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WTO processes favor big business and rich countries.

What's wrong with the WTO?
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.
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Opinions

"The process, including even at Singapore [the first WTO ministerial meeting] as recently as three years ago, was a rather exclusionary one. All meetings were held between 20 and 30 key countries. … And that meant 100 countries, 100, were never in the room. …[T]his led to an extraordinarily bad feeling that they were left out of the process, and that the results even at Singapore had been dictated to them by the 25 or 30 privileged countries who were in the room."

—Charlene Barshefsky, former U.S. Trade Representative

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"These deals aren't about free trade. They're about the right of these guys [corporate agribusinesses] to do business the way they want, wherever they want."

—Eugene Whelan, former Canadian federal agriculture minister

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The WTO is "the place where governments collude in private against their domestic pressure groups."

—Anonymous WTO official quoted by the Financial Times

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"I think nobody had any idea where the Uruguay Round was headed, you know. There wasn't some great conspiracy. There were just all kinds of pressures. I mean, everybody has to look after themselves... The pharmaceutical companies, American Express, they know what's going on. No-one has to tell them. They tell governments what's going on! So they can protect their interests, and they take the initiative. It's just normal. …"

"I don't know whether I should say this or not, but... There is a feeling in many countries that their interests should not be subordinated to some overall ideology... The worst situation is in the countries that are acceding to the WTO. We see very extraordinary things, really disturbing. Some countries are asked to make many more commitments than existing members are. They're being pushed to liberalize to the maximum."

—Murray Gibbs, official of the United Nations Conference on Trade and Development (UNCTAD)

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"Transnational corporations, particularly the largest, control directly or indirectly over two-thirds of world trade. What we call trade is at least one-third IBM trading with IBM, Ford with Ford, etc., and a further third is TNCs trading among themselves. … It should surprise no one that the US brought suit against the EU in the banana case on behalf of Chiquita Brands banana production in Central America and Ecuador—the US produces no bananas—this just makes explicit what is, or ought to be, perfectly obvious."

—Susan George, Vice-President, Association for Taxation of Financial Transactions to Aid Citizens (ATTAC), France.

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"The WTO is increasingly intruding into people's lives, no matter who they are or where they live. There should be a set of strong rules to protect the interests of the weak against exploitation by the powerful. These rules should encourage democracies at all levels to prioritize their social aims above the interests of transnational companies. If the WTO cannot be reformed so that it agrees new rules and administers some of them as part of an overall framework, we need a new organization that can."

—Barry Coates, Director, World Development Movement, U.K.

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"Though corporations have no standing in the WTO—the organization is, officially, open only to its member countries—the numerous advisory bodies that provide technical expertise to delegates are overflowing with corporate representation. The delegates themselves are drawn from trade ministries and confer regularly with the corporate lobbyists and advisors who swarm the streets and offices of Geneva, where the organization is headquartered. …"

"Large corporations are essentially 'renting' governments to bring cases before the WTO, and in this way, to win in the WTO battles they have lost in the political arena at home."

—Ellen Frank in Dollars and Sense, U.S.

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"As critics feared, the WTO's built-in bias against public participation has made the institution a perfect venue for industry and governments to pursue agendas that would fail in open democratic forums."

—Lori Wallach & Michelle Sforza, Public Citizen Global Trade Watch, U.S.
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The WTO and its defenders argue that it is democratic because all countries officially have one vote and decisions are usually made by what they call "consensus." In practice, however, votes are almost never taken. Rather, the U.S. and other major powers work with the WTO Director General to broker "Green Room" decisions in secret among small, handpicked caucuses of compliant countries. They then present the results as faits accomplis to the other member countries. At the Seattle Ministerial in 1999, such longstanding practices finally ignited a revolt by some less-developed countries and ultimately led to the failure to launch a new round of trade negotiations.

Smaller and poorer countries cannot afford to maintain the representatives and trade lawyers necessary to make their voices heard on policy issues at the WTO headquarters in Geneva. WTO dispute-resolution processes, too, are slanted against such countries, which don't have the resources to defend themselves against complaints by rich countries. Often just the threat of a complaint forces them to settle a dispute in favor of transnational enterprises and against the interests of the majority of their citizens.

The dominant governments, for their part, often take their cues from powerful industry consortia such as TransAtlantic Business Dialogue (TABD). These exert a disproportionate influence on WTO decision-making, much stronger than that of most governments of poor countries. Meanwhile, non-governmental organizations representing the interests of ordinary citizens are shut out of policy decisions and the dispute-settlement process.

