THE GATT AND DEMOCRACY

PCDForum Article #6,  Release Date February 1, 1994

By David C. Korten

Much of the world has rejoiced in recent years at the important gains that democracy has made around the world. Yet few people are aware that the world's governments are at this very moment falling in line to ratify an international agreement that could seriously weaken the functions of democratically elected bodies nearly every where on the planet. The agreement is known as the General Agreement on Tariffs and Trade (GATT). The new GATT agreement recently finalized by the world's governments and now awaiting ratification by legislative bodies would give to an unelected and secretive global organization veto power over most decisions relating to the regulation of commerce and the setting of labor, health and environmental standards that now reside with democratically elected bodies in nations and localities around the world. Yet this agreement is expected to pass without consequential opposition.

Presented to the public as a trade agreement intended to promote global prosperity through free trade, it is far more. Among other things it would create a powerful World Trade Organization (WTO) with a legal personality similar to that of the United Nations, the World Bank and the International Monetary Fund and give it powers the GATT never had. For example,

  • A particularly key provision buried in Paragraph 4 of Article XVI states that:
    Each member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.
  • The annexed agreements include all the substantive multilateral agreements relating to trade in goods and services and the agreement on intellectual property rights. This provision thus obligates each member country to revise any national or local laws in conflict with the provisions of the GATT.
  • Provision is made for one country to challenge the domestic laws of another country when it believes a particular law impairs benefits it expected from the trade rules or impairs the attainment of any objective of the GATT.
  • Challenges may also be brought against state and local laws, with the national government obligated to take all reasonable measures to ensure compliance. Under GATT precedents such "reasonable measures" would include preemptive legislation, litigation and withdrawal of financial support.
  • Essentially any local or national health, safety or environmental standards that exceed international standards set by an unelected body may be challenged as trade barriers unless the offending government can prove to the satisfaction of the WTO panel that a number of narrowly restrictive provisions have been satisfied. The burden of proof rests with those who would set standards higher than the international norm.
  • Such challenges will be presented in secret hearings to panels comprised of three trade experts. There is no provision for introduction of alternative perspectives, such as amicus briefs from non-governmental organizations, unless the panel chooses to solicit them. Documents presented to the panels are secret except as a government chooses to release its own documents. The identification of the panelists who supported a position or conclusion is explicitly forbidden. Under the proposed rules the recommendations of the review panel are automatically adopted 60 days after presentation unless there is a unanimous vote of all WTO members to reject them. This means that over 100 countries, including the country that won the decision, must vote against a panel decision to overturn it rendering the appeals process virtually meaningless.
  • In making its determinations, the primary concern of the WTO is to facilitate trade. Other public policy goals relating to, for example, the environment, health, safety, labor rights or even the economic impact on the economy of the locality whose laws are being challenged are all subordinated to the overarching goal of promoting international trade.
  • When a panel decides that a domestic law is in violation of WTO trade rules it may recommend that the offending country change its law. Countries are then expected to change the offending law accordingly within a prescribed period. If not, trade sanctions may be applied to force it to do so.
  • Changes to certain trade rules made by a two-thirds vote of the WTO members become binding on all members. Standing committees of the WTO would also be empowered to initiate negotiations on new rules. In effect, the WTO would become a powerful unelected global legislative body able to amend its own charter without further referral to national legislative bodies.

There is no way to say for certain what national or local laws might eventually be challenged and overturned by the WTO. However, the following are examples of laws that have been challenged as trade barriers under the GATT or which according to experts would become subject to challenge under the WTO:

  • Prohibitions against the use of bovine growth hormones a measure advocated by consumers, animal welfare groups, veterinarians, farmers and most of the dairy trade.
  • Prohibition of the sale of tuna captured by methods that endanger dolphins.
  • Prohibitions on the export or import of tropical timber.
  • Requirements that locally harvested timber or other resources be processed locally to provide local employment.
  • Restrictions on the sale of foods with pesticide residues that are higher than standards approved by an international panel.
  • Standards, such as a California law requiring that the public be warned before being exposed to cancer-causing substances or toxins, that are set by popular referenda rather than by a professionally staffed regulatory body acting solely on the basis of scientific principles and risk assessment.

Evidently, in the view of the architects of the WTO, the people have no business making decisions about their own health and well-being. In the eyes of these architects, only experts meeting in secret have such right. Consequently, the WTO will empower panels of three unelected and unaccountable trade specialists acting in secret to set aside the democratic will of any people as expressed through popular referendum or through the legislative action of elected and publicly accountable representatives whenever in their judgement doing so would advance the cause of free trade.

By the logic of this agreement the wishes and democratic rights of the world's people must give way to a higher public good, the right of corporations to pursue profit where they will without the interference of local people or their elected officials. Any law put forward by people in any locality or nation that is a member of the WTO and that some influential group somewhere in the world deems unfavorable to its commercial interests may be challenged without democratic or judicial recourse for the people whose will has been set aside.

Certainly there are benefits from trade, but they are neither of sufficient consequence nor so widely shared as to justify placing free trade above all other public interests and removing from the people their right to decide when trade interests should receive priority and when not.

If the WTO (GATT) passes it will be nothing less than a coup de grace for the principle that sovereignty resides with the people the foundation of all democratic governance. At this point only an outraged public can stop this blatant assault on the democratic right to self-governance.


David C. Korten is president and a fellow of the People-Centered Development Forum. This article is based on documents prepared by and available from Public Citizen, 215 Pennsylvania Avenue SE, Washington, D.C. 20003, U.S.A. (1-202) 546-4990; Fax (1-202) 547-7392; and Parents for Safe Food, 5-11 Worship Street, London ECA2A 2BH, United Kingdom, (44-71) 628-2442; Fax (44-71) 628-9329.

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