As civil as human society has seemingly become in today’s day in age, even the most developed countries of the world still behave and interact towards each other in such an unconstructive manner that undermines the economic interests of people around the world. Mercantilism, which has long before industrialization characterized the behavior of Western nations, is the prevailing behavior of modern state interaction.Political interests, which can range from anywhere between territorial disputes to national humility, often determine whether or not policies which economically benefit the people become enacted. Thus to keep politicians and policymakers around the world accountable, a worldwide body or bodies is needed to force all the nations of the world to abide by certain rules on a global level in order to assure that the economic interests of the people, in developed and undeveloped nations alike, are presented in the international policies of the nations of the world.
Thus, through a series of trade talks and rounds, the World Trade Organization was enacted specifically to fit this need; to try to make the global economic system fair, to enact objective rules, and to globally enforce these rules. The WTO must now be evaluated as to determine how well it is achieving these goals. This paper will begin by briefly going over how it is that the WTO liberalizes trade, the case for the WTO in its comparison to its alternatives, and lastly recommendations for the WTO to better achieve its goals.The main strengths of the WTO are that it demands the accountability of its members by adhering to WTO rules and acts as an arbitrator in settling disputes by giving all members an equal playing field. The WTO is a member organization with a set of rules that all member states must abide by. Multilateral trade negotiations which began with the creation of the GATT in 1947 have over the last 55 years have been enacting trade laws and regulations with the purpose of liberalizing trade.The requirements of membership are the first step in enforcing government policies to speak in the interest of economics.
All of the WTO’s member states must abide by its rules, thus most of the nations of the world are being held accountable to rules in the interest of economics on a fair, global level. When states enact policies that disregard the rules of the WTO, the WTO has the ability to force states to comply with the rules by paying compensation, facing trade sanctions, or suspending membership status.Member governments, understanding that they will face economic tribulation if their policies are unfair or are not compliant with rules, are thus much more likely to keep their economic policies in the interests of their economies. Thus nations are less able to use economics as a political tool. This is administered through the dispute settling mechanism, which is often regarded as one of the best of the WTO improvements from the GATT, “Dispute settlements is what WTO does best.Trade disputes are brought before the WTO at approximately three times the rate that had typically been handled by GATT. ” (Lash 373) The Dispute Settlement Body is the department of the WTO that arbitrates these disputes between members and its decisions are binding. Bilateral agreements have been known to be characterized by results that are heavily determined by the size and power of the trading partners, thus leading to larger countries taking advantage of smaller countries.
Furthermore, bilateral agreements often risk leading to trade wars, which disrupt normal trading relations. Thus, through the dispute settlement mechanism, the WTO is the only organization that can prevent the consequences of bilateral resolutions. For example, the US with its sheer power and economic size would be able to have its way with almost any other nation in almost any situation, and thus the other country would be forced to comply with all the demands of the US or give up the trade entirely.This is especially important since many smaller nations depend on foreign trade to survive. Furthermore, the WTO can fight interstate collusion, such as was needed concerning the oil trade in the 1970s. A vision of the world without the WTO can most closely be imagined when observing the world before GATT – which the WTO was spawned out of. Two centuries of unilateral trade policy by the United States are characterized by such backward decrees such as the Reciprocal Trade Agreements Act and the Smoot-Hawley tariffs.Even since the formation of the WTO, many past presidential candidates, who are luckily not in office, such as Ross Perot and Pat Buchanan have been against free trade policies and have advocated closing the economy.
Many of the people in office are not far from the foolishness of those they beat. And the average policy makers of other countries are even less apt understanding economic ideology. The losses incurred by closing the economy are not also limited to within the nation, as demonstrated during the interwar period in the 1930s.There is a political interdependence between a nation and its trading partners, which is affected by trading policies. When the United States and the United Kingdom imposed trade barriers in the early 1930s in response to the economic recession that soon became the Great Depression, they made it harder for other countries to resist also going down that path, by either provoking retaliation, which Canada did to the United States, or setting an example that affects the political economy of tariffs in other countries.Another alternative to the WTO are regional agreements, such as EU, NAFTA, and ASEAN. However, as successful as these regional agreements are, they will never be able to accommodate the needs of nations on a global level, for they will always be restrained to their region. Thus regional agreements cannot compete with the WTO because they operate on different levels.
