The World Trade Organization (WTO) is the institutionalized version of the General Agreement of Tariffs and Trade (GATT). Established on 1 January 1995, the WTO world trade organization promotes open trade and regulates international trade and free trade through trade agreements among member governments. Located in Geneva, Switzerland, the WTO world trade organization currently has 147 member countries.
The WTO world trade organization came into existence on the basis that it was going to oversee international trade to the benefit of all its member countries. However, since its establishment the WTO world trade organization has instead, in some quarters, developed a reputation for increasing inequality among countries and has been blamed for causing trade barriers and the great “North-South divide.” For example, critics such as Ariff, M. in his 1989 “TRIMs: a North-South Divide or a Non-issue?” examined this divide in detail.
Although proponents of the WTO world trade organization are correct to point out that there are some benefits conferred by the WTO world trade organization in a much longer and bigger process for trade and environment, it is difficult to ignore how the WTO world trade organization has altered the face of international trade and free trade politics and the potentially detrimental effects it has on trade policies for the developing South.
Is the WTO World Trade Organization Undemocratic and Causing Trade Barriers?
One of the major criticisms aimed at the WTO world trade organization is that it is undemocratic, not transparent and that it causes trade barriers. Critics also question why negotiation rounds lack transparency and happen behind closed doors although the policies of the WTO world trade organization impact practically all aspects of the world and society. The WTO world trade organization website responds to this, saying that “decisions taken in the WTO world trade organization are negotiated, accountable and democratic.” It purports that “the rules of the WTO world trade organization system are trade agreements resulting from negotiations among member governments and are ratified by members’ parliaments, and decisions taken in the WTO world trade organization are virtually all made by consensus among all members.”
However, in reality, this “consensus” is arrived at by delegates from the countries in a shroud of secrecy and may be seen as presented to the rest of the members as a “take-it-or-leave-it” package. Many negotiations are limited to select groups of countries, known as "green rooms," often hand-picked to include the European Union, the United States, and Japan.
Chakravarthi Raghavan’s book, “Two Winners, One Loser at WTO world trade organization Conference,” provides some insight into this. For example, a writer present at the Singapore ministerial conference noted, “The entire negotiations were made among some 30 delegations (with a Minister and advisor for each delegation allowed in the room). The other delegations did not know what was going on.” In fact, some 28 countries do not even attend many of the WTO world trade organization’s meetings simply because they lack the resources to set up diplomatic missions in the expensive city of Geneva.
Is the WTO World Trade Organization a White Elephant?
The WTO world trade organization also stands accused of causing smaller developing countries to be powerless. The WTO world trade organization website responds, saying that “Small countries would be weaker without the WTO world trade organization. The WTO world trade organization increases their bargaining power.” However, the richer countries of the North have been accused of using a combination of bilateral pressure and strong-arm tactics to coerce smaller developing countries to do their bidding. The developing countries are then left to jostle for the leftover benefits of trade policy review, if any.
They continue to accept this, mainly because they want to avoid antagonizing the powerful members and suffering any resulting economic and political repercussions. Aileen Kwa’s book, Power Politics in the WTO world trade organization, Focus on the Global South provides one such example. When asked why his country backed down from its opposition to the controversial “Singapore Issues,” one African delegate at Cancun said, "Well, we have preferential arrangements with the EU on beef and sugar. They would have removed that."
Even if these grievances exist, the WTO world trade organization website claims that “in the WTO world trade organization’s dispute settlement unit (DSU), developing countries have successfully challenged some actions taken by developed countries.” Unfortunately, this statement fails to paint the full picture. Developing countries’ use of the DSU against developed countries is considerably less than their share of developed country international trade.
According to Gregory Shaffer’s book, Defending Interests, Public-Private partnerships in WTO world trade organization Litigation, just over 50% of the developing countries’ complaints were lodged against developed countries, which was considerably less than the latter’s share of international trade with developing countries. This might be perceived as being attributed to political and economic pressure from powerful countries in the North.
Show us the Money, WTO World Trade Organization
Critics have even questioned the economic benefits the WTO world trade organization confers on free trade for the South. The WTO world trade organization website is quick to point out the benefits brought about by international trade under it. Its own estimates for the impact of the 1994 Uruguay Round trade policy deal were between $109 billion and $510 billion added to world income. The UNCTAD Trade and Development Report 2002 rebuts: Why then are developing countries trading more, yet earning less?
The report notes that despite huge increases in exports in the South, developing countries’ incomes have not increased significantly, compared to those of the North. WTO world trade organization rules might instead be seen as increasing the inequality between the North and South by opening up countries to foreign investment and thereby making it easier for production to go where the labor is cheapest and most easily exploited and environmental costs are low. As such, developing countries end up competing with one another on wage levels and even if they increase volumes of international trade, they do not increase their incomes.
The apogee of all of these, as shown in Martin Khor in his 2007 publication entitled "Third World Network," is that there are several flaws inherent in the WTO world trade organization’s structure and practices, which may undermine the developing countries’ abilities to benefit more from international trade. These in turn are reflected in the WTO world trade organization’s various policies and trade agreements. As much as one would like to take the sanguine approach and look at the rosy outlook provided by the WTO world trade organization, one should be cognizant of the plight of the developing countries.
Jo Bilson - Jo Bilson is a management consultant with interests including venture capital and entrepreneurial finance.
