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Towards a New Framework for International Trade

"In [Adam] Smith's day, government was openly and unabashedly an instrument of wealthowners. Less than 10 percent of British men - and no women at all - had the right to vote. When Smith opposed government interference in the economy, he was opposing the imposition of wealthowners' interests on everybody else. Today...[the wealthowners'] aim is the opposite: to stop the representatives of the people from interfering with the interests of wealthowners" (Allan Engler, The Apostles of Greed, Fernwood Publishing, Halifax, 1995, p. 104).

The first five newsletters were dedicated to an analysis, in both as detailed and concise a manner as possible, on the rules, mechanisms, patterns, and underlying goals of the international trade regime. With this newsletter, I will attempt to sumarize the broad goals, principles, and agreements of the present international trade milieu. It has been possible to deduce the goals and principles from the stated intentions of the interested parties, the mechanisms of the trade agreements, and the ways in which those mechanisms have been employed thus far. I have tried to establish that a key underpinning of the international trade system is the role of transnational corporations in building systems of investment, production and marketing across several economies. Trade proponents try to defend corporate liberalization as a mechanism that results in improved protection of human rights and the natural environment. But it is this very mechanism, imposed in a top-down manner by the World Bank and the International Monetary Fund, and then locked in through the WTO, NAFTA, and soon the FTAA, that is allowing corporations to create insidious patterns of exploitation, both of the environment and of the citizens of developing countries. Comparative advantage in a poor country amounts to pushing wage costs down until they pay for the costs of transportation and lower productivity. Poor countries accept this in order to maximize their exports so that they can service foreign debts.

Having summarized the situation as we find it today, I will then attempt to sketch out some of the basic goals and principles that might bring us towards a new framework for international trade. The UN Universal Declaration of Human Rights confirms the person - that is, the actual human person, not the legal corporate person - as the legitimate basis for every country and clearly lays out our rights as citizens - the right to life, freedom of movement, expression, association, and secession, and establishes that the citizen is the source of legitimacy in the government of our country. A new framework for international trade would preserve and entrench the dignity and primacy of the citizen, and to allow the mechanisms of democracy to determine domestic public policies.

A government that was committed to the primacy of the citizen would insist that an international agreement would start with this premise and that negotiations on how to conduct international trade and investment would proceed from a desire to embody this premise. Such an agreement would make the UN Universal Declaration on Human Rights binding on its signatories, and would conduct all negotiations in such a way that they met the criteria of the Declaration. Corporations that wanted freedom to move in an unrestricted manner would have to demonstrate that their actions were the "least damaging to human rights" and the burden of proof would be on corporations to prove that their actions fulfilled these criteria.

A summary of the present trade regime

Broad Goals:

• Progressive liberalization of trade and investment flows for all goods and services
• Guarantee of "consistency and predictability" of trade and investment rules for corporations
• Protection of intellectual property rights across all member states
• All of these allow and encourage corporations to integrate their operations across different economies into complex transnational investment, production and marketing networks

Principles and Mechanisms

• National treatment - a nation may not discriminate in any way between companies and products of domestic origin and those of foreign origin
• Most Favoured Nation treatment - a nation must treat companies and products from every country as well as the best-treated country - benefits conferred to any member must be conferred to every member
• Standstill - a country cannot change a law or regulation to make its trade environment less liberal than it already is
• Roll-back - agreements have a built-in requirement towards further liberalization and eventual elimination of exceptions
• Non-discrimination of "like" products that are from different countries or are produced differently (e.g. genetically modified food or tuna caught in huge driftnets)
• Universal application of rules - Agreements are understood to apply universally by default, unless a member calls for a specific exception, subject to eventual roll-back
• Scientific evidence - exceptions to trade rules, for protection of human, animal or plant life or to protect public health and safety, should be based on sound scientific evidence; that is, a product or service should be considered safe unless it is proven to be unsafe
• Least trade restrictive - in the event that an exception to a trade rule is justified by scientific evidence, the exception must be the least trade restrictive of all possible measures that might achieve the goals of the exception
• Labour and environmental agreements are understood to be non-binding and cannot be used to enforce supranational standards
• Dispute settlement - disputes are settled in secret by panels of international trade experts and are binding on members through threat of retaliation; disputes can involve state-state arbitration or, in some cases (i.e. NAFTA Chapter 11) investor-state arbitration

