Monday 12 July 2010
'The problem isn't beef, bananas, cultural diversity or the patenting of life. The problem is the WTO'
Leading development analyst Susan George on why the world trade talks in Seattle next week won't help the great majority of people or the environment
The ministerial conference of the World Trade Organisation (WTO) talks, which open next Tuesday in Seattle, is being blandly presented as a straightforward negotiation on international trade in which everyone will have to make a few concessions. The WTO message, however, is not getting through, and mass demonstrations are planned to greet the delegates and the lobbyists from the multinationals.
Europe has already had to contend with bananas, hormone-fed beef and genetically modified organisms (GMOs), all of which have helped to mobilise opinion against the tyranny of any international organisation that thinks it is a cut above everyone else. But how have things come to such a pass?
Since 1947, the General Agreement on Tariffs and Trade (Gatt) had been working discreetly to get customs duties on all kinds of goods reduced. Following the eighth round of talks in Uruguay (1986-93), that came to fruition. In March 1994, ministers gathered in Marrakesh to sign the document that created the WTO. Its 800 pages gave world trade a framework far more constraining than the feeble Gatt.
The lobbyists of transnational corporations, who had long had the ear of official negotiators, rubbed their hands with glee: the WTO gave them the ideal tool to complete their globalisation and impose their own rules on all human activities now defined as objects of "trade".
The WTO, which, unlike Gatt, has the status of an international organisation, has 134 member states and 30 observers. Its headquarters in Geneva are home to Gatt, which is still responsible for liberalising trade in goods, and a dozen other agreements. Among the most important of these are those on agriculture and the General Agreement on Trade in Services (Gats), which covers more than 160 sectors and sub-sectors, including education, health and the environment. The agreement known as Trips governs intellectual property - including biotechnology and the patenting of micro-organisms and microbiological processes - while the Trims agreement is concerned with "trade-related" investments.
One of the WTO's tasks, the elimination of non-tariff barriers to trade, is performed in part through two other agreements. The agreement on technical barriers to trade and the one on sanitary and phytosanitary measures each claim to "harmonise" standards and rules for the protection of the environment, public health and consumers. In practice, "harmonisation" imposes ceilings that effectively reduce national laws to the lowest common denominator and dispenses with the precautionary principle. Anyone who refuses to import a product on the grounds that it may be hazardous to health or destructive to the environment must provide scientific proof. One of the battles between WTO countries will be over the principle of on whom the burden of proof lies.
Formerly, when Gatt wanted to penalise a country that was not playing by the rules, every member had to agree, even the one that was to suffer the penalties. As a result, Gatt carried little authority. The WTO, with its implacable discipline, is the opposite. If its dispute settlement body orders sanctions, the members - including the plaintiff - must be unanimous if the sanctions are not to apply. Hence the undeniable right of the US to penalise roquefort cheese, foie gras and Dijon mustards by imposing prohibitive customs duties. If the Europeans refuse to import hormone-fed beef, despite the WTO ruling, no matter. They must then compensate the US and Canada every year for their lost earnings.
The conditions under which the WTO's panels, which have settled more than 170 disputes, are appointed are obscure. The names of the "experts", who meet behind closed doors and who hear no outside witnesses, are not made public. This impenetrable procedure is astonishingly quick: disputes are generally settled in 12 months, 18 at the most. Canada, the world's biggest asbestos producer, hoped to take advantage of this to force Europe to import the carcinogen again.
Without warning, the WTO has created an international court of "justice" that is making law and establishing case law in which exist ing national laws are all "barriers" to trade, and is sweeping aside all environmental, social or public health considerations.
In so doing, it is merely following the principles that govern all its activities. For example, the "most favoured nation" clause demands equality of treatment for similar products from different member countries. With the banana decision, the WTO was able to deny the EU the right to have a foreign policy. In the WTO's eyes, a banana is only a banana, be it from Ecuador or the former European colonies.
The national treatment clause prohibits any discrimination affecting products of foreign origin, especially on the basis of the human or ecological conditions under which they were produced. In other words, no account may be taken of the "processes and methods of production". No reference may be made either to sustainable development or to human rights, and trading partners may not be rewarded or punished on the basis of their respect for those ideas. The article on "eliminating quantitative restrictions" penalises quotas and the refusal to import or export. This provision could invalidate many multilateral environmental agreements and some social conventions.
