Whacking the WTO

"Whose Trade Organisation?: Corporate Globalisation and the Erosion of Democracy"
Lori Wallach and Michelle Sforza.
Public Citizen, Washington DC www.citizen.org 1999.
ISBN 1-58231-001-7

- Review by Dennis Small

"Under the World Trade Organisation (WTO), the race to the bottom is not only in standard of living and environmental and health safeguards but in democracy itself. Enactment of these so-called free trade deals virtually guarantees that democratic efforts to ensure corporations pay their fair share of taxes, provide their employees a decent standard of living or limit their pollution of the air, water and land will be met with . . . intimidation (and) threats . . ." (from Ralph Nader's preface to "Whose Trade Organisation?, p.xi. Nader founded Public Citizen about 30 years ago to campaign for genuine democracy in the US and internationally.)

When the dreams of WTO Director General, Mike Moore, of inaugurating a new era of capitalist governance collapsed in the farce of the failed WTO ministerial conference in Seattle in December 1999, the wheels were seen to be rolling off the WTO globalisation roller coaster. Lori Wallach, director of Public Citizen's Trade Watch, could rightly proclaim:"History has been made in Seattle as the allegedly irresistible forces of corporate economic globalisation were stopped in their tracks" (Press, 6/12/99). After many years of being bullied, divided and manipulated, the Third World finally made a considerably more substantial and concerted stand than in the past against the Western free trade onslaught, forcing the brakes to come on. A critical factor in this was the bitter struggle for the position of the WTO Director General. The US-backed campaign to put Mike Moore in the top job over Thai Deputy Prime Minister, Supachai Panitchpakdi, disrupted the previously expectant consensus that the position would go to a Third World candidate for the first time. In the end, a compromise was reached but serious damage had been done to working relations within the WTO. Good old Mike! He has maintained our confidence that the NZ Government, acting on lots of US encouragement, has mistakenly launched a secret weapon against the whole free trade/investment programme.

NZ free traders have been paying the price in more than one way for their support of Moore's power tripping. For instance, in November 1999, a NZ proposal for the agenda at the imminent WTO Seattle conference got short shrift at the WTO's council negotiations in Geneva. NZ had wanted the Seattle agenda "to include support for an initiative by Asia Pacific Economic Cooperation (APEC) forum countries to reach quick agreement on ending tariffs in eight key sectors" (Press, 10/11/99). But many developing countries said it had no place in the agenda declaration. Right on!

Of course, even now Mad Mike and his hard Right mates are feverishly trying to get the free trade vehicle going again. But, along with the Third World stand, non-government organisations (NGOs), which helped mobilise the marches in Seattle streets against WTO policies, have succeeded in reaching new levels of international activism. After the success of beating back (momentarily, at least) the totalitarian commercialism of the Multilateral Agreement on Investment (MAI), the global movement against free trade/investment has also proved significant in helping disrupt the general corporate programme at the WTO and elsewhere. People have risen up around the world with more effective liaison among activists from a very wide range of backgrounds and pushing a whole range of issues.

Freeing Up Information

Above all, what NGOs have done, is to draw attention to formerly highly secretive machinations of power politics in international trade and investment issues, disseminating information capable of embarrassing the Big Boys. It is not only President Clinton who has been caught with his pants down. One of the prime US organisations involved in making these exposures is Public Citizen's Trade Watch. We don't always necessarily agree with this organisation's policies but it has long done sterling work and put out volumes of brilliant analytical material. Wallach's and Sforza's study, "Whose Trade Organisation?" is just about the best book imaginable on the WTO at the turn of the millennium, allowing for the fact it is written from within the US, the WTO's main backer, and so inevitably has a American perspective on a lot of the subject matter (however critical this perspective might be). All the same, this angle in turn can be very enlightening given the importance of the US's role and scope of activity.

There are some important omissions, e.g. the interface/collaboration of the World Bank and the International Monetary Fund (IMF) with the WTO, that this reviewer would have liked to have seen included but in about 200 pages of text (aside from extensive footnotes, etc) there has to be a very selective choice from a vast amount of topics and material. Even here, in this specific instance, Wallach and Sforza at least make a connection between the policies of the IMF and the WTO and their similarly deleterious impact on "developing countries" (p.134). While the new WTO carried on the programme of the General Agreement on Tariffs and Trade (GATT), it was given extensive new powers and activities. Following its institution in 1994 (after closure of the GATT Uruguay Round at the end of 1993), the WTO has emerged on the world scene as an organisation armed with real teeth and a clearly articulated corporate agenda. It now forms one arm of a capitalist triad - along with the World Bank/IMF - in policing the global economy.

"Whose Trade Organisation?" constitutes a detailed, systematic and up to date treatise on the problems with the five year old, transnational corporation (TNC) driven regime. The book deals with highly technical, complex and legalistic topics in covering many of the weighty issues involved but is as readable as the subject matter can allow. Topics comprise: environmental impact; food safety standards and public health; genetically modified organisms (GMOs); intellectual property rights (food security and access to medicines); developing countries; mergers, service jobs and low wages in developed countries; human and labour rights; and the WTO's dispute resolution system. The authors have made their study as user friendly as possible (with boxed items to highlight examples; chapter summaries, etc.), as well as thoroughly authoritative in documentation. Of the writers, Lori Wallach in particular, as the director of Public Citizen's Trade Watch, has established a very high standing for her analyses of free trade issues and related campaigning. Over the years, she has probably done more than anyone else in the US to expose the secret side of negotiations and agreements on free trade/investment .