Globalism vs. Globalization

Mark Ritchie, in a recent essay, draws a distinction between globalization and globalism. He suggests that globalization refers to the mechanisms by which corporations organize their operations to take advantage of global markets for labour, resources, investment and sale, whereas globalism refers to a loose philosophy of respect for people and the planet, international solidarity, and open communication. He writes that "as an ideology, [globalization] is largely unfettered by ethical or moral considerations...[while g]lobalism, like all values and ethical beliefs, requires active practice in our day-to-day lives. Communications to foster understanding, sharing of needed resource on the basis of equity and sustainability, and mutual aid in times of need are three central features that undergird globalism" (www.itcilo.it). When The Mike Moores of the trade world speak about how "open societies do better," and when they muse about the "irony" of activists using the Internet to coordinate protests, they're using the mystique of globalism in order to sell globalization.

To Ritchie's working definition of globalism (an arbitrary term, but appropriate for this discussion), I would add that it implies a respect for the place of both international and local connections. That is to say, globalism recognizes the value of global vision and communication while at the same time recognizing the vital importance of maintaining communities that preserve traditions and function on a human scale. Harriet Friedmann writes,

Today, the ideal global[ized] meal may be the hamburger...A recent magazine advertisement exemplifies the combined effects of corporate-guided changes in food practices. A young girl is offered a doll to help her learn to be a mother, a way girls have learned in many human societies. What exactly is she learning from this doll? To feed her baby, who is wearing a "Happy Meal" bib, a McDonald's burger, fries and shake! Another doll might teach her to breastfeed her baby or to mash bananas. But the food she is learning to serve her baby is bought from McDonalds (Harriet Friedmann, "Remaking 'Traditions': How We Eat, What We Eat and the Changing Political Economy of Food," Deborah Barndt, ed., Women Working the NAFTA Food Chain, Second Story Press, Toronto, 1999, pp. 54-55).

Corporate globalization actively seeks to remake the world into a form that serves the goal of every corporation, which is to increase profit and market share. This is accomplished through a bewildering variety of means, including the strategic "liberalization" of education, long considered a fundamental public value. Scott Preston recently posted an insightful essay on the No Logo discussion list in which he examined a document on "Human Capacity Building" that was produced by Asia Pacific Economic Cooperation (APEC), a trade liberalization body with 21 members, including Canada, the US, China, and Indonesia. Preston argues that the document "identifies education as the key pillar of the new globalized economy, and calls upon a partnership between business, government, and academia not only to reform education to meet the needs of the global economy, but to take the initiative in harmonizing other social institutions as well." I did not find the particular document that Preston read, but found another document on the APEC web site that covered similar territory. The Joint Ministerial Statement on Human Resource Development announced that "We are strongly and unequivocally committed to...the importance of education and training for developing a flexible and adaptable workforce, which are essential for sustaining economic growth through trade and investment liberalization and facilitation and economic and technical cooperation." This can be facilitated through "better opportunities for cross-member investment in the delivery of educational services and skills training," including what they call "Executive Education and Development" to produce "strong and capable" managers (www.apecsec.org.sg).

Another APEC document on education warrants a careful reading.

A learning society prepares its people to embrace change. A learning society is forever learning, evolving, creating and acting upon what is important. Lifelong learning will be the characteristic of this society. As formal pre-employment education continues to be important, continual re-training and upgrading of knowledge for adult workers to develop themselves will also become paramount. With lifelong learning, individuals will be able to better contribute to their communities and work-places ... In particular, high standards in literacy, mathematics, science and technology provide the necessary foundation needed for the new global economy. In this inter-connected world, where knowledge and understanding of the languages and cultures of other communities is an asset and a way of life, the learning of foreign languages can help our people unlock new doors of information and opportunities. Education can help learning societies sustain and enrich cultures, and build mutual respect and understanding that transcends cultural differences. Globalisation presents opportunities for education to play a role in helping people communicate and co-operate in the new world (www.apecsec.org.sg).