Regional agreements have been very successful and may have done more for some nations then the global organizations, but they will never be able to replace global organizations, such as the WTO, because regions will interact with each other in a mercantilist nature just as nations do. The WTO is needed to regulate interaction between regions. In order to keep the WTO productive and effective, the agenda of the WTO should be focused on liberalizing trade and nothing else. It must only concern itself issues within its jurisdiction, “The WTO is primarily a trade forum and lacks expertise in assessing environmental or labor standards. (Lash 372)It seems that everyone interested in the WTO is trying to clutter the its agenda with irrelevant issues, “Friends of the WTO want to see it expand its scope to set rules that will cover all sorts of new trade issues, ranging from investment and competition policy to e-commerce and product standards Foes of the WTO also want to overload the agenda with issues such as labor standards and environmental regulations. ” (Irwin) Cluttering the WTO agenda will impede the progress of the WTO, which will likely only lead to overregulation and will waste much valuable WTO time.
The main concern of the WTO should be to reform the troubled global structure; the WTO must commit itself to develop developing countries faster and more effectively. The interests of undeveloped countries are often undermined because rich countries, especially the US, put in the most money into international organizations such as the WTO and thus have a tremendously unfair amount of influence on the WTO’s actions. The fundamental rationale for international bodies such as the WTO is to keep countries on a level playing field, with equal treatment, equal rights, and equal bargaining power.
The WTO should look to reform its administration as to more fairly represent the interests of all the WTO members. There are many issues in the WTO which are administered in ways which seem to be unfairly favoring developed countries. Some of these issues include the antidumping measures taken by developed countries to restrict the exports of developing countries and the long transition periods developed countries are taking to implement the phasing out of export quotas. The issue of whether or not TRIPs should be in the WTO, the regulations pertaining to intellectual property, is also causing quite a stir in current WTO debate.These provisions protect the interests of developed countries by attempting to prevent the transfer of technology from multinational corporations to the domestic firms of developing countries. “It perpetuates technological superiority of the bug companies so that they can have control of the market and keep consumer retail prices far above what they would otherwise be if there were competition. ” (Khor 32) These measures have also been abused by the corporations of developed countries such as in the case of Ricetec, a Texas based firm which patented basmati rice, a product native to India, and a large export of that country.
If TRIPs must remain in the WTO, then they need to be fundamentally restructured as to be harmonic with fair competition, permissive of fair technological transfer, and less susceptible to abuse. Anti-globalists around the world are also making headlines with their protests. They are also generally regarded as absurd, contradictory, and utterly ridiculous.Many of these activists target the WTO simply because it is the platform that gives them the most media attention, “The protests and massive disruptions of traffic in Seattle illustrated that these demonstrators are more interested in press coverage than meaningful debate and dialogue.
(Lash 372) Policymakers need to educate these opponents as well as the general public to better understand what it is the WTO actually does. As harmless as these protestors seem now, a steady increase of them will soon lead to political trouble for many nations, “Friends of the WTO face an enormous challenge in dealing with these groups and responding to the charges they make. (Irwin)When states interact as mercantilists, as in their interest of national wealth, they are not guided by the same invisible hand that we as individuals enjoy when we act in our interests of personal wealth. Politicians must strive to understand this, because time and time again the interests of the people are overlooked in the interests of politics. In order to create a fair global playing field, the WTO has been created to set and enforce its rules designed to facilitate economic interaction in an effort to liberalize international trade.
The WTO has thus been given the ability to force the accountability of governments, through its membership requirements, its ability to arbitrate disputes, and its ability to punish its members. A world without the WTO would most likely be characterized by a RATT, the regions” agreement to talk and talk, as this world would most likely consist of a number of large regional blocks, which interact with each other in a manner close resembling the GATT. The future agenda of the WTO should remain focused in order to keep it productive in the name of liberalizing trade.The hardest duty of organizations such as the WTO is its duty to serve and assist developing nations around the world, where giant leaps in the standard of living are most easily made, and where human tribulations are the most commonly found. Fundamental restructuring may be needed to balance the power in the WTO, so that developing countries will have stronger influence on the policies enacted and how they are enforced.
If the WTO can keep its mind clear and speak the interests of all its members, then it will make great strides in improving living standards around the world.