What is the WTO? The World Trade Organization is an international organization charged with governing global trade. The WTO was formed in 1995 during the Uruguay Round of international trade negotiations for the Global Agreement on Tariffs and Trade (GATT). The goal of WTO is to facilitate trade among member nations by promoting free trade.

Who are the members? Currently there are 134 members countries in the WTO and 33 nations with observer status. Each country is represented by its trade representatives. According to the rules, decisions are made by voting or consensus involving all member nations. However, in practice the so-called QUAD countries (U.S., Canada, Japan and the European Union) have made key decisions in closed meetings. These decisions are presented to the other countries for ratification but they have little or no input into them.

What is covered by WTO decisions? The WTO regulates tariffs and quotas and other areas such as food safety laws, product standards, rules on use of tax dollars, investment policy and many domestic rules that impact trade. The WTO not only makes rules but it can enforce them and impose punitive measures against countries that pose barriers to trade.

What is a “barrier” to free trade? Measures that have been considered as impediments to free trade include subsidies provided by governments to help local or national businesses survive, some safety and environmental standards and rules that ensure services to all citizens. Barriers could be anything from subsidies for struggling farm economies, through stipulations to keep jobs at home, measures to establish better labor standards in sweatshops and economic sanctions against human-rights abusing countries. In June 1999, US Trade Ambassador Charlene Barchefsky announced health care and education should be on the free trade agenda.

What happens when there are disputes? The WTO allows members to challenge each others’ laws and regulations as violations of WTO rules. The WTO Dispute Settlement Process includes a panel of three judges. These judges have been persons with a background in corporate law. There are no conflict of interest rules and the panel often has little background in domestic law. This tribunal operates in secret, times and locations of the meetings are not disclosed. Documents, hearings and briefs are confidential. Only national governments are allowed to participate. There are no appeals to anyone outside the WTO. Once a WTO ruling is issued, losing countries have a set time to implement one of three choices: (1) change their law to conform to the WTO requirements, (2) pay permanent compensation to the winning country, or (3) face non-negotiated trade sanctions. The U.S. official position has been that laws must be changed to be consistent with WTO. Economic sanctions must be paid for by nations (tax payers) even if the violator was a corporation.

What are some examples of WTO rulings? In 1998 the WTO ruled that the precautionary principle is not a valid basis for restricting markets and ruled that the European Market could not ban hormone treated beef. Laws protecting small-scale banana farmers in the Caribbean were struck down when the U.S. filed a complaint for Chiquita and Dole Fruit companies even though no bananas are raised in the U.S. Part of the U.S. Clean Air Act had to be rewritten and weakened. There was a ruling against the state of Massachusetts for its law boycotting government purchases from Burma because of the human rights record of the Myanmar (Burmese) military. Several laws protecting endangered species have been eliminated.

What have been the results of free trade policies? United Nations studies show that, with a handful of exceptions, growing inequality has accompanied trade and investment liberalization over the past 15 years. Researchers at the Institute for Policy Studies note a growing divide between the wealth of the worlds billionaires and the world’s poorest. The combined wealth of the world’s 475 billionaires is greater than the income of the poorest half of the world’s people. This growing inequality is an outgrowth of the increased power of globalized corporations and the loss of power of laborers. Poor nations, conscious of their unequal position in negotiations, fear economic sanctions and are powerless to challenge corporations with more power and wealth than that held by their country.

Developing nations are rapidly depleting their once abundant natural resources under pressure for increased trade. Factories are springing up all over yet workers in most of the third world’s new global factories are denied the right to organize and strike. Companies in the U.S. use the threat of moving production to China or Mexico to bargain down wages and benefits. Money and corporations have the freedom to move across borders with little or no restriction. Labor (people) who wish to move from a county such as Mexico to the U.S. do not have that freedom.

What is being done? Citizens groups from across the world are making strides to define a vision of development that would benefit all people and the environment. These movements realize that individual countries can not regulate global corporations and are calling for new global institutions to govern global economic activity. They are calling for rules that follow eight core principles. democracy(governments serving people not corporations), subsidiary (whatever can be done locally, should be), ecological sustainability (economic health can not be based on ever-increasing consumption and exploitation of resources without considering the consequences to the planet), economic human rights (global trade is meant to enhance quality of life and respect core labor and social), food security and food safety (communities and nations are secure when people can provide enough safe food for themselves), certain goods and services should not be traded (the “global commons”- water, seeds, genetic structures of life, culture, etc.- needs to be preserved and people should be protected against pernicious goods e.g. drugs, toxics, arms), equity (the gap between rich and poor peoples and nations needs to be lessened), cultural, biological, economic and social diversity (diversity is central to a dignified, interesting and healthy life).

For more information on WTO and globalization

• The World Trade Organization www.wto.org
• Public Citizen’s Global Trade Watch www.tradewatch.org
• 50 Years Is Enough Network www.50years.org
• United For a Fair Economy www.ufenet.orgFriends of the Earth www.foe.org
• Information from: A Citizen’s Guide to the World Trade Organization, NETWORK, Institute For Policy Studies