New Statesman

Blueprint for a screwed-up world
Simon Retallack
Monday 25th August 2003

An international summit in Cancun next month could transfer even more
power from democratic governments to big corporations. By Simon Retallack

      Picture this. A world government is created with big business in charge.
When any national or local government hits corporate profits by passing a law
to protect the environment or public health, this world government can impose
huge financial penalties until the law is removed. Too preposterous to be true?
The fantasy of paranoid, emotionally unstable greenies? Or perhaps just another
mad idea from one of those neoconservative policy wonks with friends in the
White House?

      Wrong. This vision of how the world should be run is all too likely to
become reality - and with the support of the British government. At the World
Trade Organisation summit in Cancun, Mexico, starting on 10 September, the EU
will try to use its leverage as the planet's largest trading bloc to expand the
rights of corporations in an unprecedented way. The negotiations will be led by
the European Commissioner for Trade, Pascal Lamy - and the UK Secretary of
State for Trade and Industry, Patricia Hewitt, will be right behind him.

      At the top of their list of demands is the innocuous-sounding agreement
on investment. The transnational corporations and their lobby groups want what
the investment chapter of the North American Free Trade Agreement (Nafta)
provides for North American corporations, but on a global scale. Were this to
happen, the British government would no longer be able to prevent a foreign
corporation setting up in the UK, no matter how bad its environmental or social
record. New laws designed to improve environmental, health or labour standards
could be interpreted, if they reduced corporate profits, as an "expropriation"
of foreign investment, and thus prohibited. Corporations could go to special
closed-door tribunals to claim compensation, paid by UK taxpayers, if these
rules were breached.

      The people of Canada, Mexico and the US have lived under exactly these
rules for the past nine years. When the Canadian government banned a fuel
additive in 1996, which Prime Minister Jean Chretien described as a "dangerous
neurotoxin", the US-based Ethyl Corporation sued for compensation. It argued
that the ban constituted an "expropriation" of Ethyl's Canadian investments.
Merely by introducing and debating the bill in parliament, it claimed, the
Canadians had harmed Ethyl's global reputation, thereby expropriating part of
its future profits. Lawyers advised the government that it would lose, and so
it lifted the ban and gave Ethyl $13m and an apology. Canadians breathe in the
results of this decision every time they step outside.

      Likewise, the Mexican government had to pay the US waste-disposal company
Metalclad $15.6m. This was because the municipal government responsible for
Guadalcazar refused to allow Metalclad to open a new toxic-waste facility on a
site that is highly vulnerable to groundwater contamination.

      In 2000, a US company, SD Myers, sued the Canadian government for profits
lost from a ban on PCBs, hazardous chemicals found to cause cancer and to harm
development and reproduction in humans. A Nafta tribunal ruled in the company's

      Many other cases brought by corporations against environmental and health
laws in North America are pending. The US bulk-water trading company Sun Belt
is suing the Canadian government because the provincial government of British
Columbia banned water exports. The Canadian corporation Methanex is suing the
US government because California is phasing out the gasoline additive MTBE, a
potential human carcinogen, which is said to have contaminated groundwater
supplies. The US Crompton Corporation is suing the Canadian government for
introducing restrictions on the use of another possible carcinogen, the
pesticide lindane.

      If the corporate lobbyists have their way - and the European Commission,
with British support, seems determined that they shall - we too will have to
live in such a screwed-up world. In effect, if we want the government to
improve the quality of air, water, food, or working conditions, ministers will
be forced either to pay off corporations with millions of pounds of our money
or to change the law until it suits the corporations. What price democracy?

      But there is more. Lamy, backed by Hewitt, also wants a new WTO agreement
on government procurement - the awarding of contracts, paid for with public
money, to deliver services or carry out building projects. This market is worth
hundreds of billions globally. Transnational corporations want to stop
governments giving preference to local companies when awarding contracts and to
ban conditions being imposed on the winners. KFC could bid to feed hospital
patients or McDonald's to provide school lunches, and it would be illegal to
award the contracts to local catering firms on the basis that they were local,
as well as illegal to require McDonald's and KFC to use British-grown, GM-free
food. Parents who want more on their kids' menus than Filet-O-Fish and
McChicken sandwiches would have to contend not just with the local authority
but with the WTO itself.

      The European Commission, sanctioned once again by the UK, is also leading
the push at the WTO for an agreement to give foreign corporations the right to
take over domestic services such as the provision of water, energy, transport
and, eventually, even health and education.

      Crucially, this agreement (known as Gats) would also place legally
binding limits on the power of governments to regulate such services. For
instance, it would not allow government regulations that failed to comply with
the need to be "least trade restrictive". So, for example, any conservation
policy that hindered free trade, such as bans on water exports, would be
prohibited. Bulk-water traders, transnational manufacturers and agribusinesses
could go from place to place, sucking up water supplies until they are

      The Cancun summit will also hear a US demand to remove all tariffs on
non-agricultural goods. This would inevitably accelerate the pace at which
natural resources are extracted, as they would become cheaper to trade, leading
to even greater destruction of forests, fisheries and other natural resources.
New Zealand's government wants to go further: it will call for an end to
"non-tariff barriers" - any laws that restrict trade - thus threatening
environmental or social regulations.

      There is the further possibility that Cancun will agree to the
corporations' demands that where the provisions of WTO agreements clash with
those of multilateral environmental pacts, the former should have priority.
This would seriously undermine treaties such as the Kyoto Protocol on climate
change, the Montreal Protocol on ozone depletion and the UN Convention on
International Trade in Endangered Species. All contain trade instruments to
require countries to change their policies in pursuit of global environmental
goals and these could be ruled illegal if free-trade rules take precedence.

      What is being proposed, then, is nothing less than a large-scale transfer
of power from democratically elected governments to unelected corporations. It
makes all that fuss over the threat to British sovereignty from the new
European constitution seem completely misplaced.

      It also makes a mockery of new Labour's repeated claim to "govern for the
many, not the few". And what it does to the government's claim that it wants to
put the environment at the heart of decision-making isn't printable.

      One source of hope is that many governments from developing countries are
staunchly opposed to much of this agenda. The challenge will be for them to
stay united enough to resist the arm-twisting and bribery that western
governments usually deploy. But there is a challenge to ordinary citizens, too.
Only in the absence of protest, petitioning and public outrage does this
suicidal project stand a hope of succeeding. Four years ago, a WTO meeting in
Seattle was derailed by a combination of developing-country opposition and
street protests. We must hope that the same happens at Cancun.

Simon Retallack is commissioning editor of the Ecologist

This article first appeared in the New Statesman. For the latest in
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