NEXT PAGE -->
|
| * * * COMPANIES & PRODUCTS * * * |
|---|
Updated Daily!
| * * * IN-HOUSE RESOURCES * * * |
|---|
October 21, 1999
THE WTO AND FREE TRADE
What is being described as "the Protest of the Century" will take place in Seattle, Washington, November 29 to December 3 amid teach-ins, workshops, and strategy sessions all aiming to send a powerful message to members of the World Trade Organization (WTO), who will be in Seattle for the WTO's Third Ministerial Meeting. Activists are calling for people from all nations and all walks of life to make the journey to Seattle, to demand that the WTO change its ways. But what is the WTO?
Although many environmental and community activists in the U.S. know almost nothing about the WTO, in the 4 years since its creation the WTO has emerged as the policy voice, the muscle, and ultimately the fist of transnational corporations. Created by international treaty in 1995, and now boasting 134 nations as members, the WTO has written 700 pages of rules which add up to an enforceable commercial code governing markets and trade world-wide -- a code enforceable not by nation-states but by the WTO itself. No doubt about it, the WTO is a powerful new system of global governance.[1]
The structure of the WTO was designed by transnational corporations, so it should come as no surprise that the WTO is (a) radically undemocratic, fully insulated against pressure from ordinary citizens; and (b) a vehicle for transnationals to challenge and effectively repeal restrictions imposed on them by nation-states.[1] The main idea that the WTO was set up to define and enforce is "the global free market" or "global free trade." But what is "free trade"?
Far back in the mists of time, when humans began trading shells and beads with each other, the first markets emerged, but such traditional markets were never free. All traditional markets are embedded in societies and are regulated and restrained by those societies for the purpose of maintaining social cohesion. Familiar societal controls on markets include such things as:
** the Roman Catholic and Islamic religions' prohibitions against usury;
** medieval guilds, which set minimum wages, and which set standards and prices for goods;
** customary prohibitions or restrictions on the sale of certain goods, such as public spaces, sexual favors, spoiled food, and judicial decisions, for example;
** laws requiring government purchasing policies to give preference to businesses run by people of a particular city or region, or by women or minorities, or by some other identifiable group;
** regulations requiring that products be labeled with their ingredients or with their method of production (such as "organically grown"), and that the labels be certifiably true;
** laws discouraging monopolies, to promote competition;
** a guaranteed minimum income, regardless of employment, traceable to 1795 in England;
** laws requiring that production methods should protect endangered species (for example, that shrimp be harvested by methods that do not kill rare sea turtles);
** prohibitions against child labor;
** government ownership of certain public-service enterprises (municipal and state hospitals in the U.S., or the oil industry in Mexico, for example);
** limits on the length of a work day;
** restrictions on 100% ownership of businesses by foreign nationals;
** tariffs intended to increase the price of imported goods as a way of protecting domestic producers;
** government subsidies to promote particular industries -- for example, planting many thousands of seedlings to assure a domestic timber industry in the future;
** Etc., etc.
As anyone can see from this list, market restrictions can be imposed by law, or merely by custom, with varying effects on different members of a society. It is not possible to generalize that all controls on markets are good or bad (though some free trade zealots do assert that all market restrictions are unnatural and evil).
In sum, history shows us, beyond any doubt, that, when humans develop markets spontaneously, such markets are subject to societal controls, which generally are aimed at maintaining social cohesion. Governments impose market restrictions as part of their primary duty, which is to provide security for the citizenry.
Free markets -- markets that are free of restrictions, regulations, and encumbrances -- do not occur spontaneously. Free markets only appear when they are engineered by the relentless application of state power. As a historical fact, free market regimes are extremely rare.
For a very brief period, and in one country only, a free market, or laissez faire, regime did emerge. In the latter half of the 19th century in England, a true free market economy functioned for a brief time. It did not occur spontaneously -- it was imposed by the brute power of the state, and at great cost to the average citizen of the time.[2] (Charles Dickens wrote novels about life during this period.) The British "free market" experiment collapsed into the trenches of World War I and was not heard from again until the ruling (business) class revived the idea in the late 1970s in Great Britain, the U.S., Australia, and New Zealand. Thus, actual experience with free market regimes is quite limited, principally because such regimes are very difficult to establish and maintain in the face of popular opposition. If a democracy is alive and well, free markets soon revert to traditional regulated markets because citizens demand and expect a modicum of security, equity, and humane treatment. Free market regimes are arguably efficient (in the narrowest economic meaning of that word) but the historical record demonstrates that they are exceedingly painful and costly for ordinary working people, incompatible with democratic institutions, and destructive of the natural environment. History shows that, left unregulated, markets cannot take into account that species are disappearing at unprecedented rates, economic inequalities are growing ominously, and the lives of families and communities are in tatters.
