Beyond the WTO
Alternatives to Economic Globalization
A Preliminary Report
by a Task Force of the International Forum on Globalization
Release Date: November 26, 1999
(Full Report will be issued June 2000)
Task Force members: Debi Barker, Maude Barlow, Walden
Bello, Agnes Bertrand, Brent Blackwelder, John Cavanagh, Tony Clarke, Edward
Goldsmith, Randy Hayes, Colin Hines, Martin Khor, Andy Kimbrell, David Korten,
Sara Larrain, Jerry Mander, Victor Menotti, Anuradha Mittal, Helena
Norberg-Hodge, Mark Ritchie, Vandana Shiva, Steve Shrybman, Lori Wallach.
- Principles of an Alternative Agenda
- Democracy/Popular Sovereignty
- Favoring the Local
- Ecological Sustainability
- Economic Human Rights
- Food Security and Food Safety
- Certain Goods and Services Should Not Be Traded and Should Not Be Subject to Trade Agreements
- Cultural, Biological, Economic and Social Diversity
- Views on Global Institutions: Internationalism, Not Globalization
- The Future of the IMF, the World Bank, and the WTO
- Finance and the IMF
- Production and the World Bank
- Trade/Investment and the WTO
Special thanks on this preliminary report to John Cavanagh and Sarah Anderson of the Institute for Policy Studies.
Comments on this preliminary report can be emailed to John Cavanagh:
For over half a decade, the International Forum
on Globalization (IFG) has convened some of the world's leading critics of
corporate-led economic globalization. IFG teach-ins, newsletters, pamphlets, and
declarations have spelled out, in great detail, the dangers of the recent shift
in global rules in favor of global corporations and against people and the
Since the IFG's creation in 1994, the most
frequent question asked by those who enter the globalization debate is: "If you
are opposed to the World Trade Organization (WTO) and the current set of global
rules, then what are you for?" In June 1999, twenty-two IFG Board members and
associates from North and South gathered in Washington, D.C. and spent three
days answering this question. This pamphlet is the first result of the IFG
"alternatives" task force deliberations. It offers principles to undergird an
alternative set of rules and institutions that would foster more dignified work,
healthy communities, and a cleaner environment. It then spells out what kind of
institutions at different levels of governance could be built upon these
This pamphlet is a work in progress. Based on
reactions to it, discussions at the WTO Ministerial in Seattle, and further
meetings of the IFG "alternatives" task force, a longer, more detailed version
will be issued in 2000. We welcome reactions and inputs.
I. Principles of an Alternative Agenda
The current organizing principles of the regulatory
institutions of the global economy are narrow and serve the few at the expense
of the many and the environment. Economic growth has been the central goal of
the International Monetary Fund (IMF), the World Bank, and the General Agreement
on Tariffs and Trade (GATT), as well as its successor, the WTO. The expansion of
international trade and investment has been viewed as an end in itself. The
governing formula of the past half century has been: free trade and investment
will bring prosperity, which will bring democracy. This formula has guided the
declarations of U.S. presidents from Truman to Clinton as well as the policy
pronouncements of most leaders the world over, particularly since the early
1980s. The persistent mantra of corporate and government leaders alike has been
that the necessity of remaining competitive in a global economy requires
governments to cut regulations and to encourage the most favorable climate for
foreign investment, often at the cost of worker rights and environmental
integrity. In the words of Council of Canadians chair Maude Barlow: "Stateless
corporations have given rise to corporate states".
The "free market" paradigm is anything but free.
Trade and investment are governed by increasingly complex rules that favor
corporations over everyone else. And, the "free market's" beneficiaries are
increasingly few. Even "consumers," touted by free traders as the greatest
beneficiaries, often find that goods produced in countries with exploited
workers and lax environmental enforcement are not cheaper because large firms
that dominate a market can keep prices high. The big losers have been workers
whose wages and benefits are bargained down by mobile firms. And, in ways that
the IFG spells out in other publications, corporate-led globalization has
undermined the environment, equity, financial stability, healthy communities,
food safety and security, and cultural diversity. Indeed, it is threatening the
bedrock of democracy.
