Big business at work

Print edition : December 11, 1999

Multinational corporations, the prime movers of globalisation, are becoming involved ever more actively and visibly in setting the agenda for international trade negotiations among governments, in which big business has tremendous stakes. The Se attle meet was no exception.

"The idea was simple: to identify those barriers to trade or opportunities for liberalisation on which both business communities (in Europe and in the United States) could agree as targets for government action. We should put the business 'horse' befo re the government 'cart'."

- Timothy J. Hauser, former acting Under Secretary of Commerce for International Trade, in a testimony before the House Committee on Ways and Means, Hearing on the New Transatlantic Agenda, July 23, 1997.

"We want neither to be the secret girlfriend of the WTO nor should the International Chamber of Commerce have to enter the WTO through the servants entrance."

- Helmut O. Maucher, chairman of Nestle and former president of the International Chamber of Commerce (ICC) , in the Financial Times, December 6, 1997.

IF the World Trade Organisation is all about free trade, and if giant business corporations are the principal agents of globalisation, what was big business' stake at Seattle?

Considering the immense clout of these corporations, the media at large covered surprisingly little about their role in the run-up to the Seattle conference. For instance, it is little known that the Seattle Host Organisation (SHO), the key organiser of the ministerial meet, was co-chaired by the heads of the two Seattle-based global leaders in their respective lines of business - Microsoft and Boeing. At Seattle, corporate sponsorship rose to new heights, epitomising the predominant role that multinati onal companies play in world trade.

During the run-up to Seattle, the SHO sought corporate sponsorship of the event. It said that "supporters will be welcome to participate in a series of private sector programmes organised by the SHO, and, where appropriate, the SHO will look first to spo nsoring firms for key speaking roles. During the WTO week, sector-specific conferences will take place, bringing together industry leaders, specialists and participants engaged in the key issues for the next round of trade talks... The attendance for the se sessions is limited, allowing for the greatest possible interaction between participants, officials and guest speakers." The SHO also said it would provide "special briefings to contributing firms prior to the WTO Ministerial to ensure that they recei ve constant updates on the status of the ministerial meetings."

"Supporters" were entitled to invitations to the ministerial dinner, opening and closing events and private sector conferences. The number of invitations issued to companies depended on their level of support. For instance, "Emerald level" sponsors, who contributed $250,000 each, were allowed five guests for the ministerial dinner; the companies who had committed support, apart from Boeing and Microsoft, included General Motors, Ford, Deloitte and Touche (a consultancy and accounting multinational), UPS and Honeywell. "Diamond level" sponsors, who paid between $150,000 and $249,999 each, included Hewlett Packard, Motorola, Lucent Technologies and the Port of Seattle. Companies at the "Platinum level" included IBM, Caterpillar, Lufthansa, each of which paid up to $149,000. There were other sponsors - at gold, silver and bronze levels. Signage and corporate material of the supporting companies were allowed at the conference, and the SHO's official Web site had links to the sponsoring companies' Web site s. Sponsors provided about $9 million to conduct the meet.

The Seattle meet was not the first major international event for which such corporate fund-raising had been undertaken. Earlier this year, the celebrations of the 50th anniversary of the founding of the North Atlantic Treaty Organisation (NATO) was spons ored by U.S. corporations. About a dozen companies contributed a quarter of a million dollars each and their heads were directors of the host committee of the NATO summit.

CRITICS of the WTO recall the agenda-setting role of multinationals during the Uruguay Round process which laid the basis for the transition from the General Agreement on Tariffs and Trade (GATT) to the WTO between 1986 and 1993. The large business corpo rations played a key role in bringing new issues such as Trade-Related Aspects of Intellectual Property Rights (TRIPS), trade in services and other issues on the agenda. These issues were traditionally outside the scope of the GATT process, which was mai nly concerned with tariffs on goods trade. Business interests in the Quad - the U.S., Canada, the European Union (E.U.) and Japan - were particularly active in bringing the Uruguay Round to a successful conclusion.

A campaigner draws attention to "corporate tyranny". At Seattle, corporate sponsorship operations rose to new heights.-STEPHAN SAVOIA/AP

In the U.S., the Coalition of Service Industries lobbied the Government to form a separate regime for international trade in services. Multinationals such as Federal Express, Citicorp and American Express, and Arthur Andersen, the accounting and consulta ncy multinational, are part of the Coalition. The Intellectual Property Committee, a forum for 13 major U.S. corporations, including Monsanto, DuPont, General Motors and others, worked to incorporate TRIPS in the Uruguay Round. The former chief executive officer of Pfizer remarked in 1996 that "our combined strength enabled us to establish a global private sector government network which laid the groundwork for what became TRIPS". Critics have also pointed out the "strikingly similar" positions put fort h by industrial lobbies and those presented by the official U.S. delegation during the talks on TRIPS during the Uruguay Round. Of the 111 members of the U.S. delegation, as many as 96 were from the corporate world.

