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#694 - Steps Toward A Corporate State, 26-Apr-2000

Governments in the U.S. -- federal, state, and local -- together
spend more than a trillion dollars of taxpayers' money per year.
That's a thousand billion dollars each year, representing
roughly 1/6 of total U.S. Gross National Product. By any
measure, it is a huge sum of money.[1]

Many people concerned about the decline of their communities
have begun to realize that government purchasing (often called
procurement) has great potential for promoting environmental and
social sustainability -- a potential that has barely been

By spending money strategically, governments can

** reduce environmental damage by (for example) purchasing
recycled materials; 48 out of the 50 states in the U.S. have
laws directing state agencies to purchase recycled materials.[2]

** create jobs in local communities and strengthen regional
economies by purchasing from local firms;

** assist women-owned businesses, minority-owned businesses, or
businesses that avoid the use of environmentally-destructive
products such as tropical hardwoods, plastics, chlorinated
solvents, or unnecessary pesticides;

** promote fair labor practices. Dozens of cities and counties,
including Pittsburgh, Pa., Cleveland, Oh., and San Francisco,
Ca. have local ordinances banning purchase of products made in
sweatshops. Similarly, two dozen U.S. cities now require
companies doing business with the city to pay their workers a
"living wage."[3]

** reward firms that adopt innovative technologies, such as
chlorine-free chemistry, solar power, or non-toxic cleaning

In sum, government purchasing policy offers citizens an
opportunity to make both governments and corporations
accountable to taxpayers. Citizens can use government purchasing
policy to guide their regional economy onto the path most likely
to improve their quality of life. To put it another way,
government purchasing offers citizens an opportunity to impose
human values on their local and regional economy.

Now, however, some of these U.S. laws have been declared illegal
by the World Trade Organization (WTO), headquartered in
Switzerland, and many similar laws are now under attack by
corporations. It is crystal clear that the combined corporate
power of Japan, Europe and the U.S. is now aiming to make
government purchasing policy off-limits to democratic

Despite the anti-WTO protests in Seattle last fall, the WTO has
not changed in any fundamental way. It is a powerful new system
of world governance, designed and run by corporate lawyers who
are not elected, who do not answer to the people they govern,
and who make decisions behind closed doors. Their decisions are
binding and can only be appealed once, to a three-member
tribunal composed of other WTO bureaucrats, who are themselves
usually corporate lawyers.

To a historian, it seems reasonable to conclude that the WTO and
the "free trade" policies it was set up to enforce are the most
direct threat to democracy and popular sovereignty since the
rise of the corporate state under National Socialism in Germany
in the late 1930s.

The corporate media in the U.S. describe the purpose of the WTO
as "globalization" -- a term so vague that it is meaningless.
The media never say so in plain language but the overarching
goal of the WTO (and of "free trade" policies in general) is to
diminish the power of governments, and thus to reduce
governments' capacity to influence the behavior of transnational
corporations. The WTO was set up as a forum in which
transnational corporations can challenge and effectively repeal
restrictions imposed upon them by nations (or by sub-governments
within nations). In other words, rather than "globalization,"
the real purpose of the WTO is "global corporatization" --increased
corporate control over all the nations and economies
of the world.

Created by international treaty in 1995, and now boasting 134
nations as members (nations that are not members can be iced out
of international trade), the WTO has written 700 pages of rules
which add up to an enforceable commercial code governing markets
and trade world-wide -- a code enforceable not by nation-states
but by the WTO itself. One of those rules is called the
Government Procurement Agreement (GPA).[4]

The GPA basically says that governments can set standards for
the PERFORMANCE of purchased materials but cannot set standards
based on METHODS OF PRODUCTION. Therefore, government purchasing
policies cannot discriminate against materials produced by child
labor or slave labor, for example. Likewise, requiring that
items be manufactured from recycled materials would be
prohibited under the GPA.

