the wto and the world food system - iuf uita iul ... the wto and the world food system a trade union...

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the wto and the world food system

a trade union approach

The WTO and the World Food System:a trade union approach

printed on recycled paper

International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco andAllied Workers’ Associations

Geneva, 2002

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the WTO and the world food system


1. introduction: the WTO and “global agriculture”

2. building a trade union response: an integrated rights approach

3. the WTO Agreements and global inequality

3.1 The Development Box

3.2 Consolidating Corporate Control

3.3 Downward Harmonization

3.4 The Attack on GMO Labeling

4. the broader context

4.1 The WTO as a Regime

4.2 Corporate Globalization: Breaking Down Barriers

4.3 Export Dependency and External Debt

5. global investment regimes

5.1 Investment Rules in the WTO

5.2 NAFTA Chapter 11

5.3 The FTAA and Bilateral Investment Regimes

6. conclusion: implications for strategy

contents

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introduction: the wto and“global agriculture”

Making sense of the world food system today isboth easy and complex. It is easy if we considerthe importance of food in sustaining human life.Everyone needs food; access to adequate, safeand nutritious food is a fundamental humanright. Some 1.3 billion people are actively en-gaged in agricultural production, with the agri-cultural sector employing half of the world’slabour force. This includes 450 million wagedagricultural workers. In developing countries ag-ricultural workers constitute the majority of theworkforce, reaching as high as 80 percent insome countries. Women account for more thanhalf of the world’s waged agricultural labourforce, and 70 percent of all child labour is em-ployed in agriculture.

The majority of working people engaged in ag-ricultural production are involved in the produc-tion of food. According to the UN’s Food &Agriculture Organization (FAO), rural womenare responsible for half of the world’s food pro-duction and between 60 to 80 percent most de-veloping countries. All agricultural workers andsmall farmers are both producers and consum-ers of food, and their livelihood is tied to the live-lihoods of those who consume the food theyproduce. This is a simple but fundamental link inthe world food system.

A common sense approach to understanding theworld food system raises some basic questions.If access to safe, nutritious food is a fundamen-tal human right, why are 820 million peopleliving in hunger today? Why are people in food-exporting countries living in hunger, and whyare agricultural workers among the malnour-ished? If the value of annual global exports inagricultural products is USD 545 billion, whydo waged agricultural workers and small farm-ers register among the highest levels of globalpoverty?

More than half of the world’s workforce is en-gaged in agricultural production. Why then arethe conditions under which food is produced sodestructive to the health and well-being of thesepeople? According to the ILO at least 170,000agricultural workers are killed every year as a

result of workplace accidents. Agricultural work-ers are twice as likely to die at work than work-ers in any other sector. Among these fatalitiesare an annual 40,000 deaths from exposure topesticides. Every year an estimated three to fourmillion people engaged in agricultural work suf-fer severe poisoning, including work-relatedcancer and reproductive impairments, from thehazardous pesticides they are forced to use.Only five percent of the world’s 1.3 billion agri-cultural workers have access to any kind of la-bour inspection system or legal protection oftheir health and safety rights. Yet the agenda ofcorporate globalization aggressively promotedby agencies like the World Trade Organization(WTO) seeks greater deregulation and less so-cial protection.

Following what the WTO calls “the setback inSeattle” in 1999, the Fourth WTO Ministerialmeeting in Doha (November 9-15, 2001)launched a new round of trade liberalization.The winners of this new ‘Doha DevelopmentRound’ are clearly the transnational corpora-tions (TNCs) that dominate the global economy.This includes the agricultural and food process-ing industries, where mergers and acquisitionshave seen the centralization of control in thehands of a few global corporations. Corpora-tions supplying seeds have merged with agro-chemical and biotechnology companies,effectively reshaping the world food system. Thepresident of Monsanto’s seed division, RobertFraley, says “This is not just a consolidation ofseed companies, but really a consolidation ofthe entire food chain.”1

It is through this control of the entire food chainthat corporations like Du Pont can claim – in its“to do list for the planet” – a simple task: “feedthe planet.” What this really means is that peopleare less able to feed themselves without corpo-rate giants like Du Pont as they become more de-pendent on the products and productionmethods of TNCs. In this sense, the food chain islocked and the TNCs hold the key. This is the di-rection corporate globalization is taking us, andthe new round of WTO trade talks will take usthere more quickly.

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These are not philosophical questions or reflec-tions on the morality of our times. They are someof the most basic political questions that must beasked about the system we live in. They in turnraise another basic question: If these are themost serious problems facing billions of peopletoday, why does the WTO work so hard to ex-acerbate them? Hunger and malnutrition, foodsecurity and sustainable agriculture weresidelined as “non-trade issues” in the final WTOMinisterial Declaration. The conditions of workin the agricultural sector were ignored alto-gether. Instead of serious attempts to deal withthese problems, the trade talks focused on howto increase the pressure on agricultural workersand small farmers to become more competitive,and how to expose them more fully to a volatile,fluctuating market. This is the same market thathas displaced and impoverished hundreds ofthousands of small farmers and agriculturalworkers faced with falling prices for coffee,sugar and other agricultural products. Whilehunger and the need for millions of people togain access to food is one of the biggest chal-lenges we face, the WTO agenda gives priorityto gaining “market access” in ways that consoli-date corporate power and profit in the agrifoodindustry.

In 1996 the World Food Summit announced itsplan to halve world hunger by 2015. Yet in theWTO trade talks more urgent deadlines weredrawn up for expanding global agribusiness.While the deadline for halving world hunger is15 years away, the deadline for more rapidmarket liberalization in agriculture is to beachieved in 15 months – with new commitmentsplanned for the Fifth WTO Ministerial in Mexicoin mid-2003.

Hunger and malnutrition only enter the picturewhen the problem can be redefined to benefitagribusiness. In the months leading up to theWTO Ministerial in Doha, US President Bush de-clared: “I want America to feed the world.We’re missing some great opportunities, notonly in our hemisphere, but around the world.”2

In this way a global humanitarian crisis and thelarge-scale violation of people’s right to accessto adequate, safe and nutritious food is rede-fined as a business opportunity. Among those tobe “fed by America” (i.e. US agribusiness) arethe small farmers and agricultural workersaround the world whose livelihood was de-stroyed by competition, declining commodityprices, debt and displacement resulting from thedumping of under-priced produce by corporateagribusiness and dependence on over-priced

fertilizers and seed. Moreover, the 30 millionpeople in the US who live in hunger – includingover four million malnourished people living inthe food-exporting state of California – knowthat only when their hunger is a business oppor-tunity will “America feed America.”

For the US government feeding the world’s hun-gry and promoting US agricultural exports areone and the same. As Bush declared, “It startswith having an administration committed toknocking down barriers to trade, and we are.”

What are these “barriers”, how are they“knocked down” and what are the conse-quences?

Shortly after the WTO meeting in Doha, the USSecretary of Agriculture, Ann M. Veneman,stated clearly that these “barriers” include anyefforts by governments to protect public healthby ensuring that consumers have the right tochoose not to consume GMO food products. Inparticular, Veneman criticized the EU’s move tostrictly regulate GMO foods and impose com-pulsory labeling of GMO food products. Likeother forms of environmental and social protec-tion, restrictions on GMOs are seen as “barri-ers” that must be knocked down or preventedfrom being erected in the first place.

In the same speech Veneman reaffirmed that“…non-trade issues cannot be allowed to under-mine key WTO provisions or divert us from ourprimary goal.” That goal is not to ensure the uni-versal right to adequate, safe and nutritiousfood, or to promote sustainable agriculture thatsupports the livelihood of millions, but to create“global agriculture.”3 Under this global vision,“future agriculture policies must be market-ori-ented … they must integrate agriculture into theglobal economy, not insulate us from it.” It is inthis context that the WTO Agreement on Agricul-ture and the Agreements on Sanitary andPhytosanitary Measures (SPS) and TechnicalBarriers to Trade (TBT) play a central role inbreaking down barriers and consolidating glo-bal corporate domination of the world foodsystem.

Regardless of differences in views on when andhow to liberalize agriculture and promote the in-terests of agribusiness, the majority of govern-ments represented at the WTO meeting in Dohatacitly support the US government’s vision of amarket-oriented and commercialized “global ag-riculture.” With a few exceptions, the main dis-putes among trade negotiators concerned who

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gets what share of the profits from “global agri-culture”, not the violation of the rights of workingpeople in the destructive process of globalizingagriculture.

This vision of “global agriculture” fails to recog-nize the social and environmental crises whichare built into the current world food system andtheir enormous cost in human lives. Significantly,the rights and livelihood of the millions of agri-cultural and food processing workers, subsist-ence farmers and marginalized/small farmerson whose labour this entire system is based areignored altogether.

This is why the labour movement must meet thechallenge of building a long-term, comprehen-sive strategy to ensure that the world food sys-

tem is primarily geared towards fulfilling theright to food safety, food security, food sover-eignty and the rights and livelihood of workingpeople engaged in food production.

