Russel Norman: Free trade costs local liberty

The big news coming out of the World Trade Organisation talks in Geneva is all about agriculture - how much more access we will or won't get to sell our dairy products. That's if you listen to our Trade Minister.

Well, fair enough, but there is something rather more important going on at the WTO and you won't hear about it from Labour or National. The two big parties have identical trade policy - that the WTO free trade agenda is all good.

The bad news is that the non-democratic WTO is starting to overrule the decisions made by democratically elected governments on two main fronts.

First, emerging case law from WTO disputes panels suggests virtually any law or regulation may be construed as a restriction on "market access" and deemed WTO illegal.

Secondly, the WTO Working Group on Domestic Regulation is considering a paper from the New Zealand Government proposing to increase the WTO restrictions on the content of laws and regulations that national and local governments can make regarding provision of services.

As the Labour Party celebrates its 90th birthday, its Government is proposing to the international community that democratically elected governments should have less freedom to make and enforce rules to meet the needs of people and the environment.

New Zealand's paper proposes a "necessity test" - regulations or laws must be not be more trade restrictive than necessary and must be essential to achieve the specified objective.

So if, for example, a city council limited the number of landfills to try to reduce waste they could find themselves in breach of the WTO.

A foreign-owned waste management company could get their government to take a case against New Zealand to the WTO on the basis that the local council had other options to reduce waste than restricting the number of landfills - that is, restricting landfills was not "necessary".

It is ridiculous, offensive and undemocratic that a three-person disputes panel at the WTO should have the power to make decisions about the best way for local councils in New Zealand to achieve policy objectives, but that is what our Government is proposing.

On top of this, WTO case law is ruling domestic regulation can and will be seen as a restriction on "market access" and overruled by WTO.

Take the case of United States versus Antigua. When the US made WTO commitments to liberalise trade in "recreational" services in 1995 it had no idea this might mean allowing overseas internet gambling operators access to the country.

But last year the WTO ruled that even though the US never made any explicit commitments to allow free trade in internet gambling, such commitments were implicitly included as a kind of "recreational" service.

Furthermore, the WTO ruled that US laws prohibiting internet gambling were in breach of its rules allowing "market access".

In the end, the only way that the US managed to protect its laws banning internet gambling was via a special exemption - the laws were needed to protect public morality (for more information see the American Society of International Law - www.asil.org).

According to Joost Pauwelyn, associate professor of law at the Duke University Law School and former legal officer at the WTO Secretariat, this "illustrates once more how deeply WTO commitments may penetrate the regulatory powers of its member countries".

What this means is that if people elect a government to achieve social or environmental goals, they may discover that the regulations required to implement them are WTO illegal.

This seriously undermines the scope of democratic participation, and leaves parliamentary sovereignty impeded by the virtually irreversible WTO commitments made by previous governments.

Already it is WTO illegal for our Government to introduce mandatory local content quotas on television and radio, due to the commitments under "audio-visual" services made by National in 1995.

Now, this is set to get worse as a result of the pincer movement between the WTO case law, whereby all regulations may be seen as potential restrictions on market access, and the necessity test on domestic regulation, whereby countries have to prove that their regulations are necessary to achieve the set purpose.

This Labour-led Government has rightly reversed the new right agenda in many areas, but not so in trade. In trade it is spearheading attempts to restrict democratic policy making.

And just as the new right economic policy of the fourth Labour Government undermined progressive social policy, so the trade policy of this Labour Government threatens to undo some of the gains by making them open to challenge in the WTO.

Let us not forget the lessons of the fourth Labour Government. Don't be fooled again.

* Dr Russel Norman is the Green Party Co-Leader