WTO: A Criticism

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World Trade Organization
A criticism

By Muhammad ibn Kateb Al Ashari

Harun M Hashim, Law Centre, IIUM, Kuala Lumpur, Malaysia

In the name of God Most Gracious Most Merciful
History

Based in Geneva, the WTO was set up in 1995, replacing another international organization known as the General Agreement on Tariffs and Trade (Gatt). Gatt was formed in 1948 when 23 countries signed an agreement to reduce customs tariffs. The WTO has a much broader scope than Gatt. Whereas Gatt regulated trade in merchandise goods, the WTO also covers trade in services, such as telecommunications and banking, and other issues such as intellectual property rights.

The highest body of the WTO is the Ministerial Conference. This meets every two years and, among other things, elects the organization's chief executive - the director-general - and oversees the work of the General Council. The Ministerial Conference is also the setting for negotiating global trade deals, known as "trade rounds" which are aimed at reducing barriers to free trade. The General Council is in charge of the day-to-day running of the WTO and is made up of ambassadors from member states who also serve on various subsidiary and specialist committees. WTO has a dispute settlement mechanism also, under the dispute settlement understanding. It has 151 states as members as of December.

Organization

The WTO has about 150 members, accounting for about 95% of world trade. Around 30 others are negotiating membership. Decisions are made by the entire membership. This is typically by consensus. General Council meets several times a year in the Geneva headquarters. The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body. At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS) Council report to the General Council. Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements.
Objectives

The objectives of WTO are:
Provide security and predictability to the multilateral trading system.
Preserve the rights and obligations of Members under the covered agreements
Clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law.
Negotiate the reduction or elimination of obstacles to trade.
Protecting environment from trade related activities 

Criticism

WTO has become very powerful in a matter of short time, influencing nation states' domestic laws and even enforcing them to adopt laws suitable for world trade. WTO promotes free trade, that is to say, it promotes trades without any barriers. There are exceptions to this only if trade harms environment. This is very difficult to show in the WTO setting because politicians and trade specialists govern mostly not by environmental experts but WTO. The dispute settlement understanding of WTO do not oblige environmental specialist to be in panel nor does it encourage. The WTO legitimizes and in many cases obliges life patents. WTO rules permit and in some cases require patents or similar exclusive protections for life forms. This life patenting does not take into consideration various moral or ethical issues. Ms Cecilia Oh says that patenting was originally devised for mechanical inventions but not biological and also patenting means blocking the knowledge to developing countries, regarding biological technology. This becomes a bargain and manipulative tool for the developed nations, which WTO has facilitated to attain. The WTO does not mention bans on imports of goods made with illegal labor (subjugated labor in wars or child), where as it adopted some provisions on environment protection. One of the consequences for this is developed states open industries in poorer countries for cheap labor and at times almost no cost, especially when children are used in labor. A good example is the diamond trade in the world. Developed countries do not care how those raw diamonds have come to their hands, which in truth comes through forced and subjugated labor . Also WTO rules do not allow countries to treat products differently based on how they were produced -- irrespective of whether made with workers exposed to toxics or with no regard for species protection. In general, WTO rules state that governments can make purchases based only on quality and cost considerations, but not the human and moral condition. WTO rules force Third World countries to open their markets to rich country multinationals, and abandon efforts to protect infant domestic industries. In agriculture for example this will harm rural and low scale agricultural economic development of people in a nation and will force them to cities not as producers but sellers of foreign products. The WTO undermines democracy. Its rules drastically shrink the choices available to democratically controlled governments, with violations potentially punished with harsh penalties. The WTO thus overrides and controls domestic decisions about how economies should be organized and corporations controlled. To give an example WTO's aim in building trade capacity diversifies and increases exports, as well as increasing foreign investment to create jobs. One should think this as one sided as developing countries cannot compete with developed countries in this, due to the quality and efficiency gap, a gap which cannot be lessened except by investing in domestic trade and barring foreign products.

