Meet Free Traders' Worst Nightmare

Activist Lori Wallach's savvy jabs at the excesses of globalization have business worried

Lori Wallach is the merry prankster of congressional lobbyists. She distributes plastic handcuffs to members of Congress to symbolize how international trade agreements shackle them. To heighten concerns about food safety, Wallach once distributed boxes of old, odoriferous broccoli to congressional offices. During a 1994 lame-duck session of Congress called to approve U.S. membership in the World Trade Organization, Wallach provided members with pillows that had the plea "Sleep On It"printed on them.

But Wallach is not just joking around. As director of Public Citizen's Global Trade Watch, a Ralph Nader-founded group, she wants to slow the march of globalization. She is taking on President Clinton and Corporate America by challenging their efforts to let China join the WTO. Even if she loses that one, she'll fight to stop Congress from normalizing trade relations with Beijing.

On almost any other issue, the 36-year-old director of a left-wing group would be little more than an exasperating curiosity to the legions of free-trade-loving business lobbyists in Washington. But this year, from her cramped office near the Capitol, Wallach is beating the K Street crowd at their own game. The stakes are huge as the U.S. trade relationship with China shapes up as the biggest lobbying contest of the year. Both the Clinton Administration and business advocates of granting China permanent Most Favored Nation trading status--also known as normal trade relations--are clearly worried.

One big reason is Wallach, a Harvard-trained lawyer who serves as the unofficial legal tactician for a growing coalition of free-trade skeptics (graphic, page 114). The White House once hoped to stampede Congress into passing permanent MFN by asserting that it was the only way to get reciprocal trading rights from China. But Wallach, who totes dog-eared copies of various trade agreements around with her, undercut that argument by digging up a 1979 U.S.-China agreement that guarantees the U.S. MFN status from China.

Once described as "Ralph Nader with a sense of humor," Wallach is also known around Washington as a fierce debater, a masterful vote-counter on Capitol Hill, and a skillful organizer for the campaign against globalization. She got started in 1990 as an activist on food-safety issues and quickly realized that international organizations, such as the General Agreement on Tariffs & Trade, predecessor of the WTO, were seizing jurisdiction over a wide swath of domestic regulations. "I kept hearing Monsanto Co. tell Congress: `You can't do that because of GATT,"' she says.

To fight back, Wallach founded Citizens Trade Campaign, a coalition of labor, environmental, human rights, and consumer groups. Now, CTC is part of a larger effort opposing free trade and the growing power of the WTO. This loose-knit alliance fielded some 60,000 demonstrators in Seattle last December to help derail the WTO meeting.

While television news crews focused on the vandalism of 200 or so unaffiliated anarchists, a more significant story unfolded in church basements and meeting halls around Seattle--many of them rented by Wallach--where thousands of environmentalists, union members, human-rights activists, and food purists attended teach-ins and prepared for coming battles.

Free-trade opponents have united behind an ambitious agenda: Not only do they plan to oppose permanent MFN trading status for China but they also want to reform the International Monetary Fund and World Bank, which meet in Washington on Apr. 16.

WORLDWIDE STANDARDS. Anti-globalists would erase some of the debts of the IMF's Third World clients, stop loans for projects deemed environmentally unsound, and allow debtor nations more leeway to spend on health and education--even if that means missing some loan repayments. Finally, they want the World Trade Organization to help enforce worker rights and environmental standards worldwide. Says Wallach: "We are not a campaign. We are not a fluke. We are a mainstream public-interest movement, and we are not going to go away."

Polls bear her out: In both Gallup and Zogby polls last November, twice as many Americans said the U.S. should withhold trade privileges until Beijing provides economic, political, and religious freedoms than said that freer trade would promote such freedoms. And only 1 in 4 Americans believes China is becoming more democratic, says Steven Kull, a polling expert at the University of Maryland's Program on International Policy Attitudes.

Business is finally paying attention. Until the WTO meltdown in Seattle, advocates of free trade dismissed a string of lobbying victories by the anti-globalization crowd. These include two failed congressional attempts at passing fast-track trade-negotiating authority in 1997 and 1998, in part because of opposition from globophobes. Anti-globalists also helped scuttle an effort in Paris in 1998 to rewrite international rules on foreign investment in a treaty strongly supported by major U.S. corporations. And they blocked repeated attempts to extend the North American Free Trade Agreement to the Caribbean and Chile.

The growing political power of the anti-globalists has taken the free-trade Establishment by surprise, concedes U.S. Trade Representative Charlene Barshefsky. After Congress overrode a splintered coalition's objections in 1994 and approved NAFTA, the anti-globalization movement blamed the agreement with Mexico for the subsequent loss of some 400,000 jobs. "What neither business nor the Administration saw at the time was that opposing trade agreements and legislation would become their raison d'tre," says Barshefsky. She has learned to respect the group's lobbying clout even while disagreeing with almost everything it espouses. "Their single biggest lesson is that grassroots lobbying is what counts the most," says Barshefsky.

Wallach insists that the coalition's lobbying strength comes from its message. But critics of the message find it muddled and sometimes contradictory. At the WTO protests in Seattle, some demonstrators demanded stronger enforcement of environmental and labor standards by the WTO, while others sought to dismantle it. Some opposed the WTO's bias toward securing intellectual-property protections for wealthy nations at the expense of the developing world. But few demonstrators seemed worried about protectionist barriers to imports of textiles and commodities from poorer nations. In fact, the anti-trade alliance has proved more adept at opposing legislation and trade pacts than at formulating policy. "Their whole strategy is selfishly nationalistic," complains trade historian Susan A. Aaronson of the National Policy Assn., a nonpartisan business/labor think tank in Washington.

To her critics, Wallach offers this plan: Allow nations to establish their own environmental, health, safety, and labor standards and enforce them through trade sanctions without WTO interference. "Trade shouldn't trump every other concern, which is what you have when trade bureaucrats in Geneva are deciding on food-safety and endangered-species protections," Wallach says.

Where does the money come from to finance the coalition's activities? Wallach says the Citizens Trade Campaign's budget totals about $300,000. Funds come from individual contributions and foundation grants, but the group also receives donations of staff time from other organizations. Wallach certainly isn't in this fight for its lavish perks: In a town of limousines, she drives a battered blue Buick to appointments, a pink parking ticket often decorating the windshield. The Seattle effort, Wallach says, cost less than $200,000. The staff numbered 100, but only 5 were paid, she claims. Some 3,000 CTC demonstrators were housed by 2,400 Seattle families, which kept expenses down.

To counter that grassroots power, Washington's business lobby will spend $6 million or more for pro-China TV ads in 100 congressional districts and sponsor enough CEO fly-ins to keep the hangars at Washington's Ronald Reagan National Airport plenty busy this spring. In this rough-and-tumble election year, no one can yet say who will win the Battle of Beijing. "I'll give our side 6-to-5 odds," says Representative James P. Moran (D-Va.), a free trader. Boasts Wallach: "We've beaten worse odds before." Remember Seattle?

Before it's here, it's on the Bloomberg Terminal.