World Trade Organization - Case Study Example

Running Head: WORLD TRADE ORGANIZATION World Trade Organization Insert Name Institution Course Date World Trade Organization Thesis statement: This paper will evaluate the reasons why the governing organization is deemed to have undermined democracy within communities, families and environment as asserted by the Global Exchange. Introduction The World Trade Organization (WTO) was enacted to replace the General Agreement on Tariffs and Trade (GATT) in 1995. GATT was a post-second world war institution created in 1947 to enhance international governance. The international institutions were created to respond to the economic and social crises as those occurred in the 1930s thus preventing the international climate from deteriorating to the point of war (Hoekman and Mayroidis, 2007). In the 1930s, countries imposed subjective and biased trade barriers in an endeavor to hold the effects of financial depression out of their countries by keeping domestic trades active and thus preserve domestic service (Dowlah, 2004). However, protectionism led to the effects of economic depression to stretch all over the world. The global trade body is little known to many people across the globe despite the fact that it has enhanced its scope to focus on reduction of tariffs on the manufactured goods. This means that the institution no longer follows the original rules which governed its predecessor institution the General Agreement on Tariffs and Trade (Hoekman and Mayroidis, 2007). Currently the organization is determined to reduce non tariff barriers whether they are deemed to be good by the host nation or not but the institution might consider them as hindrances to international trade. The inception of global trade body increased concern by critics since the institution was to be lead by unelected bureaucrats who would seize power from citizens and their governments. The critics were drawn from business men, academic people and government supporters (Dowlah, 2004). It is important to note that some of the rules of the organization reach into just every spot of daily life including water allocation, professional principles, transport rule, cultural assortment, food creation, environmental security, and the price of pharmaceuticals (Dowlah, 2004). The global trade body is a ‘member-driven’ organization. This implies that all its decisions are made by all its members; there is no executive body like that of the World Bank. Decisions at World Trade Organization are reached through consensus despite the fact that the agreement advocates for decision making by the majority vote this has never happened. The organization acts as the primary international body that deals with trade barriers and unfair competition through multilateral negotiations. The institution provides an avenue for countries both developed and developing to air their grievances regarding the trade policies of their trading partners. The underlying goal of the World global trade body is to liberalize world trade and establish secure basis which will enhance economic growth and development (Global Exchange, 2009). The global trade body, in aiming to realize its goals toward trade liberalization, the institution has round of negotiations. There have been eight rounds since its inception and the eighth rounds took place in Uruguay Round. This round was one of the most important to the United States agriculture. This is so because despite the growth in the agriculture sector, it was not part of the General Agreement on Tariffs and Trade. At the eighth round, reform was eminent. All the governments felt that economic growth was on the verge of collapsing due to the increasing budget expenditures and trade frictions. Since the inception of World Trade Organization (WTO), corporate attorneys usually form part of global trade body panels and have consistently ruled against laid down rules. Rulings such as the United States law protecting sea turtles was a barrier to “free trade”, it is a clear indication that our democratically nominated public representatives are stripped of their powers to protect the environment and public health (Hoekman and Mayroidis, 2007). The world governing trade rules can be enforced through a sanction which is not the case for United Nations treaties or even the International Labor Organization conventions. This way of enforcing rules gives World Trade Organization more power than any other organization operating on the international stage since its authority eclipses national governments. The corporate agenda was getting into the nerves of people and needed to stop. In 1999, people challenged the corporate agenda at Seattle and demanded a more democratic, socially just and environmentally sustainable global economy. According to the Global exchange, the next ministerial took place in Qatar, a state in the Middle East where free-speech privileges are imaginary. In this meeting, empty pledges which geared toward an implicit acknowledgement that the current system was unfair in respect to the poor countries. Cancun, Mexico, was the next meeting point where the rich countries hunted the growth of the WTO. The new issues which were tabled received a major blow after the new coalition of the developing countries argued that the inequitable universal agricultural system had to be cleaned up first. The talks did not succeed since the coalition of the poor countries stood their ground (Dowlah, 2004, Global Exchange, 2009). However, this stand was not long lasting since the most powerful countries paved jointly a nominal compromise to get the discussions back on track by giving false guarantees that agriculture would be fairly improved. Member countries of the trade organization have the right to confront other countries’ local or federal laws as barriers to international trade under the rules of World Trade Organization (Hoekman and Mayroidis, 2007). Any government, according to the laws of global trade body, overturns any of its laws that contravene the laws of organization or risk facing trade sanctions. It clear that this kind of transfer in control to a global-level administration challenges a foundation of democracy- the manner in which citizens create laws that shield the public interests. Despite the fact that the organization gives priority to developing countries in accessing modern markets, the trade liberalization demoralizes Southern nations’ long-term progress forecasts (Hoekman and Mayroidis, 2007). Under World Trade Organization, small firms experience a lot of difficulties in competing with multinational firms since they lack equivalent access to advanced technology, economies of scale, or capital. This issue of inequality among firms is evident in the agriculture sector because World Trade Organization rules governing trade and domestic policy development weaken national approaches to ensure food protection. According Global Exchange, (2009), the service sector has also been affected by the new governing rules which strip safety for local firms. For instance, most locally owned banks are under threat since the global trade body rules force countries to allow foreign banks to open branches in small towns where communities have already associated themselves with the local banks. Martin Khor, an economist from Malaysia, argues that the rules of governing