The world is being remade before our very eyes, though most of us
cannot see it happening. It is being done in the name of "free trade"
and it is being done behind closed doors. Even the minutes of the
meetings are not being made public as U.S. negotiators hammer out "free
trade" agreements with other countries, which will have the effect of
curtailing--in some cases completely nullifying--environmental
protections, and protections of workers' rights, that took 50 years to
Free trade is coming upon us like a locomotive. The U.S. and Canada
signed a free trade agreement in 1989. The North American Free Trade
Agreement (NAFTA) between Canada, the U.S. and Mexico is before
Congress now, facing a "yes or no" vote later this fall. The granddaddy
of free trade agreements is the GATT [the General Agreement on Tariffs
and Trade], which came into existence in 1948. The GATT has been signed
by 102 countries including the U.S., and another 30 countries abide by
its rules though they are not formally "contracting parties." GATT sets
rules governing the kinds of trade restrictions that are allowed
between GATT participants. The explicit aim of GATT is to eliminate all
The latest round of GATT talks have been going on for six years now,
seeking to abolish all trade restrictions between GATT countries.
Because this round of GATT negotiations began in 1986 in Uruguay,
people call this the "Uruguay round" of GATT talks, though the talks
have long since moved to Geneva, Switzerland.
In principle, free trade sounds good. Free trade means the unrestricted
exchange of commerce between buyers and sellers across international
boundaries. Another term for free trade is LAISSEZ FAIRE (a French
phrase meaning roughly, "let [people] do or make [whatever they want
to]"). It means, basically, keep government interference to a minimum
in all matters of trade.
Free trade means no trade barriers. Trade barriers are such things as
TARIFFS and QUOTAS and SUBSIDIES.
TARIFFS are taxes on imports, aimed at protecting domestic producers.
If U.S. cotton growers are being hurt by imports of cheaper cotton from
Guatemala, a tariff on Guatemalan cotton raises the price of imported
cotton and gives U.S. cotton producers an edge in the U.S. market. But
in terms of price, the loser is the U.S. consumer who pays an
artificially inflated price for cotton. In principle, free trade
promises cheaper t- shirts for everybody.
QUOTAS are artificial restrictions on the quantity of goods one country
can sell to another. For example, if GM persuades Congress that
Japanese cars are hurting the Detroit economy, Congress might establish
an IMPORT QUOTA on Japanese cars, to allow only so many in. One result:
the consumer pays an inflated price or has fewer kinds of cars to
Another kind of trade restriction is the EXPORT QUOTA. For example,
Congress might restrict the export of American high technology
products, such as computer chips or software, to keep them from our
Another kind of trade barrier is the SUBSIDY. If the U.S. government
employs taxpayer dollars to invent a new strain of wheat that grows
fast in dry regions, wheat farmers in dry parts of Nebraska are better-
equipped to compete against Canadian wheat farmers.
Free trade advocates envision an end to all trade restrictions, aiming
to give the lowest prices to consumers everywhere and the highest
profits to producers everywhere. And if price and profit were the only
measures of value, free trade would create heaven on Earth.
But trade barriers are not always about price. For example, the U.S.
Marine Mammal Protection Act, a federal law, bans the import of tuna
into the U.S. from countries, like Mexico, whose fishing nets kill more
dolphins than U.S. standards allow. Tuna and dolphins swim together,
and tuna nets catch and kill dolphins needlessly, so U.S. law aims to
protect dolphins by outlawing the import of tuna not caught by
"dolphin- safe" techniques. This is an example of an IMPORT RESTRICTION
established not for price but to protect a valued species of mammal,
EXPORT RESTRICTIONS are also used to achieve social goals having
nothing to do with price. For example, one U.S. law restricts the
export of hazardous wastes on the theory that we're all better off if
hazardous waste isn't spread about the planet willy nilly.
Import and export QUOTAS are sometimes used to preserve resources and
to protect endangered species. For example, the U.S. has sometimes
placed import quotas on Japanese and Icelandic fish products, to put an
economic squeeze on these two countries, to pressure them to stop
killing endangered whales.
SUBSIDIES are used often to protect the environment. For example, the
U.S. government may pay farmers to set aside some land, to allow the
land to rest and become revitalized--a method of soil conservation. The
Canadian province of British Columbia subsidizes its logging industry,
using tax dollars to replant trees in forests after logging because
forests provide many benefits to the land, to rivers, and to humans.
Free trade advocates want GATT and NAFTA to abolish all trade
restrictions--even those that serve social goals like preserving
species, maintaining forests, and stopping the spread of toxic waste.
On August 16, 1991, a GATT panel concluded that U.S. import
restrictions on "dolphin-unsafe" tuna from Mexico constituted an
illegal restriction on trade. THE GATT PANEL RULED THAT IT IS ILLEGAL
FOR MEMBER COUNTRIES TO MAKE DISTINCTIONS BETWEEN PRODUCTS BASED ON THE
MANNER IN WHICH THEY ARE PRODUCED.
