The World Trade Organisation (WTO) is an international organization that deals with rules of trade between countries. The WTO replaced the General Agreement on Tariffs and Trade (GATT), which was traditionally solely concerned with trade in goods, in 1995. WTO, however, is a much larger organisation with greater research potential and a higher profile. It doesn’t just mastermind trade negotiations, but also provides disputes -settlement procedures. This is meant to resolve disputes between member countries and provide a forum for the airing of complaints about unfair trade restrictions.
The WTO is based on a series of agreements, fundamental principles and aims; however the main ones are to help trade flow as freely as possible, to achieve further liberalization gradually through negotiation and to set up an impartial means of settling disputes. A broad objective of the WTO is to reduce ‘protectionism’ and to promote ‘liberalisation’. The WTO argues that its achievements have been slow but progressive, yet some groups believe that it simply has liberal ideology, which is not achievable in real life and that it only benefits a few, namely government elites and executives of trans-national corporations.
The WTO director, Renato Ruggiero says that “however imperfect our progress, the underlying trend is unmistakable. Multilaterally, regionally, unilaterally- all paths are leading to freer trade”. Ruggiero argues further that the WTO and free trade have also been a success to ‘developing’ countries, and statistics do show that seven years ago less economically developed countries accounted for under 20% of world trade, yet now they account for a quarter of total trade in the world.
This can certainly be taken into account but these figures do have significant limitations. World Trade’ may have been defined differently seven years ago and it is not known whether it accounted for services provided by ‘developing’ countries. The WTO certainly has major difficulties in enforcing international trade rules. A good example of this was the dispute between the US and the EU concerning bananas in 1999. EU had importation rules on bananas, which favoured suppliers in former British and French colonies in the Caribbean, Africa and the Pacific against bananas grown in Central America.
The USA was keen to support South American producers because the majority of the distributors of South American bananas are American-based, so the US imposed import tariffs on a wide range of European goods. The WTO eventually solved this dispute; however it highlighted the difficulty of resolving problems which concern the so-called ‘cheap’ imports, as the USA and the EU firms have sought to apply duties on ‘cheap’ imports. On of the WTO objectives, is to increase trade with developing countries, and prevent any internal problems that this may cause.
In most developing countries the increase in trade has had a major effect on the environment and people. These countries are forced to exploit their natural and human resources in order to keep up with the increasing trends in the volume of goods and services traded (figures show that in the last twenty years world trade volume has increased by over 100%, yet GDP volume has only increased by under 50%), and pay their debts to organisations like the World Bank and the IMF. The WTO also is incompetent in dealing with problems of protectionism in highly industrialized countries, where the government subsidises domestic producers.
One of its aims is to bring about more competition by cutting subsidies; however the WTO has not been very successful in achieving this. For instance this is the case in corn production. In the Philippines corn farmers were struggling to compete with corn imported from the US which was priced at 30% lower than their corn. This is because the US government provides $5 billion annually in subsidies to its maize producers, which enables them to export at prices which are far lower than those of most staple food producers in developing countries.
This can be argued to be a case of uneven protectionism which does not benefit free trade, as the WTO suggests; on the contrary it exposes basic flaws in the multilateral trading system which requires alterations to provide the kind of equity that it pursues. The WTO has also proved itself incompetent in addressing outstanding trade issues. In late 1999, there was an attempt to launch a ‘Millennium Round’ in Seattle, however due to the fact that the negotiating teams have not agreed on agenda in advance, the initial discussions broke up as the talks became more and more acrimonious.
Therefore there were still worries about restrictions on agricultural products; developing countries still felt marginalized from the progress made to date; many people were worried about working conditions in developing countries (50’000 people protested against this in Seattle), and there were many other live issues. Nevertheless, this may have been the beginning of a further important round of negotiations. Success is based on the achievement of goals, aspirations and values.
However, success is a relative term with positive connotations for some, and negative for others. There are several ways to assess the WTO success. The Uruguay Round Agreements and the establishment of the WTO were proclaimed as means of ‘enhancing the creation of global wealth and prosperity and promoting the well-being of all people in all member states’. The WTO chooses to assess its success by measuring the increase in trade, the GDP or equalizing of the country’s Balance of Payments. In most cases, however, these only examine a narrow and isolated topic.
On the whole WTO can be said to be successful in promoting trade, especially in manufacturers. Some argue, however, that in the last 7 years the WTO has contributed to the concentration of wealth in the hands of the rich few, increasing poverty in developing countries and unsustainable patterns of production and consumption. Overall, the WTO can be said to have not been very competent in achieving its aims, and many developing countries feel that they have been left out of the benefits that have resulted.