QuestionsWeb LinksClass OutlineClass notes
Question for Discussion: Do you agree with its
opponents that the WTO needs to be abolished?

Readings: Cavanagh, pp. 55-74; Shiva, "Spinning
a New Mythology"; WTO, "10 Common
Misunderstandings about the WTO";
Beck and Danaher, Top 10 Reasons to Oppose the WTO;
Moberg, "The Death of Doha"

Video: DVD: Seattle Protests 1999; DVD: WTO Cancun


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Debating the WTO

What is the World Trade Organization

The Battle in Seattle

Critics of the WTO and Globalization

Network of anti-WTO Activists

Debating the WTO

The Earth Summits


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Challenging the WTO


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Eyewitness: The Battle of Seattle

" In the words of one protester choking back the gas yesterday: "Fuck the police, Fuck the WTO. The consequences of doing nothing outweigh any shit they can throw at us. We gotta stop these people carving up our planet." from Squall: The Battle for Seattle 1

Shiva, Spinning a New Mythology: WTO as Protector
of the Poor: "The protests in Seattle were about getting the switches to the global economy back in peoples hands and under democratic control to prevent total social and ecological breakdown. Seattle dispensed with the myth that globalization and free trade cannot be stopped or challenged. It also got rid of the argument that the U.S., as the only super power, would always have its way.

Firstly, the super power was under siege by citizens from across the world: farmers, women, young people, the environmental community and workers, and it behaved as brutally as any anti-people government does in the face of people's resistance. Seattle was the Tianamin Square of the U.S., and it was a leading Chinese human rights activist who made the analogy.
(Shiva, 121)

What is the WTO?

 The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. from What is the WTO?:

10 Benefits of the WTO Trading System (in-class)

10 Common Misunderstandings about the WTO (in-class)

The Argument for Free Trade
Bello, Reforming the WTO is the
Wrong Agenda

GATT (General Agreement on Trade and Tarrifs) was, in fact, functioning reasonably well as a framework for liberalizing world trade. Its dispute-settlement system was flexible and with its recognition of the "special and differential status" of developing countries; it provided the space in a global economy for Third World countries to use trade policy for development and industrialization.(Bello, 104)

The founding of the WTO primarily served the interest of the United States. Just as it was the U.S. which blocked the founding of the International Trade Organization (ITO) in 1948, when it felt that this would not serve its position of overwhelming economic dominance in the postwar world, so it was the U.S. that became the dominant lobbyist for the comprehensive Uruguay Round and the founding of the WTO in late eighties and early nineties... (Bello, 105)

It was also the U.S. that pushed to expand WTO jurisdiction to the so-called "Trade-Related Investment Measures" (TRIMS) and "Trade-Related Intellectual Property Rights" (TRIPs). The first sought to eliminate barriers to the system of internal cross-border trade of product components among TNC (transnational
corporation) subsidiaries that had been imposed by developing countries in order to develop their industries; the second to consolidate the U.S. advantage in the cutting-edge knowledge-intensive industries.....And it was the U.S. that forced the creation of the WTO's formidable dispute-resolution and enforcement mechanism after being frustrated with what U.S. trade officials considered weak GATT efforts to enforce rulings favorable to the United States.
(Bello, 108)

It was not global necessity that gave birth to the WTO in 1995. It was the U.S.'s assessment that the interests of its corporations were no longer served by a loose and flexible GATT but needed an all-powerful and wide-ranging WTO. 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. It seeks to institutionalize the accumulated advantages of U.S. corporations.
(Bello, 108)

The central principle of UNCTAD (United Nations Conference on Trade and Development)--an organization disempowered by the establishment of the WTO--is that owing to the critical nexus between trade and development, developing countries must not be subjected to the same expectations, rules, and regulations that govern trade among the developed countries. Owing to historical and structural considerations, developing countries need special consideration and special assistance in leveling the playing field for them to be able to participate equitably in world trade. This would include both the use of protective tariffs for development purposes and preferential access of developing country exports to developed country markets(Bello, 110)

In the GATT, a one-country one-vote system was initially tried, but the big trading powers saw this as inimical to their interests. Thus, the last time a vote was taken in GATT was in 1959." The system that finally emerged was described by U.S. economist Bergsten as one that "does not work by voting. It works by a consensus arrangement which, to tell the truth, is managed by four--the Quads: the United States, Japan, European Union, and Canada."" He continued: "Those countries have to agree if any major steps are going to be made...that is true. But no votes.". (Bello, 114)

With surprising frankness, at a press conference in Seattle, U.S. Trade Representative Charlene Barshefsky, who played the pivotal role in all three ministerials, described the dynamics and consequences of this system of decision-making: "The process, including even at Singapore 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."' (Bello, 115)

