For their eyes only: when secret documents land in Greg Palast's hands, he spots the killer shark lurking in the free-trade pool - Trade Rules - from The Best Democracy Money Can Buy - Excerpt

New Internationalist, July, 2002 by Greg Palast

When Churchill said, 'democracy is the worst form of government except all the others', he simply lacked the vision to see that the World Trade Organization would design a system to replace democracy with something much better - Article VI. 4 of the General Agreement on Trade and Services, or CATS.

Last year an extraordinary document, dated 19 March 2001, marked 'confidential', came through my fax machine from the WTO Secretariat. This unassuming six-page memo which the WTO modestly hid away in secrecy may one day be seen as the post-democratic Magna Carta. It contained a plan to create an international agency with veto power over parliamentary and regulatory decisions.

The memo begins with considering the difficult matter of how to punish nations that violate 'a balance between two potentially conflicting priorities: promoting trade expansion versus protecting the regulatory rights of governments'.

Think about that. For a few centuries Britain, America and now almost all nations have relied on elected parliaments, congresses, prime ministers and presidents to set the rules. It is these ungainly deliberative bodies that 'balance the interests of citizens and businesses.

Now kiss that obsolete system goodbye. Once nations sign on to the CATS, Article VI. 4- otherwise known as The Necessity Test - will kick in. Then, per the Secretariat's secret programme outlined in the 19 March memo, national parliaments and regulatory agencies will be demoted, in effect, to advisory bodies. Final authority will rest with the CATS Disputes Panel to determine if a law or regulation is 'more burdensome than necessary'. And the CATS panel, not Parliament or Congress, will tell us what is 'necessary'.

As a practical matter, this means nations will have to shape laws protecting the air you breathe, the trains you ride in and the food you chew by picking, not the best or safest means for the nation, but the cheapest methods for foreign investors and merchants.

Let's get down to concrete examples. The Necessity Test had a trial run in North America via inclusion in NAFTA, the region's free-trade agreement. The state of California had banned a gasoline additive MBTE, a chemical cocktail that was found to contaminate water supplies. A Canadian seller of the M' chemical in MBTE filed a complaint saying California's ban on the pollutant fails the Necessity Test.

The Canadians assert, quite logically, that California, rather than ban MBTE, could require all petrol stations to dig up storage tanks and reseal them, and hire a swarm of inspectors to make sure it's done perfectly. The Canadian proposal might cost Californians a bundle and might be impossible to police.

But that's just too bad. The Canadians assert their alternative is the 'least trade-restrictive' method for protecting the California water supply. 'Least trade-restrictive' is NAFTA's Necessity Test. If California doesn't knuckle under, the US Treasury may have to fork out over $976 million to the pollutant's Canadian manufacturer.

The GATS version of the Necessity Test is NAFTA on steroids. Under CATS, as proposed in the memo, national laws and regulations will be struck down if they are 'more burdensome than necessary' to business. Notice the subtle change from banning 'trade-restrictive' rules (NAFTA) to 'burdensome' rules.

Suddenly, the CATS treaty is not about trade at all, but a sly means to wipe away restrictions on business and industry, foreign and local.

What burdensome restrictions are in the corporate cross-hairs? The US trade representative has already floated proposals on retail distribution. Want to preserve Britain's greenbelts? Well, forget it - not if some bunch of trees are in the way of a Wal-Mart superstore. Even under the current, weaker CATS, Japan was forced to tear up its own planning rules to let in the retail monster boxes.

The Blair Government assures us that nothing threatens the right to enforce laws in the nation's public interest. But not according to the 19 March memo. The WTO reports that, in the course of the secretive multilateral negotiations, trade ministers have agreed that, before the CATS tribunal, a defence of 'safeguarding the public interest... was rejected'.

In place of a public interest standard, the Secretariat proposes a deliciously Machiavellian 'efficiency principle'. 'It may well be politically more acceptable to countries to accept international obligations which give primacy to economic efficiency.' This is an unsubtle invitation to load the CATS with requirements which rulers know their democratic parliaments could not accept. This would be supremely dangerous if, say, one day, the US elected a president named 'Bush' who wanted to shred air-pollution rules or, say, Britain elected a prime minister named 'Blair' with a mad desire to sell off his nation's air traffic control system. How convenient for embattled chief executives: what elected congresses and parliaments dare not do, GATS would require.

Britain's government can brush off the green-haired anti-GATS protester, but can't ignore the objections of the British Medical Association (BMA) jittery about GATS' control over the National Health Service. In the journal, The Lancet, the BMA nervously questions European Trade Commissioner Pascal Lamy's assurances that 'interpretation of the rules [must not bell settled by disputes procedures', that is, the GATS panel. One defender of GATS calls the BMA's accusation 'hysterical'.