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Taking Trade to the Streets: the Lost History of Public Efforts to Shape Globalization

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By Susan A. Aaronson

University of Michigan Press

Copyright © 2001 Susan A. Aaronson
All right reserved.
ISBN: 047208867X

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CHAPTER 1 - How Trade Agreement Critics Redefined the Terms of Trade

ON NOVEMBER 30, 1999, some five thousand delegates from more than 135 nations traveled to Seattle, Washington. They met to discuss whether or not to launch a new round of trade talks under the aegis of the World Trade Organization (WTO). Despite the many pleasures of Seattle, most of the delegates did not enjoy their stay. The official talks were eclipsed by a week of street protests and sporadic violence, as vandals smashed the storefront windows of Nike, Starbucks, and McDonald's.

In the United States and around the world, the protests became front page news. Reporters struggled to describe who these trade agreement critics were and why so many had taken to the streets. They found that the protesters came from all over the world and presented a wide range of political views. Nationalists such as Pat Buchanan of the United States and Maude Barlow of Canada argued that the WTO took power from democratically elected governments. Greens from around the world condemned the WTO for elevating trade objectives over environmental goals. Union leaders and human rights advocates criticized the WTO and other trade agreements for protecting property rights but ignoring worker rights. Despite their diverse concerns, these trade agreement critics issued a common message--that globalization threatened national consumer, environmental, health, and worker regulations. Moreover, almost all the protesters argued that the WTO and other trade agreements were part of the problem, rather than central to the solution of regulating globalization. They condemned the WTO for transferring power from the people to global corporations.

Most trade liberalization advocates were dismayed by the protests and unsure as to what to do about them. President William Jefferson Clinton said he shared the protesters' concerns about the WTO's lack of transparency and that he would continue to work to make the world trading system more equitable. The director general of the WTO, Michael Moore, described the ministerial as a "disappointment." The Financial Times characterized the Seattle Ministerial as a "disaster" and a "wake-up call." But other observers took a less sanguine view; they described the protesters as "protectionists" who simply wanted to impede trade. Many economists, business leaders, and developing country officials alleged that trade agreement critics were using their concern for the environment or human rights as a smoke screen for their true intent, to protect domestic producers. After all, in their view, social and environmental issues are not "trade" issues, but rather national issues to be settled within WTO member nations.

Policymakers, as well as many of the reporters and analysts covering the events in Seattle, forgot that the Seattle protests were not the first time that trade policy was made in the streets. In 1773, some sixty colonists, including five masons, eleven carpenters, twelve apprentices, and two doctors, traveled to Boston Harbor. Dressed as Indians, the colonists dumped British tea into the Boston harbor to protest British tea tariffs. But the Boston Tea Party did not improve trade relations between the colonists and the mother country. In 1774, Britain passed the Intolerable Acts, which provided for the quartering of troops in Boston, and closed the port. The colonists were so infuriated that delegates to the First Continental Congress voted not to trade with England until it changed its trade policies. Some thirty years later, abolitionists living in the newly independent United States and antislavery activists in Great Britain marched to protest the legal importation of slaves. These protests had a more positive impact. After several years of such protests, in 1807, the United States and Great Britain banned trade in slaves.

Ironically, in recent years, the press has barely covered street protests against trade agreements such as the General Agreement on Tariffs and Trade (GATT) or the North American Free Trade Agreement (NAFTA). During the Uruguay Round, farmers protested in Geneva, headquarters of the GATT, as well as in Strasbourg, home of the European parliament. In 1992, while policymakers negotiated NAFTA, demonstrators protested the secret negotiating process.

Moreover, in May 1998 massive street protests in Geneva presaged the Seattle protests. Inside the grand palace housing the WTO, proponents of trade agreements celebrated fifty years of trade liberalization. Speakers from around the world argued that world trade has grown sixteenfold since 1950, because of the GATT's rules. They noted that the people of the world have benefited from that trade with more and cheaper goods as well as a better quality of life. Outside that grand palace, however, some ten thousand protesters disagreed. While some individuals quietly protested, others threw rocks and overturned cars.

The 1773 protests in Boston Harbor, the 1998 protests in Geneva, and the 1999 protests in Seattle are part of a long-standing debate over what trade rules should cover and how such rules should affect other important national priorities such as protecting consumers or the environment. The public has long attempted to shape globalization--yet that history has not come to the fore. This book attempts to change that misperception by describing how so many individuals and nongovernmental organizations have come to see trade agreements as threatening national systems of social and environmental regulations. Using the United States as a case study, I examine the history of trade agreement critics, focusing particular attention on NAFTA (the agreement between Canada, Mexico, and the United States) and the Tokyo and Uruguay Rounds of trade liberalization under the GATT. I also focus on whether such trade agreement critics are truly protectionist.