Now transnational corporations -- working through the governments that they dominate[3] -- have spent roughly 20 years exporting the "free market" model to all the nations of the world -- a utopian experiment in social engineering that takes your breath away for its scope, scale, and boldness. Even the most ruthless social engineers of the 20th century -- Josef Stalin and Mao Zedong -- did not attempt social engineering projects on the scale of the experiment that the free traders have undertaken today. And the World Trade Organization (WTO) is the vehicle for enforcing this colossal attempt to remake all of the world's economies according to a single utopian idea.
In principle, WTO rules are established by consensus of all 134 members, but in practice the so-called QUAD countries (U.S., Japan, Canada and the European Union) can meet behind closed doors and influence the rules. Within the WTO, the QUAD countries are the 900-pound gorilla. Within the QUAD countries, transnational corporations wield enormous influence, comparable to the influence of the Christian Church in medieval Europe.[3]
The WTO allows countries to challenge each other's laws and regulations as violations of WTO rules. Cases are heard and decided by a tribunal of three trade bureaucrats, usually corporate lawyers. There are no rules on conflict of interest, nor is there any requirement that the three judges have any appreciation of the domestic laws of the countries involved. The judges meet in secret at locations and times that are not disclosed. Documents, hearings, and briefs are confidential. Only national governments are allowed to participate, even if a state law is being challenged. There are no appeals to anyone outside the WTO. Once a WTO ruling has been issued, losing countries face 3 options: They can (1) amend their laws to comply with WTO rules; (2) pay annual compensation to the winning country; or (3) face non-negotiated trade sanctions (penalties imposed on goods that the losing country exports to other WTO countries).
In its short history, the WTO has already begun to repeal environmental regulations and policies that took citizens 30 years to enact. For example, the WTO ruled in 1998 that the precautionary principle (see REHW #586) is not a valid basis for restricting markets because it is "non-scientific." When the European Union banned the sale of hormone-treated meat within EU countries, the U.S. lodged a formal complaint to the WTO. Despite a lengthy report by independent scientists showing that some hormones added to U.S. meat are "complete carcinogens" -- capable of causing cancer by themselves -- (see REHW #666) the WTO's 3-lawyer tribunal ruled that the EU did not have a "valid" scientific case for refusing to allow the import of U.S. beef. The losing countries are now required to pay the U.S. $150 million each year as compensation for lost profits.
The WTO grew out of an earlier organization called the GATT (General Agreement on Tariffs and Trade). The GATT mainly focused on repealing tariffs, which are taxes on imported goods intended to protect domestic producers against foreign competition. But when the GATT merged into the WTO, the WTO gained the new responsibility of opposing "non-tariff barriers to trade." Non-tariff barriers to trade include such things as food safety laws, product standards, rules on the use of tax dollars, and investment policies.
Example: WTO has ruled that a nation cannot refuse to import goods based on the methods by which those goods were produced because such refusal constitutes an illegal "non-tariff barrier to trade." Thus the WTO in 1998 declared illegal a U.S. environmental regulation requiring that imported shrimp must be caught by methods that minimize harm to endangered sea turtles. In 1997, the WTO overturned part of the U.S. Clean Air Act, which prevented the import of low-quality gasoline with a high potential for air pollution. U.S. Environmental Protection Agency has acknowledged that this WTO ruling "creates the potential for adverse environmental impact." Thus at the behest of transnational corporations the WTO can -- and will -- repeal any nation's environment al protections.
Now the WTO is meeting in Seattle Nov. 29-Dec. 3 to initiate a new round of talks, the Millennium Round. In this new phase, the corporations that support the WTO intend to expand the WTO's power and reach even further.
Activists are demanding that the WTO be opened uo to scrutiny and that its record of performance be formally evaluated before any new talks begin. They see the WTO as threatening democracy, quality of life, environmental integrity, environmental justice, and every nation's control of its own destiny. Clearly, a titanic clash has begun. For information about attending the Seattle protest, phone 1-877-STOP WTO. More next week.
