World Trade Organization: Facilitating Global Trade Amidst Challenges Essay

The World Trade Organization (WTO) is an entity that is focused on harmonizing free trade across the world. The organization’s main agenda is to address the misgivings of the international trade where some countries have continuously dominated at the expense of others. The WTO is a product of another pioneering organization that was known as the General Agreement on Tariffs and Trade (GATT). WTO became a fully-fledged organization in 1995 after months of negotiations that culminated in the now famous “Uruguay Round of Talks”¹.

The main difference between WTO and its successor GATT is that the former has a more global outlook and its main aim is to influence and not to regulate. During its formation, the WTO was meant to bring down the various trade barriers that dominated international trading especially the disparities between the developing and developed nations. Since its inception, observers have questioned the success that the WTO has had in facilitating free trade across the world.

Skeptics have pointed out that some influential players in the international trade have been using the organization to further their own (sometimes selfish) agendas. This paper focuses on the WTO and its performance record in regards to facilitating international trade.

The essay will highlight the initial goals of the organization as well as areas where it has had a positive impact. Furthermore, the paper will outline both past and future challenges in regards to the institutional goals of the WTO. The WTO has influence in almost all areas of modern economies including commodity markets, movement of agricultural products, trade in intellectual property, and monetary markets among others. Overall, this essay will focus on the institution of WTO from all angles with respect to the current conditions of the global trading environments.

This table is an example of vital data that is compiled by the WTO on a provisional basis. Source Journal of Economic History².

The institution of the WTO is subject to various internal and external influences. The WTO has only been in existence for slightly over two decades and this makes the organization relatively young. The creation of the organization was subject to three key areas of influence. The first area involved turning the previous GATT into an organization that can facilitate formal talks in relation to global trade. The other main interest in the formulation of the WTO was to ensure that the body could oversee expansions of the global trade through various interceptions such as “implementation of commitments, provision of training, technical assistance, and dissemination of information based on research activities”³.

The WTO was also formulated with the view of turning it into a platform through which countries and other trading entities could resolve their disputes. Incidentally, this creation purpose is the subject of divided opinions in regards to WTO. For instance, some feel that WTO is not a just dispute-resolution mechanism because it often favors the interests of big corporations. From the outset, it is clear that the complexities of global trade in the 21^st century have been too complex for the original institution of the WTO. Consequently, there is need to update the organization in order to make it relevant to the modern international trade environment.

Nevertheless, the organization has managed to stamp its authority in various international trade disputes in the course of its twenty years of existence. Furthermore, the organization has continued to gain more relevance as a tool for disseminating vital global trade statistics. Currently, the most important aspect of existence for WTO is to ensure that there is a balance between its rule making and rule enforcing agendas.

Most global organizations are formulated on distinct principles that are aimed at propagating important agendas. The WTO is based on certain important principles that are set to benefit the entire international trade fraternity. The main principle behind the formulation of the organization is a strict non-discrimination policy in regards to international trading. There are various unfair practices that dominated the international trade from the 1950s to the 1980s⁴.

The WTO sought to eliminate the discriminatory policies that were mainly propagated by the developed countries at the expense of poor developing and resource-rich nations. Within the policy of non-discrimination, countries are expected to treat all traders in the same manner whether they are locally or nationally affiliated. Since the WTO was formed in 1995, it has had a notable level of success in some areas of its operations⁵. The organization has remained true to its purpose of ensuring free trade. This section of the essay highlights areas where the WTO has made positive contributions. First, the WTO has not only enhanced the value and quantity of trade but has also helped in eradicating trade and non – trade barriers.

Prior to the formation of the WTO, countries would form trade barriers just to protect their interests. In other scenarios, countries would form trade barriers that were aligned to political affiliations. The WTO has been instrumental in bringing down unfounded trade barriers. Furthermore, countries are reluctant to institute malicious trade barriers in anticipation of showdowns with the trade organization. The organization has also succeeded in widening the scope of its operations from commodity-based trade to trade in services, intellectual property, and financial services.

Initially, the WTO was meant to be a more significant version of its predecessor GATT. A closer analysis of the organization indicates that it has been successful in furthering GATT’s overall agendas. For instance, the trade organization has introduced the annual World Trade Report and the Trade Policy Review, both of which have had a significant impact on international trade practices⁶. Another area of success for WTO is that the organization has been at the forefront when it comes to sustainable global trade. Without the organization’s dispute resolution mechanism, some disagreements would slow down the rates of global trade considerably.

The WTO has also failed to deliver on some of its outlined agendas. For instance, the organization has been observed to have no regards for environmental and labor laws when it is formulating its policies. Furthermore, the organization has been advancing the capitalist agenda without making necessary considerations on this issue⁷. For example, the privatization of vital services such as health education is not always beneficial to the masses. Another area where the WTO has failed in great proportions is in adjudicating trade disputes that involve intellectual property. On one side, the WTO encourages developed countries to withhold technology from poor countries. On the other hand, the organization is unable to curb instances where developed countries ‘steal/hijack’ any unique intellectual property from poor countries⁸.

Table 2. Imports by country, 2006-2011. (US$ million and per cent).

Source: WTO Secretariat calculations, based on data from the Comtrade database, United Nations Statistics Division (UNSD) (Standard International Trade Classification, SITC, Rev. 3)⁹.

Moving forward, the WTO is set to encounter various challenges as it seeks to make its presence felt in the international trade arena. First, the organization will continue to operate in an environment where power politics can derail any sound agendas. It is important to note that even though most organizations and countries expect WTO to oversee fair trade, they also expect to be favored by this organization. Furthermore, the WTO operates in a different reality than the one under which its ideologies are formulated.

Another future challenge for the WTO is that the organization has to navigate through an environment of inequality that has been created by national and regional legislations. For example, human rights and environmental laws continue to interfere with WTO’s agenda of harmonizing international trade. There is a chance that some stakeholders of the WTO have realized that it is possible to use these laws to undermine the spirit of free trade.

The decision-making abilities of the WTO are subject to various stakeholders and regions. Consequently, the organization has to contend with a slow decision making process. In future, the trade organization should consider changing some of its structures with the view of quickening its decision-making structures. Agriculture and textile industries are some of the areas that are subject to unfair international trade¹⁰. The WTO should find a way of harnessing these areas of operations.

The WTO is not a new type of organization in respect to global trade but its agendas are new. The organization came in with the promise of fair trade but this vision is yet to be realized across the international trade horizons. Nevertheless, the organization has had considerable success in some areas while others have lagged behind. On a closer analysis, the interface between the international stakeholders and the WTO has lacked the symbiosis that was initially meant to drive the memo of free trade.

Reference List

Barfield, Claude. “Free Trade, Sovereignty, Democracy: Future of the World Trade Organization.” Chinese International 2, no.1 (2011): 403-413.

Correa, Carlos. Intellectual Property Rights, the WTO and Developing Countries: the TRIPS Agreement and Policy Options. Boston: Zed books, 2000.

Dunlevy, James and William Hutchinson. “The Impact of Immigration on American Import Trade in he Late Nineteenth And Early Twentieth Centuries.” The Journal of Economic History 59, no. 4 (2009): 1043-1062.

Lecturer’s Last Name, First Name. “Political Economic Notes.” Lectures, 2015.

Oatley, Thomas. International Political Economy. New York: Routledge, 2015.

Piermartini, Roberta. The Role of Export Taxes in the Field of Primary Commodities. Cambridge: Cambridge University Press WTO Discussion Paper, 2004.

Subramanian, Arvind and Shang-Jin Wei. “The WTO Promotes Trade, Strongly but Unevenly.” Journal of International Economics 72, no. 1 (2007): 151-175.

WTO. “World Trade Report.” World Trade Organization. 2015. Web.

World Trade Organization. The Legal Texts: The Results Of The Uruguay Round Of Multilateral Trade Negotiations. Cambridge: Cambridge University Press, 2009.

Footnotes

1. Arvind Subramanian and Shang-Jin Wei, “The WTO Promotes Trade, Strongly but Unevenly,” Journal of International Economics 72, no. 1 (2007): 153.
2. James Dunlevy and William Hutchinson, “The Impact of Immigration on American Import Trade In the Late Nineteenth and Early Twentieth Centuries,” The Journal of Economic History 59, no. 4 (2009): 1049.
3. Lecturer’s First Name Last Name, “Political Economic Notes” (Lectures, 2015).
4. Lecturer’s First Name Last Name, “Political Economic Notes” (Lectures, 2015).
5. Roberta Piermartini, The Role of Export Taxes in the Field of Primary Commodities (Cambridge: Cambridge University Press WTO Discussion Paper, 2004), 3.
6. Carlos Correa, Intellectual Property Rights, the WTO and Developing Countries: the TRIPS Agreement and Policy Options (Boston: Zed books, 2000), 19.
7. Thomas Oatley, International Political Economy (New York: Routledge, 2015), 84.
8. Claude Barfield, “Free Trade, Sovereignty, Democracy: Future of the World Trade Organization,” Chinese International 2, no.1 (2011): 404.
9. WTO, “World Trade Report,” World Trade Organization. Web.
10. World Trade Organization, The Legal Texts: The Results Of The Uruguay Round Of Multilateral Trade Negotiations (Cambridge: Cambridge University Press, 2009), 39.