Abstract
The World Trade Organization is global economic block that seeks to bring together all member states into a forum where they can engage in multilateral trade agreements. The desire to bring the world into a single trading block is the fact that cannot be disputed, especially in the current globalized society. No single country can claim that it is self-sufficient despite the size of its economy. However, there have been concerns that the interests of the third world countries have been ignored by this body. The developed nations have been benefitting at the expense of the poor nations. This issue should be addressed appropriately. The main complaints of the third world countries include unfair trade balances within this setting that favours developed nations, direct support for policies brought about by the developed economies, and the total disregard to the demands of the third world countries. In order to address this issue, the organization should refocus its strategies to ensure that all member states feel accommodated in their system. Some of the policies that have been seen to favour the West should be reviewed so that the third world countries can feel fully represented in the organization. It is through this that the organization will get full cooperation from all the member parties.
Introduction
The World Trade Organization is an international body that seeks to bring all member countries around the globe into a trading black. This organization was founded in 1995, to replace the defunct General Agreement on Tariffs and Trade (GATT). In order to understand the principles under which the World Trade Organization was formed, it would be necessary to analyse the forces that led to the formation of its predecessor. The Second World War made the international society realise that there was a need to liberalise trade between various countries around the world as a way of improving growth of economies of individual countries. Industrialisation was taking shape and colonisation had just come to an end. Most of the companies in Europe and North America depended on the raw materials that were obtained from their colonies in Africa and other developing nations. Before granting these countries independence, the European companies had the express authorities from their own governments to obtain these materials from their colonies. However, this had come to an end as these countries gained self-rule. The European and American companies also needed ready market for their products not only in the developed economies, but also in the developing countries. As Basudeb (2003) says, the powerful nations around the world around this time realized that there was a need to create an organization that would bring the world into a single trading block without any barriers to trade. This led to the creation of GATT in 1946. However, many member states realized that GATT did not live to its expectations after being in existence for over five decades. They realized that there was a need to rebrand the organization and give it more strength in order to liberalise trade around the world. This led to the creation of World Trade Organization on January 1, 1995.
The third world countries had been members of GATT and subsequently became members of the World Trade Organization upon its conception in 1995. According to World Trade Organization (2002a), most of the third world countries joined this organization for reasons other than to achieve trade benefits during the early times. This scholar says that most of the African states, which were gaining independence during this period, considered joining the organization just to demonstrate that they were sovereign states that could make independent decisions. Others were forced to join the organization by their colonisers as one of the conditions of being granted independence. Still others joined because they did not want to be left behind for fear of economic exclusion. These irrelevant focuses when joining this organization made them irrelevant in the decision-making process during the summits that were majorly dominated by the United States and European Union. This was the genesis of a long journey that would see these countries’ interests ignored as the major economies benefitted from this outfit. In this research, the focus is to determine aims, roles and benefits of World Trade Organization and how its existence is detrimental to the third world countries.
Aims of World Trade Organization
The desire to bring the world into a single trading block is the fact that cannot be disputed, especially in the current globalized society. According to Food and Agriculture Organization (20001b), no single country can claim that it is self-sufficient despite the size of its economy. The United States of America, which is the leading economy in the world, needs the global market in order to sustain its economy. China thought that it could stay away from this organization, but realised that it was impossible to ignore the world market despite the fact that it has one third of the world’s total population. This only means that this organization is important to the individual countries. The following are the aims and objectives of this organization as stated in its website and other relevant documents about it.
- World Trade Organization seeks to facilitate, implement and administer multilateral trade agreements among member countries.
- The Organization seeks to provide a forum for bilateral and multilateral trade negotiations in order to improve trade relations among its members.
- The organization aims at developing universally acceptable rules that define governing procedures for settlements of trade disputes among the member states.
- The organization seeks to bring its affiliate organizations, especially the World Bank and International Monetary Fund, into a forum where they can offer financial help directly to the member states at friendly terms.
- The organization seeks to ensure that developing states are secured from exploitation by providing a trade balance in order to help them develop their economies.