Sustainability means satisfying human needs fairly and without destroying the ecosystems that support life. The conflict between modern economies and the natural environment lies at the heart of "sustainable use of the planet." (The conflict between modern economies and "fairness" is also a huge problem, which we will take up at a later date. Also, see Conference Announcement, below, in this issue.)
How can modern economies be modified so they sustain ecosystems instead of destroying them?
Tax policies can definitely help. The basic idea is to tax the things that we don't want (such as pollution and waste), and remove taxes from the things we do want (for example, work, income and savings). Many economists have been promoting taxes on pollution for years.[1]
The idea isn't to increase taxes -- in most cases, the idea is to "shift" from one kind of tax to another kind without increasing the total tax burden. Naturally, shifting taxes onto pollution will raise the tax burden on polluters, who are often wealthy and powerful people. Thus tax shifting may cause a political fight but so does almost everything that benefits large numbers of people these days.
A new report, just published this week by Sustainable America (SA), describes 10 kinds of "environment friendly" taxes that can replace traditional taxes.[2] The new taxes provide income for government but much more importantly they provide incentives for individuals and businesses to behave in ways that protect the environment, thus harnessing "market forces" on behalf of environmental protection.
Sustainable America's 10 taxes can alleviate a broad array of environmental hazards: global warming; discharges of industrial poisons into air and water; agricultural toxicants (fertilizers and pesticides); smog created by motor vehicles; suburban sprawl and urban blight; contaminated land (so-called "brownfields"); municipal garbage; excessive use of water; destruction of forests; and depletion of fisheries. Environment-friendly taxes can help solve many important problems. Taxes don't replace other environmental policies (such as bans, precautionary actions, and regulations), they supplement them.
The SA "environment-friendly taxes" report is much more than just a traditional report -- it is an "organizer's kit" aimed at citizens who want to mount campaigns to shift over to these new taxes. The Kit gives you just about everything you would need to conduct a campaign. For each of the 10 kinds of taxes, the Kit describes:
* What is the problem that needs to be solved?
* What should be taxed to help solve it?
* Who should pay the tax?
* How should the resulting revenues be used?
* How will this tax change peoples' behavior?
* How will individuals and communities be affected?
* Who is using these policies today?
* Where can you get more information?
Here is a brief discussion of some of these "taxes for sustainability":
LAND VALUE TAX TO DISCOURAGE SPRAWL
Urban sprawl destroys natural areas, paves over farm land, eats up scarce open space, increases commuter traffic and air pollution, isolates the poor in city centers, decreases the urban tax base, reduces the jobs available to city residents, increases the number of vacant or abandoned lots and buildings in cities, destroys the traditional sense of community found in urban neighborhoods, and increases the tax burden on suburban residents. To revitalize our cities, and reduce automobile pollution, we need to curb sprawl.[3]
The movement of people out of cities and into suburbs is being promoted by many public policies. For example, governments subsidize automobile travel (by paying for highways, traffic control, law enforcement, parking, effects on public health, and more). The Federal Housing Administration's (FHA) rules have favored lending for single-family dwellings (suburban) but not for multi-family units (city). FHA rules have also made it cheaper to buy a new home (suburbs) than to renovate an older one (city). Federal tax deductions for home mortgage interest subsidize homeowners (suburbs) over renters (city). As suburban development drives up the price of farmland in the suburbs, inheritance taxes may force the children of farmers to sell the farm just to pay the taxes. To revitalize cities and prevent destructive sprawl, each of these subsidies to the suburbs should be reduced or terminated.
But that is not all. SA suggests that the property tax could be shifted in an interesting way to reduce the incentives for sprawl. If the property tax were taken off of urban buildings and focused on the land beneath the buildings, this would penalize land speculation and would reward people who built on their land. Land speculators hold land undeveloped, hoping to earn a higher price in the future. This promotes "leap frog" development out of the city and into the surrounding countryside. The proposed shift from traditional property tax to "land value tax" would penalize land speculation and encourage urban development. Removing (or reducing) the tax on buildings makes them cheaper to construct and operate, and more affordable to buy or rent. Urban construction creates urban jobs.
As things stand now, as urban buildings decay, owners often don't make repairs because their property tax will rise. Thus the typical property tax creates an incentive toward suburban sprawl and urban decay. Shifting the property tax from buildings onto land reverses these incentives.
