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Ralph Nader and Lori Wallach

Imagine a new governing system with enormous control over the lives of most of the world's population. Under this system, decisions made in secret by unelected bureaucrats dictate how much pesticide can be put on the food Californians eat; how the citizens of Thailand can regulate cigarette sales; and whether Europeans have the right to ban the use of dangerous hormones in beef.

Imagine the predominating drive behind this system was not the advancement of the health and economic well being of the people, but the health and economic well being of the world's largest corporations and financial institutions.

While this sounds like something out of a science fiction novel, such a scenario is evolving before our eyes. In the name of "free" trade, economic and political control is shifting away from local, state and national governments to inaccessible, unaccountable international bureaucracies.

In approving the far-reaching, powerful new World Trade Organization (WTO) and smaller international trade agreements, nations have ceded large swaths of their legal capacity to protect their citizens. Approval of these agreements has placed every world government in a virtual hostage situation at the mercy of the globe's largest corporations.

Corporate Rules Replace Democracy

The recent expansion of the General Agreement on Tariffs and Trade (GATT), which transformed the GATT from a trade contract into the World Trade Organization, allows for a circumvention of the democratic process altogether.

What is now being characterized as "trade" includes wide portions of each nation's economic and political structures. GATT and other trade agreements are moving beyond their traditional scope of quotas and tariffs to provide transnational corporations with new and unprecedented freedoms, such as: investment anywhere in the world without restrictions; uniform global environmental and safety standards (with the practical result being that standards are watered down to a lowest common international denominator); monopoly rights governing ownership of intellectual property (patents, copyrights, and trademarks) in force throughout the world.

While American Express, Cargill, and other megacorporations rejoice at the prospect of global commerce without commensurate democratic global law, the rest of the world is left vulnerable to unrestrained corporate activity and plummeting living, health and environmental standards.

In GATT and NAFTA, not all "fetters" on commerce are targeted for elimination. Rather, the agreements are comprehensive sets of trade rules that promote watering-down or eliminating restrictions that protect people, while increasing protection for corporate interests. For instance, labour rights were left out as inappropriate limitations on global commerce. But regulation to protect property rights - such as intellectual property - was expanded. The right for capital to invest in any country in any area was also strengthened.

Under the WTO, domestic legislatures are forbidden from pursuing certain goals, such as significant subsidies to promote energy conservation, sustainable farming practices or environmentally-sensitive technology. Laws with mixed purposes, such as the provision of the U.S. Clean Air Act which implement the international ozone agreement are suspect under the Uruguay Round's requirements.

To encompass a vast array of national, state and local environmental, health, consumer and worker safety standards, the Uruguay Round expanded coverage of "non-tariff barriers". A "non-tariff barrier" is trade jargon meaning any measure that is not a tariff and inhibits trade. Unfortunately, what free trade advocates see as non-tariff barriers we see as our basic environmental and health protection.

With the concept of non-tariff barriers, corporate interests focus on safety, health or environmental regulations that they don't like, develop arguments about how they violate the rules of a trade agreement, and then demand that the regulation be revoked.

If the threat of using non-tariff barriers seems unrealistic, consider the following partial list of laws which have either been attacked as non-tariff barriers under existing free trade agreements or specifically threatened with future challenges under the Uruguay Round rules: Canadian plain packaging rules for cigarettes, Thai cigarette sales limitations, a Danish and several U.S. states' recycling programs, the U.S. asbestos ban, U.S., Filipino, Malaysian and other countries' restrictions on exports of unprocessed logs, U.S. fuel efficiency standards, driftnet fishing and whaling restrictions, U.S. laws designed to protect dolphins, and European bans on smokeless tobacco.

The World Trade Organization's non-tariff barrier rules promote a race to the bottom in consumer, environmental, worker and health standards, as companies push countries to lodge challenges against other countries with higher standards. Thus, the Office of the U.S. Trade Representative (USTR) initiated action under the old GATT against the European ban on bovine growth hormones, a consumer protection U.S. citizens' groups have been pushing for in the United States. The USTR is currently threatening Europe with a WTO challenge against an EU ban on sale of furs caught with steel leg hold traps.

