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Warsaw Pact

The mutual defence treaty, lasting from 1955 to 1991, which gave the Soviet Union the pretext to station troops throughout the Iron Curtain countries, so ensuring its domination until the sudden collapse of East European communism. (See also Brezhnev Doctrine.)
Werner Report

The Werner Report prefigured in 1970 many of the features which marked later efforts to achieve monetary union. It was a period of intense currency instability, with a strong D-Mark and a weak French franc both parting company from the dollar, itself suffering from a US balance of payments crisis. In 1971 the post-war monetary order based on the dollar, known as Bretton Woods, collapsed; and in 1973 the Yom Kippur War in the Middle East led to a quadrupling of oil prices, accompanied by global stagnation and inflation. A less propitious period for introducing monetary union could scarcely be imagined, and the project soon disintegrated, after two attempts at fixing European parities (the 'Snake' and the 'Snake in the tunnel') had fallen apart. The episode was a humiliating failure, but it taught the Commission that Treaty law and a supranational central bank were essential ingredients for success if the plan were ever to be relaunched.
Western European Union

See WEU.
WEU (Western European Union)

More or less defunct for some 45 years, the WEU was designated in the 1992 Maastricht Treaty as the future defence component of the EU. It originated in 1948 as the Brussels Treaty Organisation, of which Britain, France and the Benelux countries were the signatories, changing its name in 1954 with the addition of West Germany and Italy. The stimulus for change was the collapse of the European Defence Community, Jean Monnet's dream of a European army, but the WEU's military function was made irrelevant by NATO, and any broader political or economic role was overshadowed by the emergence of the Common Market. With the ending of the Cold War, however, the EU (and especially France) has become more assertive, doubtless calculating that it now has less need of NATO's protection. Hence a revived interest in developing an independent European military capability, albeit partly under the NATO umbrella, building on the newly formed 60,000-strong Eurocorps and the institutional framework of the WEU.

Portugal and Spain joined the WEU in 1988, and Greece in 1995. In 1992 Iceland, Norway and Turkey became 'associate members' and Austria, Denmark, Finland, Ireland and Sweden (all except Denmark neutrals) became 'observer members'. In 1994 the Baltic states, Poland, the Czech Republic, Slovakia, Hungary, Romania and Bulgaria were made 'associate partners'. But in real terms this amounted to little more than bureaucratic fodder for the meetings of the WEU's Council of Ministers, Permanent Council and Assembly of member state parliamentarians. For despite aspirations of a more cohesive European defence identity, the 1991 Gulf War, the 1992-5 Bosnian crisis and the 1999 Kosovo crisis showed that there were not enough shared aims to underpin a common security policy. Moreover, in an emergency only NATO and individual nations (chiefly the USA, but also France and the UK) could muster the resolve and fire power to take resolute action. Even the limited peace-keeping objectives set out in the Petersberg Declaration of 1992 seemed to stretch the WEU's capacities to the limit.

    You can call it Margaret or Mary-Anne if you like, but it is still a European army. Commission president Romano Prodi, 2000

The relationship of the WEU to NATO is ambivalent. NATO's success in deterring Soviet aggression for half a century was based not just on weaponry but on sophisticated command and control systems tested in numerous military exercises. European forces could not mount any sustained action without the help of US surveillance and logistics, a dependence recognised in the Luxembourg Declaration of 1993, in which the WEU defined itself as the European pillar of NATO. It was notable that in the Kosovo conflict, in its own backyard, the Europeans were only able to deploy some 10% of the effective strike capacity of the combined force. Yet the EU longs to prove that it is a genuine world power, with a Common Foreign and Security Policy to match its economic weight and a military arm in support.

Historically, Britain's attachment to NATO and scepticism over the WEU have been both a bulwark of the Atlantic Alliance and a microcosm of the long-running debate about whether the EU is to become a federal state or to remain a confederation of independent democracies. But Prime Minister Tony Blair's gesture of Anglo-French solidarity in 1999, when he offered British support for the Eurocorps and echoed French language about 'autonomous' European forces, set alarm bells ringing. Washington was concerned lest the WEU develop less as a welcome burden-sharing arm within NATO than as a rival, duplicating costs and sowing confusion - after all, France remained even now outside NATO's integrated command structure (in the Gulf War, French airborne capabilities were crippled by not being networked into the allies' enemy-recognition system). The Treaty of Amsterdam had held out the prospect of incorporating the WEU into the EU. These were the sort of developments that could fuel isolationism in the USA.

As a compromise, NATO chiefs had worked out the idea of Combined Joint Task Forces, in which WEU forces could act independently, using US NATO-assigned logistics and lifting capacity, in cases where the alliance as a whole was not involved. It was, however, all too easy to see the potential flaws in this arrangement. The Pentagon would not share intelligence with the WEU - and how would it respond to WEU actions with which it disagreed? From a practical standpoint, recurrent cuts in European defence budgets and the fact that Britain had shared so many dangerous conflicts with the USA probably assured the continuance of NATO-based defence for the EU in the medium term. But the longer term prospects in an increasingly proud and integrationist Europe were difficult to read.
White Wednesday

On 16 September 1992 a crescendo of currency speculation culminated in the withdrawal of the pound and the lira from the ERM and the devaluation of the peseta. Since this spelled the ruin of Prime Minister John Major's policy of tying sterling to the D-Mark zone, it was initially called Black Wednesday, the more so as millions had been spent on foreign exchange markets trying to prop up the pound. Later, as the new-found freedom assisted the UK's recovery from recession and the predicted inflation failed to occur, the day came to be reassessed and is now equally often known as White Wednesday.
'Widening'

Enlarging the membership of the EU. (See also 'Deepening'.)
Wilson, Harold (1916-95)

As Labour prime minister, Harold Wilson applied to join the EC in 1967. President Charles de Gaulle vetoed the UK's entry, as he had previously vetoed Harold Macmillan's application. Wilson's motives, like Macmillan's, were defensive; he believed the UK to be in irreversible decline and hoped that Europe's economic success might somehow come to the rescue. Having lost the 1970 election to Edward Heath, Wilson won back power in 1974. By now the UK was in the EC, but the Labour Party had become more sceptical. After a token renegotiation of the Tory terms of accession, Wilson held a referendum in 1975, which endorsed continued British membership. The referendum campaign repeated the exaggerated promises and downplaying of risks which had marked Heath's entry negotiations.
'Wine lake'

The vast surplus of wine caused by over-production resulting from EC price guarantees. (See also 'Butter mountain'.)
Wirtschaftswunder

West Germany's post-war economic miracle, engineered by Ludwig Erhard, Chancellor Konrad Adenauer's free-marketeering minister of economics from 1949 to 1963.
Women's rights

See Discrimination.
Working Time Directive

Adopted by qualified majority voting in 1993, the Working Time Directive was a Commission social measure (to reduce unemployment by cutting working hours) masquerading as a health and safety measure - the difference being that health and safety rules are of universal EU application, whereas social rules are governed by the Social Chapter of the Maastricht Treaty, from which the UK had at the time an opt-out. The UK's appeal against the circumvention of its opt-out was overruled by the European Court in 1996, although Britain's industrial safety record is good and its submission that no genuine medical issues were at stake was not seriously challenged.

The Directive imposes a maximum 48-hour working week together with minimum periods of daily and weekly rest, holidays and breaks. Many suspected the Commission not just of flat earth economics (unemployment in the USA is lower than in the EU, although US working hours are longer) but also of an unspoken agenda - that of preventing British companies from retaining a competitive edge through flexible employment practices. The wider significance of the Directive was that it showed that the Commission, with the aid of the Court, was more concerned with harmonisation than with global competition or respect for the intent of a Treaty-based exemption. (See also 'Social dumping'.)
World Trade Organisation (WTO)
Background

The World Trade Organisation (WTO) was set up in Geneva in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT), to add new dimensions of scope and political authority to the regulation of world trade. It is the accepted forum for the negotiation and settlement of trade problems between its member states, and is responsible for administering 29 multilateral agreements in areas as varied as textiles, agriculture, services and 'rules of origin'.

Over a period of nearly 50 years since World War II GATT had been successful in liberalising merchandise trade through a series of eight negotiating 'rounds'. In theory, however, GATT was merely an interim agreement with a secretariat, and the need had long been felt for a more substantial body. The growth of service industries, relating in particular to information technology, intellectual property and international investment, demanded more sophisticated rules; agriculture - a protectorate of Byzantine complexity both in the USA and in the EU - was overdue for reform; and international negotiations were becoming further complicated by concerns over food safety, the environment and exploitation of labour. Moreover, it was widely felt that the consensual GATT system of arbitration and dispute settlement, which had proved slow and ineffective, should be overhauled.

    Unilateralism is the enemy and it is American. French prime minister Lionel Jospin, quoted in Le Figaro, 1999

The main diplomatic challenges facing the WTO are the ambitions of China and relations between the EU and the USA. In 1999 China, an emerging great trading nation that had sought membership since the WTO's inception, finally succeeded in overcoming US government objections. But the outcome was not yet certain. China's application needed the approval of Congress and the EU. And doubts remained about the genuineness of its intent to act transparently and to comply with international rules. As for the EU and the USA, the two blocs have frequently been at loggerheads, with the EU becoming more assertive and the USA resorting increasingly to unilateral sanctions. Thus tentative proposals for an Atlantic free trade area, which seemed to many the logical outcome of half a century of liberalisation, have come to nothing (although the EU did reach a free trade agreement with Mexico in 1999). The disputes have ranged from EU tariff preferences for former colonies (the 'banana war') to European restrictions on the broadcasting of American TV programmes (the 'culture war') and US sanctions against European companies trading with countries deemed hostile by the USA. On occasion voices are even raised in the US Congress and in France calling for a reversal of the liberalisation of world trade, though the overwhelming evidence of the prosperity generated by free markets doubtless assures a continuance of current policies.
WTO principles and the growth of trade

The multilateral trading system is based on six principles: non-discrimination, progressive reduction of trade barriers, transparency, fair competition, special arrangements for developing countries and 'predictability' - the latter principle meaning that participating states should not increase tariffs or bypass the rules through quotas or other restrictions. This régime stands in sharp contrast to the pre-war cartels and protectionism that followed the stock market crash of 1929, reinforcing the slump and destabilising Western society. In the half century since the establishment of GATT in 1948, average duties on manufactured goods have fallen from over 40% to 3%; manufactured exports have grown more than 40-fold; and the share of world GDP represented by international trade has more than doubled to 22%. By the year 2000, the WTO's membership had reached 134, with a further 31 applicants, compared with the 23 original signatories of GATT.
The GATT Uruguay Round

As the last pact entered into before the formation of the WTO, the Final Act of the Uruguay Round represents the current regimen for the governance of world trade. Negotiations started in 1986. The driving force was the USA's desire to bring services into the GATT framework and to anchor the European Community (which had recently passed the Single European Act) into a liberal global trade system. In particular, the USA wanted to free agriculture of subsidies - to the point of being willing to cripple Europe's unpopular Common Agricultural Policy. Eight years later, in 1994, after France had brought the negotiations close to collapse, the Final Act was signed - a comprehensive series of agreements covering services, public procurement, intellectual property, tariff cuts on manufactured goods, a modicum of agricultural reform and the removal of various non-tariff barriers to trade. The Act also established the WTO to implement these agreements.
Administration and dispute resolution

The supreme decision-making body of the WTO is the Ministerial Conference, which consists of all the member countries and meets at least once every two years. The General Council is effectively a board committee of the Conference, meeting as and when needed and also serving as the Dispute Settlement Body. With a budget of under $100 million and a secretariat of 500, the WTO is one of the world's most cost-effective international institutions.

In international law, WTO agreements have the status of treaties. In the GATT era, it proved easy to block the settlement of disputes, whether at the stage when a panel of experts was formed to evaluate a case or when their report was to be adopted by the Council. The resultant delays encouraged the USA to resort to unilateral measures. The WTO has brought in a revised procedure, which aims at mediated solutions but speeds up the panel system if a dispute cannot be resolved voluntarily. There is also a new international appeal body, and ultimate recourse to the General Council. The penalty for breaching the rules is a retaliatory sanction equal to the value of the trade impaired.

In practice, there have been less than 20 disputes a year requiring the formation of a panel. Some $300 million of sanctions have been authorised - all in favour of the USA - but to put this figure in perspective, it is less than 0.005% of annual global trade of nearly $7 trillion.
The WTO and the EU

Trade within the EU is a permitted exception to the general WTO principle of non-discrimination. The Community qualifies as a 'regional trade agreement', being substantially barrier-free internally and not having raised its barriers against the outside world.

Although all the member states of the EU are WTO members in their own right, they are required to cede control of their external trade policy upon accession to the Community. Accordingly, in any negotiation the Commission acts on behalf of the EU (with qualified majority voting in the Council of Ministers, so that no member state has a veto). This rule, however, failed its most severe test in 1993 during the Uruguay Round, when France effectively overturned an agreement on agriculture hammered out by the Commission and the USA. France's tactic was to threaten the nuclear option of vetoing the entire Final Act on the grounds of 'vital national interest' - a move of uncertain validity in terms of Community law, and one which relied on a principle rarely invoked since the days of Charles de Gaulle. Brinkmanship led to a last-minute compromise, but the episode created extreme ill-feeling, not only in the USA but also within the EU, where it highlighted the division between the protectionists and the liberalisers, the latter led by the UK and including Denmark, Germany and The Netherlands. Tension ran so high within the Commission that Ray MacSharry, the Agriculture Commissioner, tendered his resignation.