Throughout the book, Wallach and Sforza document all sorts of revealing implications of the WTO programme - the sorts of things that the mainstream media mostly hide from us. Their opening example connects with an article published in an earlier Foreign Control Watchdog, (no.85, August 1997: "Controlling Human Consumption: Nestle Replaces the State", pp. 15-20). A United Nations Children's Fund (UNICEF) code is supposed to stop TNCs like Nestle killing infants in the Third World through a ban on the misleading marketing of infant formula. Yet given the systematic protection that TNCs ensure for themselves, this international code is only voluntary and so depends on the good will of the companies concerned. "Whose Trade Organisation?" cites the case of Gerber Foods and Guatemala (p.1). Gerber has been marketing in Guatemala its infant formula with a picture of a healthy, fat baby, something banned under the global code. To quote: "When Guatemala insisted that Gerber remove the baby from the packaging of products distributed in Guatemala, the company refused and threatened action under an international trade agreement known as the General Agreement on Tariffs and Trade" (p.1).

Well, of course, GATT became the WTO in the transformation brought about by the Uruguay Round and Guatemala, intimidated by the threat of a long and costly dispute under the WTO's new provisions, "backed down and exempted imported baby food products from its labelling restrictions. Today, Gerber's pudgy baby face remains in stores throughout the country" (p.1). As Wallach and Sforza say: "This is but one story of how the WTO can affect the lives of people around the globe, most of whom have likely never heard of it, much less realised that its establishment amounted to a slow-motion coup d'etat over democratic governance worldwide" (p.1). For sure, the TNC-controlled mass media are not going to tell us what is really happening! In Aotearoa/NZ, given the blinkered focus on prising open overseas markets, coupled with the rest of the Rogernomics legacy, governmental commitment to free trade still prevails into the new millennium despite some verbal reservations expressed by the Alliance.

As "Whose Trade Organisation?" shows, the global reach of the WTO is indeed frightening in both power and extent. Among many other things, the WTO's provisions can:

  • "limit the strength of a country's food safety laws and the comprehensiveness of product labelling policies" (p.2);
  • "prevent a country from banning products made with child labour" (p.2);
  • "even regulate expenditure of local tax dollars", e.g. prohibit "environmental or human rights considerations in government purchasing decisions" (p.2);
  • constrain "state and local laws as well as national ones" (p.2);
  • undermine international treaties on the environment, threatening vital agreements like the Convention on Trade in Endangered Species (CITES) and the Kyoto Treaty on global climate change (p.5).

A WTO dispute panel has ruled against the European Union's (EU's) ban on beef containing residues of the artificial growth hormones which the US wants to dump on consumers everywhere (p.6). Furthermore, while the US does not produce bananas for export, the Clinton Administration "went to bat for Chiquita, the banana giant, when it successfully attacked Europe's preferential treatment of bananas from former EU colonies"(p.6). Under US, and NZ pressure, South Korea has weakened two food safety laws (p.6 - see also "The Cost of Free Trade: Aotearoa/NZ at Risk", CAFCA, 1996, pp.8,9). "To avoid a US WTO challenge on its 30 day shelf life limit for meat, South Korea weakened its food safety policy by extending shelf life to 90 days" ("Whose Trade Organisation?", p.52). NZ was very pleased that the US acted as its bullyboy. Both countries have also collaborated in breaking down protection for South Korean beef farmers (for NZ the Chilean beef market followed in April 1998 with poorer countries in line).

On the other hand, although the US is the WTO's biggest gunslinger as well as unilaterally and illegally under WTO rules dealing out its own arbitrary trade sanctions through US Trade Law Section 301 (see ch.8), certain WTO cases have been both undercutting its own national or more local standards, or are likely to do so in the near future. Various laws which owe their existence to popular demand of the American people are now being dismantled. For instance, the Clinton Administration has gutted the US law on protection of dolphins and other marine mammals (pp.17, 22-26; & "The Cost of Free Trade", pp. 95-97, 106, 123, 134). Whatever weasel rationale it may have used on this issue, NZ in practice firmly supported the attack by Mexico, the EU and other countries on the US's Marine Mammal Protection Act.

Indeed, during a second WTO dispute panel hearing on the wrangle over this American law, NZ even saw fit to make an "intervention" in support of the panel's findings. Our Government was not really concerned about the method of tuna fishing (in this specific case killing lots of dolphins as collateral damage) so long as the value of free trade was upheld. The WTO rigidly maintains that there should be no discrimination in trading practice on the basis of how products are produced or harvested. "Trade rules that forbid the differentiation between production methods make it impossible for governments to design effective environmental policies" ("Whose Trade Organisation?", p.23). There are certain complications to the US dolphin issue (with the US having other fish to fry) but for NZ its narrowly focused free trade policy was ever paramount; and this has been NZ's general approach on environmental and various other matters affected by trade. As well, the NZ Government has been very keen to keep its real priorities in these matters under wraps from public scrutiny. Ironically enough, Environment Ministry briefing papers to the new "Centre/Left" Government in 2000 warn that the country's "false" green image will undermine our economy "if changes are not made" (Press, 26/1/00).

Corporate World Government

Overall, while matters at issue can vary enormously in nature and alignment, TNCs are free to exploit the exalted value of trade over any other values, whether against their "home" country or some other country. Time and again, they can play one country off against another, or organisations within a country. One huge source of their power is that they can be advising and formulating policy for many countries at once as part of official negotiating teams.

