Spennithorne and beyond

To: Retort
From: The just-because-we're-paranoid Department

This piece by Greg Palast should be explosive; it has (he reported 
yesterday) been suppressed in the US media.

The WTO's Hidden Agenda
Friday, November 9, 2001

By Greg Palast
LONDON -- Three confidential documents from inside the World Trade 
Organization Secretariat and a group of captains of London finance, who 
call themselves the "British Invisibles," reveal the extraordinary secret 
entanglement of industry with government in designing European and American 
proposals for radical pro-business changes in WTO rules.
One set of documents, minutes of the private meetings of the Liberalization 
of Trade in Services (LOTIS) committee, obtained by BBC television's 
Newsnight program and CorpWatch, record 14 secret meetings, from April 1999 
and February 2001, between Britain's chief services trade negotiators, the 
Bank of England and the movers and shakers of the Euro-American business 
world. Those attending the closed LOTIS include Peter Sutherland, 
International Chairman of US-based investment bank Goldman Sachs and 
formerly the Director General of the World Trade Organization.
LOTIS is chaired by The Right Honorable Lord Brittan of Spennithorne Q.C., 
who, as Leon Brittan headed the European Union. He currently serves as 
Vice-Chairman of international banking house UBS Warburg Dillon Read.
Other LOTIS members include the European chiefs of US service industry 
giants Morgan Stanley Dean Witter, Prudential Corporation and 
PriceWaterhouseCoopers. LOTIS is an outgrowth of the self-styled, "British 
Invisibles," more formally known as the Financial Services International 
London group. They were joined at various times by specially-invited 
members of the European Commission's trade negotiating team.
The minutes indicate that the government officials shared confidential 
negotiating documents with the corporate leaders as well as inside 
information on the negotiating positions of the European community, the US 
and developing nations. At the meeting held on February 22nd of this year, 
Britain's chief negotiator on the General Agreement on Trade in Services 
(GATS) made reference to the European Commission's paper on industry 
regulation which had been privately circulated to LOTIS members for their 
comment.
GATS is a far reaching agreement that would affect every public service 
from healthcare and education to energy, water and transportation. It would 
challenge national environmental, labor and consumer laws as barriers to 
trade making these and other critical services totally unregulated, say 
critics.
Barry Coates, director of the WTO watchdog organization the World 
Development Movement, said he was surprised to learn that the LOTIS 
industry members received documents which the British government had 
refused to give his organization, even papers "which they told us did not 
exist."
Coates, in Qatar today to monitor the WTO confab, was somewhat amused that 
the minutes indicate that LOTIS members, whose companies represent over 
$100 billion in assets, seemed fixated on countering the arguments and 
actions of Coates' low-budget organization. Two of the LOTIS meetings 
concentrated on hiring consulting firms and academics to provide the 
government agencies with answers to the World Development Movement's 
arguments which question GATS and the wider globalization agenda. The 
minutes noted that "the pro-GATS case was vulnerable when the NGOs asked 
for proof of where the economic benefits of liberalization lay."
Reuters executive Henry Manisty offered his news service to the LOTIS 
propaganda effort. Manisty told the LOTIS group he "wondered how business 
views could best be communicated to the public." Reuters, he said, "would 
be most willing to give them publicity."
"For a long time conspiracy theorists thought there had been secret 
meetings between governments and corporations," said Coates. "Looking at 
these minutes, it was worse than we thought. [The WTO GATS proposals] are a 
stitch-up between corporate lobbyists and government."
A Question of Necessity?
Besides having advance or exclusive access to otherwise confidential 
governmental negotiating documents, the minutes indicate that the industry 
chiefs, as members of the European Services Forum, held exclusive meetings 
with the "Article 133" group, which sets the European Commission's trade 
policies. The Article 133 group's deliberations are supposedly confidential.

At least one such gathering with the Article 133 committee, held on October 
30th has been independently confirmed by investigators from the Dutch think 
tank Corporate Europe Observatory.

Two other sets of documents suggest that LOTIS and other corporate 
lobbyists appeared to have been astonishingly successful in getting Western 
governments to adopt their plans to radically expand the reach of the GATS 
treaty. A confidential memo dated March 19th obtained from inside the WTO's 
Secretariat, written four weeks after the LOTIS meeting on the matter, 
indicates that European negotiators had accepted industry-favored 
amendments to GATS Article VI.4, known as the "necessity test."

