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INTRODUCTION TO THE WORLD TRADE ORGANIZATION: Frequently Asked Questions about the WTO

“Chiapas Today” Bulletin No. 361
CIEPAC; CHIAPAS, MÉXICO
July 31, 2003

INTRODUCTION TO THE WORLD TRADE ORGANIZATION
Frequently Asked Questions about the WTO

Note: The following text is from a grassroots educational pamphlet that has just been published by CIEPAC. The full version with cartoon drawings is available in Adobe Acrobat http://www.ciepac.org/publicaciones/public.html#folleomc

1) What is the WTO?

The WTO (World Trade Organization) is an association of 146 member countries, of the 190 countries in the world today. There are another 30 countries that have observer status, a step that precedes becoming a full-fledged member. So almost all the countries in the world are members. There are all types of countries in the WTO, capitalist, socialist, rich and poor countries, very industrialized and also developing countries.

2) What’s the purpose of the WTO?

The principal objective of the WTO is to be a forum where all member countries can reach agreement on lowing tariffs (or taxes) on foreign trade, in other words everything we buy and sell beyond our borders. As we’ll see further on, the WTO has taken on other activities.

The business of the WTO should be of interest to us because the rules that are being decided therein have an impact on our country, its economy, inhabitants, and everything that has to do with our lives, what we eat, what we dress, what we buy and sell.

3) Is this business of lowering trade tariffs good or bad?

Well it’s not as simple as that. Depends on how it works. The way the rules are working now, it’s good for rich countries, and bad for poor countries, because the former control the WTO and use this forum to further their interests. By means of the WTO, rich countries force poor countries to lower trade tariffs and barriers, so that their products can be sold without restrictions, but there is no correspondence in the opposite direction, rich countries don’t always let poor countries’ products in.

Since its inception, the WTO has established rules that restrict national sovereignty. These rules weaken or invalidate domestic legislation designed to defend the environment, or people’s health, or workers’ rights. With the WTO rules, a company can, through its government, sue another country for an environmental law that it might disagree with, alleging that it is an “impediment to trade”.

The suit is reviewed by an internal WTO committee and the “trial” takes place in secret. During the trial there is no access for the public at large, nor can relevant documents be reviewed. In a word, the entire process is hidden from public view. But if the verdict is against the country brought to trial, then it has practically no choice: it must change its laws.

Domestic legislation thus struck down might have been enacted to protect citizens, and what’s worse is that laws are invalidated in a process that is totally undemocratic. But that’s how the WTO is. There is virtually no way for us, the citizens of the world, to express our opinion.

4) But aren’t the poor countries the majority within the WTO?

The poor countries have a very difficult time defending themselves within the WTO. The WTO’s internal rules say that each country has one vote, and that a vote from a rich country is equal to a vote from a poor country. But decisions are not commonly taken through a voting process in the WTO, but rather supposedly by consensus, in other words no deal is struck if all countries are not in agreement.

What happens, then, is that the rich countries gather together and make the rules, without taking into consideration poor countries’ demands. Generally the trade representative of the USA, Canada, the majority of the Europeans, Australia, in all some 20 rich countries, who then invite some developing countries, whose governments are enthusiastic supporters of “free trade”. It is in these restricted meetings that deals are struck, and then immense pressure is brought to bear on the other hundred and some-odd countries. A poor country that protests, that doesn’t accept the rich countries’ rules, is threatened by harsh economic sanctions. We reiterate: the WTO is totally undemocratic. The rich countries impose their interests on the poor, in spite of the fact that the latter are the majority.

5) Why don’t the poor countries leave the WTO if it’s not in their best interests?

They don’t leave because they would face threats from the rich countries. The rich countries could say “well, if country X leaves, we will no longer buy anything from that country, or even sell it anything.” Country X would in essence be isolated, it would be unable to trade with almost any country, nor would it be able to sell its goods to those who buy the most, namely the rich countries, nor could it buy anything from them either.

Let’s see a pertinent example from a poor country. Imagine the case of Mexico if, for example, it left the WTO and the United States stopped buying its goods.

