Neoliberal Globalization:Cancún and Beyond

An In-Depth Report on the World Trade Organization

Green Paper #4 100% post-consumerrecycled paper$3.00

They Want It All….and They’reUsing the WTO to Get it.

Stop The Corporate Steal!

The transnational corporations thatdominate the world’s economy aredemanding even more rights and lessresponsibilities through trade talks at theWorld Trade Organization. They, and thepowerful governments which supportthem, want more power, more control andmore profit. That includes control over:

The food that we eat – as hugeagribusiness corporations seek to openmarkets even further so that they can cap-ture and control them, while promoting theuse of biotechnology in agriculture so thatfarmers will become “bio-serfs” or losetheir livelihoods altogether. (See sectionson Agreement on Agriculture, TRIPS, andHungry For Profit, pp. 10-14)

The water we drink – as giant watercorporations push agreements like theGATS (see Anything You Can’t Drop on

Your Foot, p. 14) to advance and lock onprivatization of water. They want to turn abasic human right and necessity into a highsource of endless private profit.

The right to determine our ownfutures – as secret trade and investmentdeals are negotiated behind closed doors toremove the rights of governments andcommunities to have any real say on thekinds of trade, investment, social, environ-mental and economic policies whichreflect their needs, values and realities.

…And life itself – as pharmaceuticaland agribusiness corporations try to forcegovernments to allow for the patenting oflifeforms for private monopoly profit, andas biodiversity becomes yet another com-modity to be exploited, bought and sold inthe market place

Across the world and in our commu-nities, people are resisting these attacks.

The WTO’s war of terror against peo-ple and the planet must stop!

Introduction Table of ContentsCapitalism, Colonialism &Commodification

We Have No Alternative…

Whose Trade Organization?

A Secretive Trade Court

Democracy? What’s that?

Seattle, Doha, Cancún

GATT-astrophe! Double Standards, Empty Promises and Risky Trade-Offs

Behind Every Trade & InvestmentAgreement, A Corporate Capitalist

Policy Coherence, the WTO,IMF, World Bank and IDB

Why Cancún?

• Agreement on Agriculture

• TRIPS, Health, Biocolonialismand the Privatization of Life

• Learning from the MAI

• Hungry for Profit – GE Food

• Anything You Can’t Drop onYour Foot – GATS and Services

Who Pays for “Free” FinanceUnder Casino Capitalism?

The “New Issues:” An InvestmentAgreement at the WTO

More Corporate Welfare…Expanding the WTO

The WTO, Globalization and War

Hidden Hand, Hidden Fist

The WTO Agenda, IndigenousPeoples and Resistance

No Borders? No Nations? Not Quite

Globalizing Patriarchy

Commodifying Workers

At War with the Environment

Forestry and GeneticallyEngineered Trees

To Reform or Reject the WTOand Neoliberal Globalization?

Living Alternatives

Acronyms

Protester in Seattle at the WTO mobilization in November, 1999 expresses his feelings aboutbeing tear gassed. The four days of protests helped to seriously derail the 1999 WTOMinisterial meeting held there. The Seattle mobilization was the largest ever in the U.S.against the neoliberal globalization agenda and was largely viewed as a major shot in the armto the global movement against neoliberalism.

Photo: A. Foelsche

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Neoliberal Globalization’sTriple Bottom Line:Capitalism, Colonialism andCommodification

“The corporate caterpillars come intoour backyards and turn the world to pock-et change… They preach from the pulpit ofthe bottom line. Their minds rustle withmillion dollar bills.”

In her song, The Priests of the GoldenBull, Cree singer-songwriter Buffy SainteMarie captures the essence of the neoliber-al globalization agenda. i

2003 marks the tenth anniversary ofthe signing of the North American FreeTrade Agreement (NAFTA) and 511 yearsof resistance against colonialism in theAmericas.

The Fifth Ministerial of the WorldTrade Organization (WTO) takes place inCancún, Mexico, September 10-14, 2003.

In Miami, the Summit of the Americas— the next meeting of trade ministersfrom 34 countries negotiating of the pro-posed Free Trade Area of the Americas(FTAA), a hemispheric version ofNAFTA, excluding only Cuba — takesplace November 20-21, 2003. TheFTAA is supposed to be completed andsigned by 2005. Activists in LatinAmerica call the WTO and the FTAA the‘two-headed monster’ of neoliberalism.Neoliberalism describes both the ideolo-gy and strategy behind free market poli-cies and “globalization.” It advocatestotal freedom of movement for capital,goods and services, sees everything as atradable commodity, and argues thatmarket forces must be left to rule, freefrom interference from government orcommunities.

Throughout the Americas and theworld there is growing resistance to priva-tization, market reform programs, and freetrade. In the South these programs are usu-ally imposed on countries burdened withdebt due to crippling loan conditions fromfinancial institutions like the World Bankand the International Monetary Fund(IMF), and backed up by official bilateraldevelopment assistance from governmentagencies like the U.S. Agency forInternational Development (USAID). InParaguay and Peru there have been majormobilizations against the privatization ofelectricity, telecommunications, and otherutilities. Huge marches have taken place inEl Salvador against President Flores’ plansto privatize healthcare and social securityin a country where telephone costs have

more than doubled and power ratesincreased five times since privatization. InMexico the Electrical Workers Union(SME) has helped create a National Frontof Resistance against President Fox’s pri-vatization plans for two national powercompanies.

Transnational corporations (TNCs)are nothing new. Chartered companies likethe Dutch East India Company, and theHudson’s Bay Company (Canada) exploit-ed colonies backed by their parent govern-ments. The classic colonial state wasstructured for the exploitation and extrac-tion of resources. In the 21st century,neoliberal globalization is forcing coun-tries into becoming playgrounds fortransnational corporations to wander andplunder at will.

Since former British prime ministerMargaret Thatcher first coined the phrase,we have had the mantra “There Is NoAlternative” (to the “free market”) rammeddown our throats. Alongside proclamationsthat capitalism had triumphed over commu-nism, neoliberal globalization has been por-trayed as evolutionary and inevitable.Indigenous and traditional economieswhich have operated on a communal non-monetary basis for millennia, are systemati-cally undermined to make way for homoge-nized consumer culture and individualism.“Economic growth” is championed as anend in itself, to be pursued by all societies.The structures and rules that shape today’sglobal economy have been carefullydesigned to benefit some and dispossessothers. Neoliberal globalization is a delib-

Protesters at the WTO mobilization in Seatlle in November, 1999 carry a banner critiquing cap-italism as a root cause of many of the world’s inequalities. Photo: S’ra DeSantis

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Neoliberal Globalization: Cancúnand Beyond

Written by Aziz Choudry in May/June2003.

Published July, 2003.

Additional text by GracielaMonteagudo and Brendan O’Neill

Edited and reviewed by SorenAmbrose, S’ra De Santis, Jason Ford,Orin Langelle, Brendan O’Neill, AnnePetermann and Brian Tokar.

Layout by Anne Petermann

Additional thanks to Doyle Canning,Brad Hash, Eric Shragge, and LaurenSullivan

Cover Photo: Riot police protect theU.S. Department of Agriculture build-ing in Sacramento, CA during 6 days ofprotest against biotechnology and theWTO in June, 2003. Photo: Langelle

Photos: Orin Langelle, ArthurFoelsche, S’ra DeSantis

For additional copies, contact ASEJ,PO Box 57, Burlington, VT 05402info@asej.org www.asej.org

erate process being pushed by powerfulplayers for their own economic and geopo-litical interests. Yet alternatives to this agen-da have always existed. The peoples ofChiapas and Argentina havedemonstrated examples of alterna-tives (see Living Alternatives, p.22), as have certain progressivelocal and national laws.International treaties and conven-tions on the environment, and oneconomic, cultural and socialrights show that a world withoutthe WTO would not be a worldwithout rules. Change can comefrom popular struggles.

The World TradeOrganization is a manifestation of a muchbigger problem – capitalist “development”based on domination, exploitation and con-trol over the natural world and peoples’lives. It is an intensification of a centuries-old process of colonialism.

We Have No Alternative…… but to resist, and in our struggles, to

build and support genuine alternativesbased on self-determination, social andeconomic justice, and caring for the Earth.

In the global South, “free” trade andinvestment agreements are being used tolock in the socially and ecologically abhor-rent structural adjustment model which has

been imposed on much of the world by theWorld Bank, the IMF and regional finan-cial institutions like the Inter-AmericanDevelopment Bank (IDB). Structural

adjustment programs (SAPs) include pri-vatizing state-owned enterprises and ser-vices, slashing public spending, orientingeconomies towards export, liberalizingtrade and investment, increasing interestrates and taxes, and slashing subsidies onbasic consumer items like food, medicinesand fuel. While this model has workedextremely well for transnational capital, ithas been an abject failure for the majorityof the world’s peoples. The free marketmodel has led to increased inequalitiesbetween countries and within nations.Mark Weisbrot of the Center for Economicand Policy Research describes the IMF-World Bank record on economic growth (amantra of the agencies) as “their most

spectacular failure.”ii Over the last 20years, low- and middle-income countrieshave implemented the economic policiesof the World Bank and IMF. Income per

person in sub-Saharan Africa hasdeclined about 20%, while in LatinAmerica it has grown only around7%. Both regions showed vastlysuperior growth in the previous twodecades, before structural adjustmentpolicies became the norm. By com-parison, from 1960 to 1980, incomeper person grew 34% in Africa and73% in Latin America.

