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The Anything But Free Market

Just as many national governments support environmentally detrimental subsidies, many international trade agreements between nations also work in the opposite direction of sustaining our world. The General Agreement for Tariffs and Trade (GATT) that established the World Trade Organization (WTO)and current guidelines for international trade is exemplary.

The most far reaching of all trade agreements, GATT first came into being in 1948, shortly after the IMF and World Bank were created at the International Monetary and Financial Conference in 1944 at Bretton Woods. In its sixty years of existence, there have been eight rounds of adjustment to GATT. The most recent round of closed-door debate was held in Uruguay and concluded in the spring of 1994 after eight years of difficult negotiation. Generally, the push for this latest round of adjustment came from the United States during the 12 years of the Reagan and Bush I administrations. In many ways, the document created in Uruguay could be considered the constitutional framework of our so-called New World Order.

WTO Protester

Though it is true that the foundation of efficient distribution of food and natural resources is incumbent on an increasing atmosphere of laissez faire in world trade, the present structure of GATT is premature in its offerings. The industrializing world is on too uneven a footing for the kinds of deregulated free trade GATT proposes. Few developing nations can compete with the existing economic giants on a level field, and yet that is exactly what GATT presumes. Germany, Japan, and the United States, current world economic leaders, got to where they are today through long periods of heavily protectionist trade policies. China is pursuing this course now. But GATT's liberalization of markets accents international economic imbalance and amplifies the power of money.

One of the greatest defects in the system of capitalism is that large sums of capital are advantaged. In a sense, money is to trade as weapons are to war. To ask struggling new economies like Indonesia or Malaysia to participate in the ring with the heavyweights is like asking primitives with stone-tipped spears to battle divisions of armored tanks. GATT simply greases the uphill climb for developing nations and provides vast leverage to those already at the top of the mountain.

In regard to the environment, GATT's principle of harmonization demonstrates a clear example of how this inequity can open dangerous loopholes in the administering of international law. Rather than use GATT as a powerful tool to implement higher environmental standards all over the world, harmonization, though clearly necessary in some form to the evolution of the global market, amounts to a dropping of standards to the lowest common denominator.

In the dynamics of the industrialized West capitalizing the developing Third World, the potentials of education, higher standards of living, self-determined fertility restraint, and environmental concern come with a difficult transitional time lag. The developed portions of the world have collectively attained a near ZPG along with a steadily rising environmental awareness. Conversely, the developing nations, pressed by high population growth rates, social deficiencies, and the costs of new infrastructure, struggle to meet the extra expense of cleaner industry. In the Climate Change Conference held in Kyoto, Japan in December 1997, this difference between developed and developing nations was one of the central issues of contention. The developing nations argued they could not compete economically with the developed nations in liberalized markets with the added costs of greenhouse gas controls. These same nations were promised financial assistance for meeting new global clean air standards set at the Earth Summit in Rio in 1992. But that money was slow to come because the developed nations were having such a hard time coming up with the finances to cover their own costs, much less help other nations. Decarbonizaton is easier said than done.

Harmonization seeks to reconcile this financial stress existing between developed and developing nations. Graduated timeframes have been created to give the less developed countries a chance to catch up with the developed world's higher environmental standards. In the meantime, however, GATT's liberalized trade regulations leave the door open for transnational businesses to use these timeframes as windows to the lesser developed countries' lower standards. Emission control, water regulations, pesticide limitations, and workplace health standards in these developing nations are all thirty to fifty years behind the industrial vanguard. Western business can avoid the stricter laws of the developed nations by moving their operations to Third World countries where these same laws are more lax or non-existent. Thus wealthy transnational corporations get the best of both worlds, manufacturing under lesser strictures and lower labor costs, while selling in the more affluent markets of the developed world. GATT's harmonization principle thus becomes an avenue for circumventing environmental standards worldwide, not building them.

Yes, time is necessary for lesser developed countries to attain the standards of the more developed countries, but in addition to harmonization's timeframes, GATT's harmonization regulations can also label one country's high environmental standards as non-tariff trade barriers to one with lower standards–further perverting the process. Products from foreign markets must be allowed in the U.S. market even though they do not meet U.S. standards of labeling or toxic chemical levels. Asbestos, CFC's, and DDT, all illegal in U.S. production, now have free channel to all world markets through manufacturing operations in the developing nations thanks to GATT. This might offer some consolation to the Third World if the profits went to the developing nations, but, in more cases than not, the profits actually accrue in the pockets of the transnationals who have the wherewithal to move their manufacturing plants from one country to another, chasing not only the cheapest labor but the easiest environmental standards. And the sad truth is that these kinds of trade laws were created through the auspices of the developed world by the influence of these very same wealthy transnationals.

The transnational corporation, though it invariably has its roots in the developed world, is not tied to any national sovereignty, democratic suggestion, or social concern. Transnationals are free-roving mavericks tied only to the bottom line. When the net worth of some corporations is greater than the GNP of many developing nations, the weapon of money controverts all sense of a free market. Corporations waving big checks and making lofty promises can enter a needy nation, take advantage of its cheap labor costs, lower employee work standards, and lower environmental standards. With no moral justification other than profit, they quickly pillage natural resources, then dash off to greener fields ten, five, two years later, leaving nothing but an empty manufacturing plant, environmental damage, inflation, and unemployment.

The problem is simply that GATT's present by-laws too heavily favor those-with over those-without. And why shouldn't they, it was those-with that made the rules in the first place. Money and products are free to travel across national boundaries, but labor is not. It's strictly big business; capital over labor.

When a, like Nike for example, shops the world round for the cheapest labor, they will be depressing wages at home. Of course, one might argue that in the long run, this facilitates the evolution of a truly international market and a leveling of wages in the world's labor force. But as the circumstances are presently showing, smart companies simply take advantage of the loophole as long as it exists, then take those profits on to greener fields later. But again, a company like Nike has no real allegiance to the U.S. or any other nation. It is a transnational corporation with manufacturing plants all around the world. All that matters is making the bottom-line whistle. Profit margins must maintain. The wheel must turn. The global industrial revolution is a capitalist monster, eating what it can, while it can, with no concern for the future. And this is the system that many hope will manage our encroaching natural resource scarcities. Don't count on it.

International trade agreements are powerful economic tools critical to facilitating trade and spreading wealth, but if the underlying premise of the agreements is unfettered growth, corporate expansion, and reckless resource harvest, not sustainability or even a leveling of the playing field, we are wasting one of our most useful methods of planet management. This is something that can be changed.

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