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.

Discuss the above statement by giving the pros and cons of the WTO Agreements in the era
of globalization.

abstract
introduction
scope and objectives
objectives of assignment
conclusion

Abstract

The World Trade Organization (WTO) aims to establish an international trading system
based on a free and open trading system. This organization strives to reduce and eliminate
governmental trade barriers, such as tariffs and quantitative restrictions. As will be discussed
later, .............

History of World Trade Organization

The WTO was officially created in January of 1995 and effectively replaced the General
Agreement on Tariffs and Trade (GATT), which had been in force since 1948, a few years after
the Second World War. Before the WTO was created, an initiative to start something similar
known as the International Trade Organization (ITO) took place. Unfortunately, the ITO treaty
was not approved by the U.S. and a few other countries and ultimately never went into effect.

In the 1980s, as the world economies became more global in trade and business, it became
evident that GATT was not built or structured to address many of the new global trading
challenges that were arising. As a result, the biggest trade negotiating event on record began in
1986. It was known as the Uruguay Round, seeing as it took place in Punta del Este, Uruguay.
One of the final accomplishments of this round was the creation of the WTO. The WTO is
currently working on new negotiations and agreements, known as the Doha Development
Agenda, and these started in 2001.

The WTO is a global organization that helps countries and producers of goods deal fairly and
smoothly with conducting their business across international borders. It mainly does this through
WTO agreements, which are negotiated and signed by a large majority of the trading nations in
the world. These documents act as contracts that provide the legal framework for conducting
business among nations. There are several groups within the WTO, with the highest decision-
making authority going to a group known as the Ministerial Conference, which can make
decisions on all matters and trade disputes among members.

Functions of World Trade Organization

Among the various functions of the WTO, these are regarded as the most significant by the world
trade analyst. The functions of WTO are to oversee the implementation, administration and
operation of the covered agreements and also to provide a forum for negotiations and for settling
disputes. Additionally, it is the WTO's duty to review and propagate the national trade policies
and to ensure the coherence and transparency of trade policies through surveillance in global
economic policy-making.

Besides that, there are also other additional functions of the WTO. Another priority of the WTO
is the assistance of developing, least-developed and low-income countries in transition to adjust
to WTO rules and disciplines through technical cooperation and training. The WTO shall
facilitate the implementation, administration and operation and further the objectives of this
Agreement and of the Multilateral Trade Agreements, and shall also provide the frame work for
the implementation, administration and operation of the multilateral Trade Agreements.

The WTO also provide the forum for negotiations among its members concerning their
multilateral trade relations in matters dealt with under the Agreement in the Annexes to this
Agreement and administer the Understanding on Rules and Procedures Governing the Settlement
of Disputes. Last but not least, with a view to achieve greater coherence in global economic
policy making, the WTO also cooperate with the international Monetary Fund (IMF) and with
the International Bank for Reconstruction and Development (IBRD) and its affiliated agencies.
As globalization proceeds in today's society, the necessity of an International Organization to
manage the trading systems has been of vital importance. As the trade volume increases, issues
such as protectionism, trade barriers, subsidies, violation of intellectual property arise due to the
differences in the trading rules of every nation. The World Trade Organization serves as the
mediator between the nations when such problems arise. WTO could be referred to as the
product of globalization and also as one of the most important organizations in today's globalized
society.

Advantages of WTO:

Members of the WTO enjoy the benefits conferred by any trade agreement. However, since
the WTO has so many members, its benefits are really global. The WTO helps trade
throughout the world to flow smoothly through its trade agreements. This provides its
members with a fair method to resolve trade disputes without resorting to violence or even
war.

Membership in the WTO also has responsibilities. Members agree to avoid erecting trade
barriers, instead abiding by the WTO's resolution of the dispute.

This prevents the escalation of trade restrictions that could help the individual country
temporarily, but hurt world trade overall. In fact, it was just this type of retaliatory trade
warfare that worsened the Great Depression of 1929. As global trade slowed, countries
sought to protect domestic industries. Trade barriers were erected, creating a downward
spiral. As a result, global trade shrank by 25%.

Members of the WTO know what the rules are, the penalties for breaking the rules, and how
to play the global trade game. This certainty creates a safer trading arena for everyone. It
also lowers the costs of doing business just by removingvolatility.