How, then, are we to prevent trade in endangered species or toxic waste? How can we limit exports of cereals when there is a national food shortage, or of tree trunks when the forests are being laid waste? The agreements on technical barriers and sanitary and phytosanitary measures reinforce this legal arsenal. An incalculable number of national standards, rules or laws could easily be classed as "barriers to trade".
These are just a few of the pitfalls along the road to the meeting of the WTO's supreme body, the ministerial conference in Seattle. The previous conferences have set the agenda: to review the agreements on agriculture, services and intellectual property. Seattle will decide the precise content of what Sir Leon Brittan has pompously termed the "Millennium Round".
It is planned to conclude the round with a global agreement in three years' time. The talks will move liberalisation forward and prevent any backtracking; that is how the WTO does things. And the US is reluctant to see the Trips agreement and GMO controversy re-opened, especially as the African countries have declared their opposition to the patenting of life.
A battle to the death is looming between the Cairns group of major agricultural exporting countries (Argentina, Australia and Brazil) and the US on one side, and Europe and Japan, which are considered too protective of their farmers, on the other. The Cairns group simply wants agricultural products to be allowed to compete like any other merchandise. Under pressure from France, the EU stresses the "multi-functionality" of agriculture as protecting diversity, the environment and rural life. Producers in the US, though, are urging their government "to resist any attempt to introduce the concept of multifunctionality".
We do not yet know the order in which the fields covered by the agreement on services will be tackled. If the word "horizontal" is heard, however, it is time to show one's claws: in WTO parlance, it means that a liberalisation measure accepted in one field must be extended to all. A liberalisation applied to banks or insurance, for example, would also have to be applied to education and health.
If governments have their priorities, business has its own. The US Coalition of Service Industries stresses distribution, finance, information technologies, telecommunications, tourism and health. The European Service Leaders' Group, presided over by the chairman of Barclays Bank, is concerned with 21 sectors.
The US Coalition of Energy Services is calling on the US special trade representative and chief negotiator, Charlene Barshevsky, to get their activities added to the agreement on services. The coalition - whose 27 members represent hundreds of billions of dollars - looks as if it will get its way. Brazil, France and Norway, which still regard these areas as public services, have been identified as "possible opponents".
Nobody knows what other sectors might be added to the agenda. The Europeans want the list to be as long as possible. For them, anything is useful in establishing a better balance of power with Washington.
The US negotiators prefer not to include investment, lest they reawaken the citizens' movement that scuppered the Multilateral Agreement on Investment (MAI) in October last year. In any case, agreement on services would open up many advantages for investors. Neither do the Americans want to include electronic commerce: they want this virgin sector to remain a green pasture of zero customs tariffs. Public contracts, which account for 15% of most countries' gross national product, are clearly a juicy target that the US would like to see included.
The Americans, however, will be adamant that the so-called accelerated tariff liberalisation initiative (ATL) be placed on the agenda, defining as it does eight disparate fields in which zero tariffs should quickly become the norm. Alongside jewellery, toys or medical equipment, we find forestry and fishery products - fields in which zero tariffs would accelerate the destruction of these non-renewable resources. In this, Washington has the support of the Asia-Pacific Economic Cooperation Conference, whose member countries account for 60% of world trade.
Where are the countries of the southern hemisphere in all this? The EU says that they deserve special care. Many of them have no ambassador to the WTO, and complain that they have made concessions without getting anything in return - especially in the field of textiles and clothing. Their priority is to see the commitments given to them in the Uruguay Round enacted. They are also suspicious of the European and North American desire to discuss ecological or social clauses. They see this as protectionism in disguise.
The movement that brought down the MAI has quickly mobilised itself again, this time against a WTO that is anti-democratic and destroys freedom and the environment. Accused by the partisans of free trade of wanting to take the world back to the 1930s and the trade wars, the movement replies that international trade needs rules, but not those of the WTO. There is another international law - that of human rights, multilateral environmental agreements and labour law, to which trade should be subordinate. The economy should serve the people and their natural environment, not the other way round. Too much liberalisation spells death to freedom.
The protesters, who will be many in Seattle, are united around one certainty: the need to fight for each other - failing which all will be defeated.
The problem isn't beef, bananas, cultural diversity or the patenting of life: the problem is the WTO.
