This video is my best find in months and I hope to persuade everyone to watch it.
http://www.iptv.org/video/detail.cfm/31 ... 081220_155 (requires MS Silverlight plug-in download)
Prior to the election in 2008, "recovering trade attorney" Lori Wallach lectured at Iowa State University and outlined what I will coin as the True World Order (The TWO!) of the IMF, WTO, World Bank, NAFTA and other globalization authorities. (No satanic magic required, just capitalism.) Since the crises of the 1970s the transnational corporations and financial capital have commandeered the offices of the powerful states led by the US to impose, through obscure and voluminous "trade agreements" mostly unrelated to trade, a neoliberal policy wish-list on almost all of the world's countries. The system intensifies labor exploitation and suppression, overturns national legal codes, accelerates and practically requires all the familiar economic and ecological disasters, and reduces nations to little more than servile bidders for capital. The point is not only to maximize profit but in effect to require states to guarantee and insure it. In just one hour Wallach reviews the history, structure of the system, global impacts, many typical cases of WTO and NAFTA rulings, and examples of successful resistance. (I was pleased to recall the protests that stopped MAI back in the 1990s.)
The video aired on Iowa PBS in Dec. 2008. I found a transcript in a single block-paragraph, so I edited it to add paragraphs and correct some obvious mistakes. Unfortunately it doesn't contain the slides and I don't feel like capturing them off the video. So watch.
Check out the paragraph I bolded at the start for something that I hadn't known. The Citibank-Travellers merger of 1998, in violation of US law, prompted the Rubin-Summers Brigade to lead the charge for a repeal of the Glass-Steagal Act limits requiring separation of commercial banking from insurance and investment banking. In effect, this was a retroactive legalization of the merger, and made the financial scams and bubbles of the 2000s possible. But WTO rules negotiated not by Congress but by trade envoys had already required a repeal of the limits, so it's possible that this is what prompted Citibank to go ahead with the merger in advance of its actually being legal in the US.
Intelligent Talk #155
Alternatives to Economic Globalization
Original Air Date: December 20, 2008
Iowa Public Television
Funding for this program was provided by Friends of Iowa Public Television, the Iowa Public Television Foundation, generations of families and friends who feel passionate about Iowa Public Television programs.
“The U.S., under one of its commitments under that part of WTO, actually agreed to deregulate our financial service sector, including explicitly committing to getting rid of the Glass-Steagall Act. That was the act that was put in place after the Great Depression to try and limit speculation. It used to forbid banks – bank holding companies from owning other financial services so if one thing went bad the whole sector wouldn’t go down the tubes.”
On October 21, 2008, Iowa State University hosted Lori Wallach, Director of Public Citizens Global Trade Watch, as part of their technology globalization and culture series. Ms. Wallach, an internationally recognized expert on globalization and trade, has been dubbed the trade debate’s guerrilla warrior. This is Intelligent Talk Television.
The subject of my talk is alternatives to corporate-led globalization. The task that I have undertaken as a recovering trade attorney is to try and translate out of gobbledygook, technical language what exactly are the instruments implementing the current set of globalization rules, given globalization really is a phenomenon that’s defined in our time. It’s going to affect and shape every student that’s here. It is affecting the lives of everyone from the food that we eat to our health to our economy and understanding exactly what is this thing globalization, which seems to mean a lot of things to a lot of different people, is important to understanding if the current model is working for most people, what the outcomes are and, if it’s not working, what are alternatives.
And so the place I’m going to start is really the structure of the current system, given there’s no way of escaping, whether you’re here or in Timbuktu, this phenomenon. Then it’s important for everyone to understand what exactly is this thing globalization. Then I’m going to talk about the outcomes under the current model, and then I’m going to talk about alternatives but also some of how the alternatives are being advocated for, not just here but around the world, including a lot of youth movements and student movements around the world.
[shows slide, one of many]
Don’t panic, this is the short part. I am, yes, going to talk about Bretton Woods. Bretton Woods was a meeting that was set up after World War II, and it was to be a progressive international set of rules for global economic governance. Believe it or not, it was the thing that was set up because sometimes you hear the GATT or WTO and you think, oh, must be conservative business interests. It was set up by the global – it was set up by the progressives of their time. And these institutions originally had very narrow specific pieces of business that were appropriate for the time.
The GATT, which was set up in 1947, general agreements on tariffs and trades, it was to set tariffs, the border tax which you charge on a good when it goes across the border, for trading goods. If you could not drop the thing on your foot, it was not covered by GATT – so it didn’t cover services, investment, finance – [only] physical stuff moving across borders. It also set up what are called quotas, which is the amount of stuff you can move. So, for instance, if your country was totally self-sustaining on wheat, you didn’t want to import wheat, you would have a quota of zero for wheat imports, versus if you grew nothing and you had to import all your food, you’d have a hundred percent open quota.
IMF, International Monetary Fund, it was originally set up to run the gold standard. All currencies used to trade for a particular weight in gold. Nixon took us off the gold standard. People that have taken economics classes know about that change in the ‘70s. But up until then the IMF literally had the job of figuring out how much each currency of each country was worth to a fixed gold standard. It also did short-term trade loans. So practically, when you are exporting something, if you ship something overseas in the time it leaves your country, before it goes to your country to actually be received, someone has to finance the float. So after World War II to get trade going again, the IMF took on that role instead of just private banks.
World Bank was originally set up very narrowly to come up with the money to rebuild Europe and Japan after World War II. So that was the original vision of it, and it stayed that way until the ‘70s. In the ‘70s, well, Europe and Japan were reconstructed. What was maybe the mission of the World Bank now? Well, instead of shutting down and saying, alleluia, we fixed it, they had mission creep. It got bigger and different. So did the IMF. They had what we called charter changes, and they got into the business of making long-term loans to developing countries, and they would set conditions on those countries, which are called structural adjustment programs – it’s a contract you sign – and the country was required to restructure its domestic laws, economics but other laws, its budgeting laws, its education laws, construction procurement rules in order to focus on being able to pay back the loan.
Now, if you’re running a poor country and it’s a democracy, you may not decide that the most important thing to organize your country around is paying this organization in Washington, D.C., hard currency on your debt. You might think it’s better to invest in schools or health care, roads, and develop your industry. The IMF and the World Bank started making these loans and requiring countries to adopt a particular package of policies. Sometimes that package of policies is called the Washington Consensus. Other times it’s called the Neoliberal Model. I’m going to outline what the package was, but for developing countries, that model through the IMF and the World Bank was imposed in the ‘70s as a condition to loans.
The GATT was what still covered the rich countries. But the WTO, starting in 1995, replaced the GATT, the World Trade Organization. The GATT became 1 of 17 agreements the WTO would enforce. The World Trade Organization is not a trade agreement, even though it’s called the World Trade Organization. This is sort of the punch line of the whole lesson here, which is, ladies and gentlemen, though you did not elect them, the World Trade Organization is actually a form of global governance that extends way beyond trade, and these rules are rules that affect everything. In a little while I’m going to talk about actually how the WTO sets rules on higher education services, which translates out to your university and whether the state can fund it and who else needs to get the money and what the qualifications for professors and degrees are, which you might wonder what the heck is the so-called trade agency in Geneva talking about that kind of stuff going on in Iowa. I’m going to give you a preview of coming attractions.
So, the WTO enforces 17 agreements and only GATT really is about trade one hundred percent. These other agreements really need to be seen as structures of international governance. And the sad story is that the U.S. played a huge role in negotiating the rules. And in the U.S. there were 500 business interests particularly corporations, some foreign ones who operate in the U.S., who got to actually decide a lot of these rules. And at the time with those 500 corporate advisors – it’s through a system called the Intergovernmental trade advisory system – there were 14 labor union representatives, zero consumers, zero environment, zero faith, zero human rights. So not surprisingly these rules represent a pretty lopsided business interest. And, you know, you want the business interest in there, just not only.
