WTO Follies

It was an appalling spectacle. Sleek officials lounged around in fancy hotels while rioters swung from lampposts, the national guard dropped tear gas, traffic was barricaded, and looters attacked 1,000 retailers as the cops stood by. The meeting of the World Trade Organization was the sort of political spectacle we haven’t seen in years.

What the heck was going on? The WTO politicized trade on a global-government level and thereby guaranteed endless wrangling and conflict at the expense of everyone else. At the meeting, freedom was attacked from all sides: by the protestors, the troops who gassed them, and the delegates inside the meeting hall.

With the exception of some third-world reps resisting Clinton’s new regulations, there were no friends of liberty in Seattle. So it was good when the meeting collapsed, along with the proposed "Clinton Round" of special-interest trade talks.

Ever since the WTO was proposed five years ago, the Mises Institute has denounced the notion that world trade somehow needed world government management. Even before this bureaucracy was created, we worked to get the message out with our WTO Reader, which took this perspective that no one else was willing to take.

In the years since, we’ve defended the classical ideal of free trade in our teaching conferences and publications, against both WTO bureaucrats and the sort of open anti-capitalism on display in Seattle. We have shown that on trade policy, there is only one option compatible with liberty. The WTO must never meet again while nations, on their own, seek to remove trade interventions.

Of course, during the Seattle meetings, you couldn’t count on the media. Mainstream news outlets described the mercantilists inside the meeting hall as paragons of free trade, while those outside were heroic defenders of women, workers, children, blue sky, and dolphins.

To get at the truth requires independent thinking based on the following observation: the World Trade Organization has absolutely nothing to do with free trade. The people gathered inside the meeting hall weren’t actual importers and exporters. They were government officials (parasites) trying to get a piece of the action. This was the whole purpose of the WTO from the outset.

As early as 1994, it was clear that the WTO charter, a 29,000-page, 300-pound monstrosity, was a Trojan horse for economic planning. "Rights" for union thugs and eco-crazies were written into the charter, which was written and negotiated by the Clinton administration. It’s true that the conspirators did not achieve all their objectives at the outset. But over time, they were determined to.

No surprise that the WTO was favored by leftist organizations that wanted to link world trade with a socialist political agenda. And no surprise that some multinational corporations favored the treaty because it would impose huge costs on potential competitors. The architects of the WTO had openly stated that the treaty wasn’t about free trade. US Trade Rep. Mickey Kantor even toasted the WTO in champagne as the trade equivalent of the monstrous IMF and the World Bank.

In the streets, the protestors and the US delegation only pretended to oppose each other. In fact, there is a revolving door between the protesting organizations and the Clinton administration, and they were in constant discussion in advance of the meeting. Together, they favor more, not less, power for the WTO.

The labor unions and environmentalists don’t want the WTO abolished; they want to use it to advance their own anti-capitalist agenda. For example, the AFL-CIO is dedicated to the UN’s International Labor Organization, itself a socialist propaganda agency. And from the beginning, as we pointed out at the time, the WTO promised to enact the ILO’s agenda.

The same goes for the loopy social reformers and welfare statists who paraded in the streets. Their agenda was gruesomely symbolized by the looting that is the welfare state without the middleman. It was no coincidence that the national guard and federalized cops did nothing to stop the property destruction. They themselves live off the looted property called taxes.

It was Clinton who said, "I also strongly, strongly believe that we should open the process up to all those people who are now demonstrating on the outside." And it was Clinton who ripped off the free-trade mask and told a reporter that he favored "sanctions…for violating any provision of a trade agreement."

This last admission caused the delegates from developing countries to go ballistic. Indeed, they were the only people who made sense inside the meeting hall, because they understand that new global economic regulations would devastate their economies. They know that unionization and minimum wages bring unemployment, and that wacky Sierra Club regulations would cripple businesses wanting to invest in their countries.

In the classical idea of real free trade, the international economy needs no government management. Producers and consumers can work out their own deals and sort out their own conflicts, peacefully and to their own mutual advantage, without government involvement. In the old days, merchant law, reputation, and consumer sovereignty were the guiding forces. Even the old Gatt system, which thankfully had no teeth, was better than the WTO. In the best of all worlds, government wouldn’t be involved at all, of course.

It’s a sad fact that genuine free trade has few friends in high places. Governments don’t like it (because it denies them power and revenue), lefty social activists don’t like it (because it is an impetus to free-market domestic policies), and many multinationals don’t like it (because it forces them to compete on equal terms with small companies). And yet free trade is a crucial foundation to prosperity and peace.

Frederic Bastiat had it right: when goods do not cross borders, the way is prepared for troops. Ludwig von Mises, in particular, thought that the abandonment of free trade brought about the two world wars. And as Murray Rothbard argued, true free trade might have prevented the American civil war, which began as a struggle over tariffs. This is why we have a moral duty to take a stand, no matter what others do.