• Susan George is president of the Observatoire de la mondialisation (Globalisation Observatory) and associate director of the Transnational Institute (Amsterdam).This is an edited extract of an article in the November edition of Le Monde Diplomatique. To subscribe to the English version, published jointly with the Guardian Weekly, phone 0161-832 7200 x 8712, or email gwsubs@guardian.co.uk
* guardian.co.uk © Guardian News and Media Limited 2010
The ministerial conference of the World Trade Organisation (WTO) talks, which open next Tuesday in Seattle, is being blandly presented as a straightforward negotiation on international trade in which everyone will have to make a few concessions. The WTO message, however, is not getting through, and mass demonstrations are planned to greet the delegates and the lobbyists from the multinationals.
Europe has already had to contend with bananas, hormone-fed beef and genetically modified organisms (GMOs), all of which have helped to mobilise opinion against the tyranny of any international organisation that thinks it is a cut above everyone else. But how have things come to such a pass?
Since 1947, the General Agreement on Tariffs and Trade (Gatt) had been working discreetly to get customs duties on all kinds of goods reduced. Following the eighth round of talks in Uruguay (1986-93), that came to fruition. In March 1994, ministers gathered in Marrakesh to sign the document that created the WTO. Its 800 pages gave world trade a framework far more constraining than the feeble Gatt.
The lobbyists of transnational corporations, who had long had the ear of official negotiators, rubbed their hands with glee: the WTO gave them the ideal tool to complete their globalisation and impose their own rules on all human activities now defined as objects of "trade".
The WTO, which, unlike Gatt, has the status of an international organisation, has 134 member states and 30 observers. Its headquarters in Geneva are home to Gatt, which is still responsible for liberalising trade in goods, and a dozen other agreements. Among the most important of these are those on agriculture and the General Agreement on Trade in Services (Gats), which covers more than 160 sectors and sub-sectors, including education, health and the environment. The agreement known as Trips governs intellectual property - including biotechnology and the patenting of micro-organisms and microbiological processes - while the Trims agreement is concerned with "trade-related" investments.
One of the WTO's tasks, the elimination of non-tariff barriers to trade, is performed in part through two other agreements. The agreement on technical barriers to trade and the one on sanitary and phytosanitary measures each claim to "harmonise" standards and rules for the protection of the environment, public health and consumers. In practice, "harmonisation" imposes ceilings that effectively reduce national laws to the lowest common denominator and dispenses with the precautionary principle. Anyone who refuses to import a product on the grounds that it may be hazardous to health or destructive to the environment must provide scientific proof. One of the battles between WTO countries will be over the principle of on whom the burden of proof lies.
Formerly, when Gatt wanted to penalise a country that was not playing by the rules, every member had to agree, even the one that was to suffer the penalties. As a result, Gatt carried little authority. The WTO, with its implacable discipline, is the opposite. If its dispute settlement body orders sanctions, the members - including the plaintiff - must be unanimous if the sanctions are not to apply. Hence the undeniable right of the US to penalise roquefort cheese, foie gras and Dijon mustards by imposing prohibitive customs duties. If the Europeans refuse to import hormone-fed beef, despite the WTO ruling, no matter. They must then compensate the US and Canada every year for their lost earnings.
The conditions under which the WTO's panels, which have settled more than 170 disputes, are appointed are obscure. The names of the "experts", who meet behind closed doors and who hear no outside witnesses, are not made public. This impenetrable procedure is astonishingly quick: disputes are generally settled in 12 months, 18 at the most. Canada, the world's biggest asbestos producer, hoped to take advantage of this to force Europe to import the carcinogen again.
Without warning, the WTO has created an international court of "justice" that is making law and establishing case law in which exist ing national laws are all "barriers" to trade, and is sweeping aside all environmental, social or public health considerations.
In so doing, it is merely following the principles that govern all its activities. For example, the "most favoured nation" clause demands equality of treatment for similar products from different member countries. With the banana decision, the WTO was able to deny the EU the right to have a foreign policy. In the WTO's eyes, a banana is only a banana, be it from Ecuador or the former European colonies.
The national treatment clause prohibits any discrimination affecting products of foreign origin, especially on the basis of the human or ecological conditions under which they were produced. In other words, no account may be taken of the "processes and methods of production". No reference may be made either to sustainable development or to human rights, and trading partners may not be rewarded or punished on the basis of their respect for those ideas. The article on "eliminating quantitative restrictions" penalises quotas and the refusal to import or export. This provision could invalidate many multilateral environmental agreements and some social conventions.
How, then, are we to prevent trade in endangered species or toxic waste? How can we limit exports of cereals when there is a national food shortage, or of tree trunks when the forests are being laid waste? The agreements on technical barriers and sanitary and phytosanitary measures reinforce this legal arsenal. An incalculable number of national standards, rules or laws could easily be classed as "barriers to trade".