- To eliminate any hurdles to the world trading system and promote global trading systems for companies operating in the member states.
- To ensure that there is competitiveness in trade among member states.
- To ensure that the global living standards for people in the member states is improved through economic development.
Some of the above aims of this organization has been achieved, especially those that focus on empowering the leading economies in the world. However, the policies that focused more on helping the third world countries gain competitive edge have not been realized. This may be attributed to the fact that the third world countries that are supposed to champion for their rights are either too weak to do so or are ignorant of their rights. It may also be attributed to the efforts made by the developed nations to ensure that status quo that benefits them is maintained in this trade imbalance (World Trade Organization, 2005).
Opportunities, challenges and response
According to the Food and Agriculture Organization (2003), it is clear that although this organization could not be favouring some countries, it is more beneficial to be a member refrain from it. This is so because of some of the benefits it offers to its member states. One of the opportunities that this organization offers to its members is free trade market. As mentioned before, no country is self sufficient, not even the leading economy in the world, not the most populous country. Africa has the raw material for some of the products manufactured in the United States, Europe or China. These raw materials can be exported to these regions in order to earn foreign exchange. These third world countries can also export other products such as flowers and their artwork to Europe and the United States. On the other hand, the United States, Europe, and China export their manufactured products to these countries and other developed nations who are members of the organization. As Balding (2010) puts it, the organization opens the world for trade by eliminating barriers to trade. This way, countries can export what they produce in excess and import what they do not produce.
It is important to note that, despite this seemingly positive environments to trade, a number of challenges have been met that may jeopardise this relationship. One of the main problems has been an imbalance of trade among the member countries. For instance, Africa and many other third world countries export very little to China. Most of their exports go to the United States and Europe. However, they heavily import from China, especially because of the low prices of their products. This means that some countries are unfairly benefiting from this relationship at the expense of others. Basudeb (2003) says that third world countries have suffered a lot from this relationship because their interests are not taken care of by this organization.
In the recent past, there has been a direct response from some of the member states in the third world countries. They have realised that they have a right to be listened to within this outfit after long years of being ignored. Most of the third world countries, especially in Africa, are currently considering negotiating as a single block. With African Union as their voice, they are considering pushing for their demands in this organization in order to gain competitiveness in the global world. This block, with the help of the United States and European Union, has forced China to eliminate some of the unfair tariffs and other import restrictions in order to allow the international society trade in the country freely (Broadman & Recanatini, 2000). However, there is yet to be a successful balance of trade. The third world countries continue to export cheap raw materials to the developed countries and import expensive finished product. As Basudeb (2003) says, as long as this unfortunate trend continues, these developing nations may not realise their dream of an equitable trade balance within this organization.
Past challenges
In the past, there were challenges that this organization faced, making it difficult to achieve its objectives, especially those that were meant to benefit the third world countries. According to Food and Agriculture Organization (2000), World Trade Organization- in part as GATT- spent much of its time focusing on how to bring China on board as one of its members. China was home to a third of the world’s population and this made it difficult for this organization to ignore it. However, there was a conflict of interest among the major partners in this organization and that of China. The United States and Europe had specific rules that they felt China had to fulfil before being granted membership, especially issues to do with its trade tariffs. On the other hand, China believed that dropping the policies would make its local companies vulnerable to the most competitive companies of the West. In this battle, most of the fundamental values and objectives of this organization were ignored. Focus on Africa was no longer an issue because they were already willing partner despite the unfavourable environment. The egocentric approach that some member states took when addressing issues of the trade balance among member states was also another challenge for this organization in the past. These major economies still viewed the third world countries as sources of cheap raw materials for their products. This made it difficult to address fundamental issues they raised in the forums.
