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. A fair multilateral system would be non-discriminatory, give developing countries more negotiating power and be based on commitment to human rights, labour rights and environmental sustainability.
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 industialised countries including Australia caucus together and use other measures like aid to exert pressure on developing countries. Some larger emerging economies like China and India are now challenging this dominance.
These richer 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 fundamentalist neoliberal agenda has led to stalled negotiations and dashed 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 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 1132 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.
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 retained unfair subsidies on their agricultural exports while insisting that developing countries remove their tariffs, with the result that they have been flooded with cheaper imports.
Over the last decade the WTO has stalled on new agreements, with only one agreement reached between all its members: the 2013 “Bali Package” on trade facilitation, which had a tiny scope compared with previous meetings and overall WTO objectives.
The WTO has focussed instead on negotiating smaller agreements involving fewer countries. One example is the WTO Environmental Goods Agreement, for which negotiations are ongoing with an aim to remove tariffs on products that are considered good for the environment. However, only 17 countries out of the WTO’s 164 member states are involved in the deal, and an agreement has not yet been reached.
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) the Regional Comprehensive Economic Partnership (RCEP), and the Trade in Services Agreement (TiSA)
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, 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.
Trump and the WTO
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 huge unilateral tariffs on Chinese and other imports to the US. Trump wants China to agree to tougher rules on subsidies and state-owned companies, and wants to remove differential treatment for developing countries.
We should reject US unilateralism and trade wars with China, which will harm all countries.
Instead we need fundamental change of the WTO to achieve a fair multilateral trade system based on human rights, labour rights and environmental sustainability, and which reduces rather than intensifies global systems of inequality.
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 2016)
Updated: February 2019