World trade Organization - Essay Example

? World trade Organization Introduction The world trade organization (W.T.O) is an international organization,which deals with rules and issues of trade between nations. Since its formation, the world trade organization has initiated trade agreements. These agreements entail negotiations with the world’s trading nations, which pass agreements in parliaments. The organization has the primary goal of necessitating business between producers, exporters, and importers of services and goods. This paper seeks to describe a number of aspects concerning the WTO. The paper will discuss the development of the W.T.O, when it developed, and interests, which supported its development. The paper will also focus on how the organization related to changes in the transnational flows of production and investment. In addition, the paper will address this organization developed as part of the broader network of transnational institution. The paper will also focus on the impact of world trade organization’s transnational regulation on equality and democracy within domestic states. The development of the world trade organization The world trade organization came into being in 1995. After the Second World War, organizations to deal with trade, such as General Agreement on Tariffs and trade were formed. The last talks of the General Agreement on Trade and Tariffs gave birth to the world trade organization. The WTO carried on with the negotiations initiated by the GATT. The world trade organization developed to end trade discrimination and enhance multilateral trade among nations. Thus, the General Agreement on Trade and Tariffs contributed to the formation of the World trade organization (Aturupane 2000, p. 350). The initiation of WTO in 1995 can be regarded as a significant development in international trade. The organization developed with the need to revive multilateral trade regime. The previous trade regime had to do with treaties on the regulation of tariffs (Janow et al 2008, p. 47). The GATT came into existence in 1948, years after the end of the Second World War. Its objective entailed the reduction of tariffs in order to enhance international trade. However, the nature of international trade changed over time. Global trade became more complex than before. As a result, nations realized that GAAT did not have the appropriate answers to the complex nature of global trade. This saw the formation of the WTO following a series of negotiations referred to as Uruguay Round (UR). Interests which supported the development of WTO. Aturupane (2000, p. 351) observes that a number of interests supported the development of the World Trade Organization. These interests have to do with the improvement and enhancement of global trade within nations. One of the interests, which supported the formation of the WTO include the desire to increase trade in goods as well as services. Intellectual property rights also formed part of the reasons as to why the international organization came into being. Interests to enhance trade in agricultural goods also reinforced the formation of WTO. Other organizations such as GATT had minimal trade in agricultural goods. As a result, the World Trade Organization came into being to improve trade activities in agricultural goods. Non discrimination in trade activities also enhanced the development of WTO. Before its formation, countries saw the need to address the issue of non discriminatory trade agreements. On this regard, WTO had to be formed to eradicate discrimination in the imposition of tariffs. This could see an end to trade barriers within member states. The MFN principle ensured that WTO had the mandate to ensure eradication of trade barriers. Under this principle, a country cannot impose tariffs on other member states based on discrimination. Non discrimination became the basis of multilateral trade regimes (Janow et al 2008, p. 145). Dispute settlement can be regarded as an interest as to why the WTO came into existence. Before its development, dispute settlement entailed delay and had lacked transparency. Any country could delay the implementation of rulings and trade decisions. This led to increased complaints regarding the process of settling disputes (Janow et al 2008, p. 47). The blockage and interference with the rulings brought confusion and inefficiency in trade activities. Member states, which formed the WTO, came up with the dispute settlement board. This board deals with matters relating to trade among member states. Since its formation, WTO has successfully solved trade disputes among member states. This has led to accountability and smooth flow of trade between these countries (Janow et al 2008, p. 207). The WTO developed at a time when tariffs used to below. Its formation aimed at reducing trade barriers in international trade activities. Many non tariff barriers also existed at this time. As a result, nations joined hands to address the issue of trade barriers; both tariff and non tariff. This would enhance free movement of goods and services within the member states. As a result, trade would include a variety of products than when trade barriers existed. Barriers to trade have a negative impact on business and other trading activities. As such, the formation of such organizations as WTO could see an end to the endless barriers and promote exchange of goods between nations (Aturupane 2000, p. 354). The Doha negotiations also led to the development of the world trade organization. In the mid 1990s, developing countries realized that the Uruguay negotiations favored developed countries. As a result, developing countries accepted the terms of agreements of WTO with an aim to access the market. Under WTO, trade rules could favor all nations irrespective of the level of development. This brought a need to form the organization since it would ensure balancing of trade activities between nations. The world trade organization treats all nations equally in trade activities. This makes sure that some countries do not benefit at the expense of others. The world trade organization came into existence a time when the living standards of a number of nations in the world were low. One of the reasons behind its formation had to do with the raising of standards of living of member states. This could be enhanced by ensuring full employment and allowing for the expansion of goods and services in a manner that could encourage sustainability. With an effective mechanism for trade, nations could improve the living conditions of their citizens. Thus, the desire to improve living standards can be termed as one of the interests that saw the development of the World Trade Organization (Scholte 2011, p.111). How the development of WTO related to Changes in transnational flows of production and investment The development of the World trade organization related to changes in the transnational flows of production and investments. Formation of the WTO removed all constrains on foreign investment. This led to an increase in the total foreign direct investments to a country. For example, with the removal of barriers, countries had the opportunity to invest outside their national borders. Reduction in tariffs and other barriers to trade meant that trade could be possible and without any difficulties (Janow et al 2008, p. 207). Countries ventured in international markets, where they could incur low operation costs while at the same time increasing the returns from investments. However, the investment may not be in areas where the host country would prefer. The development of WTO has some negative implications on transnational flows of investment and production. For example, foreign direct investments may not be in areas that enhance exports in the host country. As a result, this may lead to low developments in terms of infrastructure and technology. In addition, the profits from the investments may be repatriated; this has reduced the foreign exchange stock. At the time of its development, WTO aimed at improving the flows of investments between the member states. Prior to its formation, investments and products were not treated fairly (Aturupane 2000, p. 354). As a result, this organization came up as part of the broader network that would ensure fair treatment of investments among member states. Nations could become flexible in terms of choosing the markets to invest. Before the development of world trade organization, investments in agriculture were not widespread among nations. General agreement on trade tariffs paid little interest to investments in the field of agriculture. The need to improve production and enhance investment in agriculture saw the rise of WTO. Besides, WTO has a much wider coverage on trade issues than other organizations formed before such as GAAT (Atrupane 2000, p.355). WTO can be regarded as an answer to diversity in trade. For example, the organization deals in diverse sectors such as product standardization, subsidies, and actions such as dumping. On this regard, therefore, the development of WTO related to changes in transnational flows of production and investment. The organization has brought considerable changes in production and investments (Atrupane 2000, p. 356). How WTO developed as part of a broader network of transnational institution The World trade organization developed as a transnational institution owing to its role in improving economies under transition. The broad activities of the organization led to its development as its activities spread across all nations. Following its formation, the various features of WTO played a significant role in enhancing economic prospects of nations across the world. For example, the organization has improved economies of countries in Eastern Europe and the Soviet Union. The WTO helped these countries to alter their trade regimes to enhance transition in the world of trade. Most of the trade features initiated by the WTO facilitated international trade and enhanced liberal trade among nations (Atrupane 2000, p. 356) The WTO also developed as a transnational institution due to its efforts in assisting economies in transition. The organization ensures that large economies do not exploit smaller economies by treating both the developed and developing nations equally. In addition, the WTO as a transnational institution provided forum where trade problems and multilateral relations can be negotiated (Janow et al 2008, p. 47). The organization has ensured the implementation of obligations agreed upon by member states; this has enhanced its development as an international organization. The mechanism trade policy review also enabled the organization to develop as part of the broader network of transnational institution. This mechanism enhanced the transition of economies and consequently, the development of this international organization. Further, the policy review mechanism can be termed as particularly essential since it allowed for the accomplishment of trade policies between the trading partners. The policy has played a role in enhancing evaluation of trade practices. Additionally, the review of these policies enabled policy makers to improve policies based on how they work. The efforts of the WTO in reviewing policies played a significant role in allowing for the organization’s development as a transnational institution. The policies, which enabled the development across nations, can be regarded as a critical milestone in enhancing the development of the organization. The considerable impact of World trade Organization on globalization and