The official World Trade Organisation web site, defines the WTO as “the only global international organisation dealing with the rules of trade between nations . . . [through] helping producers of goods and services, exporters, and importers (to) conduct their business”1. It was formed in 1995 after growing out of and extending the institution of the General Agreement on Tariffs and Trade. As of the thirtieth of November 2000, the WTO has 140 member-countries, over three-quarters of which are developing or least-developed countries.
As the WTO implies, its current role is to serve as the lubrication for the joints in the engine of globalisation; although just how effective and fair this lubrication may be, is still a point of great contention. The WTO preaches that its purpose and effect are to “improve the welfare of the people of the member countries”2, and it claims that this is achieved by administering trade agreements, and monitoring and handling trade disputes.
This essay will test the truth in this statement, of whether or not the actions taken by the WTO have failed to further enhance the welfare of the people of its member countries, and if so, whether the WTO therefore needs to be either reformed or even abolished. The criteria by which I will assess this truth, takes into account the three major arguments that are held against the WTO, with regard to its affect on the welfare of the people of its member countries. One of these arguments is that the international rules the WTO authors, consistently favour multinational corporations at the expense of workers and small farmers.
Another argument is that by removing trade barriers as the WTO seeks to achieve, jobs are ‘exported’ to lower labour cost countries where the standards to which the labourers are subjected, are below what is internationally accepted. The final main argument against the WTO’s aims that is raised, is that if countries cannot make their industries globally competitive, they will experience a decline in their people’s standards of living. Judging the results of these arguments, will allow me to decide whether or not the WTO is in need of reform, abolishment, or if it should continue without alteration.
The basic premise of the WTO is to open up trade between nations, and one of its potential disadvantages is that its operation is dictated largely by the needs of its economically dominant members (S-11 Online 2001). These members dominate, because they also house the major multinational corporations which make up a large quantity of the country’s export trade. In this sense, the political side of international trade is a very important one. For example, what is good for General Electric – a leading US corporation – must be good for the US, but not necessarily beneficial for other international industries (APEC Branch 1999).
In this sense, the needs of General Electric are favoured by the US Government, who in order to protect this leading corporation of theirs manipulate trade barriers so that countries competing with the US, cannot profitably export the same goods General Electric sells. The opposite is therefore true, that if a country cannot sell certain goods to other nations profitably, or even at all, it must abandon that industry and move onto ‘greener pastures’. The sad irony is that moving to ‘greener pastures’ means moving towards a more industrialised economy where the needs of workers, farmers and small business are ignored (Callaghan 2001).
To show sympathy and compassion for such globally useless industries would mean the government would either have to subsidise their excess production cost, or impose trade barriers on the cheaper imports which threatened their production in the first place. Such an action, under the WTO’s rules and agreements, is illegal under any pretence, whether the imports be genetically modified or the product of slave labour (WTO Online(1) 1999). Such free trade opportunities obviously encourage a negative attitude from countries towards their labourers, and therefore result in poor work conditions and a diminished lifestyle; or even poverty.
This phenomenon is referred to when we read about a country who ‘exports jobs’ to another, a catchcry of those who are in favour of tariffs (Ebeling 2000). Thus it can be seen, that through achieving the wants of multinational corporations, the livelihood of ordinary people can be severely compromised. In the constant search for profit and greed, headless organisations which hold the trade practices of an entire nation in their hands, can do insurmountable damage to exposed economies.
The WTO states that its ultimate aim is to generate development in order to increase growth, it says that this is achieved by breaking down the barriers between economies and therefore forcing upon them the need to adopt new strategies. This, it says, will allow them to cope with fluctuating trends in the global marketplace (WTO Online(2) 1999). It forgets that these economies lack the infrastructure to capitalise on their own potentially competitive industries, and therefore must succumb to the will of self-focussed multinationals in order to preserve a tortured survival (Sirico 2000).
It makes no sense that the WTO wishes countries to focus on those industries in which they are globally competitive, and yet allows dominating multinationals to ‘milk’ their local industries of their rightful funds. Wills proffers the example of Uganda and Nestle. Coffee being Uganda’s main export good, and Nestle being the multinational corporation which ‘exports jobs’ from its home economy, in order to rob Uganda’s workers of their equivalent wage and work conditions.