So these agreements, they don’t cover trade, but they often say trade. The general agreement in trade and services, GATS as compared to GATT, that covers every way a service can be delivered or regulated. This is where education comes in. So, under GATS, countries agree that they will treat not only trade and services – so if you go overseas for a semester in Gatsies – that is mode to exchange of students to occupy a service overseas. But also how a foreign service provider here in Iowa can be regulated is constrained by that agreement. So believe it or not, just an example, the U.S. made commitments for retail services with no limitations, which means that for everyone who has ever been in one of the Wal-Marts in downtown big marketing fights about whether or not a huge Super Wal-Mart can set up and wipe out downtown, if it were a foreign company, for instance, any of the foreign chains that are also big megastores, the U.S. gave up the right to have zoning restrictions about a mega retailer if it’s foreign owned. Now again, you would say what’s the trade part of that? That has nothing to do with anything going across borders. That’s a domestic regulatory issue about local land use and development. It’s bound under the GATS. So is a set of rules about privatizing and deregulating various services.
So as I’m going to describe in a second, the U.S. as one of its commitments under that part of WTO actually agreed to deregulate our financial service sector, including explicitly committing to getting rid of the Glass-Steagall Act. That was the act that was put in place after the Great Depression to try and limit speculation. It used to forbid banks – bank holding companies from owning other financial services so if one thing went bad, the whole sector wouldn’t go down the tubes. As a WTO obligation, the U.S. revoked that. It’s actually in our schedule of commitments.
Again, it has nothing to do with trade. It has to do with now services are regulated in the U.S. so that agreement implements an – about deregulation and privatization of services unrelated to trade. The sanitary and phytosanitary agreement, SPS, sets limits on food inspection. Since NAFTA and WTO, the amount of imported food has increased 70%. But under that agreement, we’re limited from inspecting it at the border. We can only inspect imported food at the same rate we inspect, at the final moment, U.S. food. Given the U.S. inspection system has lots of stops along the way, what pesticide you can use, field inspection, water testing, our final checks are a small percentage at the end of a system. But on imports, even if a country has no regulatory system, we can only do that level of inspection, thanks to these rules. So all of these issues about, for instance, most recently melamine in milk products from China, but it’s been issue after issue with imports, is related to that agreement.
TRIPS agreement, trade related intellectual property. It sounds perverse but this agreement actually sets monopolies. It isn’t a free trade agreement. It is a set of rules that sets monopoly patents terms, and it includes patents on drugs, seeds, life forms. It also had copyright. So this is the issue under which trade and textbooks actually is regulated internationally. A lot of countries didn’t have patenting of medicine, seeds, or life forms. The U.S. had 17-year monopoly patents. The TRIPS agreement required that the U.S. extend patents on all drugs to twenty years. That costs a lot of money, as we’re going to see.
When you ever have “trade related” in front of an agreement, it means it has absolutely nothing to do with trade. That’s a WTO clue. So any agreement that starts with trade means this shouldn’t really be in the agreement. Like TRIMS, Trade Related Investment Measures. That is a set of rules about how governments can regulate investment in foreign investors. So if folks remember from a couple years ago the whole Dubai world port issue, the question about whether or not a foreign company could run land side dock activities in a U.S. port, it’s a TRIMS issue.
And then finally just as an example, because I promise I won’t get into the weeds any further, the agreement on government procurements. It actually has WTO rules setting how we can spend our tax dollars. So we are only allowed to set out specifications that have to do with the ability of a company to actually fulfill a contract. That is to say all of the work folks, like I did in school when I was your age during the ‘80s, to try and get divestment of our state where I was in school, Massachusetts, to not do business with companies in South Africa, forbidden by the AGP. Anyone here who works in the Burma campaigns, the Burma human rights campaigns? A lot of states have tried to use that tool. Massachusetts tried to implement a procurement ban just like South Africa and Burma, and the WTO actually had a case about this; you’re not allowed to do this anymore. As well under that rule, you’re not allowed to give preference to local.
So for anyone who is a student in agriculture, you know the recent farm bill actually nationalized something a lot of states do, which is preferences for local farmers to fulfill contracts for education systems, institutions like prisons, et cetera. That’s actually a violation of the agreement in government procurement, and we have a bet going about what country is going to challenge that part of the farm bill first under the WTO. [I don’t know if this has happened since – Ed.]
So you have this comprehensive system that has nothing to do with trade. And then in NAFTA, you have everything that’s in WTO but it’s even more intense. So there are even more investor rights or the service sector privatization rules cover everything unless you argued out an exception for it. Some people call NAFTA “WTO on steroids,” because with the WTO, the U.S. was the main pusher of this. These U.S. companies had a large role in it and the U.S. government. It started, by the way, the WTO negotiations under Reagan and was completed under Daddy Bush, and that whole process then had pushed back because there was a European Union, there were big democracies developed in countries like India. But with NAFTA, it was basically the U.S. more dictating the negotiating because the power dynamic with the NAFTA countries, Mexico and Canada, was not as balanced. So NAFTA is even more of the delivery mechanism of the agenda I was describing in WTO.
And since NAFTA, the U.S. has done free trade agreements based on NAFTA with all of those countries: Australia, Bahrain, Chile, Singapore, Morocco, Oman, The Central America Free Trade Agreement, which is those countries: Guatemala, Costa Rica, Honduras, Nicaragua, El Salvador, and the Dominican Republic and Peru. There are agreements with Jordan and Israel, but are not real NAFTA style agreements. They’re little dinky things.
WTO, NAFTA, and the agreements on the left are all about 900 pages of nontrade rules. The tariff schedules are the big ones, like WTO and NAFTA, are my height when you print them out and put them on the floor and stack up the actual trade part. And it’s just how much do you charge for number 3 undies when they cross the border, but then there’s number 4 undies which have a different tariff rate as compared to number 7 undies, and then they’re totally different if they’re men and women’s. So, those are actual tariff schedules.
The nontariff part is bigger than the New York City phone book and those are rules of global governance. Colombia, Panama and Korea are three agreements that are NAFTA style agreements that the Bush administration negotiated and Congress has said no. To some degree the outcomes of the first set of agreements has had Congress starting to rethink that model.
And then on the right in the red – and this is another preview of coming attractions – those are all the attempts to expand the NAFTA model that actually have been defeated or rejected by countries written by – so the multilateral agreement on investment – and one of the folks here tonight actually just brought me pictures from a protest from 1997 that he happened to have from home, having been in Paris that day when we were doing a protest, against that particular MAI. It was NAFTA, basically, for all the developed countries, and it was defeated through citizen activism around the world, Canadian, French student groups, and some very smart people in the developing world who put us onto it and basically helped organize that.
Free trade agreements with Malaysia, the Southern African Customs Union, which would have been South Africa, Botswana, et cetera, Thailand, Egypt. AFTA was Bolivia, Ecuador, Peru and Columbia. And the FTAA, which was All NAFTA for the entirety of the Americas, all the Caribbeans, all the Americas except for Cuba. So as they used to say, NAFTA, from the Arctic to the Antarctic, totally boxed and buried. People say it’s in a deep coma. I actually think it’s probably worth burial. All of these things have basically been derailed either because certain countries, in the case of FTA, Brazil, but also a lot of activism in the Caribbean, looked at what had happened under NAFTA to Mexico and basically said not sure that actually we want to sign up for that package. Same thing happened with South Africa, et cetera.
And you can think of the practicalities of it. I mean, for instance, in Malaysia and in South Africa, one of the ways that racial tensions are resolved is by procurement policies that explicitly divide government revenues by group. It’s basically an affirmative action procurement program in South Africa. And in Malaysia, it’s to make sure that the population is getting a share of the business, totally forbidden under the procurement agreement of these agreements. Well, those are fundamental governance instruments that have to do with local tax dollar distribution. And when they were all told if they signed up to those agreements, they couldn’t do it, they said no thanks.
