http://worldpolicy.org/
December 9, 1999
THE WTO AND THE GLOBALIZATION OF THE ARMS INDUSTRY
Unless you were stranded on a desert island or in an isolation tank for the
first week of December, you no doubt saw pictures and heard reports of the
protests that shut down the first day of the World Trade Organization (WTO)
meeting in Seattle. The demonstrations -- which involved tens of thousands
of union, environmental, student, consumer,and peace activists from all over
the world -- cast a cloud over the Clinton administration's efforts to paint
the WTO as a forward-looking organization that will spread the benefits of
free trade to all the participants in the global economy, from shareholders
at Boeing to peasants in Bangladesh. As we will discuss below, the
operations of the WTO are relevant not only to issues like child labor and
environmental protection, but also to issues like weapons proliferation and
military spending which are central to the work of the peace and arms control
communities. The actions in Seattle may also provide an opportunity to move
towards building a diverse progressive coalition that can address some of the
root causes of global conflict, from economic inequality to the degradation
of natural resources.
"We've got No Voice, No Seat. Listen to the people marching in the street."
The thrust of the protests against the WTO -- a 134 nation international
organization charged with developing and enforcing uniform trade rules -- was
the charge that it is a profoundly anti-democratic institution with the power
to undermine labor, environmental, and consumer rights without consulting the
people and organizations that will be most effected by these changes.
Operating in secret, the WTO allows countries to challenge each other's laws
and regulations on labor, environment, human rights and consumer protection
as "non-tariff trade barriers" which limit corporate profit. Below are just
a few examples of the impacts of WTO decision making:
The WTO forced the EU to open its markets to hormone treated beef, after the
United States' challenged their ban on the product.
Each year in France, at least 2000 workers die of asbestos-related cancer.
When the French tried to ban all forms of asbestos, they were told their law
protecting their workers, violated WTO rules.
The WTO ruled that the U.S. Clean Air Act which required gas refineries to
produce cleaner gas was an unfair barrier to Venezuela's gas trade.
If there are any questions about who reaps the greatest benefits from the
WTO, a look at who sponsored the Seattle meeting is instructive. In return
for their $9.2 million in donations, major multinational corporations were
given privileged access to the WTO proceedings (at least the ones that
weren't canceled due to the protests!). Major weapons contractors Boeing and
Allied Signal/Honeywell both ponied up $250,000 or more to be *Emerald level*
sponsors, entitling them to five seats at the Host Organization's opening and
closing receptions and to an exclusive ministerial dinner. Boeing CEO Phil
Condit was a co-chair of the Host Committee for the WTO meeting, along with
Microsoft's ubiquitous Bill Gates. "Emerald" sponsors also received four
seats at the private sector conferences< arranged by the Host Organization,
and were given briefing updates on the ministerial's progress, assistance
with room reservations, media assistance and hospitality service. In short,
while the people in the streets protested their exclusion, well-connected
corporate officials were welcomed with open arms.
The WTO Agenda: What's In It for Weapons Makers?
Companies like Nike that use child labor in the Third World aren't the only
beneficiaries of the WTO's slanted approach to making rules for the
international trading system. Arms makers are also interested in the WTO
agenda because they are in the process of becoming truly multinational
companies, dependent on exports to boost their profit margins and willing to
enter into joint ventures, partnerships, and even mergers with companies in
other countries. The Pentagon, which spends $75 to $80 billion per year on
weapons procurement, research, and development, is still by far the biggest
market for U.S. weapons makers. But the end of the Cold War may have marked
the beginning of the end for the notion of a strictly "national" defense
industry, as mergers and cross-border alliances have begun to make weapons
manufacturing a global industry. Major U.S. weapons conglomerates like
Boeing, Lockheed Martin, and Raytheon are the product of a wave of
U.S.-government subsidized mergers that were promoted during this decade, and
the merger wave is striking Europe as well, where British Aerospace just
joined hands with GEC Marconi to create the world's second largest
arms-making company (after Lockheed Martin). All of these new mega-companies
have stressed increasing their exports as priority number one.
Just as car manufacturers were enthusing in the 1980s about the the "world
car" with components built in many different countries, in the 1990s weapons
manufacturers and the governments of the major military powers have laid the
groundwork for the "world fighter plane."
