With the WTO (World Trade Organization) as a vehicle, multi-national corporations are placing profits before human needs.

by Peter Montague

  For many years, the market for baby foods and infant formula in ‘developed’ countries has been shrinking as birth rates decline. So to create new demand for their products, baby food corporations have aggressively sought to ‘open new markets’ in the Third World.

A key vehicle for ‘opening new markets’ is advertising intended to convince women that breast-feeding their babies isn’t ‘modern’ and bottle feeding is healthier. The premise of such advertising is medically false—breast-feeding provides superior benefits compared to all synthetic substitutes. (Breast-feeding provides an infant with significant immunity against disease; it creates a strong emotional bond between mother and child; it helps prevent breast cancer in the mother, and more.) Nevertheless, many women are taken in by the false advertising; as a result, according to UNICEF, only 44% of infants in the Third World are breast-fed.

Chiefly because of this false advertising, says UNICEF, 1.5 million infants die each year because mothers unwittingly prepare infant formula with contaminated water, causing fatal diarrhea.

During the 1970s, a world-wide grass-roots campaign focused attention on this problem, boycotting Nestle, a major manufacturer of infant formula.

Partly because of this boycott, the World Health Organization (WHO) developed a Code on Marketing of Breast-Milk Substitutes. The WHO code prohibits words like ‘humanized breast milk’ and ‘equivalent to breast milk.’ To protect illiterate women from being duped, the code prohibits pictures "that idealize the use of bottle feeding."

Snubbing the Law

In 1983, Guatemala passed a law incorporating the WHO code. It encouraged new mothers (1) to breast-feed their infants and (2) to fully understand the dangers of using infant formula. The law prohibited labels of idealized babies on packages of baby food intended for children under 2 years. It also required labels to state that breast-feeding is nutritionally superior.

The law also prohibited baby food manufacturers from providing free samples of their products (if a baby starts taking free samples the mother stops lactating, thus converting mother and infant into full-time, paying customers). And finally the law prohibited baby food manufacturers from directly marketing their products to mothers in the hospital.

The regulations went into effect in 1988 and all manufacturers of baby foods—with one notable exception—complied. Infant deaths attributable to bottle feeding declined, and UNICEF began highlighting Guatemala as a model.

However, the U.S. baby food manufacturer, Gerber (motto: "Babies Are Our Business"), objected to Guatemala’s new law. The Guatemalan Ministry of Health attempted to negotiate with Gerber, but the company reportedly continued to market its infant formula directly to mothers in the hospital, and continued to give free samples to doctors and day care centers.

Gerber also refused to remove its trademark picture of a chubby, smiling baby from its labels, and refused to add a phrase saying breast milk was superior. Gerber thumbed its nose at health authorities, who were trying to protect their most vulnerable citizens, infants.

In November, 1993—five years after the law went into effect—Gerber lost its final appeal in Guatemalan courts; it looked as though even Gerber would have to comply with the Guatemalan law.

But Gerber opened a new line of attack, arguing that the Guatemalan law was illegal under international statutes because the law was an "expropriation of Gerber’s trademark." This tactic bought Gerber some time while the World Trade Organization was being created. In 1995, when the WTO came into being, Gerber dropped its claim about illegal expropriation of its trademark and threatened to challenge Guatemala before a WTO tribunal.

Soon Guatemala realized it was up against immense power and Gerber won without having to request the U.S. to take its case to the WTO. Just a few letters containing the WTO threat were sufficient.

This illustrates a marvelous feature of the WTO—the ease with which small, poor countries can be intimidated by trans-national corporations into ‘opening their markets.’ Under WTO rules, countries must open their markets to foreign corporations and cannot establish, as a precondition for business, that domestic laws will be respected. Thus corporations have a powerful new way to challenge any government.

An Important Lesson

Many poor countries cannot afford a full-time delegation to the WTO in Geneva. Nor can they maintain in-house legal expertise on fast-changing WTO rules. To hire outside counsel to defend themselves against a WTO challenge would cost several million dollars. Countries that know the WTO ropes and have money to burn can use procedural ploys that make the WTO a very expensive arena in which to litigate. For example, one country can challenge the credentials of another country’s delegation, thus prolonging the proceedings indefinitely. As Ralph Nader has written, "The WTO practice of allowing rich adversaries to object to the delegations of poor countries undermines poor countries’ meaningful participation in the WTO — and makes threats of WTO challenges enormously powerful tools to forestall the adoption of public health safeguards by poor countries that need them the most." [1, p.117]

Pharmaceutical corporations in the U.S. and Europe evidently learned a lesson from Gerber. The drug corporations have launched a campaign of threats against countries that try to make medicines more affordable and accessible to their citizens. South Africa, Thailand and India are examples.