The way to think of all of these agreements, NAFTA, WTO, the FTAS is really as a delivery mechanism, a delivery mechanism for a model of neoliberal policies, most of which don’t have a lot to do with trade. The reason why that is particularly sort of relevant to think about, as I’m about to turn to what the outcomes have been, which then begs the question of what you do to fix it. And so what the actual policies are, are worth summarizing after giving you a picture of what the instruments are. So what are those instruments delivering?
Privatizing deregulating services – and I see a typo – financial services, water, healthcare and education; cutting, weakening or harmonizing, which just means globally standardizing regulatory standards for food, environment, worker safety, toxic et cetera; establishing some new property rights, so the new intellectual property right. A lot of countries, for instance, didn’t allow patenting, monopoly patenting of medicines. The U.S. didn’t allow monopoly patents in medicines until the 1950s, just FYI. No developing country has ever been able to develop with monopoly patenting in places as a developing country. And then commodifying commons, turning things that we think of as in the commons, not known by anyone, into tradable commodities. So in some instances that’s in the services agreements where, for instance, something that we would think of as a right, like education or in Canada health care – we probably should think of it as a right here too – is turned into a tradable for-profit commodity. Or biodiversity, the agreement requires countries to set up patenting of life forms. So for countries that have an ethical or other issue with basically setting up patents of species or human cells, it’s required. [Human gene patents have actually been overturned by the Obama admin. – Ed.]
Deregulation on foreign investment. You can’t limit foreign ownership. That was explained with the Dubai ports world issue. But also, you can’t have preapproval. So the U.S., until these agreements, to say nothing of the developing countries, would decide what was in the interest of the U.S. to have for foreign investment. And developing countries always set conditions on what a foreign investor has to do. So if you want to come in and invest in that country and you’re going to create a power plant next to your textile plant, then you also have to have the power plant have enough capacity to also light up the town where the workers are or you have to help build a school next to whatever it is you’re going to do. It’s the conditions to help make sure that investment from a foreign company actually had broad benefit. And in finance liberalization, NAFTA in all those agreements explicitly forbid currency controls. So when there is a financial emergency, you’re not allowed to freeze your currencies.
That is one of the reasons Malaysia wouldn’t sign up. Folks might remember in 1997, the last big global financial crisis was in Asia. And Malaysia is the only country that came out of it relatively unscathed, and it’s because they froze their currency exchange, they froze cashing in certain investments, and they waited for it to blow over for a couple of months. That’s explicitly – those measures are explicitly forbidden. Governments are basically handcuffed from doing it. And then there’s deregulation of the banking sector.
Sort of the key thing about this is that you really have to think of it as a governance system. This is the challenge of globalization. These are agreements that have been packaged as trade. It’s a brand, free trade. And who’s not for free trade, right? It sounds great. But it’s like a Trojan horse, which is under that brand, that whole other agenda I’ve been describing, which is just one version of politics and global governance, has been attached and rode through parliaments all over the world. So the U.S. domestically was experimenting during Reagan and Daddy Bush with this radical deregulation of financial services. It proved to be a bad idea.
But then we used these instruments to export that model to the whole world, so everyone had to sign up. The way it works is the binding rules of WTO are each member shall ensure the conformity of its domestic laws, regulations, and administrative procedures with the attached agreement. What that means is all of your existing laws need to be changed to conform with the WTI, and all of those nontrade rules. NAFTA has a similar clause, as does CAFTA, AFTA, and all the other ones. And then, if you have a new law in the future, it has to stay one of the parameters set.
So actually neighboring Nebraska, a rancher at one point when I was talking about this said to me, so let me just see if I get this straight. Our Congress actually voted to approve a high-voltage electric cattle fence around the capitol, and if they have an idea that’s on the other side of the fence and is called WTO, they get zapped, and they’re told to go back inside the fence, that these guys who elected who are the Congress are told in what parameter they’re allowed to walk around, by – like, who elected them, the WTO?
That’s not an inaccurate description because every country is subject to dispute resolution. Unlike other international agreements like the International Labor Organization conventions or the Multi-Action environmental agreements, these agreements, WTO, NAFTA, et cetera, are actually enforceable. They’re self-enforcing in that they have built in dispute resolution tribunals. So if any one country thinks another country who signed up hasn’t conformed to all of its laws existing in future to these constraints in all of these nontrade areas, then the country is challenged in a built-in tribunal.
The tribunals do not have any of the rules of due process. I used to call them kangaroo courts, until I went to Australia and was told this was an insult to all marsupials. They are worse than kangaroo courts. There are no evidentiary rules. There is no outside appeal once these tribunals at the WTO and NAFTA rule. You just have to comply. And if you don’t change your domestic law that this panel will rule is against the trade agreement rules, you have trade sanctions put up against your country until you conform, so indefinite trade sanctions. So it’s something like every country has numerous choices. Change your law; perpetual trade sanctions. Take your pick.
[SLIDE SHOWS QUOTE]
The problem is that every now and then someone tells honestly what’s going on. That’s the quote of the first head of the WTO, who admitted that what they’re actually up to was writing the Constitution for a single global economy, not a trade agreement, not even a financial agreement, but a governance system. Now, when I first saw that quote, it was kind of – I’d been following the details – I’d been deep in the details of the agreement. When I looked at that, I said now I know why I’m so peeved. I didn’t get to vote for this, but it’s totally changing everything about what my day-to-day life is going to be like and this guy sort of fessed up and made it clear.
Now, this system has been in effect for WTO since 1995, for NAFTA in 1994. The free trade agreements that came after came sequentially. They’re all smaller. NAFTA and WTO are really the biggies. And we now have a record of how that system of global governance has actually performed. It’s worth [considering the] record. I always start by saying there are some upsides to this. Among the upsides of this system is that scholars and activists from around the world have had to work with each other to understand what this is, how it affects each of our countries and our constituencies, and have learned an enormous amount. This is the upside of globalization, not this version of corporate globalization but globalization in the generic sense is there’s a lot of diversity and a lot to be learned and shared.
Unfortunately, what we ended up learning was that that package of policies that were delivered through the IMF and the World Bank on the developing countries in the ‘70s is more or less what NAFTA and WTO did for the rich countries, WTO for the whole world, Canada and the U.S. under NAFTA. So as one of my Malaysian coalition partners famously said at the eve of the WTO being signed – we were all sort of packed into an apartment in Paris trying to figure out what last thing we could do to get them to renegotiate parts of it. He said, well, if this goes through, you’re all going to understand what structural adjustment is and not just by studying what happened in Africa, because it’s the same model and now it’s going to be imposed on you.
So it’s been about fifteen years of that experiment, and there are a lot of economic sets of data that you can look at, but the measure that usually is tossed around is the growth in volume of trade. As I’ve demonstrated, trade is the tiniest little bit of it, the little GAD is it. I mean before even the WTO went into effect, the U.S. average tariff was three percent. So the normal trade stuff, the notion of protectionism, taxes on the border, it was already done. That negotiation had happened from 1947 until the GATT turned into the WTO, which is why in the whole political discourse now, as you listen to the presidential campaign, one candidate is accusing the other candidate of being a protectionist. You scratch your head and say, that era actually more or less ended. These agreements are about nontrade policies. We’ve all sort of agreed that we’re not going to have tariffs, and in most countries there aren’t tariffs. There’s some countries that are exceptions, and we’re going to talk about some of those. But if you measure it by growth and trade, volume and trade, you miss what these agreements are mainly about.
When you look at it as far as human effect, you get a really different data set. I’m going to talk both about the economics, but I’m also going to talk about some of the social indicators, because that is actually what we also need to be looking at, because some of the phenomena that happened besides growing inequality and downward pressure on U.S. wages is that actually huge array of domestic regulatory policies have either gotten sacked in WTO or NAFTA tribunals or the pressure of the threat of a challenge has chilled innovations or just gotten countries to dump things on their way to implementing these agreements.
