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November 17, 1999
The WTO:
What’s That Organization?

By Sam Parry

At an Oct. 14 press conference, President Clinton was asked whether expected protests by U.S. labor unions against the World Trade Organization might "weaken the U.S. negotiating position" at the WTO summit in Seattle.

"No," the president answered with a wry smile, "because there will be a lot of people from other countries demonstrating against it, too."

Clinton's riposte jabbed at what is fast becoming one of the touchiest issues facing nations around the globe: how to structure international trade so it benefits not just wealthy corporations, but also the world's common wealth, how to spread economic benefits more broadly while still protecting the environment and respecting democratic judgments.

Although a staunch advocate of free trade, even Clinton has acknowledged the pressing need to put a "human face on the global economy."

In his last State of the Union address, he said the imperative was to find "common ground on which business and workers, and environmentalists, and farmers and government can stand together." But to date, he has had limited success bridging the chasms separating those groups.

Indeed, to many people who struggle to make end's meet, the world trade agreements -- from the Tokyo Round in 1973 to the Uruguay Round in 1986 through the development of the WTO in 1995 -- have amounted to little more than an open invitation to powerful multinational corporations to tighten their grip on the global economy and to plunder natural resources at an alarming rate.

The statistics are striking. Since World War II, the world has experienced a rapid economic expansion fueled by trade, from a total output of $3.8 trillion in 1950 to $18.9 trillion in 1992 (using constant 1987 dollars).

But the benefits have been uneven. Many of the top corporations now exceed medium-sized countries in size and wealth. Of the top 100 economies in the world in 1996, 50 were corporations with total sales of $3.5 trillion, more than the gross domestic product of every country except the United States and Japan.

This consolidation of power has tracked with a growing disparity between the world's rich and poor.

Despite greater availability of goods and services, many countries are wracked by unprecedented poverty and deepening despair. More than 80 countries (out of 188 United Nations member states) have per capita incomes lower than they did in 1970, according to the U.N. Development Programme's annual human development report.

Nearly 1.3 billion people (out of six billion on the planet) do not have access to clean water and live on incomes of less than $1 per day. Almost one billion people are malnourished. Meanwhile, the disparity between the wealthiest fifth of the world's people and the poorest fifth has widened from a 10-to-1 ratio in 1948 to a 74-to-1 ratio in 1995.

World economic expansion has contributed, too, to a degraded environment. The level of carbon dioxide gas -- the main greenhouse gas -- is more than 30 percent higher today than it was at the start of the century.

Tropical forests decline by 11 million hectares annually. Each year, deserts encroach on another six billion hectares of once-productive land, while poor land management results in a net loss of 26 billion tons of soil.

The uneven effects of world trade have worsened political stresses as well, both abroad and at home.

On Oct, 13, in a speech to the centrist Democratic Leadership Council, Clinton acknowledged that the Democratic Party is "not of one mind and we do not have a consensus on the way forward with trade."

Yet, Clinton often has exascerbated those differences by making the debate a "for or against" argument. He takes the position that either you recognize that free trade is good and therefore endorse the world trading system or you're a short-sighted protectionist who sees no value in international relations.

The trade issue has caused fissures, too, in the Republican Party, where presidential candidate Pat Buchanan has bolted the GOP for the Reform Party, a rallying point for diverse political forces suspicious of supra-national trade organizations.

Trade also has divided the country along vocational lines. The business community, corporate executives and the major news media strongly support free trade. But blue-collar workers and unions complain about loss of manufacturing and textile jobs.

World trade is even a hotter issue in countries suffering economic downturns or facing adverse trade rulings. Europeans fumed over the WTO's decision that penalizes them for rejecting American beef raised with genetically engineered growth hormones.

Facing heightened public fears after the outbreak of mad cow disease, the European Union took the precautionary step of banning growth hormone-treated beef. While the science remains murky, some scientists suspect that growth hormones could be endocrine disrupters and could contribute to breast cancer.

The ban, however, prompted a protest from the United States which complained that the E.U. was putting American cattlemen at a trade disadvantage. In July, the WTO sided with the United States and gave Washington a green light to impose up to $200 million in retaliatory trade sanctions against European goods.

All these conflicts are likely to reappear at the WTO's new round of global trade talks in Seattle from Nov. 30 to Dec. 3.

