Behind the WTO
A flier produced and distributed by the Student Environmental Action Coalition and the Young Democratic Socialists.

WHY SEAC AND YDS PRODUCED THIS FLIER

SEAC defines the environment to include the physical, economic, political and cultural conditions in which we live. By challenging the power structure which threatens these environmental conditions, SEAC works to create progressive social change on both the local and global levels. The WTO has the power to overturn every environmental success we have earned over the years. As environmentalists, we are opposed to the WTO's blanket ability to make decisions about local people's environments without their input or permission.

As a socialist organization, the YDS is interested in fashioning a society where people's needs are viewed as more important than corporate profits. We believe that this can happen only through the struggle for economic democracy. By giving ordinary people a voice in the economy, their needs will begin to take precedence over corporate profits.

The World Trade Organization is one of the primary institutions, on a global level at least, fighting to place corporate profits over the people's needs. Through the WTO's regulations, corporate mobility and profit are placed over labor and environmental standards. Because the WTO, in effect, stifles economic democracy on a global level, young socialists are concerned about it and what it's doing.

SEAC and YDS are both progressive organizations with broad visions for a sustainable, democratic society. Both of our organizations believe that there is much that youth and students can do to create the world we all deserve to live in. Our day-to-day struggles for justice at our most immediate levels can only be successful when we work together with a diverse community of activists. We have come together to fight the WTO because we recognize that hard-won local, state, national and international victories for environmental and social justice are being extinguished by bureaucrats who do not feel the ramifications of their decisions. The collective voice of youth is an influential part of the growing opposition to a global order based on exploitation. SEAC and YDS join their hands and voices to the struggle.

BEHIND THE WORLD TRADE ORGANIZATION

This November, the World Trade Organization (WTO) will be meeting in Seattle, Washington - behind closed doors. Their plan is to take "Free Trade" to the next level. Composed of 134 member countries that have banded together to further the principle of unrestricted trade, the WTO is empowered to enforce international trade agreements such as the General Agreement on Tariffs and Trade (GATT). The WTO has the power to force countries to overturn any laws that it considers a barrier to trade and unfettered competition. This is particularly threatening to environmental and labor standards, which corporations oppose as restrictive of their growth and profits. While "free" trade agreements often, if not always, include protections for intellectual property rights, rarely do they include similar protections for environmental or labor standards.

There are millions of people and scores of organizations around the world who have mobilized against the policies of the World Trade Organization. In the US, reaction to the WTO has been muted. Partly this is due to our mainstream media, which has all but ignored significant WTO decisions - even those that affect the lives of all Americans.

This is unfortunate, since students and youth in this country, like those in other countries, should be interested, and opposed, to the WTO's policies. We have a vested interest in preserving democratic economic and social policy-making while the current ideology of the WTO leads to an authoritarian, corporate structure. And this corporate-managed economy will hurt young people. The prospect for safe jobs with a living wage slips further from most young people's lives as corporations gain more and more control over our laws and governmental policies.

WHAT IS THE WTO?

The World Trade Organization is a recent creation of the General Agreement on Tariffs and Trade (GATT). GATT was first negotiated after World War II by the major Western economic powers in order to strengthen the strategic interests of capitalism through reinvigorated international commerce. For the next forty years, GATT negotiations, called "rounds," proceeded to open markets slowly but surely by eliminating tariffs and import quotas gradually and selectively among countries within US and European spheres of influence. In 1986, GATT members began the Uruguay Round, which carried trade liberalization to historic new heights. At the Uruguay Round, which occurred at the height of Reagan and Thatcher's conservative influence, negotiations went far beyond tariffs, extending to cover the broader category of "barriers to trade." These barriers can include any policies, laws, or possibly even cultural or religious customs which seem to interfere with the "natural" workings of supply and demand. Providing the structure for this aggressive approach to capitalist expansion is the WTO, which was established with the ratification of the Uruguay Round in 1994.

The WTO enforces GATT and settles trade disputes between member nations. These executive and judicial functions distinguish the WTO drastically from pre-Uruguay GATT rounds, which allowed members exemptions from many provisions and kept enforcement powers to a minimum. The WTO arbitrates conflicts through special panels or "tribunals." The panels act like judges, hearing complaints that one member's practices violate GATT against the interests of another. If the panel rules against a member, it may authorize punitive sanctions against the guilty party in order to force it to eliminate the practice in question. Before 1994, GATT members had to unanimously vote for any action to be taken against a member. With the WTO, such actions happen automatically with the tribunal's ruling.

