The Enforcers - What is the WTO, and why we must fight it!

At the end of September 2000, tens of thousands have been trying to protest at the annual meeting of the World Bank and International Monetary Fund in Prague. They are right to protest. But what are they protesting about? The World Bank, IMF and the World Trade Organisation - that was stopped in its tracks in Seattle last December - are the three pillars of the global capitalist economic order. They argue that problems like world poverty, the destruction of the environment and poisoning of our food "just happen." Actually these things are imposed by the giant multinationals that control the world's economic resources. And these three institutions are their enforcers.

What is the WTO?

Let's take a look at the WTO first. It emerged out of the GATT (General Agreement on Tariffs and Trade) in 1994. It sees itself as a sort of court that ensures there is a "level playing field" in the arena of world trade. It's a free trade gendarme. Gregory Palast, in a recent issue of the Big Issue, gave us a glimpse of what it really gets up to. Earlier this year a young woman of thirty died of breast cancer in London. Maude could have been cured, but her local Health Authority decided they couldn't afford the drug Taxol. Taxol is expensive. It is manufactured by Bristol-Myers Squibb, who sell it with a 900% mark-up. The firm can charge so much because they are a monopoly. If any other company or country tries to produce Taxol at a price health authorities can afford, Bristol-Myers Squibb will hunt them down through the courts. They can take a case to the WTO under its TRIPS (Trade in Intellectual Property Rights) clauses. The World Trade Organisation thinks it's much more important to protect multinationals' monopoly rights than save the lives of "little people".

How can they justify this? The WTO argues that firms like Bristol-Myers Squibb spend a great deal of money on developing successful drugs like Taxol. If they can be ripped off by any Tom, Dick or Harry, then why should they bother? Protecting their "intellectual property rights" is the only way to stimulate progress. It's hard on Maude, but that's the way of the world.

Actually firms don't do research and come up with bright ideas. Workers do. But any worker who joins an outfit like Bristol-Myers Squibb signs away their intellectual property rights over to the firm that pays them. And anyway the drug company didn't invent Taxol. US government researchers did. All Bristol-Myers did was patent the size of the dose. Now they can hold the world to ransom. And the WTO will help them do it with every power at its disposal. Who killed Maude? It was the WTO.

Profits before people!

Maude's story is not a one-off. South Africa is threatened with an AIDS epidemic more serious than anything we've experienced in Europe since the Black Death. Life expectancy is expected to dip below forty. Although they haven't got it completely licked, drugs can help AIDS sufferers. Glaxo produces a medicine called AZT. It doesn't come cheap, partly because Glaxo can mark it up by 400% because of their patent monopoly. South Africa needs plenty of it, but can't afford Glaxo's prices. Argentina offered to produce AZT at a price the South African health service could afford. Al Gore, the US Vice President and self-appointed muscle man for big business, took Argentina to the WTO. In matters of intellectual property rights the WTO is a hanging judge. Argentina is being forced to back down, and millions will suffer and die unnecessarily in South Africa. Thanks a lot, WTO.

Is the WTO protecting innovation? Not on your life! AZT was dreamed up in US government labs, twenty years before the AIDS virus was identified. All Glaxo Wellcome did was patent the results of others' research - what your mum probably explained to you was theft when you were little. Glaxo management obviously believe the public sector should shoulder the losses of doing basic research while the "wealth creators" pocket the proceeds as a reward for their entrepreneurship.

The most extreme example of this is the American firm Rice Tec which claims it owns basmati rice, and has the patents to prove it. The only problem with that claim is that basmati rice has a documented existence for hundreds of years past. It was developed by unknown Indian peasants who would have been scandalised and amazed to find out that centuries later capitalist corporations could lay claim to life forms at all - let alone life forms they could have had no responsibility for developing.

The first economics lesson you get at school is about consumer sovereignty. It's about how in the market place capitalists compete with each other to give us exactly what we want. The WTO has moved beyond that first lesson. If we don't want genetically modified organisms in our food (and surveys all show we don't) then the WTO is determined that big business is going to stuff it down our gullets whether we like it or not. They allow the grain barons to mix GM foodstuffs with unmodified crops and forbid clear labelling so that the consumer cannot buy what they want. After the listeria, salmonella and BSE scandals the WTO is determined to let big agribusiness keep poisoning us in the cause of profit. This is not encouraging enterprise or guaranteeing level playing fields in world trade. This is lining up with the multinationals against workers and consumers. That's what the WTO is for.

IMF and World Bank

The IMF and the World Bank, like the GATT which transmuted into the WTO, were set up after the second world war to regulate world capitalism. Though the distinction is not entirely clear, the World Bank is supposed to be responsible for long-term development finance, while the IMF goes in for crisis management - the writer Anthony Sampson called it the "financial sheriff". In fact both institutions share a hard-nosed neoliberal agenda, using their loans as a crowbar to open up vulnerable countries to the looting and depredations of the multinationals. In part they act as an insurance system for first-world bankers. During the 1980s and early 1990s lending to less developed countries' governments was seen as a licence to print money. Accordingly the advanced lands' financial institutions saw it as a duty to dive in - in the interests of "enterprise". With the Mexican crisis in 1994 and the East Asian collapse in 1997 it was panic-stations for the bankers. The World Bank took up the slack while the IMF steamed in and wigged off countries for economic mismanagement that had only weeks before been held up before us as miracle economies. In effect the World Bank has "nationalised" non-performing third world debt to get banks in the old imperialist countries off the hook.

Both the World Bank and the Fund go in for "structural adjustment policies" as a condition for their loans. In effect they demand open-house for big business. In fact Article 1 of the World Bank's charter lays down the five objectives of the organisation. One is to "promote private foreign investment," another is to "conduct its operations with due regard to the effect of international investment on business conditions in the territories of members." Clear enough!

What does structural adjustment do for the poor in the poorest countries? Here's a balance sheet from Africa in the 1980s:

"Between 1980 and 1989 some thirty-three African countries received 241 structural adjustment loans. During that same period average GDP per capita in those countries fell 1.1% a year, while per capita food production also experienced steady decline. The real value of the minimum wage dropped by over 25%, government expenditure on education fell from $11 billion to $7 billion and primary school enrolments dropped from 80% in 1980 to 69% in 1990. The number of poor people in these countries rose from 184 million in 1985 to 216 million in 1990, an increase of seventeen per cent."

Thanks a lot, fellers!

"And forgive us our debts....."

Last year Gordon Brown was crowing because he said he had got the advanced capitalist counties via the World Bank to embark on a very limited programme of debt forgiveness for a handful of the very poorest countries - provided that they were prepared to be good boys and girls in the eyes of world capitalism. $100 billion was to be written off. Since then the scheme seems to have run into the ground. Oxfam is furious at the broken promises. They say: "The World Bank and its board continue to fail to deliver on its mandate and its vision, most visibly on debt relief." Yet debt is an unsupportable burden for poor countries. Take the example of Guinea-Bissau. Their main export is cashew nuts. The country's debt is over ten times its total exports. Just to stop the debt from spiralling further out of control, the country needs to export two and a half times the cashew nuts they can produce at present.

In any case World Bank loans are not a solution for the world's poor - they are part of the problem. The Bank actually makes $1 billion a year on its loans - a straight transfer of resources from poor to rich.

What are the conditions imposed by structural adjustment policies? In Zambia they demanded cuts in state spending and privatisation. Parents now have to pay to send their kids to school. Of course many can't afford it, so the education system is in meltdown. Thanks in part to the guidance and help of the Bank, infant mortality has increased by 25%.

In Bolivia, the Fund and the Bank demanded the government privatise water. The system was sold off to a consortium of American and British utilities, including our Northwest Water. Fortunes made by fat cats who ripped off British consumers were turned to impoverishing the Bolivian people. In the City of Cochabamba the ordinary folk rose in revolt against their outrageous new water bills. The Bolivian military responded by shooting five of the demonstrators dead to protect the profits of imperialist business. While the Bolivian army fired on their own citizens, the World Bank's President verbally backed the repression and argued the case for privatisation. They say: "In our view, shutting the private sector out of water services altogether is not only unrealistic, but will actually prevent solutions that give the poor access to water. That's why the World Bank is working with governments to mobilise private initiative and resources." That's not the way it looks in Cochabamba.

It's time to go!

Apart from cuts in government spending and privatisation the Fund and the Bank insist on tearing up pro-union laws and health and safety legislation; they want decent pension and welfare schemes to go; and they want every country opened up to the rule of the multinationals. It's not just in the "third world" that the malign programme of structural adjustment impoverishes working people. The host country where the gathering took place, the Czech Republic, has had to go cap in hand for loans of $3.9 billion. They have had to pay the price in return. The social welfare system has been "reformed" almost out of existence. Benefits have fallen by 44% since 1997 at the behest of the "terrible two". They are less than half the level they were in 1991.

The protesters are against the consequences of capitalism for the globe. It's time for the system, and its enforcers, to go.