Components of Lockheed Martin's F-16 fighter plane are now built in a dozen
different countries, including major assembly lines in Israel, South Korea,
Turkey, and Taiwan. Boeing and Textron have invested in weapons firms in the
Czech Republic and Romania in hopes of using them as platforms for cashing in
on the Central European arms market in the wake of NATO expansion. The
Pentagon's next generation Joint Strike Fighter (JSF) will be developed by
U.S./British corporate partners for sale to the U.S. Air Force, Navy, and
Marines and the British Navy and Air Force. Other possible "partner
countries" that have been mentioned for the JSF include Germany, Israel, and
Turkey (each of which would get a share of production in exchange for
committing to buy a certain number of the planes for their own armed forces).
In Europe, multinational projects like the proposed JSF have resulted in a
"least common denominator" approach to marketing the resulting weapons system
-- for example, if one partner nation has laws that allow the sale of
weaponry to a major human rights abuser then the weapons produced by the
partnership can be sold to that nation (even if the laws of other partner
nations would normally prohibit sales to that country). As of this writing,
the Pentagon is busy trying to rewrite U.S. arms export regulations to make
them more "user-friendly" to exporting companies, in part to address concerns
that U.S. companies will have a harder time forming partnerships and joint
ventures with European firms unless the U.S. lowers the standards entailed in
its arms export process.
It's no surprise that Boeing, which makes $13 billion per year selling
missiles, combat aircraft, and other weapons systems ($3 billion in arms
exports, with the rest going to the Pentagon), would be a prime sponsor of
the WTO meeting. Boeing has been a strong advocate of WTO membership for
China, which provides a huge market for the company's airliners. And the
Aerospace Industries Association (AIA), of which Boeing is a member, has been
pressing for "normal" trade relations with China, a code word for reinstating
the U.S. arms trade with China that was suspended after the Tiananmen Square
massacre. The AIA has also taken a stand against "unilateral" trade
sanctions, a position which would undermine efforts to limit weapons sales to
repressive regimes like the Suharto regime in Indonesia or the current
government in Turkey. The arms industry position on trade sanctions is in
keeping with the spirit and substance of the WTO rulemaking process: when
peace and human rights activists persuaded Massachusetts to pass a law
prohibiting government contracts with companies doing business with the
military junta in Burma, Japan and the European Union challenged the law as a
violation of the WTO's Agreement on Government Procurement. Japan and the EU
also joined a U.S. business lobbying group to challenge the Massachusetts law
in U.S. courts. If these efforts succeed, peace and social justice activists
will lose an important tool for mobilizing opposition to dictatorships
(imagine, for example, if the U.S. anti-apartheid movement had been
prohibited from promoting divestment and boycott measures against companies
doing business in South Africa).
As Steven Staples of the Council of Canadians noted in a speech >on "WTO and
the Global War System" which he delivered in Seattle on November 29th, arms
corporations derive a double benefit from the WTO system: not only do they
profit from the elimination of environmental, health, and labor standards
generated by the WTO process, but their own activities in the military sphere
-- including massive research and export subsidies from their home
governments -- are EXEMPT from challenge under WTO rules. Staples cites
Article XXI of the General Agreement on Tarriffs and Trade -- the main WTO
governing document -- which states that a country can't be prevented from
taking any action "it considers necessary for the protection of its essential
security interests . . relating to the traffic in arms, ammunition, and
implements of war and such traffic in other goods and materials as is carried
on directly for the purpose of supplying a military establishment (or) taken
in time of war or other emergency in nternational relations." This "security
exception" gives governments a perverse incentive to invest in the military
sector at the expense of >civilian projects. Recently, a Canadian government
program that subsidizes the military and aerospace industries was struck down
precisely because the program had been opened up to include civilian products
like regional airliners; when the program was restructured to cover only
military equipment, it passed muster with the WTO. Similarly, the government
of South Africa made a multi-billion dollar weapons purchase this year
justified in part on exaggerated claims of the offsetting investments that
European arms manufacturers would make in South Africa as a condition of the
sale -- these sorts of quid pro quos (known as "offsets") would be subject to
challenge if they were done as part of a civilian procurement effort, but
they are allowed under the WTO's "security exception."
