Excerpted from The New York Times
May 16, 1998
By ELIZABETH OLSON
GENEVA -- The World Trade Organization has come under attack recently from critics who say it ignores environmental and social issues in settling trade disputes. At the center of the issue is a ruling against the United States last month, favoring a challenge from developing countries to the U.S. law that protects sea turtles from shrimpers' nets. Interest groups are accusing the three-year-old trade organization of being responsible for gutting environmental laws in the name of unfettered trade.
"WTO allows companies to try to trump the democratic process in the United States," said Chris McGinn of the Washington-based Public Citizen Trade Watch. "It gives them an additional appeal process once a law is passed to try to undo hard-fought consumer, environmental or health legislation."
In the case of the sea turtles, India, Malaysia, Pakistan and Thailand contended that U.S. law illegally blocked their shrimp imports to American markets, and they won a preliminary decision. The U.S. trade representative, Charlene Barshefsky, chided the organization's panel for reaching "the wrong conclusion." The United States said this week that it would appeal the ruling.
A reversal is unlikely if past practice is any guide. The trade group's 132 member countries have brought more than 100 conflicts over trading practices to the dispute settlement process, although most have not yet completed the lengthy course. Of the rulings that have been appealed, none have been overturned.
That only fuels the anger of those interest groups that insist that environmental good is more important for society than global trade rules, and warn that national safeguards for the environment, food safety and labor standards are threatened by the trade organization's reach.
The WTO, a government-to-government entity accustomed to operating in gentlemanly secrecy, is reeling under the onslaught. "I am very sorry" about the criticism, said Renato Ruggiero, head of the organization. "We are not against endangered species."
Ruggiero, a former Italian trade minister, won office after the United States, which had favored another candidate and was suspicious Ruggiero might be a closet protectionist, dropped its opposition...
To date, some 126 cases have been subjected to the organization's process, a tightly choreographed set of consultations, hearings, panels and rulings. This is far more than its predecessor handled, mostly because losers then could stonewall unfavorable rulings without facing sanctions.
Dispute settlement at the WTO is binding, with losing governments encouraged to fix offending trade regulations, or, if not, to agree mutually on compensation, like tariff reductions in other areas. If that fails, trade sanctions can be put on the loser. That has not been tested because, so far, losing countries have complied with rulings. The United States has used the system, modeled on American trade law, more than any other country, winning highly publicized challenges to European Union restrictions on hormone-treated meat and to the European plan for importing and selling bananas, as well as to Japan's taxes on imported spirits and Argentina's duties on footwear and textile items.
American trade negotiators have racked up a notable score card -- 19 victories and one loss in cases they initiated. They have also lost four cases brought by other nations. While Rita Derrick Hayes, the U.S. ambassador to the World Trade Organization, praises the "rules-based" system as bringing stability and predictability to world trade, governmental organizations increasingly see the organization's settlement of disputes quite differently.
"All the pressure tactics that are effective in the United States don't work with WTO because it's an autocratic institution," McGinn of Public Citizen Trade Watch said.
The sea turtle case was not the first to rouse the ire of environmentalists. In 1996, Venezuela and Brazil won a challenge to the U.S. regulations on gasoline cleanliness that required Americans to lower overall standards, environmentalists maintain. But the criticism that followed was mild compared with the firestorm generated by the turtles case, and the United States, Britain, the European Union and Japan agreed earlier this month that there was a need to bolster the public's trust in their trade club.
Even its fans admit that the organization's secrecy has extracted a price in public confidence. Governments frequently leak interim rulings, supposedly confidential, to put the best face on a defeat. Ruggiero warns that such leaks undermine the organization's credibility by allowing it to be painted as the "enemy of developing countries, consumers and the environment."
The greening of the organization, pressure groups argue, should include releasing confidential documents on disputes, opening closed sessions to observers and allowing filing of outside views.
Environmentalists are also lobbying to have trade-dispute panelists vetted for possible conflicts of interest. Panelists are trade experts, usually lawyers or negotiators...