Criticism of the World Trade Organization

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

The stated aim of the World Trade Organization (WTO) is to promote free trade and stimulate economic growth. 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.[1]

Martin Khor[edit]

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);
  • The increase in non-tariff barriers 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 Uruguay Round; and
  • The 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."[2] 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."[3] 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.[4]

Labour and environment[edit]

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."[5] 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.[6] 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."[7]

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."[8] Therefore, both Bhagwati and Arvind Panagariya have criticized the introduction of TRIPs 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."[9] 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."[10]

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

Decision making[edit]

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.[11] 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".[12]

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.[13] 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".[14] However, Dr Raoul Marc Jennar argues that a consultative parliamentary assembly would be ineffective for the following reasons:

  • It does not resolve the problem of "informal meetings" whereby industrialized countries negotiate the most important decisions;
  • 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;
  • It does not rectify the multiple violations of the general principles of law which affect the dispute settlement mechanism.[15]

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."[16] This is often referred to as Policy Laundering.

References[edit]

  1. ^ Cline, William R. (2004). "Conclusion". Trade Policy and Global Poverty. Peterson Institute. p. 264. ISBN 0-88132-365-9. 
  2. ^ Khor, Martin (2000-01-28). "Rethinking Liberalization And Reforming The WTO". Third World Network. Retrieved 2007-03-22. 
  3. ^ Khor, Martin (November 2006). "The WTO's Doha Negotiations And Impasse: a Development Perspective". Third World Network: 16. Retrieved 2007-03-22. 
  4. ^ Bhagwati, Jagdish (January–February 2005). "Reshaping the WTO" (PDF). Far Eastern Economic Review 162 (22): 26. Archived from the original on 2007-03-04. Retrieved 2007-03-22. 
  5. ^ 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. Retrieved 2007-03-22. 
  6. ^ Kennedy, Kevin C. (2006). "The World Trade Organization: Ultimate Arbiter of International Sanitary and Phytosanitary Standards?". In Lawrence (Busch, Jim Bingen. Agricultural Standards: The Shape of the Global Food And Fiber System. Springer. p. 46. ISBN 1-4020-3983-2. 
  7. ^ {{cite book The WTO, whose decision-makers habitually move past the issue of labor standards, has become a vehicle for global corporations to deliver goods and services at low cost while chipping away at the job security and welfare of the working and middle classes in developed countries. They gradually find themselves in a race to the bottom with desperate citizens in developing nations. |last=Khor|first=Martin|authorlink=Martin Khor|pages=154|editor=Robin Broad| title=Global Backlash: Citizen Initiatives for a Just World Economy|year=2002|publisher=Rowman & Littlefield|isbn=0-7425-1034-4| chapter=How the South is Getting a Raw Deal at the WTO}}
  8. ^ Bhagwati, Jagdish (January–February 2005). "Reshaping the WTO" (PDF). Far Eastern Economic Review 162 (22): 28. Archived from the original on 2007-03-04. Retrieved 2007-03-22. 
  9. ^ Bhagwati, Jagdish (December 2005). "From Seattle to Hong Kong" (PDF). Foreign Affairs 84 (7): Article 15. Archived from the original on 2007-03-04. Retrieved 2007-03-22. 
    * Panagariya, Arvind (1999-07-20). "TRIPS and the WTO: an Uneasy Message". Retrieved 2007-03-22. 
  10. ^ Bhagwati, Jagdish (December 2005). "From Seattle to Hong Kong". Foreign Affairs 84 (7): Article 15. Retrieved 2007-03-22. 
  11. ^ 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 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. 
  12. ^ "Transparency, Participation and Legitimacy Of the WTO". Third World Network. March 1999. Retrieved 2007-03-23. 
  13. ^ "Reform of the World Trade Organization and International Financial Organizations". Global Economic Governance. World Federalist Movement. Retrieved 2007-03-23. 
  14. ^ "The WTO: The role of Parliamentarians? - Public Symposium: The Doha Development Agenda and Beyond, (WTO) - Summary Report". Revista Inter-Forum. Retrieved 2007-03-23. 
  15. ^ 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. Retrieved 2007-03-23. 
  16. ^ Hosein, Ian, 2004, "International Relations Theories and the Regulation of International Dataflows: Policy Laundering and other International Policy Dynamics"

"Reforming WTO Decision Making: Lessons from Singapore and Seattle" http://scid.stanford.edu/publicationsprofile/1515