Mike Sears, president of Boeing's Military Aircraft and Missiles division,
summed up the military sector's support for the WTO model for managing world
trade when he said, *No restrictions should be imposed on our ability to find
the best solutions for our customers.* But what if the customer is the
Turkish government, which has used U.S. attack helicopters to bomb and strafe
Kurdish villages, or the Indonesian military, which gave U.S.-supplied rifles
to the right-wing militias that slaughtered thousands of people in East
Timor? Should the international community step aside and let arms companies
come up with the best "solutions" for these kinds of customers?
Peace and human rights activists have proposed a different set of rules to
govern international weapons companies that would be MORE restrictive than
the regulations that apply to civilian endeavors, not LESS restrictive as the
WTO model appears to be. In the United States, the European Union, and at
the United Nations, leaders such as Rep. Cynthia McKinney (D-GA), Nobel
Laureate Dr. Oscar Arias of Costa Rica (joined by 18 fellow Nobel laureates)
have pressed for a Code of Conduct that would restrict arms sales to
dictators and human rights abusers. The U.S. version of the Code suggests
that no government should receive U.S. arms and training unless it meets the
following standards:
a democratic form of government
respect for basic human rights of its citizens
non-aggression (against other states)
full participation in the U.N. Register of Conventional Arms.
Recently Congress took a small step to curb U.S. arms exports, passing
legislation urging the President to enter into international discussions to
establish stricter standards on global arms sales that would include the Code
of Conduct criteria, and empowering the House International Relations
Committee to hold hearings and issue a "scorecard" on which nations meet
these standards. However, supporters of the bill acknowledge that this is
just a first step since the compromise legislation does not force the United
States to use these criteria in its own arms sales decision making process.
Taking into consideration the fact that between 1990-1995, 85 percent of U.S.
arms transfers went to states that did not meet the above criteria, the U.S.
needs a stronger push to enact the full Code of Conduct which would give
human rights criteria priority in arms export decisions.
The main lesson for the peace movement from the WTO protests is that
international networks (like the one that successfully promoted an
international treaty banning anti-personnel land mines) are essential to
bringing about meaningful reforms. The most important development in Seattle
was the involvement of labor unions and activists in the same coalition with
students, environmentalists, and other progressives. If the peace and arms
control movements are to become full partners in this exciting new coalition,
it will be necessary to do some concerted outreach to labor and find some
points of commonality. Opposition to "offset" arrangements that export
military technology and jobs, the fight against trading arms and other
technology to regimes that violate labor rights, and a critique of WTO rules
that favor government spending on the military over job-creating public
investments in the civilian sector would be some good places to start.
------------------------------------------------------------------------------
--
Resources on the Global Arms Industry and the WTO:
Ann R. Markusen and Sean S. Costigan, editors, "Arming the Future: A Defense
Industry for the 21st Century," (Council on Foreign Relations Press, 1999)
provides up-to-date analyses on the globalization of the weapons industry,
the trend towards mergers and military "mega-firms," and the impacts of these
developments on weapons proliferation. Details on how to get the book and
research papers from the Council's study group on the arms trade and the
transnationalization of the defense industry are at http://www.foreignrelations.org/public/armstrade
The Arms Sales Monitoring Project of the Federation of American Scientists
has the best site for data on arms sales, including extensive links to other
sites and the text of "The Arms Trade Reveled," which provides detailed
guidance on how to research the arms trade and arms companies, at www.fas.org/asmp/.
The Aerospace Industries Association (AIA) is one of the weapons industry's
largest and most effective lobbying groups. Its agenda is set out in some
detail on its web page, at www.aia-aerospace.org. Despite the use of
euphemisms, some jargon, and a certain amount of spin control, the site gives
a good overview of the AIA's main interests. It also has links to the web
pages of key members like Lockheed Martin, Boeing, and Raytheon.
A Citizen's Guide to the World Trade Organization,* published by the Working
Group on the WTO/MAI. You can download it at www.citizen.org/pctrade/activism/activist.htm.
Corporate Watch, has great analysis of the corporate agenda at the WTO
ministerial, access it at www.corpwatch.org
Mother Jones magazine, as usual, has great coverage. Check them out at www.motherjones.com.
------------------
"Quis custodiet ipsos custodes" RKBA!