A topical issue exemplifying TNC power is the US argument that there is no safety difference between GMO food and non-GMO food, "and that only products that are substantially transformed should be labelled. Yet, GMOs are sufficiently transformed to be patented as original creations" (p.86). So, on the one hand then, as Wallach and Sforza indicate, the official US line is that GMO and non-GMO foods are equivalent, i.e. the former have not undergone "significant change", and that any GMO restrictions and labelling are therefore WTO-illegal (see ch.3). On the other hand, the US argues that GMOs are sufficiently novel to warrant intellectual property rights protection for their TNCs. The contradiction is both glaring and very revealing: private property is to usurp consumer protection and the requirements of public health, not to mention all the other potential hazards of GMOs, e.g. environmental harm. The US is trying to do away with "several EU GMO rules" and has been threatening WTO action (p.86).

In Aotearoa/NZ, there has recently occurred another related assertion of intellectual property rights over the consumer and public health. Pharmac, the Government's drug buyer, suffered a defeat in its struggle to try and weaken the power of the drug companies with a Court of Appeal ruling - in confirmation of a High Court judgement - that "the Commissioner of Patents could accept "Swiss-type" claims, i.e. "patents for new uses for old drugs" (The Press, 21/12/99). Effectively, this means that "drugs already patented - protected from competition - for 20 years, could get another protection period of up to 20 years for a new use". Following its seeking of a judicial review in 1997 after a change in policy by the Commissioner of Patents, Pharmac had been faced not only by the TNCs and their Researched Medicines Industry but also by the Commissioner! The change to previous policy had allowed "Swiss claims on pharmaceuticals for the first time".

The avenues for TNC manipulation are vast and diverse. Monsanto, with the connivance of the US Food & Drug Administration (FDA) - the very body supposed to regulate such TNCs and protect the public - launched a massive GMO experiment on the American people, and is now trying to extend and consolidate the experiment worldwide. This kind of unfettered capitalism has amounted to an absolutely outrageous violation of individual rights and consumer choice - the very thing which the free marketeers would abhor if they had any intellectual or moral integrity. But, of course, the free marketeers only have one bottom line - private profit.

Monsanto has also been the company to the fore in inflicting artificial bovine hormones on European consumers. "The WTO ruled against a ban on beef containing artificial hormone residues because the EU could not prove scientifically that residues in meat harm human health (the actual hormones are known to do so)" ("Whose Trade Organisation?", p.52). As Wallach and Sforza go on to elaborate, the Codex Alimentarius organisation which acts as the WTO's food standard authority, had "issued a standard permitting residues of artificial hormones in beef only after a four year US campaign to gain approval of these chemicals" (p.56).

There have been revelations in Britain of collaboration between the British Government and Monsanto in "secret experiments that exposed consumers to potentially lethal hormones in milk" (Press, 2/7/99) - the same stuff just mentioned. The farmers involved were allowed to pump the treated milk into the general milk supply. In Aotearoa/NZ, Monsanto has been up to its usual tricks. A Parliamentary select committee found that a trust - the Gene Technology Information Trust - supposedly set up "to give impartial and authoritative information on genetic engineering received $27,500 from Monsanto" (Press, 4/9/99 & 12/10/99). More and more, corporate goals are shaping governmental and intergovernmental outcomes, and, indeed, even reaching far into local and domestic affairs.

The WTO's beef hormone ruling, in fact, "poses a direct challenge to one of the pillars of contemporary public health policy, the Precautionary Principle. Under this principle, potentially dangerous substances must be proven safe before they are put on the market" ("Whose Trade Organisation", p.60). The basis for this is the eminently reasonable consideration that wherever there is not enough scientific evidence to demonstrate that no danger exists, then the public interest demands that people should not be subjected to the substance, process, or whatever at issue if there are indications of risk. However, what Codex, the WTO and the rest of the corporate brigade are doing is to demand scientific proof that there is a danger before any constraints can be put upon trade, thus effectively standing the Precautionary Principle on its head. So once again, a WTO ruling sets a highly dangerous precedent for future cases. In the beef hormone dispute, since the EU responded to consumer concern and continued to resist the pressure of the US and its TNCs, the US has in turn exacted 100% tariffs as punishment on a variety of important imports from the EU.

Besides beef hormones, bananas have been a big bone of contention between the US and the EU. As mentioned above, the US Administration took up the landmark case for the American TNC, Chiquita Brands International, against the EU and its former colonies in Africa, the Caribbean, and the Pacific (ACP countries). It was obviously very significant that:

"The Clinton Administration filed a WTO complaint on bananas . . .days after the US-based multinational Chiquita gave $US500,000 to the Democratic Party. Then, in response to an EU plan to implement the WTO's eventual ruling against the banana regime" in a way unsatisfactory to Chiquita, Republican Senate leaders introduced a bill in Congress which "imposed tariffs on the EU for not fully complying with the WTO. This move came one month after Chiquita CEO, Carl Lindner, donated $US350,000 - this time to the Republican Party" ("Whose Trade Organisation?", p.140).

It seems that Chiquita can pull the strings on the American Administration and Congress at will; and the whole episode provides yet another illuminating insight into the operation of global power politics under corporate influence. In Aotearoa/NZ, we have had the experience of Labour/National Rogernomics and the pivotal role of Big Business, although there is more freedom of information and consequent ability to spotlight specific instances of such influence in the US than in our secretive little society with its inhibitive libel laws. For example, the two main political parties in NZ, with the help of the corporate media, could collude pretty effectively to bury the "Winebox". In the US, on the other hand, the exercise of TNC power over elected political representatives can often be glaringly clear.

The WTO ruling against the EU system of banana trade preferences is very portentious. Besides showing how TNCs can direct governments to act according to narrow corporate interests, the ruling represents an assault on the 1975 Lome Convention's trade agreement, an international treaty that has had some orientation to Third World development. Lome has provided a range of benefits for the ACP countries, a grouping which includes a number of very poor nations.

