WTO, CC 2.0
World Trade Organization
The World Trade Organization is an international organization focused on opening trade between different countries, and is viewed as one of the largest trade organization in international relations. The World Trade Organization itself explains its organization by saying: “There are a number of ways of looking the World Trade Organization. It is an organization for the opening and expansion of international trade, and for the enforcement of trade in the world (Hurd, 2014). The World Trade Organization is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other” (WTO, 2014). As Hurd (2014) explains, the World Trade Organization offers “three major contributions to the economic system: (i) it establishes rules that govern how members can set domestic policies that affect international trade; (ii) it requires that members maintain public lists of import tariffs for all products which cannot be altered except through multilateral negotiation; (iii) and it sets up court-like dispute-settlement procedures to hear complaints when one member believes another is breaking these rules” (43).
Similar to the International Monetary Fund and the World Bank, the World Trade Organization developed from the Bretton Woods Conference in the mid 1940s in the United States, and was seen as the third part of the overall economic system (Narlikar, 2005). However, nothing concrete arose from the meeting, and it was in 1945, through the United Nations, that the International Trade Organization (ITO) was formed. Soon after, states began planning for the international organization. Specifically during this time, they were to “(1) draft an ITO charter, (2) prepare schedules of tariff reductions and (3) prepare a multilateral treaty containing general principles of trade, namely, the General Agreement on Tariffs and Trade (GATT)[,]” with the second two being completed in 1947 (Matsushita, Schoenbaum, & Mavroidis, 2006: 2). However, the ITO Charter, while written by a number of states in 1948, was never adopted. This was partially because of the role of the United States, as President Truman tried to have Congress pass the ITO Charter, but following Republican majority, he stated that he would not present the ITO Charter to Congress (Matsushita, Schoenbaum, & Mavroidis, 2006). Thus, while many saw the General Agreement on Tariffs and Trade (GATT) as less weaker and less useful, GATT continued to be the primary trade entity until the World Trade Organization decades later (Narlikar, 2005).
General Agreement on Tariffs and Trade (GATT)
Given the absence of an international organization regarding trade openness, it was the General Agreement on Tariffs and Trade (GATT) that morphed into an international organization, functioning as many initially expected the International Trade Organization to work. Thus, the General Agreement on Tariffs and Trade (GATT) transformed to include members, and also had meetings (Matsushita, Schoenbaum, & Mavroidis, 2006).
As Matsushita, Schoenbaum, & Mavroidis, 2006 explain the General Agreement on Tariffs and Trade had a number of obligations. They have summarized the obligations as follows:
” 1). A requirement of national treatment of imports with respect to taxes and regulations (Article III);
2). A prohibition on quotas, import or export licenses and other measures, with some exceptions (Article XI), and a special provision relating to quotas on cinematograph films (Article IV);
3). Guarantees freedom of transit (Article V);
4). Rules relating to subsidies and antidumping and countervailing duties (Articles VI and XVI);
5). Rules on valuation for custom purposes (Article VII);
6). Rules on fees and formalities connected with importation and exportation (Article VIII);
7). Rules on marks of origin (Article IX)
8). Rules on transparency and publication of national trade regulations (Article X);
9). Rules on currency exchange regulation (Article XV);
10). Rules on state-trading enterprises (Article XVII); and
11). Rules on government assistance to economic development (Article XVII)” (4).
However, these principle components of the General Agreements on Trade and Tariffs did not arise overnight; there were many attempts to formalize trade rules among states, with eight total periods, which were: Geneva 1947; Annecy 1949; Torquay 1950; Geneva 1956; Dillon 1960-61; Kennedy 1962-67; Tokyo 1973-1979; Uruguay 1986-94 (Matsushita, Schoenbaum, & Mavroidis, 2006: 6). It was during the Uruguay period that the General Agreements on Trade and Tariffs was officials transformed into the World Trade Organization. The reason for the shift to officially establishing an international organization such as the World Trade Organization was because of state concerns with enforcement of the agreed upon points regarding free trade and reduction of trade barriers. Related to this, states were looking for an international organization that could help with enforcement issues that could arise (Matsushita, Schoenbaum, & Mavroidis, 2006). As Matsushita, Schoenbaum & Mavroidis (2006) explain: “The idea of a new world trade organization was taken up in the FOGS negotiation. When the Draft Final Act of the Uruguay Round was issued in 1991, it continued a proposal for a “Multilateral Trade Organization”. Working groups and negotiators did further work, and the name was changed to the World Trade Organization. The Draft Final Act included agreements on transitional agreements and the termination of the GATT 1947 and the Tokyo Round agreements on subjects covered by new WTO agreements. Finally, negotiators decided that the WTO would come into being on 1 January 1995″ (7).