Notice how Mark Ritchie's globalist values of "communicating" and "cooperating" to "transcend cultural differences" are deftly subjugated to the deeper corporate globalizationism of "retraining and upgrading of knowledge for adult workers to develop themselves" and "provide the necessary foundation needed for the new global economy." If you step back far enough, this all starts to look like a circular argument. That is, the trade and service liberalization that corporations needed in the first place to exploit markets more effectively creates the globalized economy and at the same time becomes the mechanism through which the globalized economy can best function, as well as the main incentive for further liberalization.

Towards a new framework for international trade

Broad Goals

• Protection and cultivation of basic human rights, specifically as expressed through the UN Universal Declaration of Human Rights
• Protection and cultivation of democratic rights, that is, of the legitimacy of the public weal and the centrality of the public in determining what this constitutes and how it can best be served
• Advancement of real sustainability in the flow-through of energy and materials, and in the production of waste
• The broadest possible dissemination of knowledge in a manner that
  1. makes techniques and ideas available to those who need them
  2. improves access to education so that all people can share in the development as well as the deployment of ideas, and
  3. encourages research and innovation towards human development rather than corporate profit
• Encouragement of real communication among peoples as a guard against nationalism, racism, regionalism and corporatism alike.

Principles and Mechanisms

Corporate activities should not threaten or interfere with the protection and cultivation of human rights and democratic rights; any corporate activities that are considered necessary but nevertheless compromise liberty or democracy should be conducted in a manner that is least liberty restrictive and least democracy restrictive Presently, trade is among corporations, not individual persons; furthermore, the largest share of trade is among divisions of the same corporations. Therefore, a lot of what we call "trade" is merely that portion of the movement of capital, materials and components within a corporation that happen to cross political borders. It is not international trade in any meaningful sense of the word and should not be "protected" by trade rules.

• Corporations are not persons; they are legal entities that were created by people in order to serve a specific purpose; while the individuals that own, work for and buy from corporations have rights, corporations themselves cannot possess rights
• The rule of law is based on the principle that some things are wrong in and of themselves - corporations are purely instrumental, goal-directed entities, and so cannot internally process non-instrumental values. Therefore, industry self-regulation is not sufficient to ensure that corporate activities will not be harmful
• "Consumer sovereignty," or the idea that citizens/consumers can exercise their collective will through individual market choices, is an absurd and self-serving deformation of democracy. By drawing the attention of citizens away from elected governments, corporations are seeking only to remove a major barrier to their own unfettered activity while at the same time enforcing the idea that the market is the only legitimate sphere of human activity. As such, market liberalism is not a sufficient proxy for democracy. Ample evidence for this is provided through the so-called "prisoner's dilemma," in which the totality of individuals making rational choices creates perverse collective results
• Democracy requires disagreement and debate; criticism is the best instrument for correcting mistakes, and diversity is the best means for encouraging a broad range of opinions. By contrast, corporatism and executive decision-making regard debate as inefficient and criticism as subversive. As John Ralston Saul points out, "Ten geographers who think the world is flat will tend to reinforce each other's errors. If they have a private dialect in which to do this, it becomes impossible for outsiders to disagree with them. Only a sailor can set them straight. The last person they want to meet is someone who, freed from the constraints of expertise, has sailed around the world" (John Ralston Saul, Voltaire's Bastards, Penguin Books Canada Ltd., Toronto, 1993, p. 476)
• National treatment - nations should not discriminate in the manner in which they treat corporations; that is, a law or regulation should apply equally to all corporations, regardless or their nation of origin. This is predicated on the assumption that an abusive corporate practice is abusive regardless its place of origin
• Liberty, Democracy and Environmental Standstill - a country cannot change a law or regulation to make human rights, democracy and environmental sustainability laws weaker than they already are
• Roll-Forward - agreements have a built-in requirement towards further protection of human rights and the environment and eventual elimination of obstacles to human rights, democracy and environmental sustainability Precautionary Principle - this is a restoration of traditional domestic policies towards new products: a product or process should be considered unsafe until it is determined to be safe by scientific consensus. In this matter, safety must apply to all of the following:
  • all people involved in production
  • all people involved in consumption or use
  • all people affected directly or indirectly by its production or use
  • all animals and plants that are affected directly or indirectly by its production or use, including those animals and plants that are effected incidentally by its production or use (safety refers to either threats to a species or the unneccessary destruction of an ecosystem)
• Arbitration of disputes should be open to the public rather than secret, and relevant evidence and testimony should be considered in an open and fair manner
• Free market liberalism should be regarded as a tool that may be employed towards trade goals rather than a primary goal itself. Liberalism is not an end in itself, much as it may, under the right circumstances and subject to democratic processes, contribute to the pursuit of such an end. Free market liberalization should be understood to be non-binding and cannot be used to enforce supranational standards. Or, as Sergio Marchi explained about environment and labour protection in the MAI, "What we want to ensure is that we do as much as we can...but at the same time, you don't want to go to the Cadillac version, the binding version, with most countries seeking an exemption from that" ("Ottawa resists US push on global deal." The Globe & Mail, October 23, 1997).