A more general implication of the WTO's free trade/investment regime, of which "bananagate" is only a part, is that the EU is now engineering big changes to the Lome Convention, citing "WTO compatibility as one of the reasons for this change in negotiating mandate" (p.140). The EU wants to substitute the Lome trade treaty "with reciprocal trade agreements individually negotiated between the various regions in the ACP and the EU, similar to the North American Free Trade Agreement" (p.140) - i.e. the NAFTA between the US, Canada and Mexico which has already set some very bad precedents. For instance, "labour rights enforcement in Mexico has been abysmal in nearly six years since NAFTA's implementation, and Mexico's wages have not kept up with productivity gains" (p.177).

The global banana trade, as with so many other commodities, is dominated by just a few TNCs. Only three companies - Chiquita, Del Monte and Dole - control two thirds of this trade. Dole was linked with Chiquita in the arguments of the US Trade Representative, Charlene Barshefsky, against the EU position (Press, 23/12/98). Six Central and South American banana-growing countries joined with the US in contesting the EU's ACP preferences. Export of bananas from these countries depends on "cheap farm labour" ("Whose Trade Organisation?", p.141), and there is still a deeply rooted legacy of the old "banana republic" syndrome throughout the region. Under US persistent pressure, supported by the findings of WTO dispute panels:"The EU has announced that it would have no choice but to rescind the ACP preferences", p.143).

For the Wall Street Journal: "The fight over bananas is essentially a struggle between two fruit distfributors with strong political connections" (reprinted in the Press, 30/3/99). From its viewpoint, the Wall Street Journal was disturbed about the Clinton Administration's imposition of sanctions on European trade over bananas and beef hormones as these new tariffs could prove dangerous for free trade in general.

The British firm, Geest, controls the banana trade in the West Indies’ Windward Islands. Since bananas here are grown by small farmers whose production costs are higher than that exacted from sweated plantation labour in Latin America, the giant American TNCs have grabbed an opportunity to extend their oligopolistic market share even further. Whereas the Caribbean islands are hugely reliant on the European market, all islands together of the former EU colonies represent only 8% of this market. Consequently, the WTO decision will "doom the Caribbean's small, independent farmers and help the three huge banana" TNCs which dominate the world trade ("Whose Trade Organisation?", p.130).

Trading In Hunger And Other Human Abuse

When protesting the power of TNCs in agriculture, French farmers have carried pictures of WTO Director General, Mad Mike, complete "with horns and a tail" (Press, 8/11/99). While it can be very easy, and actually misleading, to grossly personalise political issues, Moore has certainly made himself a most worthy target with policies which can be well be described as monstrous, i.e. threatening the livelihoods of hundreds of millions of people, and the access to adequate food for billions. Next to the overall issue of democracy, of which it is indeed a part, food security should make the most demands on our attention, analysis and action.

By far the most disappointing aspect of the movement in Aotearoa/NZ which has developed against free trade/investment is the lack of active concern for the question of food security in Third World countries, and how this relates to the policies of the NZ Government and organisations like Federated Farmers. Other than the work of GATT Watchdog and its associates, there has been no consistent activity in this area despite the importance of NZ's role and the Government's declared objectives. It is much easier to respond to perceived direct threats to one's own wellbeing - GMO foods and similar things - than to attack what has been peddled in NZ as a policy approach fundamental to the country's prosperity. I remember on one occasion during the GATT Uruguay Round, after making a public criticism of free trade, being rung up at work by a future president of Federated Farmers, and having a civilised yet rather heated debate about NZ's position. Interestingly, the caller's more or less last word was to the effect that if we did not see reason, then we would come to be seen as the "enemy"!

Again, I have found even in "aid" organisations supposedly committed to working for change and justice, that key decision makers often lack any real knowledge, or serious interest in the problems, and, indeed, can become extremely uneasy about really tackling the challenge of free trade. The realisation that their own lifestyle may depend (under the current system anyway) on the promotion of hunger and poverty in the Third World is felt as something deeply threatening. It is easy to mouth slogans, much less easy to confront the structures of injustice which can even include aid groups since these, certainly from my own personal experience in one, can be subject to the same process of globalisation that are at work more widely in society, adopting e.g., capitalist models; crap about "corporate image"; commercialised performance criteria; executive salary scales; marketing orientation over development concerns; consumerism; etc. Adopt New Right language - and think the same way! Even now some who have learnt to speak out against free trade are really far from understanding or willing to tackle its capitalist roots.

The great challenge for the future is whether consumer concerns in the so-called developed societies can mesh sufficiently with survival issues for peasant farmers in the Third World. The question of GMO foods certainly has a large latent capacity in this direction. Already connections are being made. Increasingly, TNC-promoted propaganda is touting GMO foods as the solution to hunger and healthcare in poor countries while protesters are contesting GMO production altogether. On the dawn of the new millennium, an international conference in Edinburgh organised by the Economic Council for Cooperation and Development gave expression to these conflicting arguments (Press, 1/3/00).

It is tragically ironic that so many NZ farmers have swallowed the free trade chalice without realising that the draught is poisoned. They have callously ignored the mass protests of peasant farmers in the Third World. Yet free trade threatens small and medium farmers - the family farmer - everywhere because ultimately TNCs stand to benefit most. Traditionally, farmers have always been price takers who have been subject to the vagaries of the weather as well as exploitative middlemen, speculators, etc. In the recent past, this was a common rubric of textbook economics, e.g.: " . . . the farmer, unable to control economic swings, has traditionally been their victim. What we have tried to do . . . is to intervene in the market process, to make it yield results more in accord with our conceptions of social justice. And despite all the difficulties . . . the results are far from unimpressive" (those conclusions on farming were written in 1975 by two very prominent American economists, Robert Heilbroner and Lester Thurow, in "The Economic Problem", [4th ed., Prentice-Hall Inc., p.133]. Thurow, incidentally, was later lucky enough to become one of Mike Moore's gurus). Since those days the family farmer has been sacrificed to TNC imperatives although, funnily enough, the textbooks today do not quite state things in exactly these terms.