WTO rules generally require domestic laws, rules and regulations designed to further worker, consumer, environmental, health, safety, human rights, animal protection or other non-commercial interests to be undertaken in the "least trade restrictive" fashion. This means that the laws of the land must not restrict international trade. Other concerns are secondary while trade is primary. This fact is highlighted in the rules of origin, safeguarding measures and import licensing agreements of WTO, where no provision discuss human rights violations or environmental impact assessment before import and regarding products. An example would be child labor in India and Bangladesh, where more than 44 million and 17.4 million children work in the labor market, respectively.

WTO and environment

GATT 94 article XX provides provisions for environmental safety. Also the SPS agreement of WTO provides basic provisions for the safety of human health especially against genetically modified organisms. Cartagena protocol on the other hand focuses on this, which is not a WTO treaty, but under convention on biological diversity. Very often these two conflict and there has not been any decisive solutions as of yet. Cartagena protocol for example depends on precautionary principle that is to say the absence of knowledge in to a biological modified product is not a justification for its safety, thus it allows import ban on such products on precautionary basis, whereas on the other hand the SPS agreement only allows trade restrictions for such products only if there is sufficient scientific proof against its use.
Conclusion
WTO as has been seen in this presentation is paving the way for the dominance of one-sided world economy. Its system is facilitated to keep a certain gap always between the developed and developing nations. It fails to take the human issue into consideration but solely focuses on the material and technical issues. It also bars sharing of bio-technical trade knowledge through patenting. It says it has an agenda working with other international organizations but it has not developed a full-fledged infrastructure and provisions of its objectives and progress of such a relationship. It has also violated the economic self-determination of states as provided by human rights conventions of UN. WTO should shift towards total change in its certain provisions specially relating to labor and human rights. It should work with international labor organization and Interpol, to protect trade related human rights and trade related environmental issues. If human and environment which is the driver of trade and raw trade resources, suffers for the sake of trade, then one needs to ask for whose sake international trade is designed for?


End Notes

WTO. DSU, article 3.2

Khor, Martin (2000) WHY LIFE FORMS SHOULD NOT BE PATENTED. http://www.twnside.org.sg/title/2103.htm retrieved 31/05/2012
Mansoor, Farkhanda. The WTO versus the ILO and the case of child labour 2004, 2 WEB journal of commercial law issues http://webjcli.ncl.ac.uk/2004/issue2/mansoor2.html#Heading64 retrieved 31/05/2012

CNN (2001) Diamond trade fuels bloody wars http://archives.cnn.com/2001/WORLD/africa/01/18/diamonds.overview/index.html retrieved 31/05/2012

UN (2001). Conflict diamonds http://www.un.org/peace/africa/Diamond.html retrieved 31/05/2012

WTO. EC-Asbestos case, Appellate body report DS135

ibid

OECD (2003). Trade Capacity Building: Critical for Development in Policy Brief, p 2 on http://www.oecd.org/dataoecd/23/15/8890063.pdf retrieved 31/05/2012

Unicef (2010). Child Labor in Bangladesh. http://www.unicef.org/bangladesh/Child_labour.pdf & Hasanat, Babat. International trade and child labor. Journal of economic issues 24 (2) 1995 retrieved 31/05/2012

CBD. Cartagena protocol, article 10.6 and 11.8

WTO. SPS agreement, article 5 (7)

Bibliography

CBD. Cartagena protocol, article 10.6 and 11.8

WTO. SPS agreement, article 5 (7)

WTO. DSU article 3.2

Khor, Martin (2000) WHY LIFE FORMS SHOULD NOT BE PATENTED.
http://www.twnside.org.sg/title/2103.htm retrieved 31/05/2012

Mansoor, Farkhanda. The WTO versus the ILO and the case of child labour 2004, 2 WEB journal of commercial law issues http://webjcli.ncl.ac.uk/2004/issue2/mansoor2.html#Heading64 retrieved 31/05/2012

CNN (2001) Diamond trade fuels bloody wars http://archives.cnn.com/2001/WORLD/africa/01/18/diamonds.overview/index.html retrieved 31/05/2012

UN (2001). Conflict diamonds http://www.un.org/peace/africa/Diamond.html retrieved 31/05/2012

WTO. EC-Asbestos case, Appellate body report DS135


OECD (2003). Trade Capacity Building: Critical for Development in Policy Brief http://www.oecd.org/dataoecd/23/15/8890063.pdf retrieved 31/05/2012



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