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COMMENTS
OF PUBLIC CITIZEN, INC.
REGARDING U.S. PREPARATIONS FOR THE
WORLD TRADE ORGANIZATION'S MINISTERIAL MEETING
FOURTH QUARTER 1999
October 22, 1998
Contents
The Interests of Public Citizen
I. The Impact of the World Trade Organization
1. The SPS Agreement and the Codex Alimentarius: The Beef- Hormone Ruling the Folpet Case
a. The Evisceration of the Precautionary Principle
b. The Codex Alimentarius
c. The Chilling Effect: The Folpet Case
a. Gerber in Guatemala
b. South Africa's Parallel Importing Policies
a. The Ineffectiveness of Article XX
b. The Status of MEAs in the WTO
c. The Status of PPMS in the WTO
2. The Venezuela Gas Case and the Subversion of the Democratic Process
1. Economic Impact Assessment of Trade Liberalization in the U.S.
II. The Future of the World Trade Organization
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COMMENTS
OF PUBLIC CITIZEN, INC.
REGARDING U.S. PREPARATIONS FOR THE
WORLD TRADE ORGANIZATION'S MINISTERIAL MEETING
FOURTH QUARTER 1999
October 22, 1998
Public Citizen submits these comments in response to the Office of the United States Trade Representative's (USTR) request for comments concerning the agenda of the third Ministerial Conference of the World Trade Organization (WTO) to be held in the United States during the fourth quarter of 1999, 63 Fed. Reg. 44500 (Aug. 19, 1998).
The agenda for the WTO Ministerial agenda should be objective review of the WTO's actual four-year performance and identification and remedy of its problems. The Third Ministerial Conference could provide an excellent opportunity for an objective and comprehensive review of the WTO and whether and how it has worked to meet the objectives for which it was established. Thus, the Ministerial Conference agenda should focus on evaluating the four-year experience with the WTO and its actual implications on the wide range of issues it affects: consumer safeguards, food safety and security, health and safety standards, the environment, standards of living for the people in WTO member countries and democratic decisionmaking. Existing data, based on the four year experience with the WTO, already document certain problems -- the lack of public participation and transparency, pressure to harmonize consumer protection standards downward, the continual series of anti-environmental WTO panel rulings and precedents, the damaging effects of financial services liberalization exemplified by the crisis in East Asia, and the unabated worldwide trend of increasing income inequality coupled with wage stagnation. The Ministerial agenda should have as its as its second element addressing these problems.
Absent informed consideration of the WTO's real-life performance to date, it is inappropriate to consider negotiations either to expand the WTO's jurisdiction or to deepen its current scope.
These comments set forth some specific examples of how the WTO has worked over the last four years. Consideration of these and other real life outcomes of the WTO must inform the Ministerial Conference. In particular, these comments address the following issue areas set forth by the USTR in its request for public comment: (1) implementation of existing agreements and work programs, with a particular focus on the Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement"), (2) reviews of existing agreements and work programs, (3) consultations with non-governmental stakeholders, (4) relationship between trade and labor and the environment, and (5) institutional issues, like openness and transparency.
The Interests of Public Citizen
Public Citizen, founded by Ralph Nader in 1971, is a non-profit consumer advocacy organization with over 120,000 active supporters nationwide. Since its founding, Public Citizen has worked to strengthen the ability of citizens to participate in the domestic policy-making process and has worked to improve consumer health and safety. For the past eight years, Public Citizen has worked to educate the American public about the enormous impact of international trade and economic globalization on our nation's health, safety, labor and environmental standards, democratic accountability, and policy-making procedures.
We submit these comments because the last four years of the WTO's operation have demonstrated that consumer, environmental and labor groups' concerns expressed prior to approval of the Uruguay Round in the early 1990s about what the WTO would mean for our health, safety and environmental standards, human rights advocacy, democratic policy-making and economic well-being were justified.
By merit of its approval in the United States by a lame duck Congress, comprised of fired and retired Members of Congress � many eyeing their next private sector job opportunities � the WTO's legitimacy has always been shaky. Given that similar perversions of democracy were necessary to obtain positive votes for the WTO proposal in many other countries, the WTO must prove, on the basis of its actual performance, to be in the public interest. The U.S. should ensure that the Ministerial Conference is aimed at taking honest measure of the WTO, admitting its failings and taking action accordingly.
These comments provide an assessment of the WTO's impact in the areas of public participation and transparency, health policy, environmental policy, economic development and well-being and human rights policy, focusing on specific case-studies and WTO dispute panel rulings. They also address in broader terms the long-term approach the U.S. should take towards the WTO given increasing economic dislocation in the global economy and given its structural bias against traditional modes of democratic lawmaking and participation.
I. The World Trade Organization and its Impact
A. Public Participation and Transparency in the WTO
1. Environmental and Labor Standards
During the May 1998 Geneva WTO Ministerial, President Clinton delivered a speech in which he acknowledged the concerns harbored by environmentalists and other public interest groups towards both the closed nature of WTO proceedings and the "trade �ber alles" bias of the GATT/WTO agreements and dispute panels. In response, the President suggested the establishment of new fora for "business, and labor, and environmental, and consumer groups" to provide "regular and continuous input to help guide further evolution of the WTO." The President's speech also laid out additional procedural changes for the WTO, such as opening dispute panels to public view and addressing labor and environmental concerns.
Such sentiments have been expressed by the Administration before, however, and when parsed, the specifics of the President's 1998 speech merely restate the obligations regarding the WTO set forth in the 1994 GATT Uruguay Round Implementing Legislation. In fact, the "proposals" the President presented are merely a partial list of obligations under the 1994 GATT Implementing Legislation, such as the commitment to opening the WTO dispute resolution process and to address labor and environmental matters related to trade that the Administration has totally failed to meet.
The Administration must replace this public relations strategy with substance. Indeed, the insincere WTO speech and the establishment of a phalanx of "civil society advisory groups" was broadly understood to be a "charm initiative" to quell the opposition to the Administration's retrograde trade policy which had been resoundingly defeated with the 1997 demise of a fast track proposal. If the President's "proposals" are to be understood as anything other than further domestic political fodder for the Administration's planned 1999 fast track campaign, the Administration must produce tangible changes in the WTO to break what is widely perceived in nongovernmental organizations (NGOs) and Congressional circles as a pattern of chronic insincerity on WTO accountability and openness on labor and environmental issues. For instance, the Administration typically portrays itself as fighting on the frontlines to ensure that environmental and labor standards aren't completely neglected and undermined by the WTO, and then blames other WTO member-countries when meaningful policy changes in these areas fail to materialize.
During the 1996 Singapore Ministerial, U.S. negotiators announced they were unable to secure any concessions from trading partners on labor standards within the WTO. The Administration's agenda was modest. Yet, it was unable to create a labor working group (which may actually be a blessing in disguise given the damaging failures of the WTO environmental working group detailed below). It was unable to advance a proposal to hold harmless core labor standards that conflict with WTO trade rules. It could not even wrest a WTO study on labor issues. Rather, the Singapore Ministerial Declaration, to which the U.S. signed, effectively marginalized labor issues by relegating them to the ILO � a body with weak enforcement capacity (unlike the WTO) and making new WTO policy that the WTO was not an appropriate forum to consider labor issues.