Only when farmers have managed to exert some form of market intervention, especially through producer cooperatives and producer boards, have they had some protection from those market forces which would subject them, or actually destroy them. Ironically, the very forces of increased exploitation and TNC takeover, as exemplified in the NZ Business Roundtable, have sold many of them the free trade message despite the obvious contradiction of interests.

Wallach and Sforza are incisive enough as regards the Third World farmer:

"The Uruguay Round Agriculture Agreement prohibited numerous internal support programmes and import controls that developing countries typically use to protect small producers and encourage self-sufficiency in food production while permitting continuing export subsidies. With small local producers no longer shielded from the subsidised agricultural commodities of the US and particularly the EU, the Uruguay Round creates increased dependency on imported staples like wheat and corn" (Whose Trade Organisation?", pp.138/9).

A graphic example can be taken from the NAFTA process whereby Mexico's corn market has been prised open for exports from the US. Formerly, "Mexico had used subsidies and import quotas to manage the supply and thus the prices of its main staple, corn" (p.137). However, as a consequence of the rolling back of agricultural protection, "Mexican production of corn and other basic grains fell by half and millions of peasants were displaced" (p.137). In 1996 a shortage of corn in the US actually led to a food crisis in Mexico and widespread malnourishment among the country's children. NZ has played a role in purveying advice on Mexican agricultural policy, pushing the free market message - to the obvious detriment of the Mexican people. The inauguration of NAFTA saw the Zapatista uprising in Chiapas.

In crudely evident terms, the free trade approach in agriculture fuses economic and political objectives for the West: private gains for its TNCs and big farmers, coupled with strategic leverage over the growing masses of poor and malnourished. Yet, at a deeper and longer term level, the approach is potentially counter-productive. A hardened gang of Western agencies - with the World Bank, IMF, and the WTO as its most powerful members - continues to force Third World countries to adopt repressive structural adjustment programmes; and at the same time drive down the prices of the commodities on which so many of them depend for foreign exchange to import food and other goods, e.g. by getting too many countries to produce too much of too few commodities like coffee and cocoa. World Bank/IMF-mandated export agriculture in developing countries often squeezes the production of basic food grains for the majority of the population since the best land and resources go to grow tea, or flowers, or other luxury crops for affluent consumers overseas.

Increasing poverty and hunger mean eventually greater threats to political control in the future, let alone the stability of the globalised economy. In the shorter term, of course, repression enforced by the free market keeps inflation low and Western consumers content with the cost of a number of basic commodities. Remember, NZ's own Mike Moore is only trying to do the job that he both so eagerly sought and was selected for by the power brokers at the WTO. One of Mike's favourite poses is that of the democrat. But even as Moore spouts his commitment to open processes and similar propaganda, he has reverted to the notorious, closed door "green room" meetings of the GATT tradition whereby the US, EU, along with a few carefully chosen players, exclude the rest of the membership and make the big decisions. Certainly, Mike must get quite sentimental whenever he thinks back to his plotting days in Labour's "fish and chip" gang.

More On The Environment And Conservation

Wallach and Sforza rightly stress the WTO's anti-environment bias: "The WTO ruled against every environmental or conservation law it has reviewed, judging them to be illegal trade barriers that must be eliminated or changed" (p.12). Thus the WTO's track record on the environment to date is abysmal. Multilateral environmental agreements are vulnerable to WTO challenge; the WTO Committee on Trade and Environment is a farce which is now devoted to seeking forms of trade liberalisation that it wants to claim are environmentally benign; and GATT article XX of the WTO which had potential as a means of environmental protection has proved to be, within the interpretations of WTO jurisprudence, quite useless in safeguarding "a WTO-challenged environmental, conservation or health law" (p.12). Meantime, the US pushes the big business argument against eco-labelling, contending that most of such labelling represents illegal barriers to trade.

American environmentalists have been campaigning against the import into the US of certain wood products on the grounds of ineffectual pest control regulations. It was reported in March 2000 that a US appeal court "has stopped an injunction on import permits for non-tropical wood products from New Zealand, Chile, and Siberia" (Press, 1/3/00). The NZ Government has strongly backed the US Administration in its contest with American environmentalists. Trade Minister, Jim Sutton, said that: "The appeal court decision reinforced NZ's view that its timber exports were never a threat to US bio-security" (ibid). Whatever the merits either way of this particular case, it certainly highlights the gathering erosion of biosecurity barriers under pressure from free trade.

In the US: "Scientists estimate that infestations of Asian gypsy moths associated with imports of Siberian logs could cost the forest and farm economy of the Pacific Northwest as much as $US58 million" (Whose Trade Organisation?", p.39). The gypsy moth pest, which is native to Europe and Asia, has been destroying millions of acres of trees in the US each year. Here in NZ, the Forest and Bird Protection Society has warned that: "An Asian gypsy moth outbreak is a time bomb waiting to go off and the Ministry of Agriculture and Forestry (MAF) is unable to prevent it . . ." (Press, 7/1/00). About 50 infestations of the Asian gypsy moth were found in imported cars between 1997 and May 1999. Insect pest arrivals are increasing in NZ and urgent action has had to be taken against tussock moths and tiger mosquitoes. A specialist "offshore inspection and decontamination company" has warned that MAF procedures are inadequate and that any outbreak would mean immediate bans on all NZ forestry exports by the US and other countries. American environmentalists clearly have some reasons to be concerned enough to take pre-emptive action vis-a-vis NZ.