These adverse impacts are pulling millions of
people into diverse streams of a global river of citizen backlash to
globalization. These movements have pressed to stop certain aspects of
globalization and to slow down others. They are pressing for new rules and new
institutions to govern global economic activity. And, inevitably, they are
branded by free trade proponents as "protectionists," a moniker that is deployed
as a crude insult.
A word on protectionism. The alternatives that we
present in this document and that we advocate in our work are varied and cannot
be reduced to a single term. We reject the traditional notion of "protectionism"
in that we believe that trade of many goods and services as well as foreign
investment can be positive under the right terms and rules. At the same time, we
often use the verb "to protect" to refer to the many gains in local, state,
national, and global legislation that "protect" local communities, the
environment, viable food systems, the health and safety of workers, and the
diversity of cultures. We also point out that most current global economic rules
and institutions "protect" global corporations at the expense of others.
Healthy societies are rooted in certain core
principles. We outline eight core principles which, we argue, economic policies,
rules, and institutions should seek to further:
A. Democracy/Popular Sovereignty
Democracy flourishes when people organize
to protect their communities and rights and hold their elected officials
accountable. For the past two decades, governments have transferred much of
their sovereignty to the hands of global corporations. We advocate a shift from
governments serving corporations to governments serving people and communities,
a process which is easier at the local level but vital at all levels of
B. Favoring the Local
Economic globalization entails first, and
foremost, de-localization and disempowerment of communities and local economies.
A high percentage of people on the earth still survive through local,
community-based activities: small scale farming, local markets, local production
for local consumption. This has enabled them to remain directly in control of
their economic and food security, while also maintaining the viability of local
communities and culture. Even in developed countries, most jobs have
traditionally been connected to local economic production. Economic
globalization is rapidly dismantling this, strongly favoring economies based on
export, with global corporations in control. This brings destruction of local
livelihoods, local jobs, and community self-reliance.
It is therefore necessary to reverse
directions and create new rules and structures that consciously favor the local,
and follow the principle of subsidiarity, i.e., whatever activities can be
undertaken locally should be. Whatever power can reside at the local level
should reside there. Only when additional activity is required that cannot be
satisfied locally, should power and activity move to the next higher level:
region, nation, and finally globalized trade and communications. Such rules as
"site here to sell here" and grounding of capital locally should be codified.
Economic structures should be designed to move economic and political power
downward toward the local, rather than in a global direction. (In Europe, calls
by IFG members and others for globalization to be replaced by more emphasis on
protecting and rebuilding local economies has had its first political success.
United Kingdom Green Members of the European Parliament were elected in 1999 on
a manifesto that called for the "Protect the Local, Globally" route to
C. Ecological Sustainability
Economic globalization is intrinsically
harmful to the environment, as it is based on ever-increasing consumption,
exploitation of resources, and waste-disposal problems. One of its most
important elements, export-oriented production, is especially damaging as it
directly increases global transport activity, fossil fuel use, refrigeration and
packaging, while requiring very costly and ecologically damaging new
infrastructures: ports, airports, dams, canals, etc. It also accelerates
conversion to industrial-style agriculture with corresponding increases in
pesticides, water and air pollution, and biotechnology. Such elements, combined
with many other wasteful aspects of global trade, are also powerful contributors
to the problems of global climate change, ozone depletion, loss of habitat, and
unprecedented levels of pollution. Viable alternatives must be rooted in the
principle of ecological sustainability.
D. Economic Human Rights
In 1948, governments of the world came
together to adopt the United Nations Universal Declaration of Human Rights,
which established certain core rights, such as "a standard of living adequate
for ...health and well-being..., including food, clothing, housing and medical
care, and necessary social services, and the right to security in the event of
unemployment." Much of the past half century has been a struggle by people to
press their governments to advance these rights. These rights remain as central
to human development today as they did 51 years ago. The goal of trade and
investment should be to enhance the quality of life and the respect of core
labor, social, and other rights.
