Newsgroups: bit.listserv.biosph-l
Date:         Sat, 3 Oct 1992 10:58:55 PDT
Reply-To:     casspa@ATLANTIS.CS.ORST.EDU
From:         casspa@ATLANTIS.CS.ORST.EDU
Subject:      NAFTA/GATT

The following article appeared in the October issue of "In Good Tilth".
I had meant to post the article as written but left it at my office.  So...
this is the edited 60% version.
Paul

FREE TRADE AGREEMENTS:  A PRIMER GATT and NAFTA'S IMPLICATIONS FOR
THE ORGANIC FARMER, THE CONSUMER, AND THE ENVIRONMENT

By  Marianne Dugan

     Although it may seem a remote and esoteric issue, the
impending North American Free Trade Agreement (NAFTA) and the
proposed new version of the General Agreement on Tariffs and  Trade
(GATT) both promise to throw a carefully-aimed monkey wrench into
the health, safety, and environmental laws which citizens around
the world have worked hard to create.  In addition, the
negotiators of these agreements are tinkering with the rights of
nations to decide to what extent they will promote small-scale
agriculture.   These two important consequences of GATT and NAFTA
stem  from a common root -- standardization.  The proposed texts
of GATT and NAFTA require member nations to accept common standards
for a  wide range of laws, from pesticide residues to farm
subsidies.   Although they are not lowest common denominators, they
are much lower than those existing in the United States and in many
other countries. NAFTA and GATT have been attacked by a wide range
of interest groups, from environmental organizations to consumer
groups and the National Family Farm Coalition, which represents
about forty farm and rural advocacy groups.  The objections are
based on two characteristics of the trade agreements:  One, the
non-democratic,secret process by which they are negotiated, and
two, the fact  that they value large-scale economic factors and the
"trickle-down theory" over anything else, including health, safety,
environment, and family-level economics.

OVERVIEW

     GATT was signed in 1947, when international trade was  impeded
by high tariff rates.  There have been seven "rounds" of GATT since
then, and world trade volume has increased twenty-fold.  The
present phase is the "Uruguay Round" of GATT, which has been
underway since 1986, between 107 nations.  A final agreement is
expected soon.  NAFTA, between the United States, Canada, and
Mexico, is a new agreement which is still under negotiation.  The
President has not yet even released a draft for public
inspection. Until now, North American trade has been governed by
GATT and by the U.S.'s bilateral agreements with Canada and Mexico.
     One of the more disturbing aspects of the trade agreement
process is what is known as "fast-track."  During the Nixon
administration Congress delegated to the President authority to
negotiate trade agreements in secret.  The President then submits
the agreement to Congress, which is allowed only twenty hours of
debate over ninety days, and cannot amend the agreement -- a take
it or leave it proposition.  The undemocratic nature of the process
is exemplified by the fact that, rather than being  drafted
by elected Congresspeople, the U.S. proposal for the Uruguay  Round
was drafted by Daniel Amstutz, former senior vice president of
Cargill Inc., the world's largest privately owned corporation and
largest grain company.  Thus it is no surprise that the proposal
favors multinational agribusiness and food processors.