The question then arose whether it was the member states or the Commission that had legal power to sign the agreements contained in the Final Act. The member states claimed that the Act was subject to 'dual competence' and that under the Treaty of Rome the Commission had exclusive competence only for merchandise trade. The Commission disagreed and sought a ruling from the Court of Justice, which determined that the Commission had exclusive powers with respect to most trade matters, but that it shared responsibility with the member states with respect to certain services. In practical terms EU trade policy is formed by a dialogue between the Commission and the Council of Ministers, in which the Council sets the negotiating parameters and the Commission undertakes the actual negotiations, working with representatives of the member states.
The Seattle Conference

The Seattle Conference of 1999 was intended to launch the WTO with a new round of trade negotiations. The conference soon fell into chaos amid rowdy street demonstrations. The 'green' movement directed much of its wrath against multinational corporations, which were accused of having undue influence over the WTO and being neglectful both of poorer nations' needs and of consumer safety - a dispute over the risks of genetically modified food being but the latest of many such controversies. Free marketeers and development economists found themselves in an unusual alliance. Both were dismayed that demagogues from the advanced countries were pandering to lobby groups by posturing about environmental risks and employment conditions in the third world, when their real aim was to protect their industries against low-cost competition. (Many of the environmental concerns were genuine, but this seemed a hypocritical way to address them.) All in all, the high political profile brought about by the transformation of GATT into the WTO backfired and the conference ended in stalemate. The real tests, however, are yet to come. When the forthcoming round finally gets under way it will be judged by the success or failure of agricultural reform and the liberalisation of services as well as by the effectiveness of the new dispute resolution procedures.
WTO

See World Trade Organisation.
 
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Historical Background

Until 1952, foreign states and their agencies enjoyed virtual immunity from lawsuits in the courts of the United States1. In 1812, Chief Justice John Marshall issued the seminal opinion that recognized this immunity.2 In this case, the court upheld a French plea of immunity against an American citizen's assertion of ownership of a national vessel of France which had entered the territorial waters of the United States. In the opinion of the Court, Marshall emphasized the "exclusive and absolute" nature of a nation's territorial jurisdiction, any exception to which could arise only from the consent or waiver of that nation3. He further explained:

"The world being composed of distinct sovereignties, possessing equal rights and equal independence...[and] all sovereigns have consented to a relaxation in practice, in cases under certain peculiar circumstances, of that absolute and complete jurisdiction within their respective territories which sovereignty confers.

This decision announced that the common practices of nations form the foundation for this doctrine of sovereign immunity, while a given state's agreement to grant immunity in a particular case is a matter of grace, comity, and respect for the equality and independence of another sovereign country.

In the opinion of the justices at the time, this decision only upheld the United States' lack of jurisdiction over an armed ship of a foreign state in its port and was not intended for greater application. Nevertheless, that opinion came to be regarded as extending virtually absolute immunity to foreign sovereigns, which remained as rule for over 140 years. As this case made clear, however, foreign sovereign immunity is a matter of diplomatic grace on the part of the United States, not a restriction imposed by the Constitution. Accordingly, the Court consistently has deferred to the decisions of the political branches – in particular, those of the executive branch – on whether to take jurisdiction over actions against foreign sovereigns and their instrumentalities. In most cases, immunity was requested in all actions against friendly foreign sovereigns.

This practice was radically changed in 1952 when the State Department announced that it was adopting a "restrictive" principle of foreign sovereign immunity4. This new policy meant that: "The immunity of the sovereign is recognized with regard to sovereign or public acts (jure imperii) of a state, but not with respect to private acts (jure gestionis) [of a state]"5. This marked the United States' decision to join the emerging international consensus that private acts of a sovereign – commercial activities being the primary example – were not entitled to immunity.

This restrictive theory was not backed by any legislation, and hence its application proved troublesome. This was finally changed in 1976 with the enactment of the Foreign Sovereignties Immunities Act (FSIA), establishing legislative standards to determine when to exert jurisdiction over the actions of a foreign state. This act replaced the precedent of deference to the wishes of executive authority with a comprehensive legislative framework "governing claims of immunity in every civil action against a foreign state or its political subdivisions agencies, or instrumentalities."6

In essence, the FSIA states that foreign states are immune from the jurisdiction of both federal and state courts in the United States, subject to certain exceptions.7 This can be summarized insofar that under international law, states are not immune from the jurisdiction of foreign courts when commercial activities are concerned that have a "direct effect on the United States8", and their commercial property may be levied upon for the satisfaction of judgments rendered against them in connection with their commercial activities.

The Application of the Foreign Sovereignties Immunities Act (FSIA)

A case closely connected to this act is that of Verlinden B.V. v. Central Bank of Nigeria9. In it, a contract was made between the Federal Republic of Nigeria and the petitioner, a Dutch corporation, for the purchase of cement by the former. This contract was drawn up with the condition that Nigeria was to establish a confirmed letter of credit for the purchase price. Subsequently, the petitioner sued the respondent bank, an instrumentality of Nigeria, in Federal District Court alleging that certain actions by the respondent constituted an anticipatory breach of the letter of credit. The petitioner alleged the Federal District Courts had jurisdiction under the provision of the FSIA.

Another example of the use of this act is the Supreme Court case, The Republic of Argentina v Weltover Inc10. In this case, Argentina, as part of an action to stabilize its currency, issued bonds which provided for the repayment by U.S dollars through transfer on the market in New York City. Concluding that it lacked sufficient exchange to retire the bonds, Argentina unilaterally extended its time for repayment when the bonds began to mature. The bond holders, two Panamanian corporations and a Swiss Bank, declined to accept Argentina's proposed rescheduling of the payment, and took Argentina to the district court, which eventually ruled in favor of Weltover, Inc.

Argentina appealed to both the Appellant and the Supreme Court on the grounds that the district court did not have jurisdiction over the matter. The Supreme Court, however, found that the district court had jurisdiction under the Foreign Sovereign Immunities Act. Furthermore, when the case was being reviewed by the Supreme Court, Argentina argued that the "direct effect" argument was inapplicable as the plaintiffs were all foreign corporations with no other connections in this country. Yet under the precedent of Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, Argentina's position was considered to be untenable. This act gives the United States jurisdiction over another country when their actions affected the United States in a direct manner, no matter the national origin of the plaintiffs.

However, despite the fact that this law would seem to have such broad implications, it also has a very narrow jurisdiction. This can be seen in the 1989 case of the Argentine Republic v. Amerada Hess Shipping Corp11. In this case, a crude oil tanker owned by respondent United Carriers Inc., a Liberian corporation, and chartered-to-respondent Amerada Hess Corp., also a Liberian corporation, was severely damaged when it was attacked in international waters by Argentine military aircraft during the war between Great Britain and Argentina over the Falkland Islands.

It was found in this case that the FSIA provides the sole basis for obtaining jurisdiction over a foreign state in the courts of the United States, and that none of the exceptions in the act under which a country's immunity could be violated were applicable.

Similarly, in Saudi Arabia v. Nelson12, the FSIA was also found not have jurisdiction. In this case, the Nelsons, a married couple, filed this action for damages from the petitioners, the Kingdom of Saudi Arabia, a Saudi hospital, and the hospital's purchasing agent in the United States. They alleged, among other things, that Mr. Nelson had suffered personal injuries as a result of the Saudi Government's unlawful detention and torture of him, and the petitioners' negligent failure to warn him of the possibility of severe retaliatory action if he attempted to report on-the-job hazards.

The Nelsons asserted that the United States legal system had jurisdiction under the FSIA. However, the Supreme Court ruled that the Nelsons' action was not "based upon a commercial activity" within the meaning of the first clause of the act. Thus, although the introduction of the FSIA was a turning point in the United States' position on the sovereignty of States, it was an act limited in application by its own specific clauses.

The Future of International Sovereignty

Although the FSIA plays an important role in United States' policy on absolute sovereignty, it is only one of many laws that have influence in this area. One such law is the International Emergency Economic Powers Act (IEEPA), which has been repeatedly invoked by the President to control the actions of foreign countries.

A prime example is the case of Dames and More v. Regan 453 U.S. 654 (1981). In reaction to the seizure of the U.S. embassy and American nationals in Iran, President Jimmy Carter invoked the International Emergency Economic Powers Act (IEEPA) and froze Iranian Assets in the United States.

When the hostages were released in 1981, an independent claims tribunal was created, and Dames and More attempted to claim 3 million dollars, unsuccessfully contesting that the executive orders were beyond the scope of presidential power. This same act has been used by other presidents: For example, in 1990, President George Bush used it to block Iraqi government property and prohibiting transactions with Iraq, and in 1993, President Bill Clinton used the powers of the act to enforce sanctions against the Yugoslav republics of Serbia and Montenegro.

There has also been a recent push to extend the jurisdiction of the United States' legal system into the international realm. Just recently the House of Representatives has been debating a bill which would ensure that the commercial activities of the People's Liberation Army of China or any Communist Chinese military company in the United States are monitored and subject to the authorities under the International Emergency Powers Act13.

Similarly, Congress has been debating the International Anti-Corruption Act of 199714. This act provides that foreign countries receiving assistance must be conducive to United States business interests – e.g. market principles, elimination of corrupt trade actives by private persons and government officials, and clear movement towards integration into the world economy. Countries which are considered not conducive to such interests could then be subject to probationary periods and a cessation of aid.

Although there are some exceptions made for humanitarian needs, the implications of this bill are enormous. The requirement that a country meet certain economic standards in exchange for U.S. aid signifies that the sovereignty of a country is being ignored in exchange to better conditions for American businesses. In proposing the bill, Senator Campbell addressed President Clinton, saying that he had received "complaints from companies when encountering illegal or unfair illegal business practices in their countries."15 The Senator concluded:

Mr. President, corruption foreign countries hurts the U.S. economy, trade with foreign countries creates and supports American jobs. Trade helps keep prices low, provides greater selection of goods, and creates a larger market in which American companies can sell their products. Corruption limits the possibilities for U.S. investment and exposes and it increases the risk and costs of doing business to the detriment of U.S. business and consumers.

Not unlike the FSIA, this act is attempts to weave into the international legal framework a basis for the infringement of sovereignty when commercial interests are at stake.

In addition, across the international realm, there is a clear movement towards the increasing role of international tribunals and courts. The World Trade Organization (WTO) has only recently been expanded so that it may hear, try and resolve trade disputes in its Dispute Settlement Body (DSB).

On March 25, 1995, Venezuela, having first engaged in unsuccessful "consultations" with the United States, filed a formal request with the DSB to establish a panel to examine whether the United States had violated GATT by virtue of its promulgation of certain regulations setting forth "Standards for Reformulated and Conventional Gasoline"15.

On May 19, 1995, Brazil, also having engaged in such consultations, filed a similar request. The European Union and Norway also joined in the proceedings as third parties, in accordance with the WTO's procedures. The World Trade Organization ruled that the United States discriminated against foreign oil refiners and ordered that the United States develop a plan to change its rules on imported gasoline or face unspecified sanctions.

The United States has also taken trade complaints to the WTO Dispute Settlement Body. Examples include complaints against Indonesia, Australia and Argentina as well as Japan, Germany and Brazil, taken under the Super 301 law which has become a conduit for complaints to the WTO.

Another organization which has exerted its influence across the boundaries of states is the International Court of Justice. Its best-known case is that of Bosnia Herzegovina v. Yugoslavia in which the court was called to establish the if the genocide convention had been violated.

In addition, there is now the unique legal framework of the European Union, wherein sovereign states voluntarily subject themselves to a transnational authority.

There has been some debate as to if such transnational bodies have any meaningful influence over sovereign states. The answer would seem to be "yes," as there has been general compliance with the rulings of these courts. The United States was forced to comply with the WTO ruling on its gasoline sanctions, and Japan immediately agreed to partially open its auto and fire insurance markets to foreign companies after a complaint was issued by the United States.

Conclusions

The introduction of the FSIA in 1967 marks the change in United States' policy regarding the absolute sovereignty of states. Despite very narrow scope, this act has been applied successfully in a number of cases to subject other countries to the jurisdiction to the United States' legal system. There is also evidence that more legislation will be passed by Congress which would pose a further threat to the sovereignty of states. However, the United States itself is not immune to the legal actions of other authorities, especially transnational institutions such as the WTO. Specifically, there has been a clear trend in recent years towards the increased role of transnational institutions, and this has certainly contributed to the atrophy of the individual states' power.

END NOTES:

1 See Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 486, 103 S.Ct. 1962, 1967, 76 L.Ed.2d81 (1983).
2 Schooner Exchange v. M'Faddon, 11 U.S. (7 Cranch) 116, 3 L.Ed. 287 (1812)
3 11 U.S. (7 Cranch) at 136.
4 Id. at 487 & n. 9,103 S.Ct. at 1968 & n. 9.
5 26 Dep't of State Bull. 984 (1952), reprinted in Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 711,96 S.Ct. 1854, 1869, 48 L.Ed.2d 301 (1976) (Appendix 2)
6 Id. at 488, 103 S.Ct. at 1968; H.R.Rep. No. 1487, 94th Cong., 2d Sess. 7, reprinted in 1976 U.S.Code Cong. & Admin.News 6604, 6606
7 28 U.S.C. ss 1330(a) & 1604.
8 § 1602(a)(2).
9 461 U.S. 480
10 504 U.S. 607 (1992)
11 488 U.S. 428 (1989)
12 507 U.S. 349 (1993)
13 H.R. 2647 105th Congress 1st Session
14 S1200 105th Congress !st Sesson
16 the ''Gasoline Rule", 40 C.F.R. Part 80.

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JEFFREY KAPLAN
Consent of the Governed
The reign of corporations and
the fight for democracy
This article has been abridged for the web.

DESCRIBING THE UNITED STATES of the 1830s in his now-famous work, Democracy in America, the young French aristocrat Alexis de Tocqueville depicted a country passionate about self-governance. In the fifty years since sovereignty had passed from the crown to the people, citizens of the new republic had seized upon every opportunity "to take a hand in the government of society and to talk about it....If an American should be reduced to occupying himself with his own affairs," wrote de Tocqueville, "half his existence would be snatched from him; he would feel it as a vast void in his life."

At the center of this vibrant society was the town or county government. "Without local institutions," de Tocqueville believed, "a nation has not got the spirit of liberty," and might easily fall victim to "despotic tendencies."

