The World Trade Organization

• The WTO was created during the Uruguay Round of GATT to police and enforce GATT rules

• Most comprehensive trade agreement in history• Formation of WTO had an impact on– Agriculture subsidies (stumbling block: US/EU)– Applied GATT rules to services and intellectual

property (TRIPS)– Strengthened GATT monitoring and enforcement

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The WTO

• 145 members in 2003 (153 in 2008)• Represents 90% of world trade• 9 of 10 disputes satisfactorily settled• Tariff reduction from 40% to 5%• Trade volume of manufactured goods has

increased 20 times

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The WTO

• Policing organization for:– GATT– Services– Intellectual property

• Responsibility for trade arbitration:– Reports adopted unless specifically rejected– After appeal, failure to comply can result in

compensation to injured country or trade sanctions

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WTO at work

• 280 disputes brought to WTO between 1995 and 2003

• 196 handled by GATT during its 50 year history

• US is biggest WTO user – Big wins - beef - bananas– Big loss - Kodak

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The WTO -achievements

• Telecommunications (1997)– 68 countries (90%) of world telecommunications

revenues– Pledged to open their market to fair competition

• Financial Services (1997)– 95% of financial services market– 102 countries will open, their markets to varying

degrees

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Doha agenda -WTO

• Cutting tariffs on industrial goods and services• Phasing out subsidies• Reducing antidumping laws• WTO regulation on intellectual property

should not prevent members from protecting public health– TRIPS agreement

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WTO - criticisms• Free Trade benefits developed countries more than developing countries.

Developing countries need some trade protection to be able to develop new industries. The WTO have sought to maintain same rules for developing countries, however, many of the existing industrialised nations used tariff protection when they were developing. Therefore, the WTO has been criticised for being unfair and ignoring the needs of developing countries. (This is related to the infant industry argument)

• Free trade has often ignored environmental considerations. e.g. Free trade has enabled imports to be made from countries with the least environmental protection. Many criticise the WTO’s philosophy that the most important economic objective is the maximisation of GDP. In an era of global warming and potential environmental disaster, this may be the least important.

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WTO - criticisms• Free trade ignores cultural and social factors. Arguably a reasonable

argument for restricting free trade is that it enables countries to maintain cultural diversity. Some criticise the WTO for enabling the domination of the multinational companies.

• The WTO is criticised for being undemocratic. It is argued that its structure enables the richer countries to win what they desire; arguably they benefit the most.

• Critics contend that small countries in the WTO wield little influence, and despite the WTO aim of helping the developing countries, the politicians representing the most influential nations in the WTO (and within those countries or between them, influential private business interests) focus on the commercial interests of profit-making companies rather than the interests of all.

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WTO - criticisms• 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."

• 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.

• Other critics have characterized the decision making in the WTO as complicated, ineffective, unrepresentative and non-inclusiveThird 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]

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