AGRICULTURAL SUBSIDIES

     Despite the drastic environmental and health implications  of
these agreements (discussed below), agriculture has been the main
bone of contention in the Uruguay Round of GATT.  The U.S. has
demanded that the European Community (EC) reduce its agricultural
subsidies by as much as seventy-five percent, and the negotiations
have remained deadlocked over this issue.  Although the U.S. has
accused the EC of being too stubborn, it was the U.S. which in
1990 stated that it would let the talks fail before it would
"settle  for a modest result," and the Bush Administration has
repeatedly refused the requests of farmers and other groups to hold
hearings in which they can voice their objections to the agreement.
     According to a 1990 study, if the EC cut domestic
supports by one-third and export subsidies by one-half, U.S. net
farm income could rise $4 billion by 1996.  In the early 1960s, the
EC began its "Common Agricultural Policy" as a way of insuring
"food security" and protecting its millions of small farmers.  The
U.S. argues that this policy, especially its export subsidies,
enables European countries to keep out cheaper foreign foods and
dump  their surpluses on the world market.  However, a 1990 report
showed that total subsidies for each farmer were worth $8,000 in
EC countries and $20,000 in the U.S.  U.S. subsidies themselves may
have only limited interest to small American farmers, however; in
1987 forty-two percent of the U.S. government's direct payments
went to the top 3.6 percent of American farms, and ninety percent
went to the top 18 percent.
     Many see GATT as a direct threat to the already besieged
small farmer, favoring only corporate agribusiness.  Small-farm
groups like the National Farmers' Organization and the National
Family Farm Coalition are opposed to the U.S. position, calling it
"radical and counterproductive."  The Coalition advocates
controls on U.S. farm acreage and higher farm prices, and wants
GATT to allow countries to protect family farmers while
eliminating dumping and overproduction.  The U.S. GATT stance also
displeases some U.S. producers of sugar, meat, dairy products,
peanuts, and mohair, who are protected through import quotas.  Mark
Ritchie, executive director of the Institute for Agriculture and
Trade Policy, said in 1990 he envisions a coalition of these
special commodity producers, environmental organizations, and
small-farm groups.  The conservative American Farm Bureau supports
the Administration position, but it has been pointed out that that
group "claims more members than there are farmers, largely  because
it awards membership to everyone who buys its insurance."
The Uruguay Round marks the first time the major players  in
GATT have even allowed agriculture to be a negotiating issue.  The
U.S.'s new insistence on EC concessions is in large part due to
America's loss of world grain markets during the 1980s, after a
boom period when 58 percent of U.S. wheat was exported.
Although the U.S. blames the EC's surpluses for this upset, the
EC dumped its grain into a market already glutted by subsidized
American surpluses.
     In early 1992 40,000 Canadian farmers marched on their
national capital to demand their government not give in to
negotiators' demands that it drop its domestic food policy, which
limit imports as long as Canadian farmers are not producing large
surpluses.  The protesters fear that such an agreement would
destroy the Canadian family farm, especially in the dairy and
poultry industries, by allowing U.S. multinationals to take over
the market, and they point out that Canada rewards farmers for
producing only what is needed nationally.
     In Europe, small farmers have been equally aggressive,
marching on GATT headquarters in Brussels and threatening to
blockade Paris with tractors if the EC gives in to the U.S.
demands.  European farmers point out that eighty percent of French
farmers earn less than the national minimum wage of about $1100 a
month, and ten percent of all Western Europeans live on farms,
compared with two percent of Americans.
     The U.S. has suggested a compromise called "decoupling,"
whereby agricultural subsidies would be dropped in favor of  direct
payments to small farmers, linked not to production but to family
income.  Farmers complain that this would allow their governments
to cut payments during fiscal crises.  Carlisle Ford Runge of the
University of Minnesota's Institute of Public Affairs believes
that "decoupling will mean greater reliance on market prices and
the search for a profitable mix of crops, independent of government
price supports. . . . The overall effect will be to enhance
diversified cropping mixes, creating demand for research into new
crop alternatives and widening the base of agricultural
productivity gains."
     Another idea, which appears not to have gained favor with
negotiators, is to allow "subsidies" in the form of environmental
programs, which often benefit small farmers.  Runge points out
that "soil and water conservation, wildlife habitat and rural
infrastructure would yield direct economic benefits to farmers,
who have suffered the brunt of rural environmental pollution . .
. .  This relationship is particularly significant in Europe, where
environmental damages and rural unemployment resulting from
farming specialized crops are major political issues. . . . [P]rice
support programs are disguised transfers that protect domestic
agricultural constituencies from market forces with little scrutiny
from taxpayers, and even less regard for their environmental and
global trade effects."  However, since this factor has not entered
into the GATT agreement, environmentally sound, sustainable
agriculture programs in states like Texas risk being challenged as
conferring an "unfair competitive advantage" in violation of GATT.

