THE GOOD FIGHT
In approving the far-reaching, powerful WTO and smaller international trade agreements, such as NAFTA, the U.S. Congress, like the governments of other nations, has accepted harsh legal limitations on what domestic policies it may pursue and thus ceded much of its capacity to protect citizens. This new governing system is designed to exert control over minute details in the lives of the majority of the world's people. This system is structured not to enhance the well-being of human beings, but rather the well-being of the world's largest corporations and financial institutions.
Unlike members of Congress, Big Business knew what the WTO agreements contained. That's because corporate lobbyists helped draft them. Big Business has crafted these agreements to circumvent national and local governmental democratic processes, to undermine citizens' ability to force effective regulation of corporate activity, and to lock in rules that enable corporations to shut plants in one country and move elsewhere, even to a country under the thumb of a repressive regime, with virtually no restrictions.
Under these trade deals, U.S. and other nations' laws, whether federal, state, or local, must comply with the special business-friendly rules of the trade agreements. Laws to protect consumers, or to ensure that products are not made with child labor, or to safeguard the environment -- all such laws risk being decreed impermissible "nontariff trade barriers" under the tricky rules of trade agreements.
Secret tribunals established by the trade agreements render binding judgment on U.S. and other national laws. If the secret tribunals declare an American consumer protection law, say, to be in violation of WTO, NAFTA, or some other agreement, the United States has a choice: change the law or pay fines or accept sanctions to maintain it. The potential sanctions are so severe that governments now regularly repeal laws, or even withdraw them from consideration, lest they be challenged at the WTO or another trade body.
These are thus pull-down agreements: They pull down our accumulated victories and achievements in the areas of wages and hours, union organizing, food safety protection, consumer safeguards, and protections for our natural environment, among others, and have a chilling effect on future advances. For example:
Perhaps nothing has shifted as much power to multinational corporations as the investment chapter of NAFTA, known as Chapter 11. Chapter 11 contains two key features: First, it provides an array of strong protections against government action or regulation that might affect foreign investors. One gift to corporations is a prohibition on "expropriation," or actions "tantamount" to expropriation, except for public purpose and with fair market value compensation. In theory, expropriation would seem to apply only in cases where a government exercised eminent domain, such as taking over a factory. But in NAFTA, the definition is far, far more expansive. The second key feature of Chapter 11 is that it permits investors to bring suit for compensation directly against governments that have allegedly infringed on their investment rights.
NAFTA's Chapter 11 has provided the basis for a number of eyebrow-raising cases. In the largest Chapter 11 suit yet brought against the United States, in 1999 the Canadian corporation Methanex sued the U.S. government for $970 million because of a California executive order phasing out the sale of a Methanex product. Methanex claims that California's phase-out of methyl tertiary butyl ether (MTBE), a gasoline additive, violates the company's special investor rights granted under NAFTA because the California policy limits the corporation's ability to sell MTBE. MTBE poisons groundwater. Methanex says that instead of banning MTBE, California should enforce rules prohibiting improper disposal. This case is pending.
The MTBE case is reminiscent of a 1998 case brought against Canada by the U.S.-based Ethyl Corporation. In that case, Ethyl sued Canada for $250 million after Canada banned the gasoline additive methylcyclopentadienyl manganese tricarbonyl (MMT) because of health risks. The state of California had banned MMT and the U.S. Environmental Protection Agency was working on a similar regulation. Ethyl claimed the Canadian ban violated NAFTA because it "expropriated" future profits and damaged Ethyl's reputation. After learning that the NAFTA tribunal was likely to rule against its position, the Canadian government revoked the ban, paid Ethyl $13 million for lost profits, and, as part of a settlement with Ethyl, agreed to issue a public statement declaring that there was no evidence that MMT posed health or environmental risks.
In another pending case, the U.S.-based United Parcel Service (UPS) is pursuing a NAFTA Chapter 11 case against Canada for $100 million, arguing that the Canadian postal service's involvement in the courier business infringes upon the profitability of UPS operations. Canada Post is a government-owned corporation that does not receive public subsidies. Nevertheless, in this case, the first NAFTA investor-to-state case against a public service, UPS claims that by integrating the delivery of letter, package, and courier services, Canada Post has cross-subsidized its courier business in breach of NAFTA rules. For example, UPS argues that permitting consumers to drop off courier packages in Canada Post mailboxes unfairly advantages Canada Post as against other courier services.