So in the U.S., this just gives you a snapshot of some of the things that have happened. U.S. drug prices went up over $6 billion because of the WTO requirement we changed from a 17 year to a 20 year monopoly patent. So those were just for the drugs that were under patent when the WTO went into effect, so the number total is much, much bigger. It’s three extra years for every drug that’s been put on patent since 1995. That’s a University of Minnesota pharmacology study.
$65 billion in food is now imported, which is double the value imported before NAFTA and WTO. Now, I put that actual fact in because I was coming to Iowa. When I’m talking some place that doesn’t have farms I don’t typically put that particular data point in, but I sure keep the second one, which is that under WTO, we’re now required to import meat and poultry that doesn’t meet our standards and we’re limited on how we can do border inspection. So literally the implementing act, the thing that created the WTO, the thing that Congress voted on in 1994 in its gazillion pages to ensure conformity of all U.S. laws, revoked the rules on our longstanding meat and poultry inspection rules – laws, the U.S. laws, that said nothing can be imported unless it meets U.S. standards. It didn’t discriminate. It just meant imports had to meet the same standards. And the WTO required that that be waived. That was considered an illegal trade barrier. And anything that the exporting country deems equivalent, a word not defined, must be accepted. And it’s also a violation if we don’t put a USDA grading sticker on it. So you don’t know where it’s from. It gets a USDA stamp. It doesn’t meet USDA standards. And under WTO, we literally changed our laws to conform to that. Bon appétit. Toy recalls soaring.
Now, again, we’ve seen a huge shift in manufacturing. Some of that has to do with investment rules in these agreements. Some of that’s beyond what these agreements do. But the difference is under these agreements, just like the food inspection rule, we’re limited on how much we can inspect imports at the border and we’re explicitly forbidden from discriminating against specific countries that have problems. So, you know, if you’re an inspector and you’ve got limited resources, what you would end up doing is thinking where am I having problems with lead in toys. Turns out mainly it’s been China. Part of that is because a lot of production is there. So then you would say, I’m going to inspect the toys coming from China that have paint on them at a higher rate. It’s more efficient. I don’t really have to worry about playing cards coming from Sweden, say, not painted, coming from a country that hasn’t had a problem. Or Thailand has a really good set of rules on dyes. I don’t know why but that’s true. Don’t have to look at the stuff from Thailand, but this country has a problem. WTO rules forbid you from selecting inspection that way even though it would be the logical, effective way to do it. So as a result, a tiny percentage of both meat and other products gets inspected since WTO and NAFTA. The numbers are actually horrifying. For food in the U.S., it’s now less than three percent. It wasn’t great before NAFTA and WTO – it was only about 25% -- but it’s scary.
And then you have the radical deregulation of financial services. I always put that in the slide because most people won’t believe me that actually it was a WTO commitment that got rid of Glass-Steagall. Most people say, yeah, and I bet you blame ingrown toenails on the WTO too. Well, no, actually, ladies and gentlemen, in the U.S. supplement, three of GATT’s commitments, paper two, actually page four, because I was looking at it last night, there was a specific commitment to dump the major firewall that was put in after the Great Depression to avoid speculation. It was implemented shortly after the WTO in a supplemental bill.
WTO attacks against domestic laws have resulted in a huge array of laws getting sacked. I listed some of the ones that particularly annoy me. The first one is the U.S. Marine Mammal Protection Act. So that dolphin in your tuna fish can, that no longer means that it’s dolphin safe. U.S. Clean Air Act regs on and gasoline cleanliness were sacked by WTO in 1998. We weakened those laws. Those are the Clean Air Act regs that were trying to stop the asthma epidemics in urban areas. We weakened the laws. U.S. Endangered Species Act regulations on sea turtles being caught in shrimp nets, we weakened those laws. That one was challenged in about 2001. Japan, Australia both had invasive species protections. Again, I put that in there because I’m coming here to a place where people know something about invasive species and farms. The U.S. has actually weakened one of our, FIDO sanitary is the technical term for it, anti-critter, anti-bug invasive species rule, because of a threat of WTO action. So anyone who has done any work on the Asian longhorn beetle, the thing that eats U.S. maple trees, that basically all of these farms fringe – maple trees are having to get chipped down and burned, that’s that case.
The U.S. has challenged successfully the European Union system of labeling and segregating GMOs. That’s an ongoing fight. The EU keeps changing the law, and the U.S. keeps saying it’s not enough. The Canadian cultural diversity policies that had to do with a magazine distribution system, that’s a services case, a GATS case.
And then one of my personal favorites, the WTO rule that the U.S. isn’t allowed to ban Internet gambling. Where’s the trade in that, ladies and gentlemen! The trick to it was, in that GATS agreement I mentioned, you list different things that you commit to have to meet the rules, and the U.S., which has the biggest, smartest negotiating team in the world – some African countries have one person in Geneva for all the agencies including WTO. The U.S. accidentally listed a thing called other recreational services, and one of those WTO tribunals of which there is no due process and no outside appeals decided that included gambling. So not only are we not allowed to ban Internet gambling, but all of the state monopoly lotteries that are used for education financing and road building are technical violations, and Europe has just sent papers in two weeks ago, threatened to challenge those, so we have to get rid of those. All of the Indian gaming compacts that states have, which are considered exclusive supplier arrangements in technical terms, totally forbidden. The whole gambling sector is covered.
So again, what do any of those things actually have to do with trade? At WTO the plaintiff always wins. If you bring a case, the rules are so lopsided and the panels are so lopsided that basically every country ends up being forced to conform its law. If you look, I cut it down as developing countries, U.S., et cetera, to show it’s pretty uniform. And ironically, given the U.S. pushed the WTO, the U.S. loses slightly more cases on average than everyone else and is not able to succeed when they’re prosecuted slightly more often than everyone else, which is just an irony given this was the U.S. idea. Because so many of the cases go against the country, at this point you only have to threaten. These are just some of the examples.
The Gerber case is my own personal makes-me-crazy-made pet peeve. The U.S. State Department on behalf of Gerber baby food wrote a letter to Guatemala that said under the WTO’s rules on patents, copyrights, and trademarks, your trademark of the fat baby face, your ban on the fat baby – Guatemala had banned the fat baby face trademark – is a violation of WTO. So why had Guatemala said to Gerber you can’t put the fat baby face on the formula? Because under the so-called UNICEF code – sometimes it’s called the Nestles’ code. This was the U.N. treaty against the false marketing of formula, breast milk substitutes, that was put into place in the ‘80s after an epidemic of child deaths in the developing world, because the formula companies would go into poor countries and try and trick mothers in villages to starting to use the formula to convince them it’s better than breast milk. But of course, number one, once you use formula for a while, your milk dries up, so you can’t nurse. So you’re not hooked on having to buy something you can’t afford. But if you’re in a place where there isn’t safe water and you mix the water with formula, you kill your baby. So there was this horrible, horrible phenomenon. So there was a global push, led by the faith community actually, to get this treaty. And Guatemala, among 80 other developing countries, adopted it. And one of the things it required was plain packaging. You can’t represent, like, by depiction of a fat baby so that an illiterate woman might look at it and go, oh look, they’re going to tell me – this is going to make my baby fat, better than nursing. So plain packaging. Well, Gerber had the trademark on the fat Gerber baby face. It was a trademark but it was also a depiction of a fat baby. And as a result, things were either covered up with a sticker on the shelves in Guatemala. Or at some point there was an injunction where they were told label it plain or don’t sell it either. Every other company [country?] had complied. So the U.S. got a letter off to Guatemala. And I only know about this case – there are a lot more threats than we know about – because the Health Minister of Guatemala called and said, “I understand you’re a free trade attorney who actually knows WTO.” And I had gotten this – he said, “I’ve gotten this outrageous letter saying that we can’t implement the UNICEF treaty to save our most vulnerable citizens’ babies because of the WTO trademark rules.” Why does a trade have a trade market anyway. It’s not about trade. I said to him, “Yeah, it’s actually in there. We can probably do a big public campaign to help you, a guilt campaign, but legally it’s a serious problem.” Well, here’s a guy who’s one of the highest ranking officials in the country had no idea it was there. In the end Guatemala dumped the law. So now Gerber and everyone else is back with this deceptive packaging – or this packaging that could lead people to take choices that are worrisome for their baby’s health, to be more legal and precise about it.
