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 favour.
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 depleted.
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