A 1996 Journal of Commerce article reported that the Administration's labor rights "push" would be part of a strategy to get labor support for fast track in fall 1997.(1) Revealingly, the Administration's inability to secure even the emptiest of commitments on labor among WTO trade partners contrasted unfavorably with its ability to secure an equally controversial proposal on information technology. Indeed, some Geneva-based commentators reported that the U.S. only raised the labor issues as a bargaining chip to be traded for its real goal of completing the Information Technology Agreement.
Yet even when institutions have been created within the WTO to ostensibly mediate the conflicts between "free trade" and other social objectives, nothing positive is accomplished in them. The creation and operation of the Committee on Trade and the Environment (CTE) is a pertinent example.(2) The rhetoric was grandiloquent, with Vice President Gore at the signing of the Uruguay Round Agreement in Marakesh stating, "As the world moves to resolve environmental problems and strengthen environmental protection, the corresponding trade implications will have to be discussed openly in the World Trade Organization, as well as other fora. The decision to create the Committee on Trade and Environment within the World Trade Organization provides the formal means to do so.... This Committee... has a mandate to develop recommendations for necessary change."
Yet, once the political spotlight faded the Administration failed to push for progress in the CTE. In the two years leading up to the Singapore WTO Ministerial, the United States did not generate a single pro-environmental (or labor) proposal for the WTO. When the European Union offered proposals for WTO recognition of multilateral environmental agreements that allow the imposition of trade sanctions, the Administration neither supported the E.U. nor produced any proposals of its own. Other countries grew bitter at the lack of leadership from the United States, the country that had called for the creation of the CTE in the first place. Perversely, the CTE has become a venue for identifying environmental measures that should be eliminated to avoid trade conflicts, and a flurry of proposals arose at the CTE to place greater constraints on the ability of multilateral environmental agreements to be enforced via trade measures.
There is, however, truth to the Administration's claims that some Third World countries resist rules to limit WTO damage to environmental and labor standards. The skepticism harbored by developing countries towards this agenda must be analyzed in the context of the unbalanced power relations within the WTO between industrialized and developing countries. The governments and NGOs of Third World members have bitterly complained that in past negotiations, including those that created the WTO in the first place, major decisions are made at informal group meetings between the U.S., the E.U. and Japan, while developing country participation is reduced to a pro-forma rubber-stamping of the agenda. In addition, disciplines on intellectual property rights and work programs on investment, competition and government procurement have been advanced against their wishes.
It is thus not surprising that some developing countries would look at developed country labor and environmental proposals as another example of "northern imperialism" or as a ploy to suit certain mercantilist interests over the interests of developing countries. Therefore, proposals at the WTO to ensure the WTO does not undermine environmental and labor measures must be advanced in the context of broad changes that make the WTO an open and truly inclusive body. The different operating procedures of the WTO as compared to the United Nations is refelcted in the very different policies developed by the two institutions on globalization issues.
Finally, the only steps taken at the WTO towards making the institution more transparent to those on the outside has been the de-restriction of WTO documents for public inspection. The General Council's July 1998 decision to derestrict certain documents would have been a step in the right direction, had not many documents that would reveal the day-to-day workings of the WTO, like minutes of meetings of WTO bodies, been exempted. The U.S. should not rest with the July 1998 decision on derestriction, but should push for the more timely release of all WTO working documents.
In addition to WTO working documents, WTO proceedings and dispute settlement panels must be made more publicly accessible. As well, to ever gain any modicum of respectability, the WTO dispute resolution systems operation must be overhauled to ensure due process guarantees.
There is a built-in bias against public participation in the WTO that needs to be reversed if the Administration is serious about changing the institution. According to a WTO official quoted in a recent Financial Times report: The WTO "is the place where governments collude in private against their domestic pressure groups. Allowing NGOs in could open the doors to . . . all kinds of lobbyists opposed to free trade."(3) This mindset is entirely unacceptable, yet it epitomizes WTO rules, operation and culture.
The problems posed by the lack of due process guarantees and the opacity of the WTO have direct and adverse material affects on the adjudication of cases under its dispute settlement process. WTO rules empower the Secretary-General to appoint members to dispute panels. Public Citizen has discovered that a panelist appointed to the dispute panel to arbitrate the E.C. challenge to the U.S. Cuban Liberty and Democratic Solidarity Act (Helms-Burton) has a prominent position in a body which has taken a strong position in opposition to the U.S. law. Arthur Dunkel, selected by WTO Director-General Renato Ruggiero to serve on the dispute panel, also serves as the chair of the International Chamber of Commerce's "Commission on International Trade and Investment Policy." According to the ICC:
The International Chamber of Commerce is profoundly disturbed by the US Cuban Liberty and Democratic Solidarity (Libertad) Act 1996. The ICC believes that the Helms-Burton Act, which threatens to distort international trade and investment and to cause considerable commercial disruption to companies from countries which are trading partners of the US, is in clear contradiction of the fundamental principles of the World Trade Organization and may contain elements which are incompatible with US obligations under the WTO. Moreover, the provision for extraterritorial application of US court rulings is contrary to accepted principles of public international law.(4)
It is even more troubling that the U.S. government was not aware of this potential conflict of interest until Public Citizen informed USTR in May 1998. In this case the E.C. withdrew its WTO complaint to pursue resolution of the conflict through bilateral talks with the U.S.(5) In future cases, the lack of a screening mechanism for conflicts of interest could lead to cases wherein the rulings are prefigured simply by virtue of whom is appointed to the dispute panels. This would further undermine the rule-based system of law on which WTO is ostensibly based.
In fact, the panel in the second GATT tuna/dolphin case may have been compromised by the appointment of a panelist who represents a corporate front group with a direct interest in the outcome of the case.(6)
These two examples bring to life the concerns expressed by WTO critics about special interests that perceive environmental, public health and other public interests as obstacles to free trade getting a backdoor way of eliminating them through the WTO dispute process.
More generally, the WTO is so closed that the most basic concessions on transparency are immediately heralded by the U.S. as major victories. While the WTO recently posted panel reports on the Shrimp-Turtle and Australian Salmon cases on its website, it took four years for a WTO panel to concede that it is not actually GATT-illegal for dispute panels to acknowledge amicus curae briefs from NGOs. Their submission to appellate bodies is still prohibited. (Indeed, in 1996, the WTO went to the trouble to return, by registered mail -- all the way from Geneva -- an uninvited amicus submission from Public Citizen on the Beef Hormone Case. The accompanying note scolded us for interfering.) The Shrimp-Turtle appellate panel ruled that amicus briefs must be submitted by governmental parties to the dispute, and will be considered reflective of the government's position. Governments thus choose among those briefs that comport with its position on a particular, guaranteeing that amicus curae briefs submitted by NGOs who disagree with their government's position (as occurred during the beef hormone case) would never be considered by WTO panels.(7) The U.S. must insist that the WTO derestrict other documents relating to dispute resolution, such as briefs, memos of law from WTO staff, and other supporting documents, while pushing for mandatory consideration of all amicus curae briefs.
1. The SPS Agreement The Codex Alimentarius: The Beef Hormone Decision and the Case of Folpet
Prior to the WTO's approval, Public Citizen and other consumer and environmental groups had serious concerns that the Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement") would not safeguard a country's right to adopt and implement measures to protect human, animal and plant life or health, and to establish the level of protection of life and health that it deems to be appropriate. Unfortunately, the WTO decision applying the SPS Agreement -- EC Measures Concerning Meat and Meat Products (Hormones) -- vividly illustrates how the SPS Agreement can be an obstacle to governments' exercise of their right to take action to protect against risks to human health.
