Criticism of the World Trade Organization

The stated aim of the World Trade Organization (WTO) is to "ensure that trade flows as smoothly, predictably and freely as possible".[1] However, the WTO does not claim to be a "free market" organization. According to the WTO, it is "sometimes described as a 'free trade' institution, but that is not entirely accurate. The system does allow tariffs and, in limited circumstances, other forms of protection. More accurately, it is a system of rules dedicated to open, fair and undistorted economic competition."[2] This compatibility to a certain degree of protection is proved, for example, by the fact that cartels like the OPEC have never been involved in trade disputes with the WTO, despite the evident contrast between their objectives.[3]

The actions and methods of the World Trade Organization evoke strong antipathies. Among other things, the WTO is accused of widening the social gap between rich and poor it claims to be fixing.[4] UNCTAD estimates that the market distortions cost the developing countries $700 billion annually in lost export revenue.[5]

WTO Ministerial Conference 2005 Protest
Protestors clashing with Hong Kong police in the Wan Chai waterfront area during the WTO Ministerial Conference of 2005.

Martin Khor

Martin Khor argues that the WTO does not manage the global economy impartially, but in its operation has a systematic bias toward rich countries and multinational corporations, harming smaller countries which have less negotiation power. Some suggested examples of this bias are:

  • Rich countries are able to maintain high import duties and quotas in certain products, blocking imports from developing countries (e.g., clothing);
  • According to statements made at United Nations Conference on Trade and Development (UNCTAD, 2005), the use of NTBs (non-tariff barriers), based on the amount and control of price levels has decreased significantly from 45% in 1994 to 15% in 2004, while use of other NTBs increased from 55% in 1994 to 85% in 2004,such as anti-dumping measures allowed against developing countries;
  • The maintenance of high protection of agriculture in developed countries, while developing ones are pressed to open their markets;
  • Many developing countries do not have the capacity to follow the negotiations and participate actively in the Doha Round; and
  • The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement, which limits developing countries from utilizing some technology that originates from abroad in their local systems (including medicines and agricultural products).

Khor argues that developing countries have not benefited from the WTO Agreements of the Uruguay Round and, therefore, the credibility of the WTO trade system could be eroded. According to Khor, "one of the major categories of 'problems of implementation of the Uruguay Round' is the way the Northern countries have not lived up to the spirit of their commitments in implementing (or not implementing) their obligations agreed to in the various Agreements."[6] Khor also believes that the Doha Round negotiations "have veered from their proclaimed direction oriented to a development-friendly outcome, towards a 'market access' direction in which developing countries are pressurised to open up their agricultural, industrial and services sectors."[7] Jagdish Bhagwati asserts, however, that there is greater tariff protection on manufacturers in the poor countries, which are also overtaking the rich nations in the number of anti-dumping filings.[8]

Labour and environment

Other critics claim that the issues of labor and environment are steadfastly ignored. Steve Charnovitz, former Director of the Global Environment and Trade Study (GETS), believes that the WTO "should begin to address the link between trade and labor and environmental concerns." He also argues that "in the absence of proper environmental regulation and resource management, increased trade might cause so much adverse damage that the gains from trade would be less than the environmental costs."[9] Further, labor unions condemn the labor rights record of developing countries, arguing that to the extent the WTO succeeds at promoting globalization, then in equal measure do the environment and labor rights suffer.[10]

On the other side, Khor responds that "if environment and labor were to enter the WTO system [...] it would be conceptually difficult to argue why other social and cultural issues should also not enter." He also argues that "trade measures have become a vehicle for big corporations and social organizations in promoting their interests."[11] Scholars have identified GATT Article XX as a central exception provision that may be invoked by states to deploy policies that conflict with trade liberalization.[12]

Bhagwati is also critical towards "rich-country lobbies seeking on imposing their unrelated agendas on trade agreements." According to Bhagwati, these lobbies and especially the "rich charities have now turned to agitating about trade issues with much energy understanding."[13] Therefore, both Bhagwati and Arvind Panagariya have criticized the introduction of TRIPS (Trade-Related Aspects of Intellectual Property Rights) into the WTO framework, fearing that such non-trade agendas might overwhelm the organization's function. According to Panagariya, "taken in isolation, TRIPS resulted in reduced welfare for developing countries and the world as a whole."[14] Bhagwati asserts that "intellectual property does not belong in the WTO, since protecting it is simply a matter of royalty collection [...] The matter was forced onto the WTO's agenda during the Uruguay Round by the pharmaceutical and software industries, even though this risked turning the WTO into a glorified collection agency."[15]

For a discussion on the incorporation of labor rights into the WTO, see Labour Standards in the World Trade Organisation.

