What if the business elites of the world had joined in preparing a master plan to consolidate their
power and render democracy impotent? What actions might their advisors have counseled?
MEMORANDUM
December 1, 1983
TO: International Business Roundtable Members
FROM: Harry Winters, Staff Economist
SUBJECT: The Next Phase: The Uruguay Round of GATT
The Roundtable’s leadership council has decided it is time to
initiate the new phase of our plan to assume responsibility for the
whole. Let me put this decision into historical perspective.
Following World War II, the Roundtable successfully promoted
the formation of the United Nations to provide a symbol of
democratic global government. However, as documented by economists
and political scientists throughout the post-war period, the
founders of the Roundtable were well aware that democracy is a
luxury only the wealthy can afford. The elimination of poverty,
which creates openings for the spread of Communism and limits
expansion of consumer markets, is one of the Roundtables central
priorities. Economic growth must come before democracy.
Consequently, the real power has been placed in the Bretton
Woods institutions (the World Bank, International Monetary Fund, and
the General Agreement on Trade and Tariffs or GATT) under the control
of the executive branches of the G-7 governments. Executive branches
of government are able to conduct much of their business in an
orderly fashion because they can operate out of the public spotlight
an impose security discipline, particularly where international
negotiations are involved. Furthermore, the Roundtable has
substantially greater influence with the Bretton Woods institutions
as they are firmly in the control of the governments of the seven
industrial countries.
The World Bank Phase
The World Bank had the lead in implementing the first phase of the
Roundtable strategy. This focused on regaining control of the former
colonial economies. The Bank’s role was to convince these countries
that foreign borrowing would spur their economic growth. Of course
the borrowing was in foreign exchange, which meant that whatever
money was borrowed was necessarily spent abroad. Their economies
quickly adjusted to dependence on buying foreign goods and services
beyond the value of their own exports.
The IMF Phase
Once countries were mortgaged beyond their means, the IMF was
brought into play, teaming up with the Bank to place the indebted
countries in the equivalent of bankruptcy receivership. This allowed
the imposition of structural adjustment policies that reduced
spending on social programs, reduced redundancies in the public
service, eliminated restrictions on foreign investment and trade,
forced the sale of public corporations at fire sale prices, and
oriented their economies to production for export–opening up
substantial new investment opportunities for our members. The
reduction of public employment produced a sudden increase in the
educated unemployed and helped to drive down wages, much as the
increased pressure to export pushed down primary product prices in
international markets. As planned, the adjusted economies became so
deeply dependent on Roundtable member corporations for credit,
technology, and jobs that they now actively compete with one another
in offering investment incentives.
The GATT Phase
We are now positioned to implement the GATT phase of the Roundtable
strategy by bringing into full play the most powerful and least
known of all the Bretton Woods institution. We have intentionally
kept it out of the public eye so that the public would not come to
suspect its true power. While the World Bank and the IMF are almost
powerless to dictate policies to the wealthy industrial countries,
GATT agreements are imbedded in multilateral treaties that are
binding on all signatory countries, both rich and poor. Its rulings
are enforceable through the application of powerful sanctions and
are beyond independent appeal.
While GATT has been styled as a trade organization, we believe
we can successfully expand the definition of trade barriers to
include virtually any constraint to corporate action in the global
economy. Preparations are underway at this moment for a new round of
GATT negotiations. U.S. President Ronald Reagan, who is almost
assured a second term, will serve as our standard bearer. Our
members are now working with Reagan’s staff to define the U.S.
position for the next GATT round.
Our GATT Agenda
The outlines of our strategy for the upcoming GATT negotiations are
well defined. We will work to eliminate all remaining barriers to the free flow of goods
between countries, including 1) measures that give domestic
producers a competitive advantage over foreign producers; and 2)
health and environmental regulations that exceed recognized
international standards. Furthermore, we will work to eliminate the right of
governments to:
- Restrict the export of natural resources.
- Give preferential treatment to local over foreign investors in
any area of the economy, including manufacturing, mining, and
services such as banking, insurance and shipping. - Restrict any import on the grounds that the processes by which
it was produced fail to conform to local social or
environmental standards. - Bring intellectual property rights under the GATT to assure their
protection in all signatory countries.
