The Chill Factor: Consumer Safeguards Under Fire

In the nearly five years of World Trade Organization operation, WTO tribunals have formally decided nearly two dozen cases, holding an array of environmental safeguards and consumer protections—from endangered species protection measures to bans on the import of hormone-treated beef—to be "illegal."

But the WTO's smothering of democracy extends far beyond the scope of its tribunals' decisions. An even greater threat to the democratic evolution of environmental, consumer, health, safety and human rights rules may be the chilling effect of WTO rules and the trade agency's enforcement machinery.

The chilling effect works in two ways.

Backing Away from Democracy

First, countries may be pressured to repeal or revise their laws in the face of other countries' threats of a WTO challenge, even before a challenge has formally been filed or before it has come before a WTO dispute settlement panel.

In 1995, for example, the European Union adopted a prohibition on the use of steel jaw leg-hold traps for 13 fur-bearing species out of a concern for animal welfare. Steel jaw traps are very painful, and animals often chew off their own limbs to escape. The EU also sought to ban the import of furs from countries that permit the use of the traps.

The United States and Canada responded with threats of a WTO challenge to the EU rule. The EU's proposal focused on how the pelts were "produced," which in general is an illegitimate basis for regulation of imports under WTO rules.

The result of the threats was that the EU backed down. It negotiated a deal for a watered down animal protection standard that many animal welfare advocates believe will prove unenforceable, after it is slowly phased in.

Similar kinds of saber rattling have led South Korea to withdraw food safety rules and Guatemala to exempt imports of infant formula from its labeling restrictions.

Voluntarily Low Standards

The second kind of chilling effect is even more insidious: Fearful of even the prospect of a WTO challenge, countries may decide not to adopt laws they otherwise would.

Consider the case of the state of Maryland's effort to promote democratic reforms in Nigeria. When the state legislature considered a bill to bar the state from buying goods from companies doing business in Nigeria -- then ruled by a cruel dictatorship -- the measure was expected to pass handily. Maryland hoped to emulate the success that similar "selective purchasing" laws had in helping end apartheid in South Africa.

But as a vote neared, the U.S. State Department intervened. "We would like to work with you to ensure that we don't expose ourselves to a potential WTO challenge," a State Department official told the Maryland legislators. The Maryland bill appeared to run afoul of WTO rules on government procurement, which generally say that government purchasing decisions can only be made on the basis of quality and price.

With the federal government applying pressure, the Maryland legislators voted against passing the Nigeria selective purchasing law.

This kind of internally generated pressure and fear of WTO challenge works its greatest harm in developing countries, who fear confronting powerful rich countries—even when they might be able to defend their laws in a formal WTO challenge. The WTO chilling effect is part of the reason that developing countries have not taken measures—legal under WTO rules—to lower the cost of essential medicines, for example.

The WTO's chilling effect works to freeze in place existing rules—including those that are out of date or weak—thereby preventing countries, states, and localities from advancing standards to meet changing needs and the ongoing challenge of improving the quality of our lives and environment.

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