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 ON THIS PAGE  When is trade free?   The WTO's Bill of Wrongs   Opinions   The WTO v. Democracy   Visions of change

What's wrong with the WTO?
A guide to where the mines are buried
by Peter Costantini ~ Seattle ~ November 2001

Submerged within the mind-numbing verbiage of the World Trade Organization treaties and their interpretations are a handful of principles that subordinate all other values—environmental sustainability, consumer and worker safety, public health, freedom of labor and human rights—to maximizing trade. The provisions and interpretations articulating these principles impede nations from enforcing their own laws to protect the public good. They imperil rights and protections won by citizens over the last century and undermine national and local democracy and transparency.

Most of these strictures are not intrinsic to international trade. Rather, they have resulted from the veiled efforts of the most powerful nations and corporations, who use WTO rules and rulings as crowbars to wrench open markets and batter down laws defending the quality of human life and the environment.

The record of the past six years is clear: nearly all WTO decisions have gutted democratic restrictions on trade, effectively lowering environmental, consumer protection, public health, and human rights standards. Even when reasonable standards were applied equally to all domestic and foreign producers, the WTO has repeatedly struck them down as trade barriers, demolishing shelters that citizens have built against the stormy side effects of market forces.

When is trade "free"?

A central principle of the 1947 General Agreement on Tariffs and Trade (now enforced by the WTO) was non-discrimination: products imported from one country should be treated the same as those imported from all other countries and those produced within the importing country. This principle is expressed in two technical terms:

• National treatment - Goods imported from countries that have signed the treaty must be treated the same as domestic ones.
• Most-favored nation treatment - Goods imported from each signatory country must be treated equally.

WTO provisions and rulings, however, go far beyond these concepts in turning trade into an end in itself rather than a means to improve people's lives. Under them, even national standards that respect these well-established benchmarks can still be declared illegal restrictions on trade.

And the WTO's version of "free trade" has distinct limits. Countries and corporations of means can manipulate negotiations and dispute settlements to their advantage. When it comes to intellectual property, for example, the WTO's TRIPS Agreement enforces restrictions on trade—copyrights and patents—in the name of encouraging innovation. This benefits almost exclusively wealthy nations and transnational enterprises, while harming small farmers and indigent AIDS victims. Yet the WTO outlaws other exceptions to free trade that might benefit poor people and countries.

For many sectors in many countries, lowering barriers to international trade may be a viable policy. But no developed country has industrialized without protection and government support of critical industries. And many developing countries who have thrown their economies open to international markets have sunk deeper into poverty and debt.

Developing and industrialized countries alike should be able to weigh the pros and cons of trade liberalization for their particular economy against other social values and goals. The WTO is harmful not because it promotes free trade, but because it forecloses with closed tribunals and draconian penalties the possibility of any economic strategy other than corporate-managed trade. It attempts to impose an anti-democratic monoculture on an exuberantly heterogeneous world.

Opinions

"We are writing the constitution of a single global economy." —Renato Ruggiero, former WTO Director-General, Italy "The WTO is basically the first constitution based on the rules of trade and the rules of commerce. Every other constitution has been based on the sovereignty of people and countries. Every constitution has protected life above profits. But WTO protects profits above the right to life of humans and other species." —Vandana Shiva, Director, Research Foundation for Science, Technology, and Natural Resource Policy, India ~ "There are some who believe that simply opening markets on a global scale is the be-all and end-all, no matter how it is done or no matter who benefits. I subscribe to a different view. It is imperative that we open markets in a manner consistent with the rules of the WTO, but we must make sure Americans benefit directly from the process, and to do that Americans must drive the rules of the new global landscape and the opening of markets." —Charlene Barshefsky, U.S. Trade Representative "From the free-market paradigm that underpins it, to the rules and regulations set forth in the different agreements that make up the Uruguay Round, to its system of decision-making and accountability, the WTO is a blueprint for the global hegemony of Corporate America." —Walden Bello, Director, Focus on the Global South, Thailand ~ "In broad terms, the WTO is designed to entrench 'grow-now, pay-later' globalization by removing the power of governments to regulate corporate activity in the public interest. The result is that it will undermine our capacity to redirect current economic, development and trade policies towards a truly sustainable path." —Steven Shrybman, former Executive Director, West Coast Environmental Law Association, Canada

The WTO's Bill of Wrongs

You cannot restrict trade in a good based on how it is produced.

"Production and processing methods" can't be considered in trade rules, even if they damage people or the environment.

You must use the 'least trade-restrictive' method—not the most effective one—to protect people and the environment.

The WTO enshrines commerce as a higher value than other more fundamental human values. Environmental or human-rights standards that are more effective at protecting victims of pollution or dictatorships are trumped by weaker standards that marginally increase trade.

You must first prove a substance dangerous before restricting its use.

The WTO assumes untested chemicals and technologies are safe until proven otherwise. This stands the Precautionary Principle—better safe than sorry—on its head, and can force nations to lower their public health, safety and environmental standards.

You must lower national standards if they are higher than international standards.

The WTO sets ceilings rather than floors for national consumer, environmental, and worker protections. When international standards are lower than your own, you must harmonize your standard downwards.

You must treat life forms and life-saving drugs as commodities.

The WTO honors monopolies in intellectual property over human needs for medicine and food, threatening public health, small farmers, indigenous knowledge and biodiversity in developing countries.

You must deregulate and privatize essential public services.

The WTO pressures member nations to open their basic public services and resources to the market, to to detriment of their citizens and the benefit of transnational corporations.

You cannot use trade policy to encourage development in poor countries.

The WTO restricts less-developed countries' use of trade as a tool to foster balanced development. It also attacks special trade arrangements that make up for past injustices.

You must subordinate human rights to free trade.

The WTO weakens the power of citizens to champion human and labor rights through the policies of their governments.

The WTO v. democracy

WTO processes favor big business and rich countries.

The WTO's undemocratic decision-making mechanisms are weighted in favor of the industrialized nations and against developing countries. Transnational business groups exert heavy influence on policies and negotiations, while citizen groups are marginalized and excluded.

The WTO resolves disputes unfairly behind closed doors.

The WTO dispute resolution process is secretive, biased and exclusive, concentrating power in the hands of international-trade insiders. It does not include procedural safeguards or due process protections, yet it exerts tremendous coercive power over member countries.

Visions of change

Alternative paths to fairer trade rules

Key proposals on how to impose sustainable societal values on international commerce

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