E. Food Security and Food Safety
Communities and nations are stable and
secure when people have enough food, particularly when nations can provide their
own food. People also want safe food, a commodity that is increasingly scarce as
global agribusiness firms spread chemical- and biotech-intensive agriculture
around the world.
Some of the strongest citizen movements
around the world are now fighting the juggernaut of globalized industrial
agriculture. Monopoly control of food and seeds among a small number of
corporations now threatens millions of farmers and tens of millions of peoples'
food security and safety. Global rules of trade now strongly favor the
industrial agriculture model, rapidly destroying small scale farmers who mainly
produce staple foods for local consumption. Globalized industrial agriculture is
driving small farmers off their lands and replacing them with pesticide and
machine intensive, monocultures producing luxury items for export, at great
environmental and social cost. And, biotechnology brings a host of new
ecological and health risks.
Any new rules of trade must recognize that
food production for local communities should be at the top of a hierarchy of
values in agriculture. Local self-reliance in food production, and the assurance
of healthful, safe foods should be considered basic human rights. Shorter
distances and reduced reliance on expensive inputs which must be shipped over
long distances are key objectives of a new food system paradigm.
F. Certain Goods and Services Should Not Be Traded and Should Not Be Subject to Trade Agreements
The current trend of corporations placing
all goods in the market is unhealthy. The global community has agreed that trade
in endangered species and in toxic wastes is wrong and global conventions have
been signed to end this trade. Many countries have created national parks and,
in effect, told corporations that the trees in the parks are not to be traded.
These examples are indicative of a growing debate over which goods and services
should not be subject to trade and other market arrangements.
The debate needs to be spread further with
the goal of both preserving the "global commons" (including water, seeds, the
genetic structures of life, as well as culture) and protecting people against
pernicious goods (e.g., drugs, toxics, arms). In Canada, for example, activists
have made a strong case that the bulk export of water will deplete critical
water resources. They also want portions of Canadian culture off limits to
global corporations. In India, activists argue that certain realms of
"collective property" such as seeds should not be subject to patenting by global
corporations. Globally, there is a growing consensus that no life form should be
patented. Likewise, we would assert that certain goods should not be traded if
the process under which they are produced violates basic labor or environmental
rights and standards.
Texas populist Jim Hightower often quotes
his father: "Son, everyone does better when everyone does better." Greater
equity reinforces both democracy and healthy communities. Economic
globalization, under the current rules, has widened the gap between rich and
poor countries and between rich and poor within most countries. The social
dislocation and tension which result have become one of the greatest threats to
peace the world over.
H. Cultural, Biological, Economic and Social Diversity
A few decades ago, it was still possible to
leave home and go somewhere else where the architecture was different, the
landscape was different, the language, lifestyle, dress, and values were
different. Today, farmers and filmmakers in France and India, and millions of
people elsewhere, are protesting to maintain that diversity. Tens of thousands
of communities around the world had perfected local resource management systems
that worked, but that are being undermined by corporate-led globalization.
Cultural, biological, social, and economic diversity are central to a dignified,
interesting, and healthy life.
II. Views on Global Institutions: Internationalism, Not Globalization
The principle of subsidiarity, that decision-making should
start with strong local institutions and then work up toward regional, national,
and global institutions, still requires effective global institutions.
The world needs effective global institutions that will:
A. Prevent the spread of disease, conflict, and harm to the environment across borders.
The UN World Health Organization has been central to the global
battle against the spread of HIV and AIDS, as well as dozens of other deadly
diseases; it has helped countries protect themselves against the marketing
incursions of tobacco, alcohol, and infant formula corporations.
In Rwanda, the Balkans, East Timor, and other societies torn with
conflict, a stronger and more ready United Nations diplomatic infrastructure and
peacekeeping force could have prevented countless atrocities.