1 Quoted in The Guardian, December 15,1997

2 New York Times, June 19, 2001.

3 Speech by US Secretary of Agriculture AnnM. Veneman, Oxford, UK, January 3, 2002.

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2. building a trade union response:an integrated rights approach

As trade unions organizing and representing theinterests of food and agricultural workers andsupporting the interests of marginalized andsmall farmers, how do we respond to thesechallenges?

It is not enough to add these problems as“issues” on our unions’ list of things to do. Weneed an approach that builds a critical under-standing of the WTO, globalization and agricul-ture, one that makes sense of what is going onand lays the groundwork for union responses.Such responses involve strategies and tacticsthat must take into account complex problemswithout getting caught up in technicalities anddistracted by minor debates. As we will see be-low (in section 4), treating the WTO agreementsas legal texts requiring a technical understand-ing and a technical ‘fix’ is a self-limiting strategythat fails to take into account the power and poli-tics of the WTO.

For our strategy to be of real consequence toour members it must involve a perspective on theglobalization of agriculture and the WTO whichprovides a set of criteria for understanding theirimpact on workers and small farmers aroundthe world. Moreover, it must provide a roadmap for unions to chart their local responses.We need a common agenda that strengthens in-ternational solidarity and builds an internation-ally coordinated response, while at the sametime respecting and encouraging a diversity ofstrategies and tactics at the national and locallevel.

In the introduction we indicated that the WTO,and neoliberal policies generally, undermine theworking conditions and livelihood of workingpeople and deny access to adequate, safe andnutritious food. To put it another way, the right toadequate, safe and nutritious food is denied bythe WTO and neoliberal policies.

This paper does not provide a comprehensiveanalysis of the WTO agreements and their im-pact on food and agriculture, but instead at-tempts to develop a framework for trade unionstrategy. This framework starts with a set of prin-

ciples and goals – a commitment to rights – anduses this to assess the impact of the WTO on theworld food system, and to identify the chal-lenges faced by agricultural workers and smallfarmers. What is presented here is an integratedrights-based approach to understanding the im-pact of the WTO Agreement on Agriculture, par-ticularly the implications of the new round ofnegotiations that will culminate in the Fifth WTOministerial in Mexico in 2003, and a frame-work for education and mobilization among ourmembers.

One approach is to agree on a set of collectiverights which cover as many of the issues as pos-sible, but which is clear and manageable. Theserights should be treated as a package; insepara-ble not only in principle but in practice. This isimportant because one set of rights cannot be re-alized without the other. Since the problems weface are multi-faceted and are tied to a widerange of problems, we require an integrated ap-proach that is able to respond to a multiplerange of issues.

The principle of interdependent, inseparablerights is certainly not new. The Universal Decla-ration of Human Rights dating back to 1948,advances this notion. In reflecting on the insepa-rability of these rights the FAO has stated that:

The civil, cultural, economic, political and socialrights proclaimed in the Universal Declarationare considered interdependent, interrelated, indi-visible and equally important. To be able to en-joy the right to food fully, people need access tohealth care and education, respect for their cul-tural values, the right to own property and theright to organize themselves economically andpolitically.

This argument concerning inter-dependent andindivisible rights also applies to the UN’s Inter-national Covenant on Economic, Social and Cul-tural Rights (1966). Among the rights stipulated,Article 8 of the Covenant guarantees the right toorganize, freedom of association and the rightto strike and Article 11 guarantees the right toadequate food.

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However, a trade union response that linksworker and trade union rights with food rightsreaches beyond mere principles to the practiceon the ground. An integrated approach is neces-sary not only because of the broad range ofchallenges the world food system presents uswith, but also because of the nature of the foodchain itself, where workers’ and consumers’ in-terests are inextricably tied.

All too often the right to safe food is treated as aprinciple that must be enshrined in multilateralagreements like the WTO Agreement on Agricul-ture. It is an important principle, but any seriousconsideration of its enforcement in practice musttake into account the role played by workers ingrowing and processing this food. Whether itconcerns hazardous pesticides or the speed-upof production lines, protection of the right to safefood begins not on the shelf, but in the fields andfactories. For example, the widespread problem

of repetitive strain injuries and the high inci-dence of industrial accidents and fatalities suf-fered by many workers in the food processingindustry are directly related to the high speed ofproduction and the intensity of work. The dou-bling and tripling of slaughter and processingline speeds in recent decades has also been theprinciple vector for spreading the pathogens be-hind the rising incidence of meat-related foodpoisoning. The production system that placesworker health and safety at risk also contributesto unsafe food. The right to safe food thereforecannot be separated from the right of foodprocessing workers to organize and bargaincollectively to ensure a safe work environment.Furthermore, if one set of rights cannot be sepa-rated from the other in practice, then they cannotbe separated in a strategy that attempts to en-force the right to food safety at internationallevel. That is precisely why the new ILO Conven-tion on Safety and Health in Agriculture

Box 1: ILO Conventions concerning agriculture

Convention No. 87: Freedom of Association and Protection of the Right to Organize

Convention No. 98: Right to Organize and Collective Bargaining

Convention No. 29: Forced Labour

Convention No. 105: Abolition of Forced Labour

Convention No. 100: Equal Remuneration

Convention No. 111: Discrimination (Employment and Occupation)

Convention No. 138: Minimum Age

Convention No. 11: Right of Association (Agriculture)

Convention No. 141 Rural Workers’ Organizations

Convention No. 129: Labour Inspection (Agriculture), 1969

Convention No. 99: Minimum Wage Fixing Machinery (Agriculture)

Convention No. 101: Holidays with Pay (Agriculture)

Convention No. 25: Sickness Insurance (Agriculture)

Convention No. 36: Old-Age Insurance (Agriculture)

Convention No. 38: Invalidity Insurance (Agriculture)

Convention No. 40: Survivors’ Insurance (Agriculture)

Convention No. 12: Workmen’s Compensation (Agriculture)

Convention No. 10: Minimum Age (Agriculture)

Convention No. 110: Plantations

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(adopted in June 2001, and yet to be ratified)must be treated by trade unions, small farmers’organizations and consumer organizations alikeas a tool for advancing not only the rights of ag-ricultural workers, but the right of all workingpeople to good, safe food.

The struggle to combine food workers’ rightsand the right to good, safe food is not new. TheIUF has long been committed to defending andadvancing a comprehensive set of rights con-cerning food production, distribution and con-sumption. This includes the right to adequate,safe and nutritious food whereby food produc-tion is geared towards the satisfaction of humanneeds. Article 2, paragraph 6 of the IUF Rulesreads:

Within its specific sphere of activity, the IUFshall actively promote the organization of theworld’s resources in food for the common goodof the population as a whole, and it shall seekadequate participation of labour and consumerinterests at all stages of national or internationalpolicy-making relating to the production,processing and distribution of food and associ-ated commodities.

The objective of seeking “adequate participationof labour and consumer interests at all stages ofnational or international policy-making” ex-presses a particular right – the right of workers’organizations, together with consumer interests,to shape national, sub-national and internationalfood policies. Yet in the following discussion ofthe WTO and the world food system, we willsee that the WTO systematically removes thatright, reducing the space for labour and con-sumer interests to determine food policy in orderto promote the power and interests of agrifood,chemical and biotechnology corporations.Moreover, at all stages of national and interna-tional policy-making the WTO is enforcing amodel of market-oriented, industrial agriculturethat gives priority to food production for corpo-rate profit over the common good of the popula-tion as a whole.

The right to food security alone is not enough ifit is narrowly interpreted in terms of the avail-ability of food. Who produces it, how it is pro-duced and the long-term sustainability andcapacity to maintain an adequate supply offood are important factors. In the WTO’sMarrakech Ministerial Decision the concept offood security was included, but was redefinedas the availability of food in the market, not theadequacy of food for the population or ad-

equacy of nutritional intake. In practice theMarrakech Decision only permits developingcountries that are net food-importers to providegovernment assistance and direct payments toimport foodstuffs if there is a shortfall. In otherwords, in developing countries government sub-sidies for the import of commercial foodstuffs onthe world market are permitted, but subsidies forlocal food production are not. This contradictionhas led some to argue that genuine food secu-rity can only be guaranteed through food sover-eignty.

The concept of food sovereignty is a relativelynew concept, dating back to 1996, and wascoined specifically in response to the threatposed by the WTO to poor countries’ capacityto develop and maintain an adequate supply ofstaple foods. In this context, mere availability offood (as defined by food security) is no longersufficient, since it fails to recognize the source ofthis food and the livelihoods dependent on itsproduction and use. A useful working definitionof food sovereignty may be found in the FinalDeclaration of the World Forum on Food Sover-eignty, Havana, Cuba, September 7, 2001:

Food sovereignty is the means to eradicate hun-ger and malnutrition and to guarantee lastingand sustainable food security for all of the peo-ples. We define food sovereignty as the peoples’right to define their own policies and strategiesfor the sustainable production, distribution andconsumption of food that guarantee the right tofood for the entire population, on the basis ofsmall and medium-sized production, respectingtheir own cultures and the diversity of peasant,fishing and indigenous forms of agricultural pro-duction, marketing and management of rural ar-eas, in which women play a fundamental role.

