Setting the Trade Debate

This week, a diverse group will gather in Hong Kong to oppose the World Trade Organization. Unlike the delegates negotiating inside the convention center, they won’t have a catchall phrase like “free trade” in which to cram their views on a wide range of public policies.


Recently, a left-leaning blogger wrote, “I am mystified by the idea the anti-globalization movement is unified around any set of ideas. I cannot recall ever having seen a less coherent or [more] internally contradictory movement.”


The truth is, there is no “anti-globalization” movement; there’s a movement of disparate social justice causes. The unifying idea that brings them together is self-governance, and their activists should shout it from the rooftops. It provides the frame within which all the disparate critiques of corporate globalization fit neatly.


If the central question we’re asking is: “free trade or protectionism?” the debate is already lost. That’s how the corporate globalizers have presented it, that’s how the media — which clearly has a horse in the race — report it and that’s why they’ve kept the upper hand.


If it’s “corporatism or self-governance” — a question that is far more accurate — then there’s no excuse for anyone who considers him or herself even moderately progressive to remain on the fence. Regardless of how compelling the economic rationale for the modern trade agreement, self-determination — especially in a democracy — is far more precious than economic efficiency. It’s a no-brainer.


The anti-corporatization movement seems fractured for good reason: trade deals like those being negotiated in Hong Kong touch on dozens of areas of public policy. They impact (or in some cases will impact, if the “free-traders” get their way) a range of public services, environmental regulations, tax laws, food safety issues, and the price of AIDS medicine in poor countries. And trade deals like NAFTA and CAFTA give multinationals the right to sue governments — including local governments — for enacting policies that hurt their bottom lines. In short, these deals should offend the sensibilities of all “small d” democrats.


Too bad that’s so rarely mentioned.


It’s not just our jobs — they’re taking our debate


A few weeks ago, some of the leading minds of the liberal establishment, among them Gene Sperling, the former head of Clinton’s National Economic Council, economist Jamie Galbraith and Progressive Legislation Action Network’s David Sirota debated trade policy at Josh Marshall’s TPM Café.


What was noteworthy about the exchange is that the trade skeptics offered only the very worst arguments against global corporatization: the issue of job outsourcing in the U.S. More maddening yet, they portrayed it as the issue.


The topic of outsourcing may be a valuable political wedge, but it has less to do with trade policy than it does with domestic policy. While “free-trade” agreements help create a climate that encourages offshoring, domestic policies — including tax law and regulations on capital movement — along with labor’s declining influence, changes in the corporate culture and, for that matter, new technologies are far more culpable for the offshoring trend.


But there it is: “They’re taking our jobs!” is the staple criticism given play by the media and by Democrats. Implied is that those who are faced with overseas competition should be shielded with traditional forms of protectionism — tariffs, quotas, import licenses and duties, etc.


That’s a poor prescription. As Gene Sperling has eloquently argued, those kinds of protections often suffer from the law of unintended consequences. What’s good for the goose in one sector or community may kill the gander in another (the classic example is if you protect steel workers, the price of steel goes up and hurts automotive workers).


Democracy vs. “free trade”


In its current form, “free trade” is about creating a back door to pressure countries to adhere to the economic policies of the “Washington Consensus,” whether they’re popular or not.


That’s job number one for the big multinationals because a majority of governments on the planet today are, to varying degrees, democratic. And democracy is a huge challenge to many of their interests. Workers’ movements, environmentalists, pesky public interest groups, and above all, voters exert varying degrees of influence on those elected representatives.


Trade treaties constrain legislatures to remain true to the prevailing economic orthodoxy. Most folks don’t know this, but when state lawmakers draw up new legislation, they drop a line to the office of the U.S. Trade Representative to make sure their bills comply with the United States’ trade commitments.


Other countries acting on behalf of their biggest corporations can challenge laws that aren’t “WTO legal.” These aren’t about widgets being shipped from here to there; the range of what falls under the catchall “free trade” is astounding. A few of the more notorious decisions include:


·         A Massachusetts law preventing state and local governments from doing business with the brutal dictatorship in Burma was overturned by domestic courts after a WTO challenge.


·         An EU policy that gave preferential tariffs to small banana exporters in Europe’s former colonies was successfully challenged by the U.S. after lobbying by the Chiquita banana company.


·         Venezuela, backed by Brazil, successfully challenged provisions of the United States’ Clean Air Act that kept fuels with higher levels of pollutants out of the market.


The WTO has an arbitration process, but since 75 of 88 challenges have been victorious, just the threat of bringing a case is usually enough to make governments re-think its legislation. This is even more the case when it comes to health, environmental and food safety laws — all but two challenges have prevailed.


In NAFTA, and the newer regional deals like CAFTA and the proposed Free Trade Area of the Americas (FTAA), the business community managed to get what they’ve tried and failed to achieve in the WTO: the ability of multinationals to cut out the middle man and sue governments directly for the loss of profits resulting from a regulation or law they consider too “burdensome.”


Under those rules, “signatory governments are required to provide extensive rights and privileges to foreign investors” who are then “empowered to privately enforce these new rights by demanding cash payment from governments” that violate those privileges, according to a report by watchdog group Public Citizen [PDF].


The cases are decided behind closed-doors in “private tribunals operating outside the nations’ domestic court system”:


“The track record of cases demonstrate an array of attacks on public policies and normal governmental activity at all levels of government — federal, state and local. Even though these NAFTA cases implicate commonplace public policies, the investor-state system is a closed and unaccountable one. Citizens whose policies are being attacked have no avenue of meaningful participation and neither do the state and local officials they elected to represent them. Court decisions can be challenged and jury decisions undermined, yet no judge or jury has standing to participate in the private NAFTA tribunals.”


These rules shift significant amounts of risk from investors to governments. At the same time, they sharply limit what governments can ask for in return.


If the process is extended to the entire 148-member WTO — as the wealthy countries have been attempting to do for a decade — it will be a massive grab by the rich countries’ multinationals.


A trade debate based on the terms of self-governance and national self-determination belong at the center of any prominent discussion of trade. Opposing the world’s trading systems on these terms makes you a “small d” democrat, not a protectionist.


A popular movement with many fronts has risen around the idea that democracy is more valuable than hewing to the economic orthodoxy of the moment. This week, that movement will once again clash with the corporatist agenda, this time in Hong Kong.


We’ll see who comes out on top.



Joshua Holland is an AlterNet staff writer. He is in Hong Kong covering the WTO ministerial meeting throughout the week.

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