As Irwin (2002) explains, the GATT and WTO are actually quite similar. GATT was an agreement by states, whereas “the WTO is an international organization. But like GATT, it has vitally no independent power. The power to make trade policy and to write the rules governing it resides with the member governments, not with the WTO” (186). This point can further be seen when looking the role of the Director-General, the top post in the World Trade Organization. In the WTO, this position “has no policymaking authority and cannot comment directly on members’ policies” (Irwin, 2002: 186). However, where the WTO does differ from GATT is in its expansiveness; it focuses on a host of goods, services, and other issues such as intellectual property, and not just goods (Irwin, 2002: 186).
Uruguay_Round, WTO, CC 2.0
World Trade Organization Structure
The World Trade Organization currently has 164 members, and there are about 640 employees working for the World Trade Organization. however, As Ian Hurd (2014) argues: “…it has a reach that is both broad and deep…Virtually all of the world trade takes place under WTO rules: 97 percent of world trade is between WTO members, and 99 percent of the import tariffs of developed countries are bound by the WTO” (42).
The two governing structures within the World Trade Organization are the Ministerial Conference, as well as the General Council.
The Ministerial Conference is the structure within the World Trade Organization that makes the key decisions. This group is made up of all states within the World Trade Organization, and meets “at least once every two years”, and is also responsible for selecting, and providing the authority to the Director-General of the World Trade Organization (Matsushita, Schoenbaum, & Mavroidis, 2006). Here, at at Ministrial Conferences, there are often sessions that are called “green room” sessions, which are comprised of representatives from only some states in the World Trade Organization, many of which have been from the stronger economic states in the world (Wallach & Woodall, 2004 5)
The General Council runs the operations of the World Trade Organization, and meets when necessary. The General Council continues to be active on a daily basis, as are many of the councils formed by the General Council; committees such as Council for Trade and Goods, Council for Trade Related Aspects of Intellectual Property Rights, and a Council for Trade in Services, along with others. Furthermore,”The General Council has control over the WTO budget, which is prepared by the Director-General and the Committee on Budget, Finance and Administration” (Matsushita, Schoenbaum, & Mavroidis, 2006: 10).
In terms of decisions made, the World Trade Organization has is similar to the World Bank and the International Monetary Fund, the World Trade Organization works off of a consensus system, however, varies differently when looking at the actual voting system. When states do not agree, an issue is taken to a vote. Every state represented has one vote. This differs from the World Bank’s stock voting system, and the IMF’s quota system, where states with more shares or a larger economy and higher contributions have more voting power (Matsushita, Schoenbaum, & Mavroidis, 2006: 10). In fact, the World Trade Organization continues to call for consensus, but without the vote imbalances, this tends to lead to very slow decision-making. Furthermore, in the early years of the WTO, there were few states that were making decisions, as many were not in the negotiating room; this has clearly shifted, making agreement much more difficult. And because of this, there have been various proposals pitched to change the decision-making structure of the World Trade Organization, some of them similar to vote weighing systems that we see in other economic international organizations such as the World Bank and the International Monetary Fund (Narlikar, 2005). However, states with smaller economies, many of which feel limited in power in the World Bank and International Monetary Fund, do not want the equal vote system in the World Trade Organization to change (Narlikar, 2005).
World Trade Organization Membership
The process for becoming a member in the World Trade Organization has been noted by some as “difficult and time-consuming” (Matsushita, Schoenbaum, & Mavroidis, 2006: 11). Matsushita, Schoenbaum & Mavroidis (2006) illustrate this point by looking at the process for China entering the WTO. They say on this issue:
“In the case of China, for example, a prerequisite to the negotiation of a “Protocol of Accession” to the WTO was the requirement of negotiating bilateral market access packages with interested WTO members. Thus, China entered into a series of bilateral trade agreements, notably with the United States and the European Community. Only after these bilateral negotiations were completed substantive discussions on the text and annexes of a Protocol of Accession begin. The entire accession process, which extended over 14 years, was finally completed when China became a WTO member by decision of the Fourth Ministerial Conference of the WTO in November 2001″ (11).