The WTO is often promoted as a "rules-based" trading frame work that protects the weaker and poorer countries from unilateral actions by the stronger states. The opposite is true: the WTO, like many other multilateral international agreements, is meant to institutionalize and legitimize inequality. Its main purpose is to reduce the tremendous policing costs to the stronger powers that would be involved in disciplining many small countries in a more fluid, less structured international system. It is not surprising that both the WTO and the IMF are currently mired in a severe crisis of legitimacy. Both are highly centralized, highly unaccountable, highly non-transparent global institutions that seek to subjugate, control, or harness vast swathes of global economic, social, political, and environmental processes to the needs and interests of a global minority of states, elites and TNCs.
(Bello, 116)

In other words, what developing countries and international civil society should aim at is not to reform the WTO but, through a combination of passive and active measures, to radically reduce its power and to make it simply another international institution coexisting with and being checked by other international organizations, agreements, and regional groupings. These would include such diverse actors and institutions as UNCTAD, multilateral environmental agreements, the International Labor Organization (ILO), evolving trade blocs such as Mercosur in Latin America, SAARC in South Asia, SADCC in Southern Africa, and ASEAN in Southeast Asia. (Bello, 118)

Danaher, Top 10 Reasons to Oppose the WTO

The WTO is undemocratic and unaccountable. The WTO claims that it operates by consensus, but the Seattle debacle illustrates how the WTO really functions. After much of the ministerial declaration was drafted in private "green room" meetings with select countries present, African and Caribbean countries effectively banded together for the first time. They denounced the closed-door process and blocked the launching of a new round. The WTO boasts of its interference with the democratic process within countries as well. Their website states: "Under WTO rules, once a commitment has been made to liberalize a sector of trade, it is difficult to reverse... Quite often, governments use the WTO as a welcome external constraint on their policies: `we can't do this because it would violate the WTO agreements. "' (Danaher,101)
Shiva,Spinning a New Mythology: WTO as Protector of the Poor

By dismantling regulations and trade restrictions, a system is being created in which no one knows where the switch is and who is responsible to switch it off. The rules of WTO are ensuring that neither local communities nor national governments can regulate trade or investment under free trade. (Shiva, 121)

Politics and power is being redefined. The powerful of the world--in governments, politics, media and business--are emerging a new global alliance, transcending North-South divides. This global alliance of the powerful sees people, people's organizations and NGO's as the biggest threat, both domestically and internationally....The powerful elites are institutionalizing slavery through the WTO. The WTO as the institution of the poor is a new mythology being spun, not to protect the poor, but to protect the WTO and TNCs, and hence perpetuate the trade rules which are the ultimate assault on the survival of the poor. (Shiva, 122)

The IFG on the World Trade Organization :

The World Trade Organization (WTO) is among the most powerful, and one of the most secretive international bodies on earth. It is rapidly assuming the role of global government, as 134 nation-states, including the U.S., have ceded to its vast authority and powers. The WTO represents the rules-based regime of the policy of economic globalization. The central operating principal of the WTO is that commercial interests should supersede all others. Any obstacles in the path of operations and expansion of global business enterprise must be subordinated. In practice these "obstacles" are usually policies or democratic processes that act on behalf of working people, labor rights, environmental protection, human rights, consumer rights, social justice, local culture, and national sovereignty.
Corporations and Markets are Created
by States from One World under Business,
by Charles Derber

The corporation is inherently a political creature, and the free market order itself is a government-based. system.The idea of free markets, a core tenet of the globalization mystique, obscures the reality that markets are always constructed by governments and can survive only with multiple forms of government intervention and public subsidy. There can be no market without state power establishing, regulating, and militarily defending property and corporations. As with our state charters and governments managing and stabilizing the economic and social order. And all markets rest on abundant forms of "corporate welfare" involving not just tax breaks and subsidies, but expenditure on education, infrastructure, and research and development without which the economy would collapse. Most important, the government stands as the ultimate guarantor that contracts will be enforced and laws against fraud upheld so that people's trust in the market remains secure." (65)

The Myth of Free Trade:
See Free Trade or Fair Trade

"Free Trade is a myth. Governments always support, in many different ways, such as with tax incentives, tarrifs, and export subsidies, the industries of their own countries. The WTO doesn't create "global free trade," it just manages the rules by which national governments support their own industries. The debate about the WTO is not about "free trade" but "fair trade." Dominated by the U.S., Japan, the European Union, and Canada, the WTO tends to create global trade rules that work against the Third World countries. Created in 1995, the WTO would like to force national governments to accept a set of global rules about how they should support trade. These rules are often shaped by First World governments and Transnational Corporations to benefit them at the expense of the Third World. The best example of this is U.S., Japanese, and European subsidies for their farmers, which makes it impossible for Third World farmers to compete with First World farmers. While trying to impose "free trade" rules on the Third World, First World governments refuse to accept these same rules for their farmers. The U.S., Europe, Japan, and Canada want "free trade," but on their terms, that is , they want managed trade that supports their industries and economies. Of course, this has nothing to do with "free trade," but is all about "managed" and "fair trade." (Chris Lewis)

