Thursday, February 28, 2008

A Short Guide to the WTO, the Millennial Round, and the Rumble in Seattle

With NAFTA becoming a major part of the political campaign between Clinton and Obama, I remembered Ed Notes re-printing an article about free trade. It was shortly before the WTO meeting in Seattle and cleared up a number of misconceptions I had and forced me to confront my basic instinct to be a supporter of unfettered free trade. After all, we were taught in high school and college economics that a major reason for the Great Worldwide Depression of the 1930's was the restriction of free trade (the Hoot-Smalley tariff bill was a major villain we were told.) Then came the riots that disrupted the conference and shook downtown Seattle like no earthquake could. I guess the powers that be never read Elaine Bernard's article.

While not stated, applications of market-based and corporate agendas to education systems can be implied.

Ed Notes reprint from the Jan. 2000 edition

A Short Guide to the WTO, the Millennial Round, and the Rumble in Seattle
By Elaine Bernard
November 24, 1999

The World Trade Organization (WTO) is coming to Seattle at the end of November and tens of thousands of labor, environmental, and progressive activists are organizing to give them a hot reception. There are thousands and thousands of pages out there - on the net, in progressive journals, articles, even books, on the WTO. But rather like trade agreements themselves, sometimes the very volume of materials available on the topic overwhelms the uninitiated reader. So, I thought I would put together a quick guide to the WTO, to the Seattle meeting, and to the various debates within the progressive community on the WTO.

What is the WTO?
It’s an international organization of 134 member countries which is both a forum for negotiating international trade agreements and the monitoring and regulating body for enforcing the agreements. The WTO was created in 1995, by the passage of the provisions of “Uruguay Round” of the General Agreement on Tariffs and Trade (GATT). Prior to the Uruguay Round, GATT focused on promoting world trade by pressuring countries to reduce tariffs. But with the creation of the WTO, this corporate inspired agenda was significantly ratchet up by targeting so-called “non-tariff barriers to trade” - essentially any national or local protective legislation which might be construed as impacting trade.

So, Aren’t we in favor of regulation?
Sure, but not the type of regulation proposed by the WTO, a powerful body of un-elected bureaucrats, who deliberate in secret with an aim to turning the entire world into one big market. Officially, the WTO has two main objectives: to promote and extend trade liberalization (by breaking down national “barriers” to trade), and to establish a mechanism for trade dispute settlement.

In practice, the WTO is seeking to deregulate international commerce and break open domestic markets for foreign investors. Its rule making seeks to free corporations from government regulation which would constitute a barrier to trade. It permits relatively unrestricted movement of money, capital, goods and services, while at the same time providing investors and corporations with extensive protection of their property rights. It even extends corporate property rights through the so called “intellectual properties” provisions. Intellectual property as defined by trade agreements is not about the creative powers of intellectuals. Rather, it is about protecting corporate ownership and monopoly over the patenting of plants, processes, seed varieties, drugs, and software. The intellectual property provisions are just one example of how there is extensive protectionism in this so-called “free trade” regime - but protection for corporations and punitive market discipline for workers, consumers and small farmers.

Freedom for Capital, Market Discipline for Labor
Here’s an example of WTO thinking. The WTO says that they can not deal with social issues, only “trade” forgetting that once you start to deal with trade in services, you are indeed dealing with many social issues. It says that it can only regulate “product” not “process.” With labor and environmental standards, what we normally regulate is process. It’s been an important acquisition of the labor, consumer, and environmental movements in recent years to move beyond the simple regulation of end product and regulate process - how things are made. It is in the very production methods that we can improve safety, eliminate hazards and develop cleaner processes. The difference between a shirt produced by sweated labor under near slave like conditions and a shirt produced by union labor under decent conditions isn’t readily obvious in the packaging (the end product) but rather its observed in the monitoring of the “process” of how the shirt is produced.

By contrast, when the WTO sees the interest of investors and capital threatened - it can spring into action and be quite powerful in its enforcement. So, for example, when workers are being forced to work with flagrant violation of labor law and safety codes, the WTO says there is nothing it can do. But let these same workers illegally produce “pirate” videos, or CDs (challenging a corporations copyright) and the WTO can spring into action sanctioning all sorts of actions against the offending country - in order to protect a corporations “intellectual property.”

Ok, back to Seattle, what is the millennium round?
The WTO wants to continue its campaign of trade liberalization and in particular it wants to increase the trade in services - including public services. Unfortunately, this means further turning over services such as health care, education, water and utilities to markets and international competition and undermining and destroying local control and protection of communities.