B. Set norms on internationally agreed upon
rights and standards which are largely implemented at the national level:
The UN International Labor Organization, through a dialogue among
governments, representatives of organized labor, and corporations, has hammered
out over one hundred conventions that define internationally recognized worker
rights. A great deal more work is needed on how to strengthen national labor law
and enforcement of existing laws through national, regional, and global
The United Nations Development Programme has created an
alternative measure of human welfare called the Human Development Index, which
offers a much more comprehensive measure of a society's accomplishments than
Gross National Product (GNP). While weak on environmental criteria, the index
offers peoples' movements and governments a new measure against which to measure
Author David Korten has begun to enumerate a strengthening of the
United Nations Economic and Social Council (ECOSOC) that could provide a strong
international anti-trust regime; require global corporations to adhere to the
highest standards regarding human, labor, and environmental rights; and provide
guidance on other global economic reforms.
In addition to these UN initiatives, over 200 international
environmental treaties begin to lay out environmental rights and standards which
nations aspire to achieve, and begin to sketch out enforcement mechanisms.
However, the trends of the past two decades
have progressively weakened the United Nations system while infusing new powers
into the IMF, the World Bank, and the WTO. The U.S. government, after being the
shepard of the United Nations' creation in 1945, has largely undermined its
efforts to carry out these functions since the advent of the Reagan
administration in 1981. In the name of the free market and efficiency, the
Reagan administration systematically undermined UN agencies and threatened to
cut off funds to stifle activity that was viewed as interfering in the market.
This is not to suggest that the United Nations has been free of corruption and
that resources have not been wasted. As with most institutions of governance,
much greater accountability to those it serves will enhance its effectiveness.
Since the early 1980s, the refusal of the
U.S. Congress (until earlier this month) to pay the full dues owed to the United
Nations has created a permanent crisis atmosphere in what should be the most
important and stable international body. While Exxon and General Motors, not to
mention the World Bank and IMF, are flush with resources, the United Nations is
starved from fulfilling its mandate. What a tragic perversion of global
III. The Future of the IMF, the World Bank, and the WTO
If strengthening some United Nations agencies would enhance
human security and environmental health, what should be done with the three
agencies that have become the enablers of corporate-led globalization: the IMF,
the World Bank, and the WTO? The answers to this question becomes clear in each
instance if one asks: what are the needs in each of the realms in which these
institutions function: global finance, production, and trade/investment?
Certain principles govern our approach to global
economic and environmental institutions, principles which grow out of the eight
core principles laid out at the outset of this document:
1. Subsidiarity and democracy: Global institutions should seek only to do
what cannot be done at lower levels of government. All global institutions
should be open, transparent, and democratic.
2. Respect lower levels of government: Global institutions should not
undermine national rules, unless those rules violate fundamental human rights.
Hence, a global trade body should not have the power to rule that a nation's
environmental law is an "unfair barrier to trade." No global body should
challenge a nation's imposition of capital controls. At the same token,
countries that allow slavery or bonded labor should not be able to trade freely
goods made under those conditions.
3. Stronger global institutions are needed to fight global harms: Stronger
global environmental agreements with enforcement powers are needed.
4. More limited powers and mandates for the IMF, World Bank, and WTO will
create more space for healthy development: Walden Bello points out that many
countries experienced their most vibrant development (Latin America in the
1930s; East Asia in the 1960s) when global economic institutions were weak or
non-existent. Bello argues that strong rules protect the strong and weak rules
advantage the weak. The IMF, World Bank, and the WTO have primarily been
protecting strong corporations over people and the environment. Stronger
regional institutions in Asia, Latin America, and Africa would allow for weaker
5. It's the Development Model, Stupid: The IMF, World Bank and WTO have been
promoting a development model that places a premium on maximum trade and
investment. This model has been devastating for workers, the environment,
equity, and financial stability. (Harvard economist Dani Rodrik has pointed out
that there is not even a statistical correlation between trade and investment
liberalization and economic growth.) Alternative models that emphasize domestic
production for domestic markets and that refocus trade and investment on serving
national needs will be more resilient and sustainable.
With these principles in mind, we turn to
the three main realms of global economic activity: finance, production, and
trade/investment, in order to suggest new roles for the governing institutions.
