Critiquing WTO’s Treatment of Developing Countries Essay

Introduction

In global trading interactions, some countries may create policies that impair others from trading competitively in the market. Without creating rules and checks in the form of trading pacts, this situation introduces an imbalance in the development of different nations. A similar situation also emerged following the creation of the North American Free Trade Agreement (NAFTA). In fact, according to Matsushita et al., NAFTA’s trade discrimination benefited Britain more compared to other nations.¹ In the move to eliminate the possibility of a nation benefiting from discriminatory practices in the global trade, the World Trade Organization (WTO) plays a pivotal role in this case. Nevertheless, the organization also faces various criticisms from global communities concerning its seeming unjust treatment of developing countries, a situation that makes it wise to reflect on the validity of these claims.

Global Community’s Criticisms about the WTO’s Treatment of Developing Countries

The WTO’s key agenda is to ensure that all member countries, including emerging economies, especially those in sub-Saharan Africa, participate equally in the global trade without any form of discrimination. In his book, “International Political Economy”, Oatley reveals the struggles that political stakeholders have to go through in their fight to win from the international economic deals.² However, according to Matsushita et al., members of the global community criticize this focus by claiming that its implementation favors developed nations.³ For example, as Timmermann and Henk reveal, amid the WTO’s increased focus on market liberalization, the EU⁴ and the U.S. has resorted to policy frameworks that seek to protect their local industries from the influx of foreign-produced products and services.⁵ In response, some member states have resorted to creating free trading areas that increase their capacity to penetrate new markets, especially within the Asia-Pacific region. According to the lecture notes by Seay⁶, Britain is a major beneficiary of free trade.⁷

The WTO has made significant efforts to establish a multilateral system of trade. However, this move has attracted anti-WTO protests among players in the global community. Timmermann and Henk assert that such players interpret a national regulation that seeks to implement policy frameworks for protecting local industries as a barrier to the WTO’s facilitation of free trade.⁸ This state of affairs introduces difficulties in the WTO’s efforts of protecting the intellectual property. For example, according to Timmermann and Henk, while developed nations can manufacture HIV/AIDS medicines at a patented cost, the WTO member nations in sub-Saharan Africa and South America are poor to the extent that they cannot purchase them at the set prices (49). Hence, if they must buy the medicines or manufacture them, they can only do so under the more affordable generic label. However, Timmermann and Henk assert that such a move would violate the WTO’s intellectual property rights pacts (TRIPS).⁹ This situation subjects developing nations to potential trading sanctions. Consequently, the WTO is criticized following its inability to ensure that emerging economies integrate some technologies, especially in medicine and agriculture, into their local systems. Arguably, this option can only work without the TRIPS pacts.

The WTO comes under heavy criticism in terms of its methods and actions for enhancing free trade. For example, Matsushita et al. assert that the organization widens the gaps between developing poor nations and rich developed countries.¹⁰ This way, according to the lecture notes by Seay, it opposes its primary role of fixing disparities in the trading capacity of different nations.¹¹ In fact, Matsushita et al. posit that discrimination in global trade causes market distortions that result in a loss of about 700 billion USD of export revenues in developing nations.¹² This situation compromises its export-oriented strategy of economic growth.

Matsushita et al. exemplify this bias by claiming that some rich nations “maintain high import duties and quotas in certain products, blocking imports from developing countries like clothing.”¹³ The WTO also faces the criticism of supporting protectionist policies.¹⁴ For example, according to Timmermann and Henk, developed nations adopted policies that aimed to protect their agricultural sectors, yet the WTO did not adopt appropriate strategies for ensuring they do not lock their markets from developing economies.¹⁵ Indeed, poor countries remain under pressure to open their markets as a strategy for ensuring the free flow of global trade. One would expect such deprived countries to launch complaints during ministerial conferences in search of fairness. However, many of them do not participate actively in negotiations such as the Doha and Uruguay Rounds.

Parties to an international system feel treated justly if they have equal say and engagement in the decision-making process with others. However, Matsushita et al. assert that the WTO’s discussions are unrepresentative and/or non-inclusive of all parties to the world trade system.¹⁶ According to the lecture notes by Seay, this situation prejudices the consensus-building approach to the international system decision-making process.¹⁷ Such non-inclusion makes sense upon considering delegating the decision-making power to not only a small but also an informal steering committee, namely, the consultative board. The fact that the consultative board develops harmony on behalf of the member countries makes the WTO a non-transparent global organization due to the minimal say of a majority of developing nations in the WTO system, yet decisions made bind them. This case presents the WTO as a body that regards developing nations as inferior in making decisions that should equally bind their developed counterparts, hence reinforcing the criticism that the organization favors the industrialized nations. Indeed, more emphasis on the need to remain faithful to the general principles set out in law can pave the way for a friendlier and efficient dispute settlement mechanism where all parties feel equally involved.

