Global Policy Forum

The Hidden Tentacles of the World's Most Secret Body

Sunday Independent (London)
July 17, 1999

Behind the imposing entrance of a grand 1920s building on the shores of Lake Geneva lies what is probably the most powerful organisation on Earth. Far more potent than any government, its decisions are already affecting our lives and unleashing international conflicts.

It can stop us choosing what we eat. It can strike down laws passed by even the strongest, democratic governments. It can start or sanction trade wars. And it can set at naught the provisions of international treaties which have been solemnly ratified by the world's nations.

It's not Nato, despite its victory in Kosovo. It's certainly not the weak and underfunded United Nations. It's not even the IMF, although it directs the economies of scores of countries. No, the building on the lakeside - set in fine gardens with a magnificent view of Mont Blanc - belongs to a much less well-known but much more powerful body, the World Trade Organisation (WTO).

This organisation, which sets the rules that govern how nations trade with each other, is about to become the centre of a gigantic battle for public opinion. This autumn it will begin a push, backed by many of the richest nations, to extend its powers even more. And some 700 organisations from 73 countries have sworn to stop it.

Ranging from big outfits such as Oxfam, Friends of the Earth and the Japanese Consumers' Union to small grassroots networks in the Third World, they have signed a joint declaration to "oppose any effort to expand the powers of the World Trade Organisation", saying that it has worked "to prise open markets for the benefit of transnational corporations at the expense of national economies, workers, farmers and other people".

Already the temperature is rising. Last week, the WTO ruled that the EU must drop an 11-year ban - imposed to safeguard health - on US beef treated with hormones. It authorised the Clinton Administration to penalise European goods until it does.

The row will come to a head on 29 November, when world trade ministers meet in Seattle. The EU, despite its experience last week, will be pressing for a new round of negotiations - called the Millennium Round - to give the WTO power over even more areas of world trade. It will be backed by Japan, Canada and, to a lesser extent, the US. The grassroots campaigners and some Third World governments, including India, Egypt, Malaysia and a coalition of African countries, will resist.

It was never supposed to be like this. The WTO is the inheritor of a 50-year push to promote free trade - a cause once as uncontroversial as freedom itself - to prevent a repeat of the unhappy era of beggar-your-neighbour protectionism between the wars. In eight rounds of talks since 1947, its predecessor - the General Agreement on Tariffs and Trade (Gatt) - gradually opened world markets. The Uruguay Round, completed in 1994, set up the WTO. It was charged with monitoring and enforcing the new rules and given unprecedented powers to make legally binding rulings on trade disputes between countries, and authorise retaliatory, punitive trade sanctions.

The way it has used these powers is leading to a growing suspicion that its initials should really stand for World Take Over. In a series of rulings it has struck down measures to help the world's poor, protect the environment, and safeguard health in the interests of private - usually American - companies.

"The WTO seems to be on a crusade to increase private profit at the expense of all other considerations, including the well-being and quality of life of the mass of the world's people," says Ronnie Hall, trade campaigner at Friends of the Earth International. "It seems to have a relentless drive to extend its power."

Environmentalists and health campaigners fear that after slapping down such diverse "impediments to free trade" as small Caribbean banana farmers, clean petrol, endangered turtles, and health precautions, it will now help the US government, Monsanto and other biotech companies make it impossible for people to refuse to eat genetically modified food.

The US and Canada have already officially complained to the WTO about the increasing measures in Britain and other European countries to label GM products. Even though these are only being brought in after much public disquiet and enshrine the principle of consumer choice, they may fall foul of the trade rules.

If they do, European governments will have to scrap the labels or face massive retaliatory action on wholly unconnected industries (targets for sanctions so far include jam and tea-makers, bed linen and handbags, cheese and motorcycles).

Enter a little-known, but immensely powerful body, the Codex Alimentarius Commission, a living embodiment of the effectiveness of the bureaucratic dodge of disguising the importance of an institution by giving it an obscure name.

Run by two UN bodies, the Food and Agriculture Organisation and the World Health Organisation, it is supposed to be used by governments to set food standards. In practice its assemblies and decision-making committees are packed with representatives of the food industry, who meet in secret to set rules to govern their own conduct. They are, unsurprisingly therefore, not very demanding.

The WTO makes the world observe these standards and no other. A democratically elected government cannot choose to set tougher ones to protect its people. If it tries, the WTO can rule the measures illegal and hit the country with punitive sanctions.

