Global Justice or Globalisation?

An edited version of this paper was placed on the Green Party's website in March 2001
www.greenparty.org.uk

Executive Summary

The Conventional Wisdom

When it comes to issues of international trade and investment, we are living in something close to a one-party state. Labour, the Conservatives and the Liberal Democrats all want more trade liberalisation - indeed the phrase itself sounds like something that no enlightened person could oppose. The British Government under the Tories was one of the strongest supporters of the Multilateral Agreement on Investment (MAI), known by its opponents as the "corporations' charter", which would have given unprecedented power to multinational corporations to sue democratically elected governments in secret tribunals. Labour when it came into office continued to support the MAI until the collapse of negotiations in 1998. All three major parties now want to give more power to the World Trade Organisation (WTO).

The Hidden Debate

Future historians will find it puzzling that while one issue relating to national sovereignty (the European Union and single currency) dominated headlines for years - and was responsible for convulsions in both parties of Government - another of even greater importance failed to register even with Government ministers.[ Note i] Most Eurosceptics, whatever their rhetoric about unelected bureaucrats in Brussels, are willing to surrender decision-making over a wide range of issues to the unelected officials of the WTO, an unelected and secretive body that promotes "free trade" and in doing so limits governments' abilities to protect consumers, domestic businesses and the environment.

Discussions are held behind closed doors and the outcome is presented as a fait accompli. Proposals for further trade liberalisation are treated as uncontroversial, and appear in the main party manifestos only in the broadest generalities, with no suggestion that democratic freedoms are being bartered away and future political options closed off.

The Argument of Inevitability

Supporters of globalisation often present it as an inevitable consequence of technological progress - that as communication becomes faster and more sophisticated, national barriers to trade and investment are becoming irrelevant. This is Margaret Thatcher's TINA ("There is no alternative") writ large, and most commentators give it the same drugged acquiescence as they did TINA in the 1980s. Juan Somavia, Head of the ILO, has pointed out, however, that although changes in information and communication technology may be irreversible, the rules governing international trading relations are made by politicians. Changes in these rules can be reversed, and proposals for new ones need to be rigorously scrutinised.

The World Trade Organisation

Free trade agreements are administered by the WTO according to the principle of non-discrimination between domestic and imported goods. Under WTO rules there are few exceptions to the principle that free trade takes precedence over everything else.

In practice, even regulations to protect public health can, if they reduce foreign company profits, be viewed as discriminatory and as 'restraints on trade'. Governments who want to exclude a particular import must prove their case to the WTO according to its own narrowly defined criteria. No allowance is made for the precautionary principle.

A country can take a complaint against any such exclusion to a WTO disputes resolution panel. The hearing is closed and the decision binding. Countries with expensive teams of lobbyists have a clear advantage over poor countries. If a country's complaint is upheld, it is allowed to impose tariffs on unrelated products from the offending country. This works to the advantage of large, wealthy nations, in that for example US sanctions on goods from a small developing country like Bangladesh would do far more harm than sanctions by Bangladesh on US goods.

Generous treatment of former colonies can also bring WTO-approved sanctions. The US brought an action in the WTO against the EU because of its favourable quotas for Caribbean bananas. By a curious coincidence, this action was initiated just after a large donation to the US Democrats by the US fruit-growing transnational Chiquita. Small Caribbean farmers are now faced with destitution if the EU gives in. The WTO did not consider it relevant that Europe had historical obligations to the Caribbean banana producers, nor that most bananas exported from South America are grown on large plantations controlled by a small number of transnational companies, nor that trade union activity on many of these plantations is forbidden and workers' representatives threatened, nor that pesticides are regularly used there in quantities and conditions damaging to human health.

The Invisible Coup

Rule changes that are presented as technical and mutually beneficial adjustments to promote economic efficiency and prosperity can have profound anti-democratic implications. Contrary to the principle that no government can bind its successor, many of the new trade measures are deliberately designed to be irreversible by future governments.

Not everybody that thinks globally is an environmentalist. Most international trade is dominated by large transnational corporations, some of them with annual turnovers larger than the gross national products of medium-sized countries. The fewer restraints there are on international trade and investment, the easier it is for these companies to move where the pickings are richest, wages lowest and regulatory overheads least demanding, and to repatriate their capital and declare their profits where the taxes are least and the rules of disclosure easiest.