Cavaugh, The Unholy Trinity

"THE THREE MAJOR GLOBAL INSTITUTIONS that create and express the rules of economic globalization are the World Bank, the International Monetary Fund, and the World Trade Organization, variously called the " unholy trinity" or the "iron triangle." It is their fundamental job to align all of the world's formerly disparate national economies behind a central formula, to create the standard gauge railway by which corporate-led economic growth can more easily fulfill the mandate of Bretton Woods." (55)

"Each has its own basic function. The World Bank funds large-scale projects, promotes structural adjustment policies, and dominates the development debate through its research department. The IMF presses similar economic "reforms" through short-term emergency loans. And the WTO is the rule-setter for global trade and investment. But they all work together to be sure that all countries adopt identical visions, policies, and standards and keep in line. And they all share the overall goals to deregulate corporate activity, privatize whatever is public, prevent nations from protecting natural resources or labor or safety Iaws or standards, and open all channels in every country for a free flow of investment and trade." (55)
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Structural Adjustment Programs

"The thrust of those policies is perhaps most dramatically revealed in the structural adjustment programs imposed on low- and intermediate-income countries by the International Monetary Fund and the World Bank. Structural adjustment requires governments to do the following:

• Cut government spending on education, health care, the environment, and price subsidies for basic necessities such as food grains and cooking oils.

•  Devalue the national currency and increase exports by accelerating the plunder of natural resources, reducing real wages, and subsidizing export-oriented foreign investments.

•  Liberalize (open) financial markets to attract speculative short-term portfolio investments that create enormous financial instability and foreign liabilities while serving little if any useful purpose.

•  Increase interest rates to attract foreign capital that has fled its home country, thereby increasing bankruptcies of domestic businesses and imposing new hardships on indebted individuals.

•  Eliminate tariffs and other controls on imports, thereby increasing the import of consumer goods purchased with borrowed foreign exchange, undermining local industry and agricultural producers unable to compete with cheap imports, increasing the strain on foreign exchange accounts, and deepening external indebtedness. "(55-56)

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The Failure of Structural Adjustment and Free Trade in the Third World

"During the 1970S, OPEC sharply increased oil prices and hence the cost of energy imports. Northern banks, awash with OPEC deposits, lavished loans on Third World countries--often with the encouragement of the World Bank. Soon the costs of debt service exceeded repayment capacity by such a wide margin that there was a threat of a global financial crisis. Beginning with Mexico in 1982, the IMF and the World Bank swung into action with structural adjustment as their primary response. Together they reoriented national economies to focus on debt repayment and to further open their resources, labor, and markets to foreign corporations. " Adjusted " countries came under great pressure to increase the export of their natural resources and the products of their labor, become more import-dependent, and increase foreign ownership of their economies." (57)

"The results have been disastrous not only in human and environmental terms but also in economic terms. In 1980, the total external debt of all developing countries was $609 billion; in 2001, after twenty years of structural adjustment, it totaled $2.4 trillion. In 2001, sub-Saharan Africa paid $3.6 billion more in debt service than it received in new long-term loans and credits. Africa spends about four times more on debt-service payments than it does on health care." (57)

"In recent years, the World Bank has provided hundreds of billions of dollars in low-interest loans to subsidize the efforts of global corporations to establish control over the natural resources and markets of assisted
countries. Corporations in the energy and agriculture sectors have been among the main beneficiaries. Often World Bank-financed roads, power plants, and electrical grids were built primarily to serve the global corporations establishing operations in the service area of the loan-financed facilities, rather than to serve the local populations." (57)

"IMF-sanctioned policies helped attract huge inflows of foreign money to what were called the "emerging market economies " of Asia and Latin America in the form of loans and speculative investment. As Walden Bello and Martin Khor have each documented, the rapid buildup of foreign financial claims set the stage for the subsequent financial meltdown in Mexico in 1994 and in Asia, Russia, and Brazil from 1997 to 1998. This is why: when it became clear that the huge financial bubbles the inflows had created could not be sustained and that claims against foreign exchange could not be covered, speculators were spooked and suddenly pulled out billions of dollars." (60)

"Over the last two decades, structural adjustment programs were imposed . by the World Bank and the IMF on close to ninety developing countries, from Guyana to Ghana. The objective of SAPs went beyond debt repayment or attainment of short-term macroeconomic stability; seeking nothing less than the dismantling of protectionism and other policies of government-assisted capitalism that their theorists judged to be the main obstacles to sustained growth and development."