With 5,000 delegates from 150 countries, the Seattle Summit will launch new strategies to promote international trade by slashing tariffs, abolishing subsidies and opening up investment for companies seeking to get into global markets.

The Clinton administration has outlined a series of its own proposals for the Seattle Summit, which the president hopes will bring "broadly shared prosperity" to all and will "ensure that the global trading system of the 21st Century honors our values and meets our goals." How prosperity and values will be balanced is less clear, however.

Outside the talks, protesters from all over the world are expected to make a different point: how the rush toward a worldwide free market has started a free-for-all among countries trying to gain an edge in the marketplace by compromising labor standards, their environments and their sovereignty.

These critics also argue that the world has little reason to feel confidence in the WTO's representation of "our values" and "our goals" when it is a remote and secretive organization.

Started on Jan. 1, 1995, and headquartered in Geneva, Switzerland, the WTO is a world trade court that is designed to arbitrate trade disputes between WTO nations.

But most Americans have never heard of the WTO, much less have a concrete idea of what it is, what it does and who runs it. The WTO has largely avoided the spotlight of controversy that has fallen on other trade agreements, such as the North American Free Trade Agreement involving Canada, the United States and Mexico.

Yet, even those who know something about the WTO are essentially powerless and voiceless in directly affecting its structure, policy or leadership. There are no popular elections to choose its top officials and no democratic process for setting its agenda.

The WTO's director-general is chosen through behind-the-scenes political deliberations among trade ministers and political leaders of member states.

This year, in often-contentious discussions, the United States pushed Mike Moore from New Zealand for the position of WTO’s director-general.

Moore won the post in July over Thailand's deputy prime minister, Supachai Panitchpakdi. Supachai had been endorsed by many developing nations that felt left out of the benefits of the WTO's liberalized trade policies.

A fiery, tough but jovial leader, the 50-year-old Moore earned his blue-collar reputation with early jobs as a meat worker, construction worker, printer and social worker. In 1972, at the age of 23, he became the youngest-ever member of New Zealand's parliament.

Over the next two decades, Moore became a Labour Party expert on foreign affairs and trade. He served as minister of overseas trade and marketing (1984-90), deputy minister of finance (1988-90), and minister of foreign affairs (1990). In 1990, he also served briefly as prime minister. He took over the WTO's helm on Sept. 1.

Many WTO watchers believe the Clinton administration backed Moore because of his skill in explaining world trade in down-to-earth and heartfelt terms. Moore has presented an agenda that stresses the need to improve the situation of less developed countries by achieving "a balanced outcome."

In testimony before the U.S. House Ways and Means Committee on Sept. 28, Moore stressed that "ministers from all our 134 member governments [must be] able to tell the capitals that they have come away from the table with something."

But Moore has annoyed some WTO critics by dismissing them as little more than "nice kids" who paint signs and attend protest rallies but haven't studied the WTO enough to understand it.

This sentiment is widely felt in the free trade community. Many free trade proponents are irritated by criticisms from environmental and labor organizations about how trade agreements undermine the environment and undercut labor standards.

Some of these pro-free traders suggest that environmental and labor concerns don’t even belong before the WTO and should be addressed in separate international treaties.

In this view, the WTO should deal exclusively with cutting tariffs and removing other barriers to trade. The WTO should stay focused on its job of establishing rules so countries can hash out trade disputes and avoid trade wars, these backers say.

The WTO’s own publications boast that the organization provides a structure for resolving trade disputes within "the rule of law, and it makes the trading system more secure and predictable. The system is based on clearly-defined rules, with timetables for completing a case."

The WTO claims to be "the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible."

By increasing trade, the WTO defenders also assert, the organization creates jobs, improves living standards in developing countries, and builds stability and peace among nations. It’s unfair, these WTO defenders argue, to blame the organization for uneven economic development and social troubles.

But the concerns both inside and outside the Seattle Summit certainly will touch on many of the broader social-economic-environmental problems that accompany world trade.

Besides defending its value as a world court, the WTO’s new leaders will be challenged to develop strategies for spreading trade benefits to more nations, while bolstering environmental, labor, health and safety standards.

Critics will try to pressure the WTO to make the world trading system sensitive to public interests, not just business interests.

Sam Parry is a conservation organizer for the Sierra Club’s International Program.

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