HEALTH AND ENVIRONMENT:  HARMONIZATION OF STANDARDS

     Although trade agreements have traditionally focused on
tariffs, health, safety, and environment regulations have now  come
under attack as "non-tariff barriers."  Such barriers include the
Food Drug and Cosmetic Act ban on food imports containing harmful
additives or pesticide residues; the Meat Inspection Act, which
regulates inspection and handling of imported meat; and consumer
product safety laws govern labeling and auto safety.
     NAFTA and GATT negotiators have come up with "
harmonization" as the solution to these restrictions.
International standards have been set as "ceilings," prohibiting
member nations from enforcing stricter standards against imports.
This is true even if the purpose of the stricter standard is not
to restrict trade and protect the domestic economy, but to protect
health, safety, or the environment.  Harmonization is an end-run
around local and national decision-making and the democratic
process itself, and  is the reverse of the approach taken by the
federal government,  which sets standards such as the Food, Drug
and Cosmetic Act as floors, allowing states to enact stricter
protections.  The true impact  of harmonization was made clear when
Mexico challenged U.S. laws  which prohibited the sale of tuna
caught in a manner which killed high numbers of dolphins.  The
Mexican government prevailed in this matter, with the result that
the U.S. cannot enforce the law.
     Food Standards

     The harmonization standards for food are set by the "
Codex Alimentarius," which previously served a merely advisory role
to the U.N.  This body, whose procedures are not open to the
public, appears to have been "captured," to a great extent, by
multinational food and agribusiness companies; its advisors
include corporate executives from Nestle, Coca-Cola, Pepsi,
Hershey, Ralston Purina, Kraft, Grocery Manufacturers of America,
and the American Frozen Food Institute.  The Codex standards cover
food contaminant levels, pesticides, additives, processing,
packaging, and labeling, and allow higher pesticide residues than
U.S. law.  For instance, Codex allows residues from DDT (banned in
the U.S.) on grains, meats, and dairy products, and high amounts
of heptachlor and aldrin (strictly limited in the U.S.) on fruits
and vegetables.  Codex requires that national standards be based
on "sound science," and be set through a balancing of health
benefits and economic detriment.  This directly conflicts with
the "Delaney Clause," a 1958 amendment to the Food, Drug and
Cosmetic Act that sets a zero tolerance level for carcinogens in
food.
     Bush Administration "Greenwash"

     This summer, the Bush administration attempted to quell
public fears by stating that the NAFTA parties have agreed to allow
the U.S. to keep out products that do not meet our standards.  This
has no basis in fact, and amounts to what Lori Wallach of Public
Citizen has called "Greenwash."  One problem is that the proposed
NAFTA text has never officially been made public.  The
harmonization standards were set long ago, and the leaked "Dallas
Draft" tracks GATT language almost word for word.  The
Administration has stated that GATT and NAFTA will not require
countries to change their environmental and health laws, but GATT
specifically requires such changes.  In fact, the Administration
used the existing U.S.-Canada Agreement's harmonization
requirements to weaken meat inspection on the border, and the
Canadian government cited the Agreement in requiring "free
passage" of food meeting U.S. standards for pesticide residues,
instead of enforcing the more stringent Canadian levels.  If
governments do not make such changes on their own, other nations
can challenge regulations as restrictions on trade.

WHAT HAPPENS IN A TRADE CHALLENGE?

