World Trade Organization And Its Critics

The World Trade Organization and Its Critics

Contents

What is the WTO? 2

How the WTO is Organized 5

Decision Making Process 6

Non Effective System 7

Dominant Critics 8

Complaints 11

Goals 12

Structure 13

Positive Responses 14

Should the WTO be abolished? 16

Bibliography 19

THE WTO AND ITS CRITICS

CASE STUDY

What is the WTO?

The World Trade Organization (WTO) was established and incorporated in January 1st 1995 at the amendment of the General Agreement on Tariff and Trade (GATT) in 1994 with the aim of regulating international trade. The creation of this organization clearly underscored the acceptance and commitment of trade liberalization by most of the international communities. Upon signing and ratifying the WTO Agreement, each member state of the WTO committed itself through a series of agreements to ultimately liberalize its trade in goods, services and trade-related aspects of intellectual property rights. Each member state signed the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes as well as the Agreement relating to the Trade Policy Review Mechanism (TPRM). This action required member states to periodically subject their national trade and economic policies for examination to ensure that their respective mandates are in keeping with the WTO's commitments. (Strategic Plan of the Foreign Trade Division 2002).

The historical timeline of trade purports that world trade has been Ð''victim of abuse' by subjection towards high tariffs in the era of the 1930s. The expansion of trade has often played a significant role in the growth of the global economy since World War II, but it was not until the commencement of trade negotiations in the Uruguay Round in 1986, that multilateral trade deals tended to be limited to that of industrial countries. While developing countries benefited significantly from the growth in global trade, they were rarely active participants in the bargaining process (Economic Issues Vol. 37).

In 1948, the United States and its principal economic partners which comprised of 23 nations, created the General Agreement on Tariff and Trade (GATT) to promote "freer and fairer" trade, primarily through negotiated reductions of formal tariffs (Gilpin 2001). After eight extensive rounds of meetings spanning over five decades, the GATT was successful in achieving its objectives of reducing tariffs and increasing world trade (Steiner and Steiner, 2006). Gilpin believed that further trade liberalization was needed, and major steps should be taken with the introduction of new rounds and in particular upon successful completion of the Uruguay Round of trade negotiations (1993). Successive American Administrations and other governments became increasingly cognizant of the GATT's inherent limitations and following the Uruguay Round incorporated with the WTO in 1995.

At its inception, the WTO comprised of 90 member states, a figure that has since increased to 144 which together generates most of the world's trade. The WTO as a fully fledged international organization whose responsibilities and authority are much broader than that of the GATT, later followed in the footsteps of its predecessor by serving an important political purpose of facilitating the reduction of trade barriers. Gilpin reported that the WTO had incorporated many of the GATT's rules and practices, but the legal mandate and institutional structure (more extensive and binding rules) of the WTO were designed to enable it to play a much more important role in governance of international commerce in comparison to the GATT.

The major function of the WTO is to assure that "trading conditions are stable, predictable and transparent" (Steiner and Steiner 2006). The WTO has many objectives; with the most important being the administering and the implementation of several trade agreements and trade rules which were built over a 50-year period under the operations of the GATT. Other agreements administered include those concerned with food safety laws, product standards, telecommunications, finance and intellectual properties. Other objectives include:

Ð'* The provision of a forum for trade negotiations;

Ð'* Arbitration of trade disputes;

Ð'* monitoring national trade policies;

Ð'* providing technical assistance to developing countries; and

Ð'* Co-operating with other international organizations.

How the WTO is Organized

The WTO is currently run by member governments associated with the organization. The WTO is chaired by the Ministerial Conference, which is the highest decision making body of the organization. This body endeavors to implement important policy decisions by consensus with the aid of members as a whole, ministers (who meet at least once every two years) or by respective delegates who meet regularly in Geneva. The General Council is a division which manages the WTO in the intervals between Ministerial Conferences. This meeting is attended by ambassadors and heads of delegations in the domicile of the WTO where it converges several times a year. Representatives of other member states may be allowed to partake in the proceedings of the Council. Surveillance of national trade policies is an important activity throughout the operations of the WTO. In order to control these issues the Council convenes as another entity commonly known as the Trade Policy Review Body (TPRB). This body revises various trade policies under the Trade Policy Review Mechanism (TPRM) which in turn reviews all WTO members. Frequency of each country's review is based according to its share of world trade. Settling disputes is another bridge of the WTO's mandate and is considered the central pillar of the multilateral trading system. It is the responsibility of the Dispute Settlement Body (DSB) and contributes to the stability of the global economy. The DSB (the General Council in another guise) is solely responsible for establishing panels of experts on cases and acceptance or rejection of results of