Yes, you read this right. According to UPS, to comply with NAFTA, Canada Post should have separate boxes to drop off courier packages, picked up by nonpostal worker personnel, taken to separate facilities, processed by workers who don't handle the regular mail, and delivered by personnel not associated with the regular mail. This case is still pending. The United States, Canada, and Mexico should amend NAFTA, if they chose not to repeal it entirely, by revoking this notorious Chapter 11 immediately.
The Ravages of Corporate Globalization on America
The pull-down effect is imposed through other means, as well. U.S. corporations long ago learned how to pit states against each other in "a race to the bottom" to profit from whatever state would offer lower wages, pollution standards, and taxes. In the world of corporate globalization, companies pit countries against each other. When one city, state, or country works to ensure that corporations pay their fair share of taxes, provide their employees a decent standard of living, or limit pollution, they are typically met with the refrain: "You can't burden us like that. If you do, we won't be able to compete. We'll have to close down and move to a country that offers us a more hospitable climate."
Complying with the much too modest standards of the international global warming treaty would "harm U.S. competitiveness," alleges a leading U.S. business-backed study on global warming. Cutting greenhouse gas emissions would be "suicidal for competitiveness," British industry told the U.K. government in January 2004. In the face of such warnings, and the implicit threat that jobs will move elsewhere, governments are reluctant, to say the least, to act. As a result, the rich countries have moved at a snail's pace to confront global warming, probably one of the greatest looming threats to planetary well-being.
Frequently, the threats by industry to close or move factories are a bluff But often they are not, especially when it comes to the matter of wages. Two parallel developments are proceeding at a stunning pace: U.S. manufacturers are closing factories, in large part either because they can't compete with low-wage competitors in China or elsewhere. And large multinationals like General Electric are themselves shifting operations from the United States to low-wage havens abroad.
In significant part due to the ravages of corporate globalization, the United States has lost more than two million manufacturing jobs since 2001. The much-pruned but still vital manufacturing centers of the Midwest have been devastated, whole communities ripped apart by plant closings.
For example, Galesburg, Illinois, a town of34,000, is dealing with the pain of the closure of a Maytag refrigerator manufacturing plant. The factory employed 1,600 in good-paying jobs, and provided jobs to one-in-twelve adults in the local workforce, according to the Chicago Tribune. Maytag said it had no choice but to move its factory to Mexico, so it could match the lower production costs of Whirlpool and General Electric, which have already shifted much of their manufacturing out of the United States. On the day of the closing announcement, Diana Stephenson, who worked at the plant for twenty-eight years, told the Chicago Tribune; "I never saw chins drop so far, with men and women crying. Everybody that talked to me was worried about their children and their future."
More than half-a-million U.S. workers have been certified under one narrow government retraining program as having lost their jobs due to NAFTA. And notwithstanding predictions from NAFTA's backers to the contrary, these job losses have not been offset by new jobs in facilities manufacturing for export to Mexico. Of course, it's not exactly clear that NAFTA's corporate backers ever believed these rationalizations for entering into the agreement.
Corporate globalization provides big companies seemingly endless routes to escape the civilizing effects of citizen controls and imposed obligations-like taxes. Business has long been masterful at devising loopholes and shelters to avoid paying taxes, of course, but globalization has significantly enhanced their escape capacities.
In a particularly brazen move, more than two dozen major U.S. corporations have reincorporated offshore in order to lower their tax rate. The reincorporated companies don't close their U.S. headquarters; they simply engage in the paper transaction of filing incorporation papers in a tax haven country. One Ernst & Young tax partner put it plainly to the New York Times: "We are working through a lot of companies who feel that ... just the improvement on earnings is powerful enough that maybe the patriotism issue needs to take a back seat."