The entire production process of the coffee is completed in Nestle’s factories located in Uganda, before being shipped over and sold to retailers in Nestle’s home economies. The only profit the Ugandan’s truly receive, is the paltry price for which they sold the unprocessed coffee. It is very easy to rationalise this unfair exploitation with economic rules and models which follow logical principles, a task the WTO is trying to achieve using the support of its four major member-country economies; the US, Canada, the European Union, and Japan.
Unfortunately, on the other side of this free-trade coin, there is a country whose majority of members suffer from exploitative work practices and sub-standard work conditions. That the WTO serves as a forum for countries to “thrash out their difficulties”3 regarding their trade practices, is of no consequence when the foundations upon which the WTO’s rules and agreements stand is considered. The evolving international trading scene is akin to the changes which were and are taking place within the Australian economy.
Privatisation of government companies and deregulation of industries, was a tactic designed to increase efficiency and provide better service (Steketee 2001). Yet we are seeing more and more evidence that efficiency comes with a different kind of price. In Australia, we noted that the people living in the country areas were forced to pay a greater sum for their services, due to the increased costs of providing those services (The Australian 2000). For us Australians, the introduction of competition resulted in the “[weeding out] of the weak companies . . . in order to] encourage and reward the strong, efficient producers”4. Does this mean that because third-world economies cannot maintain the efficiency of developed economies, they should simply be “[weeded out]”4? Privatisation of government business enterprises has certainly increased their efficiency, but at what cost? It seems that the economic definition of efficiency is grossly different from the dictionary one. Today efficiency in business means saving funds by cutting corners and sacking employees. The same is mirrored in the international marketplace.
Only the big players are favoured by the WTO’s agreements, everyone else can either be manipulated by multinationals, or left out of the equation entirely. According to my stated criteria, the WTO has failed miserably. The WTO will inform you with much authority that it: 2. Provides a forum for trade negotiations 5. Provides technical and training assistance for developing countries and 6. Co-operates with other international organisations Yet it refuses to elaborate on its promise of greater efficiency “ . . . the [WTO] . . . helps to increase efficiency and to cut costs even more because of important principles enshrined in the system. 5, those principles being, to apply a set of rules which are equally applicable to both the most developed world nation and the least; an edict comparable to racing an athlete against a child (Laurel 2000). Dispiriting also, is its passive refusal to expound the three-point system of economic success, accurately summarised into: trade = growth = jobs. A system which fails to acknowledge a constantly transforming world climate, which has (need the WTO be reminded) passed through Alvin Toffler’s Second Wave, a wave which demanded the realisation of an industrial revolution.
As of yet, the WTO still demonstrates its failure to recognise that the world’s economy has in fact moved beyond the traditional mercantilist ideals that were so prevalent in its predecessor GATT’s founding, and that a great sum of the world’s profit is now being circulated in info-tech oriented industries (Mitchell 2001). Industries which developing economies still struggling to obtain the means of processing their primary export, have hopelessly pathetic chances of developing (Stoeckel 2000).
Most frightening however, is the WTO’s encouragement – through the use of anti-unilateral trading rules – of small vulnerable nations to pool together their trading power (WTO Online(3) 1999). An action which fosters the development of a scenario likeable to Florence Chong’s “Slow out of the blocs”. Chong describes a future where three economically continental super-blocs – euro, yen and dollar – form a tight multilateral trading arrangement, that isolates those economies who cannot secure their trading partners. At present, this includes Australasia and “the economic backwaters of the world”6, Africa and the Indian sub-continent.
Within such a future, those countries not in supranational trading blocs, are denied access to “half of all global imports” 6. To this degree, it doesn’t seem as if the WTO wants to unite the world’s trading arrangements. In fact, its motives would appear simply to capitalise on those trade arrangements occurring between the three proposed regional trading blocs; a move which would almost certainly cleave a planet’s trading arrangements in two, with one side geographically and economically disadvantaged. For all of these reasons, I have decided that the WTO should be abolished.
Inefficiency is nothing compared to poverty and greed. Why is it that we must always compete so viciously that someone must get hurt? Where does growth really lead, but to one’s overindulgence and another’s lack thereof? More humanitarian ideals are necessary, if we as a global entity are to truly unite. No organisation which fosters monetary gain over sub-standard living, should ever be backed so powerfully by such greedy nations. By simply existing, the WTO serves as figurehead of what is wrong with the world; and what we need to do to fix it.