Although the appellate ruling in this case limited some of the most extreme pronouncements of the lower panel, the interpretation of the SPS Agreement in the Beef Hormone appellate ruling makes our 1993 critical analysis of that text seem unduly cautious! Indeed, every concern we raised in Congressional testimony in 1993 and 1994 was declared to be WTO law in the appellate panel's ruling.
a. The Evisceration of the Precautionary Principle in the Beef-Hormone Case
The Beef Hormone Decision demonstrates how the SPS Agreement can undermine countries' health, safety and environmental standards when trade challenges are initiated. Based on a complaint from the United States, a WTO appellate panel upheld a ruling against Europe's ban on beef from cattle treated with growth hormones, even though the European ban treated domestic and foreign products alike. Europe's zero-risk standard was based on the precautionary principle, widely recognized in international environmental law and in U.S. domestic regulatory policy.
The precautionary principle is based on the premise that science does not always provide the information or insights necessary to take protective action effectively or in a timely manner and that undesirable and potentially irreversible effects may result if action is not taken until science does provide such insights.
Indeed, many areas of U.S. law � such as our system for pharmaceutical approval � are based on the precautionary principle. For example, by taking precautionary steps with respect to possible risks from the use of thalidomide, the United States avoided a potentially disastrous epidemic of birth defects. Thalidomide is estimated to have been responsible for deformities in more than 10,000 babies in the countries in which it was approved, even though at the time of its approval in Europe and Canada, tests in laboratory animals showed no negative effects. The Beef-Hormone ruling declared that health regulations taken in advance of scientific certainty are not allowed under WTO provisions. The potential boomerang effect of this WTO determination on a range of U.S. laws is immense.
Second, the Beef-Hormone case demonstrates that the SPS Agreement exalts the role of science far beyond the point it is appropriate, attempting to eliminate all "non-science" factors from standard-setting. Despite the undisputed value of science in policy-making, scientific uncertainties, for instance concerning the health threats posed by exposure to chemicals, remain. Moreover, political judgments always play a central role in policy-making. While science plays a valuable role in informing such policy decisions, it is ultimately Congress or a state legislature that must make the political decision about how much risk society will face under a food safety or other law. Thus, Congress may make the political decision to allow zero risk from a particular hazard, rather than establishing an allowable level of risk. For example, the United States has a zero tolerance level for listeria in cold smoked fish, canned lobster and ready-to-eat seafood combined with a more rigorous sampling regime than that currently practiced in Canada. Canada considers the U.S. policy to be unnecessarily severe and thus, enumerated the listeria policy in its 1996 Register of United States Barriers to Trade.
Third, as demonstrated by the Beef-Hormone ruling, the SPS Agreement requires standards to be based on risk assessment. The foundation of risk assessment in food safety standard-setting is the notion that scientists can accurately predict the consequences of a numerous and ever-expanding list of different food additives all interacting in the human body. In fact, scientists acknowledge that they may never be able to make these determinations. For this reason, many scientists, regulators and consumer and environmental organizations are calling for public health policies that prevent such exposures in the face of scientific uncertainty and reduce the toxic load in food. However, by requiring food safety standards to be based on a risk assessment, the SPS Agreement eliminates the possibility that a society's values -- for example, prevention of exposure to a highly toxic substance in the presence of uncertain knowledge of the chemical's effects on humans at low doses -- should outweigh the uncertain outcome of a risk assessment.
Moreover, risk assessments can be no better or more accurate than the data on which they are based. Yet, most of the data on emerging toxins, like E-coli H:157, is scanty; and therefore, the risk assessments are incomplete as well.
Fourth, as demonstrated by the Beef-Hormone case, the SPS Agreement's provisions on harmonization and equivalence threaten to force countries to lower health, safety and environmental standards and to accept imported products that do not meet their high standards. As the Beef-Hormone case made clear, requiring domestic standards to be based on international ones, and establishing an entirely separate set of standards applicable only to those rules that provide greater public health protection than international standards, the SPS Agreement creates strong incentives to avoid exceeding international standards. The international standards serve as a ceiling, not a floor, curtailing innovative solutions to public health problems that are ahead of the international status quo, but not requiring that any floor of safety be put into place. In other words, the SPS Agreement contains no incentives, let alone any mandates, that countries, at a minimum, afford the level of protection provided by relevant international standards. Such downward harmonization has alarming public health consequences. International standards, such as those of the Codex Alimentarius empowered by the WTO as the acceptable food standard, are generally developed in secret with extensive industry input, but no public oversight or participation.(8)
The upcoming Ministerial Conference must carefully consider the implications of the SPS Agreement on the future ability of governments to maintain high standards of public health and environmental protection. The Beef-Hormone ruling makes clear that despite promises to the contrary by the United States government, the SPS Agreement will result in diminishing the safety of our food and in reducing the level of health or environmental protection for Americans. The U.S. beef industry may be happy with the bottom line, but the jurisprudence established by this case threatens numerous U.S. laws. The U.S. government must face up to this problem and put it on the Ministerial agenda.
The problems caused by the WTO's food standards are woven throughout the Beef-Hormone case. In 1995, the Codex Alimentarius, an international food standard-setting body newly empowered by the WTO to set international food safety standards, adopted standards for residues of artificial hormones in meat. The Codex's action was extremely controversial, not only because Codex procedures allow for undue industry influence in rule-making, but because a four-year debate on the safety of these chemicals had led to the highly unusual occurrence of votes in the Codex, which typically operated by consensus. The standard was adopted when only a bare majority of 33 countries in favor, 29 against, and 7 abstentions overturned an earlier vote against the U.S. pro-hormone position. The insistence of E.U. consumers, over opposition by E.U. farmers, that their meat be free of artificial hormones became a test: consumer rights versus a Codex newly empowered by its official status under the WTO.
In requiring that members' food safety measures be based on international standards like the Codex, the WTO biases international trade law against standards that are higher. Through the dispute over hormone-treated beef, the WTO inappropriately inserted itself as a major arbiter of domestic health and safety policy. The WTO's beef hormone decision undermines countries' democratic prerogatives to safeguard their citizens' health and well-being.
c. The Chilling Effect: The Folpet Case
Another example of the SPS Agreement's anti-public interest impact involves its chilling effect on strong standards, such as on a planned ban of the carcinogenic fungicide Folpet. Six weeks after the WTO went into effect, U.S. and foreign chemical and agribusiness companies protested an EPA plan to ban all products containing Folpet residues. As is standard practice, EPA was seeking comment during a review of "orphan" food residue tolerances for banned pesticides. Use of Folpet was banned in the United States because of its carcinogenicity and its registration was pulled in 1988. When EPA asked for comments as to why any Folpet food residue tolerances should be maintained, it received numerous petitions. One filing after another stated that under the WTO, the United States is not allowed to have a food standard stronger than Codex's international standards unless the United States can meet a certain scientific showing. Yet, one reason Folpet's registration was pulled in 1988 was the unwillingness of the company producing it to provide EPA with data proving it safe. Thus, without the industry's scientific information, the EPA is not able to meet the WTO data requirements. EPA's proposal to ban all products containing Folpet residues was stalled to allow for negotiations with Folpet's producer over obtaining the needed data. To date, no further action has been taken on the plan.
