Criticism of the World Trade Organization
The stated aim of the World Trade Organization (WTO) is to "ensure that trade flows as smoothly, predictably and freely as possible". However, the WTO does not claim to be a "free market" organization. According to the WTO, it is "sometimes described as a 'free trade' institution, but that is not entirely accurate. The system does allow tariffs and, in limited circumstances, other forms of protection. More accurately, it is a system of rules dedicated to open, fair and undistorted economic competition." This compatibility to a certain degree of protection is proved, for example, by the fact that cartels like the OPEC have never been involved in trade disputes with the WTO, despite the evident contrast between their objectives.
The actions and methods of the World Trade Organization evoke strong antipathies. Among other things, the WTO is accused of widening the social gap between rich and poor it claims to be fixing. UNCTAD estimates that the market distortions cost the developing countries $700 billion annually in lost export revenue.
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 suggested 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);
- According to statements made at United Nations Conference on Trade and Development (UNCTAD, 2005), the use of NTBs (non-tariff barriers), based on the amount and control of price levels has decreased significantly from 45% in 1994 to 15% in 2004, while use of other NTBs increased from 55% in 1994 to 85% in 2004, 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 Doha Round; and
- The Agreement on Trade-Related Aspects of Intellectual Property Rights (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." Khor also believes that 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." 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.
Labour 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." 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.
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." Scholars have identified GATT Article XX as a central exception provision that may be invoked by states to deploy policies that conflict with trade liberalization.
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." Therefore, both Bhagwati and Arvind Panagariya have criticized the introduction of TRIPS (Trade-Related Aspects of Intellectual Property Rights) 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." 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."
Another critic has characterized the "green room" discussions in the WTO as 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. Results of green room discussions are presented to the rest of the WTO which may vote on the result. 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. 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".
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. 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". 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.
The lack of transparency is often seen as a problem for democracy. Politicians can negotiate for regulations that would not be possible or accepted in a democratic process in their own nations. "Some countries push for certain regulatory standards in international bodies and then bring those regulations home under the requirement of harmonization and the guise of multilateralism." This is often referred to as Policy Laundering.
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