More free trade means more pests and diseases everywhere - something else that conventional economists seem unable to cope with when doing their cost-benefit analyses. They are sadly limited in so much of what they can factor in. Wallach and Sforza aptly state the central problem: "Increased commerce resulting from the lowering of tariffs, as well as WTO rules restricting quarantine and other Sanitary and Phytosanitary (SPS) measures, pose serious new risks to biodiversity as exotic pests and other species increasingly infest non-native territories" (p.38). Various expressions of concern about NZ's border controls have been voiced in recent years - including some from government officials like Customs officers and MAF executives (e.g., Press, 12/5/98 & 11/2/00).

As the US fights its own environmentalists over wood pests and the NZ Government cops similar local criticism, another foreign trading threat has emerged under the WTO umbrella to the American biosecurity regime. Hong Kong has been complaining about the US anti-invasive species rule and the issue is the kind of inevitable WTO panel dispute which will probably have ominous implications for NZ too. The complaint had not got as far as a formal WTO hearing at the stage of Wallach and Sforza's description. In this specific case, the dispute is over the risks posed by wood boring Asian longhorned beetles which are indigenous to Japan, Korea and China. These beetles "cannot be eradicated by pesticides once they have infested a tree" (p.38). Already action has had to be taken in New York and elsewhere to get rid of a beetle infestation. But Hong Kong has "registered a complaint at a meeting of the WTO SPS Committee against the US over a 1998 rule requiring solid wood packing materials from China and Hong Kong to be heat treated, fumigated or treated with preservatives before being exported to the US" (p.38).

It is very interesting to note in this connection that NZ's Forest and Bird Protection Society has compared MAF procedures unfavourably with those enforced by the US which insists on "decontaminating New Zealand forestry and other products" before they import them (Press, 7/1/00). These superior US procedures are precisely what Hong Kong is complaining about. If Hong Kong presses its case, the US would have to demonstrate scientifically that there is a significant risk, and that its treatment procedures for dealing with this risk are absolutely necessary and the "least trade restrictive" possible. Under the WTO SPS Agreement this is a very tall order to meet. The same SPS conditions apply to questions of food safety, shifting the bias of decision making substantially in favour of TNC innovations - ranging from higher permitted levels of pesticides, through the weakening of other safety standards, to the introduction of new GMOs. Political decisions are being transformed into pseudo-technical ones, as in the beef hormone issue, and to hell with consumer rights!

The way the global market works under free trade to focus resources on luxury production for an international elite, and at the same time erode environmental and conservation standards, is shown by the expanding trade in raw salmon. Some time ago, NZ was obliged to open its borders to the import of raw Canadian salmon as a concession in the GATT/WTO process (see chapter 6 in "The Cost of Free Trade" - this book contains a detailed scrutiny of spurious governmental arguments relating to the interface of trade and environment/public health). Then, in July 1999, the Australian Government was meant to open its market to imported raw salmon after the Canadians successfully challenged an Australian import ban at the WTO (Press, 10/8/99).

But the Australian Government has dragged its feet with "Tasmanian salmon farmers saying the North American fish could bring diseases into Australia. Canada has said it will look at punishing Australian exports if its salmon exports continue to be blocked" (Press, 23/2/00). The Australian Quarantine Inspection Service had set special conditions on any imports, "stipulating that the imported fish be headed and gutted" (Press, 22/7/99).

The US was also involved in breaking down Australia's SPS barriers to the import of raw salmon. Along with Canada, it had "requested access to Australia's uncooked salmon market in 1994 ("Whose Trade Organisation?", p.62). In response, as obligated under the WTO, Australia conducted a risk assessment of the consequences of dismantling the ban it had implemented since the 1960s. Australia found that the risks would be too high and "confirmed that it was possible that Canadian uncooked salmon could infect live Australian salmon" (ibid). However, Canada responded, in turn, and "in June 1998 filed a complaint with the WTO, arguing that the salmon ban violated the SPS Agreement. The WTO panel ruled that the ban was not based on sound science, exceeded international standards and therefore was arbitrarily and unjustifiably discriminatory" (ibid). After a fruitless appeal by the Australian Government, and after the US had also come back to the attack, we have arrived at the current situation in the Australasian salmon trade.

What is so disturbing about the precedent set by the WTO finding in the Australian salmon case is the requirement of "WTO members to adopt SPS standards relating to plant and animal health only when precise risk to animals or plants can be quantified and the likelihood of infection or infestation can be established with scientific certainty" (p.63). This requirement for the quantifiable ascertainment of "precise risk" is a major element in the threatening capitalist corruption of natural science theory and application. Driven by free trade/investment, it represents a bogus applied science that draws heavily on commercialised models - from economics, insurance and so on - for decision making purposes in the vital areas of public health and environmental policy (refer to the "Cost of Free Trade" for much on this theme in regard to the NZ scene).

In their study, Wallach and Sforza point to some of the implications for the US's own border controls and for border controls in general. They refer to the threat presented by the Asian longhorned beetles and the complaint by Hong Kong as described earlier. As they remark, what the WTO is doing is putting the burden on the importing country to prove that its controls are scientifically sound with precise probability estimates of risk, and that these controls are "least trade restrictive". All this clearly demands a great deal in the way of resources and time from the country subject to complaint, let alone the problems of going through the WTO dispute process. Thus there is created a huge bias in favour of the exporting country, whatever its demands may be.

In the case of Hong Kong, the US and the Asian longhorned beetle, any formal action would mean that the jurisprudence of the Australian salmon case will apply (p.64). Overall, of course, the big winners in the trade game will be the most powerful countries like the US which can best cope with a wide range of disputes, both for and against their trading positions. More accurately, however, the big winners represent an international elite riding on the back of the TNCs and so positioned to cream the globalising process to their advantage.