Enforcing Global Corporate Rules

To organize and enforce this new system of limits on every nation's laws and policies, the WTO was crafted as a new "governing" structure. As an institution with "legal personality" - the same status enjoyed by the United Nations, the World Bank, and the IMF - the WTO serves as a global corporate government to judge countries' compliance with the rules, enforce those rules with sanctions and provide a legislative capacity to expand the rules in the future.

The WTO's mandate looks backward to an era when environmental and other citizen considerations were not taken into account. The binding provisions setting out the WTO's functions and scope do not incorporate any environmental, health, labour rights or human rights considerations. In fact, the only reference to the environment is in the rhetoric of the WTO's preamble, which does not have the binding legal effect of the agreement. Labour and human rights are not mentioned in the preamble at all.

Moreover, there is nothing in the institutional principles of the WTO to inject any procedural safeguards of openness, citizen participation or accountability into the governance of this body or its functions. The WTO has no structural capacity for its citizens or non-governmental organizations to have any role, and in several key provisions, requires that documents and proceedings remain confidential.

The WTO's rules and restrictions apply to the federal, state and local laws of its members. Under the WTO's operations, laws in any Member country that fall outside of the 500 pages of the Uruguay Round's rules would be exposed to challenge by other countries through a new powerful dispute resolution system, an enforcement arm of the WTO. Through this system, decisions made by closed tribunals of three trade officials automatically become binding on a country whose law has been successfully challenged unless all the member countries vote not to make the decision binding. If a country losing a trade challenge does not change a measure found to be in violation of GATT rules within a prescribed period, other countries challenging that measure have an automatic right to impose retaliatory trade sanctions.

These changes effectively remove the possibility for an individual government to express its people's democratic will in opposition to a WTO ruling. Thus, when a popular law has been overruled by the WTO, its supporters can expect their government to say: "What can we do? If we do not change the law, our economy will be crippled by trade sanctions. Sorry."

Unlike past rounds of GATT negotiations, members of the World Trade Organization must agree to be bound by all the Uruguay Round accords. From a trade perspective, this all-or-nothing rule eliminates the problem of "free riders". From a democracy perspective, this rule forces countries to accept trade in areas that might be undesirable or to face exclusion from the world trade system.

How could such a major power shift and democracy grab have occurred without more debate, and opposition, from citizens, or for that matter, from the elected officials worldwide whose powers the WTO would directly curtail? Secrecy, abstruseness and unaccountability: these are the watchwords of global trade policy-making.

Every element of the negotiation, adoption, and implementation of the trade agreements is designed to foreclose citizen participation or even awareness. The WTO's aversion to democratic process is so comprehensive that even countries that might choose to release certain WTO documents are forbidden from doing so under WTO rules. Thus, the Office of the U.S. Trade Representative has stated that if current obligations under the WTO prohibit it from providing documents relating to a particular trade dispute that it would otherwise be willing to release.


One can be properly suspicious of the intent of these trade agreements given the process by which they are negotiated.

Trade negotiations invariably take place behind closed doors between unelected and largely unaccountable government agents who are mainly representing business interests. In the case of the WTO, talks took place in Geneva, Switzerland.

Secrecy predominates even within the GATT negotiating process itself. Through a variety of stops and starts in the eight-year Uruguay Round negotiations, small cliques of powerful nations regularly retreated to "green rooms" to cut deals that were then forced on other GATT signatory countries as "consensus" positions. The very conclusion of the Uruguay Round talks was held hostage as U.S. and European Union negotiators retreated into almost a year of private discussions over agriculture while over 100 other nations cooled their heels waiting for the outcome. The result of these negotiations, narrowly tailored to suit U.S. and European agribusinesses, was then declared the outcome of global agriculture negotiations.