In a globalised economy power inevitably passes from national governments, most of them more or less democratically elected, to unelected global corporations. The barriers between business and government are increasingly blurred in many countries. In the words of George Monbiot: "Globalisation was conceived and nurtured by major multinational companies and their trade associations. By engineering a single, "harmonised" global market, in which they can sell the same product or service under the same conditions everywhere on earth, they hope to extract formidable economies of scale. They are seizing, in other words, those parts of the global economy still controlled by small and medium-sized businesses."[ Note ii]

Or as Dr Caroline Lucas (Green MEP for South East England, and co-ordinator of the Greens on the European Parliament's trade committee) points out, "This process of economic globalisation has not happened by accident. It has been driven over the past three decades by the world's leading business and government elites. They have agreed common aims, including economic integration, deregulation, and an economic philosophy based on free trade and international competitiveness. They have lobbied for free trade agreements including the GATT Uruguay Round (spearheaded by the International Chamber of Commerce), the North American Free Trade Agreement (NAFTA, promoted by the US Business Roundtable of TNCs together with Canada's equivalent, the Business Council on National Issues), and here in the EU, the European Single Market and Single Currency (led by the European Roundtable of Industrialists)."[ Note iii]

The Green Alternative

Outside the political mainstream, a growing coalition of environmentalists, trade unionists, third world activists and those concerned with the erosion of democratic freedoms has come to recognise that this Emperor has no clothes - that economic globalisation according to the WTO's prescription is neither inevitable nor desirable. The debate suddenly leapt into the political visibility with the massive protests in Seattle in 1999 against the WTO's proposed Millennium Round, which would have greatly extended its power.

Trade Liberalisation or National Sovereignty?

Without the power to regulate foreign trade and investment, national governments will become mere administrators; or (as Peter Mandelson once said) "the era of pure representative democracy is over." Governments that insist on companies paying a minimum wage, adhering to decent safety standards and not polluting the environment with their waste products find that the goods their companies produce have to compete with imported goods produced much more cheaply without these constraints.

This is why free trade in the European Single Market is (at least in theory) balanced by a common Social Chapter and common environmental regulations. If the bodies that regulate international trade and investment, or rather prohibit regulation of them by national governments, have their way there will soon be a worldwide single market without even those gestures towards social and environmental responsibility that we see in the European Union.

The Right to Protect

Although protectionism has become a dirty world in today's political lexicon, cut-throat protectionism as practised in the 1930s should not be confused with the right to protect vulnerable economies against unrestrained market forces, or to protect businesses that pay fair wages and observe high environmental standards against cheaper imports produced without environmental safeguards by an oppressed and exploited workforce. The "old protectionism" demanded the opening of markets abroad whilst simultaneously protecting domestic producers. Greens support 'localisation' which aims to protect and re-build local economies everywhere, both here and abroad. This 'new protectionism' is directly opposed to the free-trade policies under which hard-won social and environmental regulations are now being condemned as unfair 'barriers to trade' and overturned by WTO decisions.

Public Health

The prototype for some more recent trade agreements was the North American Free Trade Organisation (NAFTA) which famously forced the Canadian Government to withdraw product safety regulations (and issue a grovelling apology) when an American manufacturer sued it for anticipated loss of profit. The WTO, following in this tradition, has ruled against an EU ban on American hormone-treated beef. The US has also threatened to challenge proposed EU food-labelling regulations that would show the presence of GMOs.

The Local Economy

Governments and local authorities are prohibited by the WTO from supporting businesses important to the local economy and vulnerable to the economies of scale practised by big transnational companies. Farmers and small manufacturers have gone out of business because they are unable to compete with cheap imports that may be heavily subsidised by the producer country. Unemployment has also resulted from local businesses being swallowed up by transnational giants whose investment is more in capital than in labour. Profit that once circulated to irrigate a local economy is now often sucked out to enrich foreign investors. Globalisation also creates a worldwide homogenisation of cultures, social and economic forms - a McDonalds in every town centre.

The Environment

In a world of limited energy and resources, there is something perverse about a system that deliberately promotes growth in long-distance trade, and whose health is believed to depend on such growth. The further a commodity has been transported, the more fuel has been burned, the more carbon dioxide (CO2) released in getting it there. CO2 is the main cause of climate change, the most serious threat facing the planet today. Scientists say we need to reduce emissions by 60-80%. This will be impossible if we continue to increase international trade.