     If a member nation challenges another nation's laws as
restricting trade, the dispute will be handled by special GATT or
NAFTA panels, in a nondemocratic process which is not open to the
public.  In the case of food and agriculture challenges, the
adjudicatory body is the Codex Alimentarius.
     Contrary to the Administration's assurances, the risk of
losing such a challenge is great.  Under GATT, a defending nation
bears the burden of showing why its law is not a trade barrier.
The challenger need not even show actual economic harm.
Standards that are stronger than the harmonized international
standards are presumed illegal, a presumption which can be overcome
only if the challenged nation meets one of two criteria:  1) a
flawless scientific basis (no conflicting scientific evidence) or
2) a balancing between health factors and economic loss.  As
mentioned above, the Delaney Clause would fail this balancing test.
Even  if the challenged law meets one of those criteria, the
defender must show that the law is the least trade restrictive
means to a legitimate end.  Under GATT, environmental goals are not
a "legitimate" basis for food safety laws.
     The Administration's arguments in favor of harmonization  boil
down to an assertion that the U.S. will prevail in any such
challenge, because our laws are based on valid scientific
evidence. However, it said the same thing about the tuna-dolphin
case, in which we lost because of the "least restrictive means"
hurdle.  Our laws are based on public input and scientific
evidence, and  are enacted through a complex democratic process of
checks and balances; why should we risk their being eviscerated by
a trade-oriented panel of nondemocratically-appointed judges?

THE BOTTOM LINE: WHAT DOES THIS ALL MEAN?

     If the U.S. is successful in its bid to de-subsidize farming
worldwide, that will create one more obstacle to the financial
survival of small and family farmers.  The opening up of
international markets, as usual, will mainly benefit the large
producers who can stay afloat and compete in the shark-infested
waters of free trade.
     Government programs which protect small business,
consumers, or the environment will come under increasing
international fire if NAFTA and the Uruguay Round of GATT pass.
If a challenge is successful, the loser must amend the offending
law or face trade sanctions from the other member nations.  Even
now, numerous laws have been challenged as trade restrictions:
Japan has threatened to challenge raw log export bans by the U.S.
and developing nations; the U.S. has threatened to challenge the
EC's ban on hormone-fed beef and Canada's ban on nonrecyclable beer
containers, and has successfully challenged a Canadian law which
required on-shore inspection of fish catches; and the U.S. is
challenging Canadian reforestation plans as illegal subsidies to
the Canadian forestry industry.  Far from upholding the idea of
democratically-enacted health and environment regulations, U.S.
Agriculture Secretary Clayton Yeutter complained, "We just cannot
have a situation in the world where we have an agency in some
country  put its finger in the air and if somebody objects to a
product, the product is banned."
     Harmonization standards will mean that farmers and
companies who follow U.S. health, safety, and environmental
regulations will be at a competitive disadvantage with imports.
In the long run this will most likely lead to extreme pressures on
Congress to lower U.S. standards to eliminate that gap.  The
Mexican border area is a good example of free trade gone wild.
Over the past few years, the U.S. and Mexico have agreed on a
"maquiladora zone" along the border, where U.S. corporations have
been encouraged to build factories by cheap labor costs (as low as
four dollars a  day) and relaxed environmental regulations,
resulting in what the American Medical Association has condemned
as a "virtual cesspool and breeding ground for infectious disease."
     There may be an ironicly positive side of harmonization  for
the organic farmer:  There is the possibility that the lower
international pesticide standards could lead to a consumer-
imposed reduction on trade in imported produce.  In the United
States and Europe at least, where the market for organic produce
is reaching a respectable magnitude, educated shoppers may decide
to play it safe and stick to domestic, organic produce labeled as
such.   This possibility has not been raised in the media, but
seems to be a plausible outcome, given the high level of
environmental and  health awareness of today's American shopper.
 ________________________
 [The author would like to thank Lori Wallach of Public Citizen;
much of the basic information about NAFTA in this article was
taken from a information sheet by Ms. Wallach, called "Greenwash
and Other Talking Points in Preparation for the Announcement of the
Nafta," which Ms. Wallach has offered as a source for articles
such as this.  A copy is on file with the author.]
Marianne Dugan  mdugan@oregon.uoregon.edu
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU