Nonsense in Seattle!

Why we should care.

By Thomas R. DeGregori

University of Houston

It is not just a cliche to say the truth was the first casualty of the battle for Seattle. Unfortunately, on the WTO (World trade Organization) debate, it has been largely one‑sided with the WTO opponents either receiving most if not all of the media attention or being more skilled at propaganda than those who favor it. On network newscasts on the monday evening just prior to the opening of the WTO meeting in Seattle, two of the three newscasts, ABC and CBS, devoted their entire coverage to an airing of the protesters views without even a token attempt to balance them with counter facts and opinions. Even the Newshour with Jim Lehrer broke from its usual format of two on each side of an issue and had three against WTO and only one for it. The magnitude of the misinformation was almost unprecedented in modern journalism.

You will find few issues in which economists with diverse opinions on most other issues, are in almost complete agreement as they are on the benefits of free trade. It is therefore frustrating to an economist that the message that the public was getting from the media was so replete with misinformation. If a poll were taken of economists's views on free trade in major economics departments, the results in favor of free trade would be so overwhelming that outside observers would probably assume that the poll was rigged.

The myths and misinformation that were disseminated were so pervasive that only a few of the more egregious ones can be examined here.

Myth No. 1 ‑ The WTO is undemocratic. This one is so ludicrous that it was shocking to see two different TV interviewers let it pass without comment. This critique applies to the UN, UNESCO, UNICEF etc. plus any NGO or private international organization that is created and operated by rules established by national or regional delegates and whose international officers are chosen by delegates using these rules. What do the critics propose that the WTO rules be written by an elected global government and its executive body be elected by a global plebiscite? In fact most of the above organizations were created by a small clique of developed countries with other countries being admitted under rules that they had no voice in formulating. This is true of the UN and other international institutions such as GATT (General Agreement on Tariffs and Trade), the predecessor of WTO, which were formed by the winners of World War II to serve the aspirations of the victors, however noble or ignoble they may have been. WTO is less an organization and more a set of rules (with minimum enforcement capability) to facilitate freer and more open trade and it is the first major post-colonial international institution in that it was created in a largely decolonized world with governments of most of the world's population having a say in its formulation. In our less than perfect world, some countries like the United States are more powerful than developing countries but that would be even more true in a world without WTO. Never-the-less, WTO is still being created and the one constructive outcome of the Seattle, is that the developing countries will not allow themselves to be ignored.

It is also arrogant to assume that a few thousand self‑selected demonstrators somehow more accurately reflect the world's populations better than the well over 100 countries that participated in the Uruguay round of negotiations to form WTO from 1986 to 1995, the 135 (most of whomparticipated in the discusions creating it) who have subsequently acceded to it, the 33 observers and at least 31 of which are waiting to get in. Most of these governments are democratically elected which is more than you can say for the demonstrators. What is moral and ethical basis for predominantly white middle class environmental groups' demand "to have a seat at the table?"

Myth No. 2. ‑ Free trade is somehow not "fair trade." Ask any economist if they know of any form of trade that is fairer than free trade. The very WTO judgements that were most heatedly criticized by the demonstrators were based on the WTO rules against discrimination. What could be fairer than rules that do not allow trading partners to discriminate among different partners and in which small countries can prevail against larger, more economically powerful countries? Without the non-discrimination rules of the WTO, trade can neither be free nor fair. If the demonstrators have any way to make international trade "fairer" other than some form of domestic protectionism, than I have not heard it from them. Nor have I heard of any mechanism other than a WTO type that could enforce their version of "fair trade" what ever it may be. It was never clear what the demonstrators were for, or even what they were against except some misconception of what WTO actually is. It is clear, however, that whatever is meant by fair trade, it would require a vastly more powerful organization than WTO or any envisioned by either advocates or critics to enforce it for being too powerful.

Myth No. 3. ‑ WTO violates national sovereignty. Every contract or agreement entered into by individuals, groups or countries whether bilateral or multilateral commits one to do something or not to do something. When countries enter into any agreements, they are frequently overturning existing practices, regulations or laws of their country otherwise their would have been little purpose in having them and which is the reason that treaties such as WTO have to be approved by legislative bodies.