As the WTO continues to build on its history of ruling against public health and safety in favor of liberalizing trade, it is has now become possible for companies, as well as nations, to use threats of WTO trade sanctions to cause countries to drop or weaken health and safety laws without a formal challenge. This tactic has been and will most likely continue to be used against developing countries who often lack the resources and technical capacity to defend themselves against potentially costly formal WTO challenges.
A disturbing trend is emerging in which WTO intellectual property rules are being used to discourage the adoption of public health initiatives including those advanced by world health bodies like the World Health Organization (WHO) or those accepted as common practice elsewhere in the world. International law is being skewed in favor of the property rights of corporations vis-�-vis the rights of people to life and health and the fiduciary responsibility of elected governments to provide for the public welfare.
For four years between 1990 and 1995, U.S. based-Gerber Products Company launched a campaign to force Guatemala to eliminate an infant health law that banned the use of pictures on labels for baby food for children under two years of age. The Guatemalan law implemented the WHO-UNICEF Infant Formula Marketing Code, which was developed to help protect the lives of infants by promoting breast feeding over artificial breast milk substitutes, including through elimination of packaging that would induce illiterate parents to associate formula with healthy, fat babies.
All of Guatemala's domestic and foreign suppliers of infant formula and other breast milk substitutes made the necessary changes to their packaging to comply with the Guatemalan law, except Gerber. Guatemalan infant mortality rates dropped significantly after the law passed, with UNICEF holding up Guatemala as a model of the Code's success in its literature.
Upon passing the law, the Guatemala Ministry of Health negotiated with Gerber to seek compliance. After several years of watching Gerber refuse to abide by its regulations, the government of Guatemala considered a ban on the company's products altogether. It was at this point that Gerber threatened the Guatemalan government with a challenge under the GATT/WTO.(9) Although Gerber cannot personally launch a GATT challenge to the Guatemalan law, it raised the specter of a GATT challenge to intimidate the Guatemalan government and obtained U.S. government support for its threat.
According to Gerber's letter to the President of Guatemala, the intellectual property provisions of the GATT Uruguay Round would not provide for an exception from trademark protection for the enforcement of a conflicting domestic health law that limits use of a trademark. By 1995, Gerber's threats of trade sanctions succeeded when the Guatemalan Supreme Court ruled that imported baby food products are exempt from Guatemala's stringent infant health laws.
b. South African Parallel Importing Policies
More recently, the head of the South African Pharmaceutical Manufacturers' Association (PMA) has threatened the South African government with a WTO challenge over proposed national health laws. This industry group is comprised of subsidiaries of large foreign pharmaceutical corporations and is closely linked with PHARMA, the U.S. pharmaceutical industry manufacturers' association. While only foreign governments may launch WTO challenges, this South African association of foreign drug producres has taken it upon itself to explicitly threaten a WTO challenge against the South African government's drug policy. The group objected to a recently enacted South African law designed to extend basic healthcare to its citizens which included a provision which would make medicine cheaper.
The law, when implemented, will encourage the use of generic drugs, ban the practice of manufacturers offering economic incentives to doctors who prescribe their products and institute "parallel importing."
Parallel importing is the practice of importing goods into a country through unauthorized distributors of goods. Parallel importers find the national markets where goods are cheapest, and import them into countries with higher prices. While a boon for consumers, parallel imports are opposed by some manufacturers, who seek to engage in significant price discrimination by geographic area.(10) For example, a commonly used antibiotic, Amoxicillin, costs fifty cents a tablet in South Africa compared to thirty cents in New York and only four cents in neighboring Zimbabwe.(11)
Mirryena Deeb, chief executive of PMA, said in a September 1997 press conference in Johannesburg that the trade association's members had consulted with their parent companies and were prepared to take their complaint to the WTO if South Africa didn't change the proposal. "If they don't alter it we will have no choice," she said. "[T]he issue is being pursued with a mind to going to the WTO."(12)
Several weeks later, U.S. Ambassador to South Africa James Joseph sent a letter to a South African parliamentary committee, urging the government to eliminate the parallel import provisions of the proposed health bill. "The U.S. government," the letter said, "is gravely concerned over the public policy implications of a law which could infringe on intellectual property rights...(13)" Joseph claimed that Switzerland, France and the European Union had made similar requests. The Clinton Administration even raised the industry complaint during President's visit to South Africa in March.(14)
Many nations not only allow parallel imports but some national antitrust authorities, including the European Community and in Japan, actively take steps to prevent manufacturers from discouraging or impeding parallel imports.(15) There is no restriction in WTO rules against the parallel import provisions in the healthcare proposal.
Obviously, the U.S. must cease to press challenges to parallel importing regimes put into place by countries at the mercy of the pharmaceutical industry's discriminatory pricing policies. In addition, in preparation for the Ministerial, the U.S. should draft and propose either an interpretive or clarificatory note affirming the rights of property holders under TRIPS do not trump domestic health and safety laws.
The Tuna-Dolphin, Shrimp-Turtle and Venezuela Gas rulings reveal a systemic bias in the WTO rules and the WTO dispute resolution process against the rights of sovereign states to enact and effectively enforce environmental laws. All three rulings have led (or will lead, if implemented) to the weakening of the U.S. laws in question: Four years after a 1992 GATT panel ruled against a U.S. law forbidding sale in the U.S. of tuna caught by domestic or foreign fishers using techniques that had killed hundreds of thousands of dolphins, the United States amended its species protection law after Mexican threats of a WTO enforcement case and will again import tuna caught using mile-long nets placed around schools of dolphins. In the Shrimp-Turtle case, the appellate panel ruled against the effective implementation of a law requiring all shrimp sold in the U.S. to be caught while safeguarding endangered sea turtles. This ruling, if implemented, will defang the U.S. law by requiring the elimination of those provisions requiring foreign countries to mandate the use of Turtle Excluder Devices (TEDs) on all shrimp trawlers. The U.S. will only be allowed to target individual shrimpers, and will encourage the practice of "shrimp-laundering," wherein shrimp that are harvested on boats without TEDs, but are imported on boats with TEDs, are passed off to U.S. consumers as "turtle-friendly." In the Venezuela gas case, the U.S. was forced to amend gasoline cleanliness regulations under the Clean Air Act, adopting a policy towards limiting contaminants in foreign gasoline that EPA had earlier rejected as effectively unenforceable.
During the debate over whether the U.S. should adopt the GATT Uruguay Round agreements, many environmental and consumer groups expressed concerns about the potentially adverse effects certain GATT/WTO provisions would have on sustainable development and on national sovereignty over environmental and public health and safety regulation. In his January 1994 Congressional testimony, then U.S. Trade Representative Mickey Kantor dismissed such concerns: "The...agreement clearly recognizes and acknowledges the sovereign right of each government to establish the level of protection of human, animal and plant life and health deemed appropriate by that government (emphasis added)."(16)
The emerging case law on satisfying GATT Article XX exceptions, on the legitimacy of MEAs and on the status of PPMs indicates that the WTO keeps raising the bar against environmental laws � especially those that are enforceable through trade sanctions. While the WTO publicly states it support for the principles of sustainable development in the WTO ("the [environment] has been given and will continue to be given a high profile on the WTO agenda"),(17) in a subsequent attack of candor, Secretary General Renato Ruggiero stated that environmental standards in the WTO are "doomed to fail and could only damage the global trading system."(18)
a. The Ineffectiveness of Article XX
In early October, the Appellate Body of the WTO announced its ruling in the Shrimp-Turtle case, reaffirming the panel decision that section 609 the United States' Endangered Species Act (ESA), Pub. L. 101-162 does not satisfy the requirements of the GATT Article XX exception, and is therefore GATT-illegal. Section 609 of the ESA forbids importation of shrimp from countries which permit the harvesting of shrimp without appropriate technology to protect against the indiscriminate slaughter of endangered sea turtles.