If we combine this notion of food sovereigntywith food security, and incorporate a key set ofrights uniting the interests of working people aswaged workers, small and subsistence farmersand consumers, the following set of integratedrights may form the basis for a trade unionstrategy:

√ The right to adequate, nutritious and safefood

√ The right to food security and food sover-eignty

√ The right to organize and bargain collec-tively and freedom of association

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√ The right to a safe working and living envi-ronment

√ The right to livelihood protection

By starting with these fundamental integratedrights, we can then determine whether agree-ments like the Agreement on Agriculture, andthe WTO generally, are compatible with theserights. We must ask whether these global rulesfor a “global agriculture” deny or restrict any ofthese rights, and whether they can co-exist withthese rights. An integrated rights-based ap-proach would serve to raise critical awarenessof key aspects of the world food system todayand the impact of corporate globalization. It re-quires us to think through the contradictions be-tween the demands and the realities of theworld food system, and to work through thestrategy and tactics for achieving our goals.

It is not the primary aim of this strategy to de-cide whether or not to seek the inclusion ofthese rights in the Agreement on Agriculture orbe drawn into a fruitless ‘reform vs. abolish’ de-bate. Rather, it attempts to reveal how incompat-ible these rights are with the Agreement onAgriculture and the global trade and investmentregime of which it is a part. Our strategic focushere is not about sorting through the technicali-ties of the agreement or seeking a re-wording,but rather to aggressively assert a set of rights-based priorities, objectives and processes that –if they were accepted – would render theAgreement on Agriculture useless to the corpo-rate interests that crafted it.

This raises the question of how our approachcan make use of the existing international trea-ties that are intended to secure these rights.There is a concrete basis for arguing that thesetreaties – such as the ILO Conventions guaran-teeing basic trade union and worker rights andthe rights of agricultural workers (see Box 1) -should be enforced over and above the WTOagreements. The more critical issue is the wayin which the focus on securing collective rightsemphasizes the role of national governments,for to a large extent it is only at the nationaland sub-national level that these rights can beinstitutionally guaranteed and enforced.

We may summarize the strategy - and its ben-efits - as follows:

• An integrated rights-based approach is usedto assess the impact of global trade and invest-

ment regimes and define the kinds of collectiveaction needed.

• The suppression of these rights exposes thepolitical and economic logic behind the WTOAgreement on Agriculture and similar regimes.

• These rights are not only treated as a set ofprinciples but also as the objectives underpin-ning a trade union response.

• These rights are not passive principles buttools for working people to fight back and over-come the poverty, vulnerability and insecuritywe face today.

• These rights are necessary to enhance demo-cratic control and develop collective capacities.

• A rights-based approach is necessary to rec-tify inequalities and imbalances between andwithin countries.

• At the same time a rights-based approachhelps us to focus on the systemic and global vio-lations of worker rights, thereby avoiding a nar-row country analysis and a facile “North/South” dichotomy.

Finally, a rights-based approach reminds us ofthe urgency with which we must act. Hunger andmalnutrition, the destructive impact of the currentworld food system on human health and the envi-ronment, the serious injuries and fatalities affect-ing workers in the agrifood industry, thesystematic violation of workers’ rights and thegrowing sense of vulnerability faced by workingpeople in their factories, plantations, farms andcommunities do not permit us the luxury of a“wait and see” attitude. Nor will they pausewhile we lobby and fine tune policies.

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In the introduction we looked at how the most se-rious problems we face – mass hunger and mal-nutrition, poverty and poor working conditions –are ignored by the WTO. This is not simply amatter of priorities, or the absence of key work-ers’ issues on the WTO agenda. In fact, the so-cial, political and economic measuresnecessary to alleviate hunger and malnutrition,improve working conditions in agriculture andprotect the interests and livelihood of agriculturalworkers and small farmers express a set ofrights that require social regulation and protec-tion – the very kind of social regulation and pro-tection treated as ‘barriers’ by the WTO. TheAgreement on Agriculture, for example, treatsnational and sub-national measures to protectthe livelihoods of small farmers and subsidiesfor local food production as barriers that mustbe removed. “Food security” may only beachieved through purchasing from the globalmarket and not by fostering domestic food pro-duction capacity. The Agreement on Sanitaryand Phytosanitary Measures (SPS) treats foodhygiene and safety measures designed to pre-vent the import of foodstuffs carrying diseasesand pests or the protection of public healththrough rigorous food inspection procedures as‘barriers’ that must be removed in the name offree trade.

WTO rules and obligations are not only con-cerned with breaking down barriers. They alsodetermine the function of food-related policiesand the purpose of agriculture. The WTO Agree-ment on Agriculture promotes a system of tradeand investment in food and agriculture based onlarge-scale, export-oriented industrial produc-tion. This kind of agriculture emphasizes corpo-rate profit over human needs, and thecompulsion to supply the world market over in-ternal food production.

The WTO Agreement on Agriculture and relatedWTO agreements inhibit the capacity of govern-ments to introduce those regulations necessaryto deal with problems of food shortages, hungerand rural poverty by narrowly defining a set ofpro-market policy options through which govern-ments may respond to these problems. As a re-

sult the existing problems of poverty, deprivationand displacement are exacerbated and the rightto food security and food sovereignty are under-mined.

The WTO allows certain kinds of subsidies tocontinue, particularly export subsidies throughexport credits and direct income provision tofarmers. These subsidies are common in the ma-jor industrialized countries, but developing coun-tries tend to rely on less expensive measuressuch as tariffs. WTO obligations require theabolition of tariffs, but permit export subsidieslike the US government’s export credit schemeand direct income transfers. The continued useof export subsidies and other forms of domesticsupport for big agribusiness in the US and theEU allows massive dumping of under-pricedagrifood products in developing countries.

The governments of the US and EU aggressivelyprevented the issue of export dumping from in-clusion in the WTO agenda in Doha and it willstill be off the agenda in Mexico next year - de-spite the fact that export dumping is one of thekey problems threatening the livelihood of smallfarmers and agricultural workers in poorercountries.

In response to the problems caused by exportdumping, the Second World Conference of theIUF Agricultural Workers’ Trade Group(Capetown, South Africa October 5-6, 1998)adopted a resolution calling for an end to exportsubsidies in the US and the EU.

3.1 the Development Box

One of the basic criticisms of the Agreement onAgriculture is that it exacerbates global inequal-ity – inequality between developed and develop-ing countries, and inequality within countriesbetween large-scale agribusiness and smallfarmers. While developing countries are forcedto reduce import tariffs and abolish non-tariff im-port restrictions that were not converted toequivalent tariffs during GATT negotiations, the

3. the WTO Agreementsand global inequality

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major industrialized countries such as the US,the EU and Japan maintain significantly highertariff levels even after reductions.

It is for this reason that the governments of sev-eral developing countries have demanded theinclusion of a “Development Box” in the Agree-ment on Agriculture. The Development Box pro-posal reflects a limited attempt at internationalpolicy level to rectify imbalances in WTO rulesby giving governments in developing countriesmore flexibility to protect “low-income and re-source-poor farmers” from cheaper imports andto provide support for the domestic productionof “food security crops”. These food securitycrops include staple foods or crops that are themain source of income for low-income and poorfamilies.The Development Box would exemptcertain food security crops from tariff reductioncommitments in the Agreement on Agriculture.The Development Box incorporates an earlierproposal for a separate “Food Box” that wouldexclude from the Agreement on Agriculture those“measures that countries may be allowed to en-sure domestic food security.” This is in contrastto food security based on food imports.

At the WTO ministerial in Doha, governmentrepresentatives from Cuba, Dominican Republic,El Salvador, Haiti, Honduras, Kenya, Nicara-gua, Nigeria, Pakistan, Peru, Senegal, SriLanka, Uganda, and Zimbabwe formed the

“Friends of the Development Box Group” as anegotiating group within the talks on the Agree-ment on Agriculture. In the press statement re-leased by the Friends of the Development Box inDoha on November 10, 2001, the inequalitiesof the present system were highlighted:

The WTO is supposed to ensure equity in trade,but the present agricultural trading system inpractice legitimizes the inequities, for instance,by allowing the dumping of agricultural prod-ucts from the North. OECD domestic supportshave risen by 50 percent since the time of theUruguay Round to over USD 370 billion today -a figure of USD 1 billion a day which is roughlyequal to the daily income of the poorest 1 billionpeople in the world. Subsidies comprise 45 per-cent of the value of all production. Small farmersin developing countries simply cannot competein this unfair environment.

In many developing countries, up to 60-90 per-cent of our population are small farmers. Agri-cultural production is critical as the key sourcesof employment and food security. Because thereare no guaranteed alternative sources of em-ployment for such a large number, large-scalefood imports for many of our countries are syn-onymous with importing unemployment andfood insecurity.