These “free trade” agreementsare also imposing Reaganomics-style policies on the industrialized

countries of the North – including budgetausterity, welfare, health, and educationspending cuts, privatization, and deregu-lation and restructuring that is in linewith big business whims and the freemarket gospel. The U.S. and otherNorthern governments view WTO agree-ments and other regional and bilateralfree trade and investment deals as waysto force domestic market reforms in othercountries, for the benefit of their corpora-tions. They want structural adjustment,on a global scale, locked in forever.

Neoliberal globalization and the WTOpromote protection of the interests of thepowerful, and market discipline for every-one else. Already, under NAFTA’s invest-ment chapter and bilateral investmenttreaties, corporations have sued govern-ments for laws or policies which they saynegatively affect their actual or potentialbusiness activities. Such agreements placeserious constraints on the ability of gov-ernments to enact social, public health andenvironmental policies. Should Northerngovernments force negotiations on a WTOinvestment agreement to start afterCancún, this threat will spread across all146 WTO countries. (See The “New”Issues, p. 16)

Alongside World Trade Organizationnegotiations, the U.S. recently concludedbilateral free trade agreements withSingapore and Chile. Several more are inthe pipeline. There are also subregionalagreements such as the Central AmericanFree Trade Agreement (CAFTA), sched-uled to be concluded at the end of 2003,and strongly opposed by peoples’ move-ments in Central America. CAFTA would

“We must find new lands from which wecan easily obtain raw materials and at thesame time exploit cheap slave labor that isavailable from the natives of the colonies.The colonies would also provide a dumpingground for the surplus goods produced inour factories.”

- Cecil Rhodes, English businessman, colonialist and“founder” of Rhodesia (Zimbabwe) who died in 1902 iv

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Protesters block the street at the a16 (April 16, 2000) demonstrations in Washington, DCagainst the World Bank’s annual meeting.

Photo: Langelle

include the United States and five CentralAmerican nations. The Andean TradePreferences Act (ATPA) is billed as a con-tribution to the “war on drugs” and endingarmed conflict by supposedly supportingeconomic alternatives to coca growing. Itprovides for duty-free or reduced ratetreatment to imports of some goods intothe U.S. from Bolivia, Colómbia, Ecuadorand Peru. A recent Witness ForPeace/Global Exchange report states,“ATPA requires Colómbia to accept U.S.agricultural products without protectivetariffs. Colómbian farmers cannot com-pete with subsidized U.S. agribusinesswhich ‘dumps’ products on their market.The resulting decrease inprices destroys the livelihoodof small farmers. This blowfollowed a sharp decline inworld coffee prices that hadalready decimated a key sectorof Colómbian agriculture.” iii

Many small farmers are beingdriven to grow coca in anattempt to eke out an existencefor their families. We must not lose sight ofthese bilateral and sub-regional agree-ments – they represent globalization bystealth – and are being used both to try tofast-track neoliberal globalization by thosewho feel the WTO negotiations are pro-ceeding too slowly, and to set new prece-dents by getting even more extreme com-mitments to free trade and investment thancurrent WTO agreements. There is a greatdeal of “forum-shopping” by governmentsand transnational corporations. If they donot get what they want in one arena, theytry elsewhere.

While the World Bank, the IMF, theInter-American Development Bank (IDB),NAFTA, the WTO, and bilateral and sub-regional trade and investment agreementsare transforming Central and LatinAmerica into playgrounds for transnation-al capital, infrastructure megaprojects likethe Plan Puebla Panama (PPP) aredesigned to attract transnational corpora-tions into “investing” in the region.Transnationals demand roads, railways,power and other forms of infrastructurebefore they “invest” even though these willbe funded largely by ordinary taxpayers,already bearing the burden of life in coun-tries mired in massive debt to internationalfinancial institutions. These same institu-tions like the IDB and World Bank areinvolved with promoting the PPP regardlessof the fact that the social and ecological

costs will be borne by local communities.The same corporations driving free tradeand investment regimes also stand to gainfrom these megaprojects. If colonialism andstructural adjustment laid the foundations,projects like PPP and the US-backed PlanColómbia roll out the red carpet for globalcapital, while binding free trade and invest-ment agreements provide the furniture, thelavish mansion and the locked rooms forglobal capital to enjoy exclusively, at theexpense of the vast majority of the region’speoples and the earth.

These agreements and financial insti-tutions promote a package of neoliberal

policies which include: minimal controlson big business; unrestricted foreigninvestment; unlimited export of profits;privatization of state assets, utilities andservices; full exposure of domestic mar-kets to cheap imports; privately-fundedand owned infrastructure operatingthrough deregulated markets; market-dri-ven service sectors, including social ser-vices like education and healthcare; com-petitive (i.e. low cost, deunionized) andflexible (temporary, part-time and con-tract-based) labor markets; and free move-ment for business immigrants (but strictcontrols for foreign workers and refugees).

Whose Trade Organization?

“We are writing the constitutionof a single global economy,” said for-mer WTO Director-General RenatoRuggiero in 1996. vii

On January 1, 1995 the World TradeOrganization was born out of the UruguayRound of negotiations of the GeneralAgreement on Tariffs and Trade (GATT).GATT, a trading agreement between signa-tory countries, was established in 1948 toset international rules regulating trade ingoods among its members.

With a secretariat in Geneva, and a

permanent staff of about 500, the WTOnow embodies the GATT and over 20 othermultilateral agreements (which all WTOmembers must sign) and several plurilater-al agreements (which only some WTOmembers have signed). The multilateralagreements under the WTO are said to be a“single undertaking”. This means that if acountry signs one, it has to sign all of them.The WTO administers these agreements,facilitates future trade negotiations andenforces trade dispute resolution. AGeneral Council of officials forms a dis-pute settlement and trade policy reviewbody. There are other councils on differentissues, which operate through numerous

committees.

The core principles ofthe WTO are “national treat-ment” and “most favorednation” (MFN). Nationaltreatment means that foreignproducts (and services)should receive no less favor-able (and possibly better)

treatment than domestic products (and ser-vice suppliers), making it impossible toprotect local markets. Under MFN a sig-natory country must give all WTO mem-bers the best treatment it has granted to anyone of them.

In the Uruguay Round, industrializedcountries, spurred on by transnational cor-porations, aimed to make GATT the mostpowerful instrument controlling trade –although the areas into which it expandedhad not been treated as “trade issues”before. The Reagan Administration blamedits economic problems on protectionismand unfair competition especially from theEuropean Union, Japan, and newly-indus-trialized countries like South Korea andTaiwan. It insisted that a new round ofGATT talks cover new areas of interest toU.S. corporations.

As a result, intellectual propertyrights (patents, copyrights, trademarks,etc), services, agriculture and aspects ofinvestment came under GATT jurisdictionwhen they were designated “trade-relat-ed.” These areas were all previously sub-ject to national decision-making.“Developed” countries, which were losingout to Brazil, South Korea and other SouthEast Asian countries were determined tomake up for that loss by capturing marketsfor their service industries and invest-

“I would define globalization as the freedom for mygroup of companies to invest where it wants when itwants, to produce what it wants, to buy and sell whereit wants, and support the fewest restrictions possiblecoming from labor laws and social conventions.”

- Percy Barnevik, former chairman of the ABB Industrial Groupv

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ments. Thus government policies basedon national social and economic prioritieswere often redefined as barriers to trade –and targeted for dismantling through theprocess of negotiations.

The WTO insulates itself from itscritics and the non-economic effects ofthe model of “development” which itpromotes. Social and environmentalissues only make it onto the WTO agen-da if defined in “market friendly” terms.WTO agreements oblige governments tomake serious legislative and regulatoryreforms that impact a wide range ofdomestic policies.

To join the WTO means going througha painful process of structural adjustmentand liberalization. Trade and investmentliberalization are conditions of structuraladjustment programs (SAPs), and manycountries join the WTO under pressure todemonstrate their commitment to a marketeconomy to their creditors. In order to jointhe WTO, countries are often forced to signradical bilateral trade and investmentagreements with WTO countries, like theone Vietnam signed with the U.S. in 2001.

A Secretive Trade CourtIf trade disputes cannot be settled by

mediation and consultation, the WTO dis-pute resolution system lets countries chal-lenge each others’ laws as violations ofWTO rules. Cases are decided in secretby a panel of three trade bureaucrats.They are usually former GATT or high-level trade officials. Every environmentalor public health law challenged at theWTO Dispute Settlement Body has beenruled illegal. Hearings are secret, and doc-uments and other evidence presented todisputes panels are confidential unlessparties decide to release them. OnlyWTO member governments have legalstanding; trade unions, IndigenousPeoples and NGOs have no rights to par-ticipate. Assuming that any further appealto the WTO Appellate Body is unsuccess-ful, after a ruling, the losing country caneither change the law to conform to WTOrequirements, pay compensation to thewinning country, or face non-negotiatedtrade sanctions. The affected country canapply trade retaliation against thenon-complying country, in any area cov-ered by the WTO Agreement. Only aunanimous vote of all member govern-

ments can overturn a ruling. The U.S. hasbeen the world’s biggest user of the WTOdispute settlement system.

Democracy? What’s that?The WTO is supposed to operate by

consensus. But it is dominated by power-ful governments (the “Quad”: U.S.,European Union, Japan and Canada),which then try to impose their decisions onother WTO members. By contrast, accessto negotiations for poorer countries, whichare often under-resourced and excludedfrom key sessions, is limited.

