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The World Trade Organization (WTO) Essay


Introduction

The World Trade Organization (WTO) is an international organization whose main responsibility is to facilitate smooth trade between. The organization was established in 1995 and has greatly evolved over the years to replace the General Agreement on Tariffs and Trade (GATT). Studies indicate that WTO was formed to address the many shortcomings of GATT and as a result, it deals with more than GATT (WTO 1999, p. 3). The various agreements administered by WTO cover goods, services, and intellectual property.

This paper presents an evaluation of how WTO has been successful or has failed to achieve its objectives in Jordan. To a very large extent, those affected by the shortcomings of WTO rules are the poor people who reside in the less developed nations.

Discussion and Analysis

From its inception, WTO has had numerous effects on the lives of people in different places across the globe. Some of these are discussed in the following categories.

Economic Insecurity

Although job creation is not one of WTO’s mandates, it has put in place strict rules that limit any government’s ability to create new jobs for its citizens (Cedro & Bruno 2010, p. 4). The organization’s Trade Related Investment Measures (TRIMS), for example, restricts governments from requiring a transnational corporation to deal with the challenges of job creation. According to Bown (2005, p. 301), the task of job creation is left to governments.

To a large extent, the rules established by WTO tend to favor foreign investors and not domestic corporations. Therefore, despite the fact that transnational corporations create jobs, they are never regarded as a major source of employment (Monbiot G 2004, p. 45). Research indicates while businesses in Jordanian stand to gain in the long run, small businesses may be faced with stiff competition from imports by multinationals corporations. Given a choice, consumers would rather go for the lowly priced imported commodities.

Political Security

In the present world where globalization has taken center stage, many governments appear powerless and people often feel that they lack control over their economic or social future (Stiglitz 2002, p. 10). Underlying this concern are the strict rules of WTO.

The rules that control the global economy are made by WTO and compel governments to ensure that foreign investors are fully protected (Edwards M 2004, p.35). In addition, WTO’s approach to dispute handling provides strong support and great power to enforce trade rules. There is, therefore, a need to replace WTO rules in order to establish conditions that promote peace and security.

Social Security

The General Agreement on Trade in Services (GATS) of WTO affects supply and delivery of services and allows transnational corporations to smoothly carry out their business operations across borders. Among other things, this allows them to have access to a much wider market (Rawls 1971, p. 25).

To some extent, GATS rules place restrictions regarding what governments are allowed to do as they seek to restrict operators in the private sector. In order to promote social security, it is imperative to have rules that take into account the needs of every individual or nation (Brown & Robert 2008, p. 342). This clearly indicates that WTO rules have to be revised or replaced altogether.

Ecological Insecurity

The rules of WTO have nothing to do with environmental protection. These rules, however, require environmental protection to be undertaken without discriminating against foreign investors (Scholte & Schnabel 2002, p. 6). Unfortunately, WTO has often upheld business rights over environmental rights.

This leaves people with so many questions and concerns about the future of the planet. WTO rules for example, have failed to support Multilateral Agreements on the Environment in order to safeguard the environment. Sadly, many of these corporations have bent rules to accomplish their ambitious goals and this all because of the weakness of WTO rules.

Peace Insecurity

WTO has been accused of encouraging militarism. According to the organization, governments have an important responsibility to ensure the security of the nation and its citizens (Dervis 2005, p. 2). They are required to provide military infrastructure and a strong police force to maintain peace. Governments are thus allowed under the WTO rules to use whatever means is possible to guarantee the safety of citizens. Seemingly, this is one area where WTO has offered strong support for all nations.

Food Security

Over the years, many concerns about food security have been raised. Scores of people are exposed to hunger while resistance to genetically modified foods keeps growing especially among the developing countries (Sen 2009, p. 8). Powerful agricultural corporations have been using their muscles to negotiate strategies that do not favor the growth of domestic agribusiness (Soros 2002, p. 5).

Despite the fact that countries have a duty to protect citizens by ensuring food security is maintained, multinational producers and exporters of agricultural products are making use of WTO to undermine the success of efforts made toward the realization of this important national duty.

According to Joffé (2002, p. 302), a WTO member is expected to grant non discriminatory Most-Favored-Nation (MFN) and National Treatment to products imported from another WTO member country. Presently, Jordan has no control over how other countries treat its exports and other countries may impose import duties, quotas, and internal taxes on Jordanian exports thereby making Jordanian goods and services non-competitive in international markets.

Jordan’s accession to WTO would provide an effective tool for Jordan to secure advantages and fair treatment for its exports in at least 90 percent of world markets. However, Jordan must not ignore o minimize the fact that it needs to improve the quality of its products and services to the levels of other member countries, if it is to compete effectively in the international markets. Jordanian industries will probably encounter some short-term difficulties in adapting to the new WTO system of trade because of deficiencies in these areas.

While there is great potential for the expansion of Jordan’s fiscal revenues, the negative impact of tariff reduction and ultimately, the removal of most restrictions on trade, might offset the projected increase in fiscal revenues. Thus, while accession to WTO might create a great potential for the expansion of economic activity in the country, the continuing perception of instability may provide a difficult environment for small-sized domestic firms without the implementation of government policies stimulating expansion.