Following membership in that World Trade Organization, states have a number of obligations that they must adhere to. Namely, other than if approved by the WTO, the states cannot place caps on trade, cannot set up protectionist policies, nor can states sell products at different prices internationally than domestically (Hurd, 2014). And due to debate on what the rules mean exactly (which often hinges on definitions), the World Trade Organization makes such decisions for states (Hurd, 2014). Furthermore, states are required to list what their import taxes are for every product. After these are published, they cannot be broken, as they do become legally binding (Hurd, 2014: 44). Hurd (2014) points out a fact regarding these binding tariffs when he says that “The binding rates need not equal zero, and therefore free trade is not necessarily the outcome but they cannot be changed except through the multilateral process of negotiations among the members that take place at the big review conferences of the WTO itself” (45). And it is the states themselves that work on setting these import tax understandings with one another, which is why one may see what looks like product discrepancies when looking the agreements; these variations may have been due to political influences within a state, and how these pressures may influenced a states’ negotiation position. In addition, there is even debate as to what category products are labelled, since imports are set not product by product, but rather, based on categories, which are overseen by the World Customs Organization (Hurd, 2014).
World Trade Organization and Most-Favored Nation Status
One of the other most noted policies of the World Trade Organization is the highly discussed Most-Favored Nation (MFN) policy. The idea behind the Most-Favored Nation position is that all tariffs and rule agreements should be consistent across all countries within the World Trade Organization. As Hurd (2014) states, “The principle of most-favored nation is central to the entire mission of the WTO…it creates a uniform web of trade rules across the WTO trading zone and helps to drive down both the rates of tariff applied by countries and the transactions costs of trading firms. It simplifies the trading system enormously. As countries negotiate concessions with each other under the harmonized system at WTO conferences, all players know that whatever is agreed to between two members in their closed bilateral negotiation will then become the standard tariff offered to all other WTO members” (51). The idea is that countries in the WTO do not have to worry about other states receiving better tariff rates on traded goods or services.
World Trade Organization National Treatment
The World Trade Organization also requires that states are to treat imports the same as they would treat those same products produced within the country. Thus, there should be no favoritism to local products. This is what is referred to as National Treatment, or the Most Favored Nation Clause. However, as we can imagine, this can be politically costly for states, particularly if constituents see this the importance of domestic products as a highly salient issue. As Hurd (2014) explains, “In the US, it means that government-sponsored “Buy American” programs are legally suspect” (54). In fact, there have been a number of cases regarding accusations that states have violated the notion of complete equality with regards to trading of products. For example,
“A trans-Atlantic banana war raged between Europe and the United States for eight years following Europe’s decision to erect barriers against imports of bananas grown by Chiquita and Dole (American company) in Latin America in an effort to promote banana imports from its former colonies in the Caribbean and Africa. Beginning in 1993, when Europe formed a single agricultural market, banana quotas were imposed. The United States challenged Europe’s preferential system in the WTO. The WTO concluded that the European banana quota violated trade rules and authorized the United States to impose retaliatory sanctions on $191 million worth of EU exports” (Payne, 2013: 167).
Some of these imports included higher tariffs on things like French handbags.
And in another case, “The WTO ruled in 2011 that the U.S. federal and state governments had provided illegal subsidies to Boeing so it would gain an advantage over its European rival, Airbus. But the WTO also found that the European Union had illegally subsidized Airbus” (Payne, 2013: 168).
World Trade Organization’s Arguments for The Benefits of Free Trade
The World Trade Organization has continued to advocate for the importance of free trade in the international system. That have made numerous arguments as to the benefits of free trade. In one publication, they list 10 specific benefits, which are as follows:
“1). The system helps promote peace
2). Disputes are handled constructively
3). Rules make life easier for all
4). Freer trade cuts the cost of living
5). It provides more choice of products and qualities
6). Trade raises income
7). Trade stimulates economic growth
8). The basic principles make life more efficient.
9). Governments are shielded from lobbying
10). The system encourages good government” (WTO, 2008).
