Speech by Joan Claybrook

President, Public Citizen

I would like to thank our European hosts for all of the work that went into organizing this meeting. As many of you may know, Public Citizen, the U.S. national consumer group founded in 1971 by Ralph Nader, was highly skeptical about the TransAtlantic Consumer Dialogue because it was initiated by the Office of the U.S. Trade Representative with whom we have had deep disagreements for almost a decade in both Republican and Democratic administrations.

And I apologize for Ambassador Esserman's premature departure. She needs to hear that many of the US government positions she has just presented are in direct contradition to the positions held in common by US and EU consumer groups.

Public Citizen has disagreed about the absence of the consumer, environmental, labor and other NGO voices in international economic policy-making; we have disagreed about the legitimacy of business groups and government officials making trade and regulatory policy behind closed doors, such as with TABD; we have disagreed about the content of GATT, which places a premium on commercial transactions compared to human values - which with the WTO's enforcement - can undermine our health and safety protections in secret, autocratic, undemocratic proceedings; we have disagreed about Fast Track - a uniquely undemocratic procedure hatched by Pres. Nixon in 1974 and used since five times to ram trade agreements through our Congress with limited debate. We repeatedly sued the government during the early 1990s to pry open the door, but the meager consultations we obtained were misused to legitimize the very outcomes to which the NGOs were opposed.

Having been essentially excluded, we turned to a decade of hard work organizing and extensive coalition-building. It has produced results. In the past two years, we beat the U.S. government on its misguided trade policies legislatively on Fast Track (twice), the NAFTA for Africa, and the 23 nation Caribbean Basin NAFTA expansion. And, with an international NGO coalition, we pre-empted the MAI at the OECD.

In the ashes of these political losses, the Clinton Administration has initiated a "charm strategy" with NGOs, including the environmental and consumer organizations, hoping to seduce us with talk of consultation, openness and balance, and with that potentially comes diversionary busy work. Its easy to talk the talk, but will the Administration walk the walk down a new path of balanced international commercial rules and open policy-making?

That the Administration was launching the TransAtlantic Economic Partnership (TEP) despite having no authority to do so and without consumer or environmental input was not faith inspiring. All of this was the context behind the proposal by the U.S. trade Representative's office for creating a TransAtlantic Dialogue and why we had a hostile reaction last fall.

I want to make clear that our complaint was (and is) with the U.S. government posture on trade issues and not in opposition to international cooperation. For years Public Citizen and Ralph Nader have been collaborating closely with international consumer and citizen groups on our extensive consumer, trade and globalization activities. We completely support the idea of close cooperation between U.S. and EU consumer organizations for the purpose of advancing consumer protection and democratic values.

Yet, it remains to be seen whether TACD can be effective. TACD, like any group, will be measured by its actual results. I make this point particularly for the government representatives who are with us: the measure of TACD's success, how much time and effort many groups will put into it in the future, TACD's very legitimacy, will be determined solely by its effectiveness in obtaining specific consumer goals.

The question facing us now is whether the addition of a formal consumer voice through TACD into US-EU position-setting concerning the GATT-WTO and with regard to the TransAtlantic Economic Partnership (TEP) negotiations will result in different outcomes or if the die is cast regardless of our input. I hope that during this meeting we will set some clear markers against which we can test the results of our efforts. For instance, will the precautionary principle be enshrined in the TEP's standards on food, pharmaceutical safety and the like? Will labeling of food products with genetically modified organisms be part of TEP?

From our perspective, the main challenge we face in this era of rapid globalization - the challenge on which all our aspirations and achievements rest - is ensuring accountable, democratic governance. Such open, accountable governance - from decision-making to implementation to redress - is absolutely necessary to securing high standards of consumer protection.

Some of you may know the history of Ralph Nader's work in the U.S. A major focus of his early work was ensuring that citizens had the tools to create the government safeguards for clean food, safe products and cars, and quality government and business services. Thus, he worked to enact laws that opened government records and meetings to the public. He worked to create a citizen participation role in our regulatory process and balance and transparency in government advisory committees.

When Public Citizen dove into the trade and globalization issues in 1990, we didn't want a new set of issues to add to our overflowing plates. But, we realized that those vital mechanisms for democratic governance and consumer guidelines for which we had fought for 25 years were being put at serious risk by newly expansive "trade" agreements. Our concerns, unfortunately, have proved to be correct.

From negotiation to implementation, the current international commercial regimes like GATT-WTO and NAFTA are suffering from a major democracy deficit, and we are just beginning to see the tip of the iceberg in the consequential damage to our safeguards.

And, incidentally, contrary to Ambassador Esserman's speech, there is simply no inherent connection between membership in institutions like the WTO and democracy. Singapore is only one example of that - a trade powerhouse WTO member that is a dictatorship.