Photograph: Mary Schjeldahl
 
In the era's burgeoning textile and nascent railroad industries, and in its rising commercial class, de Tocqueville had already detected a threat to the "equality of conditions" he so admired in America. "The friends of democracy should keep their eyes anxiously fixed," he warned, on an "industrial aristocracy....For if ever again permanent inequality of conditions and aristocracy make their way into the world it will have been by that door that they entered." Under those conditions, he thought, life might very well be worse than it had been under the old regimes of Europe. The old land-based aristocracy of Europe at least felt obliged "to come to the help of its servants and relieve their distress. But the industrial aristocracy... when it has impoverished and brutalized the men it uses, abandons them in a time of crisis."

As de Tocqueville predicted, the industrial aristocrats have prevailed in America. They have garnered enormous power over the past 150 years through the inexorable development of the modern corporation. Having achieved extensive control over so many facets of our lives -- from food and clothing production to information, transportation, and other necessities -- corporate institutions have become more powerful than the sovereign people who originally granted them existence.

As late as 1840, state legislators closely supervised the operation of corporations, allowing them to be created only for very specific public benefits, such as the building of a highway or a canal. Corporations were subject to a variety of limitations: a finite period of existence, limits to the amount of property they could own, and prohibitions against one corporation owning another. After a period of time deemed sufficient for investors to recoup a fair profit, the assets of a business would often revert to public ownership. In some states, it was even a felony for a corporation to donate to a political campaign.

But in the headlong rush into the Industrial Age, legislators and the courts stripped away almost all of those limitations. By the 1860s, most states had granted owners limited liability, waiving virtually all personal accountability for an institution's cumulative actions. In 1886, without comment, the United States Supreme Court ruled for corporate owners in Santa Clara County v. Southern Pacific Railroad, allowing corporations to be considered "persons," thereby opening the door to free speech and other civil rights under the Bill of Rights; and by the early 1890s, states had largely eliminated restrictions on corporations owning each other. By 1904, 318 corporations owned forty percent of all manufacturing assets. Corporate owners were replacing de Tocqueville's "equality of conditions" with what one writer of the time, W. J. Ghent, called "the new feudalism... characterized by a class dependence rather than by a personal dependence."

Throughout the twentieth century, federal courts have granted U.S. corporations additional rights that once applied only to human beings -- including those of "due process" and "equal protection." Corporations, in turn, have used those rights to thwart democratic efforts to check their growth and influence.

 
CORPORATE POWER, largely unimpeded by democratic processes, today affects municipalities across the country. But in the conservative farming communities of western Pennsylvania, where agribusiness corporations have obstructed local efforts to ban noxious corporate farming practices, the commercial feudalism de Tocqueville warned against has evoked a response that echoes the defiant spirit of the Declaration of Independence.

In late 2002 and early 2003, two of the county's townships did something that no municipal government had ever dared: They decreed that a corporation's rights do not apply within their jurisdictions.

The author of the ordinances, Thomas Linzey, an Alabama-born lawyer who attended law school in nearby Harrisburg, did not start out trying to convince the citizens of the heavily Republican county to attack the legal framework of corporate power. But over the past five years, Linzey has seen township supervisors begin to take a stand against expanding corporate influence -- and not just in Clarion County. Throughout rural Pennsylvania, supervisors have held at bay some of the most well-connected agribusiness executives in the state, along with their lawyers, lobbyists, and representatives in the Pennsylvania legislature.

Linzey anticipated none of this when he cofounded the Community Environmental Legal Defense Fund (CELDF), a grassroots legal support group, in 1995. Initially, CELDF worked with activists according to a conventional formula. "We were launched to provide free legal services to community groups, specifically grassroots community environmental organizations," Linzey says. "That involved us in permit appeals and other typical regulatory stuff." But all that soon changed.

In 1997, the state of Pennsylvania began enforcing a weak waste-disposal law, passed at the urging of agribusiness lobbyists several years earlier, which explicitly barred townships from passing any more stringent law. It had the effect of repealing the waste-disposal regulations of more than one hundred townships, regulations that had prevented corporations from establishing factory farms in their communities. The supervisors, who had seen massive hog farms despoil the ecosystems and destroy the social and economic fabric of communities in nearby states, were desperate to find a way to protect their townships. Within a year, CELDF "started getting calls from municipal governments in Pennsylvania, as many as sixty to seventy a week," Linzey says. "Of 1,400 rural governments in the state we were interacting with perhaps ten percent of them. We still are."

But factory hog farms weren't the only threat introduced by the state's industry-backed regulation. The law also served to preempt local control over the spreading of municipal sewage sludge on rural farmland. In Pittsburgh and other large cities, powerful municipal treatment agencies, seeking to avoid costly payments to landfills, began contracting with corporate sewage haulers. Haulers, in turn, relied on rural farmers willing to use the sludge as fertilizer -- a practice deemed "safe" by corporate-friendly government environmental agencies.

Pennsylvania required the sewage sludge leaving treatment plants, which contains numerous dangerous microorganisms, to be tested only at three-month intervals, and only for E. coli and heavy metals. Most individual batches arriving at farms were not tested at all. It was clear, from the local vantage, that the state Department of Environmental Protection had failed to protect the townships, turning many rural communities into toxic dumping grounds -- with fatal results. In 1995, two local youths, Tony Behun and Danny Pennock, died after being exposed to the material -- Behun while riding an all-terrain vehicle, Pennock while hunting.

"People are up in arms all over the place," said Russell Pennock, Danny's father, a millwright from Centre County. "They're considering this a normal agricultural operation. I'll tell you something right now: If anyone would have seen the way my son suffered and died, they would not even get near this stuff." After a U.S. Environmental Protection Agency scientist linked the two deaths to a pathogen in the sludge, county supervisors tried to pass ordinances to stop the practice, but found that the state had preempted such local control with its less restrictive law.

The state's apparent complicity with the corporations outraged local elected officials. People began to understand, Linzey recalls, "that the state was being used by corporations to strip away democratic authority from local governments."

MANY SMALL FARMERS in rural Pennsylvania were already feeling the devastating effects of increasing corporate control over the market. They often had no choice but to sign contracts with large agribusiness corporations -- resulting in a modern form of peonage. By the corporate formula, a farmer must agree to raise hogs exclusively for the corporation, and to borrow $250,000 or more to build specialized factory-farm barns. Yet the corporation could cancel the contract at any time. The farmer doesn't even own the animals -- except the dead ones, which pile up in mortality bins as infectious diseases ravage the crowded pens. The agribusiness company takes the lion's share of the profits while externalizing the costs and liabilities; the farmer left financially and legally responsible for all environmental harms, including groundwater contamination from manure lagoons.

Even if farmers could find a way to market their hogs on their own, loan officers often deny applications from farmers unless they are locked into a corporate livestock contract. "The once-proud occupation of 'independent family farmer' has become a black mark on loan papers," Linzey writes on the CELDF website.
 
 
A bespectacled thirty-four-year-old, Linzey speaks with a tinge of southern drawl. Under the tutelage of historian Richard Grossman of the Program on Corporations, Law, and Democracy, he has become an eloquent speaker on organizing tactics, constitutional theory, and the history of corporations in this country. But he is also an excellent listener. He heard the indignation as incredulous supervisors came to understand their lack of authority in the regulatory arena. The rights and privileges that corporations were able to assert seemed incomprehensible to them. "There's disbelief," he says. "Then the clients attack you, and then you have to explain it to them, giving prior examples of how this works."

Township supervisors were quick to see that the problem was not simply factory farms or sludge, "but the corporations that were pushing them," Linzey says. Enormously wealthy corporations were able to secure rulings that channeled citizen energies into futile battles. The supervisors started to realize, according to Linzey, "that the only thing environmental law regulates is environmentalists."

By 1999, with CELDF's help, five townships in two counties had adopted a straightforward ordinance that challenged state law by prohibiting corporations from farming or owning farmland. Five more townships in three more counties followed suit. Also in 1999, Rush Township of Centre County became the first in the nation to pass an ordinance to control sludge spreading. Haulers who wanted to apply sewage sludge to farmland would have to test every load at their own expense -- and for a wider array of toxic substances than required by the weaker state law. Three dozen townships in seven counties have unanimously passed similar sludge ordinances to date. Citing a township's mandate to protect its citizens, Licking Township Supervisor Mik Robertson declares, "If the state isn't going to do the job, we'll do it for them."

So far, the spate of unanimous votes at the municipal level has halted both new hog farms and the spreading of additional sludge in these townships.
IN DE TOCQUEVILLE'S TIME, local communities like those in Clarion County had enormous strength and autonomy. The large corporation was nonexistent, and the federal government had little say over local affairs. Americans by and large reserved patriotic feelings for their state. People, at least those of European descent, played a more active role in local governance than they do today. Their only direct experience with the federal government was through the post office. As de Tocqueville pointed out, "real political life" was not concentrated in what was called "the Union," itself a telling term; before the Civil War the "United States" was a plural noun, as in, "The United States are a large country."

Since the consolidation of the Union and throughout the twentieth century, the autonomy of state and local governments has continued to wane as corporations have grown larger and gained more extensive rights under the U.S. Constitution. In two decisions in the mid-1970s, the Supreme Court affirmed a corporation's right to make contributions to political campaigns, considering money to be a form of "free speech." And over the past few decades, corporations have won increasingly generous interpretations of the Interstate Commerce Clause of the Constitution. Originally intended to prevent individual states from obstructing the flow of goods and people across their borders, the clause has been used by corporations to challenge almost any state law that might affect activity across state lines. In 2002, for example, the federal courts ruled that a Virginia law prohibiting the dumping of trash from other states violated a waste hauler's rights. In early 2003, Smithfield Foods, one of the nation's largest factory-farm conglomerates, sued on similar grounds to overturn Iowa's citizen initiative banning meatpacking companies from owning livestock, a practice the citizens believed undercut family farms.

Elsewhere, corporate rights have posed increasingly absurd threats to sovereignty. In 1994, for example, Vermont passed a law requiring the labeling of milk from cows that had received a bioengineered bovine growth hormone; in 1996 the federal courts overthrew that law, saying that the mandated disclosure violated a corporation's First Amendment right "not to speak." Four years later, a Pennsylvania township tried to use zoning laws to control the placement of a cell-phone tower; the telecommunications company sued the township and won, citing a nineteenth-century civil rights law designed to protect newly freed slaves.

Until recently, these incidents might have been seen simply as aberrations or "corporate abuse." But an increasing number of Americans have begun to consider a whole range of single-issue cases as examples of "corporate rule." The role that government has played, in their view, is merely that of a referee who enforces the rules defined by corporations for their own benefit rather than the public's.

It was this perception that motivated the townships to take their revolutionary stand. But their successes in halting factory farming and sludge applications within their borders didn't prohibit corporations from attempting to press their case in the courtroom.

In 2000, the transnational hauler Synagro-WWT, Inc. sued Rush Township, claiming its antisludge ordinance illegally preempted the weaker state law and violated the company's constitutional right of due process. It also sued each supervisor personally for one million dollars. In response, Linzey recalls, one township supervisor asked, "What the hell are the constitutional rights of corporations?" A year later, PennAg Industries Association, a statewide agribusiness trade group, funded its own suit against the factory farm ordinance in Fulton County's Belfast Township on similar constitutional grounds. Rulings on both suits are expected as early as mid-2004.

It was only after those suits had been filed that the two Clarion County townships, Licking and Porter, took the historic step of passing ordinances to decree that within their townships, "Corporations shall not be considered to be 'persons' protected by the Constitution of the United States," a measure that effectively declared their independence from corporate rule. For Mik Robertson, the issue is simple: "Those rights are meant for individuals." He and his two fellow supervisors later revised their ordinance to also deny corporations the right to invoke the Constitution's Interstate Commerce Clause; Porter Township is considering a similar amendment. Several other townships are preparing their own versions of the corporate rights ordinance, according to Linzey.

Now, when a corporation claims that an antisludge ordinance violates its rights, the townships can simply say those rights don't apply here. The corporation would then be forced to defend corporate personhood in a legal battle. That hasn't happened yet, but Linzey and his allies have energized a statewide coalition that has vowed to fight the issue all the way to the Supreme Court, raising awareness along the way about a basic question of sovereignty: By what authority can a conglomeration of capital and property, whose existence is granted by the public, deny the right of a sovereign people to govern itself democratically? Linzey predicts that such a suit could happen within a decade. That battle, he says, could ignite populist sentiment across the country -- even around the world.

Growing support for these issues was put to the test in 2002, when agribusiness interests, displeased by the spread of ordinances prohibiting factory farming, began prodding the Pennsylvania state legislature to pass an even more severe bill than the 1997 directive. This time there was no disguising it as waste-disposal regulation. The 2002 bill had one explicitly stated purpose: To strip away a township's right to control agriculture -- including sludge applications -- within its borders. When it stalled in a senate committee, the Pennsylvania legislators renumbered the bill and rammed it through before their constituents noticed. By the time CELDF found out about the bill, it was up for a vote in the house.

"We ignited opposition almost overnight," Linzey recalls. "We were working with 100-plus townships already. All we had to do was notify them."

Within two weeks, the coalition included four hundred local townships, five countywide associations of township officials, the Sierra Club, two small-farmers groups, the citizens' rights group Common Cause -- even the United Mine Workers (whose members had been sickened by sewage sludge applied on mine reclamation sites), which invited in the formidable AFL-CIO.

"It was like Sam Adams in 1766, when the Townsend Acts were passed," says Linzey. "He had already built the mob, the rabble, and just had to alert the people that this was happening as an act of oppression."

Because the issue had been defined as protection of a community's right to self-determination, the bill became unpopular and was tabled indefinitely. On Thanksgiving Eve 2002, it met its end when a mandated voting period elapsed. Astonishingly, the coalition had won.
 