The World Trade Organization has argued, in line with these overall benefits, that free trade will make states more hesitant to fight against those they are trading with. Furthermore, they also view free trade, the General Agreement of Tariffs and TradeWorld Trade Organization’s role in promoting free trade as a “confidence builder” that will help improve trust between countries (WTO, 2008). In addition, they believe they serve a much needed function to help resolve any disputes that do arise. The World Trade Organization also believes that free trade improves income for people, reduces prices, which in turn can help lower the cost of living for people, as well as allows more competition, which can also lead to more product choices for people (WTO, 2008). Moreover, to the World Trade Organization, free trade helps with job growth, whereas protection hurts overall job prospects. According to the World Trade Organization, their set rules will also prevent political interests from influence governments regarding industry protections, which in turn can help a state from corruption (WTO, 2008).
But while the World Trade Organization has such tight trade regulations, there are certain exceptions, and in other areas, weaker legal trade categories. For example, there is some flexibility regarding national security issues, high surges in imports, movies, along with some other categories (Hurd, 2014).
World Trade Organization Enforcement Mechanisms
The role of the World Trade Organization is not merely to set trade conditions between different states, but also to enforce these agreements. The World Trade Organization has a specific system in place to deal with enforcement issues. As Hurd (2014) explains, the World Trade Organization begins looking into any violations of agreements when a state filed a complaint against another state because the first state feels violated in some capacity. Now, the World Trade Organization calls for states to deal with these issues themselves. But if they cannot do so, they turn to the WTO. The World Trade Organization, after receiving the complaint, then sets up a three person panel (comprised of individuals versed in issues of trade), where each state will present their case. Following the proceedings, the panel will write a report, which is publicized to all WTO states. Then, if there are no appeals, a specific WTO entity, named “the Dispute Settlement Body” will accept or turn down the report. If accepted, it becomes binding (Hurd, 2014: 59) (here is the link to the World Trade Organization Dispute Settlement Gateway where information is provided on disputes between member states)
While this is a used mechanism in the World Trade Organization, a number of cases are settled between states before the final report hits the desk of the Dispute Settlement Body. As the World Trade Organization notes, “The priority is to settle disputes, through consultations if possible. By January 2008, only about 136 of the nearly 369 cases had reached the full panel process. Most of the rest have either been notified as settled “out of court” or remain in a prolonged consultation phase — some since 1995” (World Trade Organization, 2016). The entire dispute settlement process is as follows:
First stage: consultation (up to 60 days). Before taking any other actions the countries in dispute have to talk to each other to see if they can settle their differences by themselves. If that fails, they can also ask the WTO director-general to mediate or try to help in any other way.
Officially, the panel is helping the Dispute Settlement Body make rulings or recommendations. But because the panel’s report can only be rejected by consensus in the Dispute Settlement Body, its conclusions are difficult to overturn. The panel’s findings have to be based on the agreements cited.
The panel’s final report should normally be given to the parties to the dispute within six months. In cases of urgency, including those concerning perishable goods, the deadline is shortened to three months.
The agreement describes in some detail how the panels are to work. The main stages are:
But if the report does go tot he DSB, and they approve it, states that do not alter their policies can be sanctioned (Hurd, 2014: 60). If sanctions are put in place, they should theoretically be connected to the industry of dispute, although that is not always the case. Often times, sanctions have had political elements to them. Hurd (2014) notes an interesting case between the European Union and the United States as it relates to steel. He writes:
In a dispute regarding US protection on steel, “the Appellate Body report authorized the EU to impose sanctions on $2.2 billion of US exports to Europe, which would have begun once the report was adopted by the DSB. The EU publicized in advance that it would target citrus goods, and that these choices were designed to add pressure in politically sensitive regions ahead of the 2004 presidential election. This was, in a sense, a response in kind to the fact that the American steel tariffs were widely seen as being motivated by the political needs of the Bush administration in steel-producing regions” (60).
Many, such as George Soros in his book On Globalization, have praised the World Trade Organization’s enforcement mechanisms, saying that “[t]he device used by the WTO is to authorize the injured country to retaliate unless it receives compensation or the practice is discontinued. This is a very effective device; in most other areas the sovereignty of states poses insurmountable obstacles to the enforcement of international law” (32).
