What is globalization? IMF? OECD? WTO? NAFTA? A brief glossary of international trade agreements and terms.

by Jean Grossholtz, professor emeritus, Women's Studies Department at Mount Holyoke College, South Hadley, MA (USA), and a Women and Life on Earth activist.

Have you noticed the disappearance of your local hardware store, the locally owned and operated video store, or garage? Have you begun to get more of your products and services from chain stores? You may not connect these disappearences to globalization, but that, in fact, is what is happening. A series of international treaties and agreements jerry-rigged by trade representatives of major industrial states and imposed upon the rest of the world by judicious use of carrots and sticks, has turned over control of our local economies, of what we eat, wear, and watch on television, to an ever smaller number of transnational corporations with economies larger than most states of the world.

Driven by the possibilities of an unbounded stock market, corporations vie for control of investors' dollars, pushing the prices of their stock well beyond the production and sales the stock price presumably reflects. With this capital investment they build transnational empires and control large portions of the global market.

Step by step these international treaties have forced upon governments the basic premise that corporations' search for profits must be unhampered by national boundaries, social or environmental concerns, or sovereignty itself. Privatization and the canceling of public companies has turned much of the world's resources over to transnational corporations.

A Brief Glossary of International Trade Agreements and Terms

Compiled by Jean Grossholtz

Bretton Woods - 1944 post-World War II treaty to regulate monetary units and to prevent the kind of competitive nationalist monetary chaos which led to international disputes, fears, insecurities, and war. The treaty fixed rates of exchange between countries with all parties pegged to the US dollar, and the US Federal Reserve Bank guaranteed with gold stored in Fort Knox. The monetary system was solid, conservative, secure, with national governments having official control of currency exchange. The world was forced to accept the economic direction of northern, former colonialist powers.

The Bretton Woods agreement also created the World Bank, and the International Monetary Fund (IMF) which were supposed to work together to help particular states out of financial difficulties. The chartered members of these institutions were the northern industrial states. The US has been the acknowledged power in this group. In time the World Bank turned its attention from the reconstruction of Europe to the development of former colonies. The IMF became the guardian of fiscal stability, arranging bailouts and loans for states in economic trouble. By this means the IMF became, in effect, the enforcement arm of this northern-controlled international monetary system. The major policy formulation is the structural adjustment program levied on states in return for bailouts and international help. These policies were designed to reduce the cost of government, orient the economy toward export, and ultimately to bring the economy more securely into the world trade system.

De-regulation - the removal of government control over investment and environment - means that governments are under the direction of world trade bodies made up of nameless bureaucrats who decide disputes on the basis of the effects on profit, not on human welfare.

Fast Track - legislation requested by President Clinton in the US to give him authority to ratify global trade and investment agreements without recourse to Congress. It was defeated after a hard-fought battle in the Congress. Labor unions played a major role in this defeat. This legislation was brought up again during the week of September 21, 1998, with little public notice. Swift action by labor unions using the internet to mobilize resistance stopped its passage into law.

General Agreement on Tariffs and Trade (GATT) - formed in 1947 as part of the Bretton Woods agreement. GATT set up a series of negotiating rounds intended to reduce and gradually elminate quotas, duties, and tariffs. This task had, in effect, been accomplished by the late 1980s.

Multilateral Agreement on Investment (MAI) - a treaty first proposed through the WTO. This proposal ran into opposition from some developing countries at the Singapore WTO meeting in 1996. It was then transferred to the OECD, negotiated in secret and finally circulated among the 29 member governments beginning in early 1997. The agreement was scheduled to be approved at the April 1998 meeting of the OECD, after which member governments would seek formal endorsement.

The treaty is in response to a massive increase in international capital transactions, now estimated at $8.2 trillion, with some $350 billion in new foreign direct investment added each year. Currency speculation is out of control, with nearly two trillion dollars electronically transferred around the world every day in money markets. Mutual funds operating internationally have increased from 28 in 1986 to 1435 in 1996. Governments and transnational corporations both want some sort of global rules on investment.