Human Insecurity

WTO has also been blamed for increased human insecurity. Apparently, transnational corporations are able to take advantage of the shortcomings of WTO rules to misuse workers (Scholte 1998, p. 31). Through WTO, several corporations have made attempts to interfere with citizen’s attempts to see an end to human insecurities.

As an example, the US State of Massachusetts put in place a law to limit trade in Burma, which had been accused of labor and human rights violation. Some countries, however, attempted to get rid of this law. In the end, the law had to be struck out in response to a legal challenge so as to maintain the commitment of the United States to WTO (Simmons & Jonge 2001, p. 16).

Opposition to WTO

According to Hoekman and Caglar (2006, p. 37), WTO has been opposed by many for a number of reasons, some of which are briefly discussed here. First, WTO is regarded as being quite undemocratic and representing the interests of a few powerful corporations with strong bargaining power. By and large, poor nations are ignored during the decision making process. Despite being required to represent the rich and the poor equally, the rules of WTO have been written by and for corporations with vested interests (Hudock 1999, p. 21).

WTO also promotes privatization of critical services making them inaccessible to many poor people (Hoekman & Petros 2000, p. 536). Although privatization supports economic growth, it also subjects the poor population to a high cost of living considering that the cost of goods and services becomes unaffordable.

Ostensibly, WTO rules also create an imbalance among nations. While farmers are able to produce enough food to cater for everyone in the world, the problem arises when corporate organizations assume the responsibility of controlling the distribution process (Khor 2002, p. 14). Increased inequality, poverty, and hunger are thus witnessed among individuals in developing nations. Joffé (2002, p. 306) is, however, of the opinion that Jordan’s accession to WTO would be adequate for it to achieve meaningful stimulation for its economy.

Accusing fingers have also been directed toward WTO for the continued destruction of the environment. The organization is in notice for declaring as illegal, various laws meant to protect the environment (Robert 1999, p. 56). Examples are the US Clean Air Act and the Endangered Species Act. A move by WTO to do away with regulations against logging, energy distribution, and fishing among others only serves to further degrade the environment.

Conclusion

From the discussion presented in this paper, it is clear that WTO is responsible for more harm than good. Although it was established to cater for the needs of all individuals and countries impartially, the organization unfortunately only serves the interests of influential business corporations which apparently control how decisions are made. This notwithstanding, proponents are convinced that membership to WTO comes with so much to offer, leading to greater development for the country.

Rather than protecting the powerless, WTO rules have created an environment where greedy owners of business corporations bend or even overturn legislations to favor them. By exploiting the weaknesses of WTO rules, corporations have managed to grow their wealth while subjecting many other innocent people to pathetic life conditions.

As has been proposed severally, there is need to replace WTO rules with rules that do not lead to the unfair treatment of some countries. Developing countries are especially at risk and need to be shielded from the greedy activities of multinational corporations that only care about growing their businesses rather than ensuring that the world is a great place for all to live and work.

Reference List

Bown, CP 2005, ‘Participation in WTO Dispute Settlement: Complainants, Interested Parties, and Free Riders’, The World Bank Economic Review, Vol. 19 (2): 301.

Brown, A & Robert, MS 2008, ‘What are the issues in using trade agreements to improve international labor standards?’ World Trade Review, 7 (2): 331 – 357.

Cedro, RR & Bruno, FV 2010, ‘John Rawls’ Justice as Fairness and the WTO: A Critical Analysis on the Initial Position of the Multilateral Agricultural Negotiation,’ The Law and Development Review, 3:2, 5.

Dervis, K 2005, A Better Globalization: Legitimacy, Reform, and Governance, Brookings Institution, Washington, DC.

Edwards, M 2004, Future Positive. International Co-operation in the 21st Century, Earthscan Publications, London.

Hoekman, B & Petros, M 2000, ‘WTO Dispute Settlement, Transparency and Surveillance,’ The World Economy, 23 (4): 527 – 542.

Hoekman, B & Caglar, O 2006, Trade Preferences and Differential Treatment of Developing Countries, Edward Elgar Publishing, Cheltenham.

Hudock, A 1999, NGOs and Civil Society: Democracy by Proxy?, Polity Press, Cambridge.

Joffé, EGH 2002, Jordan in Transition, C. Hurst & Co. Publishers, London.

Khor, M 2002, ‘The WTO, the Post-Doha Agenda and the Future of the Trade System: A Development Perspective’ Third World Network, Geneva.

Monbiot, G 2004, The Age of Consent. A Manifesto for a New World Order, Flamingo, London.

Rawls, J 1971, The Theory of Justice, Harvard University Press, Cambridge.

Robert, D 1999, Can International Organizations Be Democratic: A Skeptic’s View, Cambridge University Press, Cambridge, UK.

Scholte, JA 1998, The WTO and Civil Society, Centre for the Study of Globalisation and Regionalisation, Coventry, UK.

Scholte, J & Schnabel, A 2002, Civil Society and Global Finance, Routledge, London.

Sen, A 2009, The Idea of Justice, Harvard University Press, Cambridge, UK.

Simmons, PJ & Jonge, C 2001, Managing Global Issues: Lessons Learned, Carnegie Endowment for International Peace, Washington, DC.

Soros, G 2002, On Globalisation, Public Affairs, Cambridge, USA.

Stiglitz, J 2002, Globalisation and its Discontents, Penguin Books, London.

World Trade Organization (WTO), 1999, The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations, Cambrdieg University Press, Cambridge, UK.

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