The NZ salmon industry welcomed the opening of Australia's market and got access for its fish since NZ salmon "were considered disease free" (Press, 22/7/99). But at least one NZ producer believes that "cheap North American exports to Australia had the potential to further depress the market for fresh and frozen salmon" (Press, 23/2/00). Moreover, the Australian Workers' Union is worried that imports will severely hurt the salmon industry in Tasmania (Press, 26/10/99). Trade and salmonid fisheries are going to be at the topic of much continuing debate in Australasia. A 1998 move to introduce free trade in trout in NZ met enough opposition to effectively squash it, for the meantime anyway. Federated Farmers had supported trout imports as a tradeoff in NZ's case against American protectionism in the lamb trade, alleging that "that protection of the nation's wild freshwater trout fishery was based on a bogus scientific decision" (Press, 13/2/99). This allegation was strongly contested by the Federation of Freshwater Anglers and other groups. Once more, the whole episode shows how free trade can set national groupings at odds over societal and cultural values. The latest development is the Government's adoption of a private member's bill that will ban trade in trout with the bill being "criticised by National because of the implications for free trade as it would prevent commercial imports of trout flesh" (Press, 1/3/00).

Science continues to spawn incipient dangers. Genetic engineering by NZ King Salmon Co. Ltd., the country's largest producer, has bred mutant fish and aroused much public unease (Press, 26/2/00). By no means, therefore, do diseases transmitted from overseas represent the only threat to our salmonid fisheries. One potential peril that industrial agriculture and free trade have unleashed on the world is the spectre of an epidemic of Creutzfeldt-Jakob Disease (CJD), a legacy of "Mad Cow" disease. Given its very long incubation time, CJD, which is the human counterpart of Mad Cow disease, could still yet emerge as a major health risk despite governmental and inter-governmental controls to date. Various media reports and investigative studies have continued to warn of this risk (e.g., Press, 27/12/97 & 28/3/98, 9/5/98, 12/6/98; for a review of the deplorable handling of the issue by the NZ Government see chapter 5 in "The Cost of Free Trade").

Labour Rights, Working Conditions And TNC Power

It was reported in July 1999 that the International Labour Organisation (ILO), a United Nations (UN) agency, would "investigate whether the Government's inmate employment scheme breaches a convention on forced or compulsory labour" (Press, 15/7/99). Both the Trade Union Federation (TUF) and the Council of Trade Unions (CTU) had rightly charged the then National Government with commitment to a scheme that exploits a captive work force to provide cheap labour for private enterprise. The WTO, like the old GATT, technically forbids trade in the "products of prison labour", a point emphasised in a TUF publication on the issue ("Prison Industries: Reversing on the Fast Lane: A Study of Prison Labour in Aotearoa/New Zealand" by Radha D'Souza, May 1997, pp.13,14). TUF has consistently been the leading NZ trade union body actively alert to the free trade/investment assault on worker rights.

But the ILO is itself today increasingly under TNC influence. Furthermore, unlike the WTO, it is a toothless body. Some examples from the process of TNC penetration of the ILO, a process which has been happening on a large scale to many UN agencies, relate to the subversion of various safety provisions. Wallach and Sforza document these in regard to a case that Canada and the US are pressing against France at the WTO. The former want to overturn a French ban on the import of asbestos, a proven carcinogen for humans ("Whose Trade Organisation?", pp.182-186).

A very important WTO agreement, the Technical Barriers to Trade (TBT) Agreement is fundamental to corporate globalisation. The asbestos case cited above comes within the TBT umbrella. In these times, the global reach of TNCs is especially extended and deepened through the promulgation of international standards that apply to industry worldwide. Like the SPS Agreement, as enforced by Codex, the TBT aims to harmonise countries' national laws with international standards that are often considerably weaker in application. Indeed, under free trade "downward harmonisation" is the predominant tendency across the board, something which has been repeatedly demonstrated by the SPS Agreement as countries are forced to "lower food safety and animal and plant health standards" - in the US and elsewhere, as illustrated by the dispute over bovine hormones and other instances already cited (see especially pp.68-79 on harmonisation in "Whose Trade Organisation?"; again this was a key theme of the "The Cost of Free Trade" with close examination of the SPS and TBT Agreements and the NZ Government's specious position).

Harmonisation through the TBT Agreement is pursued principally via the International Organisation on Standardisation (ISO). As Wallach and Sforza stress: "the ISO is a purely private sector, industry-funded, industry-membership organisation" ("Whose Trade Organisation?", p.58). It sets standards for all non-food products although there seems to be a rather fuzzy overlap in practice with the SPS. As well, it covers such things as management practices, including environmental practice (p.78). Besides the ISO, other international standard-setting organisations can be relevant depending upon the particular issue.

In the case of Canada and the US versus France over asbestos it is "the International Programme on Chemical Safety which sets policy on worker safety for the World Health Organisation and the International Labour Organisation. This could prove to influence the outcome of Canada's challenge to France's ban on asbestos" (p.78). What is of real concern here is that the "chemical industry has exerted especially strong influence at the International Programme on Chemical Safety". For instance, TNCs Hoechst, DuPont and ICI wrote the first drafts of the International Programme's reports on chlorofluorocarbon refrigerants and the fungicide benomyl (p.182). Not only does this outfit advise on such things, including asbestos, but several industry front groups have been working "to influence ILO policy on asbestos under the guise that they are composed of impartial health experts, when in fact they are spin-offs of the Asbestos Institute, formed for the purpose of gathering support for the asbestos industry" (p.182).