 
In so defining the issue, the deliberations in Clarion County resonate far beyond its borders. In recent years, judges, mayors, and a host of local and state legislators nationwide, whose authority as democratically elected representatives is similarly threatened by the increasing legal dominance of corporations, have begun to take action:

    * In Minnesota, State Representative Bill Hilty has introduced a state constitutional amendment eliminating corporate personhood.
    * The Arizona Green Party is campaigning for the passage of a similar amendment in their state.
    * In the northern California town of Point Arena, legislators passed nonbinding resolutions in opposition to corporate personhood.
    * Iowa, Kansas, Minnesota, Missouri, Nebraska, Oklahoma, North Dakota, South Dakota, and Wisconsin have all passed laws outlawing corporate ownership of farms.

But in the age of globalization, questions of sovereignty can no longer be addressed strictly within U.S. borders. Clarion County's townships may pass an ordinance saying that a sludge hauler's constitutional rights don't apply. "But if there is foreign participation, say if they are partially German-owned or Canadian," says Victor Menotti of the International Forum on Globalization, "you run up against another set of corporate rights under [international] trade agreements."

It was this other set of rights, the understanding of global "corporate rule," that brought many of the forty thousand demonstrators to the streets of Seattle in December 1999 to shut down the meeting of the World Trade Organization (WTO). It is also what incited subsequent demonstrations at the meeting of the World Bank in Prague in 2000, the meeting of the G-8 (the eight most economically powerful countries) in Genoa in 2001, the Free Trade Area of the Americas meeting in Québec in 2001, and most recently, the WTO meeting in Cancun. Through it all, protesters have held fast to one principle: the right of a people to govern themselves, through their representatives, without obstruction by corporations.

One of the increasing number of public officials in the U.S. who face challenges to their sovereignty similar to those faced by their counterparts in the Pennsylvania townships is Velma Veloria, chair of the Washington State legislature's Joint Committee on Trade Policy. For fifty-three-year-old Veloria, the 1999 Seattle demonstration against the WTO was a defining event. Veloria realized that behind the tumult in the streets, "there was a whole movement that was asking for accountability and transparency." She imagined what might happen if a tanker that was not double-hulled spilled oil in Puget Sound. She and her colleagues could pass a law requiring double hulls in Seattle harbor, but under the emerging rules of the WTO, such a law could meet the same fate as a Clarion County antisludge ordinance: It could be attacked as interfering with the rights of corporations, as a barrier to trade. "It opened a whole new field for me about the sovereignty of the state," Veloria says.

California State Senator Liz Figueroa, chair of the Senate Select Committee on International Trade Policy and State Legislation, has faced similar quandaries. In 2000, Figueroa authored a bill that made it illegal for the state to do business with companies that employed slave or forced labor. Figueroa explained to the city councils and constituents in her district that foreign trade imports produced by slave labor could undercut the local economy. But as pragmatic and ethically incontestable as the bill sounds, it could potentially be challenged under the WTO's rules.

"Our job is monumental," she says, referring to her efforts to explain how trade agreements can usurp democracy. "We have to make sure our own legislative offices even know of the conflict... we have to explain the reality of the situation."

Figueroa and Veloria are not alone. International trade agreements such as the North American Free Trade Agreement (NAFTA), the WTO's General Agreement on Trade and Tariffs (GATT), and the pending Free Trade Area of the Americas (FTAA) threaten the jurisdiction of any elected or appointed representative of a sovereign people at any level of government. A National League of Cities resolution declared that the trade agreements could "undermine the scope of local governmental authority under the Constitution." Last year, the Conference of Chief Justices, consisting of the top judges from each state, wrote a letter to the U.S. Senate stating that the proposed FTAA "does not protect adequately the traditional values of constitutional federalism" and "threatens the integrity of the courts of this country." In California, Minnesota, Oregon, Washington, Massachusetts, and New Hampshire, state legislatures have expressed concern over trade agreements, as has the National Council of State Legislators. Their statements, however more discreet, nonetheless echo the chants from the streets of Seattle: "This isn't about trade, this isn't about business; this is about democracy."

 
DESPITE THEIR ENORMOUS ramifications, most international trade agreements remain a mystery to the average American. At the core, they are simple.

GATT and NAFTA cover the trade of physical goods between countries. They can be used to override any country's protection of the environment, for example, or of workers' rights, by defining relevant laws and regulations as illegal "barriers to trade." They provide for a "dispute resolution" process, but the process routinely determines such laws to be in violation of the agreements.

In the case of GATT, a WTO member country can sue another member country on behalf of one of its corporations, on the grounds that a country's law has violated GATT trade rules. The case is heard by a secret tribunal appointed by the WTO. State and local officials are denied legal representation. If the tribunal finds that a law or regulation of a country -- or state or township -- is a "barrier to trade," the offending country must either rescind that law or pay the accusing country whatever amount the WTO decides the company had to forgo because of the barrier, a sum that can amount to billions of dollars. In short, practitioners of democracy at any level can be penalized for interfering with international profit-making.

Through this process, WTO tribunals have overturned such U.S. laws as EPA standards for clean-burning gasoline and regulations banning fish caught by methods that endanger dolphins and sea turtles. The WTO has also effectively undermined the use of the precautionary principle, by which practices can be banned until proven safe -- in one recent instance superseding European laws forbidding the use of growth hormones in beef cattle. A WTO tribunal dismissed laboratory evidence that such hormones may cause cancer because it lacked "scientific certainty." On similar grounds, the U.S., on behalf of Monsanto and other American agribusiness giants, recently initiated an action under GATT challenging the European Union's ban on genetically modified food.

Under NAFTA, which covers Canada, Mexico, and the U.S., a corporation can sue a government directly. The case would also be heard by a secret tribunal, such as when Vancouver-based Methanex sued the U.S. over California's ban on a cancer-causing gas additive, MTBE. The company, which manufactures the additive's key ingredient, claimed that the ban failed to consider its financial interests. Since July 2001, three men -- one former U.S. official and two corporate lawyers -- have held closed hearings on the thirteenth floor of World Bank headquarters in Washington, D.C., to decide whether, in this instance, a democratically elected governor's executive order to protect the public should cost the U.S. $970 million in fines. The FTAA, recently fast-tracked for negotiations to put it into effect by 2005, would extend NAFTA's provisions to all of Latin America.

GATS, the General Agreement on Trade in Services, a recent trade agreement under the WTO, takes the usurpation of democracy one step further. While GATT deals with the exchange of goods across international borders, GATS establishes certain privileges for transnational companies operating within a country. It covers "services," meaning almost anything from telecommunications to construction to mining to supplying drinking water. It even includes functions that traditionally have been carried out or closely controlled by government, like postal services and social services such as welfare -- even libraries. Activists point out that the primary focus of the GATS is to limit government involvement, "whether in the form of a law, regulation, rule, procedure, decision, administrative action or any other form," to quote the treaty itself. Public Citizen's Lori Wallach has called GATS a "massive attack on the most basic functions of local and state government."

Under GATS, any activity the federal government agrees to declare a "service" would be thrown open to privatization. The supply and treatment of water is a timely example, since the European Union is currently pressing the United States to make water among the first of the services it places under GATS. If clean drinking water is so declared, no government body in the U.S. could insist that it remain publicly managed. If any government wanted to create a publicly owned water district, foreign corporate "competitors" would have the right to underbid the government for control of the service. Just as important, a transnational company could challenge any rules -- including environmental and health regulations -- that would hamper its ability to profit from a business that is related to a service under GATS.

On March 28, 2003, twenty-nine California state legislators signed a letter of concern to U.S. Trade Representative Robert Zoellick about the provisions contained in GATS. The letter states that GATS could usurp any government regulation, including nurse-to-patient staffing levels, laws against racial discrimination, worker health and safety laws, regulatory limits to oil drilling, and standards for everything from waste incineration to trace toxins in drinking water. As a result, the letter states, GATS would "jeopardize the public welfare and pose grave consequences for democratic governance throughout the world."

Veloria and Figueroa both believe that if state legislators are to challenge this "power grab," in Veloria's words, they will have to organize among themselves. "One state cannot do it alone. We need to do it on a national scale." Otherwise U.S. citizens may find themselves under the thumb of NAFTA and WTO trade tribunals, "unelected bodies that have no accountability to the people." At that point, Veloria asks, "Why have state legislators, why have elected officials?"

IN HIS WORK WITH the rural Pennsylvania supervisors, Thomas Linzey's approach to domestic corporate rights may well illuminate how individuals, states, and nations can deal with international trade treaties.

"Clarion County is one of many emerging examples of local communities reasserting their own authority to define how they want land managed and what sort of protections they want for their community," says antiglobalization organizer Victor Menotti. "It's when things like this come to light that people question what the hell we've gotten ourselves into. These local communities stand up, and others say, 'if they can do that, we can do that.'"

On many issues of local governance, Linzey believes, a state or local legislature "could declare null and void the federal government's signature on GATT." To him it would be the "ultimate act of insurrection: saying governments have no constitutional authority to give away sovereign and democratic rights to international trade tribunals that operate in secrecy."

For now, Velma Veloria is still working through traditional channels. In an attempt to remove the antidemocratic provisions of the trade treaties, her committee will take up the issue with the state's delegation to Congress. But she is well aware that her colleagues, and the people of Washington State, may find that traditional route closed to them, as the Pennsylvania townships did in 1997.

If that happens, the practice of democracy at the local level would require legislators to defy the trade agreements. "At some point we might get to where the people working with Linzey are," she says. "We may end up saying we don't recognize parts of the international trade agreements that impact us. But that depends on the grassroots, on people demanding it."

There, too, the Pennsylvania coalition may offer some inspiration. "When the agribusiness folks filed suit over our anti-corporate farming laws," Linzey recalls, "page one of the lawsuit said 'we the corporations are people and this ordinance violates our personhood rights.' When we photocopied that, people immediately understood how they're ruled by these constitutional rights and privileges. It sparks a conversation."

The Pennsylvania township supervisors are backed by a determined grassroots movement, with a constituency "ready to go to the mat for their binding law to establish a sustainable vision that doesn't include corporate rights and privileges," says Linzey. "The product is not the ordinance," he adds. "The product is the people."

THE PENNSYLVANIA ordinances express the will of a sovereign people who are exercising their right to create institutions that support their vision of how they wish to live. And, as one would expect in a democratic society, the people of Pennsylvania wish to be the ones who define the rules under which those institutions may operate, be they governments or corporations.

History repeats itself. In the course of asserting their sovereign rights, the citizens of rural Pennsylvania have undergone a profound change in personal identity and political consciousness not unlike that of their forebears. As historian Lawrence Henry Gipson noted, "The period from 1760 to 1775 is really the history of the transformation of the attitude of the great body of colonials from acquiescence in the traditional order of things to a demand for a new order." People who for generations had considered themselves loyal Englishmen suddenly declared themselves to be citizens of a new nation, one based on the sovereignty of its citizens.

Veloria believes we are at a similar juncture today. "I have faith that the American people will stand up for themselves and for democracy. They can only be pushed so far."

This article has been abridged for the web.

JEFFREY KAPLAN'S essays and articles have appeared in many regional and national newspapers and periodicals. He lives and works in Berkeley, California.

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Consent of the Governed
BY JEFFREY KAPLAN
As corporations gain in power--and in control over our lives and livelihoods--the notion of democratic governance seems more and more quaint. But some don't see it that way.

Yangtze Farewell
PHOTOGRAPHS BY STEVEN BENSON
TEXT BY PENELOPE
GRENOBLE O'MALLEY
The waters of the Yangtze are closing fast over two millenia of history--and any chance for second thoughts about China's energy needs.

Weaving Basra
BY MEGHAN NUTTALL SAYRES
Threading together a holy city even as violence tears it apart, a weaver finds the spirit of an ancient Sufi poet amidst the rubble.

Other features available in print version only:

Out of the Wild
BY VERLYN KLINKENBORG

Beating Around the Bush
BY BILL McKIBBEN

After Olive Picking
BY JOHN ELDER

IThe Accidental Historian
BY JENNIFER SAHN

Waking from the Corporate American Dream
BY HELENA NORBERG-HODGE

Sewing Dignity
BY ROBERT ITO

Seeing Things
BY REBECCA SOLNIT

The New Old Growth
BY TOM HORTON

A Tale of Two Turtles
BY ROBERT MICHAEL PYLE

Ecology of a Virus
BY MARK JEROME WALTERS

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The WTO, The US Constitution, and Self-Government
by Richard Grossman
originally published in By What Authority (Vol. 2, No. 1 - Fall 1999)
Reprinted/extended in Defying Corporations, Defining Democracy (2001)
from the PROGRAM ON CORPORATIONS, LAW & DEMOCRACY

        NOTE: This article, written just before the historic WTO protests in Seattle, has enduring insights concerning the role of corporations in trade agreements, finance and all manner of usurped governance.

        Mike Ferner, Dave Henson, Peter Kellman, Ward Morehouse and Mary Zepernick contributed to this article.

        If the World Trade Organization (WTO) were disappeared tomorrow, many people in other nations would feel a bit of relief. But nothing fundamental would change in the USA. This is because corporations already have the special privilege (which lawyers call their "right") to make basic governing decisions. WTO or no WTO, corporations are protected by our constitution and our Supreme Court, and therefore by the police, army, navy, air force, CIA . . .

        In late November, thousands from around the world will join people across the Pacific Northwest to protest WTO maneuvers in Seattle. Outside the United States, WTO decrees will inflict great harms upon human life and biological systems. We in the US have a responsibility to support efforts by activists from other lands to neutralize and abolish the WTO. So POCLAD is participating in and supporting efforts to raise hell in Seattle.

        But after Seattle, we in the USA have a formidable challenge: to identify and undo over 200 years of constitutional doctrines and laws designed to clothe corporate property with the power of government.

        One example (among a zillion) of how these doctrines work: a few years ago a Massachusetts people's movement got a law passed restricting state officials from buying goods or services from corporations trafficking with Burmese dictators. Corporate directors did not like this public assault upon their "rights." But they did not have to summon the WTO into action. Why? Because men of property in the USA have long relied on the federal courts as their very own safety net. So they expected federal judges to nullify this law. And these judges did not disappoint, saying simply that it was beyond the authority of the Massachusetts people to legislate such matters.

