When he was vice president and head of the Presidential Task Force on Regulatory Relief, George Bush helped create the tidal wave of deregulation that swept over the United States in the 1980s. Now, as president, Bush hopes to promote his deregulatory agenda on a global scale. The venue through which he intends to accomplish these aims is the General Agreement on Tariffs and Trade (GATT), an international trade agreement to which approximately 100 countries adhere.
Domestic deregulation helped bring about crises ranging from the savings and loan scandal to an epidemic of workplace injuries (and some deaths). International deregulation poses even greater dangers, threatening to impinge on Third World sovereignty and development, endanger the environment and consumer safety, and eradicate the jobs of U.S. family farmers and textile workers.
Bush's accomplices in his deregulatory scheme are the most internationally-oriented U.S. multinational corporations. Companies such as Cargill, the private grain trader; American Express; and Pfizer, a pharmaceutical manufacturer, have helped shape the U.S. position in the current GATT negotiations, known as the Uruguay Round. The overarching goal of the Bush administration is to remove any regulatory obstacles that interfere with the activities of multinational corporations.
For the Third World, the implications of the U.S. GATT proposals are horrifying. The Malaysia-based Third World Network, a coalition of more than 200 non-governmental organizations, appropriately labels the GATT proposals a means of "recolonization."
THE UNITED STATES IS attempting to bring three new areas under the GATT rubric: services (ranging from finance to telecommunications to construction), investments, and "intellectual property."
In the services negotiations, the United States has sought the removal of regulations limiting the ability of multinational service companies to operate in foreign countries. Indonesia's policy of limiting the number of branches foreign banks can operate, for example, would be prohibited. Martin Khor Kok Peng, vice president of the Third World Network, says that if the U.S. service proposals are adopted, "many of the service industries in the Third World will come under the direct control of the transnational service corporations within a few years. This would mean the eradication of almost all the last sectors in the Third World that are still controlled by national companies."
The United States and other industrialized countries' proposals on investments would preclude Third World countries from limiting foreign investment or requiring foreign investors to abide by special regulations. Mexico, for example, would have to abolish its longstanding law requiring majority Mexican ownership of all ventures in the country (a rule of decreasing importance because of the growth of the country's maquiladora program, which allows foreign companies to set up assembly and other plants that produce primarily for export -- mainly to the United States.) The U.S. investment proposals strike at the heart of economic nationalism in the Third World: Along with the abandonment of limits on foreign investment will come the abandonment of the idea that countries should maintain control of their economies.
In the area of intellectual property, the U.S. goal is not to abolish all regulations but to make all countries' regulations uniform -- known as "harmonization." The U.S. proposal calls for all countries to adopt and strictly enforce U.S.-style patent, copyright, and trademark laws. The costs to the Third World could be tremendous.
The U.S. proposal would extend patents to cover "all products and processes, which are useful and unobvious." This would enable the multinational food, chemical, and pharmaceutical companies to gather seeds and herbs from the genetically rich Third World, manipulate them with rapidly evolving biotechnology tools, and then patent the new seeds, pharmaceuticals, or other products.
Corporations rely on Third World farmers and herbalists to identify useful plants but do not compensate them. Pat Mooney, of the Rural Advancement Fund International, says that corporate botanists "do not just collect plants; they collect the knowledge of local people." Mooney says the botanists "don't have the slightest idea" which plants are valuable until they are told. But because Third World people report on "naturally occurring" plants rather than genetically altered ones, the Third World farmers' information is not patentable.
Even as the U.S. patent proposal devalues Third World knowledge, it makes private-sector patents virtually sacrosanct, again with negative consequences for developing countries. An advertisement published in U.S. newspapers by Argentine pharmaceutical manufacturers last November illustrates how GATT would drive up pharmaceutical prices for consumers in that country. The ad points out that an anti-arthritis drug that sells for $170 in the United States costs only $35 in Argentina. The difference in price is due to Argentina's more open patent laws, which enable companies to compete with the drug's patent holder, Pfizer. Were the U.S. intellectual property proposal accepted, Argentine companies would no longer be able to undersell Pfizer.
U.S. GATT PROPOSALS have equally far-reaching implications for the environment and consumer safety. Most dangerous, perhaps, is the proposals' emphasis on forcing countries to harmonize their environmental standards. This is supposed to address an alleged problem of countries using environmental and consumer safety laws that are not based on strong scientific evidence to disguise barriers to imports. In fact, it is a means of driving down international safety standards.
As Steven Shrybman, former counsel for the Canadian Environmental Law Association and now an official in Ontario's New Democratic Party government, notes, basing environmental regulations on an international consensus will often lead to the adoption of a lowest common denominator standard. He adds that "once international norms are established, national governments will be prevented, in all but the most limited of circumstances, from establishing more stringent environmental requirements."