WTO Protests, Steve Kaiser, CC 2.0
Criticisms of the World Trade Organization
Much of the criticism regarding the World Trade Organization is related to the discussion about the pros and cons of globalization, and stems about peoples’ beliefs about the issue of free trade, and more specifically, how free trade affects human rights, as well as the environment. In fact, Robert Howse (1999) suggests that “[t]he interrelationship between trade policy and labor rights is among the most contentious issues that the world trade system faces today” where “”[m]any critics of free trade have argued that it is unfair that producers in the developed industrial world should have to compete with imports from countries with very low wage rates and poor labor standards.” In response, those who favor free trade argue that such standards are “a legitimate source of comparative advantage or disadvantage” (1). Interestingly, documents during the years of the International Trade Organization did say that that states within the ITO should act against any labor abuses. In addition, organizations such as the International Labour Organization have continued to call for the protection of human rights within the context of labor standards. However, many within the World Trade Organization have been hesitant to openly tie themselves to the idea of trade in connection with set labor standards. Furthermore, when scholars have looked at what exceptions the General Agreement for Trade and Tariffs allows, this does not include restrictions for unfair labor standards or conditions, but instead have been for the “dumping” of a product (selling it lower than what it cost to produce said product), as well as the subsidization of said product by a state (Howse, 1999: 3).
As Smith (2014) explains, looking at the history of globalization and labor standards, it is difficult to know for certain whether globalization has improved or hurt labor standards. Some, such as Wallach & Woodall (2004), when looking at free trade policies of the WTO, argue that labor standards have been hurt greatly by World Trade Organization policies. Their concern has been with the idea that free trade in general won’t protect labor rights. As they state: “The “market” won’t stop the problem of forced labor. In the absence of factors that are variable in any market–such as consumers willing to pay a premium for products made without bonded labor, prison labor or child labor–employers would find it expedient to engage in such practices” (223). They continue to say that the primary reason states would avoid such practices is because of courts or public opinion, but free markets should not involve such institutions such as regulatory courts or government intervention on business practices (223).
The World Trade Organization and the Environment
There has been a history of discussion with regards to the effect of General Agreement on Tariffs and Trade (GATT) and World Trade Organization policy with regards to the environment. One of the earliest references with regards to the environment within the General Agreement on Trade and Tariffs occurred in 1971, when GATT set up a the Group on Environmental Measures and International Trade. And it was a year later that within the United Nations that the notion of environmental standards and what it would mean for international economic competition was raised (Bown & McCulloch, 2005). However, according to scholars, it wasn’t until years later, namely in 1994, where “[e]nvironmental issues had moved into the mainstream of GATT…”. It was during the meetings in Uruguay that representatives agreed to create a Committee on Trade and Environment in the World Trade Organization (142). However, many have debated just how clear and direct the World Trade Organization has been with its statements regarding environmental protection.
Furthermore, critics and environmental activists argue that the World Trade Organization’s policies regarding free trade are clearly in tension with ensuring the stability of the environment. For example, Bown & McCulloch (2005) list four different points that environmentalists have made regarding the problems with free trade as it relates to environmental concern, which they state as: “The first is that expansion of trade may produce environmental damage, either directly, if new export opportunities encourage polluting industries to expand their operations and/or increase pollution associated with transport of goods, or indirectly, as conventional gains from trade raise national incomes and consumption. A related second concern is that some country swill use weaker environmental protection as a way of increasing their international competitiveness. A third issue is that individual countries seeking to maintain high environmental standards may be restrained by GATT/WTO rules from using trade for this purpose. Finally, GATT/WHO rules my inhibit international cooperation to reduce environmental threats by restricting the use of trade sanctions to enforce multilateral environmental agreements” (142). And the World Trade Organization did little in Uruguay to placate activists’ concerns about environmental issues as it related to free trade, with no specific document or Agreement on the topic (Bow & McCulloch, 2005). And even some attempts at working on environmental protections through product standards have been met with a challenge by WTO supporters who continue to promote free trade, and worry that such standards might infringe upon this principle, or that standards might make trade more difficult for countries who work in multiple states (Bown & McCulloch, 2005: 151).
Regarding the environment, critics of free trade have worried that countries and businesses will attempt to operate in areas where there are little restrictions on operations, and thus, may in turn pollute the environment (Bown & McCulloch, 2005). Related to the second point, there is a fear that with free trade, and no penalties for environmental pollution, some countries may use this to their economic benefit, by either attracting businesses related to their current conditions, or even lowering standards, knowing that this might lead to greater business opportunities in their country, but all at the expense of environmental protections (Bown & McCulloch, 2005). Related to the third point mentioned above, some that may want to put restrictions based on production (due to environmental concerns) (either in their country or reduce exports from another country) may be ruled against if a complainant country went/goes to the General Agreement on Tariffs and Trade. There have been a couple of cases that have been ruled in this direction, thus concerning many environmentalists (such as a US tuna ban in the early 1990s, and Mexico complaint to the General Agreement on Tariffs and Trade, for as Bown and McCulloch (2005) write, “the logic of… [such cases]…implies limits on the ability of one country to restrict trade as a means to influence the environmental standards of other countries” (147). The last concern raised is whether the GATT and World Trade Organization has the ability, and is actually willing to use sanctions on countries that do not follow environment standards with regards to their economic practices. But in response to this, some who advocate for free trade have worried that this would lead to protectionist policies. (Bown & McCulloch, 2005).