December 9, 1999
THE WTO AND THE GLOBALIZATION OF THE ARMS INDUSTRY
Unless you were stranded on a desert island or in an isolation tank for the
first week of December, you no doubt saw pictures and heard reports of the
protests that shut down the first day of the World Trade Organization (WTO)
meeting in Seattle. The demonstrations -- which involved tens of thousands
of union, environmental, student, consumer,and peace activists from all over
the world -- cast a cloud over the Clinton administration's efforts to paint
the WTO as a forward-looking organization that will spread the benefits of
free trade to all the participants in the global economy, from shareholders
at Boeing to peasants in Bangladesh. As we will discuss below, the
operations of the WTO are relevant not only to issues like child labor and
environmental protection, but also to issues like weapons proliferation and
military spending which are central to the work of the peace and arms control
communities. The actions in Seattle may also provide an opportunity to move
towards building a diverse progressive coalition that can address some of the
root causes of global conflict, from economic inequality to the degradation
of natural resources.
"We've got No Voice, No Seat. Listen to the people marching in the street."
The thrust of the protests against the WTO -- a 134 nation international
organization charged with developing and enforcing uniform trade rules -- was
the charge that it is a profoundly anti-democratic institution with the power
to undermine labor, environmental, and consumer rights without consulting the
people and organizations that will be most effected by these changes.
Operating in secret, the WTO allows countries to challenge each other's laws
and regulations on labor, environment, human rights and consumer protection
as "non-tariff trade barriers" which limit corporate profit. Below are just
a few examples of the impacts of WTO decision making:
The WTO forced the EU to open its markets to hormone treated beef, after the
United States' challenged their ban on the product.
Each year in France, at least 2000 workers die of asbestos-related cancer.
When the French tried to ban all forms of asbestos, they were told their law
protecting their workers, violated WTO rules.
The WTO ruled that the U.S. Clean Air Act which required gas refineries to
produce cleaner gas was an unfair barrier to Venezuela's gas trade.
If there are any questions about who reaps the greatest benefits from the
WTO, a look at who sponsored the Seattle meeting is instructive. In return
for their $9.2 million in donations, major multinational corporations were
given privileged access to the WTO proceedings (at least the ones that
weren't canceled due to the protests!). Major weapons contractors Boeing and
Allied Signal/Honeywell both ponied up $250,000 or more to be *Emerald level*
sponsors, entitling them to five seats at the Host Organization's opening and
closing receptions and to an exclusive ministerial dinner. Boeing CEO Phil
Condit was a co-chair of the Host Committee for the WTO meeting, along with
Microsoft's ubiquitous Bill Gates. "Emerald" sponsors also received four
seats at the private sector conferences< arranged by the Host Organization,
and were given briefing updates on the ministerial's progress, assistance
with room reservations, media assistance and hospitality service. In short,
while the people in the streets protested their exclusion, well-connected
corporate officials were welcomed with open arms.
The WTO Agenda: What's In It for Weapons Makers?
Companies like Nike that use child labor in the Third World aren't the only
beneficiaries of the WTO's slanted approach to making rules for the
international trading system. Arms makers are also interested in the WTO
agenda because they are in the process of becoming truly multinational
companies, dependent on exports to boost their profit margins and willing to
enter into joint ventures, partnerships, and even mergers with companies in
other countries. The Pentagon, which spends $75 to $80 billion per year on
weapons procurement, research, and development, is still by far the biggest
market for U.S. weapons makers. But the end of the Cold War may have marked
the beginning of the end for the notion of a strictly "national" defense
industry, as mergers and cross-border alliances have begun to make weapons
manufacturing a global industry. Major U.S. weapons conglomerates like
Boeing, Lockheed Martin, and Raytheon are the product of a wave of
U.S.-government subsidized mergers that were promoted during this decade, and
the merger wave is striking Europe as well, where British Aerospace just
joined hands with GEC Marconi to create the world's second largest
arms-making company (after Lockheed Martin). All of these new mega-companies
have stressed increasing their exports as priority number one.
Just as car manufacturers were enthusing in the 1980s about the the "world
car" with components built in many different countries, in the 1990s weapons
manufacturers and the governments of the major military powers have laid the
groundwork for the "world fighter plane."