Corporate lobbyists, cruising in the halls outside the negotiating rooms, exerted tremendous influence over the negotiations. On occasion, business groups admit their influence over the process. The business coalition calling itself the Intellectual Property Committee (IPC) - its members include IBM, Du Pont, General Electric, Merck and Pfizer - has bragged in its own literature that its "close association with the U.S. Trade Representative and [the Department of] Commerce has permitted the IPC to shape the U.S. proposals and negotiating positions during the course of the [GATT] negotiations." Citizen groups, short on resources to hire lobbyists and coordinate global lobbying campaigns, have not been able to play a parallel role.

As if the advantage in resources were not enough, the corporate lobbying function has been institutionalized in the United States in a set of official trade advisory committees to the U.S. trade negotiators. In 1974, during the Tokyo Round of GATT talks, President Richard Nixon, renowned for his disdain for democracy, proposed to Congress a new way of handling trade negotiations. Nixon proposed "fast track", a uniquely anti-democratic procedure under which Congress must vote yes or no on a trade agreement and all changes to U.S. law required to conform them to its terms - with no amendments permitted.

Under fast track, Congress agrees to conduct such a vote within a brief 60 to 90 days of the President's submission of the agreement, and must limit its debate on the agreements to not more than 20 hours in either the House or Senate. In exchange for removing Congress from greater involvement in the negotiation process, Nixon proposed a system of private sector trade advisory groups. These advisers, appointed by the President, have enormous access and influence on the process.

During the Uruguay Round negotiations, the advisory committees were composed of over 800 business executives and consultants, with limited labour representation, five representatives of environmental groups who were supportive or neutral on NAFTA, and no consumer or health representatives.

Meetings of the advisory groups are closed to the public and all documents are considered confidential, with representatives required to obtain a security clearance. Under a blanket closure rule, now being challenged in court by Public Citizen, USTR Mickey Rantor has locked out not only citizen oversight of these committees for two years, but even notice in the Federal register of the meetings' occurrence.

Once the agreements are completed - or on those rare occasions when a draft of the agreements is "liberated" - any person who wants to figure out what the agreements say faces a Herculean task. The agreements are very complex and written in arcane, almost impenetrable technical jargon that bears only a passing resemblance to the English language. Only those with extensive knowledge of GATTese and NAFTAese can comprehend what the trade jargon means for their jobs, food, or environment.

This difficulty in obtaining and understanding the actual agreements was not an accident; it reflected a purposeful effort by proponents of globalization to conceal the Agreements' terms and effects from the public, the news media, and even parliamentary bodies that approved the GATT. Globalization proponents would rather have citizens read a sanitized summary suitably interpreted by the agreements' boosters. In their view, it is completely anathema that citizens should be informed of trade issues - never mind actually having a say in their approval.


Political approval of the Uruguay Round agreement by legislators around the world has legitimized and empowered the WTO, but in most countries that approval process was a sham of democracy. Most legislators had little idea what they were approving because they relied on the propaganda of their negotiators rather than independent analyses of the text. Even though the WTO has an agenda rivalling the United Nations, with much grater power to enforce its rules, it was not the cause of major national public and parliamentary debates. Rather, it was rubber-stamped by the very elected officials whose democratically-derived power it will seize.

When a challenge was issued to the U.S. House and Senate in 1994 for any member to sign an affidavit that he or she had read the 500-page GATT text and answer ten questions about it, not one of the 535 members accepted. Few members - and almost none of the U.S. press - would report having read the text.

Meanwhile, despite unified opposition by U.S. citizens organizations - from every environmental group and labour group to major family farm, religious and civil rights groups - and U.S. public opinion polls showing majority opposition to the very concept of the autocratic WTO, the U.S. Congress passed it.

Such perversities of democracy abounded in many nations' consideration of the Uruguay Round. Filipino citizen opponents noted they had "God against GATT", with the Catholic Church taking up official opposition, along with a broad array of civic groups. Ultimately, after street riots in opposition, the Filipino Senat approved the deal.

In Spain, public opposition had kept the vote off the parliamentary agenda. On Christmas Eve, without public notice, a rump session of the parliament approved the deal in the dead of night.

In Belgium, citizen protesters were dragged by police out of the parliament building so the deal could be hastily approved.