Lack of governmental support for national standards can be crucial. Standards New Zealand announced in February 1998 that it was withdrawing about 100 standards because it could not afford the cost of servicing them (Press, 11/2/98). The agency had sought sponsorship for many standards and failed to get the requisite financial support from industry or government. Indeed, the Ministry of Consumer Affairs indicated that: "New Zealanders would instead have to rely on overseas standards for some products, but those standards did not have New Zealand input and guarantees were not applicable" (ibid). Most evidently, it was the deliberate strategy of the previous National government to run down national standards in favour of internationally mandated ones.To be fair about this, the plot goes back to the Fourth Labour Government since Standards NZ has been self-supporting since 1988. Going forward (backward?!) again, in early 1998: "New Zealand standards cost $5000 a year to maintain, excluding sales revenue, while joint Australia-New Zealand standards cost about $1200" (ibid). Life and limb are likely to be very cheap in the years to come unless we can stop the rot!

In the era of the Employment Contracts Act, labour conditions in NZ have been downgraded in various ways and a decline in standards of worker safety has been an important aspect of this. Under-funding of the Occupational Safety and Health Service (OSH) has been a critical element in falling workplace health and safety standards. For example, in mid 1998 in Canterbury, a soaring workplace accident rate coupled with few prosecutions sparked a very angry union reaction (Christchurch Star, 26/6/98). In the globalising economy, labour rights and working conditions are geared to suffer further depredations from marauding TNCs intent on export processing. Worldwide, TNCs are badgering governments keen to facilitate this economic strategy into the systematic depression of labour/human rights by the spread of competitive free trade zones. Low wage, non-unionised conditions are "promoted by a combination of WTO rules that forbid the sorts of countermeasures governments would need to take to ensure both labour rights protections and more diversified production" ("Whose Trade Organisation?", p.177/8). The regime includes discrimination against small business (see ch.6).

In Aotearoa/NZ, this sort of competition is being brought home to our very door by backyard clothing manufacturers and other exploiters of imported Asian workers, creating "small pockets of Third World sweatshops" (Press, 16/11/99; & 16/10/99). These illegal operations have been and/or are virtually treating their workers as slaves. Meantime, the NZ workforce generally is under threat from the trends to the: erosion of the 40 hour working week; institutionalised and growing levels of unemployment and underemployment; casualised part-time, temporary, and on-call work; elimination of recognised holidays; employee leasing; prison labour; work for the dole schemes; plans to reshape the judiciary to get a big business bias in Employment Court and Court of Appeal decisions; and other measures (e.g., Press, 22/3/97 & 19/12/97; Sunday Star Times, 20/7/97; Christchurch Star, 14/1/98 & 18/2/98). Exploitation of "human resources" in a world of multiplying, desperate people is a real growth industry for today's capitalism!

This pattern reflects that traced by Wallach and Sforza in the US where: inequalities have been deepening; low wage service jobs are seen as the top categories for future growth; higher wage jobs are being exported to other countries; business mergers and acquisitions typically lead to "downsizing" and layoffs; etc. (again see especially chapter 6, "Whose Trade Organisation?"). The competitive race to the bottom among countries was once nicely highlighted in a 1997 article by Michael Hannah, chief executive of the Canterbury Manufacturers' Association, where he called for "wider reforms" before more tariffs were removed (Press, 20/12/97). Hannah observed: "If protection is to be removed in New Zealand, the Government must allow firms to reduce their local costs, so that they can compete with the profitability of offshore plants".

Hannah also noted that "the most profitable avenues for investment are increasingly offshore". His argument as to how NZ could benefit was not to reduce workers' safety but to roll back government expenditure and infrastructural costs for NZ business. In practice, however, workers' safety is being reduced as it is all part of what TNCs really want to make NZ "attractive to investors, foreign or otherwise". The following year it was reported that more NZ companies were considering placing factories in low cost Mexico rather than direct exporting, a very familiar syndrome (Christchurch Mail, 6/10/98). And all this is happening despite official NZ Government advertising that NZ is a low wage society. For instance, the Government's TradeNZ website has promoted NZ to the rest of the world as a place to set up business since it offers "low cost labour" with sufficient unemployment to make us "particularly competitive" (NZEI Rourou, NZ Educational Institute, vol.10, no.8, 13 Aug., 1999, p.8). As well, according to the Government, "under the Employment Contracts Act there is complete flexibility of hours worked".

Demoting Democracy - And The Rising Resistance

The main overall theme of "Whose Trade Organisation?", as the subtitle indicates, is the loss of democracy under the globalising assault of corporate interests. But Seattle may have signalled a real turning point. What Wallach and Sforza have done in "Whose Trade Organisation?" is to provide us with a vital resource for self education and better campaigning. It constitutes a superb confirmation and validation of the work to date in Aotearoa/NZ and elsewhere against the free trade agenda. It is the book to compare with the incoherent ramblings of Mad Mike in his "A Brief History of the Future"(1998), or the Ministry of Foreign Affairs and Trade's profoundly vacuous "Free Trade in the New Millennium"(1999) [see review in Watchdog, no.91, August 1999, for the former publication while the latter is to be reviewed in the next Watchdog].

As "Whose Trade Organisation?" shows, there are lots of parallels, connections, and implications that can be drawn from overseas for the NZ situation, as well as greater knowledge of issues in which NZ is deeply involved. The book reveals the WTO's vision of privatising the world and reducing all life to market forces, including health, education, and welfare, is a nightmare that democracy must rally to exorcise.

Foreign Control Watchdog, P O Box 2258, Christchurch, New Zealand/Aotearoa. December 1999.

Email cafca@chch.planet.org.nz

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