BOX 2: IUF resolution on the impact of subsidized agricultural exportson developing countries

The USA and the European Union (EU) pursue a policy of subsidizing agriculturalexports to specific target countries with the goal of artificially depressing prices. Thispolicy is leading to the destruction of farms, plantations and rural employment inSouthern, East and West Africa and in other regions of the world.The subsidized exports of the EU and the USA are therefore contributing to the growthof hunger and the destruction of the potential for strengthening local and regionalagricultural production in many regions of the world.The 2nd world conference of the AWTG of the IUF therefore calls upon:The governments and representatives of the USA and the EU• to halt the export of subsidized agricultural goods to less-developed regions of the world;• to monitor, together with rural producers and agricultural workers’ trade unions, theimpact of subsidized exports on local agricultural production, and to make public theresults of this monitoring;The trade union movement, democratic civil society, and all progressive persons to actto bring about an end to this destructive policy.

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Despite these concerns the proposal for a Devel-opment Box and other calls for ”special and dif-ferential treatment” (S&D) for developingcountries were strongly resisted by the US, EUand the Cairns Group. The final Doha Ministe-rial Declaration refused to recognize calls for aDevelopment Box.

On February 4-6, 2002, a special session onthe Agreement on Agriculture again rejected theDevelopment Box proposal. The US governmentargued that the Development Box is contrary tothe direction set out in the Doha Ministerial Dec-laration and that any kind of special and differ-ential treatment must be subordinated to theoverall market logic of the Agreement on Agri-culture, promoting market-oriented investmentand trade in agricultural production.

The government of the United States is actuallycorrect in arguing that the pursuit of more flex-ible, non-market policies contradicts the logic ofthe Agreement on Agriculture. Under the termsof the agreement, the signatories have no right todevelop policies that protect domestic food secu-rity and the livelihood of low-income and poorfarmers, i.e. policies based on social concernsrather than market logic. They surrendered thisright when they signed the Agreement on Agri-culture.

The Development Box exclusions cannot be in-corporated into the Agreement on Agriculturebecause they conflict with its real purpose,which is to generate market dependency. Thisdependency limits the capacity of governmentsto seek non-market alternatives to resolve foodshortages and protect the livelihood of farmers.The expansion of large-scale commercial agri-culture geared towards export needs the in-equalities that the Development Box attempts toaddress. Market opportunities for export-ori-ented agribusiness only exist because of theseinequalities and the destruction of local capacityfor self-sufficiency in food. The Friends of the De-velopment Box Group’s proposal is inherentlyflawed because the entire basis of the Agree-ment on Agriculture is not to promote fair andequitable trade, but to reinforce these inequali-ties and the import dependence of developingcountries that are the fastest growing market forEU and US agribusiness.

Another problem facing proposals for box ex-clusions like the Development Box is the deadlineimposed by the Peace Clause in the Agreementon Agriculture. This stipulates that the exclusionof certain kinds of “box” subsidies expires when

the Uruguay Round ends and is replaced withthe Doha Development Round – to be launchedat the next WTO ministerial in Mexico in 2003.Even if the developing countries were successfulin getting “Development Box” or “Food Box” ex-clusions from the Agreement on Agriculture, it isvery likely that the EU, US and the Cairns Groupof countries would link these boxes to the PeaceClause deadline of 2003.

While we should support the concerns raised inthe Development Box proposal on the basis ofthe right to food security and food sovereignty,we must recognize the fact that the DevelopmentBox proposal is silent on the employment, work-ing conditions and livelihood protection ofwaged agricultural workers engaged in foodproduction. In fact, the governments whichjoined together to form this negotiating grouphave done nothing to guarantee the worker andtrade union rights of agricultural workers andhave denied the right of both agricultural work-ers and small farmers to livelihood protection.

There are serious limitations built into the “devel-oping countries” approach, which does nothingto challenge the prevailing definition of nationaldevelopment and its divisions into developed,developing and least developed. This obscurespoverty, inequality and underdevelopment withincountries, including those designated as ‘devel-oped.’ Within developed countries small farmersand farmer cooperatives have suffered destruc-tive competition, displacement and indebtednessas a result of the expansion of large-scale fac-tory farming and agribusiness. Subsidized ex-ports in the US, for example, have not benefitedthe vast majority of farmers. The increasing con-centration and centralization of agricultural pro-duction has led to the rise of factory farms andthe decline of family farms. Over 50 percent ofUS production comes from only 2 percent offarms, while 9 percent of production comesfrom 73 percent of farms. The scandalous posi-tion of US farm workers is sufficiently wellknown and needs no elaboration here.

The “developing countries” approach ultimatelyends up supporting trade technocrats from the“South” (and the domestic capitalist intereststhey represent) as proponents of an “alternativeview.” As trade unionists, our focus should notbe on providing corporate welfare for localcapitalists. Rather, we must seek to build capaci-ties for democratic control and overcome restric-tions on that control.

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3.2 Consolidating CorporateControl

The real issue underlying global inequality is nota “North” vs. “South” dichotomy, but the powerof the TNCs headquartered in the North and thepolitical support they receive from political elitesat home and abroad. The WTO institutionalizesthis support and gives TNCs even greater con-trol over food and agricultural policy-makingaround the world.

Currently the top 10 agro-chemical companiescontrol about 80 percent of a USD 32 billionglobal market, while 80 percent of world grainis distributed by just two companies, Cargill andArcher Daniel Midland. Approximately 75 per-cent of the banana trade is controlled by just fivecorporations, while three corporations control83 percent of the cocoa trade and another threecorporations control 85 percent of the tea trade.These are just a few examples that illustrate theextent of corporate monopolization and controlof the world food system.

According to the FAO, developing countriesover the last 30 years have seen their trade defi-cit in cereals rise from 17 million tons to 104million tons. The FAO sees this as a ‘precarioustrend’, since historically both developed and de-veloping countries have achieved food securitythrough enhanced domestic food production. Yetthis is not merely the result of unfair rules thatmust be rectified through temporary measureslike a Development Box. It is in fact the result ofa deliberate strategy of agrifood TNCs to ex-pand markets for their produce in developingcountries, and in doing so increase developing

countries’ dependence on food imports. This in-volves destroying local competition and gainingcontrol of these growing markets. The conver-sion of land use to non-traditional agri-exportscreates a paradoxical situation of increased de-pendency on TNCs for access to markets anddistribution and inputs - including seed - whileimporting heavily subsidized agricultural prod-ucts to substitute for the traditional crops origi-nally displaced. From the perspective ofagribusiness this is the meaning of ‘market ac-cess’ secured through the Agreement on Agricul-ture.

For example, in the Philippines, the government’spromotion of cash crop exports to replace riceand corn involved the conversion of 2.5 millionhectares of land used to grow rice and 2.5 mil-lion hectares of corn to livestock production.This was linked to the US Department of Agricul-ture’s support for Cargill’s plan to become a ma-jor exporter of corn to the Philippines, makingthe Philippines a “regular corn importer”.

It is no accident that Cargill’s former senior vicepresident drafted the US proposal on agriculture(which later became the draft Agreement on Ag-riculture) in the Uruguay Round of GATT that setthese policies in motion.

At that time the export subsidies paid to a UScorn farmer were 100 times the average in-come of a corn farmer in Mindanao. It is be-cause of this heavy subsidization that US cornexports undercut Philippines corn prices bymore than 20 percent. Having converted to live-stock production, this sector is now being“opened up.” Heavily subsidized US pork andpoultry exporters have gained greater access to

Box 3: Cargill

Cargill is one of the top two exporters of soybeans from the US, Argentina and Brazil,who between them dominate world supply. Cargill exports an estimated 40 percent ofthe corn that leaves the US, which in turn supplies about 30 percent of the worldmarket. Cargill is a major corn exporter and importer around the world, buying, ship-ping and milling grain in more countries than there are WTO members (160 or so). Thiskind of market power is an aspect of global agricultural trade that is entirely ignored bythe current rules but that cries out for more attention, to ensure market distortions aremanaged. Even simple transparency measures are not yet in place. Trade rules need toreflect the actual conditions under which markets work, rather than theoretical models ofefficient markets that have little connection to reality.

Excerpted from “Food Security and the WTO”, by Sophia Murphy CIDSE PositionPaper (September 2001)

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the Philippines, reducing the market share of Fili-pino producers from 82 to 45 percent for porkand from 94 percent to 49 percent for poultry.A 1998 WTO ruling in favour of the US againstimport controls on pork and poultry in the Philip-pines further opened this market to dominationby US agribusiness.

Agribusiness TNCs also pursue their intereststhrough the use of the WTO dispute mechanism– a system that threatens trade sanctions againstthose countries maintaining “barriers” to the ex-pansion of corporate control and profit. TheSeptember 1997 WTO ruling against the EU’sbanana import scheme for African, Pacific andCaribbean exporters reveals the extent of TNCdomination. The complaint against the EU wasfiled by Ecuador, Guatemala, Honduras,Mexico and the United States. The US govern-ment filed the case on behalf of the US-basedTNC Chiquita, even though the United Statesdoes not export a single banana.