Of everything Mexico sells abroad, almost all of it (90%) is sold to the USA. The same the other way around. Almost everything (90%) Mexico buys abroad comes from the USA. If the United States staged a boycott of Mexican goods, the country would suffer serious economic problems. In fact, after having joined the WTO, no country has left, precisely because of these types of threats.

6) But why, then, do poor countries join the WTO if things go so wrong for them once they’re members?

Basically for the same reason. If Mexico were not a member of the WTO, the United States could say, “You know what? I’m not going to trade anything to you.” Mexico would loose a tremendous amount of business abroad. Obviously though, the largest part of the products Mexico sells abroad come from large multinational corporations (MNCs). What would happen in this case is that these MNCs would simply stay away from Mexico, they would not invest in the country, set up shop, etc. And those already in the country would leave. Many jobs would be lost and the country would face enormous economic problems.

There is another reason that explains why poor countries remain within the WTO. The WTO came into existence on January 1, 1995, but it just didn’t pop out of nowhere. It began as a very long process know as the GATT (General Agreement on Trade and Tariffs), that arose in 1947. The GATT was a more flexible organization, that gave poor countries greater possibility of backsliding on certain rules, or having more time to comply. Slowly, the screws were turned to limit exemptions, and in the process the WTO was formed. At that point it became very difficult for countries to leave the WTO.

7) It seems then that we’re in a very tight spot.

That’s right. We’re in a game with rules we did not make. The game is capitalist trade, and the rules have been drawn up by the economically powerful countries, and by the multinational corporations, and obviously the rules benefit those countries and companies. And if that weren’t enough, both the IMF (International Monetary Fund) and the World Bank also pressure our poor countries to undertake changes in our constitution, laws, so that they will benefit the MNCs.

8) But wait. Can you give me an example of how this works? I don’t understand why my country can’t reject unjust treatment, if the rules don’t benefit us.

Let’s see an example. It has to do with corn. If the WTO decides to eliminate all restrictions on corn coming into our country, corn can flood in from anywhere, at any prices, perhaps cheaper than the price that the domestic corn producer is asking for his harvest. If much cheap corn is entering the market, the producer faces a market price below what it cost him/her to grow it. What options are available? If the producer doesn’t lower the price, he’s stuck with his corn, but if he lowers it, he comes out losing. It no longer makes sense to plant corn.

The worse part is that this is already happening. A lot of very, very cheap corn is flooding into Mexico from the United States because the US government is paying multi-million dollar subsidies to the large agro-business companies that deal in corn.

This is why producers from Mexico and Central America are increasingly abandoning corn production, or perhaps they continue in order to feed themselves, but still, for lack of an income many have to migrate to the larger cities, or to the United States, to search for work.

If our country were to say “this is ridiculous! Let’s impose restrictions on the entry of so much cheap corn!” then the WTO’s rules would allow other countries to recuperate from our government what has been lost in foregone sales. If the United States said “we’re losing 100 million dollars a year because Country X has restrictions on our corn exports”, it would be able to recuperate than amount from Country X.

9) You know, I’ve heard the example with corn. Several weeks ago someone came to our community to talk about the Free Trade Area of the Americas (FTAA), and he gave the same example.

Yes, that’s right, because the FTAA is similar to the WTO, insofar as they’re practically identical rules are being imposed on us. The difference is that with the FTAA rules will apply only to the 34 countries in the Americas, i.e., North, Central and South America, and the Caribbean (excepting Cuba). The FTAA is not yet in force, since its rules are still being negotiated. But the FTAA will work like the WTO. It will not benefit us at all. It’s worth mentioning that in many countries in the Americas a popular referendum is being held during 2003 to gather our opinion on the FTAA.

10) But it seems to me that there is a lot of duplication. Why are rules being negotiated in the FTAA if the same rules are found in the WTO?