But the reincorporation gambit is small potatoes compared to the more exotic offshore tax shelters used by Halliburton and others. Employing such devices as tax payment deferrals, income stripping, and parking intangibles offshore, multinationals manipulate their assets and income to avoid billions in taxes. Montana Senator Max Baucus, ranking minority member on the Senate Finance Committee estimates that offshore tax shelters cost the public treasury $70 billion a year. Then there's the transfer-pricing maneuver, by which companies manipulate internal transactions between subsidiaries to shift income to the subsidiaries located in lower tax national jurisdictions. North Dakota Senator Byron Dorgan estimates the annual cost of transfer pricing at more than $50 billion.
Corporate Globalization Ravages the Third World
The damage done to the United States by corporate globalization pales in comparison to the violence inflicted on the Third World. With weaker governments and frail civic institutions, most of the Third World is far less able to counterbalance the growing power of multinational corporations. Consider the following snapshots from around the world.
HIV/AIDS now ranks as perhaps the worst pandemic in the history of the world. More than forty million people worldwide are HIV-positive. For all but a few, an HIV diagnosis is a preventable death sentence.
Existing treatments, which enable many people with HIV/AIDS in the United States and Other industrialized countries to live relatively healthy lives, are unavailable to 98 percent to 99 percent of the people in developing countries.
Life-saving HIV/AIDS drug cocktails cost more than $10,000 a year in the United States and other rich countries. Until recently, that was the price throughout the developing world and even in Africa -- where the epidemic has hit worst and where per capita income is typically little more than a dollar a day. The drugs cost so much not because they are expensive to manufacture, but because the brand-name companies have patent monopolies that prevent price-lowering competition.
Manufacturers in India, where drug patents will not come into force until 2005, are able to make AIDS drug cocktails for as little as $140 per person per year -- less than 2 percent of the price companies like GlaxoSmithKline, Bristol-Myers Squibb, Merck, and Boehringer Ingelheim were charging just a few years ago. Once the Indian companies entered the market and offered dramatic discounts, the brand-name companies started lowering their prices -- but they still typically charge four or more times the generic price.
Under the terms of the WTO's intellectual property agreement, all developing countries must provide patents on pharmaceuticals. However, there are safeguards that permit any country to authorize generic competition for pharmaceuticals or other products while they stay on patent. For years, the Clinton administration told countries it was unacceptable to use these safeguards, but that policy changed after protest by citizen groups like the Consumer Project on Technology and AIDS activist organizations Health GAP and ACT UP.
Still, the U.S. Trade Representative, who effectively works as an arm of the drug companies, is coercing developing countries into entering new trade agreements, Such agreements protect the monopolies of brand-name drug companies. Countries in the WTO will not be allowed to exercise their own safety standards. In addition, drug companies themselves lobby and threaten governments in developing countries. Often such countries suppress the generic cheaper competition that could save millions of dollars and help control HIV/AIDS. This ghastly economic imperialism epitomizes the immorality of monopoly power.
Smoking -- Merchants of Death
With sales declining in, increasingly health-conscious richer countries, the Big Tobacco companies have pinned their future on expanding into the developing world and the former Eastern bloc. Some companies feature marketing and advertising campaigns that deceptively tie smoking with youthful rebellion, Western notions of freedom and sophistication, and hipness -- and thereby work to addict children to a lifetime of smoking. Shamefully, many of their ads feature pop music or sports stars. The tobacco merchants of disease increasingly target women and girls, who often have far lower smoking rates than males.
After the U.S. government forced open markets in Asia-to-U.S. cigarette imports in the 1980s and 1990s, overall smoking rates increased by 10 percent, according to the World Bank. In the year after the South Korean market opened, smoking rates among teenaged girls quintupled. The tobacco industry is a grim reaper in waiting. Globally, the World Health Organization predicts that tobacco use will kill ten million people a year by 2025, with 70 percent of these deaths in developing countries. The numbers are unfathomable.
When countries try to enact appropriate health regulations, they may find themselves facing threats under trade agreements. For example, tobacco companies have argued that having to put large warnings on cigarette packs violates their guaranteed trademark rights. They have even suggested that such requirements in Canada are tantamount to an expropriation under NAFTA's Chapter 11.
The International Monetary Fund (IMF) and World Bank, two institutions that have little if any direct affect on the U.S. economy, exercise decisive and destructive influence over the economies of much of the developing world.