The tragic irony of the claim that WTO violates national sovereignty is that those in Seattle who most actively work to violate the sovereignty of other countries were in the streets demonstrating and not inside as delegates. Ask the governments of Africa about the intrusion into their domestic affairs by those organizations promoting wildlife and habitat conservation or ask governments throughout the third world about interference by environmental groups when these governments seek financing to build a dam or attempt to export wood or wood products. When protestors carried inflammatory signs that said, "WTO Kills," one should have asked the governments in the malarial areas of the developing world who was trying to ban DDT and other organochlorines which would have led to an immediate increase in deaths of children in Africa. It is more than a little hypocritical for these groups to talk about sovereignty and then attack WTO rulings or practices that allegedly restrict a country such as the U.S. from imposing its environmental and labor laws upon its trading partners.

Myth No. 4 ‑ It is similar to No. 3 that WTO challenges domestic U.S. laws on wildlife conservation and the environment. Nothing could be farther from the truth and it is difficult to imagine an international trade agreement which would more carefully avoid doing so than the WTO. U.S. laws on conservation and the environment fall within Article XX (included in both GATT and WTO) that allow for such laws to be exempt from protectionist provisions.

The two cases that keep being raised over and over and over again demonstrate the falsity of this argument. One of the groups that demonstrated against the WTO call themselves the Turtles because of the allegation that the WTO has overturned our laws that seek to protect the sea turtles by requiring that shrimp imported into the United States be caught with nets that have turtle extruders. In fact in the endlessly noted case brought by Thailand (which also included India, Pakistan and Malaysia), the domestic U.S. legislation was never an issue. The only reference in the decision of the WTO Appellate Body was to reaffirm the right of WTO members to take measures "relating to the conservation of natural resources." The U.S. Trade Representative, Charlene Barshefsky later correctly stated that "the United States has not relaxed any environmental law or health or safety law in order to comply with any WTO ruling."

The disputed ruling was on a simple case of trade discrimination where the U.S. had granted Thailand (and the other complaining countries) a 4 month exemption to give it (them) time for its (their) fleet(s) to adapt while it gave much longer exemptions (3 years)to more favored Latin American trading partners. This was a discrimination case ‑ "fair trade" should mean treating trading partners equally ‑ and the outcome would have been no different under GATT or even under traditional bilateral trade agreements that have "normal trading" provisions(formerly called ‑ "most favored nation"). Repeat ‑ the case had nothing to do with U.S. environmental laws as the WTO only seeks enforcement of trade arrangements to which both parties have previously agreed. The WTO recommended that the U.S. seek a multi‑lateral agreement on this issue.

It is also not true with the often cited Venezuelan (which also included Brazil) case on gasoline imports, overturned our clean air laws. Once again, the WTO Appelate Body upheld the "right of the United States to adopt the highest possible standard to protect its air quality," provided that the laws be applied equally to all producers, foreign and domestic.

Under Article XX countries, can take protective measures which would otherwise be in violation of the trade rules in order to protect endangered species or other environmental resources. Thus, countries can pass laws and restrict free trade if the laws are focused on protecting the environment. The United States did not allow the importation of shrimp that was caught with nets without turtle extruders but also did not allow imports from countries whose policies for all of their shrimp fishing (for domestic consumption or for export to other countries) did not incorporate sea turtle protection to satisfy our desire to conserve severely endangered world‑wide sea turtle populations. Never‑the‑less, this would have been acceptable as long as it was non‑discriminatory.

Article XX states that the law must be relate to the "conservation of an exhaustible natural resource" but must not be an "arbitrary or unjustifiable discrimination" between countries which the practice under discussion clearly was. WTO decisions are required to examine law, and its implementation.

Counter to the claims made at Seattle and elsewhere, the WTO Appellate Body found that the U.S. law was valid under Article XX(g) of the GATT. Sea turtles were deemed to be an "exhaustible natural resource" and therefore international protection was warranted and national (U.S. or other) furthering this goal would be upheld.

The WTO rulings against the U.S were strictly limited to the manner in which the law was implemented (discrimination that was "arbitrary and unjustifiable") and in no way overturned any domestic U.S. legislation as is being repeated ad nauseam in Seattle and around the country. The U.S. is now enforcing the law on a ship by ship basis so Americans need not worry that their consumption of foreign caught tuna is either violating U.S. law or killing sea turtles into extinction. Exactly the same situation is involved in the often repeated case on Venezuelan oil importation which was strictly a case of discrimination and in which the WTO ruling specifically upheld the validity of the U.S. Clean Air Act.

It would probably come as a surprise to those following the media coverage of the Seattle meetings that many staunch free market advocates, see the above rulings as "technicalities" and therefore oppose Article XX because it can possibly be used of promote protectionist policies. There are many free market advocates who look askance at WTO as too restrictive and would simply advocate a unilateral elimination of all U.S. tariffs with or without reciprocal action by other countries. Whatever the merits or demerits of this thesis and the arguments for it may be, it warranted attention by the media which it did not receive.