You’re right. It seems that the rules are being imposed on us from all sides. We’re being fenced in. In fact, they are virtually the same rules that Mexico has already had to face in the North American Free Trade Agreement (NAFTA) that former president Salinas signed with the United States and Canada, without asking our opinion. NAFTA is the reason why Mexican campesinos (subsistence farmers) have faced such an uphill battle since 1994 when it began. That’s why campesino organizations, like “The Countryside Can’t Stand Anymore”, have been formed. These rules were designed with rich countries and their MNCs in mind, definitely not our needs.

We’re not even consulted!

11) But you say that the WTO is still negotiating more rules. What’s that about?

Yes, now rich countries and MNCs want even more rules to favor them for things that are not strictly products, such as corn, coffee or electronic gadgets. The WTO used to make rules regarding products and commodities, but now it will also be regulating new areas, one called “services” another “intellectual property”.

It’s easy to understand. The “services” part refers to the fact that the same types of rules that we’ve previously discussed will apply to things we didn’t used to think could be bought and sold. For example the delivery of water for human consumption in a city, health services as provided in state-run clinics and hospitals. But it now turns out that the rich countries, the MNC and the multilateral banks (World Bank, International Monetary Fund) say that these services, presently handled by the government should be sold off to the private sector. We’ve seen this quite a lot in Mexico over the past few years. Before the telephone company, Telmex, used to belong to the state, now it’s the property of the richest man in Latin America, Carlos Slim. The same goes for the banks. Before, they were state run, and now almost all of them are owned by foreign concerns.

We know what happens when these services are transferred to the private sector. Rates and tariffs go through the roof, and only better-off folks have access to them.

This is what’s in the works for everything run by the government, its health services, education, electricity, sanitation, garbage collection, even water distribution in the cities, and it even extends to rivers, lakes, underground water tables, in other words, things from nature that we thought belonged to EVERONE.

12) Is that why President Vicente Fox wants to sell the Federal Electricity Commission?

Exactly! He’s totally in agreement with privatizing everything. There are still two large enterprises being run by the government: PEMEX (the state oil company) and the Federal Electricity Commission (FEC). Well Fox has been lobbying Congress to approve his “electrical energy reform”, which is nothing other than the privatization of the FEC. And he would like to do the same with PEMEX, but he doesn’t dare, at least not yet, because he knows that he would have to face the wrath of the Mexican people.

But Fox IS selling the FEC and PEMEX in other ways, by bits and pieces, hoping we won’t notice. Soon foreigners will be able to operate gas stations, foreign companies will be able to generate and distribute electrical energy, activities which, up to now, had been set aside by the Constitution for the state or for Mexicans.

With the changes being sought by the rich countries and MNCs within the WTO, Mexico would be forced eventually to privatize everything, including water, light, education and health services, presently in the hands of the state. And not even Congress could oppose this.

We’ve already witnessed in the recent past how our Constitutions has been manhandled on numerous occasions to let MNCs do what they please in our country.

These services are what will be negotiated in September, 2003 when the trade representatives of the WTO member countries meet in Cancún, Mexico.

And the other aspect being negotiated at Cancún is what we mentioned as “intellectual property”. Our old friends, the rich countries and the MNCs, want everything put into private hands, even life itself. This means that a company could come to, say, Chiapas, a state with a great deal of biodiversity, with thousands of plants, animals, microorganisms, bacteria, take something away, perhaps a plant, maybe even some microbes in the earth, and take out a patent, which would give it the right to sell the properties of that organism, and charge for its use anywhere in the world.

If the WTO approves what large companies, such as Monsanto, as proposing, what could happen is that the seeds that campesinos save from harvest time to plant next season will now be subject to payment to the company that holds the patent on those seeds.

What “intellectual property” means is that we might never have access to inexpensive medicines. The pharmaceutical companies have brought much pressure to bear in order that very strict rules be established within the WTO regarding the making of medicines and drugs. In fact, they are the same companies that wrote the rules that are now being negotiated in the WTO. Strictly speaking they would like to prohibit certain poor countries, such as Mexico, Brazil and India, from having the right to make generic medicines, equally as good as “patent” medicines, but much cheaper.

13) And what is going on with genetically modified organisms (GMOs) within the WTO?

Well, as you can imagine, the MNCs that import and export agricultural commodities want genetically modified foods to circulate freely throughout the world.

In order to benefit its multinational corporations, world leaders in GMOs, the United States is lobbying diligently to knock down what has been called the “cautionary principle”, that the scientific world has used for centuries. The principle states in essence that when we are unaware of the effects of something new, it’s best to be very careful, very cautious, and wait some years before its indiscriminate use.

This is precisely the case of GM foods. We don’t know about effects that they might have on the environment and in our bodies if we consume these foods. The precautionary principle suggests that we not use GM foods until more studies can establish their effects. But the multinational corporations are fighting the principle and reject establishing a difference in the treatment of GM foods.

The rules have been written to this effect. With rules written to order, companies could not be forced to establish the safety of GM foods, and it would fall to civil society to check on the safety or dangers of these foods. The weight of the proof shifts from the company to the consumer.

But scientists know that it is almost impossible to check all the possible effects from GM foods, especially in the short run. This will only be known with time, but companies have their sights set only on short-term profits.

14) This is incredible! But what can we do? None of this is working in our favor! What can we do to stand up and be counted?

One way is to take advantage that the WTO will be meeting in Mexico, in Cancún, from September 10-14, 2003. We can mobilize in our communities, in our organizations, and help make everyone understand what’s happing in the WTO, that the cards are stacked against us, our lives, our way of being, and that we must protest.

We can undertake civil resistance to the multinational corporations, by not consuming their products. Another way is by establishing autonomous communities, which are already working among several indigenous peoples in various countries.

Many folks are already organizing to travel where the trade ministers and representatives of the WTO will be meeting and to tell them that we are against the WTO, and its rules and its intent on privatizing everything. Other folks will be protesting without going to Cancún, perhaps in a nearby city, at the state’s capital, but a clear message will be sent, a cry of NO to the WTO, NO to ALCA, NO to privatizations.

Join us in Cancún September 10-14.
Let’s Derail the WTO!
Let us build a world from the bottom up, based on civil society and global solidarity!

(Translated by Miguel Pickard, for CIEPAC, A.C)
Miguel Pickard
The Center for Economic and Political Investigations of Community Action, A.C. CIEPAC,
CIEPAC is a member of the Movement for Democracy and Life (MDV) of Chiapas, the Mexican Network of Action Against Free Trade (RMALC) www.rmalc.org.mx, Convergence of Movements of the Peoples of the Americas (COMPA ) www.sitiocompa.org, Network for Peace in Chiapas, Week for Biological and Cultural Diversity www.laneta.apc.org/biodiversidad, the International Forum "The People Before Globalization", Alternatives to the PPP http://usuarios.tripod.es/xelaju/xela.htm, and of the Mexican Alliance for Self-Determination (AMAP) that is the Mexican network against the Puebla Panama Plan. CIEPAC is a member of the Board of Directors of the Center for Economic Justice http://www.econjustice.net and the Ecumenical Program on Central America and the Caribbean (EPICA) http://www.epica.org.

Note: If you use this information, cite the source and our email address. We are grateful to the persons and institutions who have given us their comments on these Bulletins. CIEPAC, A.C. is a non-government and non-profit organization, and your support is necessary for us to be able to continue offering you this news and analysis service. If you would like to contribute, in any amount, we would infinitely appreciate your remittance to the bank account in the name of:

CIEPAC, A.C
Bank: Banamex
Account number: 7049672
Sucursal 386
San Cristóbal de las Casas, Chiapas, México.
You will also need to use an ABA number: BNMXMXMM

Thank you! CIEPAC
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__________________________________________________________________________________________

CIEPAC, A.C.
Centro de Investigaciones Económicas y Políticas de Acción Comunitaria
Calle de La Primavera # 6
Barrio de la Merced
29240 San Cristóbal, Chiapas, MEXICO
Tel/Fax: en México 01967 674-5168
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