Based in Washington, D.C., the IMF provides loans to developing countries with balance of payment difficulties, helping them pay debts to foreign creditors. Private lenders and other public lenders generally will not lend to troubled economies unless they have a loan agreement with the IMF The IMF, whose decision making is controlled by the rich countries, in particular the United States, makes its loans on the condition that borrowing countries agree to a set of maniacal edicts known as "structural adjustment." Imagine all the other ways that taxpayer dollars, given to the IMF, could be used to truly help people in less developed countries. Over the past two decades, the World Bank, which also makes loans for infrastructure and other projects in developing Countries," has joined the IMF in making loans for structural adjustment. The results have been devastating.
In the two regions with the most structural adjustment experience, per capita income has stagnated (Latin America) or plummeted (Africa). Structural adjustment policies call for the sell-off of government-owned enterprises and services -- including functions such as tax collection that are fundamentally government responsibilities -- to private owners, often foreign investors. Privatization is typically associated with layoffs and pay cuts for workers in the privatized enterprises, and often the giveaway of valuable assets to privileged insiders. That's how Russia and Mexico corruptly became home to such a high number of the world's billionaires.
Many IMF and World Bank loans call for the imposition of "user fees" -- charges for the use of government-provided services like schools, health clinics, and clean drinking water. For impoverished people, even modest charges may effectively deny access to services. When the World Bank mandated that Kenya impose charges of $2.15 for sexually transmitted disease clinic services, attendance fell 35 percent for men and 60 percent for women. Similar results have been seen throughout the developing world.
Under structural adjustment programs, countries open up their economy to unregulated imports, and undertake a variety of measures to promote exports. Removing protections for local industry and agriculture has an even harsher impact than in rich countries. In Mozambique, for example, the IMF and World Bank ordered the removal of an export tax on cashew nuts. The result: 10,000 adults, mostly women, lost their jobs in cashew nut- processing factories. Most of the processing work shifted to India, where child laborers shell the nuts at home. In Mexico, since adoption of NAFTA, more than a million corn farmers have been driven off the land, unable to compete with cheap U.S. imports produced on highly mechanized farms.
The relentless focus by structural adjustment orders on exports comes at the expense of production for domestic needs. In the rural sector, the export orientation is often associated with the displacement of poor people who grow food for their own consumption as their land is taken over by large plantation owners (who benefit from government assistance) growing crops for foreign markets.
Oil Equates to Destruction
For years, Nigeria was ruled by one of the world's most brutal and corrupt dictatorships. Oil revenue kept the dictatorship afloat. Multinational oil companies like Shell and Chevron pumped the black gold from the oil-rich Nigeria Delta. When the Ogoni people, who live in the Delta, protested the dictatorship and the oil-drilling operations despoiling their land, the military responded with a crackdown. It executed the Ogonis eloquent leader, Ken Saro-Wiwa, and other Ogoni leaders.
No thanks to the oil companies, a fed-up populace managed to usher in a transition from Nigeria's dictatorship to a struggling democratic regime. But oil drilling remains destructive in Nigeria. The Ogoni and other ethnic groups have suffered as their land, air, and water have been despoiled by the oil companies, through flaring of gas, repeated spills, poor pipeline placement, and unlined toxic waste pits.
Unfortunately, the Nigerian case is typical of oil company operations in developing countries. The oil giants have a record of coddling dictators, trashing the environment, and wrecking local communities dependent on now-polluted streams and no-longer fertile lands.
In Burma, for example, Unocal and other companies are building a gas pipeline to Thailand. Funds from that project -- which activists claim benefited from slave labor employed by the government -- are propping up Burma's military junta. In Ecuador, tens of thousands of indigenous people charge that Texaco's operations destroyed the streams and natural environment they depend on for survival. In Chad, Exxon-Mobil is leading a consortium developing an oil project that threatens ecologically vulnerable areas and is projected to lead to the spread of HIV/AIDS (via new roads, migration, and increased prostitution). The Chad government spent $4.5 million of its first oil-related revenues on weapons; the government had promised to spend the money on poverty alleviation. In Indonesia, people living in Aceh Province, in North Sumatra, charge that Mobil Oil contracted with the Indonesian military to provide security for a natural gas project, and that the military units committed widespread human rights violations.
Plundering Our Neighbors
Corporate globalization has ushered in an era of unprecedented wealth and income inequality. Corporate and financial plunder of developing countries-and the transfer of money from the masses to a narrow elite in almost all countries, rich and poor -- has led to a shameful concentration of wealth and privilege.
Global inequalities now reach staggering levels. The four hundred highest income earners in the United States make as much money in a year as the entire population of twenty African nations -- more than 300 million people. The richest three hundred and fifty people in the world hold more wealth than the bottom three billion.
Again these income and wealth inequalities translate into far-reaching social inequalities. For example, a person born in a high-income country can expect to live half as long again as someone born in a less-developed country. A person in a less-developed country is twenty-five times more likely to die from tuberculosis than someone in a high-income country.
Confronting Corporate Globalization
As overwhelming as the odds seem of curbing corporate globalization and directing the global economy in a more humane and ecologically sustainable direction, citizens across the planet have achieved major victories against entrenched corporate power. That's one reason corporate globalizers prefer to negotiate trade and investment agreements in secret, behind closed doors, away from public scrutiny, preferably with no public awareness whatsoever.
Just a few years ago, the World Trade Organization was a little known global agency, and most people wouldn't know it from the World Tourism Organization (a small U.N. agency). That changed in Seattle in 1999. There, following on years of organizing from groups like Public Citizen and dozens of church groups and worker organizations, tens of thousands of people went to the streets to protest the WTO's corporate orientation. The inspiring street protests, combined with an empowered grouping of African governments, undermined the efforts of rich countries to expand WTO powers to further benefit multinationals. Such efforts have mostly stalled ever since.
A year earlier, an international network of civic organizations thwarted a U.S.-European attempt to craft an international investment agreement, known as the Multilateral Agreement on Investment (MAI). The MAI would have taken NAFTA's Chapter 11 to a global scale. But activists obtained a copy of the draft agreement, which was being negotiated in secret, posted it on the Internet, and developed careful and detailed analyses that showed how far-reaching the agreement would be. The deal couldn't survive public scrutiny, and it soon crumbled.
Civic groups have become especially adept at campaigning against particular corporate abuses, achieving numerous victories. The anti-sweatshop campaigns on campuses have forced universities to take responsibility for how apparel displaying their logos is made. Campaigns targeting shoe and apparel makers such as Nike and the Gap have highlighted working conditions in places where the subcontractors produce for these firms. The firms have been forced to accept at least some responsibility for improving conditions. The Burma solidarity campaign has pressured almost every major company except the oil corporations to end their investments in Burma and cut off trade with the country.
Other victories abound. The campaign for access to essential medicines has completely changed the framework for global patent issues. It has helped drop the price of AIDS drugs by more than 98 percent. It has shaped international opinion that public health needs must not be subordinated to commercial interests.
A small Colombian indigenous group, the U'wa, networked with supporters worldwide to defeat plans by Occidental Petroleum to drill for oil in their historic lands. Among other tactics, the U'wa threatened to commit collective suicide if Occidental carried out its drilling plans. Citizen campaigns all over the world have dashed the dreams of the nuclear power industry to spread its dangerous technology. No new nuclear power plants have been built in the United States in decades and Germany is now undertaking a long-term phase-out of nuclear power.
Thanks to the work of Results, Essential Action, and other groups, the U.S. Congress passed legislation requiring the U.S. representatives to the IMF and World Bank to oppose loans from those institutions that included user fees for basic health care and education. The institutions haven't come fully around, but the World Bank has backed off from supporting school fees. As a result, 1.5 million additional children -- mostly girls -- are now enrolled in school in Tanzania.
Citizen campaigns have also succeeded in crafting a people-centered globalization, which is starting to lift health, safety, and environmental standards rather than dragging them down WTO-style. For example, driven by tobacco-control citizen groups, countries adopted the world's first public health treaty in 2003. The Framework Convention on Tobacco Control calls for a comprehensive ban on tobacco advertising, promotion, and sponsorship (with an exception for countries, such as the United States, which deem such a ban unconstitutional), large health warnings, and measures to confront widespread smuggling of tobacco products.
