http://www.observer.co.uk/Print/0,3858,4170472,00.html
Necessity test is mother of Gats intervention
The World Trade Organisation has plans to replace that outmoded
political idea: democracy
by Gregory Palast
Sunday April 15, 2001
The Observer (London)
Trade Minister Dick Caborn says 'nothing' all day, and this keeps him
very, very busy. Caborn is busy reassuring the nation that nothing in
the proposed General Agreement on Trade in Services (Gats) threatens
Britain's environmental regulations. Nothing in Gats permits American
corporate powers to overturn UK health and safety regulations. Nothing
in Gats, which is part of the World Trade Organisation regime,
threatens public control of the National Health Service. The official
statement of what Gats doesn't do goes on for pages and pages.
So I've been perplexed by Caborn and his EU sidekick, Pascal Lamy,
rushing to Geneva and Washington and God knows where else to argue
over the wording of rules that do nothing, change nothing and mean
nothing.
But then last week 'something' came through on my fax machine. And
this confidential document from the WTO Secretariat, dated 19 March,
is something indeed: a plan to create an international agency with
veto power over parliamentary and regulatory decisions.
When Winston Churchill said that 'democracy is the worst form of
government except all those other forms that have been tried from time
to time' he simply lacked the vision to see that in March 2001, the
WTO would design a system to replace democracy with something much
better: Article VI.4 of Gats. And this unassuming six-page memo, now
modestly hidden away in secrecy, may one day be seen as the
post-democratic Magna Carta.
It begins by considering the difficult matter of how to punish nations
that violate 'a balance between two potentially conflicting
priorities: promoting trade expansion versus protecting the regulatory
rights of governments'.
Think about that. For centuries Britain, and now almost all nations,
has relied on elected parliaments, congresses, prime ministers and
presidents to set the rules. It is these ungainly deliberative bodies
that 'balance' the interests of citizens and businesses
Now kiss that obsolete system goodbye. Once Britain and the EU sign
the Gats treaty, Article VI.4 of that treaty, the Necessity Test, will
kick in. Then, as per the Secretariat's secret programme outlined in
the 19 March memo, national parliaments and regulatory agencies will
be demoted, in effect, to advisory bodies.
Final authority will rest with the Gats Disputes Panel to determine
whether a law or regulation is, in the memo's language, 'more
burdensome than necessary'. And Gats, not Parliament, will decide what
is 'necessary'.
As a practical matter, this means nations will have to shape laws
protecting the air you breathe, the trains you travel in and the food
you chew by picking not the best or safest means for the nation, but
the cheapest methods for foreign investors and merchants.
Let's get down to concrete examples. The Necessity Test has already
had a trial run in North America via inclusion in Nafta, the region's
free trade agreement. Recently, the state of California banned a
petrol additive, MBTE, which has contaminated water supplies. A
Canadian seller of the 'M' chemical in MBTE filed a complaint saying
the rule failed the Necessity Test.
The Canadians assert that California could simply require all petrol
stations to dig up their storage tanks and reseal them - and hire a
swarm of inspectors to make sure it's done perfectly. The Canadian
proposal might cost Californians a bundle and would be impossible to
police. That's just too bad. The Canadian proposal is the least
trade-restrictive method for protecting the water supply. 'Least
trade-restrictive' is Nafta's Necessity Test.
If California does not knuckle under, the US Treasury may have to fork
out $976 million in compensation to the Canadians.
The Gats' version of the the Necessity Test is Nafta on steroids.
Under Gats, as proposed in the memo, national laws and regulations
will be struck down if they are 'more burdensome than necessary' to
business. Notice the subtle change. Suddenly the Gats treaty is not
about trade at all, but a sly means to wipe away restrictions on
business and industry, foreign and local.
So what 'burdensome' restrictions are sitting in the corporate
cross-hairs? The US trade representative has already floated proposals
on retail distribution. Want to preserve Britain's green belts? If
some trees stand in the way of a Wal-Mart superstore, forget it. Even
under the current, weaker, Gats, Japan was forced to tear up its own
planning rules to let in the retail monster boxes.
