Who's In Charge of the Global Economy?

Maude Barlow / Council of Canadians Fall 1999

Message from the Chair

Maude Barlow is the National Chairperson of the Council of Canadians.

The dominant development model of our time is economic globalization, a system fuelled by the belief that a single global economy with universal rules set by global corporations and financial markets is inevitable. Everything is for sale, even those areas of life once considered sacred. Increasingly, these services and resources are controlled by a handful of transnational corporations who shape national and international law to suit their interests. At the heart of this transformation is an all-out assault on virtually every public sphere of life, including the democratic underpinning of our legal systems.

The most important tool in this assault has been the creation of international trade agreements whose tribunals and enforcement measures supersede the legal systems of nation-states and supplant their judicial processes by setting up independent dispute resolution systems that exist outside the confines of their courts and their laws.

For instance, the North American Free Trade Agreement (NAFTA) gave American corporations Chapter 11, the first "investor state clause" in any international agreement. For the first time, a corporation can sue a foreign government if that government enacts any law, practice or measure that negatively affects the company's profits or reputation, even if that law, practice or measure has been enacted by a democratic legislature for legitimate environmental, social, health or safety reasons.

There are several active Chapter 11 cases now in process. The first was lodged by Ethyl Corp. of Virginia, when Canada legislated a ban on the cross-border sale of MMT - which Prime Minister Chrétien called a dangerous neurotoxin - and Ethyl sued the Canadian government for $350 million in damages for lost future profit. Rather than allow the case to go to a NAFTA panel where it feared it would lose, the Canadian government reversed its ban in July 1998, paid Ethyl $20 million in compensation for its "trouble," and gave the company a letter of apology containing a statement that there is no scientific evidence that MMT poses a threat to human health or the environment.

The first NAFTA Chapter 11 case on water was filed in the fall of 1998. Sun Belt Water Inc. of Santa Barbara, California, is suing the Canadian government because the company lost a contract to export water to California when the government of British Columbia banned the export of bulk water in 1991. Although Sun Belt's agreement was with a Canadian company, Snowcap, and not the B.C. government, Sun Belt alleges the ban contravenes NAFTA and is seeking $400 million in damages. The corporation understands NAFTA gives it the right to shape Canadian government policy. "Because of NAFTA, we are now stakeholders in the national water policy in Canada," declared Jack Lindsay, its chief executive.

The other major global institution that is swiping national legal jurisdictions is the World Trade Organization (WTO). The WTO enforces a number of international trade agreements on goods, services, intellectual property rights, food safety, animal and plant health, financial services, food, agriculture policy, investment, technology and telecommunications.

What makes the WTO so powerful is that it has both the legislative and judicial authority to challenge laws, policies and programs of countries that do not conform to WTO rules and strike them down if they are seen to be too "trade restrictive." Cases are decided - in secret - by a panel of three trade bureaucrats. Once a WTO ruling is made, worldwide conformity is required. A country is obligated to harmonize its laws or face the prospect of perpetual trade sanctions or fines.

The WTO, which contains no minimum standards to protect the environment, labour rights, social programs or cultural diversity, has already been used to strike down a number of key nation-state environmental, food safety, and human rights laws. Recently, U.S. laws to protect endangered Asian sea turtles from shrimp nets and dolphins from drift nets have been successfully challenged at the WTO. All WTO agreements set out detailed rules intended to constrain the extent to which governments can regulate international trade, or otherwise "interfere" with the activities of large corporations. WTO agreements provide extensive lists of things that governments can't do.

Says U.S.-based Public Citizen, "The emerging case law indicates that the WTO keeps raising the bar against environmental laws." Renato Ruggiero, former WTO secretary-general, has admitted that environmental standards in the WTO are "doomed to fail and could only damage the global trading system." Another WTO official was quoted in the Financial Times in April, 1998, saying, "The WTO is the place where governments collude in private against their domestic pressure groups."

Democracy is a fragile creature. Through massive privatization and deregulation, people all over the world have already lost control over many areas of social and environmental policy. Now, backed by the International Chamber of Commerce that wants to establish a binding global legal system to protect transnational corporate interests, citizens are losing their democratic rights to a fair, open and just legal system as well.

In friendship,

The Council of Canadians
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