        We have a long history of corporations vetoing people's laws and making their own. And the idea of merchants using some kind of world trade organization to do this work is nothing new. Towards the end of the 17th Century, a new class of global merchants -- architects of the expanding British Empire -- realized their need "to create or adapt agencies to enforce British law on the one hand and restrain colonial legislatures on the other." So they set up a Board of Trade and Plantations to "scrutinize [the] colonial economy with an eagle eye . . . [and] recommend . . . with firm insistence the annulment of objectionable bills passed by colonial legislatures." [1]

        The American Revolution unleashed a great democratic spirit. This led to struggles between the more-propertied and the less-propertied. In a number of states, activists were able to qualify more white men to vote, increase the authority of lower legislative houses, lessen the ability of creditors to milk their debtors forever and ever, and limit the veto powers of governors and judges.

        This of course is not what the wealthy, landed men who helped lead the revolution had in mind. They were, after all, a small minority of 20%: European and Colonial class structures had already defined the majority -- women, slaves, Native peoples, indentured servants and workers in general -- as non-legal persons; indeed as property. So in self-defense, Washington, Hamilton, Madison and other leaders of this minority wrote and fixed in place a constitution "to contain the threat of the people rather than to embrace their participation and their competence." [2] Committed to "preventing popular liberty from destroying itself" because "the anarchy of the property-less would give way to despotism," [3] they made it extremely difficult for the majority to use the constitution to make basic changes in law even if and when they should ever win the civil and political rights of persons.

        In addition, these Federalist [4] founders defined decisions about investment, production, labor and technology as private property's "rights." They believed such decisions were proper matters only for the wealthy landed gentry and commercial class (the corporate managers of today). Accordingly, at the 1787 constitutional convention in Philadelphia, Federalist delegates maneuvered a leap from the Articles of Confederation -- which had kept power and authority in state legislatures -- to a totally new constitution erecting a powerful central government. In the constitution's commerce clause (article 1, section 8), they forbade majorities, through state legislatures, from making rules for production, commerce and trade.

        And to appointed Supreme Court justices, they gave the authority of kings.

        So when today's corporate managers assemble at a meeting of the World Trade Organization, it is in this triumphant Federalist tradition that they deny legislatures representing communities, states, provinces and national governments the right to make decisions over what shall be produced, where it will be produced and who shall produce it under what conditions.

        Photographs of the blue-green Earth floating in space help people see our planet's fragile place in the Cosmos. A decade's experience with the North American Free Trade Agreement (NAFTA), the proposed Multilateral Agreement on Investment (MAI) and the World Trade Organization can help us examine our country's camouflaged histories.

        With critics properly identifying the Seattle WTO meeting as an illegitimate global constitutional convention, we can now recognize the US constitution as the first NAFTA. Sent to Philadelphia by their states to address some problems of interstate commerce under the Articles of Confederation, the (mostly Federalist) delegates pledged themselves to secrecy. Once behind closed doors, they replaced the Articles with a new plan, and denied the public any details about their deliberations for 53 years. [5] Their constitution turned a cooperative venture among sovereign states into a set up where Congress would decide commerce, an unelected Senate [6] would approve treaties, a Supreme Court would dictate the law of the land, and an indirectly-elected president [7] would command a standing army.

        There are many similarities in the critiques put forward by the foes of the 1787 constitution and by foes of today's corporate WTO:

            * Ultimate authority to govern should be in the hands of elected legislators meeting in decidedly public processes, not of appointed judges;

            * Government should promote democracy, community and public virtue, not special privileges for the few, not a commercial empire based on accumulation of wealth; property should not translate into privilege and political power;

            * Communities and states should not give up their authority to distant, absentee rulers -- especially to an appointed Supreme Court or to tribunals of corporate lawyers and trade bureaucrats;

            * The majority must be able to amend bedrock doctrines and laws without waging a revolution every time;

            * Mechanisms must exist to cut out of the body politic all institutions which improperly seize property and governing authority, or cause vast harms.

        Overpowered and outmaneuvered by the Federalist founders, critics of the constitution yielded when promised a Bill of Rights. With spotlights on global production and trade deals revealing our constitution as the first NAFTA, our Bill of Rights stands exposed as the first diversionary "side agreement!" This is because, just as the labor and environmental "side agreements" did not alter NAFTA's basic undemocratic design, the Bill of Rights did nothing to change the very specific language of the constitution which empowered the propertied minority to rule. In addition, the state ratification process -- during which the text of the constitution itself could not be changed -- was the continent's first "fast track" vote.

        For two centuries, people -- especially those disinherited by the Federalist founders -- have sought to use these first ten amendments to gain their rights and stop assaults by the wealthy and powerful. But to this day, the courts have not used the Bill of Rights protect people from entities defined as private -- such as corporations. That is why, for example, workers on corporate property enjoy no Bill of Rights powers such as freedom of speech and assembly. Indeed, the Bill of Rights has been used to give even greater powers to the propertied -- as with the Supreme Court's creation and expansion of corporate "free speech."

        What's more, invoking the Bill of Rights frequently requires appeals to property's safety net -- the federal courts. Such appeals legitimate federal court authority -- particularly the Supreme Court's -- to nullify the laws of towns, cities and states (just as we legitimate the whole cockamamie NAFTA structure by invoking a NAFTA "side agreement" to save a worker or a tree). In other words, we empower the Supreme Court (or NAFTA) to amend the constitution. This is what Supreme Court justices did by ruling that the slave Dred Scott had no rights a court must respect because he was someone's property; [8] that states could not control railroad corporations within their borders; that unions were criminal conspiracies; that the Fourteenth Amendment made the corporation a legal person; [9] that speaking out against war was a crime. [10]

        The surface language of the US constitution is about We the People, our delegated authority, consent of the governed, the blessings of liberty. But the coercive power of the constitution is directed to limiting authority of the majority to make the rules for governing this country.

        The surface language of the WTO is about the free trade of goods and services across national borders. But the coercive power of the WTO is directed to limiting the authority of the majority in every country to govern -- that is, to control their own labor, spend their natural wealth, use their property, conserve their resources, structure their communities, define their institutions, choose their technologies. Backed by the military power of governments controlled by men of property (especially by the United States), the WTO is about enabling a few to rule over multitudes.

        Let us all help get the WTO off the backs of other countries. But after Seattle, we'd best start changing the rules which the propertied minority put into our constitution two hundred years ago. Growing numbers of people have been exploring this challenge, but a definitive blueprint is yet to emerge. So there is great need for creative people from all walks of life to help frame this work.

        As throughout human history, our collective task is protecting human rights over property privileges; empowering local, elected and public authority against private and distant unilateral decree; nurturing democracy, equal opportunity and the Earth, as opposed to protecting the wealthy minority's "property rights" in governing, accumulating and denying others.

        This minority uses elections, mayors, governors, legislatures, regulatory agencies, courts, police, armed forces and the president to keep the people from assembling to make the rules for investment, production, work, property and self-governance. We can replace the legal codes, judicial precedents and corporate culture which enable them to do so.

        It is up to We the People -- which now includes whole classes (such as women, African Americans, workers and Native peoples) who the culture, law and the Federalist founders once defined as property -- to define corporations as public instruments subordinate to the people, and not as private contracts. [11] Let us break the hold which dead Federalists and Supreme Court justices have maintained over our lives and this fragile Earth.

        Endnotes

           1. Charles and Mary Beard, The Rise of American Civilization, volume 1, 1927, pp. 197-98.

           2. Jennifer Nedelsky, Private Property and the Limits of American Constitutionalism: The Madisonian Framework and Its Legacy, Chicago: University of Chicago Press, 1994, p. 159.

           3. Nedelsky, pp. 27-28.

           4. Wealthy planters, land speculators, bondholders and slaveholders like Washington and Madison who sought a strong central government, and who organized states to ratify the constitution (written largely by Madison), were known as "Federalists." Those who opposed these men and their constitution were labeled "Anti-Federalists." Among the most famous were Patrick Henry, Richard Henry Lee, Mercy Otis Warren.

           5. Only after Madison's death were his detailed notes on the constitutional convention published.

           6. The 17th amendment, ratified in 1913, replaced selection of senators by state legislators with direct election.

           7. Electors appointed by each state -- comprising the so-called "electoral college" -- technically control selection of the president.

           8. Dred Scott v. Sandford, 60 U.S. 393 (1856), 151, 198

           9. Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 396 (1886), 68, 106, 199

          10. See various court decisions supporting the legality of sedition laws punishing speech and assembly during World War I. --Ed.

          11. In an 1819 decision (Trustees of Dartmouth College v. Woodward, 4 Wheaton 518), the Supreme Court wrote corporations into the Constitution, declaring that corporate charters were contracts which legislatures could not change. See "You've Heard of Santa Clara, Now Meet Dartmouth" in this volume.

        Copyright © 1999 by Richard Grossman
        Reprinted with permission of the author.

        By What Authority, the name of our publication, is English for quo warranto. Quo warranto is the sovereign's command to halt continuing exercise of illegitimate privileges and authority. Evolved over the last millennium by people organizing to perfect a fair and just common law tradition, the spirit of By What Authority animates people's movements today.

        We the people and our federal and state officials have long been giving giant business corporations illegitimate authority. As a result, a minority directing giant corporations privileged by illegitimate authority and backed by police, courts and the military, define the public good, deny people our human and constitutional rights, dictate to our communities, and govern the Earth. By What Authority is an unabashed assertion of the right of the sovereign people to govern themselves. A publication of the Program on Corporations, Law and Democracy.

        POCLAD is a project of the nonprofit Council on International and Public Affairs.
        POCLAD
        P.O. Box 246, So. Yarmouth
        Massachusetts 02664-0246
        Phone: (508) 398-1145
        FAX: (508) 398-1552
        E-mail: people@poclad.org
        Website: www.poclad.org                Karen Coulter, OR
        Greg Coleridge, OH
        Mike Ferner, OH
        Richard Grossman, NH
        Dave Henson, CA
        Peter Kellman, ME
        Ward Morehouse, NY
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        Mary Zepernick, MA
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Repeal the General Agreement on Tariffs and Trade

View Current Signatures   -   Sign the Petition

    To:  U.S. Congress

    To: The Congress of the United States

    PETITION FOR REDRESS OF GRIEVANCES

    We the People of the United States do hereby petition our duly elected representatives in both Houses of Congress, to initiate action to repeal the General Agreement on Tariffs and Trade (GATT) and thereby terminate our membership in the World Trade Organization (WTO). The basis of this petition and associated grievances are as follows:

    BACKGROUND:

    On April 1, 1994, representatives from one-hundred thirteen nations of the world, including the United States, met in Marrakech, Morocco to sign the “Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations” commonly known as GATT. By signing the Final Act, our representatives agreed to submit GATT to Congress for approval and adoption.

    On December 1, 1994, Congress enacted the Final Act of the Uruguay round of GATT. Shortly thereafter, President Clinton signed this bill and GATT, with all its Agreements including those establishing the World Trade Organization (WTO), became United States Law.

    The substance of this petition is based upon the Articles of the Final Act which are repugnant to and in direct violation of several key provisions of our constitution.

    ARTICLES ESTABLISHING THE WORLD TRADE ORGANIZATION:

    Article I. The WTO is hereby established.

    Article II, Paragraph 1. The WTO shall provide the common institutional framework for the conduct of trade relations among its Members in matters related to the agreements and associated legal instruments included in the Annexes to this Agreement.

    Article II, Paragraph 2. The agreements and associated legal instruments included in Annexes 1, 2 and 3 are integral parts of this Agreement, binding on all Members.

    Article III, Paragraph 3. The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes in Annex 2 to this Agreement.

    Article XVI, Paragraph 4. Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.

    Article XVI, Paragraph 5. No reservations may be made in respect of any provision of this Agreement.

    APPLICABLE CONSTITUTIONAL PROVISIONS:

    Article I, Section 1. All legislative powers herein granted shall be vested in a Congress of the United States.

    Article I, Section 8. The Congress shall have the power to regulate commerce with foreign nations and to make all laws necessary and proper for carrying into Execution this power.

    Article III, Section 1. The judicial power of the United States shall be vested in One Supreme Court and in such inferior courts as the Congress may from time to time ordain and establish.

    Article V. The Congress, whenever two thirds of both house shall deem it necessary, shall propose Amendments to this Constitution.

    GRIEVANCES:

    Grievance 1. Wrongful Assignment of Congress’ Legislative Power

    The Multilateral Trade Agreements established by GATT, under the guise of the WTO, are legally binding upon member nations and establish that member nations will, without reservation, agree to ensure their laws, regulations, and administrative procedures conform to those established by the WTO. Furthermore, if member nations are unable to negotiate a mutually satisfactory solution to a dispute or controversy, then the WTO may adopt a solution as recommended by its Panels. This ruling is legally binding upon the disputing parties and all other member nations of the WTO. Therefore, when a Panel ruling is adopted by the WTO, the WTO has performed a legislative act that is legally binding upon member nations and their citizens.

    Article I, Section 1, of our Constitution states that the legislative powers of our Nation will be vested in Congress. If rulings adopted by the WTO are legislative acts legally binding upon member nations, then a part of the legislative power granted to Congress by the Constitution is no longer vested in Congress, but instead, has been assigned to the WTO. Nowhere in the Constitution is Congress given authority to assign any part of its legislative powers to a second party. The wording of Article I, Section 1, is clear; all legislative powers shall be vested in Congress. If, as has been demonstrated, some of the legislative power of Congress is now vested in the WTO, then this is in clear violation of Article I, Section 1 of the Constitution.

    Grievance 2. Wrongful Abridgment of Citizen Voting Rights

    Our Constitution provides that the people of this Nation will elect those who make our laws. However, Grievance 1 established that under GATT, Congress has wrongfully assigned some of its legislative power to the WTO. If the legislative power vested in Congress is divided between Congress and the WTO, as is the case, and United States citizens do not vote for WTO representatives, then it follows that the voters of this Nation do not vote for those who exercise the assigned legislative power. If the voting citizens of this Nation no longer vote for those who establish “all” of our laws, then the voting rights of Americans have been abridged in violation of our Constitution.