And that was just a threat. There’s a whole set of other threats like that. Some of them are more than threats. The California recycled content rules, Governor Schwarzenegger vetoed a whole bunch of rules saying they violated the WTO agreement’s procurement rules. The human rights tools, I talked a little bit about that. In numerous states there have been attempts to do Burma and Nigeria resolutions, and they’ve been sacked by the State Department in a different preemptive move.
I said I would mention the globalization of education services, because perhaps the most direct implication of all of this, except for what you eat, is the education services proposal by the Bush administration, which is to submit higher education to the jurisdiction of the WTO. Currently the U.S. does not have higher education services covered under those WTO rules. So whereas, everything that is covered, the U.S. has a handcuff, the Congress, the state legislature as far as what they can do policy wise, right now higher education is outside those rules. But the Bush administration already four years ago offered to submit higher education to the WTO’s GATS rules as part of a WTO expansion called the DOHA round that’s on your way. What it would mean practically is that all the subsidies that other payments from the state would have to be available to for-profit private institutions, and particularly foreign incorporated ones, so everyone would get a foreign partner operating in your state. Professional qualifications would be subject to harmonization in a test called the least trade restrictive rule which, instead of thinking what is the most pro education rule, instead of the rule is what is the least affecting of international commerce.
NAFTA has a similar dispute system – by the way, punch line of the education thing, right now the WTO expansion is somewhat jammed and I’m about to turn to what can be done. Part of what can be done obviously is to push to get that and some other crazy things off the agenda and figure out how to fix the existing rules versus adding new sectors to be problematic rules. NAFTA has the same kind of dispute resolution, but then they also have an extra system in NAFTA that lets foreign corporations directly sue the government outside of U.S. courts at the U.N. – at the World Bank, actually. These are called investor state private enforcement. It literally has privatized the enforcement of an international agreement is basically this section. It’s in Chapter 11 of NAFTA. Of these cases so far, there has been about $30 billion in claims laid. So far only about $34.8 million have been paid out. Five times investors have won. And it’s crazy stuff.
So one of these cases – this is a list of a bunch of them. Metalclad versus Mexico, that was a case of a Mexican municipality basically telling a U.S. company that had bought a shut down toxic waste contaminated site from a Mexican firm for almost no money on the condition that they clean it up to get the operating permits back. Metalclad got $14 million out of Mexico in one of these NAFTA cases by saying, “Well, you can do that to a Mexican company. We’re a foreign investor under NAFTA. We have rights and you’re effectively taking our investment so you can either give us the permits and let us run it contaminated or you can pay us for our future lost profit.” And then NAFTA tribunal gave them the money.
Ethyl versus Canada has to do with a ban in a gasoline additive. In that case Canada had banned a gasoline additive that was banned in most U.S. states. It’s called MMT. Ethyl Corporation said – even though they couldn’t do anything in the U.S. about states doing it because it was NAFTA, they could go to Canada and say we’re a foreign investor, we’re a U.S. corporation, you have to pay us. So they got the ban reversed and got four million dollars. Loewen versus U.S. is actually an attack on a civil court judgment. Everything is on the table. Pope and Talbot is timber policy. Glamis Gold is a mining case that actually has to do with native lands protection. There’s an Indian tribe involved. All these issues – the Canada Cattlemen versus U.S. was a challenge which did get dismissed on technical grounds, thank God, but I keep it in there. It was a challenge for almost $2 billion about the temporary ban on import of Canadian cattle during the Mad Cow disease outbreak. Why wouldn’t we be allowed to do that? That was a very important thing to do. That case, thank God they had a mistake in jurisdiction.
Next topic here besides the issue of the laws getting sacked is the actual economics. One of the issues of the actual trade part of these agreements, not the nontrade part that we’ve just been touring is what’s actually happened vis-à-vis agriculture. So there’s been a huge increase in the volume of agriculture trade. And as part of that increase, interesting in the U.S., our exports have increased and that’s the only part you typically hear about in the Bush administration or the newspaper. But the story is that our imports, food coming in to the U.S., has increased much faster under WTO and NAFTA than our exports have increased. So as you can see, we have gone from a balance where we had a $23 billion surplus to less than half of that. And in 2005 we were actually a net food importer. Can you imagine that! We were importing more food, the United States of America, than we were exporting. That had not happened since 1959, and in ’59 it was a weather catastrophe. It was not a trade agreement catastrophe.
At the same time the prices paid farmers have fluctuated wildly. They’ve gone back up recently but we all know they had gone way down. Part of that has to do with the rules in agriculture in these agreements that actually let the trading companies, the grain trading companies game farmers across countries. Just as a little favorite tidbit of mine, a guy who used to be an executive at Cargill actually took off a leave, went to the U.S. trade representatives office, and was the author of the WTO agreement on agriculture. That’s what AOA stands for. That guy then left after about four years and went to something run by Archer Daniels. So revolving door of the industry actually wrote the rules, so it’s not surprising that the industry that trades grain is playing farmers in different countries off each other, thanks to these rules.
Since NAFTA and WTO, 300,000 U.S. family farms have gone under. And farm income – actual farm income minus government payments has declined dramatically. At the same time the export volumes have increased. Now, import volumes have increased more, but export volumes have increased. Now, here’s the thing, everyone who has had sort of the macroeconomics 101, when we get more stuff, so the supply is larger, right, the demand stays the same more or less or it increases, the price should go down. Instead because of some of the service sector retail and distribution rules, actually the price paid by consumers has gone up, as we all know when we go grocery shopping, at the same time that the price went down paid for the actual farmer. The slide I don’t have in there is the profit rates of Archer Daniels, Cargill, and others which, I have to say, their work on the WTO paid off handsomely.
There were a lot of promises made both in the U.S. and in the developing world about the agriculture rules in these agreements. Under WTO, in the years it’s been in place – and this is not my data, this is the U.N. data, I’m not coming up with this on my own – the number of displaced farmers, the rate of displacement has increased extremely, and hunger has increased. Everyone has seen these FAO studies about this. In Mexico under NAFTA alone, 1.3 million Campesinos farmers were displaced because of the NAFTA agriculture rules. Yet at the very same time, the NAFTA service sector rules meant that some of those same companies that were basically dumping grains – some of it not even from the U.S., coming into from third parties, being hoarded, then dumped on Mexico at the right time, those same companies bought up milling, baking distribution. So, for instance, Archer Daniels Midland was basically selling – has been buying and selling to itself three or four times in the process marking up each time. So the price of tortillas went up 50% in the same period during NAFTA, which is basically the year that the actual tariffs on corn went out, which was about between ’95 and ’98 that it actually implemented its way through. The price paid farmers went down 80%. The price paid consumers for tortilla for the corn basically number one product went up 50%.
Now, it is not a shocking outcome, therefore, that after that immigration to the U.S. from Mexico increased 60%. If you displace 1.3 million farm families off their land and then start to starve them with raising food prices, they’re going to go someplace. And so when you think of the outcomes of these agriculture policies, but also the deregulatory policies and other sectors like privatizing services, one of the outcomes that you don’t normally think about is migration. These agreements really can be seen as a supply side to massive migration.
Now, here’s what’s scary. The NAFTA rules are in place, and we saw what happened. The Chinese government’s own data projects up to 500 million peasant farmers could be made redundant if China fully implements the WTO agriculture rules … 500 million! And in India, the WTO requirement to allowing these subsidized imports – and by the way, India has been flooded by Europe. Europe has what are called export subsidies. They’re payments that literally are by the amount you send out the door. It’s not domestic support, although they have that as well. It’s actually if you export, you get cash. And in India it’s been such a catastrophe that there’s been an epidemic of suicides so that literally thousands of people – the New York Times story basically had 17,000; that was 2007. This year it is on track to be almost 30,000. Our farmers are basically drinking pesticides, killing themselves one way or another because they just cannot survive in the climate of the rules of agriculture that have been set up.