Thus the GPA provides one more way for corporations to strike
down laws that curtail their freedoms. Corporations in the
European Union, Canada, and Japan have been complaining for at
least a decade that many U.S. laws are "illegal barriers to
trade" meaning barriers to corporate freedom.[5] If such laws
can be struck down in the U.S., they can be struck down anywhere
because the U.S. is the 900 pound gorilla within the WTO. To
avoid enraging the gorilla, foreign corporations have been
moving cautiously, looking for a strategic opportunity to
strike. Now the GPA has provided an opportunity for the first

The immediate issue is the country called Myanmar, formerly
known as Burma. It is widely acknowledged that the military
dictatorship in Burma suppresses political opposition, tortures
and murders its opponents, harnesses the populace into slave
labor battalions (sometimes to work for U.S. corporations that
have invested heavily in Burma, such as Unocal) and generally
violates universally-recognized human rights.[6,7]

Borrowing a technique that was used by 23 U.S. states in the
fight to end apartheid in South Africa, a dozen U.S. cities
passed local ordinances in 1995-1996 preventing local government
from doing business with companies doing business in Burma.
(Other U.S. cities have similar laws aimed at punishing
dictators in Nigeria, Tibet, Indonesia and Cuba.[8]) In 1996,
the state of Massachusetts passed a "Burma law," and this got
the attention of corporations world-wide. (Although the GPA
explicitly binds states and does not explicitly bind
municipalities, there is widespread understanding that municipal
laws will be challenged under WTO rules. For example, when
Maryland tried to pass a law preventing state government from
signing any contracts with the government of Nigeria or with any
firms doing business in Nigeria, the Clinton administration
opposed the legislation in testimony before the Maryland
legislature, saying, "All state AND LOCAL sanctions are
perceived to violate the rules, they can cause counterproductive
disagreements.... [W]e would like to work with you to ensure
that we don't expose ourselves to a potential WTO

In 1998, Japan and the European Community (EC) each filed a
formal complaint with the WTO, seeking to overturn the
Massachusetts Burma law, basing their objection on Section
XIII.4(b) of the GPA. However, a group of 550 U.S. corporations
calling themselves the National Foreign Trade Council beat them
to the punch and sued Massachusetts in a state court, arguing
that the Constitution reserves foreign policy decisions to the
Executive Branch of the federal government. Predictably the
Clinton/Gore administration sided with the corporations against
Massachusetts. The state court and a federal appeals court both
ruled against Massachusetts.

"If such a ruling had come out a decade ago," said Massachusetts
representative Byron Rushing, who sponsored the Massachusetts
law, "Nelson Mandela might still be in prison today."[10] Now
the U.S. Supreme Court will decide the issue. However, the
European Community and Japan have announced that, if the Supreme
Court rules incorrectly, they will ask the WTO to overrule the
U.S. Supreme Court. The corporate rulers of Europe, Japan and
the U.S. agree on this: the public has no right to impose moral
standards on economic activity. The economy is not subject to
democratic control. The Government Purchasing Agreement is where
they are making their stand, campaigning to diminish the
vestiges of democracy wherever they remain.

The good news is that this corporate assault on democracy offers
unprecedented opportunities for getting the public involved.
Nearly everyone can see that taxpayers have a basic right to
spend their money as they see fit. With a modest amount of
information, people can see the good that can come from
well-crafted government purchasing policies. Such policies allow
people to improve their local and regional economies, while
rebuilding peoples' confidence that government can serve their
needs. Lastly, the WTO assault on government purchasing makes it
possible for people to understand what "free trade" and the WTO
are really about -- they are really about removing the last
remnants of popular sovereignty and substituting, in their
place, the elements of a corporate state.

Thus this brazen corporate campaign offers us all many
opportunities to take the offensive, to re-assert control over
our regional economies.

For legal technical assistance on government purchasing
policies, contact Robert Sturmberg, Harrison Institute for
Public Law, Georgetown University Law Center, Washington, D.C.;
phone 202-662-9600. See http://www.law.georgetown.edu/clinics/-hi/
(omit the hyphen). For further information about best
practices in government purchasing policies, get in touch with
Sustainable America, 42 Broadway, Suite 1740, New York, NY
10004-1617; phone: 212-269-9550; see www.sustainableamerica.org.