    Grievance 3. Wrongful Assignment of the Power to Regulate Commerce with Foreign Nations.

    The Uruguay Round of GATT, Article II, Paragraph 1, states that, the WTO shall provide the common institutional framework for the conduct of trade relations among its Members in matters related to the agreements and associated legal instruments included in the Annexes to this Agreement. In contrast, Article I, Section 8 of our Constitution states that Congress shall have the power to regulate commerce with foreign nations and to make all laws necessary and proper for carrying into execution this power. Nowhere in our Constitution is Congress given authority to assign its power to regulate commerce with foreign nations to a second party or to bestow authority upon that second party to make trade laws that are legally binding upon Americans. If Panel rulings are legally binding upon Americans, which they are, then this is in clear violation of Article I, Section 8 of our Constitution.

    Grievance 4. Wrongful Assignment of the Judicial Power of the Supreme Court.

    The Uruguay Round of GATT establishes a procedure, whereby, if a member nation of the WTO is offended by an existing United States law, that nation can bring this issue or controversy before the a Dispute Settlement Body (DSB) for resolution. If the DSB adopts a Panel report in favor of the offended Nation, as a condition of our membership in the WTO, we have pre- agreed without reservation, to nullify the offending law. Therefore, DSB adopted rulings are superior to and can result in the repeal of United States law. Article III, Section 1 of our Constitution, provides that the judicial power of this Nation shall be vested in our Supreme Court. The GATT accord establishes that the WTO now retains some of the judicial power vested in the Supreme Court by our Constitution. Nowhere in the Constitution is Congress given authority to assign the judicial power of the Supreme Court to a second party. If WTO rulings have the legal authority to repeal United States, which they do, then this is in clear violation of Article III, Sections 1 of our Constitution.

    Grievance 5. Wrongful Change in Primary Governmental Functions by a Simple Legislative Act

    A constitution is sacred to a Nation because of its three fundamental purposes; it establishes government, establishes how government will function, and protects the rights of citizens. All Constitutions include a procedure for amending its provisions. This amendment procedure is rigorous to preclude frivolous change and demands a higher level of passage than a simple legislative act. Therefore, changing any Constitution through a simple legislative act is unconstitutional because it bypasses the more demanding amendment process and the protections provided therein.

    If a fundamental purpose of our Constitution is to establish how our government functions and two prime functions of our government are to establish and review laws, then it follows that any significant change to our legislative or judicial review processes must be made by amendment. This truth is fundamental and self-evident. Clearly, it is wrong to allow a lower level procedure established by the Constitution to change procedures provided for in the Constitution, when a higher level procedure is included for this expressed purpose. Therefore, any ordinary legislative act which results in a change to how our government functions is unconstitutional because it trivializes the amendment process and by extension, the Constitution itself.

    When Congress passed the General Agreement on Tariffs and Trade thereby establishing this Nation as a member of the World Trade Organization, it did so through a simple majority vote on a trade bill. Unfortunately, WTO membership entails far more than just a trade agreement because the organization was constituted to govern world trade through a dispute settlement process. This dispute settlement process supersedes and replaces the legislative and legislative review processes established by our Constitution and therefore, as demonstrated in Grievances 1, 2, 3, & 4, constitute a fundamental and significant change in how our government functions and operates. These fundamental and significant changes are as follows:

    Before GATT:

    •Subject to final approval by the President, Congress enacted all laws governing this Nation and its people.

    •The people of this Nation voted directly for those who made our laws.

    •Congress, alone, regulated commerce with foreign nations.

    •The Supreme Court was the final and only authority over United States law.

    •The criteria for the nullification of a law was the test of constitutionality.

    After GATT:

    •The power to enact laws has been divided between Congress and the WTO. Furthermore, the president does not have veto power over laws established by the WTO.

    •The people of this Nation no longer vote directly for those who make our laws.

    •Congress no longer regulates commerce with foreign nations and this authority now resides with the WTO.

    •The judicial review authority of our Supreme Court has been divided between the Supreme Court and WTO. Furthermore, the situation is such that our Supreme Court cannot overrule a WTO ruling without violating our agreement with that organization.

    •Our laws can now be voided because a group of foreign nationals view them as being unfair to trade.

    It is self-evident that these changes wrought by the enactment of GATT, are significant and fundamental such that they constitute a significant change in the nature and form of our government. This being true, the Congressional vote for the Uruguay Round of GATT, a simple legislative act of Congress, is repugnant to our Constitution because such significant and fundamental change to governmental functions must be made by Constitutional Amendment. For these reasons, GATT and our membership in the WTO are unconstitutional.

    RELIEF:

    We, the undersigned, consider the passage of GATT and our participation in the WTO as a member to be repugnant to and in direct violation of Articles I and III of the Constitution of the United States of America and as a result, is a flagrant and unacceptable violation of our elected representatives sworn duty to protect and preserve our Constitution. Therefore, we the people of the United States do hereby petition Congress to, with all due haste, repeal the General Agreement on Tariffs and Trade (GATT) and terminate our membership in the World Trade Organization (WTO).

    Sincerely,

    The Undersigned

View Current Signatures
 

    The Repeal the General Agreement on Tariffs and Trade Petition to U.S. Congress was created by and written by Alan Adaschik (citizenal@surfbest.net).  This petition is hosted here at www.PetitionOnline.com as a public service. There is no endorsement of this petition, express or implied, by Artifice, Inc. or our sponsors. For technical support please use our simple Petition Help form.

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SF Gate        Return to regular view
    U.S. Laws Diluted by Trade Pacts
    Rulings stir criticism across political spectrum
    - Robert Collier, Glen Martin, Chronicle Staff Writers
    Saturday, July 24, 1999

    Question: What do the Marine Mammal Protection Act, the Endangered Species Act and clean-air rules of the United States and Canada have in common?

    Answer: They all have been weakened because of rulings by international trade tribunals, whose legal and diplomatic power is under growing, bipartisan criticism.

    More disputes are brewing, and elected officials across the United States and in other nations are hopping mad. Currently under challenge at the trade tribunals are a wide range of issues related to national, state and municipal sovereignty, such as jury awards and laws protecting water quality and human rights.

    The North American Free Trade Agreement and the World Trade Organization, which began functioning in 1994 and 1995, respectively, established a system of three- member tribunals to resolve disputes over government measures that act, directly or indirectly, as trade barriers.

    Governments that lose such rulings must amend domestic legislation or face heavy fines.

    ``Although there are benefits to getting more open markets, the unanswered -- and, until recently, unexamined -- question is whether Americans are willing to pay the high price of trading away our legislative power,'' said Robert Stumberg, a law professor at Georgetown University in Washington, D.C.

    Controversy has been spurred by recent cases such as these:

    -- Gasoline. In 1997, the U.S. Environmental Protection Agency weakened its Clean Air Act regulations to comply with a WTO ruling barring U.S. limits on contaminants in imported foreign gasoline. Venezuela claimed that the limits, which affected California and eight other states, acted as an unfair trade barrier.

    -- Endangered turtles. Last October, the WTO ruled against the U.S. ban on shrimp imports from nations whose fishing fleets do not use devices to keep endangered sea turtles out of the nets. The Clinton administration is revising its implementation of the Endangered Species Act to comply with the WTO ruling.

    -- Dolphin-safe tuna. This fall, U.S. supermarkets will again sell tuna that is caught using mile-long nets blamed for snaring and killing thousands of dolphins per year. Last year, Congress weakened the Marine Mammal Protection Act to comply with a 1992 WTO ruling against the U.S. ``dolphin-safe'' tuna certification.

    -- State purchasing. Two U.S. federal courts have ruled that Massachusetts' ban on state contracts with firms doing business with Burma's military dictatorship is an unconstitutional intrusion on the federal government's foreign-policy powers. Massachusetts announced last week that it will appeal the rulings -- in which the judges cited a complaint filed in the WTO by the European Union and Japan -- to the Supreme Court, where it is expected to become a major test of federalism.

    -- Jury awards. In October, Loewen Group, a large Canadian funeral corporation, filed a NAFTA lawsuit against the U.S. government, seeking $750 million in damages because of what it claimed was unfair treatment by a local jury in a Mississippi state court. In that case, Loewen had been convicted of fraudulently trying to corner the regional funeral market and was fined $500 million -- but instead of appealing the case through the U.S. legal system, Loewen settled out of court and made an end run to NAFTA.

    -- MTBE. The Vancouver-based Methanex Corp. filed a $970 million NAFTA lawsuit last month against California's plan to ban MTBE, the gasoline additive that is blamed for polluting the state's groundwater. A similar lawsuit filed last year by a U.S. company forced Canada to overturn its ban on a similar additive.

    The MTBE case ``is what we predicted would happen under NAFTA and what we predict will happen under the WTO,'' said Rep. George Miller, D-Martinez. ``It's happened with dolphin-safe tuna, and it could happen with lots of other laws.

    ``This is the New World Order's assault on democracy,'' Miller said. ``Local legislation can be nullified because a secret trade tribunal says so. . . . It doesn't matter whether you're a Republican or Democrat, a conservative or liberal.

    ``What's at risk now is the drinking water of every Californian. The issue just got brought home in a big way.''

    But others insist the new rules are helping to ensure fair treatment for international investors and are boosting trade.

    Jack Lindsey, chairman of Santa Barbara-based Sun Belt Water Inc., has sued Canada under NAFTA for $468 million after British Columbia enacted a moratorium on the export of water, canceling a 1991 contract that Sun Belt had signed to bring the province's water by tanker to Southern California.

    ``They refused to reach an equitable settlement with us,'' Lindsey said. ``All we are asking is that they honor the contract they originally signed with us, or pay us for breaching it.''

    He acknowledges that international trade tribunals can essentially overrule some national laws:

    ``In the sense that a country has assigned certain rights to an international entity, some sovereignty has been surrendered. But these are decisions outlined in treaties that are freely and openly negotiated by elected representatives. It is a legal process.''

    The Clinton administration is clearly embarrassed by the controversy over trade pacts it has championed. Officials of the State Department and the U.S. Trade Representative refused to comment on the record.

    Many California lawmakers of both parties say they worry that their powers are under attack.

    Assemblyman Robert Pacheco, a Los Angeles County Republican, said the MTBE lawsuit might open a Pandora's box.

    ``I'm concerned about the case's impact on California sovereignty, in terms of its impact on our ability to do away with something harmful to our citizens,'' Pacheco said. ``It will probably wind up being a test case about states' rights.''

    California Attorney General Bill Lockyer and the cities of San Francisco, Los Angeles and Oakland have filed legal briefs supporting Massachusetts in the lawsuit against its Burma boycott.

    For the three cities, the decision to back Massachusetts is natural -- they and a half-dozen other California cities and counties have similar bans regarding Burma. The state government does not have any such law, but views the case as important nonetheless.

    ``The Massachusetts-Burma ruling is a potential interference in our powers as state and local governments,'' said Assistant Attorney General Thomas Gede, referring to a June 22 federal appeals court decision. ``We're confident that the Supreme Court will agree that the federal courts can't restrict how we choose to do our own purchasing.''

    Gede said an unfavorable Supreme Court ruling could lead to attacks on other local measures -- such as the University of California's rules on sweatshop-free merchandise and the state's sanctions on European insurance firms involved in Holocaust-era claims -- that might be vulnerable to challenge in the WTO.

    The root of the overall problem is that there is an inherent conflict between the decentralized U.S. federal system and foreign investors, said Christiane Hayashi, a San Francisco deputy city attorney.

    ``The WTO is trying to achieve for our trading partners a uniformity that doesn't exist,'' she said. ``The European Union wants to have uniform trading rules throughout the 50 states, because when San Francisco and others make local rules, it makes it more difficult for foreign corporations'' to standardize their products and services.

    Last year, the city's Board of Supervisors, along with the National Association of Counties and a dozen other U.S. cities, adopted resolutions opposing the Multilateral Agreement on Investments, a proposed pact that is expected to be negotiated at the WTO.

    ``It's not so much that the sovereignty of the nation is being directly threatened,'' said Daniel Seligman, director of trade policy for the Sierra Club.

    ``It's more that trade has become a kind of de facto global government serving only one constituent -- transnational corporations. . . . You end up with corporate property rights that go well beyond what is provided by 200 years of Supreme Court rulings.''
    BACKLASH

    Critics of the North American Free Trade Agreement and the World Trade Organization are trying to rein in their legal powers:

    -- Insider access: On Wednesday, a lawsuit filed in Seattle federal court charged the U.S. Trade Representative and the Commerce Department with excluding environmental groups from official trade advisory committees while giving access to the timber industry. The plaintiffs include the Sierra Club, Oakland- based Pacific Environment and Resources Center and San Francisco-based International Forum on Globalization.

    -- Enforcement of rulings: Congress is expected to vote in the next few weeks on an appropriations bill amendment sponsored by Rep. Dennis Kucinich, D-Ohio, and Rep. Ileana Ros-Lehtinen, R- Fla. The measure would block the federal government from carrying out legal challenges to city and state laws that WTO and NAFTA panels have ruled to be trade barriers. A similar move last year lost by a 228-200 vote, and this year's vote is expected to be closer.

    -- WTO summit: The WTO's November 29 to December 3 summit meeting in Seattle is expected to begin a new round of agreements involving investment, financial services and agriculture. But unions, environmentalists and poor nations want negotiations stopped, saying the WTO's powers should be limited, not expanded.

    -- Robert Collier

    Page A - 1
    URL: http://sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/1999/07/24/MN30628.DTL
    ©2006 San Francisco Chronicle

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World Trade or World Domination?