Myth No. 5 ‑ A panel of three bureaucrats decides the cases. In fact a case is resolved by a panel of five agreed upon by both participants. If they cannot agree on a panel then WTO appoints a panel of three international trade experts since it is a trade issue to settle the matter. It is a cheap shot to call them bureaucrats and impugn their integrity as was repeatedly done and imply that their decisions were biased. In fact, in the close to two hundred cases that have thus far been brought before WTO, only in 15 of them was it necessary for WTO to appoint the panel; in all others the cases were resolved by a panel that was mutually agreed upon. What we are talking about is roughly 40 cases a year with approximately 3 a year being appealed in a world of over (US) $5 trillion in trade with the substantial majority of it under WTO rules. In spite of the headline making disputes between the U.S. and the European Union, these disputes involve only about one per cent of their trade. By any reasonable standard, the WTO rules would seem to be working extremely well. Not only has the movement towards freer trade since World War II produced an unprecedented growth in trade, economic development and human well-being but it has also evolved a system of rules and dispute settling mechanisms that facilitate this process and minimize the type of trade conflicts that previously sent countries marching off to war.

WTO does not enforce its decisions per se. It allows a country such as the US to impose a countervailing tariff or other trade restriction (which we could do anyway) without being in violation of the trade agreement. On the trade disputes with Europe where we imposed countervailing restrictions, the WTO ruled that they were to large. The US voluntarily reduced them because of this ruling.

A related issue is that the deliberations of the panel of three are closed. This was created to protect them from undue external influences such as those implied by the critics of WTO. Possibly they should be open (which is an issue that could have been raised at the Seattle meeting if the demonstrators were interested in being constructive) but that has risks as well as benefits. It should be noted that openness or transparency are being promoted globally in finance, trade etc. by WTO and other organizations opposed by the WTO opponents. To some of us the benefits of transparency in most if not all areas of public life are so overwhelming that we support both the WTO and all moves to make it more open.

It should be further noted that some of the least transparent organizations are those leading the opposition to WTO including some who have taken over reputable organizations to promote their hidden agenda. How many trying to follow the events in Seattle knew the agenda of any of the protesting groups other than the misguided protectionism of the labor unions who at least made their concerns known in an orderly manner and made no attempt to block or disrupt the meetings. It was a bit ironic to see the dockworkers in an act of union solidarity, join their fellow trade unionists in protesting against the WTO trading policies that have expanded trade through their port and created more employment for them.

Myth No. 5 ‑ WTO would lead to an "erosion of basic health and human services." The most frequently cited example is our "forcing" Europe to accept US "carcinogenic hormone‑fed beef." The US has had two rounds with the Europeans over this over. After the Europeans lost the first one they tried various ruses to simulate compliance and then brought charges against us for seeking to retaliate. It was technically a judgement of the three member WTO panel but in fact they relied upon the highly respected opinion of the joint FAO/WHO Codex Alimentarius Commission who were asked to study the matter. As of this spring, there were roughly 17 studies funded by European governments seeking to demonstrate harm to human health from hormone beef in addition to a number of previous studies that had similarly found no evidence of harm. Clearly, if there was evidence for harm, and there was ample funding for researchers to find it either by their own research or from the published research of others, it would have been found by now. It hasn't and those who use the term "carcinogenic hormone‑fed beef" are making dogmatic assertions without a scintilla of evidence. The fact is that, trade restrictions to protect human health are permitted under WTO but they have to be proved scientifically. And that is precisely what the environmentalists and other opponents of WTO don't want. They have gotten away for decades in the US and Europe raising groundless fears and getting things banned or winning spurious lawsuits without having to prove their case. Now they have to back up their special pleading with evidence.

It is interesting to note, that the WTO rules incorporate that favorite of the environmental movement, "the precautionary principle." Even without sufficient scientific evidence of risk, countries are allowed to take provisional, protective action "proportionate to the suspected risk" based on what is known until there is adequate scientific inquiry and a resolution of the issue.

