About the WTO
The World Trade Organisation (WTO) was founded in 1995. It aims to increase international trade in goods, services and agriculture through multilateral negotiations, and is supposed to restrain the most powerful economies through agreed trade rules . It also enforces WTO agreements through its government-to government dispute resolution process .From 1995 the WTO had agreements on goods, services, agriculture, intellectual property, and other issues.
In general, AFTINET advocates for multilateral trade negotiations involving 164 WTO members over bilateral and regional negotiations. The WTO needs fundamental change to a fairer multilateral system that would give developing countries more negotiating power and be based on commitments to human rights, labour rights and environmental sustainability. Nearly all governments agreed to these principles through the Sustainable Development Goals (SDGs) in 2015, but they have not been integrated into WTO goals or practice. A blueprint for achieving these goals can be found in "A New Multilateralism for Shared Prosperity: Geneva Principles for a Green New Deal" published by the UN Conference on Trade and Development (UNCTAD).
Major shortcomings of the WTO
The WTO is in practice dominated by the largest industrialised economies. Though decisions are in theory made by consensus between all member states, the strongest economies, the US, EU, Japan and other industrialised countries including Australia caucus together and use other measures like aid to exert pressure on developing countries. The WTO consensus system of decision-making means these countries can block proposals even if the majority of WTO members support them. This has resulted in stalled negotiations and reduced hopes for a fair multilateral trade system. Some larger emerging economies like China and India are now challenging this dominance.
The richest industrialised countries want greater global access for their products and investments, stronger intellectual property rights and less regulation by governments, than is delivered by WTO agreements. This has been resisted by developing countries. The failure of the WTO to deliver meaningful outcomes for poorer countries, along with its neoliberal agenda has led to stalled negotiations and reduced hopes of a functioning multilateral trade system, let alone a fair one.
The neo-liberal policies promoted by the WTO, along with the World Bank and the International Monetary Fund, have attracted widespread criticism and protest.
AFTINET has criticised the WTO’s promotion of a neoliberal model of growth based on export processing zones in developing countries, where working conditions are poor and environmental standards are low. This has created a “race to the bottom” to attract investors. The death of 1135 Bangladeshi garment workers who were ordered to work in an unsafe building in April 2013 is only one example of the result of such policies.
The promotion of global agribusiness at the expense of sustainable local agriculture has also contributed to food crises in developing countries, and the promotion of financial market deregulation contributed to the global financial crisis.
The WTO also expanded and enforced stronger monopolies on patents (including medicines) and copyright that favour of corporations and at the expense of consumers. Longer medicine monopolies delay the availability of cheaper generic medicines and are the opposite of free trade and competition.
Part of the reason for the current stalemate in WTO negotiations is the organisation’s failure to deliver a level playing field for developing countries to negotiate. For example, the US and the EU have retained unfair subsidies on their agricultural exports while insisting that developing countries remove their agricultural tariffs, with the result that they have been flooded with cheaper imports.
Over the last decade the WTO has stalled on new agreements, with few new agreements reached.
The WTO has focussed instead on negotiating "plurilateral" agreements involving fewer, mostly industrialised, countries. In 2019, Australia, Japan and others initiated e-commerce negotiations amongst 76 mostly industrialised countries, despite the fact that the majority of WTO members had refused to give a mandate to such negotiations.
The United States, Japan and the EU and other wealthier countries like Australia have negotiated many bilateral and regional free trade agreements outside of the WTO, which leave out or can be harmful to developing nations. These include the Trans-Pacific Partnership (TPP) , later rebranded as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
These deals have generally left out the poorest countries and pushed a more “ambitious” corporate agenda, including chapters which are not about traditional trade issues at all – such as increased investor rights to sue governments, greater restrictions on government regulation and stronger intellectual property provisions (patents and copyright) which are actually the opposite of “free trade” since they promote stronger monopolies.
During the COVID pandemic in 202-2022, over 100 mostly developing countries in the WTO supported a temporary waiver on WTO rules for 20-year monopolies on medicines which meant the pharmaceutical companies sold most vaccines at high prices to rich countries, leaving very low vaccination rates in low-income countries, and even less access to treatments and tests. The waiver would have enabled increased global production at lower prices. Rich countries, lobbied by their pharmaceutical companies, blocked the waiver for 20 months until June 2022, when a small change was made to patent rules for vaccines only. As of February 2023, there is still no decision on treatments and tests. This delay cost millions of lives.
Trump and the WTO: appeals body blocked but WTO not dead yet
US President Trump's “America First “ tactics have tried to falsely paint the US as a victim in the WTO. Trump has condemned the WTO as “unfair” to the US, has threatened to withdraw from the body, has refused to reappoint members of the WTO appeals body, and defied WTO rules in imposing unilateral tariffs on Chinese and other countries' imports to the US.
We should reject US unilateralism and trade wars with China and others, which will harm all countries.
The US has also blocked appointments to the WTO disputes appeals a body, resulting in a shortage of appeals body members. This means that, while existing cases will continue to be heard, as of December 2019 the appeals body is prevented from hearing future appeals. As of February 2023, the Biden administration has not changed this policy.
The US stated reasons for its actions are that it wants changes to the WTO appeals process to address flaws, including lengthy and complex processes and allegations that appeals bodies have over-reached the boundaries of WTO rules. However, the US has not responded to proposals for change that would address these issues, showing that its objections are to the enforceable rules-based trade system itself, a conclusion reinforced by its unilateral tariff wars.
But despite claims of its demise, the WTO is not dead yet. The EU and Canada have initiated a temporary voluntary appeals system allowable under WTO rules. This will enable WTO member governments that join it to continue to lodge government-to-government disputes under WTO rules and to have access to an appeals body if there are grounds for appeals. But this is a temporary fix that does not address longer term issues.
The WTO needs fundamental change to a fairer multilateral system that would give developing countries more negotiating power and be based on commitments to human rights, labour rights and environmental sustainability. Nearly all governments agreed to these principles through the Sustainable Development Goals (SDGs) in 2015, but they have not been integrated into WTO goals or practice. A blueprint for achieving these goals can be found in "A New Multilateralism for Shared Prosperity: Geneva Principles for a Green New Deal" published by the UN Conference on Trade and Development (UNCTAD).
Read more about the following WTO negotiations:
- The Doha ‘Development’ Round
- The General Agreement on Trades in Services (GATS)
- The Bali ‘Trade Facilitation Agreement’ (updated 2013)
- WTO Government Procurement Agreement (updated 2019)
Updated: February 2023