Trade agreements are internationally agreed upon regulations that govern the use of trade barriers. These agreements regulate how entities may trade and how nations may use protectionist tools. Until the 1980s, most trade agreements regulated the use of traditional tools of protection--border measures such as tariffs and quotas. But policy-makers recognized that domestic regulations, such as health and safety regulations, can, with or without intent, also distort trade. Thus, they worked to include rules governing such regulations in the purview of the GATT and other trade agreements.

Trade agreement critics first began to focus on the threat of trade agreements to national systems of regulations in the 1980s, during an unusual confluence of events. The U.S. economy grew slowly during much of this period. Some citizens attributed America's slow growth to the nation's massive trade and budget deficits. The Reagan and Bush administrations reduced federal spending, including services to the working poor. They also attempted to deregulate key economic sectors and reduce the regulatory burden upon business. In 1991, the United States agreed to expand its free trade agreement with Canada to Mexico. Policymakers planned to create a continent-wide free trade area called NAFTA. NAFTA was controversial because Mexico had very different social norms and systems of governance. Thus, while these policy developments were not part of a coordinated strategy to undermine the social compact, some individuals and groups concerned with the environment, human rights, and labor standards, for example, saw them as a deliberate challenge to U.S. norms.

Activists began to pay greater attention to other trade agreements in the 1990s. Their concerns grew as they looked at GATT in action, mediating trade disputes and serving as a forum for trade negotiations. Working with citizen activists in Canada, environmentalists and social activists in Public Citizen and other groups organized to preserve their influence over national systems of regulation. They also tried to hamper the progress of trade talks.

This book also focuses on how trade agreement critics have built a fluid global movement to redefine the "terms" of trade agreements (the international system of rules governing trade) and to change how citizens talk about trade. (The terms of trade is a relationship between the prices of exports and the prices of imports. This is a pun on how we talk about trade.) That movement, which has been growing since the 1980s, transcends borders as well as long-standing views about the role of government in the economy. While many trade agreement critics on the left say they want government policies to make markets more equitable, they are tactically allied with activists on the right who generally want to reduce the role of government in the economy.

This association of left and right is perhaps best illustrated by the working alliance among two key trade agreement critics in the United States, Ralph Nader (the noted consumer activist) and Pat Buchanan (the self-proclaimed "conservative of the heart"). Nader believes consumers must be citizen activists, always vigilant of business and government. Patrick J. Buchanan, in contrast, sees himself as a supporter of capitalism and a critic of big government. However, the two have found common ground in their belief that capitalism should serve the nation and not make the nation subservient to multinational corporations. Both men see the WTO as captured by such multinational business. They also agree as to how to remedy this problem. Both Nader and Buchanan want the United States to drop out of the WTO.

Nader and Buchanan are not the only prominent American individuals or groups critical of trade agreements. The chorus of trade agreement critics includes the Rainbow Coalition, a nongovernmental organization concerned with racial equality issues; environmental groups such as the Sierra Club; and activist groups from the left (Greenpeace) and right (Phyllis Schlafly's Eagle Forum). Prominent trade agreement opponents on the left include former California Governor Jerry Brown and former Texas Agriculture Commissioner Jim Hightower. On the more rightward side of the spectrum, H. Ross Perot (a data-processing billionaire) and Roger Milliken (a wealthy textile manufacturer and long-standing protectionist) have been willing to use their considerable wealth to educate their fellow Americans about the "costs" of trade and trade agreements.

Such left-right coalitions are not new to the trade debate, nor unique to the United States. In Great Britain, millionaire businessman Sir James Goldsmith worked with small farmers and environmentalists to argue for a return to more local and ecological trade. In France and other parts of Europe, nationalists and farmers collaborated to form an anti-GATT movement. In India, environmentalists, nationalists, and farmers joined to protest GATT rules on agriculture and intellectual property.

Left-right coalitions, however, have not appeared in all democracies. For example, in Canada, concern about trade agreements has seemed exclusive to the left. This may be because many Canadians on the right see trade as a way to make Canada more like the United States--less interventionist. In Australia, concerns about trade and immigration have been dominated by right-wing nationalists such as Pauline Hanson.