According to Friends of the Earth International (FOEI): "Sustainable economies, based on the principle of economic subsidiarity and economic diversity, will still require multilateral rules and inter-governmental institutions, but these institutions will not be based on out-of-date neoliberal economics. Debates concerning the continued existence of the World Trade Organisation are therefore academic. Either it adapts to support sustainable economies, losing its mandate to promote free trade, or it is replaced by a more suitable institution."[Note iv]

The Wealth Gap

A recent World Bank study found that greater openness to trade does lead to income growth among the top 60% of the population, but has the opposite effect among the poorest 40%.[Note v] Globalisation in practice leads to a 'race to the bottom', in which transnationals move their operations to the states with the lowest wages, lowest environmental protection and weakest health and safety laws. The last two decades of the twentieth century, during which globalisation has gathered momentum, have seen a widening of the gap between rich and poor, both within and between nations. The 1990s ended with 70 million more people in the developing world (excluding China) in poverty than at the start of the decade.[ Note vi]

Poor countries saddled with impossible debt repayments have been told by the World Bank and the International Monetary Fund that they will only be regarded as responsible enough to qualify for assistance if they develop their exports and "liberalise" their economies, i.e. open them up to foreign investment. They are told that the solution to their problems is to use foreign investment to increase productivity, export more, sell it more cheaply and so become internationally competitive. As a result of this advice (since primary commodities are all most of them have to export) the world markets have been flooded with these commodities and their prices have dropped, leaving some countries economically penetrated but worse off than before.

To quote again from FOEI: "Developing sustainable economies will mean changing the way in which the World Bank and the IMF operate. Specifically, the introduction of new economic goals, the introduction of economic subsidiarity and rebalancing trade would mean decision-making being devolved in part to the regional and national levels; budgetary decisions being taken on the basis of a significantly different set of priorities; an end to involuntary export-led development and an end to market opening as a condition of debt relief." [ Note vii]

Free speech and free markets have been regarded by most politicians and media commentators as part of a single indivisible package. Countries newly independent after the collapse of the USSR were told that a strong dose of market liberalisation would soon put their economies on a sound footing. Everybody would get rich by taking in everybody else's washing. As a result, public assets were sold off cheaply, often to businessmen with criminal links, wealth disparities rocketed and in some countries life expectancy dropped by several years.

The Stressed Society

British firms in labour-intensive sectors of the economy find it difficult to compete with those from newly industrialising countries in the Third World, or from the former Communist countries in Eastern Europe, where wages are a fraction of ours. The pressure to be internationally competitive forces employers in general to downsize their workforces, with the remaining employees forced to work even harder to cover for redundant colleagues, fearful that they will be in the next round of redundancies.

Job insecurity and pressure to work long hours are therefore two more of the consequences of globalisation, and contribute to the epidemic of stress and depression hitting our workforce. Family life is affected, as parents of both sexes find it hard to spend time with their children. Financial insecurity also contributes to domestic violence.[ Note viii] It is not surprising that there has been an exponential increase in violent crime in the last few years.

Financial Instability

One of the most dangerous aspects of globalisation is the removal of controls on the movement of capital. The Asian financial crisis, which began in Thailand in 1997 and plunged millions of people into poverty, was a direct result of the removal of exchange controls. The classic economic rationale for free trade (Ricardo's theory of comparative advantage) requires that capital does not cross national boundaries, yet this is exactly what the proponents of globalisation demand.

Capital movement needs to be re-regulated, not least because of the lemming-like behaviour of international short-term investment money, which can now switch almost instantly from one country to another, exaggerating and accelerating economic vulnerability and making any sensible economic planning much more difficult.

During the market collapses that punctuated the 90s Chile was less affected than some other South American countries because of its rule that investors have to lodge a deposit with the Chilean Central Bank, which is forfeited if the investment is withdrawn within a year.

Those setting the agenda for globalisation would like to ban such limitations on what they see as the freedom to invest. Part of the EU negotiators' mandate for the renewal of the Lome Convention (governing the EU's relations with third world countries) in 2000 was "promoting measures for making possible liberalisation of current account transactions, convertibility of national currencies and free repatriations of foreign direct investment and any profits stemming therefrom".

