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Fair Trade Campaign Strategy Session

As advocates of the public interest, we must evaluate the impacts of trade and environmental policy, as well as trends towards global governance. A number of critical issues linking trade and environmental policy will be discussed and debated in this forum.

1. Compensatory tariffs. Third World advocates see environmental standards as a threat to development. This is only true of development based on comparative advantage gained by being able to externalize pollution costs. A frequently proposed mechanism for internalizing these costs for traded goods - for "leveling the playing field" between competing countries - is a compensatory tariff: a duty on a product exported from a country with lower standards that would increase the price of that product in the markets of the importing country that has higher standards. Then the polluting exporter wouldn't have an "unfair trade advantage" over the manufacturer in the importing country that has tougher environmental regulations. The problem with this kind of tariff is that it would slow development in the Third World while the tariff revenues would accrue to the treasury of the country with higher standards, usually a richer country. What mechanism can collect and allocate the revenues of a compensatory tariff to enable development and environmental protection in developing countries?

2. Pre-emption of national, state/provincial and local laws. The GATT panel ruling on tuna fishing found, in favor of Mexico and numerous other nations, that the U.S. Marine Mammal Protection Act was illegal by international law. This ruling sets a precedent that international commercial interests can overrule domestic legislation - potentially pre-empting national and local pesticide regulations, energy policies, log export quotas, and so on. Current GATT proposals regarding "technical barriers to trade" would even pre-empt local government initiatives.

3. Codes of Conduct for TNCs. Transnational corporations have successfully evaded institutionalization of the UN's codes of conduct thus far. Various codes would regulate different aspects of corporate behavior: among the most onerous are "restrictive business practices." The environmental mandate of UNCED, however, may present a compelling political framework with which to generate broad support for these codes. The coming debate over the purposes of a WTO could present a similar opportunity. Which codes of conduct for TNCs address the environmental and development issues of greatest concern and how can we effectively campaign to institutionalize them?

4. The World Trade Organization. With effective advocacy, the WTO could regulate the restrictive business practices of the transnational corporations and institutionalize corporate codes of conduct. On the other hand, an WTO could become the mechanism for deregulating services and investment and permit cross-retaliation - trade sanctions from one sector to enforce policies in another. What hierarchy of international law will be established, and who will decide? How can we influence the WTO debate?

5. TRIPS. The double standard in intellectual property rights is one of the most glaring: corporations already enjoy substantial rights and are seeking the "right" to appropriate that intellectual property so far reserved by the public sector of many countries as well as that inherent to indigenous communities. What political leverage exists to offset within UNCED the TRIPS proposals of the GATT?

6. TRIMS and services. These are tactics of the corporate sector to deregulate sectors of the economy that are not presently addressed by the GATT and thus to gain access to and control of all markets in all nations. TRIMS (trade related investment measures) and services are components of the current GATT proposals that would restrict the right of governments to control foreign investment in their economies generally in the first case and in specific service industries (e.g., banking, insurance, telecommunications, maritime) in the second. What regulatory mechanisms can ensure that nations have the right to set policies enabling sustainable development?

7. Full cost pricing, social and ecological dumping. Many ecological economists propose internalizing the externalities of pollution - that is, adding the costs of prevention and/or clean-up to the prices of goods - in order to level the playing field between manufacturers of like goods. Some would add in social costs, such as low wage rates, as well. By reflecting the real value in consumer prices, full cost pricing would also affect consumer behavior and thus ration scarce resources. Full cost pricing would eliminate dumping, the practice of offering products at prices below the cost of production in order to gain an advantage and/or eliminate competitors; if applied uniformly, it would not discriminate against Third World producers. But the tremendous increases in prices would shatter the economy and disproportionately hurt the poor. How can full cost pricing be integrated into the world economy fairly?

8. The Enterprise for the Americas Initiative (EAI). In a series of bilateral deals, the EAI offers debt-for-nature swaps for the relief of official debt to countries agreeing to open their economies to free trade, foreign investment, structural adjustment, and the renegotiation of commercial debt. Of course, all of these tactics reduce the degree of control that nations have to establish policies that enable sustainable development. How can we offset these initiatives?

Organizer:

• Mark Ritchie, Executive Director, Institute for Agriculture and Trade Policy (IATP), 1313 Fifth Street, S.E., Suite 303, Minneapolis, MN 55414, or P.O. Box 80066, Minneapolis, MN 55408; (612) 379 - 5980; fax: (612) 379 - 5982; Econet: iatp@igc.org.

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