unless anti-AIDS drugs can be made more widely available. However, global pharmaceutical corporations charge such exorbitant fees for their products that they are prohibitively expensive in most of Africa. One way round this is for countries such as Brazil, India and Argentina to produce the same drugs much more cheaply and export them to poor countries. US, British and Swiss pharmaceutical giants are furious at this, and thanks to the WTO's Trade-Related Intellectual Property, Rights Agreement - designed to provide fierce protection for manufacturers' patented products - are in an excellent position to stop it.
In an attempt to reduce its infant mortality rate, Guatemala passed a law and issued regulations in 1983 encouraging new mothers to breast feed their infants and fully understand the health threats to their babies of using infant formula as a substitute for breast milk. To be accessible to illiterate people, Guatemala's regulations also included prohibitions against visual depictions of infants that 'idealise the use of bottle feeding'.
One infant formula producer, Gerber Food, bridled at the Guatemalan law and regulation because its trademark logo includes the picture of a rosy infant, the 'Gerber Baby' which it refused and still refuses to change for the Guatemalan market.
Gerber threatened to bring about WTO action to overturn the law. By 1995, Gerber's threats, taken seriously by the Guatemalan government at home and by its Washington embassy, succeeded. The law was changed so that imported babv food products would be exempt from its infant food labelling policy…
China, like Russia, has seen conditions for the majority of its citizens worsen as both countries have opened up to the global market. Should China join the WTO, the situation will worsen both internally and for other developing countries competing for the same export markets. Wages and conditions will remain very low and probably worsen. An estimated 100 million people have already left the land in search of work in towns and cities, thought to be the biggest migration in human history. WTO membership will result in cheap food imports, thus accelerating rural decline and the move to urban centres. In addition it is expected a further 1S0 million jobs will be lost as 'inefficient' state enterprises are made ready for international competition. Whatever the actual final numbers, this trend will ensure a permanent cheap labour force whose products will undercut workers in other developing countries as well as in the North.
"Gerber Products Co instigated the United States government to challenge a Guatemalan law that did not conform to the WTOs Agreement on Trade Related Intellectual Property Rights {TRIPS}. Under the guidance of the World Health Organisation, Guatemala outlawed advertising and packaging techniques that displayed chubby, healthy babies on infant formula. The Guatemalan government believed these marketing practices encouraged women to purchase infant formula and discouraged breastfeeding. After the implementation of the law, the Guatemalan infant mortality rate decreased substantially. However it was overturned by the WTO because the law violated Gerber’s trademark…"
THE BIG PICTURE, 24, Feb/March, 2001. P. 3.
Metalclald sued Mexico because Mexico refused the company permission to run a hazardous waste dump in their country. Metalclad claims that municipal authorities in Mexico ruined their investment plans because they denied Metalclad building m permits. In September 2000 Mexico was ordered by NAFTA tribunal to pay Metalclad $16.7 million (US) in compensation feed."
THE BIG PICTURE, 24, Feb/March, 2001. P. 4.
The U.S. giant Ethyl Corporation is suing Ottawa for $215-million, U.S., under NAFTA even though MMT (A chemical additive) is not permitted in many U.S…
P. Hellyer, The Evil Empire, Toronto,1997.
In April of 1997, the US-based Ethyl Corporation sought $251 million in damages in a lawsuit against the Canadian government over their ban of
methylcydopentadienyl manganese tricarbonyl (MMT). MMT is a fuel additive that is mixed with gasoline to prevent engine knocking. Many
scientists believe that the manganese portion of MMT is a dangerous neurotoxin that can cause nerve damage leading to psychosis,
memory loss, and death. MMT has also been known~o damage automobile emission control systems.
MMT is banned in some US states and simply not stocked in others because of its dangerous properties. After a long debate, the Canadian parliament voted to ban the import and inter-provincial transport of MMT.
Ethyl Corporation retaliated immediately by suing the Canadian government before a NAFTA tribunal for the "expropriation" of its assets - the profits it was denied because of the ban - and for the damage such a lawsuit and even the mere debate over the issue would do to its
reputation. When the Canadian government realized that its MMT ban would be ruled illegal under NAFTA's rules, they settled with Ethyl Corporation in July of 1998. Canadian taxpayers paid the company $20 million in damages, and the government was forced to announce that MMT "poses no health risk."
Monbiot says of the World Trade Organisation, it is "…effectively
run by corporate lawyers. The panels which make up the judgements within the
World Trade Oerganisation are almost all lawyers with a corporate training and
many of them work for the very companies who are hoping to benefit from those
judgements. The delegations which nations send to them, are largely composed
of corporate representatives. I mean the US delegations are almost entirely
corporate; there are very few government representatives there at all. And so
the whole process of trade regulation is just ripped out of our hands. We can't
engage with this at all and we end up with decisions which can be very good
for corporations, but disastrous for the rest of us.
Like for example, the decision by the World Trade Organisation to punish all
the countries of the European Union, Britain included, for refusing to import
poisoned beef from the United States. Poisoned beef: Poisoned because it's beef
from animals which have been injected with genetically engineered growth hormones
which have been shown not only to cause appalling animal welfare problems, but
also (and the European Veterinary Committee has laid this down) they say what
they call a complete carcinogen in children. What a complete carcinogen means
is it's a chemical which can trigger off cancer all by itself, it doesn't need
any other chemicals to act in concert with. And because we said "No, we're
not taking this poisoned beef in this country, and we're
not going to eat it and we're not going to allow it in." The World Trade
Organisation has slapped sanctions of $116-million a year onto European nations,
and we have to pay, And we're also stunned by retaliatory measures. The Scottish
cashmere industry, you're getting 100% tariffs on our cashmere being sold in
theUS. There's a celebrated case of French Roquefort which has also got 100%
tariffs on it…
We've seen how France's ban on asbestos is being undermined in favour of Canada.
We have seen how it's effectively going to be impossible to have an effective
ban on battery chicken keeping in Britain, despite the fact that we've already
agreed in Britain and in Europe, we're not going to have battery cages any more,
because it's so cruel. We can't stop battery eggs from coming in from elsewhere,
the United States in particular, and so our own producers then get undermined
and wiped out at the market because of course the battery eggs from elsewhere
will be cheaper.
Extracts from ABC Background Briefing, "Global democracy", 11th Nov., 2001. George Monbiot.
Monbiot says of the Transatlantic Economic Partnership, "It's this agreement
… anything which was allowed on one side of the Atlantic had to then be
allowed on the other side of the Atlantic, and you couldn't put up any barriers
at all. So the beef hormones would have to be allowed; milk hormones would have
to be allowed. I mean there's this horrendous bovine Somatrotropin, this injectible
genetically engineered hormone manufactured by Monsanto which is injected into
dairy cows in the United States to boost their production. It's got horrendous
health consequences for both cows and for human beings, and they're trying to
push this onto the agenda. There are all sorts of things that you're allowed
to do in the US that you can't do here. Indeed there were two quite good environmental
laws in the US which stopped you doing very polluting activities which we in
Europe are allowed to do, and especially as our standards come down as we incorporate
some of the Central and Eastern European nations, we could find the US under
similar pressure. So you just get this levelling down on both sides, and it
just keeps going down and down and down.
Extracts from ABC Background Briefing, "Global democracy", 11th Nov., 2001. George Monbiot
The Massachusetts state legislature…"…passed sanctions saying they would buy no products for the state of Massachusetts from companies that did business in Burma, where the thugs have stolen democracy and oppressed the people there. The World Trade Organization has entered that fight, saying Massachusetts cannot pass an ordinance like that.
K Dixon, The Third Way; British style, ERA Newsletter, 14.1.2000.
LAWS TO safeguard the environment have fallen prey to free-trade rules. In its
first ever case the WTO stopped the US cutting air pollution by cleaning up
petrol, on the grounds that this would discriminate against producers of dirtier
oil, such as Venezuela. This overruled a vote in the US Congress and forced
the Administration to change its Clean Air Act.
The WTO stopped the US requiring nations from which it brought shrimps to bring
in regulations to ensure that their boats did not catch critically endangered
sea turtles. The US is trying to get it to stop the EU recycling components
of electrical goods. And under similar free trade rules, the EU has taken Denmark
to the European Court for bringing in laws to make bottles returnable.
Environmentalists fear that the WTO could strike down provisions in long-agreed
treaties to protect the ozone layer, control the dumping of toxic wastes overseas,
and to ban trade in endangered species. The WTO has not yet ruled on such a
treaty, but this is only because it has not received a complaint about one.
"Some 125 countries signed on to the WTO in 1995, even though their citizens
were largely unaware their national sovereignty was under threat. …What
the corporations were after was a global playing field without rules and access
to unregulated labour, consumer markets, and natural resources without having
to operate under the restrictions of national laws. And what the corporations
wanted is what they got: their agenda became paramount as national and even
state laws relating to environmental protection, human and consumer rights,
local culture, social justice issues and even national sovereignty fell before
the new hegemony of the WTO.
H. Cauldicot, "Why we should be wary of the WTOs mantra of globalisation", reported in ERA Email Network 1.6.2000.