3.3 Downward Harmonization

Under the WTO, national and sub-national lawsand regulations must be “harmonized” with in-ternational standards. Although these interna-tional standards are supposed to be the basisfor local laws and regulations, any local stand-ards which exceed these international standardsare labeled unfair trade barriers. Since the defi-nition of new international standards under theWTO is determined by private industry, there isan inevitable downward harmonization.

An example of this downward harmonization isthe WTO Agreement on Sanitary andPhytosanitary Measures (SPS) – a set of rulesand obligations enforcing the international har-monization of health and hygiene inspection ofimports. The very fact that food import inspec-tion and safety measures were included in theWTO agreements means that they were alreadyidentified as potential barriers to the interests ofagribusiness.

In the introduction reference was made to the USSecretary for Agriculture’s targeting of foodsafety and hygiene inspection procedures astrade barriers. The SPS Agreement is the toolused to break down these barriers. For exam-ple, in October 1998 the WTO ruled in favourof the US in a dispute with Japan over the latter’shealth inspection and quarantine procedures for

imported agricultural products (particularlyfruit). It was concluded that these measures vio-lated the SPS Agreement, despite the fact thatprotection of local farmers’ fruit crops againstimported diseases and pests is an important is-sue relating to the rights of these farmers. TheUS government lodged the WTO complaint andwon on behalf of US agribusiness interests seek-ing greater access to the Japanese market. Thefruit import measures were then revised down-wards in line with the WTO ruling.

The systematic downward harmonization of hy-giene and safety measures for food imports un-der the SPS Agreement occurs at a time ofgrowing food safety crises. The spread of BSE(“mad cow disease”), the rising incidence of sal-monella and e-coli and the toxic contaminationof eggs are just a few of the serious healththreats facing farmers, food and agriculturalworkers and consumers in recent years. Thesecrises highlight the urgent need for more strin-gent and effective food and agricultural inspec-tion and safety measures. Higher standards andstricter enforcement of standards are necessary.Yet the WTO is taking us in the opposite direc-tion by lowering standards and declaring strictsafety and hygiene measures illegal. At the sametime, TNCs have put profit before public healthduring these crises and therefore cannot betrusted in a deregulated environment.

The international standards on which the WTOenforces the SPS Agreement are based on thestandards devised by the Codex AlimentariusCommission. The Codex Alimentarius Commis-sion is an international standard-setting body es-tablished by the World Health Organization(WHO) and the Food and Agriculture Organiza-tion (FAO) and is made up of government repre-sentatives and official advisors from privatebusiness. The Commission is heavily influencedby representatives of major food and chemicalcorporations. US-based agrifood TNCs partici-pate in Commission meetings and determine theposition taken by governments. Monsanto, forexample, is one of the TNCs exercising a pow-erful influence in Codex. The US won its case inthe WTO against the EU’s ban on imports of hor-mone-fed beef despite extensive scientific evi-dence showing the potentially harmful effects onhuman health of growth hormone residues inbeef. The reason is that the WTO decision wasbased on Codex, and the growth hormone con-cerned is a product of Monsanto.

As a result of direct TNC influence in the CodexAlimentarius Commission, Codex standards are

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extremely lax, allowing the use of hazardouschemicals that are otherwise banned in manycountries. For example, Codex permits DDTresidues in milk, meat and grains and permitsthe use of several hazardous pesticides that arebanned by many governments and rated ashighly dangerous by the WHO. New interna-tional standards on agrochemicals in the WTO– which are below existing national standards inmany countries – are based on Codex stand-ards.

This problem is not limited to food safety butalso concerns the health and safety of the work-ers involved in producing that food. Codex’s(sub-)standards for food safety are rolling backnational standards which limit or ban hazardouschemicals. In this sense harmonization not onlybrings national laws and regulations into linewith multilateral trade rules, it also detachesthem from democratic pressures on nationalgovernments, locking them into a set of obliga-tions and rules which are constantly redefiningstandards in accordance with the interests of pri-vate industry, especially TNCs.

3.4 The Attack on GMO Labeling

Under the WTO Agreement on Technical Barri-ers to Trade (TBT) “production processes andproduction methods” (PPMs) are excluded fromconsideration. This means that the social, healthand safety, environmental and political condi-tions under which goods are produced aredeemed irrelevant: commodities with the samecharacteristics must be treated as “equivalent”products under national and sub-national lawsand regulations. This also applies to “stand-ards”, including voluntary, non-binding mecha-nisms such as voluntary labeling. As a resulteven voluntary labeling can be treated as dis-crimination against the products of companiesthat do not participate in voluntary labelingschemes.

The separation of the production process andthe product means denying the right to knowwhat is in a product and how it was produced.The exclusion of PPMs enforced by the TBTagreement directly challenges the historic strug-gle of the trade union movement to bring recog-nition to the labour behind the product. Unionshave always fought for products to be judgedaccording to the conditions under which theywere produced. Unions have effectively mobi-

lized consumer awareness to put pressure onemployers to reveal the conditions under whicha product was made. By insisting on the separa-tion of traded goods and services from theirproduction processes and methods, the WTOhas established the grounds for challenging na-tional laws that attempt to make this link.

The use of the WTO to attack GMO labelingand bans on GMO food products is an exampleof this. The US considers GM food and non-GMfood to be equivalent products: therefore no spe-cial safety testing, reviews, or labeling are re-quired before entering the market. This positionis supported by the exclusion of process andproduction methods in the TBT Agreement. As aresult, moves by the governments of Sri Lankaand Bolivia to introduce laws banning GMOswere met with threats of action in the WTO bythe US government, as well as by the Argentineand Australian governments.

In January 2001, Bolivia introduced a twelve-month ban on all food and agricultural productsderived from GMO crops, but pressure from theArgentine government as well as agrifood andbio-tech corporations forced the withdrawal ofthe legislation. In response to pressure from envi-ronmental groups and small farmer/agriculturalworker organizations the Bolivian governmentannounced in August 2001 that the ban wouldbe elevated to a Supreme Decree, making it apermanent law. However, the threat by the Ar-gentine and US governments to take action in theWTO forced the Bolivian government to end theban two months prior to its expiry. The Bolivianmission to the WTO in Geneva had informed itsgovernment that the Argentine and US threat was“valid under WTO rules”. Argentina is the sec-ond largest exporter of GMO soya after the US,and Monsanto’s Roundup pesticide is used ex-tensively in Argentina.

In May 2001 the Sri Lankan government intro-duced a ban on imports of 21 categories ofGMO food products, including GMO soya,soya milk, soy sauce and soya flour, tomatoesand tomato-based products, and corn flour. Atthe same time the government declared that itwould enforce the ban under amendments to theFood Act to be enacted in September of thatyear. Under the ban GMO-free certification wasneeded for all imported food products. In re-sponse the US and Australian governmentswarned the Sri Lankan government that theywould take action in the WTO against the ban.The US government indicated that Sri Lankacould face USD 190 million in sanctions if it

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proceeded with the new law. As a result the banwas postponed. Meanwhile, the WTO called onthe Sri Lankan government to provide scientificevidence to support its decision and warned thatthe ban would be treated as an unfair tradebarrier.

Only six weeks after joining the WTO, Chinafaced the threat of a possible dispute over itsGMO labeling regulations. The US governmentthreatened to launch a formal complaint at theWTO against China’s new regulations on the im-port of GMO foodstuffs. The US government de-scribed the new regulations (designed to protectpublic health and the environment) as “an unfairtrade barrier.”

The need to regulate GMOs is not only an issueof food safety because the protection of publichealth is concerned, but also concerns the right

of people to decide not to consume GMOfoods. Moreover, it is a critical issue for smallfarmers, including subsistence farmers, whoselivelihood is threatened by competition fromagribusiness, which uses GMOs to undercutprices and produce surpluses for dumping over-seas. Their livelihood is further threatened by de-pendence on GMO seed and the specificpesticides and fertilizers required by GMOseeds. From a rights-based perspective smallfarmers, subsistence farmers and peasant farm-ers must have the right to choose not to growGMO crops and must have the right to be freeboth from dependency on TNCs and from de-structive competition with TNCs that displacesfarmers’ produce from local markets and forcesthem from the land. In this sense we must talkabout the right to regulate GMOs as a means toprotect other rights.

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The impact of the WTO Agreement on Agricul-ture and the SPS and TBT Agreements is not con-fined to the reversal or abandonment ofparticular policies and regulations to complywith WTO rules. Often these changes do not re-sult from WTO disputes or the direct applicationof WTO rules. Their impact is felt even withoutany dispute in the WTO or clear warnings thatrules are being violated. The WTO’s TradePolicy Review mechanism, for example, playsan important role in institutionalizing these rules.As part of this process, policy-makers at na-tional and sub-national level must continuallyevaluate existing or proposed policies and lawsin the light of a potential challenge under WTOrules, including the possible threat of tradesanctions on any export commodity. Decision-making at national and sub-national level is con-strained by constant risk assessment, meaningthat public concerns and interests can be ig-nored so long as any proposed legislation hasthe potential to violate WTO rules. This furtherisolates governments from the pressure of labourand social movements.