What we face with the current trade rules in the GATT, or for that matter in NAFTA, are not free trade as in the philosophy and model described by 19th century scholars. Rather, we now have is managed trade. But it is corporate-managed trade. It is simply one set of rules as opposed to another - and many of the current rules are harmful to consumer interests. We believe these rules are not necessary to assure robust trade and will undermine our revered democratic governance in which people, not corporations, are endowed with the ultimate decision-making authority. The overarching defect is the principle of imposing one set of binding rules and values on top of all of the other democratically achieved domestic policies and value choices.

These pacts are a giant step - in the decline of democratic institutions as multinational corporations extend their tentacles. It must be acknowledged that the WTO and its progeny are a threat to democracy and accountable decision-making - the necessary undergirding of any citizen struggle for sustainable, adequate living standards and health, safety and environmental protections that distinguish a humane society.

The Wall Street Journal said it all: After the Uruguay Round agreement was signed, the Journal editorialized that GATT "represents another stake in the heart of the idea that governments can direct economies. The main purpose of GATT is to get governments out of the way so that companies can cross jurisdictions (i.e., national boundaries) with relative ease. It seems to be dawning on people ... that government is simply too slow and clumsy to manage trade."

Should corporations rather than governments manage trade?

Obviously not. This philosophy runs precisely counter to our institutional premise as consumer advocates. Corporations only care about their short term bottom line, not the broader consequences.

But, we care about more and not only about product quality, price and selection. If we take the results perspective, we must also care about our safety on the job. If our cars are safe but we are exposed to asbestos at work, our health is still threatened.

We care about our overall purchasing power. We must both ensure that workers have the power to earn a fair wage and that there is competition to lower prices. Now now we must also care about whether the frenzy of global mega-mergers will undermines price competition. Increasing concentration is already causing perverse effects: like under NAFTA where increased import competition has led to higher prices. For instance in tomatoes: the price of tomatoes has soared 16% in five years while import penetration of Mexican tomatoes, which cost much less to produce than U.S. tomatoes, is up 64%.

And, we care about the implications of how the products and services we consume were produced. Was child labor used? Were toxic byproducts dumped on the environment? Were excessive natural resources used so that our children may inherit an impoverished Earth?

Different individuals - to say nothing of different communities, states, and nations - will place different relative value on these items. Thus, we believe that those who will live with the results must have the freedom and power to make the choices, to fight for the policies that suit them. Indeed, one the greatest blessings of democracy is the diversity and choices it allows.

Yet, the philosophy on which the current globalization model is premised views this very diversity as inefficient market fragmentation. The premise underlying standards harmonization and deregulation - which has overtaken the traditional tariff and quota issues to be the heart of modern international commercial negotiations - is that the world is one market. The classic macroeconomic efficiency model seeks scale to maximize efficiency of production. Thus, differences in standards, even if they are the expression of differences in cultures, values and such, are inherently undesirable as fragmentors of the global market.

This inherent conflict between consumer power and choice through democratic government and industry's goal of unified markets is the basis for our general skepticism about harmonization of standards. When you attempt to make one global standard, how do you respect the different choices that different people, cultures and societies make about different values? All of these issues point to the necessity of both restructuring our international agreements and negotiating future ones to incorporate the right substantive principles - such as the precautionary principle - and the right procedures. So, while our work at TACD will certainly focus on many specific issue areas, I propose that part of our focus be an affirmative agenda of principles and a procedure for trade decision-making. Given the TEP negotiations have neither congressional authorization nor public legitimacy, it might be politically prudent to take a sharply different approach to avoid another defeat with TEP.

And investigating how to incorporate such changes in the GATT-WTO is why we must have a "Repair and Review Round" not a Millennium Round of further deregulation and harmonization. It is not acceptable that every health, safety or environmental standard challenged at the WTO to date has resulted in a ruling declaring that policy to be a trade barrier. Thus, one of our tasks at this meeting should be to join as the TACD and as our individual organizations with the hundreds of environmental, development, health, labor and other NGOs worldwide who are campaigning against a new deregulation round. Instead we should call for the countries and WTO institution to engage in a two year, thorough assessment of the GATT-WTO's five year record with an eye to what needs to be repaired.

While Mr. Beseler applauds the US government for supporting the EU call for a new WTO Round, he and you must know that Congress has given no authority for it - nor is there public support for a new round of GATT negotiations with the US public.

To close, I want to outline six specific principles and procedures I would offer for our discussion on the standards issues on which I have spent much of my working life:

First, we must set limits on where international standard-setting is even appropriate.

Rather than having blanket provisions requiring harmonization and equivalence determinations as contained in the GATT, we should define the specific areas where they are appropriate - so that business needs are met without undermining the consumer interest. The core notion underlying harmonization - that a uniform global standard that is appropriate for numerous different cultures and suitable to the world's variety of social norms can always be established - is false.