Let me add, contrary to numerous statements, the European Union has not banned the use or production of genetically modified food though that has been frequently stated even in some of the most informed sources. In fact, genetically modified tomatoes were approved for sale in England and quickly began the ingredients for the largest selling tomato paste because they were cheaper and tastier. France approved a number of genetically modified crops and they are being grown there. The fact that there is an approval process refutes the argument that GMOs are unregulated. As a result of the hysteria whipped up by Greenpeace and others (including going into fields and ripping out plants), the European governments are seeking to delay the approval process. It is obvious that the reason that they are doing so is because they know that any objectively carried out investigation would lead to further approvals which would bring the wrath of those who have been frightened by Greenpeace about GMOs.

WTO or no other organization forces anyone to eat American food. It merely bars discriminatory restrictions on the international trade against them. McDonalds is in France and elsewhere not because of WTO or any other organization but because enough people in these countries wish voluntarily without coercion to patronize them. If the French farmer who went to Seattle wishes to protest against McDonalds, he should have stayed home and complained to his fellow French citizens about their eating habits.

This brings up a really nasty issue. Namely, much of what is being complained about has nothing to do with WTO but is an attack against voluntary choices by made by peoples around the world that are contrary to what elitist in the environmental and other movements think that they ought to make. It assumes that when people other than ourselves elect their officials, they are somehow choosing leaders who do not reflect their real needs. Or that consumers around the world are innocent victims of greedy multi-national corporations. Consequently, they need the protection of affluent white, self-appointed organizations to protect them from their own folly. These are the same organizations who assume that they have a divine right to protect the environment and its flora and fauna in developing countries from being misused and abused by its foolish inhabitants. It is a nasty issue, because when all the rhetoric is scrapped away, it is racism, paternalism and neo-colonialism by those who honestly and sincerely believe that everyone else is a racist but them.

Myth No. 6 ‑ Sweeney of the AFL‑CIO spoke on TV during the meetings about banning all child labor. This will not benefit children. Let me recommend a big fat book by UNICEF (yes, UNICEF) titled What Works for Working Children. It provides massive refutation of the simplistic arguments being raised. It is one thing to oppose chaining children to machines making carpets and it is another to oppose their working along side their parents where their output is necessary for survival of the family. In any case, only a very small percentage of the products of child labor enter into world trade so the issue is essentially a canard. The way to end child labor is to promote trade and economic development that raises income so that countries can afford universal basic education and families can afford to sustain non-income earning members through the critical years of education. Probably no post World War II measure has put more children into basic education (as well as improving human nutrition and health) than the green revolution technologies and the mechanization in agriculture that often accompanied it. Yet this green revolution technology was opposed by many of the same groups opposed to WTO and was deemed a "failure" in one of their full page ads prior to the Seattle meeting.

Issues of core labor standards were discussed at the at the 1996 WTO meeting in Singapore. Virtually all of the WTO countries are members of the ILO (International Labor Organization) where the issue has been under discussion. Collaboration on this issue is taking place between WTO and ILO in the same way that WTO works with WHO (World health Organization) and FAO (Food and Agricultural Organization) on issues of health and food safety. The developing countries are not against developing core labor standards but are against having them be part of WTO because they are absolutely convinced (as are most economists) that they would be used as a basis for trade discrimination against them. They simply do not believe that one could create a workable labor standard as part of a trade agreement that would meaningfully cover Bangladesh, Togo, Germany, Bolivia and Fiji for example.

Myth No. 7 ‑ WTO will harm the poor. Those making this assertion do so without offering any evidence or without any attempt to counter the massive amounts of evidence on the improvement in income, life expectancy, infant mortality rates, food supply per capita that has characterized the global economy over the previous decades. On what basis do those in Seattle protesting WTO have to speak on behalf of the world's poor when their governments are there arguing for freer trade and not more restrictive. Virtually everything that was being advocated on the streets of Seattle was contrary to what the developing countries at the meeting have long been advocating. It is simply another case of racism where elite white groups presume to speak on behalf of those less fortunate and purporting to know their needs better than the people themselves.

In fact, during 1999 at various meetings of organizations of predominantly third world countries, including the ACP countries (70 in Africa-Caribbean-Pacific), Group of 77 (now more than 130 countries) and the Commonwealth (54 countries), the principles of WTO were endorsed. All these and other developing countries have serious grievances and reservations about WTO and wish to change it in many ways but they all recognize the importance to them of an expanded system of trade. Seeking to prevent the meetings from taking place was not the way to help the less developed countries to promote their trade agenda.

At various meetings that I have had with leaders of deveolping countries in which I have ben involved in Africa and Asia, one complaint that is frequently made by them was that NGOs and other groups like those protesting get all the media attention presuming to speak on their behalf. Over the last few years, I have been privileged to average two trips a year to Asia and one each to Africa and the Caribbean. This complaint of others presuming to speak on their behalf is almost universal with those with whom I have met.