In the U.S., the President's Advisory Committee for Trade Policy and Negotiations (ACPTN) includes representatives from leading multinationals such as AT&T and associations such as the Motion Picture Association of America, Inc. Representatives from mult inationals such as Eastman Kodak, Monsanto and IBM account for nearly half the strength of the 42-member Committee.

In Japan, the Japanese Federation of Economic Organisations, the Keidanren, liaises with the Japanese Government and Parliament. Representatives from Mitsubishi Electric Corporation, Nissan and Toyota chair major committees in the Keidanren. In Europe, w hile the members of the European Round Table (ERT) lobbied with national governments, the Union of Industrial and Employers Confederation of Europe (UNICE) worked closely with the E.U. leadership. In the Organisation for Economic Cooperation and Developm ent (OECD), the Business and Industry Advisory Committee (BIAC), of which the ICC is an important part, plays an important role in shaping the industrialised countries' agenda at the WTO.

Lobbying by business played a key role in clinching the three international agreements that were signed at the WTO in 1997 - on Information Technology (IT) products, on telecommunications and, most significantly, on the liberalisation of financial servic es. All three, said former E.U. Trade Commissioner Sir Leon Brittan, were "jewels in the WTO crown."

The agreement on financial services, which came into force on March 1, 1999, is expected to liberalise 90 per cent of the world market in insurance, banking and brokerage services. The agreement marks a significant step in opening up markets in the count ries of the South to the multinational financial entities. Although the agreement allows countries to file specific reservations, it locks them in terms of liberalisation and market access, preventing the establishment of controls at a later date.

The E.U. and the U.S. governments lobbied extensively in Asian and Latin American capitals to clinch the agreement on financial services; the role played by corporate lobbying, however, received less attention. The Financial Leaders Group (FLG) played a key role in "identifying barriers to trade in other countries", according to the Dutch Ministry of Economic Affairs. The FLG included some of the world's biggest financial players - Barclays, Chase Manhattan, ING Group, Ford Financial Services Group, the Bank of Tokyo-Mitsubishi, Goldman Sachs and several other banking, investment and insurance companies. In a speech in Washington in September 1998, Brittan remarked that "the close links established between E.C. and U.S. industry... were an essential fa ctor in obtaining the final deal." Brittan also said that the "high-level momentum to the negotiations" was provided by the E.U.-U.S.-FLG involvement. Brittan also said that the relationship will serve as a "model" for the "next round of services liberal isation negotiations."

According to the WTO's critics, the E.U., emboldened by the success of its alliance with the FLG, initiated the formation of the Investment Network (IN). The IN, which brings together more than 50 giant companies, including Daimler-Benz (now merged with Chrysler), Fiat and British Petroleum, was established to articulate key issues to be brought on board the agenda for an international agreement on investment. The E.U. has also suggested the formation of a European association of service industries to " advise E.U. negotiators on the key barriers and countries on which they should focus on in these negotiations." A critic of the business-E.U. relationship observed that "by working closely together, the Commission presents the member-states with a negoti ating strategy pre-approved by European industry."

SINCE its formation in 1995, the Transatlantic Business Dialogue (TABD), in which the biggest corporates from the E.U. and the U.S. participate, has focussed on the agenda that governments should take up at the WTO negotiations. Among the points raised b y the TABD is the expansion of the "in-built agenda" which includes services, agriculture and TRIPS. The E.U. position, which favoured an expansion of the agenda at Seattle, is seen as a reflection of business lobbying at the TABD. The TABD also called f or the conclusion of an Agreement on Forest Products and on electronic commerce.

At the TABD's fifth annual conference held recently in Berlin, over 100 CEOs from leading multinationals gathered to articulate their agenda for the Seattle meet. They focussed attention on non-tariff barriers to trade in the E.U. and the U.S. These rela ted to genetically modified agricultural products, eco-labelling and recycling schemes in the E.U. They also demanded that the U.S. administration review its public spending provisions which are aimed at supporting local communities.

A commentator points out that the TABD is not an organisation but a "framework drawing on the resources of existing companies and organisations, to deliver joint industry messages." This is perceived to result in more efficient interaction than the "trad itional structures for government-business consultation." The TABD is reckoned to be "arguably one of the most far-reaching and influential corporate-state alliances."

A banner with a telling message outside the WTO headquarters building in Geneva. There is intense anger worldwide directed at the WTO framework that has increasingly challenged national laws in several spheres.-AP

The ICC, which represents the interests of some of the biggest multinationals, was a major player in the move to float the controversial Multilateral Agreement on Investment (MAI). It also maintains close ties with the WTO Secretariat. An ICC official sa id that the ICC "has always been a vector for business input into WTO work... since the beginning of the multilateral trade negotiations." It also had "several informal contacts with the WTO on the new issues that the WTO is looking at," a senior ICC off icial said earlier this year. Its Seattle campaign started in May 1999 when an ICC delegation met German Chancellor Gerald Schroeder just before the G-8 summit. On the eve of the Seattle meet, ICC secretary-general Maria Livanos Cattaui, said: "Progress of multilateral trade liberalisation must not be allowed to falter... The rules-based multilateral trading system is one of the finest achievements of the twentieth century."

CRITICS of the WTO point to the increasing collaboration between business and some of the key figures involved in international trade negotiations since the Uruguay Round. For instance, Arthur Dunkel, who presided over much of the transition from GATT to the WTO, is on the board of Nestle, one of the world's biggest food companies. Dunkel also chairs the International Trade and Investment Commission of the ICC. Dunkel's participation in a WTO dispute settlement panel also raised questions of a conflict of interest.

Peter Sutherland, former Director-General of GATT-WTO between 1993 and 1995, now chairs the board of British Petroleum and is also an associate in Goldman Sachs International. According to the Friends of the Earth, Charlene Barshefsky, the United States Trade Representative (USTR), was earlier a lobbyist for the Canadian timber industry.

The dispute settlement mechanism in the WTO has come in for criticism on the ground that it is non-transparent; more seriously, the system is perceived to be iniquitous to resource-poor countries or to smaller companies operating from the developing coun tries. In the WTO, only member-states are allowed to raise disputes: when a company believes that it is affected by unfair trade practices in another country, it has first to convince its own government that the issue must be raised at the WTO. More impo rtant, governments must also act in defence of companies based in their countries which have been affected by unfair trade practices of entities in other countries. To protect themselves, companies must therefore have a good relationship with their gover nments if they want the authorities to pursue their case.

In many of the high-profile trade disputes that have arisen recently, corporates and their own governments have gone hand-in-hand to fight their case at the WTO. In the banana war between the E.U. and the U.S., Chiquita Brands International, which owns p lantations in Guatemala, Honduras and Mexico, joined legal action against the E.U.. In fact, Chiquita, which controls a large part of the banana trade, helped the governments in these countries fight the case.

In the beef and milk war in 1997, Monsanto, the U.S. National Cattlemen's Association, the U.S. Dairy Export Council and other interest groups lobbied with the U.S. Government to initiate action against the E.U. for its ban on hormone-treated beef import s on health considerations. European animal health products companies, the European Federation of Pharmaceutical Industry Associations (EFPIA) and lobbied at the E.U. for a withdrawal of the ban because they claimed that it was affecting their interests as well.

The Japanese and European governments acted on behalf of companies such as Sony, Toshiba, Siemens and Philips Electronics against a Massachusetts law which penalises government purchases from companies that deal with entities in Myanmar which is under mi litary rule. They complained that the U.S. administration had also fought Kodak's case against Fuji for a share of the Japanese market for film and photographic paper. Incidentally, Kodak's CEO is a member of the ACPTN.

THE WTO framework has increasingly challenged national laws related to trade, environment, food, technical standards, labour, and biotechnology; in trade jargon, these are together called "non-tariff barriers to trade". More than any other entity in the world, multinational corporations are equipped to engage in the globalisation process. The United Nations Conference on Trade and Development (UNCTAD) estimates that more than two-thirds of world trade involves at least one multinational company. Half of this is traded between companies belonging to the same multinational group. These corporations are truly global. Being the prime movers of globalisation, they have enormous stakes in managing the contradictions that arise between governments, which are answerable to people within their borders, and global business, which wants investment and trade to move freely in a seamless world.

Perhaps nothing epitomises the growing nexus between governments and big business as the spectacle of briefcase-toting Trade Ministers from across the world engaged in bargaining in Seattle. International trade bureaucrats and negotiators are another par t of this spectacle.

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