Components of Lockheed Martin's F-16 fighter plane are now built in a dozen
different countries, including major assembly lines in Israel, South Korea,
Turkey, and Taiwan. Boeing and Textron have invested in weapons firms in the
Czech Republic and Romania in hopes of using them as platforms for cashing in
on the Central European arms market in the wake of NATO expansion. The
Pentagon's next generation Joint Strike Fighter (JSF) will be developed by
U.S./British corporate partners for sale to the U.S. Air Force, Navy, and
Marines and the British Navy and Air Force. Other possible "partner
countries" that have been mentioned for the JSF include Germany, Israel, and
Turkey (each of which would get a share of production in exchange for
committing to buy a certain number of the planes for their own armed forces).
In Europe, multinational projects like the proposed JSF have resulted in a
"least common denominator" approach to marketing the resulting weapons system
-- for example, if one partner nation has laws that allow the sale of
weaponry to a major human rights abuser then the weapons produced by the
partnership can be sold to that nation (even if the laws of other partner
nations would normally prohibit sales to that country). As of this writing,
the Pentagon is busy trying to rewrite U.S. arms export regulations to make
them more "user-friendly" to exporting companies, in part to address concerns
that U.S. companies will have a harder time forming partnerships and joint
ventures with European firms unless the U.S. lowers the standards entailed in
its arms export process.
It's no surprise that Boeing, which makes $13 billion per year selling
missiles, combat aircraft, and other weapons systems ($3 billion in arms
exports, with the rest going to the Pentagon), would be a prime sponsor of
the WTO meeting. Boeing has been a strong advocate of WTO membership for
China, which provides a huge market for the company's airliners. And the
Aerospace Industries Association (AIA), of which Boeing is a member, has been
pressing for "normal" trade relations with China, a code word for reinstating
the U.S. arms trade with China that was suspended after the Tiananmen Square
massacre. The AIA has also taken a stand against "unilateral" trade
sanctions, a position which would undermine efforts to limit weapons sales to
repressive regimes like the Suharto regime in Indonesia or the current
government in Turkey. The arms industry position on trade sanctions is in
keeping with the spirit and substance of the WTO rulemaking process: when
peace and human rights activists persuaded Massachusetts to pass a law
prohibiting government contracts with companies doing business with the
military junta in Burma, Japan and the European Union challenged the law as a
violation of the WTO's Agreement on Government Procurement. Japan and the EU
also joined a U.S. business lobbying group to challenge the Massachusetts law
in U.S. courts. If these efforts succeed, peace and social justice activists
will lose an important tool for mobilizing opposition to dictatorships
(imagine, for example, if the U.S. anti-apartheid movement had been
prohibited from promoting divestment and boycott measures against companies
doing business in South Africa).
As Steven Staples of the Council of Canadians noted in a speech >on "WTO and
the Global War System" which he delivered in Seattle on November 29th, arms
corporations derive a double benefit from the WTO system: not only do they
profit from the elimination of environmental, health, and labor standards
generated by the WTO process, but their own activities in the military sphere
-- including massive research and export subsidies from their home
governments -- are EXEMPT from challenge under WTO rules. Staples cites
Article XXI of the General Agreement on Tarriffs and Trade -- the main WTO
governing document -- which states that a country can't be prevented from
taking any action "it considers necessary for the protection of its essential
security interests . . relating to the traffic in arms, ammunition, and
implements of war and such traffic in other goods and materials as is carried
on directly for the purpose of supplying a military establishment (or) taken
in time of war or other emergency in nternational relations." This "security
exception" gives governments a perverse incentive to invest in the military
sector at the expense of >civilian projects. Recently, a Canadian government
program that subsidizes the military and aerospace industries was struck down
precisely because the program had been opened up to include civilian products
like regional airliners; when the program was restructured to cover only
military equipment, it passed muster with the WTO. Similarly, the government
of South Africa made a multi-billion dollar weapons purchase this year
justified in part on exaggerated claims of the offsetting investments that
European arms manufacturers would make in South Africa as a condition of the
sale -- these sorts of quid pro quos (known as "offsets") would be subject to
challenge if they were done as part of a civilian procurement effort, but
they are allowed under the WTO's "security exception."