This reminds us that the rules governing worldtrade, which are routinely presented as embody-ing unanimous agreement on the rationality andcommon sense of free trade, are in fact basedon the threat of sanctions by the WTO. What ap-pear as voluntary and openly negotiated agree-ments are in fact bargained through a processof threats, coercion, concessions and businessdeals that is the exclusive domain of technocratsand private business. In the following section wewill examine this coercive power and politicsunderpinning the WTO regime, as well as thebroader context of corporate globalization.

4.1 The WTO as a Regime

The WTO member-states are officially classifiedas “developed”, “developing” and “least-devel-oped.” The official reason for this is that devel-oping and least-developed countries requiremore time to fulfill the obligations laid down inWTO agreements. This is justified by the fact

4. the broadercontext

that differences in the level of development pro-duce differences in the capacity of countries tocomply with WTO rules and disciplines. As aresult, the time frames established for the re-moval of certain kinds of barriers are longer forthe less developed countries. However, the real-ity is that in the past five years the Quad (thegovernments of the EU, US, Japan and Canada)has aggressively used the WTO dispute settle-ment and trade policy review mechanisms tostrictly enforce WTO rules and disciplines onpoor countries. Rather than making concessionsfor the differences in the level of development,the WTO has defined what kind of developmentis permitted, forcing developing countries tocomply with this model at tremendous political,social and ecological cost. More broadly, theharmonization of national and sub-national lawsand regulations to conform with the new globalstandards devised by private industry and im-posed by the WTO has resulted in the systematicdestruction of efforts to protect the collectiverights, health, and livelihood of working peopleand our capacity to exercise democratic con-trols over capital.

Underpinning this is the fact that the WTO oper-ates less as an organization of member-statesthan as a coercive enforcement regime that pre-serves the inequality of the global economic sys-tem, ensuring the continued dominance of thedeveloped countries - particularly the EU, USand Japan, where over 480 of the world’s 500largest TNCs are headquartered. The kind of de-velopment both permitted and enforced underthe WTO regime is that which advances the in-terests of these TNCs, expanding their powerand profits.

By limiting the developing and least-developedmember-states to this kind of developmentmodel, the possibility of democratic initiatives toreduce poverty and foster development in morecreative and sustainable ways is significantly re-duced. In particular, efforts aimed at supportinglocalization and community-centered develop-ment are undercut by bans on government subsi-dies and restrictions on any kind of publicsupport that might limit the dominance of TNCs

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in local markets. Under WTO agreements thegovernments of developing countries cannot useindustrial policies which promote local industryor impose performance requirements on foreigninvestors to contribute to local development (forexample, domestic content policies or technol-ogy transfer requirements), despite the fact thatgovernments in developed countries used thesesame policies to industrialize in the past. In-stead, increased dependence on TNCs is com-bined with increased financial instability, andgreater inequality within and between countries.

In this way the WTO regime takes the existinghierarchy of wealthy and poor nations andfreezes it, perpetuating the inequality of the glo-bal economy and its colonial origins.

4.2 Corporate Globalization:Breaking down barriers

It is in this context that we must return to the issueof globalization. As a political process globali-zation involves the breaking down of politicaland social barriers to the expansion of capital,especially international capital represented bytransnational corporations and banking and fi-nancial institutions. These barriers are not tariffor other barriers to the flow of goods and serv-ices across borders. They are political and so-cial barriers, constructed over decades ofstruggle by labour and social movements to pro-tect the collective political, economic and socialrights of working people by limiting corporatepower and the predominance of profit over peo-ple. These include various forms of governmentregulation of corporate activities, such as lawson employment, environmental protection andpublic health. Public ownership and public pro-vision of services are also attacked as barriers,since they place fairness and social needs be-fore the most important need of corporations -private profit.

In the pursuit of greater corporate freedom,TNCs placed increased pressure on govern-ments to de-regulate and privatize. In the lastdecade alone, of the 1,035 changes to foreigninvestment laws around the world, 94 percent ofthese changes granted corporations greater free-dom and rolled back the ability - and the right -of governments to regulate them. However, thisstill was not enough. Based on their fear that la-bour and social movements would turn back thetide and restore (or create) democratic controls

on capital, the TNCs demanded that the changesunder free trade be locked into place and madepermanent. A new set of global rules was there-fore created to force each and every govern-ment to protect and preserve the rights of TNCs,with the threat of trade sanctions and economicisolation for any country that did not. These rulesnot only placed the global system above the lo-cal, but gave global corporations the status ofgovernments. The largest of these corporationsalready had the wealth of most governments, sothe same legal and political standing under inter-national law was seen as the next logical step.

In this context the purpose of the WTO agree-ments as components of the WTO regime is tolock states in at the national and sub-nationallevel, preventing the possibility of re-erectingthese barriers. The regime is expressly designedto prevent a reversal of neoliberal policies andthe corporate power it consolidates by threaten-ing sanctions against countries whose govern-ments attempt to re-erect these barriers or createnew forms of social and/or ecological protec-tion in response to the pressure of labour andsocial movements.

Like the structural adjustment programs imposedby the IMF, harmonization under the WTO hastargeted food self-sufficiency/food security andfood safety as barriers to corporate profit. TheWTO is fundamentally opposed to a sustainableagriculture which guarantees food security,fairer redistribution, and ecological protectionprecisely because such practices restrict theprofit-maximization drive and expansion of agri-food TNCs.

4.3 Export Dependency andExternal Debt

The inequality perpetuated in the WTO regime isillustrated by the ban on trade-balancing meas-ures (where governments impose restrictions onthe import of inputs by a corporation or limit theimport of inputs in accordance with its level ofexports) and foreign exchange balancing re-quirements (where a corporation’s permitted im-ports are tied to the value of its exports so thatthere is a net foreign exchange earning). Thisban ignores the realities of a global economicsystem in which poorer countries are locked intoa model of export-oriented industrialization(EOI) and massive overseas debt. In fact, muchof the pressure to impose export performance

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requirements on foreign investment and to en-sure a net inflow of foreign exchange is basedon the need to meet debt repayment obligationsin foreign currencies. Failure to meet debt repay-ment deadlines merely places the governmentsof these countries under greater control by thetransnational banks and the IMF.

The overall global debt of all developing coun-tries, according to UN statistics, was USD 567billion in 1980, and USD 1.4 trillion in 1992.In that same 12-year period, total foreign debtpayments from “Third World” countriesamounted to USD 1.6 trillion. This means thatdespite having already paid back three timesover the USD 567 billion they had borrowed, in1992 they owed 250 percent of what theyowed in 1980. Of the USD 226 billion in debtservice owed by 93 poor countries in 1998,USD 209 billion was actually paid. It is esti-mated that this used up over USD 70 billion thatshould have been spent of health, education anddevelopment in order to satisfy basic humanneeds and rights. 1

Developing country debt today exceeds USD2.5 trillion. So far, the governments of devel-oped countries have proposed to write off onlyabout USD 100 billion of this debt. Yet morethan USD 600 billion in debt owed by 71 coun-tries that cannot afford to pay their full debt serv-ice must be cancelled immediately for them tobe able to fulfill basic human rights, includingthe right to adequate, safe and nutritious foodand the right to livelihood protection.

The promise of debt reduction announced at theG8 Summit in Okinawa in 2000 in no way re-solves this problem. While highly-indebted coun-tries were granted immediate reductions of up to25 percent of their total debt, these reductionsare conditional on the repayment of the outstand-ing debt sooner, and the implementation of morefar-reaching neoliberal economic policies, par-ticularly the privatization of public services andutilities. Countries like Mozambique, where an-nual debt repayment exceeds total expenditureon health and education, find themselves havingto further cut public provision of health and edu-cation (thus deepening poverty and inequality) inorder to benefit from debt reduction.

The destructive logic underpinning this situationclearly reinforces the need for the internationaltrade union movement to demand the completeand unconditional cancellation of developingcountry debt. This is an essential step in ad-dressing the inequalities perpetuated by the

WTO regime. It would also create space tobuild alternative models of development in whichsocial needs and the livelihood of working peo-ple are placed before private profit.

If this debt were cancelled, what would be thecost to working people in the developed coun-tries? According to the Jubilee 2000 Coalitionthe cost of canceling the debt of the poorestcountries would be negligible. For the UK, thecost per person is likely to be under two poundsper year, or four pence per taxpayer per week.In Canada the impact of cancellation of debtowed to Canada by poor countries is equivalentto approximately CAD 15 per year for threeyears for every Canadian.

The relationship between the vicious cycle ofdebt and export dependence and the WTO re-gime is crucial. The power of WTO memberstates to impose sanctions on any other memberdeemed to have violated the rules is the key ele-ment in the regime’s coercive authority. But tradesanctions, or the threat to invoke them, are onlyeffective against countries that are dependent onexports.

