Corporate Globalization

by Jessica Maxwell

For people around the globe, daily interactions and access to basic necessities are increasingly shaped by anti-democratic institutions far removed from local communities. A network of global institutions and agreements has been forged in recent years to set standards and priorities on a wide array of issues. While the US government fails to support international bodies like the World Court and refuses to sign onto numerous international treaties related to human rights, environmental and labor concerns, there is bipartisan support for global economic organizations and agreements, such as the North American Free Trade Agreement.
This is an introduction to some of the primary institutions and agreements currently shaping the global economic landscape. Because the US government and US corporations have such unparalleled influence in global politics, US activists have a particular responsibility to challenge that influence when it promotes an anti-democratic agenda that exploits millions of people through economic and military oppression.

World Bank (WB) and International Monetary Fund (IMF)
The WB and IMF were developed by the US and Britain at the end of WWII to support the stability and interests of the capitalist economic system globally. Many European businesses were economically devastated or relied on transactions with the Nazi regime to remain profitable. In contrast, the resistance to Naziism was often led by anarchists, socialists, or communists, and their political strength was apparent at the end of the war. The IMF and WB provided resources necessary to revitalize the European business class and counter the challenge from anti-capitalist alternatives.

The IMF and WB have since focused their attention on the Global South. The IMF primarily finances loans to countries with short-term balance-of-payment troubles to maintain stable world markets and ensure continued repayment of external debt. The WB traditionally finances specific infrastructure projects, such as roads and power plants. Since the 1980’s both the IMF and the WB have increasingly imposed “Structural Adjustment Programs” (SAP’s) on countries as a condition for receiving loans. SAP’s promote economic “reforms,” including deregulation, privatization of public services, export-oriented economies, reduction of barriers to foreign businesses (typically eliminating environmental laws, labor protections and local subsidies and offering corporate tax breaks), and cutting government spending at the expense of social programs.

This economic restructuring reorients nations’ economies to serve the interests of global capital rather than local communities. The WB consistently prioritizes large, capital intensive projects that rely on contracts with global corporations based in the North over smaller, sustainable, community-based alternatives. In both the WB and the IMF, the level of a member nation’s financial contribution directly determines voting power, leaving those countries where WB/IMF policies are actually implemented vastly underrepresented in decision making. With few options for economic assistance, nations agree to IMF/WB conditions only to experience increasing rates of poverty and declining quality of public services as large portions of the loans they receive go to finance external debt and expensive development projects. IMF/WB policies have actually maintained a net outflow of wealth from the developing world to the richest nations since the 1980’s.

According to US Treasury Department statistics, for every $1 the US government contributes to international development banks, US corporations receive over $2 in bank-financed project contracts. In addition to diminishing public resources and services in the Global South, the IMF/WB development model uses US tax dollars to generate private profits for wealthy US corporations.

The World Trade Organization (WTO)
At the end of WWII, the US and a number of other nations signed the General Agreement on Trade and Tariffs (GATT). The WTO was formed out of the 1994 Uruguay round of GATT talks to further facilitate the development and enforcement of multilateral trade agreements. The highest decision making body of the WTO, the Ministerial Conference, is comprised of representatives from each WTO member state and meets no less than every two years, however, decision-making tends to be dominated by the “Quad”: the US, European Union (EU), Japan, and Canada.

The WTO reviews national trade policies and requires all changes to be reported by members to the WTO Secretariat. It also maintains a Dispute Settlement Body used by corporations to challenge “barriers” to free trade whenever they feel their profits are negatively impacted by national trade policies. In every case brought before it, the WTO has found environmental protection regulations to be illegal barriers to trade. It has ruled similarly against all but one health/food safety regulation. It also ruled that the Massachusetts’ boycott of Burmese goods due to human rights concerns was an illegal barrier to trade. In case after case, under threat of WTO sanctions, nations have reduced or eliminated regulations that protect public health, the environment, labor standards, and human rights and prioritized the profits of private corporations.

In late 1999, Seattle hosted the third WTO Ministerial Conference. It ended in dismal failure due to massive direct action by labor organizers, environmentalists, students, anarchists, and others. The next Ministerial Conference was held under tight security in Qatar, but the WTO returns to North America from September 10-14, 2003 for its fifth Ministerial Conference in Cancun, Mexico.

The World Economic Forum (WEF)
The WEF, founded in 1971, has become a prestigious gathering for the world’s most elite corporations to engage in private discussions on the political and economic challenges of globalization. The WEF facilitates the creation of a common agenda, analysis, and strategy for confronting these challenges. Exclusive meetings and workshops allow corporate and financial “leaders” to engage in conversation with academics, key NGO’s, select media, and cultural icons. Boasting a membership that consists of the world’s top 1,000 corporations (which pay extensively for the privilege) the WEF functions both as a global country club and an elite think-tank.

The forum traditionally meets annually in Davos, Switzerland, but met in New York City in 2002. WEF spokespeople declared the move an act of solidarity in the wake of 9/11, but critics suggested it was motivated by a desire to escape the massive protests growing in Davos and take advantage of the fearful, reactionary climate in post-9/11 NYC. 12,000 anti-corporate globalization protesters were met by 4,000 members of the NYPD and a fence that closed off the meeting site, the Waldorf-Astoria hotel – referred to by some as the “Walled-Off-Astoria.” Simultaneously, over 60,000 gathered at an alternative World Social Forum (WSF) in Porto Alegre, Brazil, uniting under the slogan, “Another World is Possible.” The WSF was founded in 2001 as a forum for those interested in discussing democratic, anti-capitalist strategies and visions for globalization and includes strong representation of people and organizations from the Global South.

Although WEF rhetoric in previous years has boasted of its ability to serve the interests of the world’s elite, it has recently begun to reflect the concerns being raised by protesters outside the forum – an indication of our strength. Unfortunately, this appropriation of the language of the global justice movement has remained superficial – no more than a tactic or strategy to maintain a positive public image, now that the public is aware of the WEF’s existence.

Anti-democratic Agreements

The North American Free Trade Agreement (NAFTA)
NAFTA went into effect on January 1, 1994, creating a regional “free trade” area among the US, Canada and Mexico. Proponents of NAFTA claimed it would create jobs, eliminate “inefficient” barriers to trade, and raise living standards. The results? Half a million US jobs were lost as corporations moved production to Mexico to exploit cheaper labor. As US corporations moved in, tens of thousands of small Mexican businesses were forced out. Competition from US imports further undermined the Mexican economy with devastating results: 8 million Mexican families dropped out of the middle class and into poverty by the year 2000, and the number of Mexicans working for less than minimum wage increased by over a million. NAFTA also institutionalized corporate rights to sue governments for acts that threaten corporate profits. A Canadian attempt to ban a toxic gasoline additive resulted in a $13 million lawsuit and elimination of the ban after US-based Ethyl Corporation challenged the policy under NAFTA regulations.

The Free Trade Area of the Americas (FTAA)
The proposed Free Trade Area of the Americas would extend the failed model of NAFTA to the entire Western Hemisphere, excluding Cuba, creating the world’s largest free trade zone— affecting 800 million people and 34 countries. The first FTAA ministerial was held in Miami in 1994. Working groups have been meeting diligently to achieve agreement on a wide variety of issues, including opening up public sectors such as education and healthcare to the free trade model of privatization and expand corporate rights to sue countries for policies that “interfere” with profit-making. It will exacerbate the effects of structural adjustment in the region by creating legal structures for enforcement of these IMF/WB proscribed programs, further institutionalizing global inequality.

US trade negotiators regularly consult with corporations, and through the “trade advisory committee system” over 500 corporate representatives have access to FTAA documents denied to the public. Major US policy decisions are directly being influenced by corporations with a vested interest in their outcome while public, democratic debate is prevented. Moreover, shortly after the Republicans won a majority in both houses of Congress, they passed legislation on Fast Track negotiating authority, allowing trade agreements to be developed and signed by US delegates without Congressional debate. The original timeframe laid out in the first FTAA ministerial called for its implementation in 2005, but the US has been pushing for a sooner completion. On November 20-21, 2003, the next FTAA trade ministerial will be held in Miami.

For the past several months, activists from around the world have been planning educational events and direct actions at the site of upcoming WTO and FTAA meetings as well as in local communities. This fall will be a crucial moment in the struggle to democratize the process of globalization.

*Author’s note: For more detail on these issues see: <www.global exchange.org> and <www.50years.org>. For information on demonstration plans at the FTAA ministerial in Miami, visit <www.stopftaa.org>

Jessica’s work on globalization includes teach-ins, trainings, and active participation in mass protests to challenge the global corporate agenda.