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Riders Of The Apocalypse

Structural Adjustment

new internationalist
issue 257 - July 1994

Riders of the apocalypse
It would be a disaster if there were no GATT agreement, we were told.
But what about the disasters now there is one? Pratap Chatterjee reports
on the birth of Bretton Woods’ newest baby, the World Trade Organization.

Five hundred horseriders galloped across the field towards the king’s tent and then, stopping short, fired their rifles into the air. It was the perfect backdrop for the holiday photographs of the thousands of delegates and journalists who were watching.

The spectacular firework display that followed and the traditional Moroccan feast with roasted sheep weighing down the tables seemed an appropriate way to celebrate the 285 billion dollars that delegates promised would be added to the world’s wealth every year by opening up markets to free trade.

The delegates, who represented 125 countries, were gathered in Marrakech in April for the finale of seven years of negotiations as part of the General Agreement on Tariffs and Trade (GATT). They signed GATT’s Final Act, the first step towards transforming it into a new formal body, the World Trade Organization (WTO).

Peter Sutherland, director-general of GATT, seemed annoyed when a journalist approached him at the entrance to the King’s tent and asked him if it were really true that more competition would benefit everyone. ‘Of course everyone can win,’ he snapped.

Moroccans aren’t quite so sure. They point out that if you take away the vowels from Le GATT, as it is called in French, you are left with an Arabic word that means crumbs. And a taxi driver who picked me up was quite sure what this was all about. ‘Ah, you are here for the American GATT,’ he said sarcastically. ‘Will Morocco get anything?’

Peter Madden, of the British charity Christian Aid, says it’s unlikely. He points out that even the World Bank’s own economists estimate poor African countries will lose 2.6 billion dollars a year, mainly because of the higher prices of food they import.

The headquarters of GATT are actually in Geneva, not in the US. It is a short ten-minute walk away from the United Nations complex, down the Avenue of Peace on the way to Lake Leman, on whose shores the city is built. Just before the Egyptianite building of the GATT, on the left, is a garden with several greenhouses. Two statues of naked women flank the steps into the building. These – the greenhouses holding exotic plants from distant tropical lands and the naked women – could stand as appropriate symbols for those who will lose from GATT’s new free-trading order.

Activists say the Final Act will create a monopoly over plant and animal forms by allowing companies to patent any useful products – yet it says nothing about the rights of people to the resources of their own neighbourhoods. Many medical products are derived from natural compounds that exist in the forests and swamps of tropical countries. But the right of those countries to benefit from the sale of their own natural wealth is being eroded as transnational corporations race to take out patents on their produce.

Take the neem tree. It has been known for centuries in India for its remarkable number of uses – its twigs are natural toothbrushes, its leaves a natural pesticide, while the extract of its active ingredient, Azadirachtin, is used in soaps and contraceptives. An attempt to patent this extraction process in India in 1968 under the Indian Central Insecticide Board was disallowed on the grounds that it was common knowledge.

But in recent years WR Grace, a US company, has applied for and received a US patent for the extraction process. Under GATT rules, in future no Indian company will be able to use this common process without paying a hefty royalty to Grace.

There are many examples of the devastating impact that free trade has on the environment. Uncontrolled timber sales have resulted in the annihilation of forests from Malaysia to Brazil. Coal mining has ruined landscapes in India; copper mining has destroyed water supplies on the Pacific island of Bougainville; while industrial production has resulted in the wholesale pollution of water and atmosphere everywhere.

It is not surprising then, that activists have been demanding that the environmental impact of the new free-trade treaty be examined. And as a last-minute compromise this made it onto the agenda at Marrakech. When activists figured out what the agenda item was, however, they were horrified. Environmental measures – such as packaging requirements or taxes to prevent environmental degradation – were to be investigated as potential distortions of free trade.

The negotiators wanted to know what effect Multilateral Environmental Agreements (MEAs) had on free trade. The agreement, for example, that bans the shipment of toxic waste for recycling or final disposal across international boundaries, came under their microscope.

Also up for scrutiny were the ‘trade sanctions’ part of the dispute-settlements mechanism meant to pressure countries to protect the ozone layer and their own endangered species.

The WTO will also look at the German system of Duales System Deutschland that forces the recycling of all packaging. Environmental charges and taxes such as that on carbon fuels to prevent global warming will be examined as well as clean air and water laws and access to information about such laws. If the WTO rules that these environmental measures are distortions of free trade, countries which have adopted them may be forced to remove them.

The WTO’s theory is that developing countries’ environmental standards will rise as they adapt to the world market. Yet, far from causing standards to rise, GATT rules require that government laws on such issues as the use of pesticides be watered down. GATT standards for the use of DDT are up to 50 times worse than those in the US.

