WTO and after
Jahangir Bin Alam | Tuesday, 26 August 2008
THE World Trade Organization (WTO) came into being in Marakkesh on January 1, 1995 following the successful completion of eight years of prolonged negotiations from 1986 to 1994 as a sequel to the Uruguay Round (UR) of negotiations. The organization's current membership strength is 153 as on July 23, 2008.
This rule-based multilateral institution, which is a successor to the General Agreements on Tariffs and Trade (GATT) was created in line with the WTO agreements, negotiated, signed and ratified by a majority of the UN member countries with a view to helping the producers of various goods and services in pursuit of their respective trade and commerce under a uniform set of rules. It may be noted that the GATT was created in 1947 with a view to reducing tariffs, removing trade barriers and facilitate trade in goods through multilateral negotiations. However, the WTO Agreement encompasses trade in services in addition to trade in goods.
The broad functions of the organization are: to administer and monitor WTO agreements, act as a forum for trade negotiations, resolve trade-related disputes, monitor trade policies of the member countries and to cooperate with other international organizations.
The objectives of the organization as stated in the preamble of the WTO Agreement are: raising standards of living; ensuring full employment; achieving sustainable development; protecting environment and ensuring that developing countries, especially the least developed ones (LDCs) their due share in the growth of international trade.
However, with the passage of time the organization's emphasis has gradually slipped from concentrating on its avowed objectives of seeing itself primarily as 'an organization for trade liberalization' and declaring that 'the system's overriding purpose is to help trade flow as freely as possible'. This is perhaps the prime reason of prevailing tensions surrounding the mandate and activities of the organization. The developing countries and non-governmental organisations (NGOs) would like to see that it puts added emphasis on achieving public interest goals, while others, for instance -- private companies, both localized and multinationals and some industrialized countries favour faster removal of barriers to free trade to enable them to reap benefits out of it at a faster pace.
On the face of it one may find WTO to be stronger and a more democratic institution in comparison with other international organizations like -- the World Bank (WB) and the International Monetary Fund (IMF) as it follows the practice of one member one vote and consensus-based decision making.
Other positive aspects of the organization that one would come across are: its special emphasis on sustainable trade related developmental aspects of its members; creation of increased number of committees and undertaking additional programmes towards providing technical; policy and financial assistance to its least developed country (LDC) members; ensuring transparency through prevention of green room negotiations and effective use of web-page; enhancement of its monitoring capacity through publication of World Trade Report and Trade Policy Review; increase in the volume of trade of its members; removal of tariff, non-tariff and para-tariff barriers to the maximum possible extent; widening the scope of trade governance from trade in goods to trade in services, intellectual property rights and investment.
Formulation of new enforceable rules and evolving newer mechanisms to handle matters relating to dispute settlement; bringing trade in agriculture and textiles under its umbrella and inclusion of development policies in the WTO agenda could be seen as no less achievements.
However, people have started questioning the nature of democratic practices that the organization has been pursuing lately. One could observe lack of transparency and accountability in the decision making process, as at times it takes place through informal meetings. Also there are significant failures of the organization such as - its lack of human resources and limitations in effective monitoring and enforcement of regulations and decisions, especially in respects of dispute settlements involving its powerful members; failure to involve NGOs as integral part of world trade governance.
Other major failures of the WTO that a dispassionate observer would come across are: Its inability to fully liberalize trade in agriculture and to some extent -- textiles; partial and unbalanced implementation of services agreement like -- failure to ensure free movement of labour; increasing the burden on developing countries through fixation of rather limited transition periods in respect of Trade-related Intellectual Property Rights (TRIPs), Trade-related Investment Measures (TRIMs) and General Agreement on Trade in Services (GATs); failure in effective implementation of rules relating to providing special and differential treatment e.g. Swiss formula in Non-agricultural Market Access (NAMA) agreement to deserving members; absence of clear policy regarding protection of environment and labour rights and last but not the least overloading the WTO agenda by turning it into a forum for discussion rather than a place for resolving critical issues.
Currently, an increasing number of voices are being raised to the effect that free trade should not be an end in itself; rather, it should be a tool for achieving equitable and sustainable development that would help create a better world.
Now a days there are criticisms galore that the WTO is dominated by the rich and the mighty and that it functions in a secretive manner to serve the causes of the rich in the garb of trade liberalization. Failure of the latest Doha Round ministerial negotiations held in Geneva from July 21-29, 2008 could be cited as an example to that effect.
However, in spite of the shortcomings and limitations, there is no denying that there has been a significant increase in the volume of world trade as an aftermath of the creation of the WTO. The increase could be much more had the organization followed its avowed path both in letter and spirit.