For example, although the United States and the European Union set up consumer and environmental dialogues as an expedient response to political criticism, these groups were excluded from the 1999 TransAtlantic Economic Partnership negotiations by both governments. Officials of the TransAtlantic Business Dialogue, in contrast, provided detailed recommendations to the negotiators and were consulted during the summit by high officials of both governments.

In a case of apparent influence buying, CEO Carl Lindner of Chiquita Brands, a U.S. transnational, persuaded the U.S. government to mount a successful challenge of the E.U.'s Lomé Convention quotas for Caribbean small banana growers in former European colonies. The U.S. acted on Chiquita's behalf even though the firm grows no bananas in the U.S. Lindner's lobbying strategy included $850,000 in contributions to the Democratic and Republican parties at critical moments in the decision-making process.

The main international standards bodies whose decisions the WTO treaties reference and impose on members are also dominated by industry and inaccessible to public input. For example, the Codex Alimentarius—the set of food-safety standards adopted by the WTO Agreement on the Application of Sanitary and Phytosanitary Measures—has been heavily influenced by U.S. agribusiness. Another body to which the WTO defers, the International Organization for Standardization (ISO), is a private-sector body that sets technical, product and environmental standards according to the needs of industry without public scrutiny.

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Legal Basis

The WTO's lack of democracy and tilted playing field are not explicitly codified in the formal rules of WTO, many of which sound fine in theory. Rather, they surface in how business is actually conducted within the organization and in changes from the pre-Uruguay Round rules of the General Agreement on Tariffs and Trade on how disputes are settled.

The following treaties are enforced by the World Trade Organization.

Understanding on Rules and Procedures Governing the Settlement of Disputes

See Dispute Settlement Understanding page.

Agreement on Trade-Related Aspects of Intellectual Property (TRIPS).

See TRIPS page.

Three major industry lobbying groups dominated the negotiations that created the TRIPS agreement:

  • Intellectual Property Committee. A coalition of 12 of the biggest U.S. transnational corporations, including General Electric, General Motors, IBM, DuPont and Monsanto.
  • Keidanren. A group of Japanese economic organisms.
  • Union of Industrial and Employees Confederations. A body representing European business and industry.

These groups directly molded the agreement in close cooperation with government negotiators. However, no non-governmental organizations from any country were allowed to participate in or even comment on the negotiations.

Agreement on Trade-Related Investment Measures (TRIMS)

See TRIMS page.

Agreement on the Application of Sanitary and Phytosanitary Measures (SPS)

See SPS page.

Effectively establishes international standards as ceilings, including those set by the Codex Alimentarius Commission and the International Organization for Standardization (ISO), both industry-dominated bodies.

Agreement on Technical Barriers to Trade (TBT)

See TBT page.

Limits the right of countries to adopt standards more stringent than those set by the International Organization for Standardization (ISO).

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Cases & Controversies

  • U.S. & Canada v. EU on hormone-treated beef
    See Hormone-Treated Beef Case page
  • U.S. v. EU on Caribbean bananas
    See Chiquita Banana Case page
    The U.S., on behalf of Chiquita Brands, won this dispute over Europe's preferences under the Lomé Convention for small banana producers in former colonies.
  • Thailand, Pakistan, India, and Malaysia v. U.S. on shrimp caught without sea turtle excluder devices
    See Shrimp/Sea Turtle Case page
    Large shrimping corporations used India to dispute U.S. ban on shrimp caught without sea-turtle protections.
  • U.S. v. Guatemala on baby-food trademark
    See Baby-Food Trademark Controversy page
    The threat of WTO action by the U.S. on behalf of a transnational firm's intellectual property rights damaged public health efforts in a poor country.
  • U.S. v. Denmark on ban on lead compounds
    See Lead Compounds Controversy page
    The U.S. threatened to challenge a Danish ban on lead compounds. Even the threat of WTO action by a powerful country can have a chilling effect on small countries' efforts to protect their citizens.
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Resources

Non-governmental

Governmental

Official WTO Web site

  • Understanding on Rules and Procedures Governing the Settlement of Disputes
    See Dispute Settlement Understanding page.
  • Agreement on Trade-Related Aspects of Intellectual Property (TRIPS)
    See TRIPS page.
  • Agreement on Trade Related Investment Measures (TRIMS)
    See TRIMS page.
  • Agreement on the Application of Sanitary and Phytosanitary Measures (SPS)
    See SPS page.
  • Agreement on Technical Barriers to Trade (TBT)
    See TBT page.

By Peter Costantini ~ Seattle ~ November 2001
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