The necessity test requires nations to prove that their regulations -- from 
pollution control to child labor laws -- are not hidden impediments to 
trade. Industry wants the WTO to employ a necessity test similar to the one 
in the North America Free Trade Agreement which has worked to reverse local 
environmental rules. For example, Mexico has been forced to pay $17 million 
to an American corporation, Metalclad, for delaying the operation of the 
company's toxic waste dump and processing plant. Local Mexican officials 
had attempted to block the plant's operation on the grounds that it was 
built without a construction permit, and would not have received one, as 
the plant handling toxins was placed above the area's drinking water supply.

According to the secret March 19 memo from the Working Party on Domestic 
Regulation, issued to WTO members by the organization's Secretariat, 
European negotiators reached a private consensus to change the worldwide 
GATS agreement to include a much stronger form of the necessity test than 
found even in NAFTA. The Agreement between the US, Canada and Mexico only 
requires that a nation's regulations be "least trade restrictive."

Under the GATS, as proposed in the memo, national laws and regulations 
would be struck down if they are "more burdensome than necessary" to 
business. The difference between the NAFTA language and the proposal for 
GATS is subtle, but the effect would be enormous. The language in the WTO 
memo effectively removes trade from the equation. Rather, a nation would 
have to adopt rules which are, in the memo's words, the most "efficient" -- 
that is to say those which carry the lowest cost to business.



NAFTA on Steroids
The changes, as proposed, would slash regulatory controls over local 
businesses as well as foreign operators seeking entry to a market. For 
example, the State of California banned the gasoline additive MBTE because 
pollutes ground water. The Canadian maker of the additive has sued the 
United States under NAFTA on the grounds that banning the chemical was not 
the "least trade restrictive" choice for stopping ground water 
contamination. California could have, the Canadians argue, chosen to dig up 
and repair thousands of gas station holding tanks and established a giant 
new inspection system. While the cost of the alternative, running into 
billions of dollars, could effectively force California to back away from 
protecting its ground water, it would permit Canada to continue to export 
the contaminant.

California is fighting Canada's interpretation of the necessity test before 
a NAFTA disputes panel. But under the language proposed for WTO, the state 
would have no defense. Lori Wallach of Global Trade Watch, Washington DC, 
calls the proposed language GATS language changes, "NAFTA on steroids."

The WTO Secretariat's proposals follow lines suggested in another 
confidential document from the European Community's Working Group dated 
February 24 and entitled "Domestic Regulation: Necessity and Transparency," 
issued just after LOTIS meeting on the matter with European trade negotiators.

Spokespersons for Britain's Department of Trade and Industry, a leader in 
the EC Working Group, responded to our discovery of the documents by 
stating that the GATS changes, as proposed, would still allow nations their 
"sovereign right to regulate services" to meet "national policy objectives."

However, according to the confidential March 19 memo, in the course of 
secret multilateral negotiations trade ministers have agreed that, before a 
WTO tribunal, a defense of, "safeguarding the public interest... was rejected."

In place of a "public interest" defense, the WTO Secretariat suggests in 
the memo that the trade body adopt an "efficiency principle." This has the 
advantage, states the official Working Group paper, of allowing Presidents 
and Prime Ministers hostile to environmental protection regulations to 
eliminate them -- not through votes of a nation's congress or parliament, 
but through an edict of WTO which a nation would be powerless to reverse. 
"It may be politically more acceptable," says the memo, "to countries to 
accept international obligations which give primacy to economic efficiency."

If, for example, the Bush Administration would rather not reduce the 
arsenic contamination of water from mining operations, despite 
congressional legislation and decisions by regulatory panels, it could 
eliminate the anti-pollution laws by acceding to orders of a WTO disputes 
panel that found regulation "more burdensome than necessary." Unlike US 
congressional, regulatory and court proceedings, WTO disputes panel 
deliberations and submitted evidence are closed to the public and the 
records sealed.

A World Trade Organization spokesman acknowledged the authenticity of the 
March 19th note. However, he said the internal discussion document could 
not be read to suggest that WTO have the, "power to strike down national 
laws or regulations."

Barry Coates of the World Development Movement disagrees, "At its heart, it 
is a direct attack on the democratic process."

###

Greg Palast can be seen today, Friday November 9th, reporting on the WTO 
Doha conference, on Britain's premier news program, Newsnight.

You can view this program on demand.

The program will remain at this location until Mon Nov 12, 2001 5:30 PM EST 
after which time it will be linked from http://www.gregpalast.com

Greg Palast is an investigative journalist who writes a column called 
"Inside Corporate America" for the Observer, Britain's most respected 
Sunday newspaper. View all of Greg's columns at http://www.gregpalast.com