As many questions as answers

I would like to invite everyone to volunteer ideas towards building this new framework. My hope is that the readers of this newsletter will be able to contribute meaningfully to this project through volunteering the ideas, mechanisms and principles on which a new framework might reside. Since no model for international trade could ever spring fully grown from the forehead of one person, and since the best guarantor of the public weal is the public, it is only proper that this project should include as many voices as possible.

I realize that attempting to do this will generate a pile of questions. For example:

Should existing trade bodies be reformed, or should they be replaced?

Are the broad policy goals and principles identified here necessary and sufficient to serve as a new framework? If not, what could be added, removed or otherwise changed?

What specific trade mechanisms and agreements could be drafted that would put these goals and principles into practice?

How should these goals tangibly affect economic growth, development, distribution of wealth, and environmental protection - and how will they do so?

To what extent should decision-making inhere in national governments, and to what extent, if at all, should supranational bodies be allowed to "discipline" member nations for non-compliance? Asked differently, should trade bodies be the proper place for enforcing global standards of liberty, democracy or sustainability? If not, then where, if anywhere, should these standards be enforced?

Having asked this, how can such a body prevent unilateral "enforcement" of rules that benefit a vested interest, as in the case of the US Helms-Burton Act?

How can a huge military and economic power like the United States be "sold" on a new international framework or, barring this, be neutralized in its ability to influence international relations according to its unilateral interests?

What major issues have I completely missed in my analysis?

I realize that these questions - as well as those that I haven't thought to ask - are extremely important, but I hope that the whole process of putting together a proposal for a new framework is not bogged down in debate. I realize that the real trade debates go on for several years, but let us at least try to nail down some kind of broad consensus. The devil's in the details, to be sure, but there can be no debate on the minutiae until a basic model is established. However, for this to work in any way, it requires participation. I look forward to a lively discussion and exchange of ideas!

Ryan McGreal
June 25, 2001

Previous: Newsletter #5 | Next: Newsletter #7

Comments

From: Scott Preston
Date: Tue, 26 June, 2001
Subject: Re: Newsletter #6

Hi Ryan,

Interesting newsletter. I've gone through it once, but it deserves more study. It helped congeal some impressions I have about the whole process of globalization which might be worthwhile sharing.

I mentioned previously that modern liberal-capitalist states may be organized around the Newtonian paradigm of atoms (individuals) and masses held together by "forces" and "movements". It may be possible to think ofso-called "globalization" (as distinct from "globalism" as Ritchie articulated it) as an effort to extend the Newtonian paradigm as it found expression in politics (liberalism, including Marxism) and economics (capitalism or communism) in whole or in part to the globe. At the heart of globalization is a particular conception or set of assumptions about the meaning of time and space, history and nature, then. These assumptions were shared by liberalism and Marxism alike. The very word "globalization" expresses this dynamic of organizing space on a new basis, identified as the new "international trade regime". Global space as envisioned in neo-liberalism is an homogenous regulated space largely overseen and administered by the WTO. This drive towards one homogenous regulated space that claims us all in a new "within", is one factor in promoting global monoculture. It is the absolute uniform space of Newtonian physics in the process of being actually realized and made normative for all.