"With dozens of countries under "adjustment" for over a decade, even the World Bank had to acknowledge that it was hard to find a handful of success stories. In most cases, structural adjustment caused economies to fall into a hole wherein low investment, reduced social spending, reduced consumption, and low output interacted to create a vicious cycle of decline and stagnation rather than a virtuous circle of growth, rising employment, and rising investment, as originally envisaged by the World Bank-IMF theory. " (61)

"What does this mean? Is structural adjustment dead, and have the Bretton Woods institutions seen the light? The fact is, in the case of the IMF, as well as that of the World Bank and the Asian Development Bank, jettisoning the paradigm of structural adjustment has left them adrift, in the view of many critics, with the rhetoric and broad goals of reducing poverty but without an innovative macroeconomic approach. James Wolfensohn and his ex-chief economist Joseph Stiglitz talk about "bringing together" the "macroeconomic " and "social" aspects of development, but World Bank officials cannot point to a larger strategy beyond increasing lending to health, population, nutrition, education, and social protection to 25 percent " (62)

"In the early 1980s, economists and politicians, powered by the so-called Reagan Revolution and the Thatcher and Kohl ascendancies in Europe, began planning a new but dramatically different GATT negotiating round. Their goal was to expand the GATT disciplines to bind signatory governments to a set of multilateral policies regarding the service, government procurement, and investment sectors; to establish global limits on government regulation of environmental, food safety, and product standards; to establish new protections for corporate intellectual property rights granted in rich countries; and to have this broad panoply of one-size-fits-all rules strongly enforced over every level of government in every signatory country."
(65)

"When completed in 1994, the Uruguay Round replaced the old GATT trade contract with a new institution, the World Trade Organization. The WTO was given a built-in enforcement system more powerful than that of any previous treaty. This system, with closed tribunals of trade bureaucrats who determined if a country's laws exceeded the constraints set by the new rules, included automatic, permanent trade sanctions against any country refusing to comply with WTO demands. In short, the WTO took on the role of implementing globally much the same policy agenda that the World Bank and the IMF had already imposed on most of the Third World. " (65-66)

"Specifically, the WTO has served primarily U.S. government and corporate interests over developing-country and civil-society interests. Just as it was the United States that blocked the founding of the International Trade Organization in 1948 when it felt that this would not serve its position of overwhelming economic dominance in the postwar world, so it was the United States that became the dominant lobbyist for the comprehensive Uruguay Round and the founding of the WTO when it felt that more competitive global conditions had created a situation where its corporate interests now demanded an opposite stance." (65)

"It was again the United States that forced the creation of the WTO's formidable dispute-resolution and enforcement mechanism after being frustrated with what U.S. trade officials considered weak GATT efforts to enforce rulings favorable to the United States. As Washington's academic point man on trade, C. Fred Bergsten, head of the Institute of International Economics, told the U.S. Senate, the strong WTO dispute settlement mechanism serves U.S. interests because "we can now use the full weight of the international machinery to go after those trade barriers, reduce them, get them eliminated." (67)

"[In}the 1990s, what had been a U.S. idea spread to become the mantra of the wealthiest countries, then known as the G-7 (the United States, Japan, Germany, France, the United Kingdom, Italy, and Canada). 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 the largest corporations based in the richest nations." (68)

"The WTO rules and enforcement system is regularly used by corporations and their allied governments to attack measures taken by governments to protect the health, safety, and culture of their people and to preserve the environment. Yet under WTO rules, governments take even stronger steps to protect the profits and property rights of corporation: and financiers. Although the WTO presumes to impose a one-size-fits--all set of rules constraining the public interest policies of WTO member nations, it does nothing to limit the excesses of global corporations and financial speculators--two priority regulatory needs. Instead, it regulates national and local governments to prevent them from regulating international trade and investment. In short, it regulates governments to protect corporations." (69)

"The Bretton Woods institutions have a distorted view of economic progress and relationships. Their embrace of unlimited expansion of trade and foreign investment in order to achieve economic growth suggests that they consider the most advanced state of development to be one in which all productive assets are owned by foreign corporations producing for export; the currency that facilitates day-to-day transactions is borrowed from foreign banks; education and health services are operated by foreign corporations on a for-profit, fee-for-service basis; and almost everything that local, people consume is imported." (73)

"Ironically, one of the IMF's original responsibilities was to help nations keep their international accounts in balance. Yet current policies of the World Bank, the IMF, and the WTO not only ignore this principle but also set in place conditions that prevent nations from honoring it. The result is imbalance, instability, inequality, and deprivation.

In the current economic system, liberalizing trade and investment and enhancing international competitiveness are seen as the means to growth, which, in turn, is seen as the key to prosperity and democracy." (74)



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America, the Environment, and the Global Economy