Decision making

Another critic has characterized the "green room" discussions in the WTO as unrepresentative and non-inclusive; more active participants, representing more diverse interests and objectives, have complicated WTO decision-making, and the process of "consensus-building" has broken down. Results of green room discussions are presented to the rest of the WTO which may vote on the result. They have thus proposed the establishment of a small, informal steering committee (a "consultative board") that can be delegated responsibility for developing consensus on trade issues among the member countries.[16] The Third World Network has called the WTO "the most non-transparent of international organisations", because "the vast majority of developing countries have very little real say in the WTO system".[17]

Many non-governmental organizations, such as the World Federalist Movement, are calling for the creation of a WTO parliamentary assembly to allow for more democratic participation in WTO decision making.[18] Dr Caroline Lucas recommended that such an assembly "have a more prominent role to play in the form of parliamentary scrutiny, and also in the wider efforts to reform the WTO processes, and its rules".[19] However, Dr Raoul Marc Jennar argues that a consultative parliamentary assembly would be ineffective for the following reasons:

  1. It does not resolve the problem of "informal meetings" whereby industrialized countries negotiate the most important decisions;
  2. It does not reduce the de facto inequality which exists between countries with regards to an effective and efficient participation to all activities within all WTO bodies;
  3. It does not rectify the multiple violations of the general principles of law which affect the dispute settlement mechanism.[20]

The lack of transparency is often seen as a problem for democracy. Politicians can negotiate for regulations that would not be possible or accepted in a democratic process in their own nations. "Some countries push for certain regulatory standards in international bodies and then bring those regulations home under the requirement of harmonization and the guise of multilateralism."[21] This is often referred to as Policy Laundering.

