Benefits and criticisms of the World Trade Organization

The World Trade Organization (WTO) is one of the most important organization set up today. It was established in 1995 after GATT was dissolved and has its headquarters in Geneva (Hoekman and Mavroidis , 2007). WTO consists of 140 members who account for approximately 90% of world trade. The organizational structure of WTO is divided into 3 main groups that is Ministerial Conference, General Council and multiple bodies, committees and councils like Dispute Settlement Body, Councils for Trade and Goods, TRIPS, Trade in services, etc. (world trade organization, revised structure, 2006) The underlying philosophy of WTO is open markets, non -discrimination and global competition in international trade which is conducive to the national betterment of all member countries (Hoekman and Kostecki, 2001). WTO consists of a set of disciplines which affects the government’s ability to put trade restrictions between countries which allows to increase international trade relations since1950. WTO is an intergovernmental organization meaning only governments have a legal standing in the organization. WTO is a member driven organization where each signatory has a vote (Narlikar, 2005)All decision of WTO are absolute and every member must abide by it. Example, in the case of U.S.A. and European Union they have a dispute over bananas or beef, it is the WTO which acts a judge and jury. WTO members are forced to impose trade sanctions against countries that have breached the rules set by the WTO (BBC News, 2010).

Criticisms in a whole

The WTO is Anti-Environment

The WTO is used by corporations to disable the hard won local and national environment protections which are called “barriers to trade". The WTO declared the US clean air act and provision of the endangered species act as illegal. WTO is also stopping industries from fishing, logging and energy distribution as it is harming the natural environment. We can support the above statement by giving an example that is in the recent times the WTO has declared illegal providing of ‘The Endangered Species Act’ that requires the shrimp in US to be caught with a less expensive turtle excluder device that lets all endangered turtles escape the nets. The WTO ruled out this law calling it an ILLEGAL ENROACHMENT (Everything2, 2001).

The WTO tramples Labour and Human Rights

WTO has refused to put free trade on labour rights despite the fact that countries that use labour rights are disadvantaged by countries that violate international labour conventions. WTO has blocked solutions to human and labour rights by saying it is illegal to ban a product by the government on basis of the way it is produced (child labour) or by companies that follow dictatorship like Burma (Global Exchange,2008).

The WTO is bad for health and squashes diversity

Since past 9 years Europe has banned beef because of a few hormones present. The WTO has asked to remove their law as it is a barrier to trade or they will have to pay heavy penalties (Organic Consumers,2010).

WTO is increasing the gap between the rich and the poor

Free trade does not work in majority of the countries .during the recent times from 1960-1998 inequality has worsened both the ways internally as well as internationally. The UN Human Development Report, 1999 says “The top fifth richest people enjoy 82% of the expanding export trade and 69% of FDI, while the bottom fifth barely get more than 1%. These trends reinforce the economic stagnation and low human development". The increase in trade and investment in foreign countries has made labour and wages very cheap. This pulls down wages and environment standards in developed countries which are to competing globally. (Everything2,2001).

WTO is a stacked court

The dispute panel of WTO decides which domestic laws are barriers to trade and whether they have to be removed or not. The dispute panel consists of 3 people who are screened for conflict of interest. Example in the Tuna Dolphin case where Mexico filed a case on US for not allowing Tuna from being caught by long nets as they would kill many dolphins every year. In the above case one of the judge was from corporate front group that was on behalf of Mexican government for NAFTA (Third World Traveller, 1999).

WTO is killing people

WTO’s intellectual property rights-patents, copyrights and trade mark are all at the expense of human lives. WTO’s support for pharmaceutical companies against the government wanting to protect the lives of people had bad implications for places like Saharan Africa as 80% of the world’s AID cases are found there. The US government is trying to stop and remove all the access ways for the developing countries to produce cheap life-saving drug on behalf of all us drug companies. For example:- for example the south African government has threatened the WTO over the national health laws saying that they should allow to import drugs which are cheaper in other countries and not only encourage the use of drugs available in their country (Global Exchange,2008).