Human Rights

One way in which human rights can be enforced is through economic sanctions - this is what ended apartheid in South Africa. Yet such sanctions are forbidden under the free trade rules of globalisation, and then WTO has already forced some US states to abandon trade sanctions against the oppressive regime in Burma.

According to George Monbiot (whose book "Captive Stare" was refused entry into Switzerland and whose anti-globalisation meetings around the UK were interfered with by pressures on several venues to cancel bookings) globalisation not only makes it harder to protest effectively against human rights violations, but is in itself a threat to freedom of expression: "It is certainly becoming harder to challenge the neo-liberal consensus to which nearly all the world's major political parties now subscribe. The global deregulation which allows big business both to seize trade from smaller companies and to dump its costs on to people and the environment can proceed only if it is accompanied by the re-regulation of the people it threatens." [ Note ix]

Species Conservation and Animal Welfare

Regulations to prevent cruelty or protect endangered species are threatened by WTO rules. For example, the WTO declared illegal The US Marine Mammals Protection Act (banning the import of tuna fish caught by a method that endangered dolphins) and forced its withdrawal.

In the UK pig farming industry, the British government rightly insisted on farmers observing certain minimum standards of animal welfare in the rearing of pigs, but was unable to enforce such standards on foreign producers or to discriminate between imported meat produced according to similar standards and that produced more cheaply but less humanely. The economic effect of these imports on UK pig farmers has been catastrophic.

Bio-Piracy

The WTO Trade-Related Intellectual Property Rights (TRIPS) allows the patenting of crops and seeds, often to the detriment of the indigenous peoples whose traditional knowledge has been hi-jacked by transnational corporations. Article 27.3(b) not only facilitates but makes it mandatory for all WTO member countries to patent certain life forms and living processes

In the words of a Joint NGO Statement on the Review of Article 27.3(b) of the Trips Agreement: "Even now, patents on life are being granted almost indiscriminately by patent offices, mostly in the North. These patents distort a patent law system that was originally intended for mechanical inventions, in order to grant corporations and individuals private rights and ownership over biological and genetic resources, traditional knowledge and genetically modified organisms, in order to obtain monopoly profits. The patent system is being used to facilitate the theft of biological resources and traditional knowledge from the South. The monopoly control over such essential resources will also have tremendous impact on food security and the livelihoods of farmers and communities in the developing countries."

The same NGOs are supporting the demand of the African group that final ratification of Article 27.3(b) be delayed until it can be modified to ensure that plants, animals, micro-organisms and natural processes cannot be patented, and to include provisions that "preserve traditional farming practices (including the right to save, exchange and save seeds), and to prevent anti-competitive rights or practices which may threaten food sovereignty of developing countries".

The Privatisation of Services

The WTO General Agreement on Trade in Services (GATS) is an ongoing set of negotiations to apply free trade rules to services such as water provision, health and education, allowing foreign firms to compete for the provision of public services (at least those where a profit can be made). As first agreed in 1994, GATS commits members of the WTO, to 'achieve a progressively higher level of liberalisation' in their service sectors. It applies to all levels of government, including local authorities. A new round started in February 2000.

The British Government is in the vanguard of this process, with public services from air-traffic control to local education authorities coming under the hammer. The DTI says that "as a major global exporter of services, second only to the US, the UK strongly supports the GATS negotiations". As this statement implies, the impetus for GATS comes from large private companies in the service sector. According the World Development Movement (WDM) "Corporations in the services industry want to operate around the world, uninhibited by government law. For them, freeing up the trade and investment in services is crucial and the GATS is designed to do this".[ Note x]

In 1998, the then Minister for Trade, Peter Mandelson, presented a paper to UK industries about the GATS 2000 agenda. In his own words, the purpose of the paper was to "encourage views on the important negotiations on international trade in services... We need your advice on trade barriers that concern you most. Within the European Community we will be drawing up request lists country-by-country and sector-by-sector. These negotiating priorities must reflect UK business priorities. Your responses will of course be treated in strict confidence."[ Note xi]

The UK's own public services are under potential threat from GATS. The United States Coalition of Service industries, which includes US healthcare corporations in its membership, is intent on using GATS to break into the British healthcare market. Public services are exempted from GATS rules if they are 'supplied neither on a commercial basis nor in competition with one or more service suppliers', but the Government's plans for Public-Private Partnerships will bring in the private involvement that will put all our services under GATS rules.