References

  1. ^ "WTO Homepage". Retrieved 2015-06-29.
  2. ^ "Promoting fair competition". Archived from the original on 2015-06-06. Retrieved 2015-06-30.
  3. ^ Farah, Paolo Davide; Cima, Elena (2013). "Energy Trade and the WTO: Implications for Renewable Energy and the OPEC Cartel". Journal of International Economic Law. 16 (3): 707–40. SSRN 2330416.
  4. ^ Cline, William R. (2004). "Conclusion". Trade Policy and Global Poverty. Peterson Institute. p. 264. ISBN 0-88132-365-9.
  5. ^ Pogge, Thomas. "Poverty and Human Rights" (PDF).
  6. ^ Khor, Martin (2000-01-28). "Rethinking Liberalization And Reforming The WTO". Third World Network. Archived from the original on 2006-10-06. Retrieved 2007-03-22.
  7. ^ Khor, Martin (November 2006). "The WTO's Doha Negotiations And Impasse: a Development Perspective". Third World Network: 16. Archived from the original on 2007-03-18. Retrieved 2007-03-22.
  8. ^ Bhagwati, Jagdish (January–February 2005). "Reshaping the WTO" (PDF). Far Eastern Economic Review. 162 (22): 26. Archived from the original (PDF) on 2005-02-06. Retrieved 2007-03-22.
  9. ^ Charnovitz, Steve (1999-11-01). "Addressing Environmental and Labor Issues in the World Trade Organization". Trade and Global Markets: World Trade Organization. Progressive Policy Institute. Archived from the original on 2007-09-26. Retrieved 2007-03-22.
  10. ^ Kennedy, Kevin C. (2006). "The World Trade Organization: Ultimate Arbiter of International Sanitary and Phytosanitary Standards?". In Lawrence (Busch, Jim Bingen (ed.). Agricultural Standards: The Shape of the Global Food And Fiber System. Springer. p. 46. ISBN 1-4020-3983-2.
  11. ^ Khor, Martin (2002). "How the South is Getting a Raw Deal at the WTO". In Robin Broad (ed.). Global Backlash: Citizen Initiatives for a Just World Economy. Rowman & Littlefield. p. 154. ISBN 0-7425-1034-4.
  12. ^ Lea Brilmayer and William J. Moon, Regulating Land Grabs: Third Party States, Social Activism, and International Law, book chapter in Rethinking Food Systems, February 2014
  13. ^ Bhagwati, Jagdish (January–February 2005). "Reshaping the WTO" (PDF). Far Eastern Economic Review. 162 (22): 28. Archived from the original (PDF) on 2005-02-06. Retrieved 2007-03-22.
  14. ^ Bhagwati, Jagdish (December 2005). "From Seattle to Hong Kong" (PDF). Foreign Affairs. 84 (7): Article 15. Archived from the original (PDF) on 2005-02-06. Retrieved 2007-03-22.
    * Panagariya, Arvind (1999-07-20). "TRIPS and the WTO: an Uneasy Message". Archived from the original on 2006-10-06. Retrieved 2007-03-22.
  15. ^ Bhagwati, Jagdish (December 2005). "From Seattle to Hong Kong". Foreign Affairs. 84 (7): Article 15. Archived from the original on 2007-04-06. Retrieved 2007-03-22.
  16. ^ Blackhurst, Richard (August 2000). "Reforming WTO Decision Making: Lessons from Singapore and Seattle" (PDF). Center for Research on Economic Development and Policy Reform (Working Paper No 63): 1–20. Archived from the original (PDF) on 2007-06-04. Retrieved 2007-03-23.
    * Schott, Jeffrey J.; Watal, Jayashree (March 2000). "Decision-Making in the WTO". Peter G. Peterson Institute for International Economics. Retrieved 2007-03-23.
  17. ^ "Transparency, Participation and Legitimacy Of the WTO". Third World Network. March 1999. Retrieved 2007-03-23.
  18. ^ "Reform of the World Trade Organization and International Financial Organizations". Global Economic Governance. World Federalist Movement. Archived from the original on 2007-02-11. Retrieved 2007-03-23.
  19. ^ "The WTO: The role of Parliamentarians? – Public Symposium: The Doha Development Agenda and Beyond, (WTO) – Summary Report". Revista Inter-Forum. Retrieved 2007-03-23.
  20. ^ Jennar, Raoul Marc. "A "Consultative Parliamentary Assembly" to the WTO: a Reform that Changes Nothing". Unité de Recherche, de Formation et d'Information sur la Globalisation. Archived from the original on 2007-02-20. Retrieved 2007-03-23.
  21. ^ Hosein, Ian, 2004, "International Relations Theories and the Regulation of International Dataflows: Policy Laundering and other International Policy Dynamics"

Further reading

Criticisms of globalization

Criticism of globalization is skepticism of the claimed benefits of globalization. Many of these views are held by the anti-globalization movement. Globalization has created much global and internal unrest in many countries. While the dynamics of capitalism is changing and each country is unique in its political makeup, globalization is a set-in-stone "program" that is difficult to implement without political unrest. Globalization can be partly responsible for the current global economic crisis. Case studies of Thailand and the Arab nations' view of globalization show that globalization is a threat to culture and religion, and it harms indigenous people groups while multinational corporations profit from it. Although globalization has promised an improved standard of living and economic development, it has been heavily criticized for its production of negative effects. Globalization is not simply an economic project, but it also heavily influences the country environmentally, politically, and socially as well.

World Trade Organization

The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world.The WTO deals with regulation of trade in goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals. Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.The WTO's current Director-General is Roberto Azevêdo, who leads a staff of over 600 people in Geneva, Switzerland. A trade facilitation agreement, part of the Bali Package of decisions, was agreed by all members on 7 December 2013, the first comprehensive agreement in the organization's history. On 23 January 2017, the amendment to the WTO Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement marks the first time since the organization opened in 1995 that WTO accords have been amended, and this change should secure for developing countries a legal pathway to access affordable remedies under WTO rules.Studies show that the WTO boosted trade, and that barriers to trade would be higher in the absence of the WTO. The WTO has highly influenced the text of trade agreements, as "nearly all recent [preferential trade agreements (PTAs)] reference the WTO explicitly, often dozens of times across multiple chapters... in many of these same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement."

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