To its supporters, the WTO is a ray of hope for free trade and growth for even the poorest developing countries. To its detractors, and there are many, it is the enemy of human rights, the environment, labor, and local self-determination. Here are answers to some common questions about the WTO to help you make up your own mind.

by Silja J.A. Talvi
Nov. 24, 1999

More WTO Coverage:

Exporting the Mess

Uncommon Ground

Circus in Seattle

World Trade or
World Domination?

The Scoop Takes on the WTO

Globalization and the Maquiladoras

Hot Button: Genetically Modified Foods

Top 10 Reasons to Shutter the WTO

Readers Weigh In On WTO

Our Complete WTO Archive
SEATTLE--Never mind Y2K. For thousands of activists worldwide, an apocalyptic phenomenon of an entirely different sort threatens the world in the new millenium: the World Trade Organization.

To its opponents, the WTO is the arch-enemy of worker's rights, environmental protection, biodiversity, national sovereignty and local economic control. To supporters, it's a beacon of free trade and beneficial growth, shining a light of hopeful promise into even the darkest corners of the developing world.

And on Nov. 30, it's coming to the US for the first time. The WTO's Third Ministerial Conference in Seattle will be the largest trade meeting ever held in the nation. Thousands of trade ministers and other government officials, including President Clinton, are expected to attend the meeting, which will set the agenda for a new three-year round of international trade negotiations.

Borne along on one side by Armani-clad horsemen of the global economy, the WTO will be weighed down on the other by throngs of disenchanted, dispossessed and altogether displeased dissenters who insist that the pro-corporate, undemocratic nature of the institution portends nothing but misery for the majority of the world's inhabitants.

But just what is this multi-tentacled creature, and why does it make so many people so angry? Herewith, a MoJo Wire primer:

What is the WTO, anyway?
The WTO grew out of GATT, the General Agreement on Tariffs and Trade, a 1948 compact among 23 countries designed to lower tariffs and other barriers to free trade across their borders.

From 1948 to 1994, GATT members came to the global trading table eight times; each time, more members were admitted. International trade boomed as national regulations were gradually diminished -- a process that moved into high gear in the Reagan-Thatcher '80s and has continued to accelerate since. At the last round of GATT talks, emboldened by the 1993 passage of NAFTA, the North American Free Trade Agreement, officials hammered out a radically new framework for international trade that laid the foundation for the WTO. While GATT concerned the literal trade in goods, the new agreements encompassed vast new areas of present and potential economic activity, including agricultural subsidies, banking, intellectual property rights, investment, telecommunications, and the broadly defined category of "services."

To give the expanded rules lasting power, the WTO was established in 1995 to enforce existing trade agreements and serve as a central clearinghouse through which trade relations between countries could be handled. According to the WTO's organizational statement, its objective is to "help trade flow smoothly, freely, fairly and predictably." It currently consists of 135 member nations, which are responsible for more than 90 percent of world trade. Membership brings the huge advantages of relatively unfettered trade in goods, services, technology, and investment capital with other WTO nations.

The WTO Secretariat, based in Geneva, now has 500 staffers. Atop the heap is new Director-General Michael Moore, a former overseas trade minister and one-time prime minister of New Zealand. In his six years in power, Moore and his Labor party have successfully eliminated many agricultural subsidies, cut government social spending, deregulated the labor market, and disempowered labor unions.

Is the WTO a democratic institution?
The organization has always emphasized that its decisions are "democratic," insofar as they are made by the entire membership of nation-states, and usually by consensus. Some developing nations have a seat at the table alongside world powers.

But to a great extent, the wealthier countries dominate decision making. The US, for instance, maintains a small army of permanent negotiators in Geneva - something most WTO member nations can't afford. WTO agreements, says Debi Barker, deputy director of the International Forum on Globalization, while eventually ratified by all member countries, are often decided upon by a small group. Citing a Nov. 6 protest letter written to the WTO by 11 member developing countries, Barker says that smaller nations are growing increasingly frustrated at being left out of important negotiation processes altogether. The IFG also argues that developing nations have been strong-armed into ratifying agreements by way of direct or indirect threats regarding IMF loans upon which many of them depend.

Everyday citizens, in turn, theoretically have a voice through their governments. All of the WTO's discussions and records of trade disputes, however, are closed to the public.

"In reality," says Steven Shrybman, executive director of West Coast Environmental Law in Vancouver, B.C., and author of "The Citizen's Guide to the WTO", the organization "is not accountable to [most] people whose lives are affected by it. Most of them live in developing countries. While they have a seat at the table, they don't even have a tiny scintilla of the resources they need to engage effectively in the complex and myriad functions, disputes, and negotiations under the auspices of the WTO."

Enforcement of WTO trade-dispute resolutions similarly favors the major powers. In theory, the WTO serves as the mechanism through which trade disputes are impartially resolved. When one country challenges another for not complying with WTO regulations, the matter is taken before an appointed, secret panel of "trade experts."

If the trade experts find that a WTO trade agreement has indeed been violated, the WTO has the power to insist that the offending country change its practices or face fines and/or trade sanctions from the injured nation. That, however, hardly makes for a level playing field. If Panama, say, were to impose sanctions on the US, hardly anyone would notice; but US sanctions could cripple Panama's economy.

WTO supporters respond that the organization's consensus-based system prevents this sort of thing from happening. And in fact, the WTO has on occasion ruled in favor of smaller nations in trade disputes with major powers.

But such rulings are hardly the norm. In one highly publicized case, the WTO ruled in January 1999 that the EU could no longer give preferential treatment to banana imports from former colonies in the Caribbean, a decision which is likely to hurt the region's already-impoverished, primarily small-scale banana farmers. Who brought up the complaint? The US -- home base to banana giants Chiquita, Dole, and Del Monte, which control an estimated two-thirds of world banana exports.

The close relationship of corporations to the WTO has become more apparent in recent years. In the months leading up to the Seattle Ministerial, high-profile corporations were courted for hefty sponsorship donations: Boeing and Microsoft were among those who rushed to give a minimum of $250,000 to secure a presence at the opening reception and Ministerial dinner, business conference participation and prominent displays of their corporate materials and logos.

"Anyone who has a trade issue on the table is well-served by having a presence so the (WTO) is reminded of those issues," remarked Fred Benson, Weyerhaeuser's vice president of federal and international affairs, to the Seattle Times in August.

But what's so terrible about global free trade?
Trade is one thing, but unrestricted, worldwide, corporate-dominated trade runs roughshod over the environment, workers' rights, small nations, and local self-determination, critics say.

Lori Wallach and Michelle Sforza, co-authors of Public Citizen/Global Trade Watch's "Whose Trade Organization?" have made a study of the 167 contested trade issues brought to the WTO as of last March. Their conclusion: In every case in which an environmental, health, or food safety law was challenged at the WTO, such laws have been declared illegal barriers to trade. WTO rulings have forced South Korea to lower meat safety rules and the US to weaken its Clean Air Act, to cite just two.

How does the WTO affect workers rights?
On paper, the WTO has almost nothing to do with labor rights. In 1996, at the Singapore Ministerial, WTO member governments declared that the issue of international labor standards fell into the purview of the United Nations' International Labor Organization. At the same meeting member states also declared that "we reject the use of labor standards for protectionist purposes."

But the ILO has only weak enforcement powers. Thus, many critics charge that the WTO has neatly absolved itself of any responsibility to protect labor rights, while reserving the right to challenge labor laws whenever they might present a challenge to liberalized trade.

Trade, of course, can be a powerful force for creating jobs, and for reducing poverty. Indeed, more than 12 million American jobs are now attributed to the export economy. According to one study, one of every four jobs in Washington state are related to international trade.

Why, then, will some of the biggest demonstrations in Seattle be organized by workers and labor unions? Outrage over abusive sweatshop conditions throughout the developing world, for one thing. But laborers in the United States are also feeling the impact of the global economy directly, especially in the aftermath of NAFTA. According to Ron Judd, executive director of the King County Labor Council, the US has lost 537,000 manufacturing jobs in the last 18 months alone as companies continue to move production overseas to places where labor costs are cheaper.

The AFL-CIO is pushing the WTO to take several concrete steps to protect workers' rights, including a review of the impact of trade liberalization on labor; adopting enforceable rules on minimum wage guarantees, workplace safety, and the right to unionize; and assurance that trade rules do not override domestic human- and labor-rights regulations. The Teamsters have taken an even stronger stance, demanding that the WTO make all nations involved in trade pacts abide by basic standards for wages and working conditions.

To the International Forum on Globalization, the WTO's whole approach to the global economy signifies a deeper issue: "When you make capital mobile, and [when] labor isn't mobile, that's an intrinsic, systemic [problem] of economic globalization of which the WTO is an instrument," says Barker.

What about the environment?
Last week, President Clinton moved to stem widespread criticism from environmentalists by announcing that his administration will work to assess the environmental impact of WTO agreements, get input from environmental groups, and provide technical help to developing countries trying to protect their natural resources. The WTO, for its part, has stepped up efforts to dispel what it has called a misunderstanding that "commercial interests take priority over environmental protection" in the agreements of the organization. It claims that there has been no conflict between WTO agreements and international environmental agreements.

But critics say that WTO decisions on trade have undermined important environmental safeguards. Shrybman cites the Biosafety Protocol of the UN Convention on Biological Diversity as an example. Last February, more than 140 nations met in Colombia to complete the Biosafety Protocol, the result of seven years of international effort toward a policy to protect the public from the potential health and environmental threat of genetically modified organisms.

The protocol was intended to give governments the right to consent to or to refuse shipments of genetically modified foods. But, as Global Trade Watch's Wallach and Sforza have documented, the US-led "Miami Group" consisting of several major exporters of genetically modified organisms blocked adoption of the protocol, citing conflicting trade obligations under the WTO. (See also "Hot Button: Genetically Modified Foods")

The US' own environmental and endangered-species laws have suffered more direct harm. In January 1996, in response to a challenge launched by Brazil and Venezuela on behalf of their domestic oil industries, the WTO ruled that 1990 US Clean Air Act regulations requiring cleaner gasoline constituted an unfair trade barrier. Buckling under pressure, the EPA amended its own regulations to allow Venezuelan and Brazilian fuel with higher amounts of pollutants into the US.

In 1998, shrimp producers from Malaysia, Thailand, Pakistan, and India demanded -- through their governments -- an end to the US embargo on shrimp from countries that didn't use devices on their nets which protect endangered sea turtles. The WTO sided with the shrimp producers, and against the Endangered Species Act.

How about local food production?
The global economy has displaced countless subsistence farmers while boosting the corporatization of food production, as free-trade policies have helped to bring down export prices on food products. But the WTO's rationale is straightforward: Free trade ultimately benefits everyone, even if it means that workers and producers must "adjust" when trade barriers are lowered.

While many European, Asian, and North American countries have indeed seen significant economic benefits from free trade, the impact of trade liberalization for developing countries has been far more negative than the WTO cares to admit. A recent United Nations Commission on Trade and Development report shows that the share of world exports and imports has, in fact, fallen sharply among the poorest countries in recent years. Rapid liberalization of trade and the removal of trade barriers has often forced producers in developing countries to compete with -- and lose to -- more sophisticated and industrialized foreign manufacturers. UN Council on Trade and Development has also found that those countries which have pursued rapid trade liberalization have seen phenomenal increases in wage inequalities at home.

"The answer that this global economic model offers for all problems is growth , and in particular, growth in trade," says Shrybman. "That makes sense only if you think the planet is infinite in its capacity to provide us with energy -- and it obviously isn't. It's telling us, in no uncertain terms, that it's had more than it can endure. More and more consumption by more and more people of more and more things just isn't a viable prescription."

