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    Letter No.53
    17 January, 1997


by Kevin Watkins

  • about the World Trade Organisation

  • Trade Ministers from 128 countries met in Singapore last month for the inaugural meeting of the World Trade Organisation (WTO). Their aim: to chart a course for trade into the 21st century and to accelerate the creation of a global market free of trade restrictions. It is a course that will affect all our lives, with widespread effects on where and how the work of the future will be done.

    KEVIN WATKINS, senior policy adviser for the Aid agency OXFAM, says that it is time for people to wake up to how our lives will be changed by these trade agreements. Behind the 'dense fog' of trade jargon, Watkins argues that the environment, our rights as consumers, employment standards, and the livelihoods of the world's poorest people are under attack.

    In this special feature, the Jobs Letter presents an edited version of his recent article on last month's trade summit.

  • Every time we buy fruit in a supermarket, or purchase a shirt or television, we are engaging in trade; and we are taking decisions which affect the environment and link us to producers in developing countries. The problem is that our ability to make informed and responsible choices about how we trade is circumscribed by WTO rules.

  • At the core of these rules is an apparently innocuous legal distinction between traded products and "processing and production methods". Governments are entitled to use trade restrictions against products on scientifically established health grounds, but cannot limit imports because of social or environmental concerns over the way they are produced.

    This approach evolved from a 1991 ruling, in which a WTO panel overturned a ITS prohibition on imports of tuna from countries whose fleets used methods, such as purse seine net fishing, which kill large numbers of dolphins. It was a preposterous ruling, in effect outlawing the use of any trade measures to protect the environment or to conserve species.

  • For a glimpse at its implications take a look a Mexico's maquiladora zone. Blue-chip American companies such as General Motors, Du Pont and General Electric have relocated some of their most pollution-intensive operations here, partly to escape US environmental legislation. Heavy metals and toxic chemicals have been dumped on a massive scale, turning the region into what the American Medical Association has called "a virtual cesspool and breeding ground for infectious disease". But GM can export its gearboxes to Europe at prices which bear no relation to the human and environmental costs of the production methods.

  • In a global economy increasingly dominated by transnational companies which can seek to maximise profits by locating production in sites with the weakest social and environmental standards, this is a recipe for disaster.

    Even the most myopic trade junkie will admit privately that inter-national market prices do not reflect the costs of cutting down forests, polluting waterways, eroding soils, and over-fishing. Yet in contrast to other areas of world trade, where the sale of goods at artificially low prices is forbidden, "ecological dumping", or the sale of commodities at prices below their real costs of production, is celebrated as a market virtue.

    You can't sell a colour television at prices below production cost, but you can export mahogany toilet seats from Indonesia at prices which bear no relation to the cost of lost livelihoods, soil erosion, or the loss of species.

  • New trade rules are needed which recognise the value of the environment, and which permit import controls on goods produced in environmentally damaging circumstances. A WTO social clause to protect basic workers' rights and address the most exploitative forms of child labour should be another step.

    Unfortunately, Third World governments at the WTO regard any social and environmental regulation of trade as a protectionist threat to their trade interests. Governments may be motivated by a concern to maximise foreign exchange earnings, but precisely what interest vulnerable communities have in being poisoned by toxic wastes, displaced from their forests, or seeing their fisheries stocks depleted is unclear.

    [Update from the Jobs Letter Editors : Last month's WTO declaration firmly rejected the use of labour standards "for protectionist purposes". This was despite the United States and many European countries insisting on action to help the 250m child workers, mainly in the third world, and to improve on sweatshop conditions. Developing nations, led by India, Pakistan and Egypt, refused WTO interference in the area of workers rights. Many officials in developing countries believe the campaign to bring labour issues into the WTO is actually a bid by industrial nations to undermine the comparative advantage of lower wage trading partners.]

  • In the industrialised world, too, the WTO's rules permeate our lives to disastrous effect. If, for example you like your milk without growth hormones, you have a problem, because a WTO panel is about to rule that a European Union ban on the use of bovine somatatropin (BST) -- a hormone which raises milk yields by up to 25 per cent —is a breach of international trade law. The case was brought to the WTO by the US government on behalf of Monsanto, a chemicals company which holds the patent for BST and stands to make in excess of $500 million annually from access to the EU market.

    According to Monsanto, there is no scientific evidence of any health risk from BST, so the EU's import ban is really about the method used to produce milk, and therefore a violation of WTO rules. Even though medical research has pointed to BST as a potential risk factor for breast and gastro-intestinal cancers, the WTO does not recognise caution as a legitimate reason to restrain imports.

  • Perhaps you harbour the hope that food labelling laws will protect your right not to eat foods which you regard, rightly or wrongly, as a threat to your health. After all, consumer sovereignty is supposed to be the governing principle of the free market. Well, forget it. Under the WTO's rules, you have no right to know what is in your food.

    For example, the Swiss chemical conglomerate Ciba Geigy has threatened to contest at the WTO the EU's refusal to market a variety of genetically-engineered corn. The genes in question, derived from a soil bacterium, have never formed part of the human food chain, so their health effects are unknown. What is known is that they confer a resistance to ampicillin, one of the most common antibiotics.

  • The WTO restrictions on environmental labelling schemes are equally prohibitive. For instance, the EU has developed an eco-labelling scheme for sustainably produced paper that could help to promote the greening of the industry, enabling consumers to express through the market a preference for sustainably produced goods. In practice, the scheme is unlikely to get off the ground, since the US Paper Manufacturers Association has warned that it will contest at the WTO any discrimination between paper products on the basis of how they are produced.

  • Paper is just the tip of an iceberg. The Canadian government has asked the WTO to confirm that all eco-labelling schemes making a distinction between similar products (i.e. sustainably and unsustainably logged timber) are illegal. Even voluntary certification schemes drawn up by development and environment groups to indicate fairly-traded tea and coffee, organically produced food, and sustainably produced wood, could be banned — thus crippling one of the most potent forces for change from below.

    As it is, a wide range of environmental and conservation measures won through intensive campaigning are already under threat. A Dutch import ban on fur from animals caught in leg traps has been threatened with action at the WTO by the US and Canada; a US ban on imports of shrimps caught without measures to protect endangered sea turtles has been challenged by Thailand and Singapore, two of the worst offenders; and Indonesia, Malaysia and Brazil have threatened recourse to the WTO if the industrial countries attempt to restrict imports of unsustainably logged timber.

  • The agreements reached at the WTO summit make depressing reading. In a world so profoundly threatened by environmental problems, so scarred by poverty, we desperately need new rules and new institutions to govern international trade. People, as well as corporations, have rights.

    Source -- The Guardian Weekly, 15 December 1996 "Goods for some are bad for others" by Kevin Watkins.

  • see also Conspiracy of Silence on Global Economy.

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