Environmentalists fear that the WTO will outlaw voluntary labelling, like the successful schemes to identify wood produced by ecologically friendly forestry. A Dutch timber labelling scheme has already been scrapped after a threat to take it to the WTO. Another target may be the increasingly popular "fair trade" initiatives, which identify tea, coffee and other products produced in ways that benefit the world's poor.

All this, protests the WTO, is in the interests of "deregulation". But it is also forcing developing countries to introduce rules which could enable multinationals to patent foods and natural medicines that their people have used for centuries: one US company has "patented" basmati rice. Poor people may thus be forced to pay for products they have traditionally used.

The WTO and its supporters - trade ministers of the wealthiest countries - insist this liberalisation will benefit the poor. It is not working out like that. Under the trade rules, for example, the Philippines is importing American corn that is far cheaper than its local equivalent. As a result, says Oxfam, half a million poor Filipino farmers risk losing their livelihoods. And, it adds, the subsidy to each American farmer, at $29,000 (#17,000) a year, is 100 times higher than the Filipino growers' entire average income.

Aren't such subsidies an impediment to free trade? The WTO seems to have a selective view. While Third World countries are forbidden to subsidise their crops, Western nations quintupled their agricultural subsidies from $47bn to $247bn in the first four years of the WTO's existence.

The biggest winners of the Uruguay Round, studies show, are the EU, US, Canada and China, while African countries lose out. Kevin Watkins of Oxfam points out that the poorest countries' share of world trade has shrunk.

In Seattle objectors will be demanding that the WTO puts its house in order. They can draw on the success of two of the most successful recent grassroots campaigns - against GM foods and for the cancellation of poor country debt. But the little-known lakeshore institution remains their toughest target yet.

The Attack on the Poor

For more than 20 years the EU has helped small West Indian banana growers scratch a living by favouring imports of their fruit. As farmers of poor soils on steep hillsides, they cannot compete with cheaper fruit grown on giant estates in Latin America by big US companies such as Chiquita. The EU scheme gives them a chance, while not doing much to affect world trade. Although the fruit makes up 60 per cent of the islands' exports, it only accounts for three per cent of world trade. Despite its pro-Caribbean stance, Europe still buys nine out of 10 of its bananas from the big US firms.

Three years ago the Clinton Administration complained to the WTO that the EU scheme was unfair - even though the US has never exported a single banana. The complaint closely followed a $500,000 donation from Chiquita to the Democratic Party. The WTO upheld the complaint, ordered the EU to stop its help, and authorised the US to start a trade war by penalising imports of a host of European goods - from Italian handbags to British bath salts - with $191.4m (#112m) in trade sanctions. The EU backed down. Experts expect the unemployed farmers to switch to growing cocoa and marijuana for smuggling into the US.

The Attack on Health

The US meat industry feeds cattle with hormones to make them grow and fatten faster. The EU stops its farmers from using the hormones and has long banned the import of meat from cattle given them, fearing that they could cause breast and colon cancer.

In 1995 the Codex Alimentarius Commission narrowly voted to adopt food standards that allowed the presence of the hormones in meat. The next year the US, after lobbying from its agrochemical industry, complained to the WTO. It said that the EU was merely trying to protect its own meat industry; the EU cited its health concerns and pointed out that Europeans have made it clear they do not want to eat beef with hormones anyway.

The WTO ruled for the US. Last Monday - after the EU had still refused to lift the ban - it authorised the Clinton Administration to impose $116.4m (#65m) of trade sanctions on European goods including Roquefort cheese, chewing gum, raspberry jam and motorcycles.

Critics fear the US will enlist the WTO in the same way to force Europe to import genetically modified milk and foods, despite widespread public abhorrence.

The Attack on the Environment

Laws to safeguard the environment have fallen prey to free-trade rules. In its first ever case the WTO stopped the US cutting air pollution by cleaning up petrol, on the grounds that this would discriminate against producers of dirtier oil, such as Venezuela. This overruled a vote in the US Congress and forced the Administration to change its Clean Air Act.

The WTO stopped the US requiring nations from which it brought shrimps to bring in regulations to ensure that their boats did not catch critically endangered sea turtles. The US is trying to get it to stop the EU recycling components of electrical goods. And under similar free trade rules, the EU has taken Denmark to the European Court for bringing in laws to make bottles returnable.

Environmentalists fear that the WTO could strike down provisions in long-agreed treaties to protect the ozone layer, control the dumping of toxic wastes overseas, and to ban trade in endangered species. The WTO has not yet ruled on such a treaty, but this is only because it has not received a complaint about one. Ominously it has so far failed officially to recognise any of the treaties, and experts believe that it is only a matter of time before they are challenged.

More Information on the World Trade Organization

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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 § 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.