What to Know About the WTO: A Union Activist's Guide

The tear gas has cleared from the streets of Seattle, but as a result of the massive battle that took place there, three letters - WTO - are now recognized by millions of people around the world. The purpose and workings of this World Trade Organization, however, remain veiled in a different kind of fog - a purposeful veil of secrecy and of high sounding phrases about global prosperity, "level playing fields," and "rules-based" trade.

Here is Labor Notes' guide to the WTO.


The World Trade Organization was established in 1994 to administer the world-wide multilateral trade agreement previously known as the General Agreement on Tariffs and Trade (GATT). Currently, 135 nations have signed the agreement. Several more, including China, are applying for membership.

When it was founded in 1947, GATT's original purpose was to promote greater international trade by getting nations to reduce their tariffs on imported goods. In fact, tariffs have fallen from about 40 percent in 1948 to about 5 percent. But since 1994, the WTO has expanded that mission to include tariffs on services and, most importantly, "non-tariff barriers" to trade, including almost any regulation of business activity.

The WTO's director-general is Mike Moore, a New Zealand free market true believer. Moore was imposed on the WTO by the Clinton Administration over the objections of developing nations.

The most important center of authority, however, is the Dispute Settlement Body, which sets up panels to decide who is right or wrong and who can impose trade sanctions against who. Panel members must be people with governmental, academic, or business experience in international trade; in other words, not labor leaders or environmental advocates.


The official story is that the WTO administers a "rules-based" system of world-wide trade between member nations. Its object, its defenders tell us, is to create a "level playing field" in which all nations are treated equally and the "market" determines the outcome.

Its supporters present the WTO as the natural and inevitable outcome of growing globalization, itself a virtual force of nature.


In reality, the WTO is about power: the power of transnational corporations (TNCs) versus the power of governments, trade unions, and popular organizations of all kinds. The WTO's rules do not govern the conduct of corporations in the business of international trade. Rather, they are aimed at limiting the power of nations to regulate TNCs, to foster or regulate domestic industries, or to set standards for the environment, labor, or food safety. The WTO rules are a bill of rights for the TNCs.

The WTO is anything but natural or inevitable. The fact is, it has been very difficult for the economic powers that be to achieve it. The "Uruguay Round" of GATT negotiations that produced WTO took eight years and broke down several times. At its founding, it remained an unfinished product torn by conflicting economic interests as well as competing TNCs. It is about as natural as Disneyland.


This reality affects us in the U.S. as the free trade regime encourages businesses to close old facilities and move work abroad in search of lower costs. Even when our work isn't going abroad - and most of it isn't - this gives the employers the added power of the threat to move away. So, our unions make concessions in the hopes of saving jobs.

It also hurts us because our state and local governments give huge tax breaks to businesses to attract them or just keep them here. As a result our taxes go up, social services are cut, public sector workers lose jobs.

Cheaper and cheaper imports produced by TNCs operating all over the world are also a problem for working people everywhere. They can affect the jobs of workers in China, South Africa, or Korea just as they do here. Imported goods as a percentage of world production rose from 7 percent in 1950 to about 20 percent today.

In fact, all working people get hurt. The inclusion of "non-tariff barriers" to trade or investment allows the WTO to rule against most kinds of labor standards, industry regulations, health and safety laws, and environmental protections when they are challenged by a member nation.

As Public Citizen trade experts Lori Wallach and Michele Sforza write, "No democratically enacted environmental, health, food safety, or human rights law challenged at the WTO has ever been upheld. All have been declared barriers to trade."




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The way this works is that the exporting or investing nation files a complaint with the WTO against a second country. The complaint may charge, for example, that the second country gives a domestic company an advantage, or that it prohibits or limits a business or business practice. A disputes panel appointed by the Disputes Settlement Body decides which country is right. The Disputes Settlement Body also appoints any appeal panel.

If the disputes panel decides in favor of the complaining country, it can impose expensive sanctions on the accused country. This was what the U.S. did in the case of the "banana wars" with Europe. The U.S. complained that the European Union was favoring bananas from its former colonies in the Caribbean. The WTO ruled for the U.S., which in retaliation imposed high tariffs on European luxury goods with WTO approval.

U.S. bananas? We don't grow bananas in the U.S., much less export them to Europe. But a U.S.-based transnational corporation, Chiquita, grows them in Central America for export around the world. The complaint came from Chiquita.


This incident tells you something else about the real WTO. While it is nations which sign on and are formally represented, it is actually the TNCs and other internationally oriented businesses who are usually behind the complaints. They are also called on as "experts" in the process of making new rules. In some cases, they actually write the rules.

In practice, the TNCs set the world-wide industry and food standards, for example, of what is safe, that underlie WTO rulings. And, as we saw in Seattle, they throw lavish parties for WTO delegates in what amounts to global influence peddling. In other words, many of the rules in this "rules-based" system are made the by TNCs and enforced by the WTO.

Pull back the curtain of national representation and there's the wizard of corporate profit-making at the controls.

No wonder the "nations" that file the complaints almost always win. Of the 113 complaints filed so far, 82 came from wealthy countries where the TNCs are based. Of the 22 cases settled by WTO disputes panels, 19 were in favor of the complaining "nation."


The WTO operates on a double standard. Nations are not supposed to employ protectionist trade practices or regulate domestic industries, but the WTO enforces certain protections for TNCs. Trade-related intellectual property rights, such as patents and copyrights, allow corporations to expropriate and monopolize technology. This prevents developing nations from employing such technology - unless they buy it from the TNCs.

This is particularly inhuman in the case of drugs. Developing countries are prohibited from using cheaper generic versions of TNC-produced drugs in fighting diseases like AIDS.

It also affects farming, where TNCs patent seeds or foods. This reached absurd levels when the WTO upheld the U.S. transnational's patent on Indian Basmati rice and a Japanese firm's patent on curry, despite the obvious fact that these TNCs did not invent these traditional foods.

This, along with the ban on subsidies for agriculture in developing countries, but not the U.S. or Europe, has given giant agri-business and chemical TNCs like Cargill and Monsanto greater power over world food production.

This, in turn, is crushing family farms the world around, including in the U.S. It is driving millions off the land and into the labor market or, more likely, un- and under-employment. This only adds momentum to the race to the bottom associated with a world increasingly dominated by TNCs and their interests.


The Clinton Administration's proposal for a WTO working group on labor standards is not new. It was first proposed by the U.S. trade delegation to the 1986 meeting of the GATT. In other words, it was first proposed by the Reagan Administration - fresh from crushing the air traffic controllers union. Need we say more?

The AFL-CIO proposes more rigorous labor standards, but it is hard to see how an organization single-mindedly bent on corporate power, deregulation, and cost-cutting could be expected to enforce them in favor of working people and their organizations. Who at the WTO, for example, would reverse the long decline of labor standards in the United States? Are the TNCs that encourage the flouting and violation of labor rights the world around likely to insist that the WTO lead the crusade for workers rights abroad?


The WTO vision of the world is the corporate, bottom line vision. In this view, nothing is as important as business and the TNCs that dominate it. Whatever gets in the way must be swept aside. The WTO's world is one of constant change and flux for the vast majority, and of growing inequality and poverty - all organized by the TNCs that dominate it.

Clearly, the vision of the labor movement must challenge the WTO's vision.