As WDM has pointed out: "Government commitments under GATS are effectively irreversible. Once a sector has been liberalised future governments, however democratic, will find it virtually impossible to reverse the decision. Certainly the WTO Secretariat does not appear to give much weight to the possibility of reversal, with senior officials describing liberalisation under the GATS as 'irreversible'"[ Note xii]. The ultimate aim of GATS is the privatisation and commercialisation of all services around the world. It is like a slow motion, low-profile MAI.

Globalisation should be an election issue

Outside the specialised EU debate (which is usually reduced to competing sets of vapid slogans) trade and investment liberalisation has been almost invisible as an election issue. International agreements with serious implications for jobs and the environment - and for the democratic process itself - have been signed without having been subjected to public scrutiny and debate.

Governments of both parties have been strong supporters of both the WTO and the failed MAI. Yet Tony Blair refers to globalisation as if it were an inescapable force of nature rather than a deliberately chosen policy that his government continues to push forward.

The Government White Paper on Globalisation

The Government's recent White Paper on globalisation (published by the Department for International Development in December 2000) proposes to help poor countries grow richer by attracting foreign investment and increasing their export income.

The White Paper wants "to allow foreign investors the right to invest in agreed defined sectors" of other countries' economies". Implicit in this is the qualification that this right should be untrammelled by the wishes of the government or the local population. Greens would reply that if foreign investment is a good thing for a country, then its government can allow it. But for a government to sign up to an agreement to be unable to prevent a particular form of investment is to sign away part of its sovereignty and to become accountable to the whim of foreign investors rather than the will of its own electorate.

The TUC, while welcoming some aspects of the White Paper, believes that it "takes a blithely optimistic view of the effects of foreign investment that does not explain the accelerating expansion in the number of export processing zones (EPZs) around the world, where basic workers' rights are violated in order to increase countries' attractiveness to multinational companies."[ Note xiii]

The White Paper also wants to "give high priority to the multilateral liberalisation of agriculture". But agriculture is the area where people most need local provision for their needs. The chief beneficiaries of liberalisation of agricultural trade will be the transnationals whose interest is to make entire countries dependent upon their brand of seeds.

In the words of Green MEP Caroline Lucas, "If Clare Short really thinks the future of Africa lies in increased exports of ever more cut flowers and mange-tout to the West then it is extremely worrying. This trade is unsustainable, inequitable and a nightmare for the environment".[ Note xiv]

Where the Main Parties Stand

In addition to the above proposals Tony Blair (together with his German counterpart) has stated that "the EU should continue to act as a resolute force for liberalisation of world trade".[ Note xv]

The Conservatives are even more enthusiastic than Labour on cutting regulation to attract inward investment: "We will campaign for an EU/North Atlantic free trade agreement and then global free trade by 2020"[ Note xvi]. Tory Eurosceptics are concerned about loss of sovereignty to the EU but indifferent to loss of sovereignty to transnational corporations and unelected organisations like the WTO.

The Liberal Democrats "recognise that the WTO is a highly effective organisation which needs to address concerns that it pursues trade liberalisation at the expense of other objectives, such as environmental protection, public health or labour standards".[ Note xvii] They want to re-start the Millennium round of free trade negotiations that was aborted at Seattle.

The Green Party's Position

The Green Party, in stark contrast to these, believes that we need less international trade, not more. Greens want to replace the global dependence on fickle and unaccountable markets with the dignity and security of economic self-reliance.

New global agreements are urgently needed to regulate international trade and investment in the interests of equity and sustainable development, rather than in the interests of transnational corporations. In the long term, the WTO should be replaced with a more accountable, decentralised body, which aims to protect and enhance social and environmental conditions, and to develop strong self-reliant regions where individual communities meet more of their own needs.

The free-trade dogmas of the WTO must be reversed to allow import and export controls on a national and/or regional bloc level, with the aim of allowing localities and countries to produce as much of their food, goods, and services as they can themselves.

The export-promotion policies of the IMF and the World Bank should be replaced with policies to promote community self-reliance through import substitution where possible. It will be necessary to work with developing countries to design and finance strategies to ease the transition. Other Green policies, including debt cancellation, will help with this.