In India, powerful public opposition had forced out of the domestic implementing legislation provisions adopting the Uruguay Round's intellectual property rules. After the parliament had voted on the limited package, on New Year's Eve, the Indian Prime Minister exercised extraordinary constitutional powers by issuing an executive decree authorizing the deleted provisions.


Not surprisingly, the operations of the agreements continue the secrecy and lack of public participation. Because the implications of the globalization agenda could not sustain democratic support, the WTO's structure imposes upon the world's many weak democracies, an autocratic system of governance.

By merit of joining the WTO, countries have authorized that body to conduct ongoing negotiations to expand and amend the initial substantive provisions. Whether such additions and changes will themselves ever be submitted to democratic approval by national governments is a matter of each country's laws. Certainly the intent of the WTO's supporters is to take decision-making out of such democratic fora.

The decision to initiate negotiations under the WTO is taken by a simple majority vote. Because the WTO requires an all-or-none adhereence to its rules by countries, there is no protection for the minority. If a majority of countries decides to initiate negotiations, all countries must go along regardless of how strongly opposed such negotiations might be at home. In several instances, changes, adopted through supermajority votes, are automatically applicable to all WTO members; others require a country's consent with the caveat that if countries do not approve, their continued membership in the WTO must be authorized by the other members. Such procedures do not provide any role for democratic input at home into WTO positions.

The WTO dispute resolution system acts as the practical mechanism to enforce the WTO's autocracy over government democracy. As mentioned earlier, the WTO dispute resolution process allows any member nation to challenge the domestic laws of another member as violations of WTO rules.

The very terms of establishment of the panels ensure they will only promote a trade über alles philosophy. WTO disputes are decided not by elected officials or their appointees, but by secretive panels of foreign trade bureaucrats pulled off a preset roster. Only national government representatives are allowed to participate in the dispute resolution process: state and local government representatives are locked out. The qualifications for WTO panelists, such as experience as a trade lawyer bringing a trade dispute, result in panelists with a uniformly pro-trade perspective.

Furthermore, there are no conflicts of interest or other procedural safeguards to guarantee that a panelist does not have a direct economic interest in a decision. In a recent dispute over timber issues under the Canada-U.S. Free Trade Agreement, which has a similar dispute resolution system, two of the five panelists were attorneys whose law firms represented Canadian lumber interests directly affected by the timber subsidy case under dispute.

There is not even a mechanism to guarantee that such panelists will be exposed to alternative perspectives or expert opinions on environmental, health, labour rights or human rights issues. The text also forbids identification of which panelists supported which positions and conclusions. This additional layer of secrecy adds to the lack of accountability of the WTO decisionmakers.

The new WTO dispute resolution rules make the decisions of the three-person review panels automatically adopted 60 days after completion unless there is a consensus among WTO members to reject the ruling, or the losing country files an internal appeal. Thus, within 60 days, over 100 countries, including the country that has won the panel decision, must be persuaded in order to stop its adoption.

The tribunals have the power to impose trade sanctions to ensure their decisions are enforced. If a country fails to change its law within a set time, the winning country can request trade sanctions against the country that has failed to change its law. Such a request is automatically granted unless there is unanimous consensus of all WTO members to reject the request.

Sign of What's to Come: The Mexican Crisis

The recent NAFTA peso debacle is an example of what can be expected in the future if we do not fight to take back our democratic rights from the globalization behemoth. Two weeks after President Clinton lauded NAFTA and Mexico as an example of free trade success, Mexico fell into major economic chaos. Overnight, the poster child for the neoliberal economic model was forced into revealing what this model had done to its economy and people. The Mexican peso had been artifically propped up in a Ponzi scheme of foreign cash infusions to push NAFTA approval and investment in Mexico following NAFTA. Despite rapidly shrinking foreign reserves, the charade was continued until after the U.S. Congress had approved GATT.