The power of trade sanctions is in fact premisedon export dependency. In contrast, democraticsystems of food self-sufficiency and sustainableagriculture based on the right to food securityand food sovereignty would prevent the threat ofsanctions from having their full effect, and wouldthereby weaken the ability of the WTO to exer-cise leverage over national governments to allowunrestrained exploitation by TNCs.

This analysis of the coercive power of debt alsoimplies that simply replacing “free trade” withfair trade is not a solution in and of itself. Fairtrade makes no sense if a country has beenforced for the last hundred years to grow andexport coffee, or if people are starving and ex-porting rice at the same time. Instead, we needto fundamentally rethink why we trade, what wetrade and the need for local alternatives.

For the developing countries, however, such al-ternatives cannot even be considered as long asthey are burdened by international debt. Thepressure of debt repayment is a driving forcebehind exports, locking these countries into thefree trade and investment regime of the WTOand the structural adjustment policies of theWorld Bank and IMF.

The total and immediate cancellation of poorcountry debt and increased, unconditional inter-

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build pressure to reign in the TNCs, restricting -rather than expanding - their rights.

1 Joseph Hanlon, “How much debt must be can-celled?”, Journal of International Development,12, 2000, pp.877-901.

national social assistance is necessary beforeany system of fair trade can be truly effective. Atthe same time, the power of TNCs must be con-fronted through more effective international un-ion action, including more aggressivetransnational collective bargaining. This must becombined with broader social movements that

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5. global investmentregimes

One of the most important outcomes of the WTOMinisterial in Doha and the resulting ‘Doha De-velopment Round’ is the move to include invest-ment rules in the WTO. Paragraph 20 of theWTO Ministerial Declaration in Doha recog-nizes “… the case for a multilateral frameworkto secure transparent, stable and predictableconditions for long-term cross-border investment,particularly foreign direct investment that willcontribute to the expansion of trade.”

This effectively revives the failed attempt in1998 to create the MAI (Multilateral Agreementon Investment) in the OECD, a set of rules estab-lishing a global charter of rights for TNCs. Bymaking illegal all kinds of government regulationof TNC activities and increasing their corporatereach into health, education, and the environ-ment, the MAI traded off human rights and de-mocracy for corporate rights and profit. Theproposed MAI was not only designed to protectthe rights of industrial capital, but financial capi-tal as well. Mutual and pension funds, hedgefunds, banks, securities firms and insurancecompanies would have been even freer fromgovernment regulation and controls, despite thefact that these same corporations are a primarysource of global financial instability, producingthe financial crises in Asia, Eastern Europe andLatin America that have impoverished millions ofworking people.

It was in this context that one of the most impor-tant victories against neo-liberal globalizationwas achieved in 1998. Mass mobilizations andprotests forced several governments to realizethat the domestic political costs of the MAI werefar too high - at least for that moment. Nosooner was the MAI defeated than it reappearedas the proposed MIA (Multilateral InvestmentAgreement) in the WTO, and various other dis-guises. Ignoring the popular rejection of globalcorporate rule, trade officials put the MAI backon the agenda in new, and more secretive,ways.

5.1 Investment Rules in theWTO

Some of the corporate rights laid down in theMAI are in fact already included in the WTO.The Agreement on Trade-Related InvestmentMeasures (TRIMs) bans any laws, policies oradministrative regulations favouring domesticproducts. This includes government incentives toencourage corporations to use domesticallymade products as a way of creating or protect-ing local jobs. This has serious ramifications forindustrial policies designed to support the devel-opment of domestic capacity, secure flow-onbenefits from foreign investment or limit the ef-fects of foreign competition. By making localcontent policies and performance requirementson foreign investments illegal, the ability of or-ganized labour to pressure governments into im-plementing socially useful, job-creating industrialpolicies was even further diminished.

The real significance of the TRIMs Agreementlies in what it was supposed to be - not what itis. Originally it was proposed that a comprehen-sive agreement on investment be included underthe WTO regime. This would guarantee nationaltreatment for foreign investors and ban any kindof government regulation on foreign investmentsuch as technology transfer requirements, restric-tions on the transfer of profits overseas, controlson foreign exchange flows, government reviewsof foreign investment performance, nationalisa-tion, expropriation, etc. The governments of theEU, US, Japan and Canada tried to push thisproposal through, but faced strong resistancefrom the governments of developing countries. Awatered-down TRIMs Agreement was the result.However, there is still pressure for an expanded,more powerful TRIMs Agreement that would actas another bill of rights for TNCs. After Doha, itis more likely that a new investment agreementin the WTO will be introduced to supercede thecurrent TRIMs Agreement.

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5.2 NAFTA Chapter 11

The draft text of the MAI was based on the in-vestment rules in Chapter 11 of the North Ameri-can Free Trade Agreement (NAFTA). The assaulton the rights and well-being of working peopleunder NAFTA’s Chapter 11 therefore holds veryimportant lessons for trade union movementsaround the world.

NAFTA’s Chapter 11 expresses in concentratedform global capital’s drive to free itself from allrestrictions on the terms and conditions of cross-border investments. Chapter 11 sets out a seriesof investor “rights” and protections culminatingin the right of corporations to directly challengethe laws, regulations and practices of a signa-tory country if these impinge on the investor’sability to extract maximum profit. Under Chapter11, it is illegal to impose local content, technol-ogy transfer, or profit repatriation requirementson investments. Investor-to-state lawsuits can beinitiated by corporations demanding compensa-tion for potential future loss of earnings. The cor-poration in such cases is deemed to be thevictim of an act “tantamount to expropriation”.The disputes are heard in closed tribunalsstaffed by arbitration “experts”. Needless to say,the treaty provides for no reciprocal right of gov-ernments to take action against corporations forcurrent or future social, economic or environ-mental damage.

The right of foreign corporations to sue the gov-ernments of other countries for passing lawswhich affect their actual or future business activi-ties means that governments can no longer draftand implement legislation which protects envi-ronmental, health and social standards withoutrisking an investor-to-state lawsuit. Moreover, theinvestor-to-state complaint mechanism allowsseveral TNCs to file individual complaints overthe same issue, multiplying the pressure - andpotential payment in damages - on a govern-ment. These claims of ‘regulatory expropriation’not only change the meaning of expropriation,adding to the list of foreign investors’ rights; theyalso redefine the meaning of government regula-tion. A wide range of government policies, ad-ministrative measures and laws which restrict,moderate, guide, adapt or deter the activities offoreign investors are now treated as acts of ‘tak-ing away’ the property of these corporations.

On November 6, 2001, Crompton Corpora-tion, a US company, notified the Canadian gov-ernment of its intent to sue under NAFTAChapter 11 for USD 100 million in damages.

Crompton Corporation claims that measurestaken by the Canadian Pest Management Regu-latory Agency to phase out a harmful pesticide,lindane, are “tantamount to expropriation” underNAFTA rules. Lindane, which is similar to DDT,is manufactured by Crompton Corporation andused mainly in canola/rapeseed production. Lin-dane has been shown to cause breast cancerand nervous disorders and is consequentlybanned in seven countries and severely re-stricted in others, including the US.

In 1997 the US chemicals giant, Ethyl Corp,used NAFTA Chapter 11 to sue the Canadiangovernment for a ban imposed on MMT, agasoline additive produced by Ethyl Corp.which is toxic and hazardous to public health.Ethyl claimed that the ban “expropriated” its as-sets in Canada and that “legislative debate itselfconstituted an expropriation of its assets be-cause public criticism of MMT damaged thecompany’s reputation.” Ethyl sued the Canadiangovernment for USD 250 million. A year later,in June 1998, the Canadian government with-drew environmental legislation banning MMTand paid Ethyl Corp USD 13 million to settle thecase.

Three years later, a Canadian corporation,Methanex, lodged a suit against the US govern-ment for USD 970 million in compensation forenvironmental laws in California which ban ahazardous chemical the company produces.Methanex argued that the law protecting publichealth was “tantamount to expropriation.”

The same NAFTA investment rules were used byMetalclad Corporation in its lawsuit against theMexican government. In October 1996,Metalclad Corporation, a US waste-disposalcompany, accused the Mexican government ofviolating Chapter 11 of NAFTA when the stateof San Luis Potosi refused it permission to re-open a waste disposal facility. The State Gover-nor ordered the site closed down after ageological audit showed the facility would con-taminate the local water supply. The Governorthen declared the site part of a 600,000 acreecological zone. Metalclad claimed that thisconstituted an act of expropriation and soughtUSD 90 million in compensation. In August2000 the NAFTA Tribunal for the case ofMetalclad Corp vs. Mexico ruled in favour ofMetalclad, ordering the Mexican government topay USD 16.7 million in compensation.

The lawsuits by Crompton and Ethyl against theCanadian government and the NAFTA ruling in

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favour of Metalclad against the Mexican govern-ment are not just an assault on legislation pro-tecting environmental and public health. Theyare assaults on the original local struggles thatbrought this legislation into being in the firstplace. In this sense, rolling back social and envi-ronmental legislation under free trade meansrolling back the past victories of labour and so-cial movements.