The panels are composed of career trade officials and business experts drawn from a bureaucratically appointed roster, leaving the process wide open to influence peddling and conflicts of interest. The panel's deliberations are closed to the public and the press, but not to select advocates from the private sector. WTO panels regularly ignore other multilateral agreements which conflict with the principles of free trade. For example, agreements involving environmental and labor issues are frequently disregarded when maximization of profits is a concern.

Even more frightening than how the panels function, however, is what they actually do. In the United States, for example, the WTO has struck down portions of the Clean Air Act, allowing Venezuelan gasoline imports to pollute US air at levels condoned by Venezuela but not the US. The WTO also upheld the US' "right" to export hormone-injected beef into the European Union, over the objections of the EU. The WTO has even interfered with individual US states by challenging a Massachusetts selective purchasing law which boycotts the military regime of Myanmar (formerly known as Burma) on the grounds that human rights standards are just protectionism in disguise.

Recently, the WTO ruled in favor of the US-based Chiquita banana company in a case against the European Union, declaring that the European Union may not promote Caribbean agricultural development by giving preferential treatment to Caribbean-owned banana exporters. US companies Dole, Delmonte, and Chiquita together control forty-two percent of the EU banana imports. So far, this near-cartel of giant agribusiness has successfully used the WTO to defend its dominant position in the market and threaten small producers - all in the name of fair competition!

THE MYTH OF FREE TRADE

GATT and the WTO have been justified using the ideology of "Free Trade." The argument for Free Trade goes something like this: Get rid of import/export tariffs and taxes on investment by foreign corporations as well as other "barriers" to trade and investment. That way, companies can directly invest in any country without being subject to either preference or discrimination. The result, it is argued, will be that corporations will be able to compete freely across the globe in one giant economy. The benefits of this system, in theory, are lower prices, more goods to choose from, and the spread of advanced technology through the developing world. However, in order for it to be fully effective, corporations must be able to challenge not just tariffs and taxes, but other means by which local governments may "discriminate" against foreign investors. This may include, as mentioned earlier, all forms of social welfare laws, pro-union policies, minimum wages, laws protecting endangered species, forests, and even regulations on dumping of chemical waste.

There are two powerful arguments against "Free Trade," both based on the idea that it will not, in fact, be beneficial to most of the world's population. The first is the recognition that "Free Trade", or "neoliberalism," is a modernization of the laissez-faire economics of the late nineteenth and early twentieth centuries, a failed economic policy that resulted disastrously in the Great Depression here and abroad. More broadly, the unchecked power of corporations led to massive environmental destruction and horrific working conditions, including child labor. It is from this era that we get terms like "sweat shop." The WTO seeks to return to this unsustainable and unegalitarian past.

Without labor standards, strong unions, and social programs that redistribute the fruits of the economy, the benefits of growth are concentrated in the hands of the few. The resulting large gap between the rich and the poor means that people cannot afford to buy the products of their labor, which tends to lead to overproduction. Overproduction led to both the Great Depression and the recent economic collapse in Asia. And the neoliberal remedies proposed in Asia were exactly the wrong answer, since the situation required a stimulation of demand rather than the exports and austerity designed to placate investors. This export-based policy led to the "dumping" of Asian steel and the subsequent loss of jobs by US steel workers. The lesson of 1929 and 1999 make it amply clear that social welfare and labor cannot be ignored while corporate monopolies are trusted to run the world. Their model simply doesn't work.

A second major problem with "Free Trade" is that it undermines democracy. The ability of countries to democratically control their economies is severely limited by Free Trade. Subsidies, public spending, low interest rates, environmental regulations, and pro-labor policies are tools that countries can use to maintain their economies. The WTO eliminates these tools. For example, Guatemala recently passed a law requiring proper labeling of nutritional products and publicly encouraged breast-feeding as a cheaper and healthier alternative to bottled formulas. Gerber, a company that sells infant formula, challenged this law through the WTO, which decided against Guatemala, forcing them to revoke the law or pay perpetual fines to the company. Guatemala no longer has accurate labeling of infant formulas. A democratically enacted law, in this case one for consumer protection, was overruled in favor of corporate profits. This is a problem.