The GATT provision at issue is the chapeau of Article XX which provides that GATT members may justify certain derogations from GATT principles in order to advance goals of protecting health, safety and the environment as long as such derogations are undertaken in a non-discriminatory fashion and do not constitute a disguised barrier to trade.
While the appellate body reversed the lower panel on the question of whether the U.S. shrimp law would constitute an exception under GATT Article XX(g), it still held that the law did not pass muster under the chapeau of Article XX � that is, it ruled that the law was implemented in a way that was unjustifiable and discriminatory. In a decision that is likely to resonate with future challenges to domestic health, safety and environmental regulations, the appellate body ruled that the Article XX exceptions are "limited and conditional." Specifically, it held that regulations designed to influence the regulatory regimes of other countries are unjustified discrimination against free trade � even while acknowledging the international environmental interest in preserving endangered sea turtles and the appropriateness of the United States policy of requiring turtle excluder devices on shrimp trawlers. By ruling that the U.S. measure itself is GATT legal, yet still insisting that the U.S. weaken the law, the Shrimp-Turtle case demonstrates that GATT/WTO trade rules can lead to a race-to-the-bottom in environmental standards. To comply with the ruling, the U.S. must eliminate the requirement that shrimp-exporting nations mandate the use of TEDs if they wish to sell to the United States. This would eviscerate the effective enforcement of sea turtle conservation. Thus, according to the WTO, environmental regulations like those protecting sea turtles should not be upwardly harmonized worldwide, but should be relaxed to the extent that these violate the principles of free trade.
In the first Tuna-Dolphin case, the panel also ruled that the Article XX chapeau exception does not allow countries to take GATT-illegal steps to conserve resources that are found outside of its territory. The second Tuna-Dolphin conjured up a new reason why the GATT XX exception did not apply to the U.S. law: it was not "necessary" to protect animal health.
While in both the Tuna-Dolphin and the Shrimp-Turtle cases the various panels relied on often disparate legal reasoning to conclude that the Article XX chapeau exception did not save United States law, the outcome was the same: every GATT/WTO panel that has reviewed challenges to the United States' enforcement of its environmental laws has ruled that they are not protected by the Article XX standard.
Thus, according to Article XX jurisprudence, a domestic law can be safeguarded for GATT rules only where a country can bear the burden of proving the negative � that no measure consistent with GATT was reasonably available, and that, of all the options, the measure it has employed is the least trade restrictive. This standard effectively encourages arbitrary and endless second-guessing of a government's policy choices by panels and will ultimately weaken environmental standards as legislators look for measures likely to pass GATT muster.
b. The Status of MEAs in the WTO
Both the tuna-dolphin and the shrimp-turtle cases reveal a disturbing tendency within GATT/WTO dispute panels to ignore existing multilateral environmental agreements. The tuna-dolphin panels refused to consider the U.S. tuna embargo within the framework of multilateral agreements on dolphin protection. Instead, the panel ignored the international precedent in favor of species protection and found that U.S. law violated GATT through the extraterritorial application of domestic law. It also ignored the U.S. effort to multilateralize tuna fishing PPMs within the Inter-American Tropical Tuna Commission. In the shrimp/turtle case, the fact that the U.S. has signed agreements mandating the use of TEDs with 17 nations did not prevent the appellate body from ruling that the United States was still implementing the shrimp import ban in a unilateral, extraterritorial and thus discriminatory manner. In addition, the panel rejected application of the Article XX exception even though the shrimp embargo conforms with multilateral environmental agreements such as the CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora). The CITES allows the imposition of trade sanctions on nations who endanger species threatened with extinction.
c. The Status of PPMS in the WTO
In Tuna-Dolphin, an additional GATT principle -- that which prohibits a country from differentiating between like products based on the way they are produced (process production methods or PPMs) -- prevailed over similar policy concerns for protecting endangered species. In the Tuna-Dolphin case - which was convened under two separate GATT panels - both panels concluded that the U.S. embargo was inconsistent with GATT rules because it targeted a process - fishing methods - and not a product. Yet the ability to distinguish among production methods is essential to environmental protection and sustainable development policies. One of the key components in setting the world on a sustainable and equitable development path involves changing the conditions and processes under which goods are produced and commodities grown, harvested and extracted. Trade rules that forbid the differentiation between production methods make it impossible for governments to adopt an aggressive approach to environmental protection or an enlightened and effective response to oppressive social practices like child labor.
2. The Venezuela Gas Case and the Subversion of the Democratic Process
In January, 1996, the very first WTO panel ruled against U.S. clean air regulations governing gasoline cleanliness. At issue was a 1993 U.S. Environmental Protection Agency (EPA) rule on gasoline contaminants (known as "aromatics") that produce emissions resulting in smog and toxic air pollutants. The rule required the cleanliness of gas sold in the most polluted cities in the U.S. to improve by 15 percent over 1990 levels, and all gas sold elsewhere in the U.S. to maintain levels of cleanliness at least equal to 1990 levels.
The difficulty in designing the regulation was finding an enforceable, trustworthy, and economically feasible way to ensure that all gas sold in the U.S. met the standards. In an attempt to minimize market disruptions and maximize health protection, the EPA settled on an interim solution: a pre-set standard for gas from foreign and domestic refiners that lacked the necessary documentation. Gas from those refiners had to match the average actual 1990 contaminant level of all gas refiners able to provide full documentation. This rule was set to expire in 1998, giving refiners five years to meet a single cleanliness target.
However, Venezuela and Brazil, claiming that the EPA rule unfairly disadvantaged their gasoline by possibly holding it to higher standards than some U.S.-refined gasoline, challenged it in the WTO. The WTO panel sided with Venezuela and Brazil, holding that the EPA's mechanism to enforce the Congressionally mandated air standards could result in discriminatory effects favoring U.S. refiners over foreign refiners. The U.S. appealed, but the appellate body upheld the panel's decision.
These rulings forced the U.S. to choose between repealing the EPA regulation and permitting imports of dirtier Venezuelan gas (and possibly placing U.S. refiners at a competitive disadvantage for having implemented the EPA regulations), or keeping the EPA regulation and facing $150 million in trade sanctions each year in the form of higher Venezuelan tariffs on U.S. products. Regardless of the U.S. choice, the WTO decision threatens a broad array of other U.S. laws protecting health and the environment. Other WTO member nations can use this decision to support challenges to U.S. environmental, health, and safety laws.
This case also demonstrates the WTO's threat to national sovereignty in that the EPA regulation had withstood all the challenges available through the U.S. democratic process. First, opponents of the rule, including the Venezuelan government represented by the powerful U.S. lobbying firm Arnold & Porter, lobbied Congress. Failing there, they participated in the rule-making process. When the EPA passed the regulation despite their efforts, opponents threatened EPA with a lawsuit. After the EPA stood its ground, opponents and their lobbyists went back to Congress to try to get the rule changed. At this point, domestic oil refiners had invested $37 billion to implement the law.(19) Venezuela and Brazil, on the other hand, renewed their attack at the WTO's secret tribunals before unaccountable, unelected trade bureaucrats. Only there, out of the public eye, could they find success.