Matching the spatial assumptions in globalization are assumptions about the meaning of time and history, and here the fascistic and totalist character of globalization is perhaps most pronounced. The "End of History" ideologues who celebrate the triumph of democractic capitalism over competing world systems have simply declared what all tyrannts have always declared -- the thousand year Reich. Into this thousand year Reich, no new or alternative future for human beings can enter, by establishment. History has ended. It is simply a mop-up operation to finally establish the "Kingdom of God" on Earth, the glorious domain of the Last Man. Once you assume the End of History, obviously any other choice of futures that compete with that vision are excluded on principle, perhaps even violently.

Nietzsche foresaw this situation as the situation of the Last Man, a being who "sees himself as the culmination, and hence perfection of evolution. Because history is progress, the last man knows himself to be superior to everything [or everyone] that has gone before; he surveys the past from the vantage point of its fulfillment and gathers what is interesting or useful while proclaiming it primitive or preparatory to himself" (Lampert, Nietzsche's Teaching, 1986: 25). Obviously, if one assumes oneself as the crown of creation and the end goal of evolution, anything else is judged aberrant, deviating, primitive, sinful (which is what the word originally meant, an old AngloSaxon archery term for an arrow that deviates from its flight path and goes off target).

Globalization and the "End of History" are Millenarian. Globalization has a strong moral and religious tone which is the result of our received thinking and cultural roots in Judeo-Christianity. It assumes an ideal of the perfect human being -- homo faber, man the tool-maker who creates himself in his own image -- as himself "tool", as servicable in terms of Capital or Labour, for example -- as "human capital" and "human resources", as head and as hands.

But if globalization is based on faulty Newtonian assumptions about the meaning of space and time, nature and history (i.e. society), there is cause for optimism. The greatest challenges to this conception of space as homogenous global space, and time as "ending" (which is implicit in the idea of "lock in" and "standstill" in trade agreements) lie in quantum physics and ecological thinking - both examples of a true "globalism" in thought and consciousness. This seems to suggest that neo-liberal "globalization" is really the last expansionist gasp of a dying paradigm attempting to reassert itself, and not the birth of a New Order at all. All tyrannies that declared themselves immortal and the culminating realization of the "End of History" were reactionary attempts to preserve a dead or dying paradigm, and to vainly stamp themselves permanently on society and human consciousness as eternal. They never succeeded.

So there is some justification for the need for a "revolution within", for a transformation in thinking, consciousness, and culture. If we simply recapitulate the patterns of recent history -- of our inherited thinking and received culture -- we will invariably reformulate those patterns in politics and economics. A full understanding of what quantum physics and ecology reveal about space(s) and time(s) is mandatory in challenging those assumptions that lie at the roots of "globalization". Quantum physics and ecological thinking provide powerful new metaphors for thinking about unanimity and diversity, of the global and the local as distinct life spaces with unique characteristics. Globalization rests not only on assumptions about the meaning of space and time, but is the policy instrument for realizing and imposing those assumptions everywhere -- control and predictability.

We are who we are as human beings and societies largely because of the meanings we give to the spaces and times we live in. Globalization, to succeed, must also aim for a uniformly controllable and predictable type of human being who can produce and consume programmatically, and that means human beings who share a uniform understanding of the meaning of (social) time and (social) space. Globalization is therefore also about creating a new human type, uniform in outlook and predictable in behaviour, which is why so much attention is being paid to education. To refashion us all in terms of human capital and human resources, into producers and consumers, is to remold us into tools of production. Slaves are tools of production.

This is why modern liberalism is so mendacious. While presenting itself as the guarantor of human freedoms, it has become the principle ideology for the realization of a new tyranny -- "freedom" used to justify its opposite "unfreedom" through the imposition of a uniform interpretation of the meaning of life-spaces and life-times.

scott preston.

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