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Page 1
The General Agreement on Tariffs and Trade (GATT)
was an international organization created in 1947 to
reduce trade barriers through multilateral negotiations.
In January 1995, the GATT was replaced by a stronger
World Trade Organization (WTO), the result of eight
years of GATT negotiations. Today, member countries
number 125 (nearly the whole world except China,
some former communist countries, and a number of
small nations) and WTO rules apply to over 90 percent
of international trade.
Although still a little-known and little-understood insti-
tution, the WTO has become increasingly controversial
as it has expanded the scope of its work from its origi-
nal narrow GATT focus on reducing tariffs on manu-
factured goods. The WTO now
also works to eliminate nontariff
barriers, and can be used to chal-
lenge environmental, health, and
other regulations that may serve
legitimate social goals but may be
regarded as impediments to inter-
national trade. The 1995 replace-
ment of GATT by the WTO
heightened concern among critics
because its stronger enforcement
powers represent a further shift in
power from citizens and national
governments to a global authority
run by unelected bureaucrats.
Business, academic, and govern-
ment supporters applaud the
WTO as a more muscular sheriff of
the world trading system.
Originally, GATT functions were intended to be part of
a broader International Trade Organization (ITO),
whose charter was negotiated in the mid-1940s. The
ITO, which would have been under the aegis of the
UN, was to have a broad regulatory mandate, covering
trade, employment rules, and business practices.
However, largely due to pressure from the business
community and concerns about the ITO threatening
U.S. sovereignty, the U.S. Senate killed the organization
by refusing to ratify it, leaving the more narrowly
focused GATT to evolve on its own.
Negotiators from member nations revised GATT rules
and liberalized world trade several times in multi-year
conferences called “Rounds.” The GATT’s (and now
the WTO’s) approach to reducing trade barriers was
based on the “most-favored nation” principle, which
requires that when a nation grants a trade privilege to
one country, it must grant the same privilege to all
GATT members. Another guiding principle is that of
“national treatment, “which requires nations to give
equal treatment to foreign imports of goods or services
as to domestic goods or services.
The most recent GATT Round, the Uruguay Round,
concluded in 1993 and received U.S. congressional
approval in November 1994. It is slated to result in
average tariff reductions of 38 percent for developed
economies, reducing average tariffs worldwide from 6.3
percent to 3.9 percent. In comparison, average tariff
rates just after World War II were 40 percent.
The most controversial outcome of the Uruguay Round
was the establishment of much stronger enforcement
mechanisms in the WTO. Although GATT always had
a dispute resolution process, member nations often
ignored its rulings since they lacked serious enforce-
ment power. Unlike GATT, WTO panel decisions are
binding. If one nation makes a complaint to the WTO
that another nation’s law or regulation is protectionist
and in violation of WTO rules, the WTO can make
that nation bring the law into compliance with the
WTO standard (with minor exceptions). If the country
fails to comply, the WTO can authorize the com-
plainant nation to impose trade sanctions.
Liberalization of investment was another goal of the
Uruguay Round, but deadlocked negotiators had to
extend the deadline for new rules in this area. Thus, at
the WTO ministerial meeting in Singapore in
December 1996, European nations, backed by the U.S.
and Japan, pushed for talks on a proposed Multilateral
Investment Agreement (MIA). The MIA would force
national governments to grant foreign investors
“national treatment,” the same concept of nondiscrimi-
nation that is already applied to trade. If the MIA were
adopted, corporations could invest without restrictions
in any WTO member nation.
World Trade Organization
Key Points
• World Trade Organization
(WTO) rules apply to over 90
percent of international trade.
• The 1995 replacement of the
General Agreement on Tariffs and
Trade (GATT) by the WTO
heightened concern among critics
because its stronger enforcement
powers represent a further shift in
power from citizens and national
governments to a global authority
run by unelected bureaucrats.
• The most controversial outcomes
of the Uruguay Round were the
establishment of much stronger
enforcement mechanisms in the
WTO.
Vol. 2 No. 14
January 1997
foreign policy
in focus
Interhemispheric Resource Center
and
Institute for Policy Studies
Page 2
GATT negotiations take place behind closed doors in
Geneva, Switzerland. Although U.S. negotiators must
consult with nongovernmental advisory committees,
these entities have a disproportionate number of corpo-
rate lobbyists. Labor unions and environmental groups
have only token representation, while family farm, con-
sumer, health, and other citizens groups are completely
shut out. Likewise, the WTO lacks mechanisms for
public accountability or participation. It is not required
to consult with nongovernmental organizations or
release documents until after decisions are made. WTO
dispute resolution panels are comprised of “trade
experts” (chosen by government trade representatives
from a set roster) who hold hearings and announce rul-
ings in secret.
Under the WTO, member countries have the right to
challenge other countries’ local, state, or federal laws as
impediments to international trade. If the WTO finds
the law to be WTO-illegal, the federal government may
overturn the law or face potential trade sanctions. This
shift in power to a global-level bureaucracy undermines
a cornerstone of democracy—the practice of citizens
working with public officials to develop laws that pro-
tect the public welfare.
While promoters argue that the WTO gives developing
countries expanded access to industrialized country
markets, critics charge that trade liberalization under-
mines Southern nations’ long-term development
prospects. Small-scale, locally owned firms have diffi-
culty competing with transnational firms because they
lack comparable access to capital, economies of scale, or
advanced technology. This concern is particularly acute
in agriculture, where WTO rules on trade and domestic
policy reform undermine national strategies to ensure
food security.
New WTO rules also strip protections for local firms in
the services sector. For example, countries must allow
foreign banks to open branches in small towns, threat-
ening locally owned banks with deeper ties to the com-
munity. Malaysian economist Martin Khor claims that
new WTO rules could also decrease access to health
care, because they require that private companies (pri-
marily from the North) be allowed to buy up hospitals,
which could raise costs for the public. The proposed
Multilateral Investment Agreement would further
diminish developing countries’ power to protect local
industries and cultures from being wiped out by foreign
corporations.
The Uruguay Round did nothing to address what the
AFL-CIO calls “the cruelest and most prevalent trade
subsidy of all”—the suppression of worker rights.
Members even refused to create a process for studying
the inclusion of internationally recognized worker
rights in the WTO, largely due to opposition from a
coalition of Southern governments and a few non-
governmental groups concerned that worker-rights
standards would be used as nontariff barriers against the
exports of low-income countries.
The argument for linking labor, as well as environmen-
tal standards, to the WTO is rooted in two concepts.
First, the violation of core worker rights and environ-
mental standards is often used by corporations and gov-
ernments to gain unfair advantage in trade. Second, the
core labor rights and environmental standards to be
protected in the WTO must be only those that are
internationally recognized in the UN-affiliated
International Labor Organization (ILO) conventions
and international environmental treaties.
Under the WTO, a nation cannot discriminate against
products on the basis of how they are produced—be it
by child labor or with environmentally destructive tech-
nologies. U.S. law, for example, has banned tuna
imports from countries that allow long circular nets
designed to catch tuna, but which also trapped and
killed numerous dolphins. Yet in the eyes of the WTO,
a can of tuna is a can of tuna,
whether dolphins were killed in the
production process or not.
One of the most contentious
aspects of the WTO rules is the use
of the “least trade-restrictive” test.
Under GATT and now WTO
rules, a measure is deemed “neces-
sary” only if there is no less trade-
restrictive means available to
achieve the measure’s legitimate
health-related goals. This test lim-
its a WTO member’s ability to
develop its own approach to envi-
ronmental protection.
In 1994 the European Union used
this principle to challenge the U.S.
Corporate Average Fuel Economy
(CAFE) standards, charging that
the fuel conservation goals of the
standards could have been just as easily obtained
through gasoline taxes. The standards were ruled par-
tially in violation of GATT.
In effect, the Uruguay Round places downward pressure
on each country’s laws to match lower international
standards (in the areas where they exist). Thus, if a U.S.
law sets a higher standard on health or food safety (e.g.,
allowable pesticide use) than the international norms
codified by the UN, a country with a lower standard
could challenge the law as an impediment to trade, and,
depending on the outcome of the challenge, potentially
force the U.S. to lower the standard down to a common
denominator.
Key Problems
• Although U.S. negotiators must
consult with nongovernmental
advisory committees, these enti-
ties have a disproportionate num-
ber of corporate lobbyists.
• The shift in power to a global-
level bureaucracy undermines one
of the cornerstones of democra-
cy—the practice of citizens work-
ing with public officials to devel-
op laws that protect the public
welfare.
• The proposed Multilateral
Investment Agreement would fur-
ther diminish developing coun-
tries’ power to protect local indus-
tries and cultures from being
wiped out by foreign corpora-
tions.
Problems With Current U.S. Policy
2
Page 3
Three sets of issues should be high on the U.S. agenda
as it approaches the new WTO in the short term:
1.The expansion of WTO Powers: The U.S.
should reexamine its support for expansion of
WTO powers into the investment realm. Certain
governments in the South have justifiably argued
for a thorough evaluation of the current WTO
before any new powers are considered. Such a
review would benefit from participation by farm,
labor, environmental, and other organizations
that have been affected by the new trade rules.
2.Democracy and Transparency: European non-
governmental groups have taken the lead in argu-
ing for an end to the secrecy which shrouds the
operations of the WTO. As a public entity, the
WTO should make all documents public imme-
diately. Dispute resolution procedures should be
open to public scrutiny. Nongovernmental
groups should be recognized as important WTO
monitors and contributors to WTO delibera-
tions, and be allowed to observe WTO meetings.
3.Labor Rights and the Environment: The U.S.
government has called for the establishment of a
WTO Working Party on Worker
Rights that will make proposals
on the inclusion of labor stan-
dards within WTO rules. Yet the
U.S. should argue the case for
such a group more ardently,
since it is a necessary precondi-
tion to a serious discussion of
how core international worker
rights could be incorporated into
the WTO.
On the environment, the
WTO’s
Committee
on
Trade and the Environment (see
In Focus: Trade and the
Environment) has been a total
failure in addressing environ-
mental concerns; indeed, governments have used
it as a platform to undermine more stringent
environmental regulations in Northern countries.
Friends of the Earth and other environmental
groups have advocated abolishing the committee
and replacing it with a more effective environ-
mental review process.
As criticism against the WTO rises among citizen
groups in North and South and among a number of
governments in the South, there is the longer-term chal-
lenge of posing an alternative to this institution that
would better serve the needs of the majority in the
world. Most governments and citizen groups agree that
there is a need for a global trading body that has the
authority to enforce the trade rules that are agreed upon
among nations.
A more just and sustainable trade and investment order
would be governed by a body that is more open and
transparent, more democratic, is built upon a different
set of rules, and is rooted in a different set of principles.
The core principles of GATT—”national treatment”
and nondiscrimination—work well only when all
nations’ level of development is equal.
In today’s unequal world, nations must be given leeway
to protect domestic industries and laws. For both the
low-income countries of the South and U.S. communi-
ties concerned about maintaining and improving social
and economic standards, a global trading body should
allow governments to subsidize, favor, and protect local
industries. Countries should be able to set domestic
content levels to encourage local production, a practice
now prohibited by the WTO. Communities should be
able to protect seeds and homeopathic medicines from
the “intellectual property” incursions of large seed and
pharmaceutical companies.
Likewise, no global body should be able to challenge
any nation’s health, safety, environmental, or other laws
as being too stringent; it is up to each nation to deter-
mine how high standards should go. At the same time,
no nation should be allowed to gain unfair advantage in
international trade through the denial of emerging
international worker rights and other standards, and a
new global trading body should have the power to
enforce this. As the debate emerges over what form a
replacement of the WTO should assume, it is useful to
put the old blueprints of the International Trade
Organization on the table. While the world has changed
markedly in four decades, the original architecture
which placed employment issues and corporate behav-
ior on the agenda may be applicable to today.
Written by Sarah Anderson and John Cavanagh of the Institute
for Policy Studies.
Key Recommendations
• The U.S. should re-examine its
support for expansion of WTO
powers into the investment realm.
• The U.S. should argue more
ardently the case for Worker
Rights group as part of the WTO,
since it is a necessary precondition
to a serious discussion of how
core international worker rights
could be incorporated into the
international trading system.
• The original proposal for a
International Trade Organization,
which placed employment issues
and corporate behavior on the
agenda, should be reconsidered.
Foreign Policy in Focus is a joint project of the
Interhemispheric Resource Center (IRC) and the Institute
for Policy Studies (IPS). It is supported by subscriptions,
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Toward a New Foreign Policy
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sources for more information
Council of Canadians
904-251 Laurier Avenue W
Ottawa, Ontario,
K1P 5J6 Canada
Contact: Maude Barlow
Institute for Agriculture and Trade Policy
1313 5th Street, Ste. 303
Minneapolis, MN 55414
Voice: (612) 379-5980
Fax: (612) 870-4846
Email: mritchie@iatp.org
Contact: Mark Ritchie
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Fax: (212) 242-1901
Email: pcdf@igc.org
Contact: David Korten
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Global Trade Watch Campaign
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Washington, DC 20003
Voice: (202) 546-4996
Fax: (202) 547-7392
Contact: Lori Wallach
Organizations
Research Foundation for Science, Technology
and Natural Resource Policy
A-60 Haus Khas
New Delhi, India 110016
Contact: Vandana Shiva
Third World Network
228 Macalister Road
Penang, Malaysia
Contact: Martin Khor
Transnational Institute
Paulus Potterstraat 20
1071 DA Amsterdam, Netherlands
Contact: Myriam Vander Stichele
Publications
“It’s the Global Economy, Stupid,” Special issue
of The Nation July 15-22, 1996.
Jerry Mander and Edward Goldsmith, eds., The
Case Against the Global Economy: And For a Turn
to the Local (Sierra Club Books, 1996).
Chakravathi Raghavan, Recolonization: GATT, the
Uruguay Round and the Third World (Penang,
Malaysia: Third World Network, 1990).
Myriam Vander Stichele, The World Trade
Organization: The Ministerial Conference in
Singapore and the Developing Countries,
(Transnational Institute, November 1996).
Arlene Wilson, The GATT and the WTO: An
Overview, CRS Report for Congress
(Congressional Research Service, March 27,
1995).
World Wide Web
GATT 94
http://anaserve.irv.uit.no/trade law
/gatt/nave/toc.html
GATT Text on Line
http://farnsworth.mit.edu
/diig/NII_info/gatt.html
Global Trade Watch
http://essential.org/public_citizen/pctrade
Institute for Agriculture and Trade Policy
http://www.igc.apc.org/iatp/trade.html
International Trade Law Monitor
http://itl.ivr.uit.no/trade_law
National Law Center for Inter-American
Free Trade
http://www.natlaw.com/treaties/gatt.htm
World Trade Organization
http://www.unicc.org
WTO Homepage
http://www.wto.org/Welcome.html
WTO Minesterial Conference 1996, Singapore
http://www.wto96.org
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STOPGL2

Following the original WTO Shrink or Sink statement signed by many hundreds of groups and first issued in March 2000, there have been new developments in the WTO, such as the new push by the EU, Japan and other countries for new issues (investment. competition, government procurement etc) in a New Round, and the increased frustration of many developing countries due to continuing lack of interest by the developed countries to rectify the problems arising from many existing agreements.

There has also been increasing interest by groups that did not sign the original statement, to take part in improving the statement with their own ideas.

Due to this, some groups and individuals have attempted to revise, update and improve the original SOS statement to make it more relevant to the current situation and thus to articulate better the NGOs' and social movements' opposition to the New Round, and our views on what's wrong and what needs to be done. Hopefully the original signatories will now join in to sign the new SOS statement whilst new groups will also join in, so that we have a stronger articulation of civil society's current stand on the WTO.

Martin Khor,
Third World Network, Malaysia

This new statement is titled "Our World is Not for Sale. WTO: Shrink or Sink" and can be found on Council of Canadians. All groups who signed the previous Shrink or Sink statement MUST sign the new statement again by following the instructions below. Soon there will also be versions in Spanish, French, Portugese and Arabic on the web-page (if you plan to translate the statement into other languages let us know so that we can post them on to the web as well).

You can sign the statement by visiting the web-site of the Council of Canadians (Council of Canadians) and click on the "Our Wold is Not for Sale" logo. This is an organizational sign-on letter only. For general inquiries about the statement or for more information on how to sign, please contact Steve Staples at the Council of Canadians.

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