The MAI treaty would impose rules on governments restricting what they can and cannot do to promote trade. The MAI gives corporations legal standing equivalent to that of nation states. Key personnel of corporations are given free unrestricted entry and authorization to work in signatory countries, in effect diplomatic privilege. MAI outlaws any performance requirements that governments might seek to impose on transnational investors and expands traditional non-expropriation rules to outlaw government actions such as new environmental laws or human rights restrictions which could cause a loss of profits. Within the structure of the MAI treaty, the loss of profits is tantamount to expropriation and corporations can sue governments for those losses.
(See: Maude Barlow and Tony Clarke, MAI Multilateral Agreement on Investment and the Threat to American Freedom, New York: Stoddart Publishing, 1998)

The OECD says agreement has been reached on 90% of the text but problems with some remaining issues will postpone agreement beyond April 1998. In fact, a world-wide protest against this agreement developed after a copy of the agreement was leaked to the press. A major electronic mail organizing effort has brought out nearly 600 organizations, two Canadian provinces, and the city of San Francisco, petitioning against adoption until a full-scale public debate has taken place.

North American Free Trade Agreement (NAFTA) - a treaty linking the economies of Canada, Mexico, and the US, intended to remove all barriers to trade and investment between the member states and to open each country's resources and labor force to exploitation by all others without restrictions. This Agreement is now being negotiated with other Western Hemisphere states, most notably Chile.

The Organization of Economic Cooperation and Development (OECD) - an organization headquartered in Paris created by and made up of representatives of northern industrial states. Called the "rich man's club," the OECD recently opened its doors to some of the Asian tigers. But the big meetings are of the ministers of the G7 which is now, with the inclusion of Russia, the G8.

In the early 1970s, as international transactions and investment increased, governments began to give up controls on capital and on international currency. This opened the door for currency speculators to treat currency exchange as another form of investment. As the currency speculators took over, international exchange rates became a free-for-all. Speculators could make huge profits with only a few cents' difference in the exchange rate. The fixed rates of the Bretton Woods accords were destroyed. Since 1985, transactions in foreign currency and international securities have increased ten-fold. Governments are helpless to control their own currencies, a fact that has been demonstrated time and again in the '90s, culminating of course in the collapse of economies in Japan and Southeast Asia in 1998.

Trilateral Commission - formed in 1973 by David Rockefeller, chairman of the Chase Manhattan Bank, and Zbigniew Brzezinski, who served as director and coordinator. The Commission included the heads of four of the world's five largest non-banking transnational corporations, top officials of five of the world's six largest international banks, and heads of major media organizations. Most US presidents (including Clinton) and many cabinet members have been members. The Commission creates forums for top executives of leading corporations to meet with government officials and media representatives. (This explains the ease with which other treaties such as the World Trade Organization (WTO), North American Free Trade Association (NAFTA), and the Multilateral Agreement on Investment (MAI) have emerged.)

The Uruguay round, which began in 1986 and extended over 6 years, took up other issues. The Uruguay round redefined what would be considered "trade," including not only agricultural and industrial products but services (including banking and health care, for example). Most notably the GATT agreement set up a definition of intellectual property rights (IPRs) to provide protection for trade related activity involving technology. Patents and copyrights were defined as the basis for such protection.

The Uruguay round also set up agreements to create a "harmonization" of standards for animal, plant, and food products and required the members to work to reduce barriers to trade such as health, safety, and environmental standards. The GATT group created the World Trade Organization. More than 100 nations were signatories.

World Trade Organization (WTO) - created by governments attendant at the Uruguay round. The WTO became reality in January 1995. It was agreed to by vote of the US Congress on December 1, 1994.

The Wall Street Journal reported that this treaty "represented another stake in the heart of the idea that governments can direct economies. The main purpose of GATT is to get governments out of the way so companies can cross jurisdictions with relative ease. It seems to be dawning on people...that government is simply too slow and clumsy to manage trade."

All WTO members are represented in the Ministerial Conference and in the General Council. Each member has one vote. The Council has authority to make binding decisions about rules and implements agreements signed under GATT. The council serves as a Trade Review Body and sets up the dispute resolution system. Member states are required to submit periodic reports on their trade practices and laws. WTO policies are discussed and created in the periodic meetings of the trade ministers from member states.

The agreement creates a dispute resolution system to enforce WTO decisions on national governments. These tribunals will hear and resolve charges that national (or state or province) legislation has created restraints on free trade...

Trade dispute proceedings are secret. No media or citizen may sit in on the proceedings and there is no outside appeal or review...

The overall effects of these treaties have transformed the world.