Three weeks later, the Mexican government announced it would devalue the peso to shrink the current account deficit that had grown in the first year of NAFTA; U.S. imports would be made too expensive for the Mexican market and Mexican exports and labour costs would become even cheaper. But the devaluation spun out of control as investors focused on Mexico's $200 billion debt, growing concentration of wealth and citizen despair that was boiling into revolt. Left to float on the market, the peso quickly devalued 40%. The Mexican banking system teetered on the edge of collapse. The Mexican President announced wage caps and a harsh austerity program instead of the promised fruits of a first year of NAFTA. Wall Street investors, holdings tens of billions in short term high profit Mexican bonds, came howling to Washington for help. The facade of globalization was peeling away and the grim reality was becoming apparent for all to see.

Warning of global economic collapse, the Clinton Administration sent Congress a request for $40 billion in taxpayer funds to bail out investors in Mexico and prop up the corrupt Mexican regime. But with Congress unwilling to approve the money and U.S. public opinion strongly against the bailout, the Administration suddenly withdrew the deal.

To cover up the globalization reality, democracy had to be trammeled. President Clinton quickly announced a bigger bailout deal that included at least $20 billion of taxpayer money directly out of the U.S. Treasury. The backdoor bailout entirely circumvented Congress, with President Clinton taking extraordinary unilateral action to use Treasury funds reserved for stabilizing the U.S. currency.

Turning Back the Tide of Globalization

As the world prepares to enter the twenty-first century, the globalization agenda is leading the planet in exactly the wrong direction. One of the clearest lessons that emerges from a study of industrialized societies is that the centralization of the power of commerce is environmentally and democratically unsound. No one denies the usefulness of some international trade and commerce. But societies need to focus their attention on fostering community-oriented production. Such smaller-scale operations are more flexible and adaptable to local needs and environmentally sustainable production methods. They are also less likely to threaten to migrate, and they may perceive their interests as more overlapping with general community interests.

Similarly, allocating power to lower level governmental bodies tends to increase citizen power. Concentrating power in international organizations, as the trade pacts do, tends to remove critical decisions from citizen control. You can get a hold of your city council representative, but not some faceless international trade bureaucrat in Geneva, Switzerland.

Instead of NAFTA and GATT's global limits on how governments can protect people, we must fight to put in place global limits on corporate behaviour. Countries and citizens must have the political space to build the diversified, more self-reliant, localized economies that promote citizen control, distribution of wealth and environmental protection.

All over the world there is a bubbling up of citizen activity. In part, this activity is in reaction to the initial effects of globalization. In India, millions of peasant farmers have banded together and are now organized village to village to defend their indigenous seeds and medicinal and cultural knowledge from multinational prospectors who want to patent and profit from such knowledge. These Indian activists have ripped down a Cargill Corporation plant by hand.

In the United Kingdom, a growing sector of the population is taking to direct action against the invasion of huge supermarket chains which are replacing locally produced food at local shops with chemically preserved foods shipped from all over the world. In addition, anti-road building and animal welfare protests have forced companies to change their plans.

While citizen movements worldwide must continue fighting the symptoms of the corporate-driven agenda, we must also make the sources of these miseries abundantly clear. If we do not make the connection between our local problems and the multinational corporate drive for economic and political globalization, then others will blame these unavoidable and increasing problems on other causes. "It's the immigrants!" "It's the welfare system!" "It's greedy farmers or workers!" Allowing such camouflage for the real causes of these multifaceted problems means not only that they won't be the target for attack and demolition, but that citizens will be divided against each other to the benefit of the corporate agenda.

How will citizens reverse the devastating globalization agenda? It will require a revitalized citizen democracy here and abroad. The opportunity to save ourselves and our planet from globalization's ravages is now. But there is no time to waste as the globalization agenda eats into our democracy like a cancer. The struggle citizens around the world must wage to protect and expand democracy will ultimately decide the fate of the planet. The worst fear of supporters of globalization is our greatest hope: that citizens will take control of their civil institutions.

Reproduced with the permission of Edward Goldsmith, co-editor with Jerry Mander, of The Case Against the Global Economy and For a Turn Towards the Local - Sierra Club Books; fax 1-415-957-5793.

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