What’s the problem with markets?
Markets are fine, in their place, but they must not be permitted to replace social decision-making. Markets should not be confused with democratic institutions. Markets, for example, might be useful in determining price of goods, but they should not be mechanisms for determining our values as a community. Markets are oblivious to morals and promote only the value of profit.

So, what do we want to do about the WTO?
Resistance to the free trade agenda and the continual drive to undermine social decision-making and democracy is the basis of unity for all the groups protesting the WTO. Beyond that profound and important agreement, there are wider differences about what to do about the WTO.

Resisters want to abolish the WTO
Some of the groups coming to Seattle are supporters of the resistance movement - arguing that the trade liberalization program of the WTO is fundamentally flawed and we would be better simply abolishing this dangerous organization. They argue for building the global resistance and constructing global solidarity from below.

Reformers believe they can transform the WTO
Others, in particular much of organized labor argue that while the WTO trade liberalization program is deeply flawed, it’s now well established as a powerful organization and that the concept of negotiated trade regulation is vital to the health and welfare of the world community. They argue that if core labor rights, environmental protections, and what the Europeans refer to as a “social clause” was inserted into the WTO’s mandate and practice that it could be transformed.

Resisters, reformers and rebels from around the globe will be gathering in Seattle later this month in a remarkable international solidarity action challenging the WTO’s corporate agenda. While there are important tactical differences in approaches to the WTO, there is also a fair degree of unity in action and in identifying the WTO as an important global institution promoting policies which are contributing to the growth of inequality and the undermining of democracy. The protest in Seattle maybe be both the last major, international demonstration of the century and the beginning of a new powerful global solidarity movement.

Elaine Bernard is Executive Director, Harvard Trade Union Program. Copyright (c) 1999 Elaine Bernard.

1 comment:

  1. This is in response to your posting about the WTO and your preface comments about the Smoot-Hawley Tariff Act and its role in the Great Depression.

    Contrary to what free trade advocates would have you believe, Smoot-Hawley had absolutely nothing to do with the Great Depression. First of all, Smoot-Hawley wasn't even signed into law until June 17, 1930. The stock market crashed in October, 1929 and the depression was underway for many months before S-H was even signed into law.

    Secondly, the S-H tariffs were raised only very slightly higher than the previous tariffs enacted in 1922 under the Fordney-McCumber Tariff Act, which was widely credited for the booming economy during the "roaring '20s." For the first century-and-a-half of our nation's history, protectionist tariffs allowed America to develop into the world's preeminent industrial power and were the sole source of federal revenue.

    Thirdly, at the height of the depression, the U.S. balance of trade declined by only $0.67 billion from its peak in 1929. At the same time, GDP declined by $33 billion. It's absolutely impossible that Smoot-Hawley could have been responsible for the Great Depression.

    Nevertheless, free trade advocates saw an opportunity to put the previously-untested theory of comparative advantage (the theory upon which free trade is based) to work and blamed the depression on S-H. The cause of the Great Depression had much more to do with the global glut of over-capacity that was built up during WWI and also due to the terms of the Treaty of Versailles which destroyed the economy of Germany.

    A word about the WTO: although the WTO's avowed mission is one of free trade, it actually does not believe in free trade and enforces protectionist measures in favor of 2/3 of its member states. (Not the U.S., of course.)

    Earlier, I mentioned the theory of "comparative advantage," which basically states that each nation benefits when it trades products that it makes best for products made best by other countries. This theory is fatally flawed because it does not factor in what happens when the nations in question have vastly different population densities.

    At this point, I must introduce myself. I am the author of a newly published book, "Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America." This new theory links rising population density (beyond an optimum level) to falling per capita consumption, driven by the need to conserve space. Falling per capita consumption, in the face of rising productivity (which always rises) inevitably yields rising unemployment.

    This theory has huge implications for U.S. policy, especially trade policy and immigration policy. The immigration implications are obvious, but why trade? It's because this unemployment effect of excessive population density is actually imported when we attempt to engage in free trade in manufactured goods with nations much more densely populated than our own.

    You can learn more by visiting my web site: There you can read the preface for free and order the book if you like. It's also available at

    However, I'd like to send you a free, complimentary copy if you'd be willing to review the book for your blog readers. Just send me your mailing address to

    Keep up the work on the great blog!

    Pete Murphy
    Author, Five Short Blasts


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