Glen Marshall of the US South-west Ohio Trade Campaign worries that ‘through GATT we may lose all the gains already made through environmental activism’. For Cameron Duncan of Greenpeace: ‘The GATT rules promote the right of all to exploit and none to manage’.

Duncan gives as an example the US challenge to a Canadian regulation that required all salmon and herring caught off Canada’s west coast to be processed domestically – a rule intended to protect local jobs. A GATT panel ruled against Canada, claiming the policy was not simply aimed at conservation.

Yet if GATT allows foreign companies to come in and exploit Canada’s fish stocks, what are the locals supposed to do? What happens when the fish stocks run out if there are no rules to prevent overuse of the resource?

The US wanted exactly the opposite when it demanded that Mexican fishing vessels stop using tuna-fishing nets which were snaring dolphins. To its credit, GATT ruled against the US, consistent with its ruling against Canada.

But as most environmentalists agree, these rulings went against dolphin and salmon. They may have protected Mexican jobs but they cost Canadian jobs; jobs gained at one site generally mean jobs lost at another.

The area of product labelling for environmental impacts is even more difficult. Eco-labelling exercises have been used to discriminate against imports of tropical timber from countries like Brazil and Indonesia. These countries are felling their forests at a rate that is wiping out thousands of species and poses hazards such as landslides from denuded mountain slopes.

But as Brazil’s environment minister Reuben Ricupero retorts, making paper from recycled materials causes other hazards by the use of chemicals to bleach out the inks. Suggestions that ‘environmentally preferable products’ should be labelled, are no easier to define. Take cars. US cars use half as much fuel as they did 20 years ago to travel any given distance. Surely the new cars are preferable to the old gas-guzzlers? But in fact because the cars are cheaper to run, US cars are on average used to travel twice as far. So the amount of fuel consumed has not decreased.

It is this that activists say is the crux of the problem – the overconsumption of resources. Free trade promotes consumption. Solutions that are truly environmentally friendly need to reduce consumption to sensible levels. But environmentalists will have to work very hard to redress the balance in the new WTO. For as GATT environmental director Richard Eglin points out ‘This is a government’s agenda, not an activist’s agenda’.

Pratap Chatterjee is the Washington correspondent for Inter-Press Service.


Leonor Briones – Philippines

A soft-spoken professor of public administration from the University of the Philippines, it is hard to imagine Leonor Briones as a warrior against the ravages of structural adjustment. Affectionately known as Liling to her friends, her day takes her far from the ivory towers of academe. It may start with her piece on Philippine economic policy greeting fellow citizens at breakfast. The morning may pass lobbying Senators on a debt-related bill. In the afternoon there’s a class to teach. In the evening an inspirational speech rallies the crowd against the latest IMF-imposed austerity package.

Liling is a Sixties-generation activist who got the bug for politics while taking her masters degree in fiscal administration in 1968. In 1972 she had to go into hiding from the Marcos dictatorship and had her first child while still underground. She was allowed to return to a teaching post at the University in an amnesty in the mid-1970s. Later she served on the government Commission on Audit. As the 1970s drew to a close her first articles on the impending Philippine debt crisis sought to raise the alarm.

As debt piled on debt, ruthless austerity programs were needed just to pay the interest. Resistance mounted. When the Freedom from Debt Coalition (FDC) held its founding convention it was natural that Liling be in attendance. To her surprise she shortly found herself its president. The Coalition has grown to an impressive size. It now represents 187 popular organizations from across the country and has three regional offices as well as five other volunteer-run chapters.

The FDC have launched a highly successful popular-education campaign and with the help of everything from comics to videos they have been able to put debt and development issues at the centre of Philippine policy debates. The Coalition has proved that economics is best not left to the ‘experts’ with effective campaigns to put a cap on debt service and against the IMF standby agreement. Most recently the FDC was the linchpin of the Kilusang Rollback Movement which defeated an IMF-inspired increase in the oil levy in February 1994.

Liling’s leadership has been crucial to the FDC’s growth and effectiveness. Her government experience and contacts helped bypass stonewalling technocrats to get vital economic data. She has proved herself effective at the nuts and bolts of institution building and has led the FDC from an oppositional to a propositional stage of political development – constructing an alternative to World Bank and IMF prescriptions is now clearly on the agenda. To this end the Coalition has launched a campaign for a People-Oriented Budget which would democratize the financial system as well as restructure taxes. That the campaign is taken seriously is due in no small measure to Liling’s thoughtful guidance.

John Gershman

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New Internationalist issue 257 magazine cover This article is from the July 1994 issue of New Internationalist.
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