The General Agreement on Tariffs and Trade (GATT) was agreed in 1994 and came into force in 1995 with the creation of the World Trade Organization (WTO) to administer and enforce it.
Given the thousands of pages of rules that form the agreement, ‘free’ trade is not about doing away with rules altogether but rather replacing rules for companies with rules for governments; replacing rules that protect citizens, consumers and the environment with rules that protect and facilitate traders and investors. Efforts to regulate pollution and environmental degradation are resisted by corporations and, according to GATT, must be proven to be necessary and the least trade-restrictive option or otherwise give way to the greater right of corporations to trade.
GATT rules place the corporate right to free trade above democratic priorities. In the process corporate rights have become even more important than individual human rights. Governments may protect public health and morals only in so far as it does not interfere with corporate rights to free trade and investment. An early indicator of the shape of things to come occurred in 2004, with a victory of transnational gambling corporations over democratic governance.
Public Citizen’s report showed that many of the proposed health and environmental policies being proposed by US presidential candidates would require modification to WTO rules before they could be passed. For example, Obama’s proposal to require large employers to contribute to the health insurance of their employees could be interpreted as favouring small employers that would mainly be locally owned and this would be discriminatory against larger foreign companies. The report concluded that “unless a government could foresee that it would need to take future action on an unimaginably broad swath of policy areas when it made its initial WTO commitments in 1994, it now faces unacceptable WTO constraints on new non-trade policies deemed necessary”, including social policies.
John Madeley, in his book Hungry for Trade: How the Poor Pay for Free Trade, noted that:
They have elevated trade into a kind of God; nothing must interfere with it, not even food. If a country wants to pass laws that enable it to feed its people, and those laws are not consistent with so called ‘free’ trade, they are disallowed. Trade is thus given a higher priority than food.’
In this way the corporate goal of free trade has taken precedence over other citizen goals such as environmental protection, improved working conditions and health and safety considerations. The WTO ensures that the interests of transnational corporations supersede those of citizens, governments and everyone else. The free trade crusade has impacted on the ability of citizens in democratic nations to regulate in the public interest whilst increasing the regulation that protects commercial interests.
However WTO rulings are only the tip of the iceberg. They send a message to nations about what is acceptable and what is not and ensure that many governments do not even try to introduce regulations that might impinge on free trade. Those that do can be headed off by threats of WTO complaints by other nations, so that the proposed legislation is killed long before a case reaches the WTO for a ruling. For example, when the European Union was considering regulations to ban the import of cosmetics tested on animals and fur from animals caught in leg hold traps, it was enough for the US and Canada to threaten a WTO complaint to ensure the regulations did not go ahead.