B. Finance and the IMF: An Emerging North-South, Citizens-Labor Agenda on Global Finance
(The recommendations in this section are drawn
from the December 9-10, 1998 Washington, D.C. conference on "Toward a
Progressive International Economy," sponsored by Friends of the Earth, the
International Forum on Globalization, and the Third World Network.)
1. Reorient financial flows from speculation to long-term investment: The
rules and institutions of global finance should discourage all speculation and
encourage long-term investment in the real economy in a form that supports local
economic activity, sustainability, equity, and poverty reduction.
2. Reduce instability and volatility: The rules and institutions of global
finance should seek to reduce instability in global financial markets.
3. Enhance local and national political space: The rules and institutions of
global finance should allow maximum space for national governments to set
exchange rate policy, regulate capital movements, and eliminate speculative
4. Keep private losses private: Governments should not absorb the losses
caused by private actors' bad decisions.
5. Address the imbalance between growing private flows and shrinking public
flows: The rules and institutions of the global economy should seek to decrease
private speculative flows while increasing those public flows that support
sustainable and equitable activities.
1. Create an International Bankruptcy Mechanism (to reduce "moral hazard")
Outside the IMF: An international debt arbitration panel should be established
to ensure that financial crises and sovereign debt obligations do not place
undue burdens on countries and also to prevent a liquidity crisis from becoming
a solvency crisis. When sovereign debt service threatens the welfare of a
country's people, the panel would restructure and/or cancel debts so as to
ensure that important social services are not compromised in an effort to meet
2. Substantial Debt Reduction Detached From IMF and World Bank Conditions:
Currently, debt payments cripple the ability of many developing countries to
invest in development. Any resolution to this crisis must include an expansion
of the resources available, and the countries eligible, for bilateral and
multilateral debt relief. This relief should not be conditioned on IMF and World
Bank structural adjustment programs and it should allow countries to dedicate
sufficient resources to health care, education, social services, and
3. IMF Reform: Member governments should insist that the IMF enforce Article
6 of its own charter, namely that the IMF should oversee capital controls, not
capital account liberalization, and that it should end structural adjustment.
With the establishment of the bankruptcy mechanism above, the IMF need only
retain minimal capability as lender of last resort and gather and publish
international economic data. Decision-making by the IMF board needs greater
transparency and accountability. This could be fulfilled, in part, by
introducing greater democracy in voting and publicly releasing all information
about its operations.
4. Establish Speculation Tax: The governments of the world's major
currencies should levy a tax on certain international transactions so as to
discourage speculative and herd behavior in international capital flows.
1. Regional Crisis Funds: We support the creation of regional funds outside
IMF control to ensure a quick response to crises while maintaining regional
sensibilities and interests.
1.Retain the Right to Apply Speed Bumps and Capital Controls: The rules and
institutions of the global economy should allow maximum space for national
government policy making to regulate the amount, pace and direction of capital
2. Eliminate Short-term Manipulative Instruments: National governments
should set regulations and incentives on cross-border transactions so as to
eliminate capital flows that are entirely speculative (e.g. gambling on market
fluctuations as differentiated from hedging risk) and can undermine the real
3.Maintain Stable Exchange Rate Regimes: National governments should strive
to reduce the volatility that has characterized exchange rates since the
collapse of the Bretton Woods arrangements in the early 1970s. Any international
regime should reinforce the ability of governments to maintain this stability.
1.Democratize Mutual Funds and Pension Funds: Local and national
regulations and taxes should be structured in such a way so as to encourage
local investment and control of local capital. Local education initiatives
should also inform citizens about the power of using their assets.
C. Production and the World Bank
The World Bank began with a lofty and worthwhile
mandate to provide low interest, long-term loans to help rebuild a world
destroyed by world war. Confined to this mandate, it could have done much more
good than harm.
Unfortunately, the Bank has evolved into a key
purveyor of the corporate-led "free trade and investment" development paradigm.
