Dec. 16, 2005 – For over a decade, the residents of Greenfield, Massachusetts have been snubbing the biggest names in retail, aiming to protect local businesses and neighborhoods from corporate "sprawl." Backed by tight zoning regulations, including size limits for retail stores, local activists have kept Wal-Mart at bay and managed to avoid the wave of mega-stores engulfing the rest of the country.
But on the other side of the planet, negotiators at the World Trade Organization (WTO) meeting in Hong Kong are discussing trade rules that could empower corporations to override policies like Greenfieldâ€™s zoning laws. According to critics of so-called "big box" retailers, the expansion of a WTO accord called the General Agreement on Trade and Services (GATS) may make it easier for giant retailers to squelch local laws.
Under GATS, which was adopted by more than 140 WTO member nations, federal, local and state governments cannot limit the size and operations of foreign service-sector corporations. If a community enacts such measures, a foreign government can challenge these "barriers to trade" through a WTO dispute-resolution process. In signing onto the accord in 1994, the US Congress committed several major sectors, including telecommunications, financial services and retail stores, to GATS rules.
In the ongoing WTO negotiations, corporate lobbyists are pushing proposals to strengthen the provisions of GATS and further constrain the authority of governments to control the terms on which corporations can do business in their communities. According to a report by the advocacy group Public Citizen, enhancing GATS could gut the state and local land-use regulations that hundreds of communities across the country have used to block mass retailers from setting up shop in their neighborhoods.
Corporate lobbyists are pushing proposals to further constrain the authority of governments to control the terms on which corporations can do business in their communities.
"Zoning is one of the last bastions of local control," said Al Norman, one of the Greenfield activists who campaigned successfully against a Wal-Mart development plan in the early 1990s. He now runs Sprawl-Busters, a group that helps communities develop strategies to keep out big-box chains. "To me," he argued, "itâ€™s unconstitutional for a trade agreement to take away that statutory power."
Industry leaders publicly support GATS as a tool to crack open foreign markets, but they say it will not impact their expansion in the US.
"We certainly oppose retail restrictions, size restrictions here, domestically," said Paul Kelly, senior vice president of government affairs for the Retail Industry Leaders Association, which represents Wal-Mart, Home Depot and other chains. But in the US, companies will continue to sell their development plans "through good old-fashioned, shoe-leather lobbying," he told The NewStandard.
"We have no intention of working through [the] WTO to do any kind of backdoor preemption," he added.
Yet grassroots groups say that although GATS has not yet factored into domestic clashes with mega-stores, retail giants are not above capitalizing on international agreements to mow down community opposition. Even if US-based companies do not invoke GATS, they argue, the accord could still foster the US expansion of foreign-owned stores, like Swedenâ€™s IKEA and the Netherlandsâ€™ Stop & Shop. At a 2002 US Department of Commerce conference, both these chains were listed among multinational corporations that were running up against local restrictions on the size and location of retail developments.
Even local governments that welcome chain stores would want their own officials, not the WTO, to have the final word
Stacy Mitchell, senior researcher with the Institute for Local Self Reliance, a community-development think tank, commented that since Wal-Martâ€™s empire encompasses several thousand stores in 15 countries, she suspects they are "imagining that one of their subsidiaries in another country could be used to helpâ€¦ challenge a local land-use law in this country." For example, she said, Wal-Mart could enlist its Mexican sister-store, Wal-Mex, to battle a US GATS violation by proxy.
Norman said that even local governments that welcome chain stores would want their own officials, not the WTO, to have the final word. "Whether people want big boxes or donâ€™t want them," he said, "they certainly donâ€™t want some sort of international trade agreement to step in between them and their right to control land use."
Some officials have already expressed concern about the impacts of WTO agreements on domestic service industries, especially public services like water utilities. Earlier this year, the Montana and Utah legislatures passed resolutions urging federal authorities to protect state regulatory authority when negotiating trade policies.
But watchdog groups say that big-box retailers and other corporations that stand to gain from GATS are steering the US in the opposite direction. In 2002, for example, the Retail Industry Leaders Association and Wal-Mart issued complaints to the US Trade Representative about regulations in some countries that limited where and how large they could build stores. Similarly, an internal memorandum of the WTOâ€™s Working Party on Domestic Regulation targeted licensing requirements and "unreasonable environmental and safety standards" as impediments to trade.
"Instead of going back and fixing problems that have been exposed," said Sarah Johnson of Public Citizenâ€™s Global Trade Watch program, "trade negotiators are trying to put more things on the table."
Earlier this year, a WTO tribunal ruling intensified fears that GATS could subordinate domestic law to the free-trade regime. The government of Antigua charged that US state and federal bans on Internet-based gambling limited the market access of Antiguaâ€™s gaming industry. The WTO ruled that the anti-gambling statutes violated GATS, though the laws ultimately survived through a loophole for regulations relating to "public morals."
Johnson told TNS the decision indicated that "the way that the GATS is being interpreted is kind of confirming worst nightmares."
The backdrop to the GATS controversy is growing evidence that, contrary to the claims of developers, unbridled mega-store expansion tends to undermine local economies. According to the University of Californiaâ€“Berkeley's Institute for Industrial Relations, compared to large retail businesses overall, Wal-Mart spent about 15 percent less per worker on wages and healthcare benefits. In suburbs and cities, Wal-Mart has generally displaced higher-paying jobs in comparable retail stores.
Nonetheless, with or without the help of the WTO, chain retailers keep finding room to grow. In Bennington, Vermont, for instance, Wal-Mart managed to muster enough local influence to stamp out a law banning retail developments larger than 75,000 square feet, which would have blocked Wal-Martâ€™s expansion plans. The company launched a political advertising campaign, vastly outspending community organizers that supported the measure, and the policy was overturned in an April referendum.
When it comes to winning over planning authorities, Norman said that retailers are often successful because "local officials either are in the hands of the developers or donâ€™t know what their powers are to stop developers."