These general benefits extend to all members. Since the membership is so large, many of
these benefits are also felt by the entire world.

Specific WTO Membership Benefits

WTO membership means that the nation automatically receives the Most Favored
Nation status. Basically, this means all 159 WTO members must treat each other the same.
They give no preferential trade benefit to any one member without giving it to all.

WTO members have lower trade barriers with each other. This includes tariffs, import
quotas and excessive regulations. Lower trade barriers allows them a larger market for their
goods, leading to greater sales, more jobs and faster economic growth.

Over 75% of WTO members are developing countries. WTO membership allows them
access to developed markets at the lower tariff rate. Membership allows them time to
remove reciprocal tariffs in their own markets. This gives these countries an opportunity to
catch up to sophisticated multinational corporations and their mature industries before
opening the developing countries' markets to overwhelming competitive pressure.

-Helps promote peace within nations: Peace is partly an outcome of two of the most fundamental
principle of the trading system; helping trade flow smoothly and providing countries with a constructive
and fair outlet for dealing with disputes over trade issues. Peace creates international confidence and
cooperation that the WTO creates and reinforces.
-Disputes are handled constructively: As trade expands in volume, in the numbers of products traded
and in the number of countries and company trading, there is a greater chance that disputes will arise.
WTO helps resolve these disputes peacefully and constructively. If this could be left to the member states,
the dispute may lead to serious conflict, but lot of trade tension is reduced by organizations such as
WTO.
-Rules make life easier for all: WTO system is based on rules rather than power and this makes life
easier for all trading nations. WTO reduces some inequalities giving smaller countries more voice, and at
the same time freeing the major powers from the complexity of having to negotiate trade agreements with
each of the member states.
-Free trade cuts the cost of living: Protectionism is expensive, it raises prices, WTO lowers trade
barriers through negotiation and applies the principle of non-discrimination. The result is reduced costs of
production (because imports used in production are cheaper) and reduced prices of finished goods and
services, and ultimately a lower cost of living.
-It provides more choice of products and qualities: It gives consumer more choice and a broader
range of qualities to choose from.
-Trade raises income: Through WTO trade barriers are lowered and this increases imports and exports
thus earning the country foreign exchange thus raising the country's income.
-Trade stimulates economic growth: With upward trend economic growth, jobs can be created and this
can be enhanced by WTO through careful policy making and powers of freer trade.
-Basic principles make life more efficient: The basic principles make the system economically more
efficient and they cut costs. Many benefits of the trading system are as a result of essential principle at
the heart of the WTO system and they make life simpler for the enterprises directly involved in
international trade and for the producers of goods/services. Such principles include; non-discrimination,
transparency, increased certainty about trading conditions etc. together they make trading simpler, cutting
company costs and increasing confidence in the future and this in turn means more job opportunities and
better goods and services for consumers.
-Governments are shielded from lobbying: WTO system shields the government from narrow interest.
Government is better placed to defend themselves against lobbying from narrow interest groups by
focusing on trade-offs that are made in the interests of everyone in the economy.
-The system encourages good governance: The WTO system encourages good government. The
WTO rules discourage a range of unwise policies and the commitment made to liberalize a sector of trade
becomes difficult to reverse. These rules reduce opportunities for corruption.

Current Issue of WTO

While most international organizations operate on a one country, one vote or even a
weighted voting basis, many WTO decisions, such as adopting agreements (and revisions to
them) are officially determined by consensus of all member states. The advantage of consensus
decision-making is that it encourages efforts to find the most widely acceptable decision. Main
disadvantages include large time requirements and many rounds of negotiation to develop a
consensus decision, and the tendency for final agreements to use ambiguous language on
contentious points that makes future interpretation of treaties difficult. In reality, WTO
negotiations proceed not by consensus of all members, but by a process of informal negotiations
between small groups of countries. Such negotiations are often called "Green Room"
negotiations (after the color of the WTO Director-General's Office in Geneva), or "Mini-
Ministerials", when they occur in other countries. These processes have been regularly criticized
by many.