While these left-right coalitions in the United States (and abroad) all sought to hamper trade agreements, they did not seek to protect the same interests. Buchanan and Milliken, as example, want to protect American jobs, American business, and American sovereignty. Nader, Brown, and Hightower of the United States and Barlow of Canada, in contrast, want to protect their ability to influence a democratically determined system of social regulation. Thus, while these trade agreement critics shared a strategy, they have not always shared objectives. They have different goals and constituencies to protect.

Trade Agreement Critics: 1996 Examples

In the U.S.

Public Citizen

Friends of the Earth

U.S. Business and Industrial Council

In Canada

Council on Canadians

Canadian Environmental Law Association

In Europe

Oxfam

Friends of the Earth

Transnational Institute

In Asia

GATT Watchdog (New Zealand)

Third World Network (Malaysia)

Source: Institute for Trade and Sustainable Development and onelist.com (anti-WTO list serve)

Some of these trade agreement critics proudly describe themselves as "new protectionists" in an attempt to differentiate their social and environmental objectives from the economic objectives of traditional protectionists. For example, many European Greens (an environmentalist political party) want capitalism to be as limited and as local as possible. They criticize global capitalism (and capitalism per se) because it has undermined the global commons in the interest of promoting economic growth. In contrast, many other trade critics clearly state they do not want to impede trade, but rather to reconcile trade rules with national regulatory rules. They criticize capitalism at the margins.

Moreover, many of these trade agreement critics do not act like the protectionists in our history books who worked at the national level to ensure that policies redounded to the benefit of citizens or particular sectors. They have built an international coalition by relying on new technologies such as E-mail and the World Wide Web, and old techniques such as international meetings, teach-ins, and strategy sessions. This internationalization does not mean that these individuals and groups are not protectionist. Nevertheless, until the 1980s it was unusual for protectionists to work internationally to protect national economic interests. According to Lori Wallach, who has been a key strategist and lobbyist for Public Citizen, the movement is composed of internationalists/nationalists. They work in tandem with foreign interest groups and governments to advance their positions (which may be in opposition to the official U.S. position) at home and abroad. They have made common cause with citizens from other nations in the interest of battling the global free market. These activists agree that trade agreements can undermine democracy, government accountability, and important regulations. They disagree, however, about how to empower workers, communities, and activists around the world while encouraging economic growth, democratization, and technological change.

By transcending borders and by changing the content of the trade debate, these trade agreement critics of the left and right force us to rethink the free trade/protectionist paradigm for debating trade. For example, labor rights advocates want to grow the GATT/WTO system to include rules governing how workers are treated as they make goods and services. In essence, these trade agreement critics want to regulate (and enforce) the use of domestic regulations internationally through trade agreements.

However, most trade agreement critics such as environmentalists and consumer advocates want to ensure that trade agreements do not serve as barriers to domestic regulation or make such regulation ineffective. They fear that in today's integrated global economy, nations will compete to liberalize their markets by lowering their national regulatory standards or by inadequately enforcing these standards. They presume that stricter regulatory standards represent a source of competitive disadvantage. However, trade agreements may preserve or even raise national regulatory standards. According to political scientist David Vogel, "the impact of trade liberalization on regulatory standards is primarily dependent on the preferences of wealthy, powerful states, and the degree of economic integration among them and their trading partners.. . . Trade liberalization is most likely to strengthen consumer and environmental protection when a group of nations has agreed to reduce the role of regulations as trade barriers and the most powerful among them has influential domestic constituencies that support stronger regulatory standards." Interestingly, many free traders fear that including domestic regulations in the world trading system could interfere with the efficiency of global markets and overload the current system of trade regulation. In essence, like the trade agreement critics, these free traders are arguing that including national standards within the trading system will lead to ineffective regulation.

Clearly, when we talk about trade today, we are talking about regulation. Regulations have important macroeconomic consequences; they can affect productivity, investment levels, prices, and other important economic factors. They can also change microeconomic conditions. Regulations may make some firms better off; others worse off. Many trade agreement critics call these differences in regulation "unfair." Yet nations trade because of their differences, whether those differences reflect government's role in the economy, natural resource allocation, or technological expertise. A free trade/protectionist paradigm does not accurately describe such trade issues. Why then, do so many observers label trade agreement critics protectionists?



Continues...

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Excerpted from Taking Trade to the Streets: the Lost History of Public Efforts to Shape Globalization by Susan A. Aaronson Copyright © 2001 by Susan A. Aaronson. Excerpted by permission.
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