Emerging challenges
According to Food and Agriculture Organization (2001a), even though some of the past challenges have been overcome, there are still emerging challenges that may jeopardise the ability of this organization to achieve its goals. One of the emerging challenges is the current competition between the United States and China in the global market. When China was joining World Trade Organization in 2001, most of the developed economies, especially the United States and Europe believed that they will benefit from China’s huge market. However, this has not been the case. China has been able to subsidise its exports making them cheap in the American and European markets. This pushed it to become the second largest economy in 2010, with some analysis arguing that it would surpass the U.S. economy in a few decades. This has created economic rivalry between these two giant economies. These economic wars jeopardise the ability of this organization to achieve its goals. Another emerging problem has been an issue of neo-colonialism. Some of the leading economies extend loans to the developing nations and then form trade agreements with them contrary to the policies of the World Trade Organization. According to the reports by Food and Agriculture Organization (2001c), China is currently perfecting this vice, especially following the strained relationship between African Union and the West.
The Doha Round of the World Trade Organization
There have been efforts to ensure the third world countries are protected from unfair trade imbalance in this organization. In November 2001, a ministerial conference was organised in Doha, Qatar in order to address some of the issues that were affecting the developing nations. In what has been largely referred to as the Doha Development Agenda, the ministerial conference was held to slash subsidies and eliminate barriers in the export of agricultural products. The developing nations argued that agricultural products formed the bulk of their exports. They complained that some of the members of World Trade Organization had policies that limited their ability to export their products to their markets. This was in contrary to the spirit of one market as was enshrined in the policies of this organization. They claimed that they had opened their markets to the finished products from these countries, and the act of closing their markets for the agricultural products was immoral and unfair. On the other hand, the European Union claimed that some of its member states such as Holland were also major producers of agriculture. For this reason, they needed to protect their local industry from what they described as dumping. Importing what the country can produce would be unrealistic, according to the arguments of the European Union. The Doha Round failed to reach an agreement on how the two blocks should address the issue of agricultural products. According to the reports made by the agriculture chairman of this organization on March 27, 2013, there is yet to be a solution to this acrimony (Green & Priyadarshi, 2001). This means that the Doha Development Agenda was defeated.
Impact of regional trade agreement in resolving impasses within the organization
According to Gibson, Wainio and Bohman (2001), regional trade agreements are the emerging problems that make it difficult for the World Trade Organization to achieve its development agenda. When countries form smaller blocks, they come up with policies that are focused to benefit them without giving any fair regard to other blocks. For instance, the European Union defeated the Doha Development Agenda because its member states had interests that had to be protected. This meant that the union gave a section of the members of World Trade Organization an unfair advantage over a section of other members. The African Union was seen as an organization that would empower African states in this organization to have stronger bargaining power. However, it is largely seen as an instrument that has complicated the ability to resolve the impasses within the organization. According to Kaufmann, Kraay and Zoido-Lobaton (1999), these blocks may be necessary if their members are willing to embrace dialogues and ready to act in line with the policies of the World Trade Organization. In fact, they can be the best avenues of solving the impasses without the need of bringing all the individual members on the round table. However, as long as they focus on their own interests and continue disregarding the needs of other blocks, then they are going to derail the operations of this organization given the strength they have based on the number of countries they represent.
Important regional trading blocs and their nature
There are a number of regional trading blocs within the World Trade Organization that are defined by the geographical factors. One of the leading regional blocks is the European Union. Although not all European nations are members, this organization is seen to represent the interest of European nations. It offers member states improved trading environment that goes beyond the stipulations of the World Trade Organization. It also has policies that make member state develop policies that would limit trading with non-member states. This is contrary to the expectations of the World Trade Organization. Another organization that has been growing in power is the African Union. This organization is economic in nature, but has always taken political tone when necessary. Most of the African nations are members of this regional bloc. Another important trading bloc is the Cooperation Council for the Arab States of the Gulf (Kaufmann & Zoido-Lobaton, 1999). This economic bloc has membership from various Arab nations in the Middle East and parts of North Africa. Asia-Pacific Economic Cooperation is another powerful economic block that brings together various Pacific Rim countries. Established in 1989 and with 21 member states, this economic organization has been keen to champion for the rights of its members within the World Trade Organization.
