World Trade Organisation

The World Trade Organisation is a body that both creates and enforces international rules on trade.
These rules consistently favour corporate industry at the expense of workers, small farmers and ecosystems.
WTO conference, Seatle USA 1999

The WTO was set up in 1995 by an international treaty signed by the member states of GATT (The General Agreement on Tariffs and Trade). GATT was the body that was the predecessor to the WTO. Set up by 23 countries in 1948, the number of countries signed up to GATT had grown to 128 by the time it became the WTO. The agenda of GATT had been the reduction of tariffs, which are taxes on imports.

With the formation of the WTO, the agenda has greatly expanded to include the removal of so-called “Non-Tariff Barriers to Trade” which are almost any restrictions placed on imports. Thus it is a violation of WTO rules for member countries to restrict imports due to their production methods, such as child or slave labour, exploitative and dangerous working conditions, use of pollutants or animal abuse.
Also WTO rules make it illegal for member countries to prevent imports on the grounds that a product would damage health or the environment in the importing country. The only exception to this rule are goods made by prisoners

Almost every sector of industry has seen control become concentrated in the hands of a small group of transnational corporations (TNC’s). [1]
The biggest 200 companies in the world now have almost twice the wealth of the poorest 80% of humanity, yet their combined global employment is only 18.8 million, which is less 0.003% of the world’s poppulation [2].
Two-thirds of world trade in goods and services is now controlled by TNC’s [3]. One-third of TNC trade is intra-firm, between the parent company and its affiliates or in-between affiliates. Using this sort of trade and accounting methods TNCs shift funds between affiliates around the world to avoid taxation. These corporations are almost exclusively based in the US, Canada, Western Europe and Japan.

The top corporations in every sector co-operate through industry coalitions and lobby groups and increasingly dictate policy to these governments. Real decision making power at the WTO is exercised by the governments of what has become known as the QUAD, consisting of the USA, the European Union, Japan and Canada.
The QUAD convenes several times a year in between WTO General Council meetings behind closed doors and without the representatives of other member governments. Policy decisions are taken and then sold to the less powerful governments.

The rich countries over-produce but have exhausted most of their raw materials. Thus they need their corporations to be free to extract raw materials from the ‘Third World’ and sell their goods and services in ‘Third World’ markets.

The WTO is the vehicle through which TNC’s aim to capture increased access to the South’s markets in agriculture, health care, education, water and utilities. The South’s governments are increasingly resisting this because they recognize that competition from TNC’s will undermine their autonomy and destroy local industries and small farmers.

In 1997 the WTO dismantled tariffs on telecommunications and trade in information technology products and an agreement was signed on the liberalisation of the financial services sector, including banking and insurance. All these agreements were the result of systematic pressure on southern governments by the EU and the US. The Agreement on Trade Related Aspects of Intellectual Property Treaty (TRIP’s) is the most far reaching and potentially damaging WTO legislation. Whilst all other rules dictate what member countries cannot do, the TRIP’s legislation is the first proscriptive WTO law, dictating what members must do.
TRIPS forces all member states to enact national patent, trademark and copyright laws giving corporations monopoly rights for twenty year periods

In the words of Noam Chomsky “Concentration of communications in any hands (particularly foreign hands) raises some rather serious questions about meaningful democracy. Similar questions arise about concentration of finance, which undermines popular involvement in social and economic planning. Control over food raises even more serious questions, in this case about survival” [4]

TNC’s such as Phillip Morris, United Fruit, PepsiCo, Cargill, Unilever and Nestle oversee vast portions of international agricultural production and trade. Transnationals either directly or indirectly control 80% of the land around the world that is cultivated for export crops such as bananas, tobacco and cotton.[4] Such agro-export “development” patterns regularly displace small farmers from fertile farming land and enforce low wage labour and exposure to dangerous pesticides.

TNCs have a long history of actively enlisting the assistance of rich nations to maintain and expand their interests in the ‘Third World’. This assistance has often involved military force, such as the 1954 US invasion of Guatemala to prevent the Guatemalan government from taking (with compensation plus interest) the unused land of United Fruit Company for redistribution to peasants.

Any member state can complain to the WTO “Dispute Settlement Body” (DSB) about any other member’s policies or laws that it claims restrict the free flow of trade. This is where the real power of the WTO is exercised.
How the members of the DSB’s panels are selected is unknown, all meetings are held behind closed doors, no documentation is provided, no witnesses are heard, there are no conflict of interest rules. Over 170 disputes have been settled so far. If the DSB finds a government guilty of non-compliance with WTO agreements, the offending country must change its legislation or face retaliatory trade sanctions by the complaining country, and possibly heavy financial penalties.

The WTO has extended its powers to enforce Trade rules. Formerly under GATT unanimous agreement had to be made before a member state could be penalised. The WTO has much more teeth. If the WTO imposes sanctions on a member state, all member states including the member who bought the original complaint, must be unanimous if sanctions are not to apply.

The WTO’s very first ruling in early 1996 ordered the US to eliminate its Clean Air Act regulation on gasoline cleanliness after a complaint by Venezuela and Brazil. The US Environmental Protection Agency weakened its regulations on contaminants in imported gasoline, in order to comply with the ruling.

In May 1997, a three-person WTO dispute settlement panel ruled that a nine-year ban imposed by the European Union on hormone-treated beef was illegal under WTO rules. The U.S. and Canada bought the complaint. Over 90% of US beef cattle are given growth hormones, including Monsanto’s genetically engineered growth hormone rBGH [5]. The E.U. fearing that European consumers will not tolerate contaminated beef have not dared lift the ban and the US, has won WTO approval earlier to retaliate by imposing $117 million of duties on European imports, including Roquefort cheese from France and truffles from Italy.

The US Endangered Species Act that imposed a ban on sale of shrimp caught without devices to protect endangered sea turtles, was repealed after the WTO ruled the legislation an unfair barrier to trade.

Canada is considering asking the WTO to rule against the US food stamps for the poor. Canada argues this is a government subsidy to U.S. farmers that creates a market for food, which would not be there in a “free” economy.

Further reading:
Case studies on WTO consequences

1. Top 10 corporations in 1999 and revenues in millions of dollars, according to “Fortune 500” list. ( 1. General Motors 161315, 2. DaimlerChrysler 154615, 3. Ford Motor 144416, 4. Wal-Mart Stores 139208, 5. Mitsui 109372, 6. Itochu 108749, 7. Mitsubishi 107184, 8. Exxon 100697, 9. General Electric 100469, 10. Toyota Motor 99740 )

2. “The top 200 The Rise of Global Corporate Power” by Sarah Anderson and John Cavanagh. Published by The Institute for Policy Studies, 1997

3. UNCTAD (United Nations Conference on Trade and Development World Investment Report 1995

4. “The Passion for Free Markets, Exporting American values through the new World Trade Organization” by Noam Chomsky, Z Magazine online, see

5. “The Corporate Planet: Ecology and Politics in the Age of Globalization” by Joshua Karliner. Published by Sierra Club Books, 1997