Obligations on developing countries to comply with higher workplace and environmental standards should be linked to the provision of transitional technical and financial support. This will require a substantial increase and re-direction the foreign aid budget.

Our medium-term objectives are:

* to establish new international trade rules to reconcile conflicts at national and international levels between free trade and sustainable resource management. These rules would place environmental protection and sustainable development above the pursuit of profit, and would enable countries to internalise the full environmental costs of international trade, including the true costs of transport. They would permit legitimate border tax adjustment to compensate for energy or pollution taxes imposed on domestic industries, and enable countries to discriminate between products on the basis of the way they are processed/produced;

* to introduce into the WTO (while it exists) a social clause, based on ILO standards, establishing minimum labour rights and conditions for participation in the multilateral trading system, together with new rules to prohibit countries from weakening existing social and environmental regulations to attract, or retain, foreign investment;

* to introduce into the WTO a food security clause, which would allow developing countries to protect their food systems up to the point of self-sufficiency for social, ecological, and economic reasons;

* to prohibit subsidised agricultural export dumping, and to redesign the agricultural policies of the industrialised countries to encourage less intensive production, and to redistribute income support from the largest producers to the small-holders;

* to ensure expanded and timely public access to all WTO documents, and access for representatives of civil society to WTO meetings;

* to introduce an international tax on currency speculation, both to raise revenue for development, and to deter a form of financial activity that is deeply, destabilising for all countries.

Just Say No

The next steps in globalisation should be backwards.

* This country should refuse to support a new round of trade liberalisation in the WTO, and should add its voice to those countries, mostly in the third world, that are calling for the reassessment of the effects of previous rounds.

* We should not co-operate in, still less initiate, any GATS-related moves to pressure other countries to dismantle their public services for the benefit of transnational service providers.

* We should demand that GATS be modified to include safeguards to ensure that our own public services are protected from challenge under its rules.

* When the EU is being pressured by the US and other countries to abandon the precautionary principle and lower its standards of public health and environmental responsibility in order to accept imports whose safety is in doubt, we should not attempt the role of "honest broker" but should align ourselves firmly with other EU nations on this issue.

* The Government should not think itself obliged to act as a marketing and public relations consultant to British exporters. What increases company profits is not necessarily of long-term benefit to ourselves as citizens, not to mention our obligations to other countries, other species and future generations.

The fight against globalisation is one we must win, otherwise history will look back on the twentieth century as the high point of democracy, before transnational corporations took over the running of the world for their own benefit.

Notes

i In April 1998, when the MAI negotiations had reached an impasse and a member of the Question Time audience asked the Home Secretary, Jack Straw, for his views, he hadn't even heard of the MAI.
ii Published in the Daily Davos (Newsweek online) 25th January 2001
iii Keynote speech to the Green Party Conference, Autumn 2000.
iv FOEI, Towards Sustainable Economies: challenging neoliberal economic globalisation.
v Matthias Lundberg, Lyn Squire, The Simultaneous Evolution of Growth and Inequality, World Bank, Washington, cited by Green Party MEP Caroline Lucas in the Ecologist magazine, Jan 2001.
vi Caroline Lucas/Conference, op. cit.
vii FOEI, op. cit.
viii Evidence for this comes from South Korea, where globalisation (in this case causing the collapse of the currency and bankruptcies for thousands of firms) led to a massive increase in domestic violence two years ago.
ix Guardian, Feb 1 2001
x Stop the GATSastrophe: WDM Campaign briefing, November 2000.
xi Liberalising Trade in Services - A Consultative Document on the GATS 2000 Negotiations at the World Trade Organisation and Forthcoming Bilateral Negotiations, UK Government 1998 (cited by WDM, November 2000, op. cit).
xii WDM, November 2000, op. cit.
xiii Memorandum submitted by the TUC and the International Confederation of Free Trade Unions (ICFTU) on The White Paper 'Eliminating World Poverty: Making Globalisation Work for the Poor'.
xiv Caroline Lucas/Ecologist, op. cit.
xv Blair-Shroeder Declaration on the Third Way (January 2000).
xvi Believing in Britain.
xvii Policy Paper 35.



Return to main political index
Return to home page