In preparing for the 1999 Ministerial, the Administration
should reassess the WTO dispute mechanism in view of these
rulings, rather than spinning such defeats of American laws at
the hands of the WTO into victories, as the Administration
hastened to do in Shrimp-Turtle case.(20)
Rather than obscuring WTO rulings -- a practice that dates at
least as far back as the Venezuela gasoline defeat (where the
USTR actually argued the U.S. had scored a victory in getting the
WTO to consider clean air an exhaustible natural resource!) the
United States must obtain an immediate cease fire in challenges
to environmental laws.
D. Economics and Economic Development
1. Economic Impact Assessment of Trade Liberalization in the U.S.
While a comprehensive economic impact assessment of Uruguay Round trade liberalization cannot be undertaken until all the disciplines have been phased in, the Clinton Administration made two key short-term promises that can be evaluated now � four years after implementation of the Uruguay Round agreements.
1. The Administration promised that the GATT would reduce the U.S. trade deficit by $60 billion over 10 years, thus creating jobs through increased exports.2(21) The Administration's line of argument followed its typically dogmatic defense of free trade: because the U.S. market is the most open in the world, trade deregulation would confer lopsided benefits upon the U.S. as other countries eliminated trade barriers. Of course, this approach ignores that the competition spurred by liberalization pits U.S. manufacturing firms against counterparts in the developing world with lower worker compensation, pollution reduction and other costs. Indeed, our trade deficit has climbed steadily over the four years since the WTO's approval, from $104.379 billion in 1994 to $105.064 billion in 1995, to $111.040 billion in 1996 to $113.684 billion in 1997. In order for the Administration's predictions to be borne out, the deficit increase would have to abruptly turn into a decrease to the tune of $12 billion per year. Yet the deficit is 44% higher in the first two quarters of 1998 than it was in the first two quarters of 1997, the year that saw the highest trade deficit since 1988.
2. The Administration also promised an increase in family income of $1700 per year if the GATT Uruguay Round were approved.2(22) Again, the predicted benefits failed to materialize. Between 1995 and 1996, the most recent years for which data is available, median annual income for families grew by $490 in real terms. Between 1994 and 1995, real median family income grew by $751.(23) These gains do not approach the levels promised � despite the fact that the US economy is at a business cycle peak. Real median family income in 1996 was still $1,013 below the 1989 level.(24)
The fact that the U.S. has a trade deficit means that more jobs are destroyed by imports than are created by exports. Indeed, according to the Economic Policy Institute (EPI), "At the economy's margins, where current rather than past trade is having its largest impact, imports have been destroying better-than-average jobs."(25) Further, jobs created through exports are typically not as well-paying as those destroyed by import competition. EPI found that "Increased import shares over the past 15 years have displaced almost twice as many high-paying, high-skilled jobs as increased export shares have created."(26) Industries facing fast-growing import competition pay wages that are about 4.5% higher than those paid in sectors with rapidly growing exports.(27) For the economy as a whole, sectors with rapid import growth pay 4.1% to 6.6% better than average, while sectors with rapidly growing exports pay from slightly below average wages to 1.9% above average wages.(28)
As well, the impact of trade liberalization has been felt in an area where the Administration's position is expressed consternation: rising income inequality, both in the U.S. and abroad.
A prominent economist at the pro-WTO, pro-free trade Institute for International Economics has determined that 39% of the increase in income inequality in U.S. from 1973 to 1993 can be attributed to trade.(29) According to the United Nations Conference on Trade and Development (UNCTAD), most of the gains in national income during the current U.S. recovery have been captured by profits, not wages.(30)
This phenomena is not limited to the redistribution of wealth in the U.S. According to UNCTAD, "the trend towards widening of gaps between income groups is apparent in both more and less successful developing countries, and is associated with export-oriented as much as with inward oriented strategies (emphasis added).(31)
The same correlation between rising income inequality and stagnating wages that we see in the US is also evident in the developing world. "In almost all developing countries that have undertaken rapid trade liberalization, wage inequality has increased, most often in the context of declining industrial employment of unskilled workers and large absolute falls in their real wages."(32) In four developing countries out of five, the share of wages in manufacturing value added today is considerably below what it was in the 1970s and early 1980s.
Indeed, in its 1995 Report to the U.S. Congress, the Congressional Research Service (CRS) predicted that there would be both winners and losers from the GATT Uruguay Round implementation. Among the projected winners was Latin America.(33) However, UNCTAD findings indicate that Latin American growth has been less than 3% annually since 1990, even after the GATT Uruguay Round implementations. Even worse, "unskilled" Latin American workers saw absolute declines in their real wages on the order of 20-30%.(34)
According to the CRS study, the Uruguay Round's big losers would be the Least Developed Countries (LDCs) and African, Caribbean and Pacific (ACP) countries. This conclusion was also presented by the OECD in its study Trade Liberalization: Global Economic Implications.(35) These predictions have, sadly, been accurate both in terms of social and economic indicators and of specific WTO cases.
a. The Lom� Treaty and the Banana Case
The Lom� treaty between the E.U. and its former colonies in Africa, the Caribbean and the Pacific establishes preferential tariffs and sets aside some portion of the E.U. market for the latter as regards a set list of tropical products. This regime is considered indispensable for the economic and political stability of the ACP countries. While the E.U. negotiated a waiver for the Lom� Convention for Uruguay Round tariff reduction requirements, the sanctity of Lom� Treaty "trade, not aid" philosophy was attacked via Lom� quota preferences -- that is, Lom�'s guarantees that the E.U. would import a certain amount of ACP products. On April 11, 1996, the U.S., on behalf of the Chiquita Banana Corporation, requested a dispute panel to rule on the GATT legality of the Lom� banana trade regime.3(36) The U.S. itself does not produce a single banana for trade, but claimed, inter alia, that the E.U.'s preferential quotas for bananas exported by AGP countries was unjustifiably discriminatory under WTO rules.
In September 1997, a WTO appellate panel handed down its ruling, affirming and clarifying the original panel's ruling that the Lom� waiver did not allow the E.U. to privilege ACP bananas by providing them with a 7% guaranteed market access license with guaranteed tariff rates that were lower than those imposed on other producers. According to the panel, the tariff quotas enjoyed by ACP countries must be eliminated or provided to all, forcing ACP countries to compete against producers from Latin America and Asia, notwithstanding the E.U. waiver.
The E.U. issued a proposal to address the panel's ruling. It agreed to remedy other policies ruled against by the panel, but stood firm on the quota issue, proposing to maintain the two-tier tariff quota regime for ACP and non-ACP banana producers. According to St. Lucia's Secretary Trade Minister Earle Hunteley, "the simple tariff would leave us wide open to fruit from cheaper sources, thus making it even more difficult to compete."(37)
The banana plantations of Latin American competitors are almost exclusively controlled by large multinational corporations like Chiquita, which rely on cheap farm labor. Eastern Caribbean banana producers, on the other hand, tend to be small-scale farmers who own and work the land, and whose production costs are therefore higher. According to the Prime Minister of St. Lucia, "The trading arrangements of the Lome Convention are not about diverting trade but providing opportunities [for countries] that otherwise would have little or no possibility of participating in the global trading system."(38)
That the U.S. challenge and subsequent WTO ruling could lead to the decimation of the ACP banana industry is compounded by the fact that no material U.S. interest is advanced by eliminating Lome Treaty preferences. That governments with no economic stake in a certain trade practice would , if the price were right, be willing to do the bidding of multinational corporations has aroused suspicions that WTO dispute resolution system operates on a "rent-a-nation" basis. Rather than encouraging the WTO attack on the economic development objectives of the Lome Treaty, the U.S. should accept that the blind quest for "free trade" should not occur at the cost of economic, social and political dislocation of underdeveloped nations. Having made the shameful decision to pursue the initial special interest challenge, the U.S. should accept the current E.U. proposals that leave intact the Lome banana quota system and pay heed to UNCTAD's warning that shock liberalization can have a negative impact on underdeveloped nations.