The Government assures us that nothing threatens its right to enforce
laws in the nation's public interest. Not according to the 19 March
memo. The WTO reports that, in the course of the secretive
multilateral negotiations, trade ministers agreed that a Gats tribunal
would not accept a defence of 'safeguarding the public interest'.
In place of a public interest standard, the Secretariat proposes a
deliciously Machiavellian 'efficiency principle': 'It may well be
politically more acceptable to countries to accept international
obligations which give primacy to economic efficiency.' This is an
unsubtle invitation to load the Gats with requirements that rulers
know their democratic parliaments could not otherwise accept. This
would be supremely dangerous if, one day, the US elected a president
who wanted to shred air pollution rules or, say, Britain elected a
prime minister who had a mad desire to sell off the rest of his
nation's air traffic control system.
How convenient for embattled chief executives. What elected congresses
and parliaments dare not do, Gats would require. Under the
post-democratic Gats regime, the Disputes Panel, those Grand
Inquisitors of the free market, will decide whether a nation's law or
a regulation serves what the memo calls a 'legitimate objective'.
While parliaments are lumbered with dated constitutional requirements
to debate a law's legitimacy in public, with public evidence, and
hearings open to citizen comment, Gats panels are far more efficient.
Hearings are closed. Unions, as well as consumer, environmental and
human rights groups, are barred from participating - or even knowing
what is said before the panel.
Is the 19 March memo just a bit of wool-gathering by the WTO
Secretariat? Hardly. The WTO was working from the proposals suggested
in yet another confidential document also sent to me by my good
friend, Unnamable Source. The secret memo, 'Domestic Regulation:
Necessity and Transparency', dated 24 February, was drafted by the
European Commission's own 'working party', in which the UK ministry
claims a leading role.
In a letter to MPs, Trade Minister Caborn swears that, through the EC
working party, he will ensure that Gats recognises the 'sovereign
right of government to regulate services' to meet 'national policy
objectives'. Yet the 24 February memo, representing the UK's official
(though hidden) proposals, rejects a nation's right to remove its
rules from Gats jurisdiction once a service industry is joined to the
treaty.
Indeed, the EC document contains contemptuous attacks on nations
claiming 'legitimate objectives' as potential 'disguised barriers' to
trade liberalisation. Moreover, there is a codicil that regulation
must not be 'more trade restrictive than necessary', ready for
harvesting by the WTO Secretariat's free market fanatics.
Not knowing I had these documents in hand, Caborn's office this week
maintained that Gats permitted nations a 'right to regulate to meet
national policy objectives'.
I was not permitted to question the Trade Minister himself. However,
the Caborn letter to MPs admits that his pleasant interpretation of
Gats has not been 'tested in WTO jurisprudence'. This is, after all,
the Minister who, with his EU counterparts, just lost a $194 million
judgment to the US over the sale of bananas.
Now, I can understand how Caborn goofed that one. Europe argued that
bananas were a product, but the US successfully proved that bananas
were a service - try not to think about that - and therefore fall
under Gats.
And that illustrates the key issue. No one in Britain should bother
with what Caborn thinks. The only thing that counts is what George W
Bush thinks. Or, at least, what the people who think for Bush think.
Presumably, Caborn won't sue the UK for violating the treaty. But the
US may. In a way it already has. Forget Caborn's assurance - we need
assurance from President Bush that he won't use Gats to help out
Wal-Mart - or Citibank or Chevron Oil.
The odd thing is, despite getting serviced in the bananas case, Caborn
and the Blair government have not demanded explicit language barring
commerce-first decisions by a Gats panel. Instead, the secret 14
February EC paper encourages the WTO's Secretariat to use the punitive
form of the Necessity Test sought by the US.
So there you have it. Rather than attack the rules by which America
whipped Europe, Caborn and the EC are effectively handing George Bush
a bigger whip.
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