World Trade Organization and the Third World Countries
According to Kaminski (1999), the World Trade Organization has failed to address the concerns of the third world countries. This scholar says that the efforts made by the representatives of the third world countries to introduce balance in trade has not been addressed by the organization satisfactorily. Although the organization has enabled the developing economies to trade with easily with the rest of the world, issues that concern developed economies have been given more priority at most of the forums of this organization. This has earned this organization massive criticism from various analysts and leaders of the developing nations.
Martin Khor’s criticism on World Trade Organization
Martin Khor is one of the leading critics of this organization, especially when dealing with issues that put developing nations on one side and developed nations on the other. According to Khor, this organization is more of an instrument used by the rich nations to gain more competitive edge over the poor countries other than being a fair economic forum. As Kern (2003) notes, most of the policies and practice of this organization has been in favour of the developed economies. In the cases where policies have been passed in favour of the developing economies, then such policies are always proposed by the developed nations. The developed nations would ensure that these policies do not conflict with their interests. This has made it very challenging to address issues concerning fair trade within the organization. For instance, the European Union’s anti-dumping policy limits agricultural products from the developing nations to their member countries, especially on the products that they can produce. However, they do not consider exporting old computers to Africa as a more dangerous dumping. Khor argues that rich countries have maintained high quotas and import duties on certain products to limit their importation into their countries. This goes against the spirit of this organization. However, the organization has been unable to address the issues adequately. According to Khor, World Trade Organization has failed to be impartial when addressing some of the complaints raised by the developing economies. He claims that the organization is closely controlled by the developed economies, and this makes it difficult to make rulings that go against them. For this reason, the developing economies are forced to be a party to an organization that it has limited influence on, and they have to accept what the giant economies offers.
Labour and environment
The World Trade Organization is increasingly receiving massive scrutiny and criticism on the manner at which it is addressing the issues of labour and environmental concerns (Khor, 2005). This organization has a mandate of ensuring that labour laws are followed by all the companies operating in the international market. The organization is expected to monitor that manner in which some of the multilateral organizations operate in a global society to ensure that human rights are protected as per the Human Rights Conventions. In the developed economies, most of the employees have the capacity to defend themselves because they are empowered. Labour in these nations is well-educated, have access to information, and have numerous job opportunities to choose from whenever they feel that their rights are being violated. On the contrary, employees in the developing countries have limited education; have limited access to information, and with limited job opportunities. This means that whenever they manage to secure employment within a given organization, they will always be willing to do anything to protect their jobs. It is because of this desperation and ignorance that leaves these employees vulnerable to abuse from their employers. Some of the employers force their employees to work for up to 14 hours in a day without factoring in the benefits of better pay for the overtime. Other employees are forced to work in very inhumane environment that puts their lives in jeopardy. Maskus (1998) recalls a case in 2007 when over 31 minors in South Africa died in their gold mines in what many considered lack of measures to offer them protection during the mines.
The company involved was an international organization that majorly exported its products to the United States, Europe and China (World Trade Organization, 2002 b). Many human rights groups expected this organization to take some actions against this firm given that the government of South Africa had ignored the issue. However, the relevant authorities took no action despite the fact that the incident was highly published. The victims’ families were promised compensation by the government of the country, but the company is still to cooperate with the relevant authorities. It has remained very active in the international market, and in various occasions, its top executives have met with the officials of World Trade organization quite often after the incident. Other multinational organizations pay their employees very little wages that are barely enough to support their needs. Similar cases have been taking place in Saudi Arabia, Nigeria, and other members of the developing economy. The perpetrators are large global companies that World Trade Organization is fighting for to create a world market. Its silence on these atrocities is worrying.