The validity of the Complaints

Timmermann and Henk argue that the WTO serves the purpose of providing a platform for intergovernmental negotiations in matters concerning international trade.¹⁸ It also helps in the elimination of hindrances to global commerce and ensuring the existence and protection of rules for conducting international trade. This way, different nations can take advantage of their comparative advantage to produce goods and services to gain optimally from international markets as a mechanism for fostering domestic, social, and economic development. Indeed, according to Ismail, the 2001 ministerial conference held in Doha advocated for the need for incorporating agriculture as a key component for the Doha development agenda. It could enhance the capacity to lower the cost of living of the public in the WTO member states. However, Britain emerged as a major beneficiary of the agreements. Hence, the claim that the WTO has not successfully eliminated all forms of bias in favor of developed nations in comparison to the developing nations is valid.

The WTO operates under the premise of developing fair trading agreements among nations. This rationale emerged after the Second World War through the General Agreement on Tariffs and Trade (GATT). According to Matsushita et al., the entity (created in 1947) had an objective of negotiating and bargaining for reducing various tariffs that prevented some nations from engaging proactively in the global trade. In fact, according to Oatley, such tariffs had been increased following threats by the EU and Japan, a situation that they pursued via engaging with the WTO to endorse the movement that sought to disadvantage America’s exports.

The purpose and function of the GATT emerged from the challenges experienced in the clause of the Most Favored Nations (MFN). The clause gave some nations specific trading rights while denying others an opportunity to participate equally in international trade. The GATT was to eliminate this selective discrimination. Nevertheless, the global community criticizes the WTO for its failure to eliminate all forms of trading discrimination, especially those that disadvantage developing countries. The reported inaccessibility and restrictions witnessed when it comes to integrating technologies from the developed world, especially in medicine and agriculture, into emerging economies’ local systems validate this criticism.

Conclusion

The WTO has a consultative committee with derogatory powers to enhance consensus building, a situation that raises an important question concerning the need for equal representation and participation of developing nations in its decision-making processes. Additionally, while the WTO focuses on enhancing free trade and reducing or eliminating protectionism, developed countries such as the UK and the U.S. adopted policies that aimed at protecting their industries from competition, especially in agriculture. Nevertheless, such nations continue to trade in the international system overseen by the WTO. While fully cognizant of this reality, the WTO continues to call upon developing nations to open up their markets to global traders, including those with protectionist policies. These concerns validate criticisms raised concerning the WTO by various global communities, including non-governmental organizations such as the World Federalist Movement.

Works Cited

Matsushita, Mitsuo, et al. The World Trade Organization: Law, Practice, and Policy. 3rd ed., Oxford University Press, 2015.

Oatley, Thomas. International Political Economy. 5th ed., Pearson/Longman, 2012.

Timmermann, Cristian, and Henk van den Belt. “Intellectual Property and Global Health: From Corporate Social Responsibility to the Access to Knowledge Movement.” Liverpool Law Review, vol. 34, no. 1, 2013, pp. 47-73.

W. Seay. “The Origins of Political Economy.” Econ 101, 28 Nov. 2017, Virginia Commonwealth University, Richmond. Lecture.

Ismail, Faizel. “Is the Doha Round Dead? What is the Way Forward? World Economics, vol. 13, no. 3, 2012, pp. 143-169.

Footnotes

1. Mitsuo Matsushita, et al., The World Trade Organization: Law, Practice, and Policy (Oxford University Press, 2015) 63.
2. Thomas Oatley, International Political Economy, 5th ed. (Pearson/Longman, 2012) 121.
3. Matsushita et al. 56.
4. adopted the name the EU in 1988. Initially, it was called the European Economic Community EC)
5. Cristian Timmermann, and Henk van den Belt, “Intellectual Property and Global Health: From Corporate Social Responsibility to the Access to Knowledge Movement,” Liverpool Law Review, vol. 34, no. 1, 2013, p. 48.
6. W. Seay, “The Origins of Political Economy.” Britain’s economy grew following its successful business of aircraft building Timmermann and van den Belt, 49.
7. Ibid.
8. Matsushita et al. 57.
9. W. Seay, “The Origins of Political Economy.”
10. Matsushita et al. 73.
11. Ibid, 75.
12. To get a detailed view of protectionist policies, visit the lecture notes by Seay Timmermann and van den Belt, 51.
13. Matsushita et al. 97.
14. W. Seay, “The Origins of Political Economy.”
15. Timmermann and van den Belt, 51.
16. Faizel Ismail, “Is the Doha Round Dead? What is the Way Forward? World Economics, vol. 13, no. 3, 2012, p. 144.
17. Matsushita et al. 63.
18. Oatley, 122.