Taxing land more than buildings will reduce taxes for homeowners. Land speculators, on the other hand, will see their taxes rise. And there are other benefits. According to the Henry George Institute in Columbia, Maryland, the city of Harrisburg, Pennsylvania has shifted from a traditional property tax to a "land value tax" system. There used to be 4200 abandoned structures in Harrisburg, and now there are 500 because now no one is penalized for repairing an old building. (See www.smart.net/~hgeorge/ ).
There can be one major drawback to this property tax shift: it could create an incentive to build on open spaces and ecologically sensitive areas, so these areas will need to be vigorously protected by zoning and by the establishment of strict urban growth boundaries, such as have been enacted in cities like Portland, Oregon. But of course such areas need protection under the present property tax system, too.
Taxes on Pollution and Waste
The other 9 kinds of taxes advocated by Sustainable America will be more familiar to many people -- a tax on carbon in fuels; a tax on motor vehicle emissions; a tax on industrial pollution discharges into air and water; a tax on municipal solid waste; a tax on fertilizers and pesticides; a tax on cut timber; a tax on wasteful uses of water (irrigation, and hydroelectric power); and a tax on harvested fish.
In each case, the main aim and effect is to discourage an activity that poisons the earth or that diminishes the earth's capacity to provide an ongoing stream of benefits to us and to future generations.
The SA ORGANIZER KIT has been very thoughtfully done. When there are reasons to believe that a particular tax will have regressive effects (penalizing the poor, for example), the KIT says so and suggests remedies. If a tax has not been tried in many locales, so that the outcomes are not well understood, the KIT says so.
This ORGANIZER KIT makes a substantial contribution toward translating "sustainability" into public policies that people can advocate in their communities and at the state level. There's a lot to chew on here. Good chewing, too.
The most important trend in the late 20th century has been the campaign by transnational corporations to create "globalized free markets," which is to say the unrestricted flow of materials and money across international borders. American corporations have spearheaded this world-wide campaign over the last 30 years.
Here is a short list of the observable effects of "globalized free market" policies: (1) Nation-states are losing the right to enforce environmental regulations and other traditional norms of civilized societies (progressive taxation, and the impartial rule of law, for example); (2) Wages for working people are under constant downward pressure toward a subsistence level; (3) Native agriculture for local consumption is replaced by mechanized industrial farming aimed at export markets; peasants are forced off the land and into urban favelas, barrios and slums; (4) Indigenous traditions, beliefs and ways of knowing are dishonored and are forcibly replaced by "advanced" forms of McCulture; (5) Inequalities in income and wealth are growing larger in every country that participates in "structural readjustments" or other requirements of the globalized free market; (6) Traditional conservative political beliefs have essentially disappeared, replaced by the ethic that now energizes self-proclaimed "conservatives" in the U.S. (and overseas): grasping self-interest and consumer choice are DE FACTO the only real virtues; (7) The traditional role of government -- to provide security for its citizens -- is fundamentally undermined as social safety nets are repealed around the world; (8) As a result of the foregoing, families and communities are stressed and often disintegrating, lawlessness is rising; as a remedy, the U.S. is experimenting with mass imprisonment (with more than a million citizens imprisoned at present); (9) Democratic forms are forcibly disappearing because they are incompatible with the campaign for globalized free markets, which is one of the largest attempts at social engineering ever conceived; (10) In numerous countries, including the U.S., right-wing extremists, hate-mongers and fundamentalists are on the rise; (11) Wars over diminishing resources, ethnicity and religion are sweeping the globe. Thus the corporate cult of the "globalized free market" is attempting to re-engineer the world, regardless of the consequences for human societies, right before our eyes. (For documentation, see, for example, John Gray, FALSE DAWN [New York: The New Press, 1998; ISBN 1-56584-521-8]; Gray is a professor at the London School of Economics).
Happily, the effort to create a globalized free market is almost certainly doomed to fail. People everywhere are organizing to return common sense to public policies, to put corporations back in their place, and to reclaim a semblance of democratic control over key institutions.
An important conference called "Coordinating Challenges to Corporate Globalization" has been organized by the Preamble Center [Washington, D.C.] for November 12-14 in Chicago. The cost is $75.00. For more information, E-mail the conference staff at wep@preamble.org, or telephone Matt Siegel, project manager, at (202) 265-3263.
--Peter Montague, Editor
NEXT PAGE -->
|
| * * * COMPANIES & PRODUCTS * * * |
|---|
| * * * IN-HOUSE RESOURCES * * * |
|---|