Environmentalists have complained that the world is under massive threat of nature related disasters that are directly contributed by the massive pollution from the developed states. The United States have been experiencing frequent hurricanes that are very destructive not only to the property, but also to human life. Japan recently experienced massive cyclone that destroyed properties and led to the loss of lives of many people. The City of Beijing and Hong Kong have been experiencing heavy smog and polluted air that is very dangerous for the elderly, young children, and people with respiratory problems. These are some of the countries that are leading in emission of greenhouse gases. These countries have been warned by the global society to reduce their emission of greenhouse gases, but they have ignored the calls. It is important to note that these natural disasters are not limited to these countries responsible for the massive pollution of the air. For instance, on 16th May, 2013, Tropical Cyclone Mahasen hit Bangladesh with devastating impacts. Over ten people died from this cyclone, with another 800,000 being displaced. Properties worth millions of dollars were destroyed and many families were left to start life from scratch. This was not the first time that a similar cyclone struck this nation. In 2008, the country had also suffered a massive attack from cyclone, but its impact was not as bad as the recent cyclone. Another minor incident had been reported in 1991. However, it is important to take note of the trends of the cyclones that have been experienced in the country. With each passing day and as the environment gets increasingly polluted, the strength and the impact of the cyclones become stronger.
The 1991 case was a mere incident that did not raise much concern. The 2008 case was worrying while the 2013 case was catastrophic. The researcher focuses on Bangladesh because the country is innocent of the attacks from nature. When ranking countries that top in environmental pollution, China tops, but Bangladesh is one of the countries trailing in this list. However, given that China and Bangladesh are in the same regional block, the emissions that benefit China have a devastating effect on Bangladesh. This is a clear indication that the emissions are not just a China affair. Other countries around the world get affected. The world is expecting World Trade Organization to reign over the United States and China to reduce their rates of emission as a way of protecting the world. There have been concerns that instead of cutting down its emissions, as see in most of the European nations and the United States, China is scaling up its emission. The environment cannot withstand this, and World Trade Organization should make this clear to China. The products manufactured out of this polluted environment are sold in the global market prepared by World Trade Organization for China. This organization should put trade restriction on this country as a way of forcing it to scale down on its pollution. It should convince all member states to stop trading with China, or any other country that is not obeying the environmental policies as a way of protecting the earth. According to OECD (2000), the issue has not been that this organization has made credible efforts towards this but defeated. The organization has made no effort at all, despite its knowledge of the ongoing trends and the danger that the world faces. The Kyoto Protocol was defeated by the developed nations, and this body did nothing to save the situation.
Decision making
World Trade Organization represents the interest of all members, and it would only be fair if all of them are treated as equal partners in the decision-making process. The decisions made by this organization should be based on mutual agreements of all the members or the majority as it is expected in a democratic forum. When the majority is allowed to have their way, the minorities should be allowed to have their say. However, critics have argued that at World Trade Organization, the rich few always have their way while the majority poor do not have their say. This is because of the vested interests of the few rich nations. According to OECD (2005), the decisions made by this organization are always pro-rich countries. The United States and European Union have been seen as the powers that control this organization. Any decision that goes against the interests of the United States is always defeated in this organization. What is worrying is that the United States, just like any other country, should be able to listen to the views of other nations and sometimes allow decision of the majority to prevail even when they are against the decisions. Oxfam (2001) says that a union that brings together the United States and European Union can paralyse any debate that is seen to be against the developed states. The Doha convention in 2001 is a clear demonstration of the power that the union has within this organization. On the other hand, the demands of the majority in the developing countries, even through their strong organizations such as the Africa Union or GCC, have failed to make their case successfully in this organization.
Call for a world trade organization parliamentary assembly
According to Oxfam (2002), The World Federalist Movement is one of the organizations that have come out strongly to put pressure on the World Trade Organization to embrace democracy in its decision-making processes. Although some critics have questions the credibility of this federalist movement given that it was started and has always been sponsored by the United States since its formation in 1947, many have supported its consistent call for democracy in major global organizations. This organization made a proposal that World Trade Organization should have a parliamentary assembly that would represent the interest of all the member states. This federalist movement stated that the best way of ensuring that everyone’s interest within the society is respected is to create a decision-making body that would have representatives from individual member states. Each country should be allocated a given number of seats in the parliaments based on the mutually agreed terms of all the member states. During the process of coming up with important policies, the parliament should be allowed to discuss the issues in the best interest of their countries. The decision made by the parliament should be respected by all member states. Any country that fails to observe the policies should be subjected to some form of punitive measures such as trade barriers.