In 1997, South Africa passed a Medicines Law which, when fully implemented, will encourage the use of low-cost generic drugs, and will prohibit drug companies from paying doctors to prescribe particular drugs. The law has two more provisions that the pharmaceutical corporations find particularly distasteful:


(1) It requires drug companies to license their products to other companies who must then pay a royalty fee to the drug’s developer. This encourages competition, thus making drugs available at reduced cost.

(2) A provision, called ‘parallel importing’ allows pharmaceuticals to be imported from several different countries, thus taking advantage of the lowest prices. For example the antibiotic Amoxicillin costs 50 cents per tablet in South Africa, 30 cents in New York and only 4 cents in Zimbabwe. [1, p.114] South Africa’s new law would make Amoxicillin cheaper and more widely available to the people of South Africa, many of whom are poor.


Pharmaceutical corporations, with help from the Clinton/Gore administration, are now using threats of WTO action to force South Africa to repeal its Medicines Law. When AIDS activists protested the Clinton/Gore administration’s role in trying to overturn South Africa’s Medicines Law, a ‘senior Gore advisor’ said: "Obviously the Vice President’s got to stick up for the commercial interests of U.S. companies." [1, p.121] Mr. Gore is doing more than this. U.S. State Department memos describe a ‘full court press,’ led by Mr. Gore, to force South Africa to ‘repeal, suspend, or terminate’ its Medicines Law. As the U.S. sees it, under WTO rules, the intellectual property rights of corporations have higher priority than human health. However, Mr. Gore seems to recognize that his campaign might come back to bite him. When pressed by the group ACT-UP in June 1999, he issued a statement denying that he was pressuring South Africa. [1, p.123].

This case is not unique. In 1992, Thailand instituted a Pharmaceutical Review Board to establish compulsory licensing for medicines. A firm with an exclusive patent on a critical medicine was required to license other companies to manufacture it, with royalties paid to the patent-holder. This competition drove down prices of critical medicines such as Pfizer’s Flucanazole, used to treat meningitis. The cost of treatment with Flucanazole dropped from $14 per day to $1 per day in Thailand. However, the U.S. pressured Thailand for seven years until the Review Board was abolished. The U.S. argued that such a Board is illegal under WTO rules. [1, p.113]

For many years, Indian law made it illegal to patent any substance "intended for use, or capable of being used, as a food or as [a] medicine or drug." [1, p.105] A WTO tribunal ruled in 1997 that India’s law is illegal. Using the WTO as a battering ram, the U.S. pressured India to abandon its prohibition against patenting food and pharmaceuticals.

Now W.R. Grace has filed for a U.S. patent on a pesticidal by-product made from the Neem tree, which grows only in India. Neem, nicknamed ‘the village pharmacy,’ has been used for centuries in India to make medicines and bio-pesticides. Grace claims that it has a new method of producing the pesticides that indigenous people have produced for hundreds of years. Grace now says it deserves the exclusive right to sell the products that were developed by indigenous communities—and argues that under WTO rules India has an obligation to enforce Grace’s patent rights. [1, p.110]

It appears that the WTO is a nearly-perfect vehicle for extending corporate dominance into every corner of the world. But the corporations are not yet satisfied. The purpose of the WTO meeting in Seattle was to consolidate and extend the WTO’s power even further.


[1] Lori Wallach and Michelle Sforza, WHOSE TRADE ORGANIZATION?: CORPORATE GLOBALIZATION AND THE EROSION OF DEMOCRACY (Washington, D.C.: Public Citizen, Inc., 1999). ISBN 1582310017; telephone(202) 588-1000.

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 Peter Montague is editor of Rachel's Environmental Weekly. He can be reached at P.O. Box 5036,Annapolis, MD 21403, USA. Fax: +1-410-263-8944