Smaller and poorer countries cannotafford to maintain the representatives andtrade lawyers necessary to make their voic-es heard on policy issues at the WTO head-quarters in Geneva. WTO dispute-resolu-tion processes, too, are slanted againstsuch countries, which do not have theresources to defend themselves againstcomplaints by rich countries. Often just thethreat of a complaint forces them to settlea dispute in favor of transnational enter-prises and against the interests of themajority of their citizens. Many countriessimply do not have the resources to contesta costly WTO challenge.

Negotiating positions and the contentsof individual government commitments atthe WTO are closely guarded secrets.World Bank economist Bernard Hoekmanand co-author Michel Kostecki write thatWTO negotiations are meant to push gov-ernments further than they would other-wise go, and to counteract pressures tobacktrack.viii Getting governments to dothis is much easier when they can make theinitial commitments and sign agreementswithout the interference of domestic pres-sure groups representing the interests ofpeople and the earth.

Seattle, Doha, CancúnThe WTO’s first two ministerial meet-

ings were held in Singapore (December1996), and Geneva (May 1998).Resistance to neoliberal globalization hadbeen going on in many parts of the worldfor years, but for many people in the U.S.,the “Battle of Seattle” in November, 1999finally brought the institution and its agen-da to their attention.

At the Seattle WTO Ministerial, mostThird World nations were excluded from

the exclusive “Green Room” negotiations,where 20 countries tried to reach a deal toimpose on the rest. While spirited massmobilizations flooded the streets, manyThird World governments dug their heelsin against the launch of a “MillenniumRound” of trade talks because of themanipulative and coercive process adopt-ed, which sidelined and excluded theirviews and concerns arising out of the 1994GATT Uruguay Round.

“In Seattle, they had green rooms.In Doha they had boiler rooms. Therich countries lined up the poor, andtook them in one by one, twisting theirarms and extracting concessions withthe threats of reduced aid budgets orworse,” commented Yash Tandon, anAfrican NGO observer.ix

Internal divisions within the WTOwere probably as marked as those inSeattle going into the Doha meeting, inNovember 2001, if not more so. IndianNGO EQUATIONS wrote that Doha wascharacterized by “high-handed unethicalnegotiating practices of the developedcountries … linking aid budgets and tradepreferences to the trade positions of devel-oping countries and targeting individualdeveloping country negotiators.”x Thepost-September 11 equation, ‘support inthe war on terror = support for free trade,’was a crucial factor in manipulating theoutcome. While different countries andindustries have interpreted the outcome indifferent ways, after Seattle, whateveremerged from Doha had to be sold to theworld as a success for the WTO or else itwould be condemned as an irrelevantforum, incapable of achieving anything.U.S. Trade Representative (and formerEnron consultant) Robert Zoellick boasted,“We have overcome the stain of Seattle.”xi

Cynically dubbed the “DevelopmentAgenda,” the Doha Declaration launched anew work program of negotiations onindustrial tariffs, intellectual propertyrights, subsidies and countervailing duties,dispute settlement, as well as the ongoingnegotiations on agriculture and services.These were to be negotiated as a package,to be concluded by January 1, 2005.Concerns about the serious problems beingborne by the South in implementing exist-ing agreements and demands for specialand differential treatment for poorer coun-tries were once again sidelined and theiropposition to negotiating new issues like

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investment treated with contempt.

At Doha, the U.S., E.U. and theirallies tried to prepare the ground so thatnegotiations on new issues (investment,government procurement, competition pol-icy and trade facilitation) could be startedafter the Cancún meeting. The DohaDeclaration states: “we agree that negotia-tions will take place after the Fifth Sessionof the Ministerial Conference on the basisof a decision to be taken, by explicit con-sensus at that Session on modalities ofnegotiations.”xii WTO working groups oninvestment, government procurement andcompetition policy were charged with clar-ifying the scope, definitions and principlesof issues and processes relating to thesecontroversial areas. Although there was no“explicit consensus” at Doha to negotiateon these issues, there is a risk that WTOworking groups may draft texts in time forCancún, where the pressure will be on tocrush resistance to their inclusion in theWTO. India and other Southern govern-ments continue to remind WTO meetingsthat there is no “explicit consensus” tonegotiate.

The key points of the DohaDeclaration contradict the interests ofSouthern countries. A joint statement ofNGOs and social movements launched inDecember 2001 roundly condemned themanipulative process of the Doha meeting.“By advancing the march of these new top-ics into the WTO system, Doha hasbrought nearer a development disaster of

great proportions, as the proposed newagreements would close off many develop-ment policies and possibilities and result inrecolonization and unprecedented powersto global corporations at the expense ofsovereignty and people’s rights andneeds.”xiii

With China’s accession to the WTO inDecember 2001, some hope that it will bea counterweight to U.S. interests. Othersare more skeptical and point to China’sextensive market reforms and adoption ofthe neoliberal model. Similarly, some hadhoped that the appointment of Thailand’sformer Deputy Prime Minister SupachaiPanitchpakdi as WTO Director Generalwould somehow signal a better deal for theThird World. But having a figurehead fromthe South is mere windowdressing for aninstitution beholden to an economic ideol-ogy which has only widened gaps betweenrich and poor.

The WTO is not one big happy family.There is renewed tension over U.S. unilat-eralism in its economic and foreign policy,a batch of simmering trade disputes, andfor some countries a sense that they arebeing played off one another in a scenarioreminiscent of colonial battles for spheresof influence between the E.U. and U.S.over their competing geopolitical and eco-nomic interests.

WTO mini-ministerials like the onesin Sydney, Australia (November 2002),Tokyo, Japan (February 2003), Sharm El

Sheikh, Egypt (June 2003), and Montreal,Canada (July 2003) have attracted specialcriticism for being particularly anti-demo-cratic. Bringing together around 25-30invited countries from North and South,they attempt to build ‘consensus’ on criti-cal WTO negotiations by a select groupwhich de facto and illegally takes leader-ship of the organization. The criteria ofcountries selected is unknown. No writtenrecord is kept of the discussions. Decisionsare made that affect the entire membershipand the agenda is set on their behalf and intheir absence.

Outside of WTO meetings and negoti-ations, the governments which dominatethe WTO use every opportunity they can topush their agendas. They do this throughtheir embassies overseas, through pressur-ing diplomatic representatives of othercountries at home, and in a variety of other“informal” ways.

Labor researcher and activist GerardGreenfield writes:

“The WTO is often accused ofsecrecy and a lack of democracy. Thiseasily leads to proposals for greatertransparency and openness. Yet suchan approach ignores the fact that weneed to have the ability to do some-thing about what we see, otherwisewe’ll just be spectators in a transpar-ent process. It’s not just the absenceof democracy in the WTO andNAFTA that is the problem, but theoutright hostility towards democracy.Aggressively cutting back our abilityto impose democratic priorities oncapital is not an afterthought - it liesat the very heart of the globalizationproject.”xiv

GATT-astrophe! Double Standards, EmptyPromises and Risky Trade-Offs

The GATT initially dealt only in tradein goods. Many governments used tariffs,import controls or quotas on importedgoods as a way to build and protect theirlocal industry, economy and jobs. Butunder free trade agreements, the removaland reduction of tariffs have led to dein-dustrialization, the closure of countlessdomestic firms, job losses, and a loss inrevenue for governments. We are told thisis good for consumers. But many govern-ments fear that if they agree to negotiate

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Riot Police at the U.S. Administration’s Sacramento Agricultural Ministerial in June, 2003confiscate a “FOOD IS A RIGHT NOT A WEAPON" sign.

Photo: Langelle

another round of industrial tariff reduc-tions without studying the effects of pastand future tariff reductions, and withoutclear guarantees that they do not have toliberalise further beyond what the localindustries can bear, this could lead to fur-ther deindustrialization, unemploymentand poverty. Moreover many countries likethe US, Japan and Europe still have con-

trols or quotas on imported goods such astextiles and clothing.

One carrot dangled in front of manycountries in the South was the phaseout ofthe Multi Fiber Agreement (MFA) and itsreplacement by the WTO Agreement onTextiles and Clothing (ATC).

What has happened with the MFAhelps to illustrate the frustrations of manygovernments in the South about thepromises of growth and prosperity undertrade liberalization that were made tothem, and the reasons why many have con-sistently been asking for a review of exist-ing agreements before any further expan-sion of the WTO. Since 1974, the MFA

Behind Every Trade andInvestment Agreement, a

Corporate CapitalistThe role of corporations in influenc-

ing trade rules to serve their interests is nosecret. Transnational corporations accountfor two-thirds of world trade in goods andservices. Free trade is a euphemism forfreedom from governmental restrictionsfor transnational corporations. Of theworld’s top 100 economies, based on acomparison of annual corporate sales andnations’ GDPs, 51 were companies, 49were countries. According to the Institutefor Policy Studies report, The Top 200:The Rise of Global Corporate Power, by1999, General Electric was bigger thanVenezuela, Citigroup exceeded Chile, andBoeing topped Peru.xix

Between 1983 and 1999 the profits ofthe Top 200 corporations grew by 362.4 %while the number of workers theyemployed rose only 14.4%. By 1999 thetop 200 companies accounted for over aquarter of the world’s total economicactivity but provided jobs for only 0.75%of the world’s workforce. Their combinedsales were 18 times the size of the com-bined annual income of 1.2 billion people– 24% of the world’s population, living inwhat the World Bank defines as “severe”poverty – on less than U.S. $1 a day.xx

Transnational corporations haveused their formidable lobbying powerto shape national economic policiesand international trade and investmentagreements. They have privilegedaccess to high-level decision makerson trade and investment issues, whilethe public has little or no input.According to David Hartridge, formerDirector of the WTO’s ServicesDivision, “without the enormous pres-sure generated by the American finan-cial services sector, particularly com-panies like American Express andCiticorp, there would have been no

services agreement.”xxi The 67-mem-ber U.S. Coalition of Service Industries(USCSI), which includes Enron, GeneralElectric, Pricewaterhouse Coopers, Vivendiand American International Inc., has lobbiedU.S. and other government representativesaggressively. Their goal is to decrease barri-ers to trade in services by opening up for-eign markets via international trade negotia-tions. To these corporations, essential ser-vices like water, healthcare and educationare mere commodities to be bought and soldin the marketplace. The USCSI 1998 sub-mission to the U.S. Trade Representativestated: “We believe we can make muchprogress in the negotiations to allow theopportunity for U.S. businesses to expandinto foreign healthcare markets.”xxii

The International Chamber ofCommerce (ICC) calls itself the worldbusiness organization for promoting theglobal market economy, and has some7,000 member companies from 130 coun-tries. It influences the WTO processdirectly through intergovernmental orga-nizations, and the member governments ofthose organizations through its nationalcommittees. It has permanent representa-tion at the WTO, claiming credit for deci-sions at the Singapore Ministerial toremove tariffs on information technologyproducts and set up new working groupsthere on investment and competition.

The Intellectual Property Committee(a coalition of 13 large U.S. corporations,including DuPont, Pfizer, IBM, GeneralMotors, Rockwell, Bristol-Myers andMerck) worked with U.S. TradeRepresentatives on a proposal to standard-ize world intellectual property laws alongU.S. lines, and make them binding andenforceable under the WTO.

Ninety-six of the 111 members of theU.S. delegation negotiating on intellectualproperty during the Uruguay Round camefrom the private sector. Diplomats in

Geneva say that the pharmaceuticalindustry drafted much of the Agreementon Trade-Related Aspects of IntellectualProperty Rights (TRIPS), while the U.S.government was its lead advocate. Atthe start of the Uruguay Round, the U.S.negotiator appointed to head the delega-tion on what was to become the WTOAgreement on Agriculture was DanAmstutz, former vice-president ofagribusiness giant Cargill, who nowheads the USAID-driven “reconstruc-tion” of Iraq’s agriculture.

In the US, corporations work veryclosely with U.S. trade negotiatorsthrough 17 Industry Sector AdvisoryCommittees (ISACs).xxiii The U.S.International Trade Administration web-site claims that officials “work side-by-side with business leaders who serve asadvisors to the U.S. Government. TheDepartment of Commerce and USTR[U.S. Trade Representative] have jointresponsibility for operating the advisorycommittees of the ICP [IndustryConsultations Program]”. The ISACsare dominated by corporate executivesand members of industry lobby groups.

Corporations need governments tomaintain national economies in whichthey are subject to minimal regulation,and to advocate trade liberalizationinternationally. Other key U.S. corpo-rate lobby groups include the U.S.Council on International Business, theAmerican Chamber of Commerce, theNational Foreign Trade Council andthe Business Roundtable (BRT).

A new coordinated multimilliondollar public relations campaign led bythe BRT and its counterparts inMexico, Canada, Europe and Japanaims to build popular support for theWTO and pressure governments toconclude a new round of tradetalks.xxiv

Green Paper #4 Page 8

had set the rules for international trade intextiles and garments made from cotton,wool and synthetic fiber. It set quotas lim-iting the amounts of imports of textiles andclothing from “developing” to “developed”countries, controlling the level of marketaccess for developing country imports.

The MFA’s quota restrictions helpedfacilitate the domination of the global gar-ment trade by transnational corporations.They did this by securing quotas, throughtheir subsidiaries, allotted to “developed”countries. Many small and medium gar-ment firms either became part of thetransnational corporations’ subcontractingchains or closed.

The phase-out of the MFA and itsquota system, which is supposed to bringtextiles and garments trade under theWTO, was sold to exporting countries inthe South as a great sacrifice by theindustrialized countries. Along withpromises about improved market accessfor agricultural products, it was used as alever to force developing countries tomake commitments to other WTO agree-ments on trade-related investment mea-sures, intellectual property and services,and to agree to lower tariffs. This kind ofhorse-trading characterizes trade negotia-tions.

The MFA phase-out has led to uncer-tainty for the future of the garments andtextile industry in many countries. Theten-year phase-out period which ends atthe start of 2005 has been characterized bytardy implementation by the E.U. and theU.S., and new forms of barriers to stopimports from the South, including morerestrictive rules of origin, and anti-dump-ing measures. Meanwhile countries in theSouth have committed to open up theirown markets for textiles and clothing.Indian trade expert Bhagirath Lal Das callsthe Agreement on Textiles and Clothing(the alternative to the MFA) and its imple-mentation a fraud perpetrated against theSouth.xv With the downward pressure onwages and conditions, the withdrawal ofsupports for local industry, trade andinvestment liberalization and the imposi-tion of an export-oriented market econom-ic model through SAPs, workers in theNorth and South alike have seen their jobsdisappear in the inhuman rush to makemore profit.

You Can Bank On It! PolicyCoherence, the WTO, IMF,World Bank and Inter-AmericanDevelopment Bank

Besides their shared commitment toneoliberalism, the WTO, IMF and WorldBank have formal relationships to achieve“policy coherence.” The MinisterialDeclaration on the Contribution of the[World] Trade Organization to AchievingGreater Coherence in Global EconomicPolicymaking, in the Uruguay Round Act1994, Part III.2 urged the IMF, the WorldBank and the WTO to follow “consistentand mutually supportive policies…with aview to achieving greater coherence inglobal economic policymaking.”xvi This isexpressed in various agreements, minister-ial declarations and decisions between theinstitutions.

In May 2003, senior officials of thethree institutions, including IMFManaging Director Horst Koehler, WTODirector General Supachai Panitchpakdiand World Bank President JamesWolfensohn met in Geneva under theumbrella of the WTO General Council todevelop a common approach to global eco-nomic policies – the “coherence agenda.”The IMF and World Bank will offer “tech-nical assistance” and financial support foradjusting debtor countries’ economies tofull trade liberalization. “Technical assis-tance” sounds benign enough, but in reali-ty it will be used to force countries of theSouth to swallow the same neoliberal med-

icine, which many of them have been dis-puting within the WTO.xvii

The Inter-American DevelopmentBank also has a close formal relationshipwith the WTO. In February 2002 theysigned a memorandum of understanding todeepen cooperation on providing technicalassistance like training courses and work-shops on trade negotiations and capacitybuilding to Latin American and Caribbeancountries “to participate fully in the multi-lateral trading system.” The IDB’s centralpolicy goal is economic integration ofLatin American countries with the globalmarket. Since 1994 the IDB has con-tributed over $10 million to support theFTAA process. It is also the multilateralsponsor of the controversial Plan PueblaPanama, which to the IDB represents theinfrastructural and regulatory prelude tothe U.S. goal of concluding the FTAA andCAFTA by 2005.xviii

Why Cancún? Major mobilizations against the

institutions which enforce and promoteneoliberal globalization, like those inSeattle (WTO), Quebec City (Summit ofthe Americas/ FTAA), Genoa (G8) andothers have led to many major meetingvenues being chosen for their inaccessi-bility and relative ease to secure. Thesecurity crackdowns and repressionwhich have met resistance on the streetsdo little to enhance the image, credibili-ty or legitimacy of these institutions.That partly explains the choice to hideaway in the ski resort of Kananaskis,

Green Paper #4 Page 9

A textile worker in Nicaragua walks through thick blue water in a ditch heavily contaminatedby dyes from a denim jeans factory. Photo: Langelle

Canada, for last year’s G8 meeting, or thechoice of Doha, Qatar (now fittingly thebase for the U.S. Central Command in theMiddle East) for the November 2001WTO Ministerial Meeting and nowCancún for the September 2003 WTOMinisterial. With the added excuse ofthe “war on terror,” ministers can cocoonthemselves away in luxury, even in acountry where over half the populationlives in dire poverty.

“The Cancún Convention Center,where the meetings will take place, is arather small, three-story building in themiddle of a 15-mile-long strip of island inthe Caribbean. There are only two smallbridges from the mainland. The airport ison the mainland and accessed by a singlethree-mile, two-lane highway thicklyforested on either side. Besides its isola-tion, it goes without saying that the regionwill be highly militarised,” write El Picoand Magpie in a recent Earth First!Journal.xxv

OUR WORLD ONTHE CHOPPINGBLOCK AT THEWTO? Understanding theAgreements

Agreement onAgriculture

Until the UruguayRound, agriculture did notfall under the GeneralAgreements on Tariffs andTrade. The U.S. eventhreatened to leave GATTif it could not maintainprotective mechanisms forsugar, dairy products, andother agricultural com-modities, Washington wasgiven a ‘’non-time limitedwaiver’’ on agriculturalproducts. But by the1980s, when U.S. big busi-ness had outgrown its markets, had a crisisof overproduction and controlled largechunks of international agriculture, (andother sectors) it began to lobby aggressive-ly for the expansion of GATT to coverthese areas. Countries had used tariffs andnon-tariff measures like quantitativeimport restrictions, discretionary import

licensing, and non-tariff measures main-tained through state trading enterprises,like producer boards, to control the importof agricultural products and help developand protect their farming sectors.

The Agreement on Agriculture (AOA)was heralded as a means to provide greateraccess to world markets in agriculturalproducts for all countries by reducing tar-iffs and other trade barriers as well asfarming subsidies. It aims to “establish amarket-oriented agricultural trading sys-tem…reductions in agricultural supportand protection…resulting in correcting andpreventing restrictions and distortions inworld agricultural markets.”xxvi Itincludes sections on market access, reduc-tion in trade-distorting domestic supportfor agriculture, and reduction in exportsubsidies. It also has an agreement aboutharmonizing sanitary and phytosanitarymeasures which cover food hygiene andinspection measures. Starting in 1995,countries were supposed to implement the

commitments they made under these sec-tions over a six year period for “devel-oped” countries (1995-2000) or ten yearsfor “developing” countries (1995-2004).

Although it stipulates the withdrawalof domestic production support and exportsubsidies, the Agreement on Agriculture

(AOA) excludes direct-income paymentsto farmers, which make up between one-fifth to one-third of U.S. farm income,and many E.U. subsidies. In one of themost glaring examples of hypocrisy inworld trade, U.S. and E.U. agriculturalmarkets remain protected – a situationwhich benefits large industrial farmersand agribusiness but not U.S. andEuropean family farmers who are oftenpitted against industrial agriculture andcorporate agribusiness. Southern govern-ments, meanwhile, are prohibited fromintroducing new programs such as subsi-dies to protect their local agricultural pro-ducers, even as their livelihoods areundermined by the dumping of cheap sub-sidized imports with which they cannotcompete. The Farm Security Act of 2001,passed just weeks before Doha, providedfor over $170 billion to U.S. farmers –mainly corporate farmers and agribusi-ness - over the following ten years. TheU.S. Farm Security and Rural InvestmentAct (May 2002), brings in an additional

US$180 billion to U.S.farmers in the next tenyears.

A 1995 WorldBank working papershowed that manyOrganization forE c o n o m i cCooperation andDevelopment (OECD)countries had used“dirty tariffication” -setting much highertariff levels for mostagricultural commodi-ties than the averagelevels of protectionthat applied when theGATT UruguayRound was ratified in1994. These oftenrepresented higherlevels of protectionthan had actually beenapplied in the countrypreviously. Canada

raised its base tariffs on dairy products toover twice its actual 1986-88 levels.Besides tariffs, other ways of blockingaccess to markets for agricultural exportswere being employed.xxvii In Doha,promises by the European Union andU.S. to reduce subsidies and increasemarket access for agricultural products

Green Paper #4 Page 10

Community members from the village of Nuevo San Gregorio in the Montes AzulesIntegral Biosphere Reserve in Chiapas, Mexico gather in March, 2003 to speak to anemergency delegation called by Global Exchange to investigate claims by the Mexicangovernment and NGO Conservation International that the indigenous communitieswere destroying the rainforest. This accusation was being used as an excuse to evictthe communities. The delegation found the rainforest destruction being most pro-nounced around the military encampments, while the indigenous villagers, havingoutlawed slash and burn techniques, were practicing sustainable organic agriculture.

Photo: Langelle

from the South were traded off for com-mitments to further liberalize agriculture,services, and TRIPS from Southerncountries.

A March 31st 2003 deadline foragreeing to ‘modalities’ – a framework,targets, and issues related to rules for fur-ther negotiations - was not met, with theE.U. and U.S. in gridlock over E.U. farmsubsidies under its Common AgriculturalPolicy. Many countries in the Southremain wary of the U.S. and its extremedemands on agricultural liberalization(for everyone but itself). In June 2003,the E.U. announced a major reform of itsagricultural policy, but many remainunconvinced that this will lead to realchange. However, the E.U. will use thisto press for bigger commitments fromother countries to open markets toEuropean exports, service providers andinvestors.

Mexican campesinos’ experience ofNAFTA after almost ten years leaves themwith no illusions as to the WTO’s promis-es about free trade in agriculture. SinceNAFTA, floods of cheap, subsidized U.S.corn have entered the market, sold at pricesbelow the cost of production, with whichcampesinos cannot compete. This has ledto massive displacement, poverty andhunger, pushing people into the cities andmaquiladoras (sweatshop factories), andforcing many to risk their lives crossing theincreasingly militarized border into theUSA in search of work. Moreover, an esti-mated 30-40% of this corn is geneticallymodified (GM), and there has already beenserious contamination of indige-nous corn varieties from GM cornimports in Oaxaca.xxviii

NAFTA has also led to strongresistance throughout Mexico. Theprivatization of the ejido (commu-nal lands on which an estimated 25million campesinos andIndigenous Peoples depend), 500years of colonial oppression, andNAFTA were catalysts for theZapatista uprising on January 1,1994, the day NAFTA took effect.

In late 2002, a number ofcampesino organizations cametogether under the name El CampoNo Aguanta Mas (“the country

side can’t take any more”). The January 1,2003 removal of tariffs on all Mexicanagricultural products, except powderedmilk, corn and beans sparked mobiliza-tions of campesinos around the country.Campesino organizations symbolicallyclosed parts of the Mexico-U.S. border that

day. On January 31st 100,000 campesinosmarched silently in protest through MexicoCity. They demanded a renegotiation ofNAFTA’s agricultural chapter and a newagricultural policy based on food sover-eignty for all.xxix

These “free” trade stories are repeatedthroughout the world. In June 2000, agroup of 11 developing countries told aWTO Special session of the Committee onAgriculture that the trade liberalizationtriggered by the Uruguay Round had bro-ken the agricultural backbone of manycountries, undermining food security, peo-ples’ health and sovereignty.xxx

Via Campesina, a global peasant andsmall farmers’ movement, has mobilizedagainst the corporate takeover of agricul-ture, biotechnology and the AOA, and for

food sovereignty. Each country, it argues,should have the right to define its own agri-cultural policies in order to meet itsdomestic needs. This should include theright to prohibit imports to protect domes-tic production and genuine agrarian reformto provide peasants and small/medium-sized producers with access to land.

Via Campesina calls for the WTO toget out of agriculture – the removal of allnegotiation in the areas of food productionand marketing from the WTO and from allregional and bilateral agreements.

TRIPS, Health, Biocolonialismand the Privatization of Life

The TRIPS (Agreement on Trade-Related Aspects of Intellectual PropertyRights) has nothing to do with “free trade.”It is a protectionist tool which requires allWTO members to guarantee general pro-tection of patents for a minimum of twen-ty years. It was sold as an anti-counterfeit-ing proposal as companies wanted to stopfake brandname clothing, music andvideos, but it prohibits measures common-ly used to facilitate technology transfersuch as compulsory licensing (when a gov-ernment gives a manufacturer a license toproduce something for which another com-pany holds a patent or exclusive rights inreturn for the payment of a royalty, in orderto introduce generic competition and todrive prices down).

TRIPS strengthens the hand of privatecompanies to claim monopoly rights andgain huge benefits from biopiracy. Privatesector researchers, agribusiness and phar-

maceutical corporations areappropriating the heritage ofindigenous communities for pri-vate profit, while those who devel-oped and nurtured them for gener-ations receive no benefits. TRIPSis a means to make all WTO mem-ber countries comply with a stan-dard set of laws which legally pro-tect the technological monopolyof transnational corporations(mostly from industrialized coun-tries) which own most patents.TRIPS goes hand in hand withWTO commitments to liberalizeagricultural trade, further expand-ing agribusiness control over foodsystems and biodiversity.

Green Paper #4 Page 11

“A profound reform of theWTO in order to make itrespond to the rights and needsof people would mean the abo-lition of the WTO itself! We donot believe that the WTO willallow such a profoundreform.”xxxi

--Via Campesina

A young boy sits in front of a bunker in the Zapatista communityLa Realidad, Chaiapas, Mexico in March, 1996

Photo: Langelle

U.S. case law has set an internationalprecedent for patenting genetic material.In 1980 the U.S. Supreme Court allowedthe patenting of microorganisms. In 1985life patenting was extended to includeplants. In 1987 the U.S. Patent Officeruled that all animals, including humanembryos and fetuses were patentable.TRIPS and intellectual property provisionsof other regional and bilateral agreementsare being used to extend and implementUS-style patent law worldwide. Accordingto the US, countries that fail to adopt suchlaws are engaging in “unfair trading prac-tice” using “non-tariff trade barriers” andmay be subject to trade sanctions. EarlyTRIPS targets were Japan and newlyindustrializing countries in East Asia thathad copied U.S. technology (e.g. the carand computer industries). But the ongoingplunder of the South’s biodiversity by U.S.(and other) companies eager for profit,without any compensation or benefits tothe communities from which the “rawmaterial” is expropriated is somehow notconsidered “unfair.”

Before the Uruguay Round, mostnations chose not to recognize patents onfood, pharmaceuticals or other productsconsidered as basic human needs. Manygovernments’ policies in these areas wereshaped by specific ethical and socio-eco-nomic considerations. As a result ofTRIPs, WTO members must adopt “effec-

tive” intellectual property protection forplants and microorganisms. While govern-ments can technically decide whether toallow patents on animals, the outcome of aWTO review of TRIPS could change that.TRIPS has transformed the very essence oflife into a mere commodity.

Current intellectual property systemsfavor and reward individual “inventors” forproducts, processes or innovations relatingto genetic material derived from plants,

animals or organisms – but not communalknowledge such as that shared and handeddown in indigenous communities. Whengenetic material is processed in corporatelabs it is named, called an “invention” andis patentable, conferring on its “owner”exclusive marketing rights. Broad patentsare being taken out on plant varieties, cov-ering ownership of “traits” and “character-istics.” Seed companies stand to reapmonopoly profits from the innovations ofsmall farmers and indigenous peoples, who

One of the most-celebrated victoriesof anti-neoliberal globalization move-ments was the failure of the MultilateralAgreement on Investment (MAI). Thischarter of rights and freedoms for transna-tional corporations was negotiated insecret among the 29-member “rich man’sclub” of the OECD. Opposition withinthe WTO from governments in the Southto any proposed negotiations on invest-ment had driven it into the OECD, whereonce concluded, it was intended for even-tual imposition on the rest of the world.Its stated purpose had been to “ensure ahigh minimum standard of treatment forforeign investors and their investments”and prevent discrimination in favour oflocal investors and investments, affordingforeign investors enforceable rights and alegally-binding dispute settlement systemwhich would bind signatory governments.

The draft text of the MAI gives ussome clear insights into the likely shape ofa WTO investment agreement. At its heartwere the principles of “national treat-ment” and “most-favored nation” (MFN).Signatory governments were bound totreat foreign investors and their invest-ments no less favourably than localinvestors and investments. Foreigninvestors would have the same or betterrights to establish, acquire, expand, oper-ate, manage, maintain, use, enjoy, sell orotherwise dispose of their investments asdomestic investors in similar situations.The best treatment given to investors fromone country had to be given to investorsfrom all MAI signatory countries.

The MAI would have effectivelylocked present and future governments – atnational, provincial, state and municipal

levels – into commitments made for 20years. As a “top-down” agreement almostall sectors were to have been coveredunless expressly reserved. Governmentshad to lodge a list of reservations settingout areas where policies did not conformto MAI requirements. These were subjectto “standstill and rollback” provisions:future governments could add no newrestrictions, and current reservations wereexpected to be eliminated over time.

The MAI would have prevented gov-ernments from limiting what foreigninvestors could own (whether strategicassets or rural land) or from imposing per-formance requirements on them to use aset amount of local content, to hire localmanagers or staff, or to share technologi-cal know-how. It would have facilitatedeasier access for investors to be able to

Learning from The MAI

Green Paper #4 Page 12

Mayangna man in the North Atlantic Autonomous Region of Nicaragua speaks to an ACERCAdelegation about the medicinal properties of the bark of this tree. ACERCA was in the regioninvestigating rampant illegal logging in the Bosawas rainforest.

Photo: Langelle

themselves will be banned from using andsaving their own now patented seeds, andforced to buy them from the patent-holdingcompanies like Monsanto.

Transnational corporations are seizingthe knowledge of local communities, espe-cially in the tropics and subtropics of theAmericas, Asia and Africa, which havedeveloped, protected and nurtured theecology and biodiversity on their lands formany centuries, and are the source of manyof the world’s food crops and medicines.Around 75% of all plant-derived drugswere discovered because of prior use inindigenous medicine.

At the same time, when governmentshave sought to respond to health crises,especially HIV/AIDS, by legislating toallow the use and import of affordablegeneric drugs, they have been targetedboth by litigation initiated by profiteeringpharmaceutical transnational corpora-tions, and through the WTO Disputessystem. The powerful U.S. drug transna-tional cartel, the PharmaceuticalResearch and Manufacturers of America(PhRMA) lobbied to ensure that the U.S.administration carry out its agenda. Thisled to threats of trade sanctions againstseveral countries, like India, SouthAfrica, Brazil, Argentina and theDominican Republic over compulsorylicensing or parallel importation laws, as

well as a notorious court case against theSouth African government. In June 2001a E.U. and U.S. WTO complaint againstBrazil’s violation of drug patents in itseffective and internationally-praised anti-AIDS program was withdrawn afterworldwide pressure.

A Doha Ministerial declaration onTRIPS and public healthxxxii said thatTRIPS should be interpreted in a way thatenables governments to protect publichealth and ‘promote’ access to medicinesfor all. This declaration was used as a bar-gaining chip to get governments ofSouthern countries previously resistant to anew expanded round of world trade talks,to acquiesce to them, but is, however, non-binding, and of uncertain legal value.

Owning a lifeform patent is muchmore far-reaching than owning an individ-ual sheep or tree. U.S. researchers HopeShand and Dr Martin Teitel write that thedistinction “can be likened to the differ-ence between owning a lake and owningthe chemical formula for water. A patentholder for water’s chemical formula wouldhave the legal right not only to decide whocould have access to a particular lake, butto water anywhere, and to the use of thechemical formula for any purpose.”xxxiii

Indigenous Peoples are at the forefrontof challenging biocolonialism. The

President of the Guaymi General Congress(Panama) said:

“I never imagined people wouldpatent plants and animals. It’s funda-mentally immoral, contrary to theGuaymi view of nature, and our placein it.”xxxiv

Similarly, local communities fromSouthern Mexico through Central Americaare resisting the MesoAmerican BiologicalCorridor project, billed as an ecologicalprotection plan, running alongside the PlanPuebla Panama and backed by the WorldBank, as a “green” front to open up theregion’s rich biodiversity to transnationalcorporations seeking profits and monopolycontrol. Indigenous Peoples living withinthe corridor’s boundaries face dislocationand the likelihood that transnational corpo-rations will steal the microorganisms andplants from the forest.

The WTO’s TRIPS, the proposedintellectual property chapter of the FTAA,and similar provisions in bilateral andregional trade agreements (which oftencontain “TRIPS-plus” provisions, goingeven further than TRIPS) are all tools toexpand, intensify and cement a regime ofmonopoly control and commodificationover life itself. And because intellectualproperty rights are often included in thedefinition of “investment” in bilateralinvestment agreements, any failure to com-

Green Paper #4 Page 13

move assets – financial instruments orproduction facilities – across borders,regardless of social and environmentalconsiderations. It would have guaranteedfree transfer of all payments relating to aninvestment in and out of a country.

The capacity of governments to cre-ate employment would have been severelyeroded by the MAI. It aimed to preventthe application of national employmentquotas or labor market (economic needs)tests. In the event of a privatization, theMAI could have prevented governmentsfrom utilizing special share arrangementsto encourage local workers and communi-ties to buy the company or to distributeshares to the public.

The MAI lacked any regulatoryframework or language about the respon-sibilities of investors regarding fair com-petition, treatment of employees, and

environmental protection. Yet it grantedthem extensive rights, including the rightto sue governments under a bindinginvestor-state dispute mechanism forinvestors who claimed they had been dis-advantaged by a government action inactual or planned investments.

Many bilateral investment agreementsand NAFTA (on which key MAI provi-sions were based) have already been usedby powerful corporations to overturn lawswhich they claim interfere with their prof-itability. In 1997 the Canadian federal gov-ernment banned imports of a fuel additivecalled MMT because it was toxic and haz-ardous to public health and car emissionsystems. U.S. chemical corporation EthylCorporation, which made MMT, usedNAFTA’s investment provisions to sueCanada for $250 million, claiming that theban “expropriated” its future profit earn-ings in Canada. It also said that the parlia-

mentary debate over MMT had damagedits reputation and demanded compensa-tion. Ottawa backed down, removed theban, apologized and paid Ethyl Corp $13million. NAFTA involves only three coun-tries. Imagine what such an agreementwould do across the 146 member countriesof the WTO.

Under pressure at home, many govern-ments tabled so many MAI reservationsexempting sensitive sectors like culturalindustries from coverage that the talksbecame bogged down. In the U.S. andCanada, many state and municipal govern-ments acted in outrage against federal deci-sions to constrain their policy options andbind them to an agreement which they hadno part in negotiating. Some voted to rejectthe deal altogether. The MAI failed througha combination of external pressure frompopular mobilizations, and internal ten-sions among OECD governments.

ply with, for example, transnational corpo-rate demands for patent protection ongenetic material in a signatory countrycould lead to a NAFTA-style investor-statedispute. A WTO investment agreementwhich contains a similar definition of“investment” would have this effect too.

Attempts by countries in the South todevelop their own technologies are frus-trated while they pay massive royalties totransnationals, often for products derivedfrom ideas and biodiversity originating inthe South. The knowledge created andshared by indigenous and traditional com-munities, and nature itself is being com-modified and privatized at a frighteningpace.

Hungry For Profit –WTO Complaint toForce the World to EatGE FoodThrough its “food aid” policiesand using the WTO, regionaland bilateral trade agreements,the U.S. Administration, backedby its biotech/agribusiness cor-porations want to force geneti-cally-modified seed, grain andfoodstuffs into all the world’smarkets, fields and stomachsthrough deliberate genetic cont-amination, and by targetingcountries which have takenprincipled stands against GE.

