Champion of Corruption

The World Trade Organisation helps business to dump its costs on other people

By George Monbiot. Published in the Guardian 30th November 1999.

Just over a year ago, a ragged band of protestors defeated a coalition of the most powerful interests on earth. The richest nations had joined forces with the biggest corporations to write, they boasted, “the constitution of a single global economy”. The Multilateral Agreement on Investment would have enabled big companies to force governments to remove public health, human rights and environmental regulations. The talks collapsed when the devious machinations of the negotiators were exposed. Now the valets of big business are trying again, pursuing the same aims through another forum, the World Trade Organisation. The WTO has become the most urgent threat to democracy on earth.

The world’s international trading rules were established with the best intentions. For centuries, the most powerful nations had been able to crush the weakest, by refusing to allow them to compete on fair terms. While Britain, for example, was prepared to buy raw cotton from India, it levied import taxes, or tariffs, against cotton clothes made in the sub-continent, ensuring that the profits from processing and manufacturing accrued to our own companies. The General Agreement on Tarriffs and Trade (GATT), drafted in 1947, would pull these tariff barriers down, enabling the poor to trade on equal terms with the rich.

It wasn’t long, however, before the negotiations began to be infiltrated by corporate lawyers. Shielded by the secrecy and opacity with which the trade rules were discussed, they began to undermine the guidelines promoting fairness and replace them with clauses enabling unconditional corporate rule. Expert panels were stuffed with corporate nominees, key decisions were taken by trade bureaucrats with startling conflicts of interest. By the time the GATT was replaced, in 1995, with the World Trade Organisation, it had become the means by which corporations force governments to open their borders to the crudest forms of exploitation.

Last year, for example, the state of Massachusetts was forced to drop its boycott of companies trading with the murderous military regime in Burma. The decision was made by a US federal judge, but he cited an appeal to the World Trade Organiation by the European Union, which argued that the sanctions were an unfair barrier to trade. Massachusetts’s lawyers pointed out that had current world trade rules been in force during the 1980s, Nelson Mandela would still be in prison.

In 1997, the European Union dropped its proposed bans on cosmetics which had been tested on animals and on fur from animals caught in leghold traps, for fear that the legislation would conflict with WTO rules. WTO guidelines will prevent it from banning imports of eggs from battery chickens, which means that US producers will be able to undercut our farmers when battery cages are proscribed in Europe. The European Union has had to suspend its ban on noisy and polluting aircraft, and it will probably have to drop its plans to make electronics manufacturers responsible for recycling their products. Last week, the UK forbade the sale of asbestos. Canada, which mines asbestos, will use the WTO to force us to lift the ban.

Earlier this year, the United States sought to oblige Europeans to eat beef contaminated with six injected hormones, one of which has been identified as a potent cause of cancer in children. Europe refused, so the WTO allowed the US to levy $160 million worth of sanctions. The United States has threatened to use world trade rules to forbid us from labelling food as containing genetically engineered ingredients.

While the corporations have been granted unprecedented power, after 50 years the original mandate of the world trade agreements – removing the barriers to exports from poorer countries – has still to be discharged. Europe continues to levy devastating tarriffs against cotton goods from India. Rich countries still destroy the livelihoods of farmers in the Third World by dumping subsidised grain onto their markets. The WTO has even introduced a new form of protectionism, granting multinational companies exclusive ownership of plant varieties.

You might have imagined that the governments meeting in Seattle today would want to tackle these problems. Instead, rich nations are forcing complex new demands onto the agenda, with a haste which suggests that they are hoping to avoid addressing the existing distortions. The trading bloc with the widest and most dangerous objectives is Europe, and the country within Europe pursuing those objectives most aggressively is the United Kingdom.

Our government is seeking to stimulate international trade in services, investments and public procurement. The measures it is proposing will prevent developing countries from awarding public contracts to domestic companies. They will forbid governments from restricting foreign ownership of the media and, most alarmingly, could force them to privatise their key public services, including welfare, housing, health and education.

Throughout their deliberations, British government ministers have responded to public concern with contemptuous duplicity. Both Clare Short and Stephen Byers have claimed that the new trade talks will concentrate on addressing the problems of the world’s poorest nations. Yet it is they who are shunting developing country concerns down the agenda, by introducing scores of new issues.

Stephen Byers insists that the measures Britain is proposing will not harm the environment, yet his department celebrates the WTO’s gutting of the US Clean Air Act as “a considerable achievement”. His aims for the new round include “reducing the burden on business and barriers to trade represented by industrial standards and technical regulations”: removing the measures, in other words, protecting the environment, workers and consumers.

The DTI minister Richard Caborn insists that the NHS and state education “could not and … will not” face “rulings by the WTO”. But the WTO’s secretariat has already announced that public services are in competition with the private sector, and should therefore be accessible to the market. Member governments, it has suggested, should “reconsider the breadth and depth of their commitments on health and social services.”

The battle in Seattle is being portrayed as a fight between poor nations and rich ones. In truth it is a struggle between big business (and its client governments) and everyone else. The WTO
has become the enforcer not of free trade but of coercive trade, compelling governments to allow corporations to dump their costs onto other people. By setting maximum standards rather than minimum ones, by failing to distinguish between protectionism and protection, the World Trade Organisation punishes states which try to defend their people.

The world desperately needs a rules-based trading system. But it must be one which renders corporations subservient to democracy, rather than democracy subservient to corporations. Businesses should be made to seek a licence to trade, which they will not receive until they shoulder their social and environmental responsibilities. Any other outcome would leave the world not with a free trade agreement, but with a charter for corporate government.