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Criticism of WTO

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The stated aim of the World Trade Organization (WTO) is to promote capitalism. Some people argue that free trade does not make ordinary people's lives more prosperous but only results in the rich (both people and countries) becoming richer, and that there is a divergence instead of convergence of income levels in rich and poor countries.[1] WTO treaties have also been accused of a partial and unfair bias toward multinational corporations and wealthy nations.

Developing countries

Critics contend that small countries in the WTO wield little influence, and despite the WTO aim of helping the developing countries, the influential nations in the WTO focus on their own commercial interests. 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 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 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]

Labor 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."[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]

Decision making

Other critics have characterized the decision making in the WTO as complicated, ineffective, 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. They argue that the GATT decision making worked in the past because there were fewer countries actively engaged and there was no compulsion for all countries to adhere to the results. 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", and proposes the following:

  1. The processes of consultations, discussion, negotiations and decision-making in the WTO have to be made truly transparent, open, participatory and democratic.
  2. Any proposals for changes to the rules, or new agreements, or new commitments on countries should be made known in their draft form to the public at least six months before decisions are taken.
  3. The discussions and negotiations that are being planned and are taking place at the WTO must be made known, and all Members must be allowed to be present and participate. The practice of small informal groups making decisions on behalf of all members must be stopped.
  4. 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 effect on national policies and practices.
  5. Civil society should be given genuine opportunities to know what are the issues being discussed and the status of the discussions in the various committees and on the various issues. Civil society groups and institutions must be given genuine opportunities to express their views and to influence the outcome of policies and decisions.[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]

References

  1. Cline, William R. (2004). "Conclusion" Trade Policy and Global Poverty, p. 264, Peterson Institute.
  2. Khor, Martin Rethinking Liberalization And Reforming The WTO. Third World Network. URL accessed on 2007-03-22.
  3. Khor, Martin (November 2006). "The WTO's Doha Negotiations And Impasse: a Development Prespective". Third World Network: 16. http://www.twnside.org.sg/. Retrieved 2007-03-22. 
  4. Bhagwati, Jagdish (January/February 2005). "Reshaping the WTO". Far Eastern Economic Review 162 (22): 26. http://www.columbia.edu/~jb38/FEER%20Final%20Edited%20by%20Restall%20and%20Bhagwati.pdf. Retrieved 2007-03-22. 
  5. Charnovitz, Steve Addressing Environmental and Labor Issues in the World Trade Organization. Trade and Global Markets: World Trade Organization. Progressive Policy Institute. URL accessed on 2007-03-22.
  6. Kennedy, Kevin C. (2006). "The World Trade Organization: Ultimate Arbiter of International Sanitary and Phytosanitary Standards?" Lawrence (Busch, Jim Bingen Agricultural Standards: The Shape of the Global Food And Fiber System, p. 46, Springer.
  7. Khor, Martin (2002). "How the South is Getting a Raw Deal at the WTO" Robin Broad Global Backlash: Citizen Initiatives for a Just World Economy, p. 154, Rowman & Littlefield.
  8. Bhagwati, Jagdish (January/February 2005). "Reshaping the WTO". Far Eastern Economic Review 162 (22): 28. http://www.columbia.edu/~jb38/FEER%20Final%20Edited%20by%20Restall%20and%20Bhagwati.pdf. Retrieved 2007-03-22. 
  9. Bhagwati, Jagdish (December 2005). "From Seattle to Hong Kong". Foreign Affairs 84 (7): Article 15. http://www.columbia.edu/~jb38/FEER%20Final%20Edited%20by%20Restall%20and%20Bhagwati.pdf. Retrieved 2007-03-22. 
    * Panagariya, Arvind TRIPS and the WTO: an Uneasy Message. URL accessed on 2007-03-22.
  10. Bhagwati, Jagdish (December 2005). "From Seattle to Hong Kong". Foreign Affairs 84 (7): Article 15. http://www.columbia.edu/~jb38/FEER%20Final%20Edited%20by%20Restall%20and%20Bhagwati.pdf. Retrieved 2007-03-22. 
  11. Blackhurst, Richard (August 2000). "Reforming WTO Decision Making: Lessons from Singapore and Seattle". Center for Research on Economic Development and Policy Reform (Working Paper No 63): 1-20. http://scid.stanford.edu/pdf/credpr63.pdf. Retrieved 2007-03-23. 
    * Schott, Jeffrey J.; Watal, Jayashree Decision-Making in the WTO. Peter G. Peterson Institute for International Economics. URL accessed on 2007-03-23.
  12. Transparency, Participation and Legitimacy Of the WTO. Third World Network. URL accessed on 2007-03-23.
  13. Reform of the World Trade Organization and International Financial Organizations. Global Economic Governance. World Federalist Movement. URL accessed on 2007-03-23.
  14. The WTO: The role of Parliamentarians? - Public Symposium: The Doha Development Agenda and Beyond, (WTO) - Summary Report. Revista Inter-Forum. URL accessed on 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. URL accessed on 2007-03-23.

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