World Trade Organization Ruling as it Relates to Environmental Issues
Another reason why the World Trade Organization has been heavily criticized on issues of failing to protect the environment have to do with some key rulings on international disputes over trade activities. For example, there was a well publicized case regarding the United States and trading of shrimp. Many states have been catching and then trading shrimp with the United States. However, in the late 1980s, the United States government was upset that shrimp catchers were using nets that were also catching other entities, which often hurt them, or led to their deaths. One of the creatures that was being caught up in the nets were various sea turtles And because of this, the United States, domestically “passed a new law in 1989 which banned imports of shrimp from countries that had not proved that their shrimping industry used nets with “turtle excluder devices” or something comparable” (Hurd, 2014: 61). However, many states companied to the WTO in 1996, which led the World Trade Organization to hear the case. They ended up finding that the United States broke trade agreements. However, some point it that the issue is not that a country cannot voice environmental concerns in the trade agreements, but that whatever agreements are set must be equally applied to all other trading countries (Hurd, 2014). There was also debate as to whether these shrimp were “like-products” compared to all other shrimp, or if these were in a different category (Hurd, 2014), and thus possibly lending them to different rules and stipulations.
One of the other more publicized environment cases as it relates to the World Trade Organization was the Dolphin Tuna case between the United States and Mexico. Here, similar to the shrimp case, the United States banned tuna imports from Mexico due to the types of netting used, which were affecting dolphins. Mexico took the case to the WTO, who again found the US of not equally applying the same trade rules for all countries regarding tuna. However, similar to the first case, many have criticized the World Trade Organization for the inability to take into consideration environmental issues when enforcing trade agreements (Wallach & Woodall, 2004). However, these are not the only cases of criticism towards WTO rulings: there have also been WTO positions against Europe’s stand on artificial hormones in beef (Wallach & Woodall, 2004).
The World Trade Organization and the 1999 Seattle Protests
In 1999, the World Trade Organization met in Seattle, Washington for its Third Ministerial Conference (Buterbaugh & Fulton, 2008) to discuss additional negotiations in regards to international trade policies, among other issues. However, they were met by thousands of demonstrators, who were protesting the World Trade Organization for various reasons (ACLU, 2000). While the initial protests caused no major issues, and while the planned activities were non-violent (ACLU, 2000), as the numbers of those out on the streets, marching and protesting the WTO, the protests soon became violent, numerous “there…[were] widespread reports of police using excessive force against persons who posed no physical threat, were not resisting arrest, or were simply trying to leave the arena” (ACLU, 2000: 9). There were also incidents of police using rubber bullets and pepper spray against protesters (ACLU, 2000).
The protesters had a number of demands for the World Trade Organization, which included stressing the rights of citizens and the environment, as opposed to what they saw as the WTO supporting the interests of multinational corporations (Buterbaugh & Fulton, 2008). according to scholars, it seems that these protests were planned well in advance of the meeting (Buterbaugh & Fulton, 2008). The environment concerns mentioned in the above section were one reason why thousands of protesters gathered in Seattle in 1999, protesting the World Trade Organization negotiations. And inside the WTO meetings, little agreement was achieved. Some argue this was due to outside activities by protesters, whereas other suggest that the World Trade Organization did not have a concrete agenda and plan for these new negotiations (Buterbaugh & Fulton, 2008″ 155).
NGO coalitions expressed a number of points that they felt were wrong with the World Trade Organization. Buterbaugh & Fulton, in their book The WTO Primer published a list by the organization Global Exchange that listed the “Top Ten Reasons to Oppose the WTO”. The list is quoted below:
1). The WTO only serves the interests of multinational corporations
2). The WTO is a stacked court
3). The WTO tramples over labor and human rights
4). The WTO is destroying the environment
5). The WTO is killing people [through intellectual Property Rights–patents, copyrights, trademarks]
6). The U.S. adoption of the WTO was undemocratic
7). The WTO undermines local development and penalizes the poor
8). The WTO is increasing inequality
9). The WTO undermines national sovereignty
10). The tide is turning against free trade, the WTO!
