Table of Contents
Introduction Text main Concluding Works Cited
The World Trade Organization (WTO) is currently one of the most influential institutions. As the successor to the General Agreement on Tariffs and Trade, it was founded in 1995. (GATT). This multinational institution creates regulations for international commerce, oversees trade disputes, and enforces GATT agreements. According to the Marrakesh Agreement Establishing the World Trade Organization, the WTO's primary functions are to "facilitate the implementation, administration, and operation" of WTO agreements; to "provide the forum for negotiations among its Members regarding their multilateral trade relations"; to provide a dispute settlement mechanism; and to achieve "greater coherence in global economic policy-making" (Marrakesh Agreement Article III).
These responsibilities require rising living standards, providing full employment, maximizing the use of the world's resources, supporting developing nations, etc. Although the activities and objectives of the WTO are intended to promote free trade and economic prosperity, they frequently become a source of contention among the 151 WTO member states (On 27 July, 2007).
Free trade encouraged by the WTO does not result in convergence of income levels between rich and poor members of the WTO; rather, it results in divergence, which means that rich countries become richer and poor ones become poorer. (Cline 264) Small nations may argue that they have minimal negotiating leverage compared to larger nations.
Despite the WTO's assertion that it safeguards the interests of developing nations, it frequently fails to govern the global economy impartially, defending exclusively the commercial interests of wealthy nations. According to Martin Khor, the director of the Third World Network, the WTO's notion that "we are all winners and there are no losers" is baseless. "Some have gained more than others, while others (especially the poorest countries) have not gained at all and may have suffered a significant loss in economic standing" (Martin Khor's presentation at Davos, Part I).
During the past two decades, just a few of nations have enjoyed economic development, whilst the vast majority have seen their living standards decrease. The principles of trade liberalization are imposed on all WTO members without regard for the nations' preparedness and capacity to implement them. It turns out that poor countries are perpetually plagued by financial instability, debt, and recession.
A country can manage the liberalization of its imports, but cannot limit the development of its exports, according to the law of trade liberalization. Trade liberalization results in an increase in imports without a matching increase in exports. This contributes to a widening of trade deficits and a deterioration of external indebtedness, both of which result in protracted stagnation and recession. Trade liberalization should be adopted in emerging nations only if they are characterized by robust local businesses and farms, human resource growth, and technological advancement. These nations should be able to make strategic economic decisions in areas such as finance, trade, and investment policies, as well as define the rate and breadth of liberalization essential for their economies to flourish.
To resolve this divergence between the established WTO principles of equality, "the rich countries must now correct the imbalances and inequities in the global trading system"; they should increase their market access to products from developing countries, but should refrain from pressuring developing countries to further open their markets. It should be permitted for developing nations to pick their own rate of liberalization" (Martin Khor's presentation at Davos, Part I).
Members of the WTO who are developing nations are dissatisfied with several Uruguay Round agreements that have worsened their economic status. After the signing of the Agreements, the dreams that developing nations had for a greater market access for their goods to the markets of affluent countries were not achieved. The following concerns contravene WTO policy and are thorny problems that require immediate resolution:
Certain exports from developing nations to developed nations are prohibited. Rich nations have the authority to maintain high import charges and quotas, so preventing imports from underdeveloped nations (for example, some food, and clothing). Contrary to their pledges to eliminate "tariff peaks," wealthy nations continue to exploit the high import levies on industrial goods exported by poor nations. Developing nations are dissatisfied with the rise of non-tariff barriers in developed nations. Anti-dumping measures and other non-tariff obstacles are permitted against the exports of developing nations. The United States opposes amendments to the Anti-Dumping Agreement, which appear to be a sensible path out of the current crisis. In affluent nations, agriculture is heavily protected, but developing nations are pressured to expand their markets. The Agriculture Agreement did not improve the situation in developing nations, as protection in wealthy nations remained extremely high, preventing exports from poor nations from gaining market access. Trade Related Investment Measures Agreement lowers developing countries' industrialization potential. According to the Agreement, developing nations are restricted from incorporating some foreign technologies into their domestic infrastructure. Among the technologies are pharmaceuticals and agricultural items. Concerning the dilemma of developing nations in the WTO, many of them are unable to follow the negotiations and participate actively in the Uruguay Round.
These are the most essential points on which developing nations may argue with other WTO members. To remedy the concerns stated, the WTO's operations should center on the examination of a large number of existing agreements: their shortcomings should be extensively studied, and special attention should be paid to determining their impact on developing nations, with the necessary adjustments made.
