State sovereignty under threat: Globalising designs of the WTO

By Susan George, Le Monde Diplomatique, July 1999

The Atlantic Alliance's intervention in Kosovo is a spectacular example of the erosion of state sovereignty, helped along by globalisation and the right to interfere. This evolution is spreading to a growing number of spheres - first and foremost the economy. However, the principle of sovereignty is not breaking down with any degree of uniformity: the social and environmental spheres remain relatively unaffected, while a higher economic order is emerging only too clearly - founded on the primacy of the markets and guarded by irresponsible and complicit international organisations, led by the World Trade Organisation.

Despite the victory against the Multilateral Agreement on Investment (MAI) - thanks to France's withdrawal from the negotiations in October 1998 - questions remain. Why were governments ready to sign this scandalous treaty and renounce huge areas of their sovereignty, without any discernible advantage in exchange? The only explanation seems to be, as Marx and Engels put it, that modern state power is merely the executive committee charged with managing the affairs of the bourgeoisie (1).

This bourgeoisie, now embodied in huge transnational industrial and financial corporations, makes itself heard loud and clear by state power via multiple lobbies. Among these, the International Chamber of Commerce (ICC) has a special place, claiming, as it does, to be the only representative body that speaks with authority on behalf of enterprises from all sectors in every part of the world (2). It makes its demands known directly to heads of state.

All matters concerning Europe and trade, including negotiations at the World Trade Organisation (WTO) are handled by the outgoing European commissioner, Sir Leon Brittan, who appears not to have noticed his resignation and still speaks for all the governments of the European Union. These governments have accepted their individual loss of sovereignty in trade as in other areas because they consider that the advantages of cooperation outweigh the drawbacks of limiting their room for manoeuvre. But cooperating is one thing. Choosing the ultra-liberal heir presumptive of Margaret Thatcher as spokesman is quite another. In the case of the WTO, we risk witnessing a contest of sovereignty-stripping, making the prospect of a social and political Europe recede.

Sir Leon is after exactly the same thing as the ICC - a world ruled by free trade. Their views on the big WTO ministerial meeting in Seattle next November are interchangeable both in form and content (3). For the time being, our sovereign European governments have fallen behind them with gusto, making them look suspiciously like Marx and Engels' perfect executive committee.

The Brittan/ICC tandem believe that agriculture must be further liberalised, which will put the future of rural communities in danger. The poorest risk losing control over their peoples' food security. The Agreement on Intellectual Property - going under the banner of Trips (the Trade-related Aspects of Intellectual Property Rights) and including patenting of life - is also up for discussion in Seattle.

Less well known than these two important dossiers is the General Agreement on Trade in Services (Gats), which is also on the agenda. Here, Sir Leon and the ICC seek the breaking down of domestic regulatory barriers across a wide range of services in order to expand the number and improve the quality of countries' commitments on market access and national treatment (4). Services should be open to foreign investment worldwide, it being understood that the agreement will include commercial presence and the movement of natural persons in order to furnish the said service. We may ask what is wrong with that? Here are some fine prospects for our own firms. But do governments have any idea of the huge losses of sovereignty they are likely to undergo?

Services, which are about to fall under the yoke of the WTO, represent thousands of billions of dollars worth of commercial transactions. This seemingly innocent terms take in almost every imaginable human activity: distribution, wholesale, retail and franchising; construction, architecture, decoration, maintenance; civil, mechanical and other types of engineering; financial services, banking and insurance; research and development; real estate services, rental, credit and hire-purchase; communications, postal services, telecommunications and audio visual, information technologies; tourism and travel, hotels and restaurants; environmental services including road construction and maintenance, rubbish collection, sewage disposal, water delivery, protection of the landscape and urban planning; recreational, cultural and sports services, including entertainment, libraries, archives and museums; publishing, printing, advertising; transportation by every imaginable conveyance including space-travel; and also education (primary, secondary, tertiary and adult) and human and animal health. In all this covers over 160 sub-sectors and activities (5).

Privatising health

The countries of the European Union have a maximum of a few dozen civil servants working on these questions, for which the European Commission is in any event setting the parameters. In contrast, the US is devoting the talents of several hundred specialists to these issues and whetting its knives for full liberalisation of services in all branches.

The US Special Trade Representative (USTR), Charlene Barshevky, instigated Washington's successful battles over bananas, genetically manipulated organisms and hormone-fed beef. Naturally she is working hand in hand with American business interests. She asked them to list their demands for Seattle - a request to which the Coalition of Service Industries responded with a detailed 31-page document (6).

Not all of the dozens of service sectors listed above have yet got themselves organised to extract maximum concessions via the WTO. Nor are all the areas cited objects of potential US aggression - at least not yet. The European health sector has, however, been singled out as a special target of liberalisation. Expenses are exploding due to an increase in their aged populations, the demographic segment that uses health care services most intensively. The coalition is sure that it can make much progress in the negotiations to allow the opportunity for US business to expand into foreign health care markets.

Until now, unfortunately, health care services in many foreign countries have largely been the responsibility of the public sector ... [making] it difficult for US private sector health care providers to market in foreign countries. But the WTO offers a way out. Among the barriers Barshevsky is expected to help demolish are restricting licensing of health care professionals and excessive privacy and confidentiality regulations.

Her negotiating objectives include encouraging more privatisation and promoting pro-competitive regulative reform. The coalition also wants market access and national treatment allowing provisions of all health care services cross-border as well as allowing majority foreign ownership of health care facilities. To sew the deal up, health care should also be included in the WTO public procurement rules so that foreign firms can bid on all government contracts in this area (7). If an agreement on health services including all these provisions is actually tabled and signed at the WTO, we can kiss goodbye our public health-care systems in Europe.