We are by no means against trade, investment, or even international organizations dedicated to economic concerns. But there is an alternative to "Free Trade" - namely "Fair Trade." Fair Trade begins with sustainable development and democracy as its overriding goals. It requires that people have the right to manage their own economies in accord with their own needs. It places a top priority on the concerns of international labor and environmental organizations, and creates institutions with the teeth necessary to enforce standards and regulations. Fair Trade must also encourage the development of local, community-based economic growth.

THE RACE TO THE BOTTOM

• GATT is one of many trade agreements which eliminate the ability of countries to regulate the flow of capital and investment across borders. In order to attract this investment, many developing countries lower environmental and labor standards, making the production of exportable goods, like sneakers and toys, much more profitable. Some nations brutally suppress attempts by workers to organize for better wages and safer conditions.
• Companies which do not move their production to "greener" pastures often use the threat of doing so in order to push wages down, or to pressure US governmental agencies to relax environmental standards.
• This is what many in the social justice movement call the "race to the bottom", as nations and workers compete to attract investment by eliminating protections and accepting poor conditions.
• We can stop this backward scramble by enacting protections at the international level, establishing base levels of decency and environmental justice that corporations cannot drop below. We must protect the rights of workers to organize and form unions. This would not eliminate investment in developing nations, but would simply insure that such investment would not destroy the environment, endanger workers, or trap people in poverty.
• The WTO does not include such basic standards. In fact, it has been used to assist the race towards global economic and environmental insecurity.

In the struggle for a more democratic economy and society, we have to be brave enough to demand that profit cannot be put before the basic rights and needs of people.

Although the WTO as it currently stands is bad news indeed, some believe that there are ways for the WTO to be reformed into a more democratic and institution. One thing is sure, if it is not seriously changed, it must be abolished. This is a list of minimum demands/actions the WTO must comply with if it is to promote fair trade, human rights and the environment.

Transparency

The WTO must open its procedures to public scrutiny. One of the WTO's goals is transparency in government procurement policies. The WTO must live up to its standards and open its hearings/decision-making process in order to be held accountable to those whom it claims a right to judge. Without public oversight, the WTO will never promote fair trade practices beneficial to the people of its member and will continue to be plagued by special interest influence and conflict of interest questions regarding its arbitrators.

Existing Institutions

The WTO needs to take into account the legitimacy of existing international institutions and agreements. This includes the principles of sovereignty and self-determination as defined in the United Nations Charter. Likewise the WTO must be accountable to international agreements and institutions preceding it, such as those concerned with human rights, the environment, health and labor. The WTO must also give credence to and recognize the expertise of other specialist institutions, such as the World Health Organization and the International Labor Organization.

We are wary, however, of the ways in which the WTO functions closely with the International Monetary Fund (IMF) and the World Bank. The IMF in particular forces countries that accept its loans to implement austerity budgets. These austerity budgets limit social spending while increasing reliance on exports and foreign investment. Although these structural adjustments are good for foreign investors, who want to see a good return on their investment, they are often deadly for the ordinary citizens of a country "helped" by the IMF.

Fairness

The WTO needs to apply its rules fairly. Currently, military trade and procurement are exempt from the WTO agreements. This accounted for $800 billion in spending worldwide in 1995 (Women's International League for Peace and Freedom). Exempting this spending protects militaristic governments from the WTO ideals of "transparency" in trade and government policy. It also insulates military production from the oscillations of the market, promoting weapons proliferation and strengthening weapons producers relative to peaceful industries which must compete and face market discipline. It is also a problem that only militarism is protected, and not, say, labor standards, environmental standards, or child education standards. Aren't these issues as much a matter of national sovereignty as arms buildup?

Local Control

The WTO, through its stress on international and national structures, effectively limits local power. This needs to change. Since the WTO is an agreement entered upon by national governments national government is prioritized. When a WTO panel decides an infraction exists, entire nations are penalized, even if the offending practice was by a local government - such as the Massachusetts law mentioned above.

This forces local government to submit to the will of national and international structures. This ignores the particular distribution of power that people throughout the world may wish to have by choosing to strengthen the power of national governments relative to state/local institutions. The WTO thus effectively promotes the influence of special interests that act at the national level and undermines local efforts at policy-making and self-determination.

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