Criticism
Many people argue that free trade does not make ordinary people's lives more prosperous but
only results in the rich (both people and countries) becoming richer. WTO treaties have also been
accused of a partial and unfair bias toward multinational corporations and wealthy nations.
Critics contend that small countries in the WTO wield little influence, and despite the WTO aim
of helping the developing countries, the influential nations in the WTO focus on their own
commercial interests. They also claim that the issues of health, safety and environment are
steadfastly ignored. WTO does not manage the global economy impartially, but in its operation
has a systematic bias toward rich countries and multinational corporations, harming smaller
states which have less negotiation power.

Some 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);

The increase in non-tariff barriers 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 Uruguay Round; and

The TRIPs agreement which limits developing countries from utilizing some technology that
originates from abroad in their local systems (including medicines and agricultural products).
Martin Khor argues 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 pressurized to open up their agricultural, industrial and services sectors."

WTO CONS

The WTO is committed to improving free trade amongst its member countries.
However, its role has been very controversial - creating polarized views.

These are some of the criticisms of the WTO

1. Free Trade benefits developed countries more than developing countries- It is
argued, developing countries need some trade protection to be able to develop new
industries. The WTO has sought to maintain the same rules for developing countries
preventing them from protecting new industries. This is known as the infant industry
argument.

2. Diversification. Arguably developing countries that specialize in primary

products (agricultural products) need to diversify into other sectors. To diversify
they may need some tariff protection, at least in the short term. Many of the
existing industrialized nations used tariff protection when they were developing.
Therefore, the WTO has been criticized for being unfair and ignoring the needs of
developing countries.

3. Environment. Free trade has often ignored environmental considerations. Free

trade has enabled imports to be made from countries with the least environmental
protection. Many criticize the WTOs philosophy that the most important economic
objective is the maximization of GDP. In an era of global warming and potential
environmental disaster, increasing GDP may be the least important. Arguably the
WTO should do more to promote environmental considerations.

4. Free trade ignores cultural and social factors. Arguably a reasonable

argument for restricting free trade is that it enables countries to maintain cultural
diversity. Some criticize the WTO for enabling the domination of multinational
companies which reduce cultural diversity and tend to swamp local industries and
firms.

The WTO is criticized for being undemocratic. It is argued that its structure enables
the richer countries to win what they desire; arguably they benefit the most.*

Criticism of the WTO fall into two broad categories:

1. Criticism of WTO aims - The WTO is very strongly committed to trade

liberalization which means a movement towards free trade both in the reduction
and elimination of tariffs and a removal of non-tariff barriers such as quotas. In fact
the first four of the WTO's principles are all explicitly or implicitly about this. This
position (pro free trade) is firmly grounded in main stream trade economics -
particularly comparative advantage theory - which implies that free trade is an
optimal system. Importantly it is even good for poor undeveloped countries, hence
the WTO's fifth principle about development.

This, however, is controversial. There are some, particularly in development studies

and development economics, who are doubtful that free trade and deregulation are
in fact good for developing countries or the best development paradigm. In fact it is
often felt that free trade is actually bad in a variety of ways for poorer countries and
beneficial mainly to richer ones. If this is so then the WTO's philosophy has serious
problems (its own principles are mutually contradictory) and the WTO is at its very
basic level biased towards the rich countries.

The other main criticism of the WTO's philosophy comes from environmental circles.
It is felt that the free trade/deregulatory paradigm are detrimental to the
environmental protection and preservation. In fact some environmentalists would
argue that the idea of the ultimate economic good being material improvement
(GDP growth) which is implicit in the WTO's philosophy is fundamentally misguided
in that it neglects and fails to take into account the (negative) environmental effects
of pursuit of this economic goal (global warming).

2. Criticism of WTO practices - Criticism of WTO practices and structure focus on

the democratic or undemocratic nature of the organization. The points tend to
separate into two related arguments. First that the structure and personnel of the
WTO is undemocratic in various ways that lead to developed richer countries
winning out over less developed poorer countries. Second that while not actively
biased or undemocratic the WTO facilitates and permits powerful groups to
dominate the others (these groups being either the richer developed countries or
TNCs-transnational corporations).

Apart from this, the other main criticism of WTO practices would be that it does not
implement its philosophy evenhandedly; in particular free trade arguments are used
to open up the markets of third world countries while the developed world retains all
kind of protectionist measures. In this view the WTO has just been a method of
institutionalizing the accumulated advantage of developed countries. *

The first step is to talk; essentially, the WTO is a place where member governments
go, to try to sort out the trade problems they face with each other. At its heart are
the WTO agreements, negotiated and signed by the bulk of the worlds trading
nations.