There is more than a hint of racism in those who presume to speak on behalf of other people without consulting them or their elected leaders. It is time that we let them speak for themselves.

Myth no. 8 - The WTO invented the idea of "non-tariff barriers." Though never stated explicitly, this was implied in op-ed pieces where the term "non-tariff barriers" was set off in quotation marks and treated as if it was an alien concept. Even worse, on both British and American TV, I saw anti-WTO spokespersons hold up a single sheet of paper and proclaim that if WTO was really about free trade, one page would be document enough for the treaty rather than the several hundred page document that was also displayed. Note the hint of conspiracy. This was either abysmal ignorance or demagoguery or a bit of both. One does not need a PhD in economics to refute it; an introductory course with a text with a good chapter on trade would be sufficient. Non-tariff barriers have long been seen to be as potent a deterrent to trade as tariffs. A public health and safety regulation that requires all avocados to be sliced open at the border to inspect for disease will as effectively restrict their importation as would any tariff. A one page free trade agreement would quite literally not be worth the paper that it is written on unless there were provisions in a much longer document that prevented the use of spurious, health, safety and other restraints of trade which is precisely why the WTO process of adjudication discussed above is necessary.

Myth No. 9 - Grassroots democracy - David verses Goliath. The activists trumpeted that theirs was purely a manifestation of grassroots democracy, citizens in action. It was the proverbial David against Goliath with David once again winning. And as always, the media bought this version of events without uttering even a murmur of skepticism, Once again, an introductory economics text chapter on trade would significantly clarify the issue. Protectionism levies a tax on all consumers that is diffuse and after a time, consumers may not be aware that they are, for example, paying a price for sugar that is way above the world market price because of protectionist quotas. But the producers and sellers of the product do and they are generally willing to lobby and spend money to further to defend privileged market position and the greater profits that it brings or to defend an industry - sugar, textiles - that would largely cease to exist in the United States without protectionism.

It doesn't take a genius to recognize that if steel workers are losing jobs to foreign competitors and steel companies are losing sales and profits. These various protectionist interests were in Seattle but the media simply did not see them. Nor were there any questions asked as to who may have paid for some of the participants to attend. There is the same, small coterie of environmentalists from developing countries who are routinely brought out or called upon in order to create the false impression of support for an agenda that is largely absent in the third world. In many instances, their organizations are funded by Western environmental groups with their "leaders's" constituency being primarily the developed country environmentalist and not their own fellow citizens. Yet we heard them interviewed on radio as if they spoke for the entire third world and no questions were asked about who was covering the cost of their trip.

Myth no. 10 - The organizers and protestors were citizens with no personal agenda except to create a better world for all of us. This myth was not new but was skillfully used by the organizers in Seattle who portrayed themselves simply as citizens pursuing, a higher, more noble truth. This is one of the most dangerous and destructive myths of our time. Over the last decades, it has given a free rein to some groups to pursue their public agenda without critical scrutiny. Too many in the media have operated on the assumption that there are no enemies in the environmental movement.

It is dangerous because we all have biases and to assume that some groups do not, is to exempt them from criticism and to give their pleading a special privilege that may not be warranted by the facts. It has also been used by various groups like Greenpease and others to give them license to trample on the rights of other citizens as was done in Seattle. Many of the protestors were there representing environmental groups with large memberships and annual budgets in the 10s of millions of dollars. These events and the media coverage that they receive from them are essential to their continued ability to raise money and fund their events and pay their own salaries. This gives them a bias but it does not make them dishonest as they are prone to accuse others.

The issue then is not who has or lacks biases but how we resolve the difference that emerge among us as we see the world from differing perspectives. What humans have developed over the last few centuries are the scientific method and democracy which though far from perfect, are never-the-less that best ways that we have to sort out myth from fact and to find common ground for living together. The protestors in Seattle, rather than furthering these objectives as they claimed, were part of a larger movement which has been systematically been undermining them.

The myths that we described above were too obviously wrong for us to believe that those that who so skillfully organized the demonstrations and who ran the sophisticated ad and propaganda campaign were totally innocent of manipulating the facts to suit their purposes. No, they were operating in terms of higher truths which simply made accuracy in the truth of the details of their message important only if it served their noble cause. When some groups act as if they are above the law and above the truth, we are all in trouble. It is even worse for democratic discourse when the media validates this distortion of the democratic process.