Having reflected upon the 1999 Seattle World Trade Organization protests years later, some, such as Noah Smith in his piece The Dark Side of Globalization: Why Seattle’s 1999 Protests Were Right (which was published in The Atlantic), has argued that there have been some negative effects of free trade and globalization. For example, he points to the rising pollution in China as evidence that not all economically developed states curb their levels of pollution.
World Trade Organization and Living Standards
The World Trade Organization has continued to argue that free trade offers better lives for individuals around the world. However, some have been skeptical of the idea that free trade has indeed improved standards of living. For example, examining years of free trade have argued that overall world standards are not getting better, and that poverty rates are still quite high, and in many cases, has actually gotten worse (Wallach & Woodall, 2004).
World Trade Organization and Dumping
There has been particular attention to the WTO and international trade with regards to the issue of “dumping.” As the WTO explains, “If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product.” There is a great debate on whether dumping is fair, or whether it leads to unfair competition. The United States, Britain, along with other countries have recently been critical of China for what they believe is dumping; China is said to be subsidizing companies in order for them to increase the amount of exports. This not only allows domestic product prices to be higher, but it can also make a company more competitive on the international markets. States believe that this brings about an unfair advantage to international trade.”
For example, China and the US have been arguing over the issue of corn, and what the United States believes are corn subsidies given by China to their exports. According to reports, “China has been selling corn and other commodities from government-owned reserves over the past two months to reduce stockpiles. The U.S. Department of Agriculture says Chinese corn inventories reached a 16-year high in 2016. Effective Sept. 1, China resumed a 13 percent value-added tax rebate on exports of corn products, including corn starch and ethanol, the Ministry of Finance said last month” (Wilson, 2016). However, others argue that the United States is making matters worse by not being able to negotiate with China, instead of going to the WTO; Peter Meyer, senior director of agricultural commodities at Pira Energy Group was quoted as saying that ““The timing of the WTO is perilous, with most corn and wheat farmers trying to make ends meet,” and that ““Rather than talk and negotiate, the U.S. has gone out and irritated one of its best customers. Subsidizing your own farmers for food security is not trade distorting” (Wilson, 2016).
Another recent case of dumping accusations involves steel. According to the US Commerce Department, “it had made a preliminary finding that imports of stainless steel sheet and strip from China are being dumped in the US market at below fair value. The department set preliminary anti-dumping duties ranging from 63.86 per cent and 76.64 per cent” (Reuters, 2016). The US Trade Commission has also ruled that other countries have also been involved in price dumping. As a result, additional anti-dumping penalties in the form of additional tax would be levied against these international actors. For example, “The highest anti-dumping taxes of 34.3 per cent were imposed against Brazil’s Usiminas, with all other Brazilian producers facing 33.1 per cent margins and just over 11 per cent anti-subsidy duties. The Brazilian government has threatened to challenge US duties before the World Trade Organization in a separate case involving cold-rolled steel imports” (Reuters, 2016).
With regards to the international organization, “The WTO agreement does not pass judgement. Its focus is on how governments can or cannot react to dumping — it disciplines anti-dumping actions, and it is often called the “Anti-Dumping Agreement”. (This focus only on the reaction to dumping contrasts with the approach of the Subsidies and Countervailing Measures Agreement.) The legal definitions are more precise, but broadly speaking the WTO agreement allows governments to act against dumping where there is genuine (“material”) injury to the competing domestic industry. In order to do that the government has to be able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price), and show that the dumping is causing injury or threatening to do so” (WTO, 2016).
The World Bank Dispute Settlement Body has heard a number of cases as it pertains to dumping. The United States alone has brought 14 complaints against China since the country joined the World Trade Organization in the year 2009 (Wilson, 2016).
Interestingly, China has been pushing for “Market Economy Status” in the World Trade Organization. If granted, this, “would make it harder for other major economies to bring ” anti-dumping cases against Beijing” (Hornby & Donnan, 2016). China believes that they are due this status since it will be 15 years (in December) that China has been a part of the WTO (there is debate on what the language specifically states as it pertains to how to treat China’s economy compared to other economies). As reports note, “Securing market economy status would benefit China by requiring global trade regulators to compare the price of Chinese exports to its domestic market — instead of higher-priced third countries — in anti-dumping cases and thus limiting their ability to impose tariffs” (Hornby & Donnan, 2016). Thus, if China is granted World Market Status, other “other members would not use China’s published margins as a basis for tariffs to prevent dumping, but would instead rely on “surrogate” costs in countries with similar-sized economies to China’s” (Kozak, 2016).