In addition to this already-approved agenda, the ICC, Sir Leon and our own governments have many additional goals. They start with the elimination of remaining industrial tariffs, a classic demand. Then there is trade facilitation, meant to harmonise, modernise and simplify bureaucratic, obsolete customs procedures, which, translated, means many fewer controls and inspections. Next comes government procurement which represents upwards of 15% of any nation's GNP. These markets must be opened up to suppliers from anywhere in the world according to the sacred principle of national treatment. Brittan and the ICC also seek a legal agreement on competition policy that requires developing a legal framework of binding international rules.

Enemies of the MAI can rest assured: an agreement on investment has not been forgotten. Since the agreement was defeated at the OECD, Sir Leon has been trumpeting everywhere that he was always in favour of the WTO as a forum for negotiating a comprehensive framework of international rules. Finally, the WTO should take up the environmental question because there are disparities and sometimes clashes between its rules and the content of Multilateral Environmental Agreements (MEA) concerning climate change, the ozone layer, biodiversity, toxic wastes, endangered species, etc. A question to our governments: why sign MEAs if it is to call them into question at the WTO?

This concern for the environment is touching, since up to now the tribunal-panels of the WTO have decided all disputes with environmental or public health implications with no regard whatsoever for either. The icing on the environmental cake is the Forest Products Agreement that is under way. This would eliminate all barriers to trade in forest-derived products and remove all obstacles to forest exploitation. Barshevsky was formerly a lobbyist for the Canadian timber industry; now she is being advised by the largest US transnational wood and paper products companies (8).

This assortment of measures - the Seattle built-in agenda plus all the new subjects - has already been christened the Millennium Round by Sir Leon. He sees it as already approved, as do the ICC and the G-7 governments. He insists on a single undertaking, meaning that all participants have to accept the whole outcome of the negotiations rather than pick and choose.

Sir Leon wants to have a multitude of issues on the WTO agenda negotiated at once: Issues which are difficult for some but important for others cannot be blocked in isolation but must be weighed up as part of the overall calculation of advantage which each WTO member needs to make on the outcome ... it is this ability to make political calculations on the overall balance of advantage which enables trade-offs to occur between different issues (9).

If this huge programme is hard to manage even for developed countries, it is quite beyond the reach of developing countries, which will be even more heavily penalised than they are already. Many of them do not even have permanent representation to the WTO; some share an embassy. Even the large countries of the South lack the necessary numbers of qualified personnel to stay on top of complex, simultaneous negotiations on a wide variety of subjects. The declaration of the French prime minister, Lionel Jospin, according to which the WTO is a more democratic venue than the OECD because the countries of the South are included, takes no account of these realities. In fact, the Quad (the US, EU, Canada and Japan) will continue to impose its will and the US, with its plethora of highly professional personnel, will have the most influence of all.

Don't worry, everything's under control, our national civil servants, concerned with state sovereignty, will no doubt reply. But what we will really need in Europe is a kind of combativeness index on a scale from one to ten to register what our governments are prepared to defend, since it is obvious they will not be able to defend all the interests of their peoples. So, national negotiator, what will it be? Public health or small farmers? Hormone-fed beef or forest destruction? Audio-visual property rights or respect for the LomT Agreement, now forbidden by the banana decision? In this globalised world, you have to know what you are really willing to fight for.

Governments need to make up their minds fast, because this whole agreement should be sewn up within three years. Why the rush? Quite simple: Multilateral rule-making has to adapt itself to the faster pace of change in a global marketplace in order to keep the rules aligned with rapidly-evolving business realities and requirements (10). And as we all know, the requirements of business supersede those of citizens - so full steam ahead for January 2003.

This prospect of overall calculation of advantage and trade-offs has not, so far, given rise to any public debate. Yet such a debate is badly needed because civil society has no desire to be governed by the executive committee of the transnationals, and is massively opposed to any extension of the powers of the WTO. Civil society wants to participate in a full evaluation of this organisation (11). The real urgency lies in taking time to examine the present and likely future impact of the WTO and its overweening ambitions. Otherwise, sovereign states will have little left to say or do.

1.In the Communist Party manifesto.

2.ICC statement on behalf of world business to the heads of state and government attending the Cologne summit, 18-20 June 1999, Paris, Business and the Global Economy, 11 May 1999; see also ICC, World Business Priorities for the Second Ministerial Conference of the World Trade Organisation, doc. 103/202, 3 April 1998.

3.Compare the ICC documents in note 2 with those of the European Commission [i.e. Sir Leon Brittan], note for the 113 Committee, 26 April 1999, EU Trade Ministers' Informal Meeting, Berlin 9-10 May 1999; and Sir Leon Brittan, The Contribution of the WTO Millennium Round to Globalisation: and EU View, speech delivered to the Herbert Batliner Symposium, Europe in the Era of Globalisation, Economic Order and Economic Law, Vienna, 29 April 1999.

4.ICC, Business and the Global Economy, op.cit.

5.The author thanks the personnel of the WTO for sending her the Schedule of Specific Commitments, European Communities and their Member States, GATS/SC 31 and following, 14 April 1994.

6.Coalition of Service Industries, Services 2000, USTR Register Submission, Response to Federal Register Notice of 19 August 1998 [FR Doc 98-22279].

7.Services 2000, op.cit. pp.14-16.

8.For more information, contact Mark Vallianatos: MVallianatos@foe.org

9.Sir Leon Brittan, The Contribution of the WTO Millennium Round to Globalisation, op. cit.

10.ICC, Business and the Global Economy, op. cit. p.5.

11.Statement from members of international civil society opposing the Millennium Round, signed mid-May by over 600 organisations from 75 countries.