Just Business: Could the WTO Lead to Reefer Reform?

Reason number 258 why global trade kicks ass. Could the WTO be the agent of change that finishes off irrational marijuana laws in this country? Tim Wu, who teaches intellectual property and international trade at University of Virginia Law School, thinks it’s a good possibility:

The irrationality of U.S. marijuana policy is not news. Support of legalization has made bedfellows of people like Willie Nelson and William F. Buckley Jr., backed up by Richard Posner and Dr. Dre. And a Supreme Court decision on whether the federal laws can trump state statutes in this area is expected any day. But the strange status of marijuana may also bring down the scrutiny of a different entity altogether: the World Trade Organization and its powerful condemnation of inconsistent national laws. The American ban on marijuana is what the WTO calls “a barrier to trade,” raising the question: Can U.S. marijuana policy survive the tough scrutiny of world trade law?

WTO scrutiny of American drug laws may sound far-fetched, but then until recently so did WTO scrutiny of U.S. gambling or tax laws. U.S. gambling laws, like drug laws, are erratic: Online casinos are strictly prosecuted, but state lotteries and Las Vegas are tolerated. Citing such inconsistency, last November the WTO declared American gambling enforcement an “illegal barrier to trade in services.” The fate of these gambling laws may be a guide to the future of American marijuana laws.

….Do such WTO decisions have any teeth? Yes, because unlike other international bodies the WTO understands punishment. In his tenure as U.S. president, George W. Bush has obeyed exactly one international court decision: a WTO ruling that shot down his protections for American steel. The reason even Bush listens to the WTO is that the organization knows the one thing politicians fear: angry industries, especially farmers. The WTO has the power to authorize punitive economic sanctions, and those inevitably target politically sensitive exporters—like Florida orange growers or Midwestern wheat.

….Two WTO principles spell trouble for U.S. drug laws. The WTO demands that countries treat foreign products the same as domestic ones (the “National Treatment” principle); and it demands that when chemicals or drugs are banned, those bans be based on good science (the “Beef Hormone” principle).

….import bans must also be supported by scientific risk analysis. And merely saying “Murder! Insanity! Death!” is usually insufficient.

That’s what the Europeans found out when their ban on hormone-fed beef was struck down by the WTO in 1998. Europeans have long been suspicious of American cattle fed growth hormones, believing that eating hormone-laden beef leads to premature sexual development. But the WTO struck Europe’s beef-hormone ban for want of good science. In WTO language, Europe failed to supply a “risk assessment that reasonably supports or warrants the import prohibition.”

….In order for the WTO to consider the legality of U.S. drug laws, some country would have to bring a WTO complaint against the United States. Don’t expect a case tomorrow, but it may just be a matter of time. An increasing number of countries—including Belgium, Holland, and Canada—have begun to allow licensed growing of marijuana, and today’s growers will be tomorrow’s exporters.

Canada is the natural WTO plaintiff. Just as with alcohol during prohibition, Canada makes lots of money selling contraband dope to its southern neighbor. According to the Canada’s National Post, Canadian marijuana is a $7 billion industry, or larger than Canada’s wheat and dairy industries, and its fisheries. And the laws up north are loose. The last two prime ministers have been legalization advocates.

….The economic incentives to bring a WTO complaint are clear. For Canadian and other marijuana exporters, the American recreational and medical weed market is the big fatty. Americans smoked 1,047 metric tons of ganja in 2000—according to U.S. government estimates, worth $10.5 billion.



….The WTO’s reasoning is economic, and economic logic taken seriously often has radical consequences. Many economists, including Nobel-laureates Gary Becker and Milton Friedman, have long believed that American marijuana laws are irrational. And as William F. Buckley Jr. puts it, “marijuana prohibition has done far more harm to far more people than marijuana ever could.” [Slate]

I find it heartening that the various entanglements countries enter into in order to advance their own causes eventually lead to scrutiny and rationality – economics is one topic all politicians answerable to their people (yet another argument for democracy) cannot afford to ignore. The business of the world is business. Nothing has changed China more than its eagerness to enter the WTO, although its desire to hold the 2008 Olympics could be a close second.