World Trade Organization Books
Amrita Narlikar, The World Trade Organization: A Very Short Introduction
Peter Van den Bossche & Werner Zdouc: The Law and Policy of the World Trade Organization: Text Cases and Materials
Mitsuo Matsushita, Thomas J. Schoenbaum, & Petros C. Mavroidis: The World Trade Organization: Law, Practice and Policy.
Lori Wallach & Michelle Sforza: The WTO: Five Years of Reasons to Resist Corporate Globalization.
References
American Civil Liberties Union (ACLU) (2000). Out of Control: Seattle’s Flawed Response to Protests Against the World Trade Organization, June 2000, pages 1-77. Available Online: https://www.aclu-wa.org/sites/default/files/attachments/WTO%20Report%20Web.pdf
Bown, C. & McCulloch, R. (2005), The World Trade Organization: Legal, Economic, and Political Analysis, pages 138-170. Available Online: http://people.brandeis.edu/~rmccullo/wp/environmentWTO2005.pdf
Buterbaugh, K. & Fulton, K. (2008). The WTO Primer. New York, New York. Palgrave Macmillian.
Hornby, L. & Donnan, S. (2016). China fights for market economy status. Financial Times. May 9, 2016. Available Online: https://www.ft.com/content/572f435e-0784-11e6-9b51-0fb5e65703ce
Howse, R. (1999). The World Trade Organization and the Protection of Workers’ Rights. The Journal of Small and Emerging Business Law. 3 J, 151. Available Online: http://graduateinstitute.ch/files/live/sites/iheid/files/shared/executive_education/summer_international-affairs_faculty-IA_professors/howseworkers%255B1%255D.pdf
Hurd, I. (2014). International Organizations: Politics, Law, and Practice. Cambridge, England. Cambridge University Press.
Irwin, D. A. (2002). Free Trade Under Fire. Princeton, New Jersey. Princeton University Press.
Kozak, E. (2016). The Chinese Trade Issue Trump Should Hammer. Lifezette. Polizette. 16 September 2016. Available Online: http://www.lifezette.com/polizette/the-chinese-trade-issue-trump-should-hammer/
Matsushita, M, Schoenbaum, T. J., & Mavroidis, P. C. (2006). The World Trade Organization: Law, Practice, & Policy, pages, 1-17.
Narlikar, A. (2005). The World Trade Organization: A Very Short Introduction. Oxford, England. Oxford University Press.
Payne, R. (2013). Global Issues. New York, New York. Pearson.
Reuters (2016). Chinese steel being dumped in US: Commerce Department. Reuters, in South China Morning Post. 13 September 2016. Available Online: http://www.scmp.com/business/markets/article/2018753/chinese-steel-being-dumped-us-commerce-department
Smith, N. (2014). The Dark Side of Globalization: Why Seattle’s 1999 Protesters Were Right. The Atlantic, January 6, 2014. Available Online: http://www.theatlantic.com/business/archive/2014/01/the-dark-side-of-globalization-why-seattles-1999-protesters-were-right/282831/#disqus_thread
Soros, G. (2005). On Globalization. New York, New York. Public Affairs.
Wallach, L. & Woodall, P. (2004). Whose Trade Organization: A Comprehensive Guide to the WTO. New York, New York. The New Press.
Wilson, J. (2016). U.S. Files WTO Case Against Chinese Agriculture Subsidies. Bloomberg. 13 September 2016. Available Online: http://www.bloomberg.com/news/articles/2016-09-13/u-s-files-wto-trade-case-against-chinese-agricultural-subsidies
World Trade Organization (2008). 10 Benefits of the WTO Trading System. Available Online: http://www.wto.org/english/res_e/doload_e/10b_e.pdf
World Trade Organization (2014). What is the WTO? Available Online: http://www.wto.org/english/thewto_e/whatis_e/who_we_are_e.htm
World Trade Organization (2016). Anti-dumping, subsidies, safeguards: contingencies, etc… Available Online: https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm
World Trade Organization (2016). Understanding the WTO: Settling Disputes. Available Online: https://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm
