Global Policy Forum

By Paul Harris

What a pleasure to see the World Trade Organization (WTO) talks crumble in Cancun! People all around the world are very confused about what is meant by the various trade agreements pimped by the WTO. We can all see that member nations still have tariffs and restrictions on some products or with some countries, but we are assured this is part of the "globalization" movement that is going to bring financial Nirvana to us all. In fact, it is far more likely to bring us Armageddon, so let's have a look at just what this is all about.

I am going to use the North American Free Trade Agreement (NAFTA) as an illustration because, in many ways, NAFTA is the template for a series of trade agreements signed internationally whose main goal has been the neutering of democratic government and the marginalization of all but the elite of the world. Ostensibly a trade deal, NAFTA is considerably more than that. In fact, and despite its name, it is not designed to be an agreement about free trade at all. It is, rather, an agreement to allow corporations to supersede the rights and powers of government. The governments which North Americans elect to represent their interests are now effectively hamstrung by NAFTA. Above all, it is an attempt to ensure that producers are able to access the cheapest possible labor pool.

The agreement subordinates the rights of the public and local government to transnational corporations. Consider a few examples of how this works and the power of NAFTA:

Metalclad Corp is a Delaware-based company that had decided it wanted to build a dump in Mexico, near Guadalcazar, in 1999. The company's management had determined this was the ideal location for the construction of a landfill site for toxic waste, but, to their annoyance, the town of Guadalcazar refused to grant them a permit to do so. Metalclad's response was to go after Guadalcazar and Mexico under the terms of NAFTA. Remember, this is much more than just a trade deal. NAFTA enshrines a bevy of legal rights for corporations and corporate investors far beyond the rights of mere citizens or even nations. Those rights include an entitlement to compensation if the actions of a foreign government interfere with a corporation's ability to realize profits. In the end, Guadalcazar's efforts to protect the health and well-being of its citizens resulted in Metalclad receiving $16.7 million (U.S.) as compensation, awarded by a NAFTA tribunal.

A Canadian company called Methanex is suing the United States for $1.3 billion. Methanex produces a substance which is a component of another product known as MTBE, an additive to gasoline. The state of California considers that MTBE entering the water supply is a health hazard; the jury is still out on whether MTBE is lethal but it does, at least, cause water to smell foul and to taste somewhat like turpentine. Naturally, most Californians are unwilling to drink it so the state government banned its use, as did more than a dozen other states. But rather than the people of California and those other states being considered the potential victims of this chemical brew, it is the manufacturers of MTBE and its components, including Methanex, who can claim to be the victims under the protections guaranteed by NAFTA. Their lost profit entitles them to an award by a NAFTA tribunal.

Interestingly, neither Canadian nor American law allows for compensation to corporations when government regulations aimed at protecting people result in reduced profits for said corporations. But NAFTA does, and NAFTA takes precedence.

Similarly, Canada had planned to ban another fuel additive known as MMT when its U.S. manufacturer, Ethyl Corporation, filed a $350 million lawsuit against Canada. Although Canada's scientific community is concerned about health and environmental risks from this additive, the government is more concerned about the $350 million because they know they will lose at a NAFTA hearing. They have decided to retain the money, cross their fingers, and hope that the health and environmental losses are minimal.

The government of Canada had recognized the inherent dangers demonstrated in such examples and had approached the other partners about shoring up the agreement since it seemed obvious that this is not what was intended. However, they quickly retreated in early 2001 when the incoming Bush administration mounted heavy resistance to any such clarification or amendment. Any illusions about the Bush administration having some focus other than corporate control of America, and the world if possible, were quickly and soundly dissipated.

Canada Post Corporation is the national postal service in Canada. In the delivery of basic mail service, it enjoys a monopoly. Originally an adjunct of government, it became an independent corporation several years ago and is self-funding. It also provides a courier service for parcels and express post which puts it into direct competition with organizations such as Federal Express and United Parcel Services (UPS). Because Canada Post is the sole service provider for domestic and business mail in Canada, it can operate its parcel service at lower cost than its competitors since it does not need to maintain separate facilities, address databases, and so on. UPS thinks that isn't fair and has launched suit. Under the rules of NAFTA, they can sue Canada Post for loss of potential profits because they can make the argument that Canada supports a monopolistic service which unfairly prevents UPS from successfully competing in the Canadian market. This time, the NAFTA law suit is $230 million.

The fear for all three signatories to the agreement ought to be that they will be unable to administer social programs or even such things as municipal services on behalf of their populations without fear of litigation by some aggrieved party. The Canada Post-UPS case in particular raises the question of whether public programs will be seen as interference in the profit-making efforts of foreign corporations. For instance, will American healthcare providers choose to sue Canada because its hospitals are publicly owned and, therefore, unfairly stacked against corporations who want to earn a profit? Will prisons operated by Mexico be sued because some private enterprise claims they unfairly restrict trade in housing offenders? Will the Toronto Transit Commission or Chicago's "El" find itself in court over their monopoly control of public transportation? The possibilities are legion.

NAFTA is all about free and open trade but the reasonable questions have to be: open for whom? and open for what? The answers are perhaps best provided by U.S. Secretary of State Colin Powell. While speaking of another agreement that is currently gleaming in the eyes of the corporatists, he said: "Our objective with FTAA is to guarantee North American companies the control of a territory that goes from the Arctic Pole all the way to Antarctica, free access to the whole hemisphere without difficulties or obstacles for our products, services, technology, and capital." Notwithstanding that North and South America are either in different hemispheres (north and south) or form only a part of the western hemisphere, his point is clear. And although Powell was specifically addressing the proposed Free Trade Area of the Americas, NAFTA is just that on a more modest scale.

NAFTA has achieved what NAFTA was intended to achieve. It is the realization of the dream of the corporatists that free-market capitalism should rule the world. Although there was a time when it was considered indecent to earn more than a reasonable profit, today, mega-profits are an absolute requirement of business. With scarcity as the primary need for capitalism's functionality, business has set about ensuring that scarcity exists, largely in the Third World. Agreements such as NAFTA help business ensure that government stays out of the way of those plans. This will result in the reduction and eventual elimination of government as the voice and representative of the people.

With NAFTA as the template for similar trade agreements world-wide, it is no wonder there is sizable opposition whenever the WTO meets publicly. The anti-globalization movement may be full of rabble-rousers but whatever reasons have drawn them to this issue, they have correctly understood the perilous world-redefining changes being wrought by these various trade agreements.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C íŸ 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.