But the WTO is not just about liberalizing trade, and in some circumstances its rules
support maintaining trade barriers for example to protect consumers, prevent the
spread of disease or protect the environment.*

The WTO describes itself as a rules-based, member-driven organization all

decisions are made by the member governments, and the rules are the outcome of
negotiations among members. The WTO Agreement foresees votes where
consensus cannot be reached, but the practice of consensus dominates the process
of decision-making.

Richard Harold Steinberg (2002) argues that although the WTO's consensus
governance model provides law-based initial bargaining, trading rounds close
through power-based bargaining favoring Europe and the U.S., and may not lead to
Pareto improvement.
The World Trade Organization (WTO) was created January 1, 1995, and it has been a
source of controversy ever since. The birth of the WTO was more of a continuation
than a truly new creation. Its predecessor, the General Agreement on Tariffs and
Trade (GATT), shared its lineage with Bretton Woods-inspired bodies like the
International Monetary Fund (IMF) and the World Bank. The idea behind these
organizations is that impartial politicians could create a more efficient global
economy than the chaotic interaction of free market forces.

In theory, members of the WTO gain access to each other's markets on even terms.
This means that no two nations can have sweetheart trade pacts without granting
the same terms to every other nation, or at least every other nation in the WTO.
However, some critics argue that in practice, the WTO has become a way to force
politics into trade causing long-term problems. One problem that many WTO critics
point to is apparent concessions the organization has made to its charters. The
most striking example is the system of tariff brokering that takes place through an
organization designed to reduce barriers to trade. The WTO rules allow a nation to
protect certain industries if the removal of tariffs would have undesirable side
effects, which include the loss of vital domestic industries. Food production is one of
the most common, but steel production, auto production and many others can be
added at the discretion of the nation. More worrisome is a push by developed
nations to have labor effects job loss, reduced hours or wages added to the list
of reasons for justified tariffs.

There is a dark side to the WTO. For years, critics protested that the WTO was a way
for nations to engage in trade, wars and raids on underdeveloped nations, and
considered it an unnecessary and expensive layer to the natural market forces of
international trade. While it's debatable whether the organization is useful
economically, the WTO is very important politically. Subsequently, governments -
with or without citizen support - will likely continue to support the organization.

In the end, the countries using the WTO to protect their own industries may only
hurt themselves if it causes their own industries to become more inefficient without
true international competition. According to economic theory, a lack of competition
takes away the incentives to invest in new technology, keep costs under control and
continually improve production because the domestic company will simply be able
to inflate prices to just under the tariff-set price of foreign goods. In the meantime,
the international competitors will only get leaner, hungrier and better at succeeding
in spite of barriers. If this cycle continues, the international competitors could
emerge as the stronger companies, and consumers may choose their products on
the basis of quality, perhaps even paying a premium over domestic goods.

Many critics of the WTO also contend that the organization has struggled with one
of the basic goals it set for itself: transparency. Even in one of its main functions -
settling disputes through negotiation - the WTO is infamously opaque when it comes
to revealing how settlements were reached. Whether settling disputes or
negotiating new trade relations, it's rarely clear which nations are in on the
decision-making processes. The WTO has been attacked from both the left and right
because of this reticence.

The left sees the WTO as the henchman of a shadowy clique of stronger nations
forcing agreements that allow them to exploit less developed nations. This clique
uses the WTO to crack open developing nations as markets to sell, while protecting
their own markets against weaker nations' products. This view has its points, as the
most economically powerful nations seem to set the WTO agenda and were the first
to pass anti-dumping acts to protect favored domestic industries while also
opposing similar actions by less powerful nations. Now we would like to add some
critical opinion about WTO.

The policies of the WTO impact all aspects of society and the planet, but it is not a
democratic, transparent institution. The WTO rules are written by and for
corporations with inside access to the negotiations. For example, the US Trade
Representative gets heavy input for negotiations from 17 Industry Sector Advisory
Committees. Citizen input by consumer, environmental, human rights and labor
organizations is consistently ignored. Even simple requests for information are
denied, and the proceedings are held in secret. The WTO is fundamentally
undemocratic.