outsourcing also contributed to its development as a transnational institution. WTO has had a lasting effect on global trade between various nations in the world. Issues such as outsourcing of labor and raw materials entail some of the organization’s key activities (Janow et al 2008, p. 145). Since its formation, the organization has enabled the transfer of labor between the nations, which make up the organization. For example, member countries have outsourced technology and services of professionals from one another. This has led to massive development of the organization as a transnational institution. WTO has joined hands with other global organizations, which facilitate trade and sustainability. How the development of WTO in the transnational context affected the equality of democracy within domestic states Since its formation, the world trade organization has influenced democracy among member states, which form part of the organization. Critics argued that the establishment of the organization seemed controversial since it emphasized on the importance of trade at the expense of other values (Scholte 2011, p.113). For example, the organization did not place a lot of interest in food safety, consumer safeguards, and human rights. This has had a negative effect on democracy of the member states. All the decisions relating to international trade have to be made in the context of the WTO. As such, countries have to consider the terms of agreements of the organization before implementing trade decisions. Instances of negative impacts of WTO on democracy include a ruling in 1996. In this ruling, the WTO ordered the United States the clean air act that regulated gasoline cleanliness. During this ruling, the WTO purported that the US rule had violated rules of the organization, which forbid different treatment of foreign producers. Although the US government appealed the ruling, it did not succeed as the World trade Organization rejected the appeal. As a result, the U.S government had to comply by changing regulations on gasoline. This it did to avoid trade sanctions that would amount to $150. This incidence saw the success of the Venezuelan industry in superseding democracy and decision making in the US. This case indicated that the organization had ultimate powers to weaken environmental protections in the US that congress had enacted (Janow et al 2008, p. 207). Scholte (2011, p.117) argues that the establishment of the WTO had an impact on democracy in the developing nations. In the system of WTO, developing countries have lacked a decisive role. The organization continues to weaken these countries as it covers other areas and ignores developing countries. The agreements of this organization have had a much deeper impact on developing countries than never before. For example, the trade agreements initiated under the WTO makes the economy of developing countries vulnerable. For example, developing countries cannot be able to control the setting up of industries in their countries. Some of the industries may have an impact on loss of jobs and employment. Since joining the WTO does not warrant a nation to question the organization’s decision; this inhibits democracy. The implications of WTO as a regional trading bloc have far reaching consequences on democracy. Accountability may not be attained in some instances owing to the bureaucratic process of doing things. Informal decision making procedures contribute to uneven distribution of economic power among nations. Power secrecy does not permit democracy as it discriminates against developing nations while favoring the developed nations. This threatens democracy among the member states. Therefore, not all nations have had the opportunity to enjoy the benefits of joining the international organization (Scholte 2011, p.118). The world trade organization has enhanced trade in agricultural products. Through its policies, the organization ensures that trading activities in agricultural produce takes place smoothly. The organization has ensured the availability of market fro agricultural produce from the various member states. Countries can be able to import agricultural produce that they have in excess and at the same time import what they cannot be able to produce. However, the organization can be blamed for overemphasis on cash crops. This has contributed to increased incidences of famine and drought, especially in developing nations (Janow et al 2008, p. 145). Conclusion The world trade organization came into existence in 1994, following a series of trade agreements under the general agreement on trade and tariffs. The organization came into existence with the aim of enhancing international trade by removing trade barriers. Since its formation, the organization has enhanced trade between member states. Countries have had the opportunity to access goods, which they do not produce. The organization settled trade disputes among nations. Through the organization, foreign trade has become possible; companies have invested in foreign markets. WTO has contributed to overall globalization and activities such as outsourcing and off shoring. Despite its numerous achievements, the organization ahs threatened democracy and sovereignty in some countries. Some of the organization’s trade rules threaten the health of citizens of the member countries that may fall victims. Reference List Aturupane, C 2000, The WTO as an international organization, Chicago, University of Chicago Press. Pp. 350-356. Janow, M, Donaldson, V & Yanovich, A 2008, The WTO: governance, dispute settlement & developing countries, New York, Juris Publishing Inc. pp 47, 145, 207. Scholte, J 2011, Building Global Democracy: Civil Society and Accountable Global Governance, Cambridge, Cambridge University Press. Pp 111-120. Read More