I always throw in this slide just because people have a hard time believing this whole immigration link. That’s actually U.S. government data that shows how before NAFTA migration from Mexico was actually declining a little bit and then afterwards went through the ceiling, right there, ’98, ’97, as I mentioned, is exactly when the corn tariff went into effect. This is actually the cleanest – you can see in Africa and some other countries, huge shifts in migration, but this is actually the cleanest line right there that I have ever seen correlating the huge surge in migration to a particular agriculture policy under one of these agreements. It’s because it was so sudden and direct. It went from basically allowing no imported corn to allowing a lot of corn, not just from the U.S. but from other countries through the U.S.
Now, another piece of this that’s worth considering is while we are schlepping around all of this stuff, what is the implication of all this shipping and all this distance on climate. One of the facts I just always want to share is that the U.S. still is the world’s largest agriculture exporter. We’re still the number one. We are also the largest net importer, and we import and export many of the same commodities. My research director, who is an economist, is actually up to his ears in a model right now with the help of climate scientists and others who are actually going through all the tariff lines to figure out exactly what are the top things by volume weight that we’re simultaneously importing and exporting, because that’s redundant trade. And it’s only profitable because this particular set of rules have certain privileges and benefits linked in for the traders, as compared to the producers, or don’t fully take account of the environmental costs. There are sort of hidden subsidies in how the behavior becomes profitable under these rules. That isn’t good news for most of us who are living with the results.
The jump between GDP as compared to the volume of trade that that slide shows I think is an incredibly telling symptom of how these agreements have been basically designed in the trade area to move stuff around as compared to the benefits that trade should deliver, because trade is very important, right? I mean, there are many benefits to trade but the measures of the outcomes are not about the good parts, i.e., more diversity, lower prices, being able to get things we can’t get here, et cetera. No, the outcome here is that you basically have the growth of the volume in schlepping stuff around way outpacing the growth in economic growth. And right now the UN is saying that 5% of all carbon emissions is actually long distance sea shipping. Now, to the extent some of that is redundant, that’s a much better place to cut out carbon emissions than some of the other changes that we’re going to have to make to adopt to a lower carbon footprint, I think.
Economically as well, the outcomes for nonagriculture livelihoods has not been pretty. In the U.S. we have seen one in six manufacturing jobs gone since WTO, one in every four. I know Iowa has lost a bunch of those. That’s stunning. One in six of every manufacturing jobs in less than fifteen years. So you can argue we’re transforming from one kind of economy to another, but in fifteen years, one in every six, that transition is obviously weighted by different factors, including those investment rules that buy us certain conduct like off shoring. As we have sent those jobs out, we’ve seen U.S. median real wages decline. That’s because those jobs were on average higher paying jobs than the same jobs in the service sector for people who don’t have college degrees. So the unemployed, uncollege degreed worker who had been in a manufacturing job and then enters the pool of workers in the service sector and helps drive down those wages in the service sector which already started lower because there was a lower unionization rate than in manufacturing.
We have at the same time gotten a trade balance – imbalance, a deficit, that is now almost 6% of our entire GDP. We have an $800 billion trade deficit. When you look at the U.S. effect, for everyone who hasn’t studied economics, just because Ross Perot messed everyone up on this fact a long time ago, the effect of trade is not on the overall number of jobs in the economy. That is actually fiscal and monetary policy. The effect of trade is on the composition of jobs in the economy, what kind of jobs. So the effect of what is called labor arbitrage – that’s something that Professor Krugman came up with that term, labor arbitrage. That has to do with basically effectively competing across borders with workers who make a lot less for the exact same work. So to the extent that investment is protected under these agreements, so it’s a promotion to offshore investment, U.S. workers are now competing with very smart, hard working capable people in other parts of the world who are making, in some instances, $2, $3 a day to be doing the same work with the same equipment and the same technology that someone in the U.S. was being paid $15, $18 an hour to do.
The way that you measure the net effect, though, is on the consumer side. The benefits of trade are always on the consumer side economically, which is everyone gets cheaper stuff. So the theory is that even if some people lose their jobs, it’s some people, but if we all get cheaper stuff because of the imports, then it’s a net benefit. Well, the thing that is daunting is now when you net out the lower prices versus the lower wages, for the 70% of Americans who don’t have a college degree, the net is now a $2,000 loss, which is to say that theory of free trade, which is the consumer benefit, always outweighs the job loss. We’ve had such a shift of high wage jobs that the wage effect is universal and no longer is that true. Some of the professors who have actually done that study, including Professor Samualson, the professor at Princeton who created modern free trade theory, has now basically said actually the wage decline of off shoring has overtaken the benefits for consumers.
Inequality in the U.S. is now at a rate it hasn’t been since the Robber Baron age as one has seen those statistics before in the newspaper. Part of how that’s happened is that even though U.S. workers have had massive growth in productivity, we have actually seen wages decline and flatten real terms since NAFTA and WTO, basically to 1973 levels. It shows how actually productivity of the U.S. worker has gone through the ceiling – well, has increased nicely, whereas median wages have declined. This is the labor arbitrage effect. Those professors who I cited, by the way, those guys were proponents of NAFTA and WTO, so it’s not a bunch of lefty professors who didn’t like this in the first place saying I told you so. Actually they have measured the outcomes of actually what their theories told them, versus the empirical data. And this gap is something that has not happened in the U.S. and productivity growth has increased. So have wages.
The decline in manufacturing that you can see sort right at that bump is where the WTO admission of China starts. And that slide actually is when it was only three million. That’s actually two years old. We’ve lost another million in the last two years. That decline has meant that in many urban areas and in many rural areas where the off-farm job was at a factory, for instance, all the white goods factories here in Iowa, those jobs are just gone. Why manufacturing matters, obviously we need to be able to make some of our own infrastructure. We no longer can make the beams – we have shut down all the steel mills that make the beans for big span bridges. So just down the road in Minneapolis when the bridge went down, part of the delay in the repair was because we had to actually import from Brazil and China the heavy metal spans that are necessary for that kind of construction project. We just don’t make it here anymore. The Department of Labor shows that when you go from a manufacturing job to a service job, you lose about $7,000 in income. That’s the actual data from the department. So, you know, the tax base in which our schools and hospitals are relying gets clobbered too.
All of that is scary but as students at a university, you think, well, I’m not that 70% of folks who don’t have a college degree. I’m getting a college degree. And we keep hearing education, it’s the answer to everything. Except more proponents of the current system like Alan Blinder, federal reserve vice chair under Clinton, has done a study that shows 28,000 to 42,000 jobs in the service sector which require a college education and which pay on average more than the median wage are highly off shoreable in the foreseeable future. He rated different kind of jobs that are off shoreable. Some of these other studies just replicate that, show some of what service sector jobs – these are jobs that take a college degree are now being shipped out under these rules. And by the way, it’s the service sector and the investment rules of these agreements that actually promote this.
And then we have the trade deficit, which I mentioned, which is to say since NAFTA and WTO we went from a bad trade deficit to a totally unsustainable trade deficit. And it’s not just here. In the developing world, the countries that most faithfully adopted the model are the ones that have seen the greatest slowdown. So the countries that were the weakest against the IMF and the World Bank, for instance Africa and the Middle East, they have had a number of people living on a dollar a day increase, and in the Caribbean in Latin America, the number of people living on $2 a day, but also the percentage, so it’s not just population growth have increased. These are countries that adopted the model. In most parts of the world that signed up to that package of policies I showed, growth has declined. So for instance, in Africa, it – per capita growth was weak before. It was 23% in the twenty years before. In the modern globalization model, there was a decline of – I’m sorry, it was 40% before. There was a decline of 23%. Obviously parts of that is AIDS, et cetera, but it also shows that those are countries that actually, because they had no leverage against these institutions, most religiously adopted the policy. Latin America actually – this shows all the regions, by the way.