The relationship between trade, labor, and environmental concerns is an additional source of contention among World Trade Organization members. Increasing trade standards cause environmental degradation. Steve Charnovitz, former director of the Global Environment and Trade Study, asserts that "in the absence of proper environmental regulation and resource management, increased trade could cause so much negative environmental impact that the benefits of trade would be outweighed by the environmental costs" (Charnovitz). According to his research, "the scale, structure, and physical effects of trade can potentially harm the environment," but not all WTO members grasp this concept. The debate on environment, trade, and labor among WTO member nations remains divided. Charnovits proposes a set of initiatives to develop a unified approach in these fields:
Subsidies. On this topic, the WTO must collaborate with other international organizations: 1. governments must agree to phase out harmful subsidies. 2. governments must agree to prohibit some of these subsidies (in order to notify citizens in countries that use them). Members of the WTO should strictly adhere to the environmental management guidelines promulgated by the foremost standardization body, ISO. Fresh institutional measures. The WTO ought to coordinate its efforts with the World Bank, the OECD, the United Nations Conference on Trade and Development, the World Health Organization, the Food and Agriculture Organization, UNEP, and the International Labor Organization, among others. (Charnovitz)They will assist its members in reaching compromise on contentious issues.
The absence of a clear and effective decision-making system is a further source of discord among WTO members. In general, the following describes the decision-making procedure: The majority of regular issues are discussed in committees, councils, and other organizations. The procedure by which WTO members discuss, debate, and negotiate topics differs from the organization's reliance on consensus to make decisions (Blackhurst Part I). Large and influential developing nations often participate in the WTO's decision-making process, but all other members are excluded.
According to the Third World Network, the WTO is "probably the least transparent of international organizations" since "most, if not all, of its key decisions are worked out in informal meetings" and "in many cases, only a handful of countries are invited to these meetings" (Transparency, Participation and Legitimacy of the WTO). Not only do the largest developed countries receive the outcomes they want, but they also have the ability to veto problems they don't want brought up or don't agree with, even if it goes against the decision of the vast majority of countries.
Lack of adequate financial and human resources is the primary factor preventing the majority of developing nations from actively participating in the decision-making process. Even if they participate in negotiations on a particular subject, they are frequently pressured to make choices or take stances they disagree. The Third World Network insists on the following to alter this position of inequality:
"The processes of consultations, discussion, negotiations, and decision-making in the WTO must be made truly transparent, open, participatory, and democratic"; The civil society of each country-member should be informed six months in advance of any proposed changes to the rules, agreements, or commitments. "The planned and ongoing debates and negotiations at the WTO must be made public, and all members must be permitted to attend and participate. "The practice of small informal groups making decisions on behalf of all Members must end"; "Parliaments and Parliamentarians should be kept constantly informed of proposals and developments at the WTO, and they should have the right to make policy choices regarding proposals arising in the WTO that have an impact on national policies and practices"; "The practice of small informal groups making decisions on behalf of all Members must end"; "Parliaments and Parliamentarians should be kept constantly informed of proposals and developments at the WTO, Civil society should be appropriately apprised of the issues being debated and the current status of those conversations. Civil society organizations and institutions should be able to voice their opinions, and the WTO should respond. Thus, civil society will have the ability to influence policy outcomes and decisions. (The Network for the Third World)
Concerning the topic of WTO decision-making, one more authoritative opinion is of some interest. Richard Blackhurst contends that the model of decision-making established by the GATT does not meet the needs of the WTO at today. In the past, the GATT model was effective because fewer nations participated in the decision-making process and not all countries were required to adhere to the decisions.
According to Blackhurst, the most effective method to involve all WTO members in the decision-making process today is to establish a small Consultative Board tasked with fostering consensus on trade problems among WTO members. The author argues that for the approximately 90 WTO members who are consistently excluded from green room meetings, the campaign for reform is well worth the effort because the Consultative Board will ensure their active involvement in WTO decision-making. (Blackhurst)
As evidenced by the preceding, the World Trade Organization has a number of pressing concerns to address in order to live up to its standing as a significant organization in the modern world. A satisfactory resolution of the discussed issues will result in the organization's effective operation, which is contingent upon the achievement of its core objectives. Without a consensus, not only will the WTO fail to achieve its goals, but it will always be in risk of being labeled an illegitimate and undemocratic institution.
"Reforming WTO Decision Making: Lessons from Singapore and Seattle," by Richard Blackhurst. Center for Economic Development and Policy Reform Research 2000. Web-based Working Paper No. 63.
"Addressing Environmental and Labor Issues in the World Trade Organization," by Steve Charnovitz. PPI Briefing, Progressive Policy Institute, 1999, web.
William Cline, Trade Policy and World Poverty. 2004: Center for Global Development and Institute of International Economics, Washington, D.C.
Steve Charnovitz, "Promoting Higher Labor Standards," The Washington Quarterly 18, no. 2 (1995): 167.
2008 Third World Network. Reconsidering Liberalisation and Reforming the WTO: Martin Khor's Davos Presentation
2008, Third World Network The WTO's Transparency and Legitimacy. Web.
International Trade Organization. Web resource for the Marrakesh Agreement Establishing the World Trade Organization.