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"WTO-perfect": enemy of the perfect and the good

Given the massive asymmetries of power in the world today, how does progressive reform happen? Consumers and workers want to have a cleaner environment and better jobs, but the corporations calling the shots stand to lose out over the time horizon they consider relevant.

Jack Knight, one of the top political economists out there, argued that the spontaneous emergence of institutional or policy changes will tend to benefit the powerful. In those rare instances where an outcome not unfavorable to the less powerful emerges, it's through a complex bargaining process where the "little guy" can impose sufficient costs on the "big guy" to make his life miserable unless he changes, or alternately where the "big guy" can somehow be paid off in a big way to not fight the change.

Progressives and reformers in general who want to see change in their lifetime are always looking for openings in these regards. It'll take many lifetimes to re-build the union and consumer movement to where it needs to be, but some short-term successes can embolden us to keep our organizing going - even if they are clearly the sloppy outcome of bargaining processes where the deck is stacked against us.

So the writers' strike, for instance, is about imposing costs on the "big guy" to get him to bargain. But environmentalists around the world have found some clever ways to increase the rewards for change. (More on this in coming days.) The problem with our trade policy, unfortunately, is that it precludes many such strategies in the name of facilitating ever-expanded corporate trade. To paraphrase Voltaire: the "WTO-perfect" is both the enemy of the perfect and the good.

Such a partial strategy was targeted in the recent case where the EU successfully bashed Brazil at the WTO over its import ban on retreaded tires. According to Inside U.S. Trade, "Brazil claimed it needed to ban retreaded tires because they become waste tires more quickly than new ones, and that their disposal poses risk to the environment and human health." But at the WTO, you have to prove that such a environmental policy is "necessary," which means, among other things, convincing panelists who specialize in trade and not environmental policy that there is no less-market restricting option even conceivable that could be applied instead.

In this case, according to IUT,

The Appellate Body ruled that any such measure must make a “material” contribution toward its objective, even if the stated objective has such a high value as the protection of human health. Sources said this makes clear that the measures in question cannot make a “marginal” contribution to its stated objective.

Additionally, the fact that Brazil granted an exemption from the import ban to Mercosur partner countries - even though it was required to do so as a pro forma matter and these countries hardly export retreaded tires to Brazil - meant that the ban couldn't be imposed against Europe and other countries that actually do export the tires.

No one would say that Brazil's enviro policy was the perfect solution to the problem. But many, many environmental policies are that imperfect. Perhaps due to other influences in the legislature or elsewhere, you can't get a full ban on all kinds of tires from all countries. Perhaps an environmental measure won't solve the environmental problem, but it can make a contribution to solving the problem, or serve as an initial step towards mobilizing a constituency for systematic reform.

This is the aspect of our trade policy that is the most worrisome - it takes a lot of achievable yet imperfect options off the table (or opens them up to sanction). Do you think national governments that didn't want to even make the concession in the first place are going to really go to bat for partial victories on our side? On the other hand, most privatizing and market-enhancing policies are allowed and even encouraged by WTO rules, and then made difficult to reverse. Going back to Knight, policies that the powerful want in the first place are given the green light, while the rare, messy victory by our side is all but taken off the table.

I'll write about some of the WTO implications of global warming policies in the coming days...

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