On February 7, 1992, another GATT panel concluded that liquor laws in
38 states of the U.S. constituted a subsidy to the U.S. liquor industry
and illegally discriminated against Canadian liquor producers. The
panel further concluded:
...THAT BOTH PARTIES [THE U.S. AND CANADA] AGREED THAT UNDER UNITED
STATES CONSTITUTIONAL LAW, GATT LAW IS PART OF THE UNITED STATES
FEDERAL LAW AND, BASED ON THE COMMERCE CLAUSE OF THE CONSTITUTION,
OVERRIDES, AS A GENERAL MATTER, INCONSISTENT STATE LAW
This interpretation would allow GATT to sue in U.S. courts to overturn
U.S. laws. Even if this radical interpretation is not upheld, it
indicates that, at a minimum, free trade will require federal
governments to pass laws curbing the powers of state and local
Since 1989, Canada and the U.S. have been joined in a Free Trade
Agreement (FTA). Some recent events indicate the direction things are
U.S. logging companies recently sued to stop the provincial government
of British Columbia from subsidizing the replanting of forests in
Canada, claiming it was an unfair subsidy of Canadian loggers. The
government of British Columbia conceded and stopped paying for the
The Canadian timber industry is urging Canada's federal government to
challenge a U.S. law requiring the use of recycled fiber in newsprint
because the Canadian logging industry says such laws are "disguised
non- tariff barriers to trade because Canada does not have the supply
needed of recycled fiber to maintain market share in the United
When the U.S. Environmental Protection Agency in July 1989 announced
its intention to phase out production, import, and use of asbestos over
a seven-year period, the Canadian government challenged EPA's
regulations in a U.S. court, claiming EPA had violated GATT and the
Canada-U.S. free trade agreement. In its legal brief, the Canadian
government challenged U.S. health and safety regulations on asbestos,
saying there is no international scientific consensus to support them.
The U.S. non-ferrous metals industry has challenged Canadian pollution
control programs aimed at reducing emissions from, and improving
workplace safety in, several lead, zinc, and copper mines. The Canadian
government says its goal is to protect workers and reduce acid rain,
but U.S. industries say the effect is to give an unfair competitive
advantage to Canadian smelters. If the U.S. wins the challenge, the
Canadian government may do what the British Columbia government did
when challenged over its tree planting pro-gram: abandon environmental
values to avoid economic retaliation by the U.S.
From the Canada-U.S. free trade agreement alone, the trend is clear:
laws intended to promote recycling, environmental health, sustainable
use of fisheries, reforestation, and acid rain reduction are being
challenged as "non-tariff barriers" and are in danger of being wiped
off the books in both Canada and the U.S.
But it gets worse.
Both GATT and NAFTA will require all participating countries to adopt
international standards for risk assessment. Furthermore, risk
assessments will be required to include cost-benefit analyses. Merely
protecting human health or other values will not be sufficient
justification to establish the validity of a regulation. One will need
to show that the economic advantages outweigh the economic
disadvantages of a regulation. This principle is already embodied in
U.S. pesticide law, widely criticized as among the weakest of U.S.
The public has no direct way to affect free trade negotiations or
disputes. Negotiations take place behind closed doors. Meetings are not
announced. No written record of negotiations is released. Even the
decisions of GATT panels, which are convened to settle disputes, are
secret. However, representatives of multinational corporations are
routinely invited to serve as advisors. Companies like Dow Chemical,
Scott Paper, Weyerhauser, Amoco, Mobil, and General Motors, are invited
to help decide the U.S. position. Is this the future of our democracy?
A recent must-read report from the Environmental Grantmakers
CURRENT NEGOTIATIONS HAVE BECOME A TITANIC STRUGGLE BETWEEN FREE TRADE
AND ENVIRONMENTAL PRESERVATION. IN FACT, TRADE NEGOTIATIONS IN GENERAL
ARE BECOMING A KEY FORUM FOR SHAPING ENVIRONMENTAL POLICY
This is an understatement. Many hard-won victories of the last 50 years
are in danger of being scuttled by free trade fever. Grass-roots
activists need to start paying attention. [More on this next week.]
GET: Thomas A. Wathen, A GUIDE TO TRADE AND THE ENVIRONMENT (New York:
Environmental Grantmakers Association and the Consultative Group on
Biological Diversity, July, 1992). Available from: Environmental
Grantmakers Association, 1290 Avenue of the Americas, Suite 3450, New
York, NY 10104; phone (212) 373-4260. 97 pages. $7.50 for one copy;
$5.00 each for three or more copies. A lucid introduction to a dense
and arcane topic. Highly recommended.
Descriptor terms: free trade; gatt; tariffs; subsidies; marine mammal
protection act; nafta; epa;