(The writer is former Secretary, Foreign Investors' Chamber of Commerce and Industry)
This rule-based multilateral institution, which is a successor to the General Agreements on Tariffs and Trade (GATT) was created in line with the WTO agreements, negotiated, signed and ratified by a majority of the UN member countries with a view to helping the producers of various goods and services in pursuit of their respective trade and commerce under a uniform set of rules. It may be noted that the GATT was created in 1947 with a view to reducing tariffs, removing trade barriers and facilitate trade in goods through multilateral negotiations. However, the WTO Agreement encompasses trade in services in addition to trade in goods.
The broad functions of the organization are: to administer and monitor WTO agreements, act as a forum for trade negotiations, resolve trade-related disputes, monitor trade policies of the member countries and to cooperate with other international organizations.
The objectives of the organization as stated in the preamble of the WTO Agreement are: raising standards of living; ensuring full employment; achieving sustainable development; protecting environment and ensuring that developing countries, especially the least developed ones (LDCs) their due share in the growth of international trade.
However, with the passage of time the organization's emphasis has gradually slipped from concentrating on its avowed objectives of seeing itself primarily as 'an organization for trade liberalization' and declaring that 'the system's overriding purpose is to help trade flow as freely as possible'. This is perhaps the prime reason of prevailing tensions surrounding the mandate and activities of the organization. The developing countries and non-governmental organisations (NGOs) would like to see that it puts added emphasis on achieving public interest goals, while others, for instance -- private companies, both localized and multinationals and some industrialized countries favour faster removal of barriers to free trade to enable them to reap benefits out of it at a faster pace.
On the face of it one may find WTO to be stronger and a more democratic institution in comparison with other international organizations like -- the World Bank (WB) and the International Monetary Fund (IMF) as it follows the practice of one member one vote and consensus-based decision making.
Other positive aspects of the organization that one would come across are: its special emphasis on sustainable trade related developmental aspects of its members; creation of increased number of committees and undertaking additional programmes towards providing technical; policy and financial assistance to its least developed country (LDC) members; ensuring transparency through prevention of green room negotiations and effective use of web-page; enhancement of its monitoring capacity through publication of World Trade Report and Trade Policy Review; increase in the volume of trade of its members; removal of tariff, non-tariff and para-tariff barriers to the maximum possible extent; widening the scope of trade governance from trade in goods to trade in services, intellectual property rights and investment.
Formulation of new enforceable rules and evolving newer mechanisms to handle matters relating to dispute settlement; bringing trade in agriculture and textiles under its umbrella and inclusion of development policies in the WTO agenda could be seen as no less achievements.
However, people have started questioning the nature of democratic practices that the organization has been pursuing lately. One could observe lack of transparency and accountability in the decision making process, as at times it takes place through informal meetings. Also there are significant failures of the organization such as - its lack of human resources and limitations in effective monitoring and enforcement of regulations and decisions, especially in respects of dispute settlements involving its powerful members; failure to involve NGOs as integral part of world trade governance.
Other major failures of the WTO that a dispassionate observer would come across are: Its inability to fully liberalize trade in agriculture and to some extent -- textiles; partial and unbalanced implementation of services agreement like -- failure to ensure free movement of labour; increasing the burden on developing countries through fixation of rather limited transition periods in respect of Trade-related Intellectual Property Rights (TRIPs), Trade-related Investment Measures (TRIMs) and General Agreement on Trade in Services (GATs); failure in effective implementation of rules relating to providing special and differential treatment e.g. Swiss formula in Non-agricultural Market Access (NAMA) agreement to deserving members; absence of clear policy regarding protection of environment and labour rights and last but not the least overloading the WTO agenda by turning it into a forum for discussion rather than a place for resolving critical issues.
Currently, an increasing number of voices are being raised to the effect that free trade should not be an end in itself; rather, it should be a tool for achieving equitable and sustainable development that would help create a better world.
Now a days there are criticisms galore that the WTO is dominated by the rich and the mighty and that it functions in a secretive manner to serve the causes of the rich in the garb of trade liberalization. Failure of the latest Doha Round ministerial negotiations held in Geneva from July 21-29, 2008 could be cited as an example to that effect.
However, in spite of the shortcomings and limitations, there is no denying that there has been a significant increase in the volume of world trade as an aftermath of the creation of the WTO. The increase could be much more had the organization followed its avowed path both in letter and spirit.
(The writer is former Secretary, Foreign Investors' Chamber of Commerce and Industry)