Mike Sears, president of Boeing's Military Aircraft and Missiles division,
summed up the military sector's support for the WTO model for managing world
trade when he said, *No restrictions should be imposed on our ability to find
the best solutions for our customers.* But what if the customer is the
Turkish government, which has used U.S. attack helicopters to bomb and strafe
Kurdish villages, or the Indonesian military, which gave U.S.-supplied rifles
to the right-wing militias that slaughtered thousands of people in East
Timor? Should the international community step aside and let arms companies
come up with the best "solutions" for these kinds of customers?
Peace and human rights activists have proposed a different set of rules to
govern international weapons companies that would be MORE restrictive than
the regulations that apply to civilian endeavors, not LESS restrictive as the
WTO model appears to be. In the United States, the European Union, and at
the United Nations, leaders such as Rep. Cynthia McKinney (D-GA), Nobel
Laureate Dr. Oscar Arias of Costa Rica (joined by 18 fellow Nobel laureates)
have pressed for a Code of Conduct that would restrict arms sales to
dictators and human rights abusers. The U.S. version of the Code suggests
that no government should receive U.S. arms and training unless it meets the
following standards:
a democratic form of government
respect for basic human rights of its citizens
non-aggression (against other states)
full participation in the U.N. Register of Conventional Arms.
Recently Congress took a small step to curb U.S. arms exports, passing
legislation urging the President to enter into international discussions to
establish stricter standards on global arms sales that would include the Code
of Conduct criteria, and empowering the House International Relations
Committee to hold hearings and issue a "scorecard" on which nations meet
these standards. However, supporters of the bill acknowledge that this is
just a first step since the compromise legislation does not force the United
States to use these criteria in its own arms sales decision making process.
Taking into consideration the fact that between 1990-1995, 85 percent of U.S.
arms transfers went to states that did not meet the above criteria, the U.S.
needs a stronger push to enact the full Code of Conduct which would give
human rights criteria priority in arms export decisions.
The main lesson for the peace movement from the WTO protests is that
international networks (like the one that successfully promoted an
international treaty banning anti-personnel land mines) are essential to
bringing about meaningful reforms. The most important development in Seattle
was the involvement of labor unions and activists in the same coalition with
students, environmentalists, and other progressives. If the peace and arms
control movements are to become full partners in this exciting new coalition,
it will be necessary to do some concerted outreach to labor and find some
points of commonality. Opposition to "offset" arrangements that export
military technology and jobs, the fight against trading arms and other
technology to regimes that violate labor rights, and a critique of WTO rules
that favor government spending on the military over job-creating public
investments in the civilian sector would be some good places to start.
------------------------------------------------------------------------------
--
Resources on the Global Arms Industry and the WTO:
Ann R. Markusen and Sean S. Costigan, editors, "Arming the Future: A Defense
Industry for the 21st Century," (Council on Foreign Relations Press, 1999)
provides up-to-date analyses on the globalization of the weapons industry,
the trend towards mergers and military "mega-firms," and the impacts of these
developments on weapons proliferation. Details on how to get the book and
research papers from the Council's study group on the arms trade and the
transnationalization of the defense industry are at http://www.foreignrelations.org/public/armstrade
The Arms Sales Monitoring Project of the Federation of American Scientists
has the best site for data on arms sales, including extensive links to other
sites and the text of "The Arms Trade Reveled," which provides detailed
guidance on how to research the arms trade and arms companies, at www.fas.org/asmp/.
The Aerospace Industries Association (AIA) is one of the weapons industry's
largest and most effective lobbying groups. Its agenda is set out in some
detail on its web page, at www.aia-aerospace.org. Despite the use of
euphemisms, some jargon, and a certain amount of spin control, the site gives
a good overview of the AIA's main interests. It also has links to the web
pages of key members like Lockheed Martin, Boeing, and Raytheon.
A Citizen's Guide to the World Trade Organization,* published by the Working
Group on the WTO/MAI. You can download it at www.citizen.org/pctrade/activism/activist.htm.
Corporate Watch, has great analysis of the corporate agenda at the WTO
ministerial, access it at www.corpwatch.org
Mother Jones magazine, as usual, has great coverage. Check them out at www.motherjones.com.
------------------
"Quis custodiet ipsos custodes" RKBA!