Environmental groups have successfully lobbied and campaigned for a range of important environmental agreements, among them a ban on the export of hazardous waste. Before the treaty was adopted, waste brokers simply dumped rich countries' wastes in poor nations.
Meanwhile, in every country, citizens are banding together to create people-controlled institutions, outside of the control of the multinational corporate predators, that meet human needs.
The Grameen Bank in Bangladesh specializes in micro-credit -- small loans at reasonable interest rates to enable people to become entrepreneurs and escape the grip of local loan sharks. The success of the Grameen Bank has sparked global interest in micro-credit, which is helping develop local economies throughout the developing world.
As Michael Barratt Brown documents in Africa's Choices, successful cooperative and other small-scale economic development projects -- frequently led by women -- are proliferating throughout Africa. He points to everything from goat and sheep projects in Niger to soap-making cooperatives in Tanzania.
In Brazil, the rural association of landless workers known as the MST has specialized in self-help land redistribution. In a country with one of the most unequal income and wealth distributions in the world, large landowners leave fertile land untilled while thousands and thousand of poor rural workers have no land whatsoever. The MST organizes peaceful takeovers of the unused land, parceling it out to the poor who will use it.
These civic efforts to counter corporate globalization are united by the vision of a political economy oriented to satisfying people's needs rather than corporate imperatives. It emphasizes the importance of orienting local economies first to meet local needs, especially in the area of food production. For reasons of environmental sustainability and corporate accountability, it favors, in the phrase of economist Herman Daly, "balanced trade" and short supply lines -- meaning purchases and sales should be made locally before regionally, regionally before nationally, nationally before globally.
No one denies the importance of trade, but societies need to focus their attention on fostering community-oriented production. Such smaller scale operations are more flexible and adaptable to local demands and environmentally sustainable production methods. They are also more susceptible to democratic control and foster businesses less likely to migrate and more likely to coincide with community interests.
The citizen movements argue that basic services like health and education should be provided as a matter of right, not based on the ability to pay. They want to protect the global commons -- the seas, the atmosphere, shared knowledge -- away from corporate privatization. But there remains a huge role for the marketplace, especially as it involves locally controlled, more democratic, and smaller scale enterprises, as opposed to oligopolistic corporations. The citizen campaigns want to decentralize economic power, which is why land reform is so essential in developing countries; and they want to facilitate citizens joining together into organizations -- like labor unions -- that can offset concentrated corporate power. They want to contain unlimited capital mobility, so that absentee corporations and financial institutions do not maintain the veto power over economic policies exacted by threats from business to leave the jurisdiction unless government capitulates to their demands.
Their emphasis on local economies notwithstanding, the civic movements embrace globalization -- just not the corporate-dominated variety. They seek pull-up agreements, such as human rights treaties that set a fundamental standard for civilized behavior; the tobacco control agreement that requires members to meet minimum requirements to protect health; and the treaties that establish thresholds of environ mental protection -- as opposed to the pull-down model of the WTO and NAFTA.
At stake is the very basis of democracy and accountable decision-making that is the necessary undergirding of any citizen struggle for just distribution of wealth and adequate health, safety, and environmental protections. The corporate alternative is an economic model of supranational limitations on any nation's legal ability to put human well being before commercial activity. Corporate globalization seeks to eliminate democratic accountability over matters as intimate as the safety of our food or the conservation of our land, water, and other resources. This fetishization of profit creates grotesque inequalities and has terrible consequences for planetary ecology.
As economist Herman Daly warned in his January 1994 "Farewell to the World Bank," the push to eliminate the nation-state's capacity to regulate commerce "is to wound fatally the major unit of community capable of carrying out any policies for the common good.... Cosmopolitan globalism weakens national boundaries and the power of national and subnational communities, while strengthening the relative power of transnationa1 corporations."
More and more people are coming to see the triumph of such a perverse corporatist mentality as intolerable. By banding together in existing and new organizations; by forming networks, enterprises, and cooperative ventures; We build momentum for a just world.