Misconceptions of the WTO
Several misconceptions exist about the World Trade Organization (WTO). Most of these misconceptions exist because many persons do not fully understand how the WTO operates. In this issue of Eye on The World, we look at ten of these misconceptions, in an effort to explain why these are not true.
1. It dictates to governments - It is a commonly held view that as the governing body of trade, the WTO dictates to governments around the world about how they carry out trade activities. This is not so. In fact it is the other way around. It is the governments of member countries who determine the guidelines that govern trading between nations.For further reading click here
2. It is only concerned about free trade - Some individuals or groups put forward the view that the WTO is only about implementing free trade, regardless of the costs. While the WTO seeks to lower or remove trade barriers, it only does so with the endorsement of member governments who set the guidelines. Member governments bargain with each other on the terms of trade. The WTO’s role in this is to provide the forum for the negotiations. For further reading, click here
3. Ignores economic development - It might appear that the WTO is only concerned about trade and that it ignores economic development. This is not so. The WTO has provisions, which seek to facilitate development, for example, developing countries are given more leeway in respect to WTO agreements and least developing countries receive special treatments such as exemption from certain provisions. For further reading, click here
4. Does not care about the environment - The view is often expressed that the WTO does not care about the environment. A range of WTO’s provisions address specifically issues, for example, subsidies are allowed if they will benefit the environment. The WTO has often been the arbitrator in the settlement of environmental disputes. The WTO however seeks to ensure that measures taken to protect the environment must be fair and not discriminating. For further reading, click here
5. It ignores health and safety - A less popular but still incorrect view is that the WTO seeks to block health and safety regulations in the name of free trade. Not so! Agreements pertaining to food safety agreements reflect concerns of member governments who create them. For further reading, click here
6. The WTO destroys jobs, widens the gap between rich and poor - While job losses may be seen to accompany trade liberalization, it is not really accurate to say this is directly caused by the WTO. In fact, the WTO is actually geared towards increasing trade by breaking down trade barriers between countries. Research has shown that trade liberalization since World War 2 has contributed to lifting an estimated 3 billion out of poverty. However, since the advent of the WTO, producers and their workers in some countries who were previously protected, now face new competition when trade barriers are lowered. This can result in displacement of workers. How well countries adjust will depend on the effectiveness of each countries strategies and policies for adjustment. The reality is that, for a number of reasons, which are not necessarily linked to the WTO, some countries are better able to adjust than others. For further reading, click here
7 . Small countries are powerless in the WTO - The opposite is actually true! Small countries would be weaker without the WTO. The WTO increases their bargaining power, because in the WTO trading system all countries have to follow the same rules. A number of developing countries have successfully used the WTO’s dispute settlement procedure to challenge actions taken by developed countries. Without the WTO, these smaller countries would have had great difficulty acting against their more powerful trading partners. For further reading, click here
8. The WTO is the tool of powerful lobbies - When persons make this accusation, they imply that vested non-governmental or private sector interests can force their governments to make decisions, which would suit a particular sector of the economy. However, governments, not NGOs or private sector interests, are the ones who participate in WTO negotiations. Leaders can therefore find it easier to reject pressure from lobby groups by arguing that they had to make certain decisions in the interest of the country as a whole. For further reading, click here
9. Weaker countries are forced to join - In reality, most countries feel that it is better to be in the WTO system than outside it. That is really why the list of countries negotiating membership includes both large and small nations. By joining the WTO, even a small country automatically enjoys the benefits that all WTO members grant to each other. They can also increase their bargaining power by joining with other countries that have common interests. For further reading, click here
10. It is undemocratic - While it is true that not every country has the same bargaining power, there is a rule within the WTO that decisions must be by consensus. Consensus means that every country accepts the decisions and there are no dissenters. Often, reluctant countries are persuaded to join by being offered something in return. For further reading, click here
These opinions are those of the WTO themselves, and I do not share all of them. In the next issue I will attempt to put these in the context of Jamaica, CARICOM, and small developing countries. This will allow us some opportunity for sharing analysis, and further discussion.
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