The NAFTA investor-to-state lawsuits alsoshowed that federal governments are often will-ing to lose these cases in order to discipline pro-vincial, state or municipal governments that haveadopted progressive social and environmentalpolicies. Where federal governments do nothave the legal or political power to reverse suchlegislation, it can allow the external interventionof NAFTA (or the WTO) to act on its behalf.

5.3 The FTAA and Bilateral In-vestment Regimes

Despite the public backlash against NAFTA, theUS and Canadian governments have already in-cluded the essential elements of NAFTA’s invest-ment rules in their bilateral investmentagreements with developing countries. The Ca-nadian government has already signed 25 ofthese agreements. This reflects the fact that sincethe signing of the Free Trade Agreement (FTA)with the US in 1988, the Canadian governmenthas followed the US strategy of building layerupon layer of multilateral and bilateral free tradeand investment regimes to lock in the expandedrights and powers of TNCs.

The proliferation of bilateral trade agreements issignificant for two reasons. It invalidates one ofthe principal ideological claims advanced onbehalf of a WTO which would give greaterpower to TNCs by arguing that strong (investor-friendly) global rules are the only effective anti-dote to a multiplicity of bilateral agreements.And it reveals the content behind the drive toconclude new investment and trade agreementsand strengthen existing ones.

An investment chapter similar to NAFTA’s Chap-ter 11 is also being drafted in the new FreeTrade Area of the Americas (FTAA). The FTAA isan expansion of NAFTA to include all 35 coun-tries in the Americas, excluding Cuba. In 1998an FTAA negotiating group on investment wasformed to draft the new charter on the rights of

TNCs. Despite opposition to the inclusion ofNAFTA Chapter 11 or MAI-like rules in theFTAA, there are strong indications that this is go-ing ahead. Although an investor-to-state com-plaint system might be successfully opposed,there is a real risk that the expanded definitionof expropriation will be included. Building onthe NAFTA investment regime, the FTAA seeks toradically circumscribe our space to act indefense of our living standards, our workingconditions, our environment and our rights asworkers and citizens by stripping governmentsof their capacity to take regulatory action in thepublic interest.

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6. conclusion: implications forstrategy

The rebirth of the MAI, and the spread ofNAFTA’s investment rules in new forms, hold im-portant lessons for trade union strategies for re-sponding to corporate globalization and theWTO. We clearly cannot limit ourselves to op-posing particular investment agreements andfree trade deals. Where we succeed in stoppingone free trade agreement, another will surface ina different form to replace it. Nor can we dashfrom one global meeting to the next, leaving ourmembers with no role other than as passive ob-servers to a process of global summitry isolatedfrom their own struggles. This can only lead tothe exhaustion of our movement. Instead, it isnecessary to take on the free trade and invest-ment regime as a whole, not by tackling its indi-vidual parts in isolation, but by building astrategy that fundamentally challenges theregime and the corporate interests that lie be-hind it.

This does not mean that unions should abandoncampaigning against new or existing compo-nents of the regime. These campaigns are essen-tial. It does, however, mean, that individualcampaigns must be thoughtfully integrated intoan overall strategic vision.

This applies as well to attempts to include spe-cific provisions or terms in the texts of the agree-ments. It is often assumed that the social impactof the WTO can be moderated or redirected byidentifying what is missing in the WTO agree-ments and insisting on its inclusion. However,closer examination of the power and politics ofthe WTO regime reveals the limits inherent instrategies of inclusion (that is, attempts to includerights or social and environmental standards inthe WTO agreements).

The deliberate ambiguity in WTO agreementslike the TRIMs agreement (referred to in the pre-vious section), and the apparent contradictionsin the wording of some WTO agreements, sug-gest that they must first be understood as politi-cal tools and only then read as legal texts.Experience over the past seven years has shownthat the power and politics of the WTO regimedetermines the interpretation of the agreements

and their use. The inclusion of “food security” inthe Marrakech Ministerial Declaration’s refer-ence to the Agreement on Agriculture did notlead to any change in the enforcement of com-mercialized, export-oriented agrifood or the alle-viation of hunger, but instead involved amutation in the meaning of food security. In theWTO regime, even hunger becomes a businessopportunity.

Inclusion strategies are therefore contradictoryfor two reasons. First, because our pursuit ofcollective rights must directly tackle global in-equality and weaken the coercive power oftrade and investment regimes like the WTO,whose power ultimately derives from the very in-equality we would seek to diminish. Second, be-cause the WTO regime, by locking states intoan agenda that guarantees the freedom andrights of TNCs and a ‘development’ model thatprevents alternatives to market dependency, is in-compatible with the long-term fulfillment of theserights. The right to adequate, safe and nutritiousfood cannot be realized in a world where TNCsare dominating local markets and destroying lo-cal production, and in which the rights of thesecorporations are guaranteed through the WTO.Nor can the right to a safe working and livingenvironment be achieved through a global tradeand investment regime that imposes the down-ward harmonization of standards and treats en-vironmental and health protection as barriers tothe expansion of corporate profit.

Since the coercive power of the WTO relies onglobal inequality, debt and export dependency,the WTO’s rules and disciplines restrict the pur-suit of alternatives which may reduce the effec-tiveness of this coercive power (for example,national policies to guarantee food sovereignty).But this power requires the compliance of na-tional governments. As we have seen in the caseof the threat to impose WTO sanctions on coun-tries introducing GMO labelling laws and im-port restrictions, often the threat of taking a caseto the WTO is enough to force governments (es-pecially in export-dependent countries) tochange their policies.

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Resistance, however, is possible, and this af-fords a key opening for the labour movementand its allies. In circumstances where nationalpolicies or laws are needed to deal with press-ing social problems (such as mass hunger or aserious health crisis) the labour movement mustforcefully argue that solving these problems ismore important than complying with WTO rules.Such in fact was the basis for the global mobili-zation for the rights of HIV/AIDS sufferers overthe (WTO-guaranteed) rights of the pharmaceuti-cal transnationals, in the face of which the com-panies beat a tactical retreat.

In response to such non-compliance other WTOmember-states (usually developed countries) maythreaten to lodge complaints in the WTO andseek the right to impose sanctions or demandcompensation. Whether these threats succeeddepends on whether there is sufficient pressurefrom labour and social movements internation-ally and within those countries to successfullymake the case for non-compliance. In the finalanalysis, the outcome will be determined, notthrough jurisprudence and interpretation of thetexts, but by the balance of social and politicalforces.

There is no reason why non-compliance, bothnon-compliance from below and non-compli-ance expressed as state disobedience within theWTO regime, should be limited in their applica-tion to developing countries. Unions everywherecan campaign for governments at all levels (lo-cal, national, regional) to review existing tradeand investment rules and treaties in the light ofthe rights set out at the beginning of this paper,and to reject all such agreements which conflictwith these rights. Legitimating non-compliance isan important means to assert our priorities (ex-pressed in an integrated set of rights) over thepriorities of corporate profit

Unions can and must campaign against the in-clusion in trade agreements of investment rulesmodelled on the MAI or NAFTA’s Chapter 11,on the simple grounds that such rules are funda-mentally incompatible with the fulfilment of basicdemocratic rights. The successful campaign toblock the MAI suggests that democratic publicopinion is already largely sensitive to such ap-peals.

There is no doubt that a number of varied tacticswill be used to tackle the WTO and corporateglobalization. A diversity of tactics has provenuseful in the past. However, it often appears thatvarious tactics are pursued by trade unions at lo-

cal, national and international levels in the ab-sence of an effective, coherent, and sustainablestrategy.

For a strategy to be effective, it must directlychallenge the powerful political and corporateinterests shaping the WTO regime, while recog-nizing its broader context. Clearly it is neces-sary to do more than identify what is missing orto rearrange the priorities reflected in WTOrules. We must address both the broader contextof the WTO regime and the extent to which theproblems in the world food system are causedby the system itself, not merely misguided poli-cies. In doing so we must avoid de-linking theseproblems from each other, just as we must avoidde-linking our set of integrated rights. As pointedout in section 2, the rights we advance are inter-dependent and inseparable. This is not merely amatter of principle, but a reflection of the factthat the problems working people face are them-selves interdependent and inseparable.

For a strategy to be coherent it must be basedon a common set of goals which are pursuedwithout compromise, and which – regardless ofthe tactics used in different situations – must beexpressed in a language that makes sense to ourmembers. It must therefore be framed in a lan-guage of rights and livelihood, and not legal ortechnocratic language. And for a strategy to besustainable, it must be pursued with a sense ofurgency which recognizes the seriousness of theproblems faced and the importance of the valueswe are pursuing. Yet this sense of urgency mustnot translate into attempts to achieve a short-term‘fix’, but instead form the basis of a long-termstrategy that mobilizes working people to de-velop, through their trade unions, their own col-lective capacities to exercise democratic controlover capital and impose our collective rightsand interests over and above corporate powerand profit.

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the wto and the world food system - iuf uita iul ... the wto and the world food system a trade union...

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