trade organization could make the access of health care low and expensive since they allow private companies to purchase hospitals. Most of the private companies are primarily from the North (Dowlah, 2004). The developing countries are not yet out of their wounds especially if the proposed Multilateral Investment Agreement is nodded. This agreement would strip the developing countries power to safeguard local industries and traditions from being cleaned up by overseas firms. The Uruguay Round did not address the censorship of employee rights which is the most rife trade subsidy of all. During the meeting, members failed to establish the procedure for learning the addition of internationally acknowledged employee rights in the World Trade Organization (Global Exchange, 2009). The failure was as a result of the opposition mainly drawn from Southern governments on the grounds that the worker-rights standards would be used as trade barriers against the exports of low-income countries. According to Dowlah, (2004), there are two concepts which root for the link between labor and environmental standards to the World Trade Organization. The first concept is the infringement of core worker rights and environmental standards which is used by firms and governments to gain inequitable benefit in trade. The second concept is the core labor rights and environmental standards to be protected in the global trade body must be the rights and standards globally recognized by International Labor Organization and international environmental treaties (Global Exchange, 2009). Under the laws of organization, no nation has a right to discriminate against any product on the grounds of the production process, even if the production procedure is by environmentally destructive technologies or is by child labor (Hoekman and Mayroidis, 2007). For instance, one of the United States law banns the imports of tuna from countries that advocate for long rounded nets intended to grasp tuna, but which also ensnared and slay many dolphins. The controversy is that, in the rules of World Trade Organization, a can of tuna should not be determined by the number of dolphins killed in the catching and production process. The organization rules have contentious aspects especially when they advocate for the use of ‘least trade-restrictive’ test. Under global trade body laws, a measure is considered “essential” only if there are no less trade-restrictive resources accessible to realize the measure’s rightful health-related goals (Dowlah, 2004, Hoekman and Mayroidis, 2007). This test limits a organization member’s capability to expand its own strategy to ecological safety. This principle was used by European Union in challenging the United States Corporate Average Fuel Economy standards, alleging that the fuel maintenance objectives of the values could have been just as easily obtained through gasoline taxes. The standards were ruled incompletely in contravention of World Trade Organization. According to Dowlah, (2004), the organization has failed terribly in tackling environmental worries; in fact, most governments have used this weakness as a platform to challenge more strict environmental policies from Northern countries. Several environmental groups have spearheaded the abolishing of committee and substituting them with more reliable environmental evaluation process. Some groups from countries in North and South and their governments have criticized the World Trade Organization policies and have the idea of creating a new institution which would better serve the needs of the greater part of people in the globe (Hoekman and Mayroidis, 2007). A good number of critics concur that there is a want for a universal trading organ that has the ability to inflict the trade regulations that are settled upon among countries (Global Exchange, 2009). The reason for this argument is that a just trade order would be governed by a body that is open and transparent, more democratic whose foundation is on new set of rules and is rooted in new set of principles. This is because the principles that govern World Trade Organization can only be possible if all nations had equal development pace. The world today is full on inequality and countries must be allowed to protect home industries and laws (Hoekman and Mayroidis, 2007).It will be advisable to have a global trading body that gives countries the power to control home industries since this will lead to maintaining and improving social and economic standards across the globe (Dowlah, 2004).Governments have the authority to evaluate domestic industries in a manner to encourage local production but this is a dream under laws and rules of World Trade Organization. Communities should be given the opportunity to protect their seeds and homeopathic medicines from the ‘intellectual property’ incursions of huge seed and pharmaceutical corporations (Global Exchange, 2009). This idea should imply that there is any global body that should be in a position to undermine any nation’s health, safety, environmental or other laws as being too stringent. Every nation should be in a position to determine how high standards should be within its territory. However, no single nation that be given the opportunity to gain uneven advantage in the global trade through the denial of emerging international worker rights (Dowlah, 2004). A new global trading body should be given the mandate to enforce this. Conclusion In conclusion, the World Trade Organization has undermined communities, local firms and families forcing them to live in a dictatorial world. Assuming ten multinational companies venture the markets of the developing countries and they will have their own manpower, the local community will be greatly affected in competing for vacancies in the said companies (Hoekman and Mayroidis, 2007). The local firms will find it difficulty to muscle the strength they have in competing with the internationally recognized corporations. People who purely depend on the products from the local firms my not easily adapt to the foreign products which are usually expensive. The governing body undermines democracy more since it allows private companies to buy hospitals and this can be a disadvantage to the society especially if the services of the hospitals are expensive (Hoekman and Mayroidis, 2007). On the environment, the World Trade Organization is the most insensitive organ that has ever been created on the earth. The body argues that, if some burns charcoal of one thousand tones, it is still charcoal whether there was deforestation or not. From the argument that people catching tuna and killing dolphins, it is clear that the World Trade Organization is reluctant to environmental conservation. References Dowlah, C. (2004). Backwaters of Global Prosperity: How Forces of Globalization and GATT/WTO Trade Regimes Contribute to the Marginalization of the World's Poorest Nations, Praeger . Global Exchange (2009), Retrieved from on March 4, 2011 Lanoszka, A. (2009). The World Trade Organization: changing dynamics in the global political economy, Lynne Rienner Publishers Mayroidis, P., Hoekman, B. (2007). The World Trade Organization: law, economics, and politics, Routledge Nunes, L. (2008). Collateral Damages, Lulu.com, pp. 100-134 Smith, J. (2008). Social Movements for Global Democracy, JHU Press, pp. 213-245 Read More