UNCTAD reports that agricultural price liberalization has not tended to boost incomes of farmers in Africa.(39) The benefits of liberalization has been reaped mainly by traders.(40) In addition, the global financial crisis attributed to the unfettered liberalization of global capital flows afflicting East Asia is threatening to reverse the short-lived growth increase enjoyed by sub-Saharan Africa. The United Nations Development Program (UNDP) reports that the financial crisis has led to a sharp drop in prices for commodities and key exports.(41) While U.S. farmers have been rescued by an emergency farm relief program, aid to Africa continues to fall dramatically. The UNDP estimates that economic growth in sub-Sahara Africa could fall to 1%.(42)
According to UNCTAD, Sub-Saharan African nations continue to be marginalized in world trade not because of any resistance to openness, but because of their inability to expand productive capacity. UNCTAD recommends that sub-Sahara Africa eschew rapid and additional liberalization in favor of a managed approach. "A gradual approach to trade liberalization is desirable in view of the existing weaknesses in supply capabilities [of sub-Saharan African countries]. The case for infant industry protection and industrial policies to promote learning and develop skills in domestic firms is no less relevant today in SSA than it has been for all successful late developers in this century."(43)
E. WTO Attack on Human Rights Policy - The Burma Case
The serious human rights violations and the deliberate suppression of democracy perpetrated by the military junta ruling Myanmar, the country formerly known as Burma, since it came into power in 1988 are widely known throughout the world. Such blatant violations of human rights and calls by Burma's pro-democracy movement have lead a number of U.S. municipal and county governments, and the state government of Massachusetts, to impose economic sanctions on Myanmar. The sanctions have been enacted throughout the U.S. as selective purchasing laws and were designed to allow local jurisdictions to avoid indirectly supporting a regime whose conduct their constituents find repugnant and also to encourage transnational corporations to divest from Burma. The selective purchasing laws are based on the effective divestiture and selective purchasing initiatives which animated the anti-apartheid movement in this country in the 1980s and are widely credited for hastening the successful transition to democracy in South Africa.
Yet such sanctions, which proved to be very successful in assisting the fight against South African apartheid, have come under attack within the WTO. The selective purchasing law against Myanmar passed by the Massachusetts state legislature in 1996 has been challenged by the European Commission (EC) and Japan, who claim that the law violates the WTO 1994 Agreement on Government Procurement (AGP).(44)
The decision of the WTO panel, which is expected to be released in 1999, will serve as an important test case on the body's encroachment into areas of democratic policymaking regarding the advancement of human rights around the world. It is very probable that if such an attack on sanctions had trumped state law during the 70's and 80's, the struggle against South African apartheid would have been seriously hindered.
The Administration's strategy relating to the E.U.'s threat of a WTO challenge against selective purchasing as a human rights tool has been to discourage such laws. In the spring of 1998, the Administration actively lobbied the Maryland State legislature against adopting a selective purchasing law against Nigeria.(45) The proposal subsequently lost by a single vote. This lobbying effort put the Administration in the same camp as the big business lobby and against pro-democratic activists. It thus questions the Administration's ability and willingness to vigorously defend the Massachusetts law against the E.U.-Japan challenge before the WTO's closed tribunals.
The Administration must therefore take steps to ensure that the rights of state governments to exercise their purchasing power to advance the cause of human rights is held harmless under the AGP. The AGP's strict rules requiring that government contracts be awarded solely on the basis of economic considerations interfere with the constitutional right of state governments to pursue economic development and other social objectives when they are market participants. The United States must propose an immediate amendment to the AGP to ensure that it is consistent with the Constitutional rights of state governments.
The Future of the World Trade Organization
Unfettered trade and investment liberalization is not working for the majority of the world. The answer is not to pursue more of it through an expansion of the WTO mandate and a deepening of the work programs, but to devote resources to developing policies to stabilize wild capital flows, raise living standards around the world and preserve existing and promote new citizen health, safety and environmental safeguards through accountable, democratic governance.
On the basis of even the limited review we have included in this filing, it is apparent that the following objectives should comprise the U.S. agenda for the 1999 WTO Ministerial:
1. Agreement to launch a comprehensive, objective review -- with provisions made for public input on the scope and substance of the research -- of the WTO's actual performance since its establishment. The real life outcomes of the WTO must be measured both as against its promised benefits and the status quo ante as regards trade enforced environmental measures, food and consumer safety measures standards, trade flows and trade-related economic indicators, etc.
2. Agreement on several measures to limit the obvious harm the WTO is causing:
a) Adoption of a "hold harmless" clause declaring that to the extent of conflict between WTO rules and the provisions or enforcement of:
o Multilateral Environmental Agreements
o UN and World Health Organization agreements and codes on public health, safety, access to basic medicines, infant feeding, food security
o Human Rights and nuclear non-proliferation agreements
The latter shall be given precedence and thus shall be held harmless from WTO challenge.
b) Agreement on a moratorium on WTO dispute resolution challenges to domestic health, environmental, consumer protection, food safety, development and human rights policies and laws whether taken under the GATT, GATS, TRIPs or other Uruguay Round agreements.
c) Agreement to make publicly available all WTO documents -- including those of working groups, negotiating groups, the legal office, the research office and the office of the Director General and dispute resolution proceedings, including all such documents generated since establishment of WTO by posting them on the WTO website and by designating a publicly accessible document room for hard copies in each WTO member country's capital.
d) Agreement for the legal fees relating to a WTO challenge or threatened challenge initiated by a developed country as against any WTO member qualifying for developing country benefits under any Uruguay Round Agreement to be paid by the developed country plaintiff.
Likewise, the agenda for the WTO Ministerial should explicitly preclude expansion of the jurisdiction or subject matter covered by WTO disciplines or to deepen the disciplines in areas where they already exist. Until there has been an objective assessment of how existing WTO rules are operating, it is imprudent to expand their coverage. As well, several of the specific areas some WTO countries are calling for expansion into are obvious non-starters: for instance the EU call for transformation of the WTO working group on investment into formal negotiations towards a WTO investment agreement. For the WTO to take on an agenda (that of the Multilateral Agreement on Investment (MAI)) that has been the target of a worldwide successful opposition campaign will only ensure greater public opposition to the WTO. As well, to pursue further liberalization of capital movement given the perils of this approach as demonstrated by the continuing global economic turbulence is bad substantive policy.
Given the need for a comprehensive review of WTO operations, immediate urgent "fixes" to the problems WTO is causing and consideration of whether the WTO's record merits its continuation at all, the WTO Ministerial agenda will be more than complete without the inappropriate raising of any "new" issues for WTO expansion.