We need to replace the current presumption for harmonization. And, instead we must establish when it is appropriate given it inherently moves decision-making away from accessible, accountable state and national governance fora to international bodies that are largely inaccessible to citizens, generally operate without accountability to those who must live with the decisions and thus are more susceptible to some level of industry capture.

Two principles I propose:

• Distinguish between industrial standards - such as the size of a light bulb or the thickness of type B glass on which harmonization does not involved public health and safety VERSUS harmonization of levels of consumer protection - such as allowable pesticide residues in food.
• Harmonize testing procedures not levels of protection: This will assure industry a more uniform and less costly means of ensuring compliance, while resisting the pressure to set international standards at the lowest common denominator.

Second, where harmonization is underway already, the standards must set a floor, not a ceiling.

Currently, international standards set a ceiling of safety. For instance, in GATT, standards that are higher than those specifically enumerated must pass a set of tests in order not to be considered trade barriers.

In areas where harmonization is already underway, we must ensure:

• That the harmonized standard is set at the highest level of protection afforded in an involved countries' domestic standard, and
• The international standard incorporates the best available technology and take into consideration the likely availability of improved technology. Such a "best available technology" approach will guard against the situation where the international standard becomes outmoded, and
• That a mechanism to systematically review the harmonized standards with an eye to upgrading it is built in.

To respect the diversity and democratic right of people to determine their preferences in risk, I propose a TEP that does not contain any ceilings on safety. Nations and subfederal entities must remain free to set higher standards for safety and health without fearing that these will be attacked as trade barriers. Of course, we would need to establish careful tests to separate legitimate health measures from trade barriers masquerading as health measures. However, instead of GATT's use of a shotgun to blast at all health standards to make certain not one protectionist measure slips through, we need to design a tweezers to pluck out the phony measures and put the burden of proof on the challanger, not the defender so the default position is for safety.

Third, we must enshrine the precautionary principle.

The TEP could provide an excellent venue for trade rules that safeguard countries' rights and practical abilities to take protective measures that are based on the precautionary principle. Ironically, while the U.S. government bashes away at the EU beef hormone and GMO policies, the precautionary principle it stomps down is the underlying basis for regulatory policy in the U.S. For example, in our pharmaceutical safety rules, the burden of proof is on the producer to show the drug is safe. Until there is scientific evidence to make that showing, the drug is kept off the market.

Bringing such a principle to life is merely a matter of setting the right rules. The obvious test - and the one that would have safeguarded the beef hormone policy -- is whether the measure is discriminatory. We must make the rule that standards based on the precautionary principle and applied equally to domestic and foreign producers are inherently permissible.

Fourth, we develop strict rules for making equivalence determinations.

Under GATT, a nation must accept a product standard of an exporting nation as equivalent to its own when the standard is designed to achieve the same level of protection as that of the importing country. NAFTA forces countries seeking to exclude a product to produce scientific assessment that the exporting country's standard is not providing an equivalent level of protection. However, neither agreement now defines how to determine equivilence per se. There are two vital aspects:

• A standard should only be determined equivalent if it provides precisely the same level of substantive protection for health, safety, etc. Thus, the NAFTA equivalence finding on Canadian meat that did not even review, much less compare numerous factors, is unacceptible.
• As well, equivalence should only be found if the procedural safeguards are as strong - meaning citizen imput, review, right to sue, etc.

Fifth, we must keep some issues outside the scope of trade rules altogether.

Since the 1970s Tokyo Round of GATT, the breadth of coverage of trade disciplines has grown exponentially, yet these have been decisions often made without the broad public interest taken into account. The TEP could set an example of some issues that are inappropriate for coverage by trade rules.

Take water, for example. Nations do not trade, companies do. Do we want to make certain things into commodities, rather than common goods for government to protect, distribute and regulate. The same principle applies to patenting life forms and for that matter seeds.

Some consumer and development advocates suggest food is an entire category that should be treated differently, because it is an essential commodity to sustain life. This is part of what I am getting at with the specific proposals above that would separate standards on widgets from bread.

Sixth, we must build in open procedures at both domestic and international standard setting fora.

There are several procedural principles that have served us well in the U.S.:

• Opportunities for public participation - with notice of issues under consideration and public dockets to collect and make available imput from diverse sources.
• Decision-making on the record - with explanation of why different positions were or were not adopted.
• Public access to all pertinent information - in a publicly available location.
• Right to sue to overrule the government decisions and for enforcement.

In conclusion, I would like to emphasize that unlike gravity or death, the current design of corporate economic globalization is a choice. And the issue we must confront is how we will build the power to force better choices, to overcome this corporate juggernaut that is now steering us toward a world in which we will no longer have any choices.

We look forward to working with you on these challenges. Thank you.