These are just a few of the pitfalls along the road to the meeting of the WTO's supreme body, the ministerial conference in Seattle. The previous conferences have set the agenda: to review the agreements on agriculture, services and intellectual property. Seattle will decide the precise content of what Sir Leon Brittan has pompously termed the "Millennium Round".
It is planned to conclude the round with a global agreement in three years' time. The talks will move liberalisation forward and prevent any backtracking; that is how the WTO does things. And the US is reluctant to see the Trips agreement and GMO controversy re-opened, especially as the African countries have declared their opposition to the patenting of life.
A battle to the death is looming between the Cairns group of major agricultural exporting countries (Argentina, Australia and Brazil) and the US on one side, and Europe and Japan, which are considered too protective of their farmers, on the other. The Cairns group simply wants agricultural products to be allowed to compete like any other merchandise. Under pressure from France, the EU stresses the "multi-functionality" of agriculture as protecting diversity, the environment and rural life. Producers in the US, though, are urging their government "to resist any attempt to introduce the concept of multifunctionality".
We do not yet know the order in which the fields covered by the agreement on services will be tackled. If the word "horizontal" is heard, however, it is time to show one's claws: in WTO parlance, it means that a liberalisation measure accepted in one field must be extended to all. A liberalisation applied to banks or insurance, for example, would also have to be applied to education and health.
If governments have their priorities, business has its own. The US Coalition of Service Industries stresses distribution, finance, information technologies, telecommunications, tourism and health. The European Service Leaders' Group, presided over by the chairman of Barclays Bank, is concerned with 21 sectors.
The US Coalition of Energy Services is calling on the US special trade representative and chief negotiator, Charlene Barshevsky, to get their activities added to the agreement on services. The coalition - whose 27 members represent hundreds of billions of dollars - looks as if it will get its way. Brazil, France and Norway, which still regard these areas as public services, have been identified as "possible opponents".
Nobody knows what other sectors might be added to the agenda. The Europeans want the list to be as long as possible. For them, anything is useful in establishing a better balance of power with Washington.
The US negotiators prefer not to include investment, lest they reawaken the citizens' movement that scuppered the Multilateral Agreement on Investment (MAI) in October last year. In any case, agreement on services would open up many advantages for investors. Neither do the Americans want to include electronic commerce: they want this virgin sector to remain a green pasture of zero customs tariffs. Public contracts, which account for 15% of most countries' gross national product, are clearly a juicy target that the US would like to see included.
The Americans, however, will be adamant that the so-called accelerated tariff liberalisation initiative (ATL) be placed on the agenda, defining as it does eight disparate fields in which zero tariffs should quickly become the norm. Alongside jewellery, toys or medical equipment, we find forestry and fishery products - fields in which zero tariffs would accelerate the destruction of these non-renewable resources. In this, Washington has the support of the Asia-Pacific Economic Cooperation Conference, whose member countries account for 60% of world trade.
Where are the countries of the southern hemisphere in all this? The EU says that they deserve special care. Many of them have no ambassador to the WTO, and complain that they have made concessions without getting anything in return - especially in the field of textiles and clothing. Their priority is to see the commitments given to them in the Uruguay Round enacted. They are also suspicious of the European and North American desire to discuss ecological or social clauses. They see this as protectionism in disguise.
The movement that brought down the MAI has quickly mobilised itself again, this time against a WTO that is anti-democratic and destroys freedom and the environment. Accused by the partisans of free trade of wanting to take the world back to the 1930s and the trade wars, the movement replies that international trade needs rules, but not those of the WTO. There is another international law - that of human rights, multilateral environmental agreements and labour law, to which trade should be subordinate. The economy should serve the people and their natural environment, not the other way round. Too much liberalisation spells death to freedom.
The protesters, who will be many in Seattle, are united around one certainty: the need to fight for each other - failing which all will be defeated.
The problem isn't beef, bananas, cultural diversity or the patenting of life: the problem is the WTO.
• Susan George is president of the Observatoire de la mondialisation (Globalisation Observatory) and associate director of the Transnational Institute (Amsterdam).This is an edited extract of an article in the November edition of Le Monde Diplomatique. To subscribe to the English version, published jointly with the Guardian Weekly, phone 0161-832 7200 x 8712, or email gwsubs@guardian.co.uk
* guardian.co.uk © Guardian News and Media Limited 2010
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