WTO undermines local level Decision Making and National Sovereignity

All the WTO member countries need to treat each other equally as well as their corporations equally regardless their track record. Developing countries cannot make any local laws for the companies till they are internationally competitive. California governor Gray Davis rejected the ‘ Buy California’ bill that would give a little preference to local companies as it was illegal by the WTO. US and many other countries are either changing their laws and constitutions or re-writing them for future WTO rulings and negotiations (Third World Traveller, 1999).

WTO operates in secrecy and hurts third world

WTO’s court of justice rules on obligations imposed by law on nations but they carry out all their work in secrecy. WTO forces the third world countries to open their markets to the developed country multinationals and stop making the efforts to protect the small new local industries. Example in the case of agriculture, the start of importing agriculture for the developing countries, will later become a great problem for the rural people (Organic Consumers, 2010).

CRITICISM OF WTO AIMS – AGREEMENTS ON FREE TRADE (Based on comparative advantage)

One of the aims of WTO is to have free trade both in reduction and elimination of tariffs and quotas (Bonhne, 2010). We can say this as few of the main principals of WTO as expressed by author Hoekman and Mavroidis in their book The World Trade Organization Law , Economics and Politics are Non Discrimination, reciprocity, binding and enforceable commitments , et all are stated clearly and implemented towards the working of the WTO. According to Pollock, WTO needs to re-think the purpose of its (WTO) existence (Rufuspollock, 2001). As according to David Ricardo a political economist pro free trade is firmly grounded in the main stream trade economics that is particularly comparative advantage theory that says that free trade is most favorable (Bhagwati and Jagdish, 2002). Examples to support the above statement are “In the new era, Apartheid as formal policy is antiquated and unnecessary. International instruments of trade and finance oversee a complex system of multilateral trade laws and financial agreements that keep the poor in their Bantustans anyway. Its whole purpose is to institutionalize inequity. Why else would it be that the U.S. taxes a garment made by a Bangladeshi manufacturer 20 times more than it taxes a garment made in the U.K.? Why else would it be that countries that grow 90 per cent of the world’s cocoa bean produce only 5 per cent of the world’s chocolate? Why else would it be that countries that grow cocoa bean, like the Ivory Coast and Ghana, are taxed out of the market if they try and turn it into chocolate? Why else would it be that rich countries that spend over a billion dollars a day on subsidies to farmers demand that poor countries like India withdraw all agricultural subsidies, including subsidized electricity? Why else would it be that after having been plundered by colonizing regimes for more than half a century, former colonies are steeped in debt to those same regimes, and repay them some $382 billion a year?" (Arundhati Roy, Do turkeys enjoy thanksgiving?, The Hindu, January 18, 2004) and in US if sugar import prices would decrese then automatically the sugar rates would drop so it would be as a boon for the consumers but visa versa for the US sugar producers. The economic theory of David Ricardo says that consumers will be more beneficial then the producers. (Richard L. Stroup, James D. Gwartney, Russell S. Sobel, Economics: Private and Public Choice, p. 46.)(Pugel, Thomas A. (2003). International economics. Boston: McGraw-Hill). Comparatively the US sugar producers will be at a great loss compared to the consumers profit therefore domestic producers are prepared against the lifting of tariffs (Brakman, Steven; Harry Garretsen, Charles Van Marrewijk, Arjen Van Witteloostuijn (2006). Nations and Firms in the Global Economy : An Introduction to International Economics and Business. Cambridge: Cambridge University Press. ISBN 9780521832984). Producers often prefer the domestic subsidies and tariffs on imports in their home countries, while objecting to subsidies and tariffs in their export markets. However, I also in agreement with Pollock feel that there are a few controversies on whether free trade is beneficial to developed countries and if free trade is more beneficial for rich, developed countries as compared to the less developed ones.

FINANCIAL CRISIS OF2007-08 AND WTO