A U.S. complaint to theWTO challenges the E.U.’s defacto moratorium on approvalsfor GE imports and crops, inplace since 1998. As well as cit-ing the GATT and theAgreement on Agriculture, theU.S. claims that the moratoriumbreaches the Agreement on Sanitary andPhytosanitary Measures (SPS). U.S. TradeRepresentative Robert Zoellick blames theE.U. for the refusal of U.S. food aid byAfrican countries, and claims that in pro-moting GE food, the U.S. wants to helpfeed the world. The U.S. is using otherpeople’s misery as a marketing tool forU.S. agribusiness.xxxv

Agriculture Secretary Ann Veneman(a former director of biotechnology com-pany Calgene) was more upfront. “Withthis case, we are fighting for the interests

of American agriculture.”xxxvi Of course,she means U.S. corporate agribusiness.

The SPS agreement recognizes thatcountries can regulate crops and foodproducts to protect health and the envi-ronment. But it requires that there be“sufficient scientific evidence” for suchmeasures, and that they operate theirapproval procedures without “unduedelay” (shifting the burden of proof off ofthe producer and onto the consumer). TheU.S. government argues that the E.U.action is unjustified regulation to thwarttrade in “safe, wholesome, and nutritiousproducts” – i.e. untested GE food. Somefood exporting countries in the Southaccuse the North of using SPS as a newway to block their products even as they

claim to be improving market access inagriculture.

Under the Agreement on Sanitary andPhytosanitary Measures, the WTO couldcompel a nation to choose between lower-ing its health standards for humans, ani-mals or plants, compensating another gov-ernment whose exports are limited orblocked by the stricter standard, or permit-ting that government to impose additionaltrade restrictions on exports from thenation with the higher standard. SPS is abusiness-oriented agreement aimed at

deregulation and trade facilitation, not rais-ing health and safety standards. Alongwith the WTO Technical Barriers to Trade(TBT) agreement (which covers technicalregulations, product standards, testing andcertification procedures), the SPS allowsfor attacks on national measures whichaddress consumer concerns (like labellingproducts containing GMOs). Pressure fordownward harmonization is built into it.

The “precautionary principle” hasbeen adopted by many governments toauthorize trade restrictions where there isstrong suspicion of environmental/healthrisks, but as yet no scientific verification,as in the E.U. moratorium case. This prin-ciple is under sustained attack from boththe U.S. and WTO dispute panels. The

U.S. and other govern-ments which havejoined this complainthave a warning for theworld: Don’t eventhink about imposingrestrictions on GEfoods or we will comeafter you, big time. Somuch for people hav-ing the right to knowand decide what weeat.

Neoliberal global-ization is intent on har-monizing food andproduct standards sothat industry canreplace diverse nation-al standards with uni-versal ones which theyhave shaped. Highstandards are likely tobe replaced by thelowest commondenominator. The

Codex Alimentarius, used as a standard forthe WTO, and heavily influenced by U.S.agribusiness, allows 50 times more DDT tobe used on or left in residual amounts onpeaches and bananas, and 33 times moreDDT to be applied on broccoli than U.S.Environmental Protection Agency (EPA)standards.

Anything You Can’t Drop onYour Foot – GATS and Services

Since 2000, negotiations have beenunderway to extend GATS (General

Green Paper #4 Page 14

Demonstrators at the USDA’s Sacramento Agricultural Ministerial in June, 2003protest U.S. attempts to use the WTO and other trade agreements to force coun-tries all over the world to accept genetically engineered food. The EuropeanUnion currently has a de facto ban on GE foods. This ban is being contested bythe U.S. Photo: Langelle

Agreement on Trade in Services), which ismore about promoting the rights of foreigninvestors than a ‘trade’ agreement. TheWTO website calls GATS “the world’sfirst multilateral agreement on investmentsince it covers not just cross border tradebut every possible means of supplying aservice, including the right to set up a com-mercial presence in the export market.”(www.wto.org) Services have beendescribed as anything thatyou cannot drop on yourfoot, including banks,schools, energy, healthcare,water, garbage collection,libraries, postal services, rail-ways, airlines, TV, radio andtourism. GATS meansderegulation of services atthe local, state and nationallevels and subjecting them toWTO rules for the benefit oftransnational corporations.Transnationals want unre-stricted rights to invest andset up a commercial presencein a country and for govern-ments to make enforceablecommitments to open theirservice markets up to privateforeign providers.

Under GATS, governments agree togive foreign service suppliers at least asfavorable treatment as local suppliers.Governments can neither set limits on thenumbers of service suppliers operating inits market nor impose requirements forlocal content.

International trade in services is bigbusiness. Services are a lucrative marketwhich the world’s transnational corpora-tions want to control. They want servicesto be treated purely as commodities to bebought and sold in a competitive market.Besides seeking to extend the range of ser-vices each government has committed,pressure is on to impose ‘disciplines’ onthe domestic regulation of services, and tobring services that are publicly ownedand/or ‘procured’ by government agenciesunder GATS rules.

GATS threatens to restrict the abilityof governments to ensure public access toaffordable, adequate basic services byremoving any restrictions and internal gov-ernment regulations in the area of servicedelivery that are considered to be “barriers

to trade.” These include measures whichpursue environmental, social or communi-ty objectives. GATS restricts core areas ofgovernment planning. All WTO membersare required to make enforceable commit-ments to open their services markets.GATS binds all levels of governments butstate and municipal officials have no say inthe negotiations. It prohibits municipal,state, provincial and federal government,

and bodies which perform delegatedresponsibilities, from using policies, regu-lations and practices that give preferencesto local firms and restrict foreign control ofservices, once the government has commit-ted those sectors to GATS rules. Thisincludes economic development roles ofsupporting local communities like localhiring or purchasing preferences.

Replying to critics, apologists forGATS insist that public services are exempt-ed – but the clause that they refer to is so nar-row that it excludes any service which has acommercial element or is offered in compe-tition with a private supplier.

The rights of foreign suppliers against agovernment deemed to have broken GATSrules are enforceable and make backtrack-ing on commitments almost unthinkable. In1999 Bolivia privatized Cochabamba’s citywater system under World Bank instruc-tions. It was sold to a subsidiary of Bechtelwhich sharply increased water prices - insome cases by over 100%. Poor householdswere spending one third of their income onwater. The crippling price rise sparked mass

protests and a general strike. After troopskilled several demonstrators, the govern-ment finally backed down and reversed theprivatisation. Bechtel was recently awardeda $680 million USAID contract to “rehabil-itate” Iraq’s shattered water, sewage andpower systems.

Had Bolivia made GATS commit-ments under water delivery, regaining

ownership would have beenalmost impossible. Even nowit is being sued for $25 mil-lion for lost profits byBechtel in the World Bank’sclosed-door InternationalCenter for the Settlement ofInvestment Disputes (ICSID)under a little-known 1992bilateral investment treaty.The E.U. is particularlyinterested in pressuring othercountries to liberalize “envi-ronmental services” – suchthings as water and waste-water services, for the bene-fit of a handful of powerfulEuropean corporationswhich already “own” andcontrol the water suppliesfor many millions of peopleacross the world.

GATS threatens to lock in andadvance the commercialization and privati-zation of public education and health sys-tems. These and other sectors could beirreversibly opened to commercial compe-tition from other WTO members. Publicfunding would have to be given equally todomestic public and foreign privateproviders. If regulations are considered“barriers to trade” then governments’ abil-ity to deliver on domestic public, social,and cultural policy objectives would beseverely curtailed by GATS. Transnational“health management organizations”(HMOs) and “educational managementorganizations” (EMOs) will gain a greaterfoothold, as health and education – funda-mental human rights – are transformed intomere commodities under GATS.

The E.U. and U.S. want other coun-tries to reduce their barriers to its transna-tional service giants in what reads like aprivatizers’ wish-list. Under GATS, theE.U. is demanding that the U.S. deregulateand open up its water, sewage and whole-sale and retail energy sectors, among oth-

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Oscar Olivera, a leader of Cochabamba, Bolivia’s successful fight againstwater privatization leads the “Eco-bloc” at the World Bank protests inWashington, DC in September, 2002. Photo: Langelle

ers. But the slow pace of making commit-ments to GATS over the past year showsthe reluctance of many countries – espe-cially in the South — to go down this trackwhile their concerns about existing com-mitments in other areas, such as agricul-ture, TRIPS and “new issues” like invest-ment remain unheeded by the North.

Opposition to services privatizationand liberalization – whether throughGATS, structural adjustment programs orbilateral and regional agreements ismounting. Many municipal councils, fromCanada to New Zealand, have challengednational governments’ rights to commit toGATS – concerned that their role in mak-ing economic, social and environmentalpolicy at a community level will be severe-ly undermined. Some state and provinciallevel governments have also expressedsimilar concerns. Health and educationunions have strongly condemned the waythat the WTO defines vital services as

mere commodities, devoid of their socialroles, and many have demanded health andeducation be removed from the GATS listof services. And as urban and rural com-munities in both the North and South bat-tle the commodification and monopolyownership of one of life’s fundamentalnecessities – water - there are calls forwater, as a basic human right, to be exclud-ed from GATS coverage. (In 2002, Frenchutility group Suez acquired the contract forCancún’s water and wastewater services.)

Who Pays for “Free” FinanceUnder Casino Capitalism?

In the 1990s, financial crises inMexico, Brazil, East Asia and Russia threwglobal financial markets into chaos andfuelled demands to rein in speculativeinvestors by reimposing some form of cap-ital controls.

