The Price of Free Trade (Part One)

Lori Wallach,
Free Trade—The Price Paid
April 13, 2005, © Big Picture TV

Summary
In the first part of this two-part series, Lori Wallach explains how the name of free trade was usurped by multinational corporations and right-wing think-tanks in the early 1990s. In 1995 the post-war trade agreement known as GATT was incorporated into the WTO at the Uruguay Round. This endorsed a much wider neo-liberal corporate agenda that stretched far beyond trade issues. It imposed radical new obligations on trading partners and in particular the developing world.

Free Trade was a beautiful Trojan horse because in parliaments around the world, nobody had any idea what they were getting themselves into. . .

Basically, the good name of trade was used as a Trojan horse. If you can imagine that the original trade rules which came under a thing called the General Agreement on Tariffs and Trade in 1947 dealt only about trading goods between countries, and those rules focused on tariffs and quotas, traditional trade measures. A tariff is a tax charged when a good crosses a border, and a quota is a quantitative limit about how much of an import you’ll take. And so in the past, trade agreement said for instance, we all the countries signing this agreement agree we’ll only charge a 3% tariff tax and blah, blah coming over the border, and we’ll all allow 1,000 pairs of shoes or whatever the quota is, it’s actually in tonnes or in millions of pieces, and those limits were then negotiated and traded and swapped and set over time.

Only starting in the early 1990s did the WTO and NAFTA explode the boundaries of what was in a legitimate trade agreement. And there is a back story to this, which is, that the Reagan and Thatcher so called revolutions, the neoliberal world view which involves trying to have worldwide an entire package of policies, the goal of which is to basically get people and their governments out of the markets, that the markets know the best, if you can just totally deregulate and liberalize everything, we’ll all be happier for that kind and gentle hand at the market. And so this world view involves a whole package of policies to implement it. Trade liberalization, finance liberalization, which means liberalization of currency trading and of a variety of instruments of trading, of investment liberalization, who can own what, who can sell and buy things, from land to different properties, new protections for property, both for investors but also for intellectual property, deregulation of social standards or harmonization of regulatory standards to one global environmental or worker safety or food safety standards that you can work on a global single unified market level with a multinational corporation, the commodification of new tradable units by patenting things and allowing you to trade things that were seen as, my own genes for instance, or to have commodification of things with human rights, basic services like the right to drinkable water and creating all these new units, and also getting the government out of the business of actually having a role in the marketplace, so getting privatization of any kind of factories and companies but also of services, so the things in many of our countries, the phone systems, the energy utilities, the water utilities that are government run or heavily regulated private not for profits are regulated monopolies, all of that needs to be gotten rid off through privatization and deregulation of services.

That mix of policies was being pushed back by parliaments throughout the world including by the US Congressmen. Reagan was trying to shove it down their throats. And so, very cleverly, the right wing think tanks and the big multinational companies who jointly sought for different purposes, one ideological, one for profit motives, to implement this world view into real policies, came up with the idea of using the obscure trade negotiations, the GATT, because ever since 1947, the GATT would have periodic negotiations every seven to ten years where it would sort of add some new issues or cut some more tariffs. And so one of those negotiations had started in Uruguay, and everyone in the world thought it was another of those snoozerama situations where they basically are in there cutting tariffs on socks, woohoo, no one’s paying attention to that. But really what was done is the entire agenda was rewritten, and the Reagan and Thatcher guys basically said, hey, let’s have a different kind of trade agreement. Let’s make the GATT just part of what’s implemented, and they created the World Trade Organization, a freestanding international body which would implement 17 different agreements, only one of which is really about trade, the GATT. It’s now submerged under the WTO. The other 16 agreements have to do with, there’s a whole agreement limiting what kind of domestic environmental standards you can have, a whole agreement limiting what kind of domestic food safety standards you can have, a whole agreement limiting how you can spend your tax dollars in procurement policy. Can you have green procurement? Can you try and not do business with companies that are human rights violators? So a whole agreement on privatization and deregulation of services, there’s a whole agreement on intellectual property protections, new patent protectionism, new copyright rights. There’s a whole agreement on how you can treat foreign investors inside your country, the trade related investment measures. All of these are non-trade related issues, but they’re now enforced through these different trade agreements like NAFTA and WTO. It was a beautiful Trojan horse because in parliaments around the world, nobody had any idea what they were getting themselves into.
— Lori Wallach