China being the outrider didn’t adopt the policies. The dark bar is the former regime, and it basically shows how growth was better in the ‘60s and ‘80s period before all these policies were adopted, with the exception of East Asia, by the way, has Vietnam and India in it, two countries that largely didn’t follow the rules. Latin America is really telling because you always hear about, oh, the lost decades when there was statism and a lack of deregulation. That was the ‘60s to the ‘80s. It wasn’t spectacular but it was 82%. Since those countries signed up for that package of policies, ’80 to 2000 and since, growth has plummeted. When there’s less pie to spread around, obviously more poverty. The exceptions are China and India. Look at their growth rates. China wasn’t even in the WTO until 2002 and didn’t take any loans from the IMF or the World Bank. India was outside the IMF and the World Bank until very, very recently and also, if you look at the chart of challenges, did not comply with the WTO very systematically and ended up getting challenged a lot until recently. Vietnam was not in the WTO until 2005. Basically those countries did all of those kinds of policies that are totally forbidden under the model, and they did incredibly well as a result. It’s the control set. There are down sides to those policies but it does show at least there is another model that gets different outcomes.
The alternatives, now that everyone is totally depressed, here’s the good news. These rules did not come down from Mount Sinai. Moses did not have a third tablet call the WTO. This is just one version. This is one version that was created by one set of interests. And given the predominant role in the United States had in setting these rules, the fact that the U.S. negotiators didn’t have a very balanced set of inputs, as far as the diversity of potential interests in our country, you can see we got some lopsided rules.
The measure are – the outcomes are measurable. You can keep looking at more levels of detail. I actually have a book, “Whose Trade Organization,” the one Mark mentioned, that in 300 pages and about 1400 footnotes goes through in so much more detail all of the cases, all the economic data. It’s sort of like a desk top resource. It’s not really a pleasant easy novel-like read, but it is sort of the encyclopedia of the outcomes. If you look at the outcomes, then the question is: Is it acceptable? And if it’s not, is it sustainable? If it’s not, then what are you going to do about it? We obviously as public citizens have come to the conclusion it’s not acceptable and it’s not sustainable. Then what do you do?
One of the first things is just become educated about it. So a couple of these Web sites, tradewatch.org is our Web site, it basically has everything. And I brought some of the fact sheets, sort of the easy version fact sheet of what we’re for, which I’m going to get to these slides, how to fix the current system, plus the legislation that will be in Congress in 2009 to do it. Or the Columbia Free Trade Agreement, the fact sheet version. At that Web site, you can also have the 60-page footnoted analysis version of what exactly is in the Columbia Free Trade Agreement if you want to get down in the weeds.
We also have resources, like we have a searchable version online of the entire U.S. WTO services commitments. It’s one of the most trafficked parts of our Web sites, because actually we think a lot of corporate lawyers use it to figure out what the hell is in that agreement. We took apart the entire 80 pages of U.S. commitment and translate it from GATTese into English and you can search it. So you can say engineering services (given what building we’re in) and see what U.S. commitments were, retailing, design, architecture, pick your issue, and it actually lays it out in English. It has next to it in GATTese what the actual language is with a guide, a key to what it all means, but there are a lot of services like that.
We have the whole list of all the NAFTA trade adjustments assistance certified NAFTA casualties. You can’t get that data from the U.S. government. We had to sue them to get the tapes, and then we translate it into a searchable form. Eyes On Trade is our blog that sends pithy, short, and frequently sarcastically humorous little blog signals out about twice a week. If you want to sign up for action alerts, we can get your name on one of these forms that will be passed out in a little bit. Pass them around, put your name on and pass them to the sides, and we will add you to action alerts to let you know about what some of these developments are. That’s more of an activist piece than getting to know it. Getting to know it is key.
Another key book is “Alternatives to Corporate Globalization.” And then I recommend for folks who are doing development studies and are interested in the developing country issues, “Kicking Away the Ladder” and “Bad Samaritans.” It’s by a Korean born professor who now teaches at Oxford. These are some of the best books that talk about this model and what’s happened in the developing world.
Once you’re educated, then you get to the question of how – what is the effective methodology to change intergovernmental institutions, right. This is sort of the thing. It’s insulated. You can’t just go to Congress and say would you rewrite that law, we’re now going to protest every single congressperson until we get a majority of them to agree, because it’s the WTO and the WTO is 165 countries where each country gets one vote. So the only way you can campaign successfully is actually a methodology that a lot of citizen activists helped create where you link internationally country-based campaigns. So in the U.S., there’s a country based campaign. That’s the role of students in civil society. So to the extent you have come to the conclusion that the current model is not sustainable, that the current level of integration and deregulation is creating risks like financial contagion, or it’s relying a lot on cheap fuel to move around redundant trade or you think about what the environmental implications are or you think about the social and moral implications, then there are things to be done.
There’s an international movement of country-based civil society groups who are working basically on this three-part agenda. We’re moving the one-size-fits-all neoliberal policy package that doesn’t have to do with trade. So taking out all the other stuff, like trying to decide how this university should operate and be funded out of the so-called trade agreement in Geneva over which you have no control.
Adding the missing stuff, the stuff that would actually make trade fair. For instance, there are lots of multilateral agreements that sovereign nations have signed, environmental agreements, human rights labor agreements. Right now the WTO trumps all of them. They have to get out of the way, if the WTO rules conflict. It’s a choice. What happened if you made the WTO contingent on countries meeting those other rules so that a floor of behavior environmentally, human rights wise, labor rights wise with all those other international agreements, not what the U.S. tells another country to do, but what everyone is already signed up to. So every country that wants the benefits of the trade rules of the WTO has to also meet certain environmental human rights and labor rules. These are choices. And then changes the way these bodies work so that actually is a place for the people who live with the results, all of you, to be able to interact with them.
Unfortunately, at the same time that that seems like a pretty reasonable thing to do, given the data, most recently the big meltdown, the interests who benefitted from the status quo are pushing for more. So there’s a WTO expansion that’s being pushed. Interestingly, civil society campaigning has stopped that, most notably in the U.S. and colorfully in 1999 at the Seattle WTO ministerial, but repeatedly since in other countries when there have been attempts to push it, free trade agreements of NAFTA expansions. And believe it or not, the same week that AIG went down, someone in Congress pushed a WTO conformity bill to get rid of – to preempt all state insurance regulations with a weak federal standard to conform with WTO, the very week AIG went down. They claimed it was required for WTO.
Despite all of that, the fact is actually truth can beat power with a lot of organizing. And “Battle in Seattle” is currently a full-feature Hollywood film that’s about the WTO protests that basically wants to remind people of that historic moment which was largely squashed, the memory of it, by the horrors of 9/11. But it is the case that a citizen movement worldwide has managed against some very powerful governments and corporations to stop WTO expansion and push for a new set of rules successfully for basically a decade. There is no WTO expansion, most recently an attempt was tanked in Geneva this very July.
The movement behind this, the global network is called “Our World is Not for Sale.” It’s another Web site I recommend you go to. It’s an amazing network from 70 countries. It’s civil society coalitions in 70 countries linked internally. So we’re obviously internationalists. We’re pro integration. We work together but the question is what rules are going to actually work for more people. The WTO shrink-or-sink agenda is a punchy 12-step version of what I described in more dry language of what needs to be taken away that’s excessive and what’s missing that needs to be added.
There’s some amazing cross country social movements: fisherfolks, Via Campesino, indigenous people’s organizations, labor unions. We actually have here with us one of the Via Campesino leaders tonight coincidentally. International campaigns in sweat shops, on water issues, these are actually powerful movements that are changing policies internationally. In the U.S. the coalition is called the Citizens Trade Campaign. That protest actually was a protest in Minnesota on a bridge, which I thought was kind of a fun graphic to use. Citizens Trade Campaign has branches around the country. The Iowa Fair Trade Campaign is its Web site. It’s the Iowa branch. It’s organized on the ground in numerous states. It’s staffed in about 15 states.