The WTO would like you to believe that creating a world of free trade will promote
global understanding and peace. On the contrary, the domination of international
trade by rich countries for the benefit of their individual interests fuels anger and
resentment that make us less safe. To build real global security, we need
international agreements that respect peoples rights to democracy and trade
systems that promote global justice. The WTO will not make us safer.

WTO rules put the rights of corporations to profit over human and labor rights.
The WTO encourages a race to the bottom in wages by pitting workers against
each other rather than promoting internationally recognized labor standards. The
WTO has ruled that it is illegal for a government to ban a product based on the way
it is produced, such as with child labor. It has also ruled that governments cannot
take into account noncommercial values such as human rights, or the behavior of
companies that do business with vicious dictatorships such as Burma when making
purchasing decisions. The WTO tramples labor and human rights.

The WTO is being used by corporations to dismantle hard-won local and national
environmental protections, which are attacked as barriers to trade. The very first
WTO panel ruled that a provision of the US Clean Air Act, requiring both domestic
and foreign producers alike to produce cleaner gasoline, was illegal. The WTO
declared illegal a provision of the Endangered Species Act that requires shrimp sold
in the US to be caught with an inexpensive device allowing endangered sea turtles
to escape. The WTO is attempting to deregulate industries including logging,
fishing, water utilities, and energy distribution, which will lead to further exploitation
of these natural resources. The WTO is destroying the environment.

The WTOs fierce defense of Trade Related Intellectual Property rights (TRIPs)
patents, copyrights and trademarkscomes at the expense of health and human
lives. The WTO has protected for pharmaceutical companies right to profit against
governments seeking to protect their peoples health by providing lifesaving
medicines in countries in areas like sub-Saharan Africa, where thousands die every
day from HIV/AIDS. Developing countries won an important victory in 2001 when
they affirmed the right to produce generic drugs (or import them if they lacked
production capacity), so that they could provide essential lifesaving medicines to
their populations less expensively. Unfortunately, in September 2003, many new
conditions were agreed to that will make it more difficult for countries to produce
those drugs. Once again, the WTO demonstrates that it favors corporate profit over
saving human lives. The WTO is killing People.

Free trade is not working for the majority of the world. During the most recent
period of rapid growth in global trade and investment (1960 to 1998) inequality
worsened both internationally and within countries. The UN Development Program
reports that the richest 20 percent of the worlds population consume 86 percent of
the worlds resources while the poorest 80 percent consume just 14 percent. WTO
rules have hastened these trends by opening up countries to foreign investment
and thereby making it easier for production to go where the labor is cheapest and
most easily exploited and environmental costs are low. The WTO is increasing
inequality.

Farmers produce enough food in the world to feed everyone yet because of
corporate control of food distribution, as many as 800 million people worldwide
suffer from chronic malnutrition. According to the Universal Declaration of Human
Rights, food is a human right. In developing countries, as many as four out of every
five people make their living from the land. But the leading principle in the WTOs
Agreement on Agriculture is that market forces should control agricultural policies-
rather than a national commitment to guarantee food security and maintain decent
family farmer incomes. WTO policies have allowed dumping of heavily subsidized
industrially produced food into poor countries, undermining local production and
increasing hunger. The WTO is increasing hunger.

The given opinions are the top reasons to oppose the WTO.*

Participants in a recent radio discussion on the WTO were full of ideas. One of them
finally interjected: The WTO is a table. People sit round the table and negotiate. The
system operated by the WTO. Most nations including almost all the main trading
nations are members of the system. But some are not, so multilateral is used to
describe the system instead of global or world. In WTO affairs, multilateral
also contrasts with actions taken regionally or by other smaller groups of countries.*

The WTO agreements are lengthy and complex because they are legal texts
covering a wide range of activities. But a number of simple, fundamental principles
run throughout all of these documents. These principles are the foundation of the
multilateral trading system.

Conclusion:

The World Trade Organization (WTO) deals with the global rules of trade between
nations. Its main function is to ensure that trade flows as smoothly, predictably and
freely as possible.

Open trade makes it possible for consumers to enjoy goods that are produced or
manufactured in countries other than their own, giving them a wider, better and,
often, less expensive choice. Open trade also benefits producers, as it provides
them with wider market opportunities to sell their products.

opinion on the cons of WTO and suggestions to improve it