In the United States, environmentalists have focused their attention on how harmonization will undercut food safety laws. The international standards contained in an early Bush administration proposal would have allowed the import of food such as bananas, potatoes, carrots, and grapes containing 10 to 50 times the amount of the pesticide DDT permitted by the U.S. Food and Drug Administration. Consumer advocates and environmentalists stopped that recommendation, but the current proposal retains a long-term commitment to harmonization.
In the meantime, it will require local, state, and national governments to prove that their consumer safety standards are based on what GATT framers call "sound science." Restrictions on potentially harmful products deemed not to have been decisively proven dangerous, such as irradiated food or bovine growth hormone-treated dairy products, could be found to be "GATT-illegal."
People such as Shrybman and consumer advocate Ralph Nader point out that the effect of the harmonization of environmental regulations will be even more pervasive than it initially appears. They argue that decentralized regulation making -- the opposite of harmonization -- is crucial for the evolution of environmental standards.
It is rare that environmental regulatory breakthroughs occur at the national, let alone international, levels. Usually a smaller jurisdiction -- at the state and city levels -- experiments with a standard, such as a ban on CFCs (chlorofluorocarbons), other cities and states copy it, and eventually national governments and international organizations, lagging behind, follow their lead. This filtering-up process will be squelched by the U.S. GATT proposals.
The economic sectors of the United States that will be hit hardest by GATT are agriculture and textiles. Historically, these areas have been subject to their own special regulatory systems.
GATT currently allows countries to limit exports of agricultural goods if they do so in conjunction with domestic supply management programs designed to maintain prices that reflect farmers' costs of production and balance supply and demand. The Bush administration hopes to eliminate this special treatment and subject agriculture to normal GATT rules. The effect will be beneficial to the multinational agribusiness interests that are advocating it, but devastating for family farmers in the United States. As Larry Swartz, an executive committee member of the National Family Farm Coalition, pointed out at a recent congressional hearing, the administration's proposals would "drive down farm income and ruin rural communities."
The effect would be felt not only in the United States and industrialized countries, but also in the Third World, where small farmers who produce for domestic consumption are likely to be pushed off their land by large plantation owners seeking to produce for export to the North. Understandably, family farm organizations throughout the world, including many in the United States, Europe, Japan, Korea, and the Philippines, have opposed the Bush GATT proposals as an issue of survival.
BRINGING THE TEXTILE TRADE into GATT will also have a severe impact on a major segment of the U.S. economy. Currently, the textile trade is regulated by an international agreement, known as the Multi-Fiber Arrangement (MFA), which allocates import quotas to textile exporters. By limiting textile imports into the United States -- though not to the extent workers and domestic textile manufacturers would like -- the MFA has preserved U.S. textile jobs.
U.S. workers cannot possibly compete directly against Third World textile workers, whose wages average less than 50 cents per hour. The Amalgamated Clothing and Textile Workers Union (ACTWU) projects that phasing out the MFA and treating textiles with normal GATT rules would lead to 85 percent import penetration of the U.S. market at a cost of more than one million U.S. jobs.
There is some conflict between the interests of U.S. workers and Third World governments in the realm of textiles. In fact, the Bush administration is proposing to do away with regulations that clearly benefit U.S. industry in large part to pacify Third World concerns about the effects of other areas of GATT.
But many critics argue that the benefits to the Third World of an unregulated textile trade are illusory. If the MFA's quota system were abolished, says Arthur Gundersheim, assistant to the president of ACTWU, textile production would be concentrated in China and a few other countries; and most Third World countries would, like the United States, be unable to compete with their super-low labor costs.
A more fundamental criticism of the importance to the Third World of textile imports focuses on the underlying faith in export-oriented development. Many argue that export-led development relies on low-wage labor and poor working conditions, benefiting a small, domestic elite (and their corporate allies in the industrialized countries) at the expense of workers in both the Third World and the industrialized countries.
The current round of GATT negotiations was originally scheduled to conclude in December 1990, but collapsed over an agriculture dispute between the United States and Europe. Now the talks are poised to restart, but the Bush administration needs authorization from Congress to continue negotiations. Organizations representing the domestic interests most threatened by the administration's request are lobbying aggressively to urge Congress to deny the administration's request.
Rep. Byron Dorgan (D-N.D.) and Sen. Ernest Hollings (D-S.C.) have introduced resolutions that would deny the Bush administration the authority to carry out its deregulatory agenda. Congressional insiders say the votes on the Dorgan and Hollings resolutions will come down to the wire, and that it is too close to predict an outcome.
Robert Weissman was editor of the Washington, DC-based Multinational Monitor when this article appeared.
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