Financial liberalization – often carriedout under the direction of the IMF - has led

to phasing out regulatorymechanisms over the move-ments of huge sums involvedin currency speculations, newfinancial products, offshorefinance centers, hedge fundsand hot money (short-terminvestment) flows to emergingmarkets. The volatility infinancial markets and overde-pendence on foreign capital –especially short-term non-productive investment -threatens the orderly runningof national economies.

Concluded in December1997, the WTO’s FinancialServices Agreement (FSA)has been signed by over 100countries. It is a plurilateralagreement, so it is theoretical-ly “voluntary” to sign on to.However, as part of thebailout conditions whichmany East Asian countrieshad to sign with the IMF aftertheir economic meltdown,they had to accept the openingup of their financial markets –the same policies responsiblefor the crisis in the first place.The FSA commits countriesto open their financial servicessector to foreign companies,

covering over 95% of world trade in bank-ing, insurance, securities and financialinformation services. These are highly sig-nificant sectors for governments seekingan independent economic strategy andwanting to ensure that investment, bothforeign and domestic, serves public goals.Dismantling such protections for thedomestic financial sector has been a keygoal of transnational banks and financialcorporations and the IMF. Indianresearcher Kavaljit Singh notes: “The crossborder trade of financial services willrequire removal of restrictions on capitaltransactions. As exchange controls areoften cited as barriers to international tradein financial services and are largely main-tained in the developing countries, FSAwill serve as an effective tool to removethese.”xxxvii

The “New Issues:” AnInvestment Agreement at theWTO

So far, attempts to negotiate a compre-hensive multilateral agreement on invest-ment at the WTO and at the OECD havefailed. Many governments, especially fromthe South, are very wary of the claimsmade about the supposed benefits ofinvestment liberalization and have opposedmoves to make a global agreement whichwould bind them to open up theireconomies by removing all regulations onforeign investment. In the past, Pakistan,India, a number of African countries andMalaysia had insisted that the WTO shouldnot be the venue for negotiating an invest-ment agreement. From the North to theSouth, social and economic global justicecampaigners have set their sights on tryingto prevent these “new issues” (sometimescalled “Singapore issues”) from getting offthe ground at the WTO in Cancún. The“new issues” include investment, competi-tion policy, transparency in governmentprocurement and trade facilitation.

Many see the threats posed by a bind-ing investment agreement at the WTO asone of the most serious for the South. Atsome point in time, most countries haveimposed regulations on investors in linewith national development priorities. Theydo this to ensure that foreign investmentbenefits the host country as well as theinvestor. Even after “independence,” manyformer colonies’ economies have remainedshaped by and for the benefit of foreign

Green Paper #4 Page 16

Indigenous residents of Nuevo San Gregorio in the MontesAzules Integral Biosphere Reserve in Chiapas, Mexico leadmembers of a March, 2003 delegation on a tour of their sus-tainably grown organic corn plots. The residents claim thatthe Mexican government wants to evict them to permit cor-porations to have access to the rich resources of the bios-phere reserve – including oil, minerals, timber and “greengold” (genetic material contained in the biodiversity of therainforest). Photo: Langelle

companies, and often those closely con-nected with their former colonizers’ gov-ernments. Many countries determined thatforeign investors could not own more thana certain percentage of telecommunica-tions or other strategic national infrastruc-ture sectors or set conditions on ownership.Many countries imposed performancerequirements on foreign investors so thatthey had to hire a certain proportion oflocal workers, or use a particular level oflocal content. Environmental, health andsafety legislation set standards in order toensure that investments were not detrimen-tal to the environment and the health andsafety of workers and the public. Nowlabor and environmental laws are beingaggressively targeted in the negotiationsand implementation of international tradeand investment agreements. The right ofcurrent and future governments to regulatein these and other ways is being con-strained by participation in such interna-tional investment agreements.

Foreign investors – especially transna-tional corporations - want governments togive them and their investments no lessfavorable treatment than domesticinvestors and their investments. Many cor-porations, and the powerful governmentswith which they are aligned, argue thatsuch laws interfere with the rights of busi-ness and create uncertainty for investors.Through the many bilateral investmentagreements which already exist, and apotential WTO agreement on investment,

they seek binding, enforceable rights, andan end to government regulation of invest-ment. Should a future government ques-tion the actual benefits of maintaining anopen investment regime, and seek to re-regulate foreign investors’ activities, undera WTO investment agreement it would riskbeing forced into costly disputes, payingmassive compensation or facing sanctionsfrom aggrieved investors or governmentsacting on their behalf.

Martin Khor of Third World Networksays that a possible WTO agreement oninvestment

“is ultimately designed to maxi-mize foreign investors’ rights whilstminimizing the authority, rights andpolicy space of governments anddeveloping countries. This has seriousconsequences in terms of policy mak-ing in economic, social and politicalspheres, affecting ability to plan inrelation to local participation andownership, balancing of equity sharesbetween foreign and locals andbetween local communities, the abili-ty to build capacity of local firms andentrepreneurs, and the need for pro-tecting the balance of payments andthe level of foreign reserves. It wouldalso weaken the bargaining position ofgovernment vis-à-vis foreign investors(including portfolio investors) andcreditors.”xxxviii

More Corporate Welfare…Expanding the WTO

The E.U. wants a WTO agreement oncompetition policy to restrict domesticlaws and practices that favor local firms byarguing that this is inconsistent with freecompetition. Martin Khor writes,

“Ironically, competition policywas originally understood as a meansto help small companies not to beoverwhelmed by the big firms. But itis now sought to be used by the richcountries to help their giant corpora-tions compete with the local firms inthe developing countries.”xxxix

This proposed agreement on com-petition policy is a companion agree-ment to the one on investment. A 1999World Bank paper says: “To oversimpli-fy, trade officials from exporting coun-tries want to force competition officialsin importing countries to assist in open-ing markets.”xl

Another “new” issue is governmentprocurement. This means the procurementof products and services by governmentagencies for their own purposes - a signifi-cant chunk of many domestic economies.There is already a WTO plurilateral agree-ment on this issue which under 30 coun-tries have signed. Now the U.S. and E.U.seek a multilateral agreement on “trans-parency in government procurement”which all WTO members would have tosign, in order to give their corporations theright to capture the lucrative market in pro-viding supplies to and contracts for publicsector projects. As New Zealand invest-ment analyst Bill Rosenberg points out:

“‘Transparency’ may provide aprocess for transnationals to challengegovernment buying decisions on thegrounds that the processes used formaking purchases were not open andclear, or were not followed to the let-ter. This raises compliance costs andmakes the job of governments (includ-ing those of overstretched poornations and small local authorities)more difficult and more susceptible tocorporate pressures.”xli

The WTO, Globalization & War Lofty claims have been made about

the WTO’s contributions to world peace. “The WTO…is a system whose corepurpose – from its inception in the

Green Paper #4 Page 17

A lone protester defies riot police during the “Battle of Seattle”--the major protests against theWTO ministerial in November, 1999.

Photo: A . Foelsche

aftermath of at the end of the SecondWorld War – was the avoidance ofglobal conflict and the promotion ofpeace. Peace through rules, peacethrough international cooperation, andpeace through widening circles ofprosperity”, claimed Supachai, in aNovember 2002 speech.xlii

September 11 proved a boon for freetraders, their neoliberal agenda and theinstitutions which promote it, at a timewhen they were engulfed by a serious cri-sis of legitimacy and credibility, and withgrowing popular opposition to the WTO.Shortly after the attacks, just a few weeksbefore the Doha Ministerial, USTRZoellick wrote in a Washington Post articleentitled “Countering Terror with Trade”:

“America’s might and lightemanate from our political, militaryand economic vitality. Our counterof-fensive must advance U.S. leadershipacross all these fronts….Economicstrength – at home and abroad – is thefoundation of America’s hard and softpower.”xliii

Support for the “war on terror” wasquickly equated with support for neoliber-al globalization. The wordgames aboutterror and free trade continues. The secondday of the Cancún Ministerial falls on thesecond anniversary of 9/11.

As we have already seen, the U.S. andE.U. were able to use 9/11 to their advan-tage at Doha to bully countries which hadpreviously stood up against their trade andinvestment agenda. 9/11 was also used to

finally ram through Fast Track (now calledTrade Promotion Authority). This transfersalmost all trade negotiating power to theexecutive branch. Under Fast Track, theU.S. House and Senate have only 20 hoursto debate a lengthy, complex trade orinvestment agreement. Congress mustvote the entire agreement up or down withno room for amendments.

In a September 24, 2001 speech at theInstitute for International Economics,Zoellick had laid the groundwork for a newMcCarthyism aimed at global justiceactivists:

“Terrorists hate the ideas Americahas championed around the world. Itis inevitable that people will wonder ifthere are intellectual connections withothers who have turned to violence toattack international finance, globaliza-tion and the United States.”xliv

The criminalization of the global jus-tice movement started long before 9/11. InAugust 2000, the Canadian SecurityIntelligence Service released a report enti-tled “Anti-globalization - a SpreadingPhenomenon” which characterized theanti-globalization movement as a nationalsecurity threat.xlv In a May 10, 2001 state-ment to Congress on the threat of terrorismto the US, FBI Director Louis Freehdeclared:

“Anarchists and extreme socialistgroups – ... such as the Workers’World Party, Reclaim the Streets, andCarnival Against Capitalism – have aninternational presence and