Economic Efficiency and International Competitiveness
Competitive pressures are the key to increasing global economic
efficiency. A critical element of our strategy is to expose
communities to the discipline of the market by making their access
to jobs dependent on increasing their international competitiveness
in three areas.
Labor. The goal is to create a global competitive labor market
that places all workers in competition with one another. As we
remove barriers to trade and investment, workers the world over
will be placed in competition with one another for those jobs
that are mobile. Placing high wage workers in competition with
the vast pool of unemployed in the global labor market will
create substantial pressure to eliminate the labor market
rigidities such as labor unions and minimum wages that currently
are a major source of economic inefficiency. Once capital is
fully mobile, it will become apparent that it is unfair to
prohibit the similar free migration of labor across national
boundaries. We will encourage these tendencies, since labor
mobility will increase the competition for non-mobile service
jobs as well and complete the globalization of the labor market.
Labor will be treated as any other commodity in the global
marketplace.
Raw Materials. Here we are pursuing a two-fold strategy:
increasing the dependence of national economies on exports and,
through GATT, eliminating the legal right of governments to
restrict the sale of natural resources on environmental grounds
or reserve them for local value-added production. This
strengthens competitiveness in commodity markets and assures
productive enterprises access to natural resources anywhere in
the world at favorable prices.
Regulation and Taxation. As corporations increase their freedom
to choose where they locate production facilities, localities all
around the world are brought into competition with one another to
provide the most cost competitive production sites by assuring
the availability of low cost, disciplined labor, freedom from
costly social and environmental regulations, generous tax
abatements, and such investor friendly facilities as publicly
funded infrastructure and worker training.
With the completion of the forthcoming round of GATT negotiations,
the state, with its concern for national boundaries and power, will
become increasingly inconsequential and powerless. Inefficient small
producers will either be driven out of the market or absorbed into
the procurement and marketing systems of more efficient larger
firms. The rights of capital and technology, and thereby of the
transnational corporation, will be irrevocably imbedded in
international law. The process of fashioning agreements on the
sharing of technology, markets and production facilities among
corporations through the formation of strategic alliances will
continue–leading to the creation of a unified global governance
structure driven by the principles of economic efficiency. The
corporation will assume responsibility for the whole–ushering in an
era of universal peace and prosperity.
Over the next few months we will draft articles for the new GATT
round consistent with the above principles. It is important that all
our members recognize the significance of the Uruguay Round of GATT
negotiations and give this effort their full support.
Indeed it is impossible to over stress the importance of a
disciplined approach as we move into this critical strategic phase.
We must present a sufficiently united front through the media we
control to avoid any consequential public debate. To this end we
have had our best media people working out the message we will ask
our members to support in public communications. Surveys reveal that
jobs and the environment are both emerging as critical public
concerns. Consequently we should saturate the media with the message
that free markets and free trade will provide jobs and protect the
environment through stimulating economic growth and increasing
economic efficiency. We can contract with prestigious university
economists to develop computer models that will affirm these claims.
We will stress the benefits to consumers of allowing free entry to
competitively priced consumer goods. Our response to arguments for
preferential treatment for local producers will stress the need to
treat all businesses fairly by providing them a level playing field.
Those who become persistent in their challenges will be dismissed by labeling them special interest protectionists and economic
illiterates who advocate economic inefficiency and elite privilege.
We may only get one chance on the GATT round. If we do not get
these agreements negotiated and confirmed by national legislative
bodies before the public becomes aware of our agenda, we are likely
to face serious opposition, particularly from special interest
groups such as labor, environmentalists, and civil libertarians
inclined to put their narrow concerns ahead of the larger global
welfare to which the Roundtable is committed.
The memo is fictitious. The events, however, are real. Is
it really a conspiracy? It seems inconceivable in our complex and fractious world that any
large group of power holders could
maintain the discipline and unity of purpose required to advance the implementation of such an
ambitious plan over a period of some fifty years. Yet the events described have occurred and the
Uruguay round GATT proposals now being finalized seek to implement each of the provisions
outlined in the memo. Agreements with similar provisions are being put into place under the North
American Free Trade Agreement (NAFTA) to meld the economies of Canada, the United States, and
Mexico.
True to the strategy outlined in the memo, the public has remained uninformed of the scope
and implications of these agreements. Fortunately, public awareness is now beginning to emerge that
the GATT and NAFTA involve a good deal more than simply another round of boring trade
negotiations.
Anonymous
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