Citizenstrade.org is the U.S. based coalition. It’s labor, environmental, faith, civil rights, family farm, consumer, et cetera. The Trade Act, of which I have the flyer, is the actual legislation that would implement domestically what I described. It lays out what must and must not be in every trade agreement, sets out renegotiation of yield trade agreements, and comes up with a new system to negotiate new trade agreements.
Given we’re about to have a huge sea change in political leadership, that’s going to be the topic in 2009. Of course, the question is if not now, when. It’s sort of one of those fights you can’t avoid, especially young people, because it’s upon you. Public Citizen didn’t get into trade. We worked on social and consumer justice. We worked on food safety. And then in about 1990, we realized we weren’t going to be effective anymore if we didn’t start working on the very same issues we’ve always cared about in the context of globalization. WTO and NAFTA became delivery mechanisms of undermining the goals and values we always advocated for.
So basically whatever it is that floats your boat, if we don’t get the global rules right, there’s no way around it. It’s actually a fight everyone has to be engaged in, regardless of what issue you care about. We now have a moment in the U.S. where a majority of the public says they don’t want the status quo. We have changes in political leadership, shifts in Congress. And, of course, the financial crisis really does indict the deregulation agenda in the way that prods an opening.
Students today are going to be the folks who decide whether we actually turn and implement the alternatives that can make the better world that we know is possible, given the indictment has been built by a lot of activism in the last fifteen years that the current system isn’t working. Fixing these current globalization rules will fix – is the fix at the root cause of a lot of outcomes and issues that are very damaging, environmental, social, developmental, you name it. And the problem is that the failure to get to the root causes basically undermines progress on all of these other issues we care about and means a set of outcomes that really I don’t think are those a lot of people would choose.
So with that, I challenge you all to get more informed and involved and to make your opinions on what parts that you like and what parts you don’t, to use the resources of the global campaign and the national campaign to actually channel your work, and to know it’s been successful so that there actually is the ability to make the change. All of those agreements that were bad that didn’t happen are the evidence. The push for that trade act I mentioned which, by the way, in six short months is a hundred cosponsors from across the Congress across the country as a new way forward. It’s all evidence that’s totally doable, but it’s going to all largely rely on you. So thank you very much, and I look forward to questions.
Do you think the new president will do anything regarding NAFTA?
The question is will the new president do anything regarding NAFTA. And the answer most easily is depends who’s president. Senator McCain loves NAFTA and he would not change it and has been pounding on Senator Obama for suggesting it should be changed. And Senator McCain actually famously said in Iowa there is no country with whom I would not do a NAFTA style trade agreement, which is a daring thing to say in Iowa, given what’s happened in Iowa after NAFTA. Senator Obama, particularly during the primary period, wrote down through a series of questionnaires, a lot of very explicit commitments of how he would change the current agreements, including NAFTA. So those investor rules I mentioned that have led to all those laws being attacked and that promote off shoring, he explicitly committed to changing those. He talked about adding environmental and labor standards, the floor I had mentioned, so that the trade rules are actually balanced on a particular set of – a floor of conduct. He’s also talked about the agriculture issue and basically allowing particularly developing countries who have a lot of subsistence farmers to be able to protect that rural economy, more as a matter of basically international relations and immigration. So he has talked about it.
But, you know, with all of these things, it will only happen if people organize it. So if there are a bunch of people who are Senator Obama fans – I went to law school with him, he’s a very, very smart guy. It is the case that it’s more of an opportunity to get these negotiations to redo NAFTA and the other agreements if he’s elected, but there will be enormous pressures on him not to do it by the same interests in Washington that got us into these agreements in the first place. So I frequently think about the lesson of Brazil and President Lula. He was the guy who was the head of their labor federation. So it would be like heading – electing the president of the AFL-CIO to be the president. And as soon as he got elected, all the activists and the labor movements, the peasant farmers movement, et cetera, they all just went, ahhh, it’s done. A bunch of them went into government. The other ones stopped pushing. And, of course, all of the corporate interests that had always been there kept pounding on President Lula. So what ended up happening is if he, like, started here sort of left of center, everyone on the right was dragging him this way and all the people that would normally have been pounding on the government the other direction, all of a sudden it’s done, our man is there, we don’t think about it. So where he ended up was way to the right of the previous right wing government on a lot of key issues. So the lesson is no matter which part – once any official is in office, accountability is the key to delivery of the things we care about.
You talk about the big bad republicans. [She didn’t – Ed.] And I’m wondering what president signed WTO and NAFTA?
Well, no, no, it’s been bipartisan. It’s been bipartisan. Right now between McCain and Obama, there’s a difference of opinion, but it was actually Clinton who signed NAFTA and – no that’s not true. Daddy Bush signed NAFTA. Clinton then worked to get it passed, and Daddy Bush did the U.S.-Canada free trade agreement, which is the precursor. Bush now has done CAFTA, but it was Clinton who passed NAFTA and who signed the WTO, so it’s been equal opportunity bipartisan. What’s very interesting is that in Congress, there’s been a shift that’s also fairly bipartisan of blocks of republican and democratic House members more than senators who, based on what happened in their congressional districts, have actually shifted from having been for either Bush’s NAFTA or Clinton’s WTO to actually being opponents now. So it’s been a bipartisan festival of being for it, and there’s been a bipartisan shift. But when it comes to the presidentials, McCain has just been very clear he likes it and Obama has been saying he doesn’t like it, but will end up in the same place unless there’s a lot of pressure, regardless of who gets elected. It’s a campaign issue.
What are the ideal outcomes of renegotiating NAFTA and the WTO?
So what would be the desired outcomes of renegotiating of fixing them. It’s basically the slide that I had towards the end. So the things that shouldn’t have been in there in the first place need to be taken out. So the outrageous investor rules in NAFTA that give treatment to – preferential treatment to foreign investors – for instance, foreign investors in the U.S. have better rights under NAFTA than the U.S. Constitution gives domestic companies. So some of those cases I listed are cases where challenges that wouldn’t be allowed in the U.S. courts, even under our relatively conservative Supreme Court, are allowed under NAFTA. So we have to get rid of the extraordinary and crazy investor rules. We have to get rid of the service sector privatization and deregulation rules. There should be trade in the service rules, because there is actual cross border trade. You need rules but you don’t want to set limits – handcuffs on domestic legislatures about how they can regulate. As long as it doesn’t discriminate, it’s not a trade issue.
The same thing with the regulatory standard limits. As long as domestic and foreign companies and products are treated the same, that’s a domestic values choice. That’s not actually a discrimination or a trade issue, so rolling back the absolute rules that say you simply cannot limit the size of a retail store, but rather the rules should be you have to treat domestic and foreign stores the same, but the local land use rules for the country or the state get to decide.
And then finally the agriculture rules need to be shifted, because right now they basically support gaming by the trading companies against producers. And so some of the kinds of things that need to be done is anti-trust, anti-cartelization rules, as well as some disciplines on the subsidies that help the trading companies as compared to the domestic subsidies for things like, for instance, environmental set asides, et cetera. That’s the short version.
Then stuff that’s missing needs to be added in. So the binding environmental and labor standards – there’s a floor once you get all that other stuff to make the trade itself fair, and then you need to reform the institutions. I suspect the first things Obama will deal with, if he’s elected, are the investment rules and the labor and environmental issues, but it may go further.
And by the way, on WTO, if you go to the “Our World is Not for Sale” Web site, the shrink-or-sink statement basically explains in really good little bullets about exactly what you cut out. One of the things I should mention is the intellectual property rules. You don’t really want monopoly protections in a free trade agreement, but what also is missing. And the thing that’s interesting about that statement on that Web site is it’s endorsed by citizens movements in 72 countries, so it’s not just a U.S. version. It is actually the version of what the civil society in a lot of different countries whose governments are in the WTO say would better suit the populations.
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