It has become an institution that subsidizes large energy and agribusiness
corporations to break into new markets. These corporations have been the prime
beneficiaries of hundreds of billions of dollars of low interest World Bank
project loans. Other corporations have benefited from World Bank loans which
build roads, electrical grids, and power plants which too often serve global
corporations and not the local population. Since 1980, the World Bank has also
used its considerable leverage to press for the "structural adjustment" of
developing country policies towards privatization, deregulation, and trade and
investment liberalization. Regional development banks along the World Bank model
have been set up for Latin America, Asia, Africa, and Europe and have largely
copied this failed model.
These institutions fail in part because they push
the wrong development models and in part because they are simply too large to
respond effectively to the needs of people on the ground. It is true that people
in their individual capacities and small entrepreneurs often need loans. Yet the
World Bank and its regional affiliates are ill-equipped to meet these needs.
Much smaller regional, national, and local institutions that respect basic
democratic principles and are shaped to meet local needs can do a much better
D. Trade/Investment and the WTO
The most fundamental problem with the global
trade order is the mandate of the governing institution: the World Trade
Organization. Ironically, it is the one institution with roots in a dialogue
over at least some of the eight principles laid out earlier. A very healthy
debate was launched after World War II about the need for a global trade and
investment institution that could help generate full employment and protect
worker rights around the world and that could help protect against what were
then referred to as "global cartels," small groups of corporations that were
gaining too much power in one sector. These broad-based goals where enshrined in
a Havana Charter of a proposed new body: the International Trade Organization
(ITO). The U.S. Senate raised objections to this broad mandate, and the ITO
never opened its doors. Instead, governments created a smaller body whose
mandate was centered on reducing tariffs on trade in manufactured goods: the
General Agreement on Tariffs and Trade (GATT). This body, with its narrow trade
expansion mandate, evolved into an institution that promoted corporate rights
over the broader social agenda. Without a broader social and environmental
mandate, increased trade after World War II benefited some but at the expense of
In 1994, the expansion of the GATT mandate into a
much more powerful WTO deepened the imbalance. The WTO took on increased powers
in areas unrelated to trade. The WTO limits governments' ability to put controls
on investment and it gained new powers to enforce its interpretation of trade
and investment rules through sanctions. It gained new powers to protect the
so-called trade-related "intellectual property rights" of corporations. With a
series of rulings that negate national environmental legislation, the WTO has
become a nightmare for environmentalists and has undermined democratic
development around the world.
Among the organizations and individuals in the
IFG community, there is a unified vision that the mandate and powers of the WTO
should be significantly reduced in accordance with the following observation of
Indian scholar/activist Vandana Shiva: "The future is possible for humans and
other species only if the principles of competition, organized greed,
commodification of all life, monocultures, monopolies, and centralized global
corporate control of our daily lives enshrined in the WTO are replaced by
principles of protection of people and nature, the obligation of giving and
sharing diversity, decentralization and self-organization enshrined in our
diverse cultures and national constitutions."
IFG participants have called for no new issues in
the WTO, no new round of trade talks, no further liberalization negotiations,
and that a democratic review of the last round be undertaken. In addition, IFG
participants recommend the following fundamental changes in a global trade body:
- the mandate should reflect the principles as stated above by Shiva.
- the body's decision making should be democratic: decisions should
derive from majority voting, not the current WTO "consensus" model where the
rich countries dominate; representatives of civil society should be at the
- no patenting of life forms and no intellectual property regime.
- the subordination of global trade and investment rules to national
and local governments' decisions about conditions on investment within their
borders. Every government has the right to set development priorities, protect
the commons, set performance requirements on investment, control financial
speculation and curb capital flight.
- the subordination of global trade rules to global environmental
- the elimination of agriculture from global trade rules to allow
countries to pursue food security and sustainable farm policies.
Some within the IFG go a step
further and advocate the elimination of the WTO altogether and its replacement
with stronger regional bodies that facilitate cross-border dialogue and
interchange. Strong local, national, and regional bodies that encourage
investment in dignified work, healthy communities, and a clean environment would
go a long way toward fulfilling the needs of the public. Cross border trade and
investment in this context would support sustainable communities rather than