Two Revelations Reveal the Fatal Flaws in WTO Style Globalization

Posted by Todd Tucker and Lori Wallach, Eyes on Trade at 9:56 AM on February 4, 2009.

Two developments this week provided further illustrationthat the current NAFTA-WTO model of trade and globalization is fundamentallyflawed.

Exhibit A: One of the most contentious issues surroundingthe congressional debate on the massive stimulus bill designed to jump startthe sinking U.S. economy was… a provision on “Buy America” rules for iron andsteel in public works projects?! Opponents of the measure – which include someof the nation’s leading offshorers of U.S.jobs, such as GE and Caterpillar – decried the plan to invest our tax dollarsin the U.S.economy as a declaration of war against “free trade,” and claimed that themeasure was WTO-illegal. (As it turns out, on theWTO-legal business, the corporates are lying, as weshow here in a detailed memo.)

Exhibit B: The Bushadministration, in its final week in office, imposed tariffs of up to 300percent on French Roquefort cheese, and extended punitive tariffs on truffles,Irish oatmeal, Italian sparkling water and foie gras. The reason? In the 1990s,the Europe Union (EU) had banned the use of artificial hormones for raisingbeef in response to health concerns. The Clintonadministration, at the urging of giant agribusiness companies, challenged thismeasure at the WTO because it not only banned the chemicals’ use by Europeanfarmers, but banned imports of artificial-hormone-raised beef. A WTO tribunal orderedthe EU to allow in the U.S.beef, and when EU officials, under threat of a massive consumer revolt,refused, the WTO authorized the U.S.to impose retaliatory sanctions. (Canada also sought and receivedsimilar authorization.)

When a country’s state, local or national policy is ruledagainst at the WTO, federal authorities are required to take all availablesteps to force a change in the law – otherwise, they risk facing perpetualtrade sanctions. It’s a fairly powerful system: in the nearly 15-year historyof the WTO, countries have always watered down or eliminated the challengedlaws, including in the cases brought against U.S. laws (which we’ve lost nearly90 percent of, by the way). There’s only been one exception, and that’s the beef-hormonecase. The Europeans – in an admirable display of moxie – decided that ensuringconsumer safety was their top priority. Although they’ve been paying out theirpound of flesh for a decade – at a rate of over $120 million per year since 1999– the Europeans apparently weren’t suffering enough, and Bush upped thecross-sanctions on his way out the door.

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Thelarger question raised by these two conflagrations is why political leaderssigned up food-safety and government procurement rules – both quintessential,non-trade domestic issues – to complywith so-called “trade” agreements in the first place. A big part of the answeris that they were pushed by companies like GE and Caterpillar and largeagribusiness multinationals, who enjoy wild privileges under these pacts thatencourage the offshoring of U.S.jobs. Since then, corporations have used the overreaching “trade” agreementrules to attack an array of important non-trade, public-interest policies. Thelatest installment is the current scare campaign to water down Congress’response to the economic crisis, and gin up the attack on important food-safetymeasures abroad.

Nations– not just the U.S.,but all nations – should have a right to invest in themselves, spend their taxdollars in the manner deemed best by their democratically elected officials, andpursue other public-interest policies. President Obama and the lasttwo classes of freshmenmembers of Congress came to office on pledges to overhaul the failed globalization policies ofthe past, and pursue global integration and cooperation on fairer terms.Let’s hope that they stand their ground: our future prosperity and securitydepends on it.

*The writers are director and researchdirector, respectively, of PublicCitizen’s Global Trade Watch division. They blog at EyesOnTrade.Org. This was originally posted on Huffington Post.