--Peter Montague (National Writers Union, UAW Local 1981/AFL-CIO)


[1] Ralph Nader, Eleanor J. Lewis and Eric Weltman, "Shopping
for Innovation," AMERICAN PROSPECT No. 11 (Fall 1992), pages
unknown. Available at www.prospect.org/archives/11/11lewi.html.

[2] Only Alabama and Wyoming have no such laws. See: Alaska
Stat.  36.30.337 (Michie 1998); Cal. Pub. Cont. Code  12310
(West 1998); Del. Exec. Order 82 (1990); Fla. Stat. Ann. 
287.045 (West 1998); Haw. Rev. Stat. 103D-1005 (1997); 415 Ill.
Comp. Stat. 20/3 (West 1998); Ind. Code  5-22-15-16 (Michie
1998); Iowa Code Ann.  216B.3 (West 1997); Kan. Stat. Ann. 
75-3740b (1997); Ky. Rev. Stat. Ann.  45A.520 (Banks-Baldwin
1998); La. Rev. Stat. Ann.  30:2415 (West 1998); Me. Rev. Stat.
Ann. tit. 5, 1812 (West 1997) (recycled materials other than
paper); Md. Code Ann., State Fin. & Proc. 14-402 (1998); Minn.
Stat. Ann.  16B.121 (West 1998); Miss. Code Ann.,  49-31-7
(1998); Mo. Ann. Stat. 34.031 (West 1997) (recycled solid waste
materials); Mont. Code Ann.  75-10-806 (1997); Neb. Rev. St.
81-15,159 (Michie 1998); Nev. Rev. Stat.  386.417 (1997); N.H.
Rev. Stat. Ann.  21-I:11 (1997); N.M. Stat. Ann. 13-1-135.1
(Michie 1998); N.Y. Pub. Auth. Law  2878- a (McKinney 1998);
N.C. Gen. Stat. 130A-309.14 (1997); Ohio Rev. Code. Ann. 
125.082 (West 1998); Okla. Stat. Ann. tit. 74,  85.53 (West
1998); Or. Rev. Stat.  279.570 (1997); R.I. Gen. Laws  37-2-76
(1997); S.C. Code Ann.  44-96-140 (1997) (recycled and
recyclable materials); S.D. Codified Laws  5-23-41 (Michie
1998); Tex. Health & Safety Code  361.426 (West 1998); Vt.
Stat. Ann. tit. 3, App. Ch. 7, Exec. Order 24-86 (recycled
materials and nonwasteful packaging); Wash. Rev. Code Ann. 
43.19.A.005 (West 1998) W. Va. Code  20-11-7 (1998); Wis. Stat.
Ann. 16.72 (1998).

[3] See www.consumerscouncil.org/ccc/policy/amic2599.htm.

[4] The text of the Agreement on Government Procurement is
available at www.wto.org/wto/govt/agreem.htm.

[5] The latest (63-page) version of the EU's complaint can be
found in PDF format at http://europa.eu.int/comm/trade/pdf/-usrbt99.pdf
(omit the hyphen).

[6] U.S. Department of Labor, Bureau of International Labor
U.S. Department of Labor, September 1998). Available at

[7] David E. Sanger, "Unocal Signs Burmese Gas Deal; U.S. May
Ban Such Accords," NEW YORK TIMES February 1, 1997, pg. A4.

[8] Quoted in Lori Wallach and Michelle Sforza, WHOSE TRADE
DEMOCRACY (Washington, D.C.: Public Citizen, 1999), pg. 188.

[9] Linda Greenhouse, "Justices Weigh Issue of States' Making
Foreign Policy," NEW YORK TIMES March 23, 2000, pg. A20.

[10] Carey Goldberg, "Limiting a States's Sphere of Influence,"
NEW YORK TIMES November 15, 1998, pg. A22.