Our first editorial on the WTO appeared on January 7, 1994, in the Journal of Commerce. We kept up the campaign, revealing the contents of the WTO treaty in article after article. We also found that the attempt to create a global trade bureaucracy has a long history. Wilson had tried it and he was stopped by free traders. Truman had his own version, but the followers of Mises helped lead the successful fight to prevent ratification.

We explained this history, and why no free marketeer could ever support the creation of a central planning agency for trade. Meanwhile the Clinton administration, together with the Wall Street Journal and various policy organizations in DC, claimed that the world economy would collapse if the WTO was not ratified. So we pointed out that this is nonsense: international trade has been around for thousands of years; it never needed a regulator and doesn’t need one now.

Never create a bureaucracy where one doesn’t exist. Why is this principle difficult? As we said in the February 1994 Free Market: "The WTO will convert peaceful trade into policy imperialism. It will allow economic exchange with some countries under approved conditions, and impose a variety of sanctions on others. The conditions will include all the legislation beloved of U.S. left-liberals, such as preferences for labor unions, artificially high labor costs, controls on the organization of industry, high taxes on capital and income, central-bank inflation, invasive tax collection, and the abolition of financial privacy. The goal, as with Nafta, is to transform every country, developed or developing, into a carbon copy of Clintonian social democracy."

The message began to have an effect halfway through the debate on the WTO’s ratification. Newt Gingrich warned against the WTO on national television: "I’m for world trade, but I’m against world government." Not a bad sentiment, though he later caved. Even Bob Dole was correct at first, and 44 senators endorsed a resolution warning that the WTO was a vehicle for managed trade.

For a while it appeared that the WTO could be defeated or at least postponed. But the endorsement of the treaty by Capitol Hill think tanks gave everyone cover. As Susan Ariel Aaronson, author of a political history of the WTO, said, it was the pro-WTO "free-traders" who swung the debate.

We suffered enormous attacks from these temporary allies of Clinton. They called us every name in the politically correct handbook of smears: "isolationists," "protectionists," and even "skinheads" (that last one courtesy of William Safire of the New York Times).

The passage of the WTO illustrates four points: 1) nothing in government is ever as it appears, 2) you can’t count on international government organizations to bring about liberty, 3) there can be no compromise in the pursuit of freedom, even (or especially) in return for plaudits from the elite media, and 4) if you do not compromise, those who do compromise will hate you with a purple passion.

But we have a different guide. As Rothbard wrote about his great teacher, "never would Mises compromise his principles, never would he bow the knee to a quest for respectability or social or political favor."

What does it mean not to compromise on the issue of trade? It means seeking the ideal established in 19th-century Europe. Economies were integrated when governments pursued a path of unilateral free trade-on their own and without gaining permission from foreign governments. This is what Wilhelm Röpke called "true internationalism," in contrast to the "false internationalism" of global bureaucracies.

Today we face new hope and new danger. On the hopeful side, the regulatory talks collapsed. Nothing good can come of a global meeting of politicians and bureaucrats drawing up regulations to run our lives. And the widespread loathing of the gathered officials reflected, however inchoately, the continuing decline of the moral status and legitimacy of big government.

The new danger is that the now-discredited WTO will be seen as representing free trade. This is where the Mises Institute has a crucial role to play, not only in insuring that the genuine free-market position gets a public hearing, but also in educating a new generation of intellectuals. It is not enough that students understand the theory behind free trade, though that is essential. They must also learn how free trade has been betrayed by the governing global elites.

Thanks to improved technology, we have an even greater opportunity to raise the uncompromising flag of liberty. Already, during the WTO meetings, we distributed editorials and papers revealing the truth about the protestors, the delegates, and their corporate backers, and saw our analysis read by the vast numbers who traffic websites looking for information on the subject. We made sure that the voice of economic liberty was there to oppose the statists demanding more government regulation.

Not that we have abandoned the old media: we were back on the pages of the Journal of Commerce, the most widely read commercial-trade daily in the world, arguing that the WTO ought to be abolished. Free trade, we said, stands its best chance when government butts out.

And our message is being even better received than it was five years ago. Students are drawn to the idealism of the classical libertarian position, while our independence from government and the establishment makes the Mises Institute a credible vehicle for truth.

We are convinced that big-government management of economy and society can be brought to an end. We want to provide a push in that direction, and to articulate an uncompromising vision of liberty and prosperity for the future.

In this, we are inspired by the example of Ludwig von Mises, who fought socialism, inflationism, protectionism, and welfarism when they were hugely popular. He was never deterred when he did not prevail, and he vowed to fight against evil no matter what. So do we.

January 10, 2000

Lew Rockwell is president of the Ludwig von Mises Institute in Auburn, Ala.