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. It also serves to enforce adherence to WTO agreements through its dispute resolution process.
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 equal negotiating power and put people and the environment at the centre of all talks.
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.
From 1995 the WTO had agreements on goods, services, agriculture, intellectual property, and other issues. But 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 result of the WTO’s shortcomings has been an increasing number of bilateral and regional free trade agreements being negotiated outside the WTO framework. 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 which are actually the opposite of “free trade” since they promote stronger monopolies.
Major shortcomings of the WTO
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 heavily 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 led 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 intellectual property rights in 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.
Trump and the WTO
In October 2018 there was a reported meeting this week in Beijing between Chinese and European Union trade officials about changes to the World Trade Organisation (“WTO”). We’re still waiting to hear outcomes of the meeting, which follows change proposals and continued negotiations between WTO members.
Member states have been under increasing pressure to reform the WTO by the US’s “America First “ tactics which reject the rules of global forums. Trump has condemned the WTO as “unfair” to the US, has threatened to withdraw from the body, has refused to reappoint WTO judges, 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, state-owned companies and preferential treatment.
What is the WTO, and why is the US thwarting it?
The WTO claims it is a “global international organization dealing with the rules of trade between nations," whose “goal is to ensure that trade flows as smoothly, predictably and freely as possible.”
Of the 196 countries globally, 164 of them are members of the WTO. Established in 1995, WTO is dominated by the largest industrialised economies. Though decisions are made by consensus between all member states, other measures can be used exert pressure on Global South countries to acquiesce to agreements detrimental to their economies. Although some bigger economies like China and India are now challenging the dominance of Global North countries like the US in the WTO, the US, EU and Japan remain dominant.
These richer industrialised countries want greater access for their products and investments, and less regulation by governments, than is delivered by WTO agreements. This has been resisted by developing countries.
The United States Japan and the EU and other wealthier countries like Australia have moved outside the WTO, negotiating many bilateral, and regional free trade agreements instead, which leave out or can be harmful to Global South nations.
Although legally binding, these free trade agreements are usually negotiated in secret, and often limit governments’ abilities to regulate in the interest of workers or the environment if those regulations come into conflict with corporate profits.
There are currently ten free trade agreements Australia has ratified, four more to come into force (including the now well-known TPP-11), eight more being negotiated, and many more between other nations excluding Australia.
Current trade policies in Australia and other industrialised nations give priority to the flow of goods, services, investment and finance at the expense of local development, democracy, protection of the environment, labour standards, and human rights.
It is difficult to see what reforms China and the EU could agree to this week that would allow the WTO to satisfy all member states or discourage the growth of bilateral and regional free trade agreements. What we need is a trade system which promotes labour rights, human rights, environmental protections and democratic civil society, and which remedies 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: October 2018