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End Notes
1. William Roberts and John Maggs, "Clinton to Push for Standards on Global Labor," Journal of Commerce, 8/29/96.
2. Another example are the border institutions created by the NAFTA side agreements on labor and the environment, which are widely acknowledged as flops. According to the Wall Street Journal, "Both supporters and opponents of NAFTA agree that the side agreements have had little impact, mainly because the mechanisms they created have no enforcement power," Wall Street Journal, "NAFTA's Do-Gooder Side Deals Disappoint," October 15, 1997.
3. Guy De Jonquieres, "Network Guerillas," Financial Times, April 30, 1998, p. 12.
4. ICC Statement on the Helms-Burton Act, 19 June 1996.
5. A U.S.-E.U. "agreement" of May 18, 1998 on the Helms-Burton law consisted of nothing more than a U.S. government pledge to pressure the U.S. Congress to change the Helms-Burton law (as well as the Iran-Libya Sanctions Act (ILSA)). Congress not only rejected the latest in a decade of Administration pleas to change the law, but added more sanctions to ILSA days after May 18. When the lack of U.S. performance on its commitments under the May 18 arrangement nullifies that attempt at bilateral resolution, its is only a matter of time before the E.U. files a new WTO challenge.
6. Tuna-Dolphin II panelist Alan Oxley represented the Brock Group, which according to its brochure International Trade Strategies, lobbied on behalf of the Mexican government on NAFTA. Mexico had a direct interest in the outcome of the case as it was the initiator of the Tuna-Dolphin I case Tuna Dolphin II sought to enforce.
7. Significant restructuring of the development of U.S. WTO positions is desperately needed. The U.S. must adopt a process for WTO dispute position-taking that is consistent with the United States Administrative Procedures Act to ensure that the perspectives of those impacted by WTO rulings are taken into account in U.S. efforts to create WTO rules with impact on U.S. regulation. Key examples are U.S. instigated WTO challenges against the E.U.-Caribbean banana trade policy (see pp. 29-31) and the Beef-Hormone case (see pp. 10-14). In each instance, U.S. WTO actions undermine or directly conflict with U.S. domestic policy set through democratic, accountable means.
8. See Public Citizen and the Environmental Working Group, Trading Away U.S. Food Safety, April 1994, pp. 43-74.
9. In a June 16, 1994 letter to the President of Guatemala, Gerber's Vice President for Latin America, Frank T. Kelly, states: "Upon the favorable and permanent resolution of this matter, we will withdraw all complaints before the . . . GATT."
10. D.A. Malueg and M. Schwartz, "Parallel Imports, Demand Dispersion and International Price Discrimination," U.S. Department of Justice -- Antitrust Division, 1993, sited by "The Comments of the Consumer Project on Technology to the Portfolio Committee on Health Parliament, Cape Town Medicines and Related Substances Control Amendment Bill and South African Reform of Pharmaceutical Policies, James Love, October 6, 1997.
11. "South Africa's Bitter Pill for World's Drug Makers," The New York Times, March 29, 1998.
12. "Drug Industry Threatens to Take S. Africa to WTO," Reuters, September 8, 1997.
13. "U.S. Urges S. Africa to Change Draft Medicine Bill," Reuters, October 6, 1997.
14. South Africa's Bitter Pill for World's Drug Makers," The New York Times, March 29, 1998.
15. "The Comments of the Consumer Project on Technology to the Portfolio Committee on Health Parliament, Cape Town Medicines and Related Substances Control Amendment Bill and South African Reform of Pharmaceutical Policies, James Love, October 6, 1997.
16. Ambassador Michael Kantor, U.S. Trade Representative, Testimony to the House Ways and Means Committee, January 26, 1994.
17. WTO Press Brief, "Trade and the Environment in the WTO, 16 April 1997.
18. Robert Evans, "Green Push Could Damage Trade Body � WTO Chief," Reuters, May 15, 1998.
19. The National Defense Council Foundation, The WTO Ruling: Venezuela's Trojan Horse, March 22, 1996.
20. When asked whether the U.S. intended to comply with the Appellate body's ruling against the turtle/shrimp law, Administration spokesperson Joe Lockhart stated: "Well, I think one of the things [the ruling] does say is that the WTO will take environmental standards into consideration. And I think that should be viewed as a positive move. I think there has been some discussions about the WTO's ability to look at environmental issues and I think this case, in particular, indicates that they will take environmental standards in view," 10/13/98.
21. Bentsen, Lloyd, "The Uruguay Round -- Now," The Washington Post, Tuesday, September 13, 1994, page A21.
22. Ibid. Bentsen states, "We have estimated that this agreement will increase America's income by about $1700 per family per year."
23. Bureau of the Census, Historical Income Tables -- Families, Table F-6.
24. Mishel, Lawrence, Bernstein, Jared and Schmitt, John, The State of Working America 1998-99, Economic Policy Institute, 1998, p. 41.
25. Robert E. Scott, Thea Lee and John Schmitt. "Trading Away Good Jobs," October 1997, Economic Policy Institute.
26. Ibid.
27. Ibid.
28. Ibid.
29. William R. Kline, Trade and Income Distribution, IIE, 1997.
30. United Nations Conference on Trade and Development (UNCTAD), Trade and Development Report 1997, Overview.
31. Ibid.
32. Ibid.
33. Epstein, Susan B. CRS Report for Congress, "GATT: The Uruguay Round Agreement and Developing Countries," Washington, D.C.: CRS, February 9, 1995, summary.
34. UNCTAD, Trade and Development Report 1997. Over the past two years, U.S. workers have enjoyed an increase in real wages, but wages have yet to catch up to their 1989 levels. See The State of Working America 1998-99, op. cit.
35. Ian Goldin, Odin Knudsen and Dominique van der Mensbrugghe, Trade Liberalization: Global Economic Implications, Paris: OECD and Washington: World Bank, 1993.
36. The U.S. itself does not trade a single banana, and the few bananas produced in Hawaii are not even sent to the mainland. Thus, theU.S. has no economic stake in the E.U.'s banana regime. Indeed, the U.S. has strong interests in economic and political stability as well as democratic governance in the Caribbean widely credited to its strong middle class of small, land-owning banana farmers. As an economic matter, the U.S. profits for such stability through the lucrative tourist trade largely organized from the U.S. and by purchase of U.S. products by Caribbean earners of E.U. hard currency from banana exports (the Caribbean is one of the few regions with which the U.S. does not have a trade deficit). However, Chiquita's Chairman and CEO Carl Lindner funneled over $500,000 into democratic party coffers -- the day after USTR requested a WTO panel on behalf of Chiquita. See, Weisskopf, Michael. "The Busy Back-Door Men," Time, March 31, 1997, p. 40.
37. Canute, James. "Caribbean, U.S. Officials go Bananas After Ruling," Journal of Commerce, February 26, 1998.
38. Prime Minister Kenny Anthony of St. Lucia, quoted in The Miami Herald, "Go Easy on Us in Trade, Island Plead Give us Time to Adapt, Decrease Dependence on Bananas, They say," December 11, 1997.
39. UNCTAD, Trade and Development Report 1997.
40. Ibid.
41. Wren, Christopher, "Sub-Saharan Africa: Growth in Peril," New York Times, 10/20/98.
42. Ibid.
43. UNCTAD Trade and Development Report 1998, Overview.
44. On 8 September 1998, the EC requested the establishment of a panel.
45. "African Trade-Offs," Editorial, The Nation, April 6, 1998.
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