There is a need to have fairness in the process of making decision. In the modern society, tyranny that existed in the past centuries may not work. Individual countries must learn to respect the interest of other countries. There is a need to work towards mutual benefit for all without embracing policies that are self-centred and meant to affect other countries negatively. The spirit of nationalism was good in the previous centuries, but that is not the case in the current global society. Activities of China affect Bangladesh directly, and so does the activities of the United States on Haiti. In order to protect the world from ultimate destruction, we need to work towards one common goal. This can only be possible when some countries drop their ambitious projects that are not environment friendly. This also requires all member states to start looking at one another as equal members in the union without feeling superior to others. The destruction of our planet will not only affect the concerned countries. It will be experienced globally. This is the argument pushed forward by the World Federalist Movement when it was proposing the formation of a parliament within this organization.
Benefits and Criticism
According to Oxfam (2004), the World Trade Organization is seen as an evil that the developing economies have to learn to live with, in the currently globalized society. Although they have stated their case and it is very clear that their interests are ignored, they do not have the capacity to withdraw from this organization because of the economic benefits they get. This is so not only because of the market offered by this organization, but also because of some of the imports they get from the developed companies. For instance, Maskus (1998) observes that mobile phones have become a normal family necessity that no one can do without. However, no single African state has a company manufacturing this product. Cars are also necessities in Africa, but the truth is that they all depend on the United States, Japan, Germany, and India for the product. These countries know that they have no option, but to cling to this relationship that they consider oppressive. However, they have directly blamed World Trade Organizations for its failure to protect them from this aggression by the world powers. The following are some of these claims.
The WTO is anti-environment
After fighting in the Kyoto Protocol and other environmental conventions to cut the rates of greenhouse gas emissions by the leading power without success, the third world countries have directly blamed this organization for its failures to take measures against the concerned countries. It is clear to this organization that contravening the measures put in place during the Kyoto Protocol would jeopardize the global environment. As an organization that brings together all the concerned parties, it was expected to reign over rogue nations and ensure that they followed principles set in this proposal. The silence of this organization has been directly interpreted by the developing nations that it is anti-environment.
The WTO is bad for health and squashes diversity
These countries have also questioned the interests of this organization to fight for the diversity in the society and to promote health. At its headquarters, most important decision-making organs are held by representatives from the developed nations. This lack of diversity in its leadership structure shows its unwillingness to embrace diversity in its operations. This explains why important decisions of the organization always go in favour of the developed nations. According to Scott and Walmsley (2003), the deliberate effort of this organization to ignore increasing pollution from the major economies shows that this organization is not concerned about health of people in the world. In various Chinese cities, especially Shangai and Beijing, health experts have confirmed that there are increasing cases of respiratory diseases caused by emissions from some of the leading companies in the country. Although World Health Organization has made its voice on the need for a reduction of these emissions, it lacks economic power that can force China to comply. World Trade Organization has this power, but has refused to put it into practice. This is a clear indication that it is not interested in protecting the health of people around the world.
WTO undermines the local level decision-making and national sovereignty
Most of the third world countries have criticised this organization claiming that it is undermining the local level decision-making processes. According to Third World Network (2001), most of the decisions made at this organization always come from the secretariat. The representatives of the individual countries, especially those that are from the developing economies, are always ignored by this secretariat, making their presence at such forums inconsequential. They are always there to rubberstamp the decision of the world powers. According to some of the recent reports, the third world countries have accused this organization of undermining the sovereignty of some countries. According to Treisman (2000), African Union has blamed the organization for undermining the sovereignty of some of its member states, especially following the ICC’s handling of cases of heads of state in Kenya and Sudan. They claim that the power that ICC wields is directly given to it by World Trade Organization. Failure to corporate with this international court would lead to trade restrictions. These restrictions can only be imposed by this organization. For this reason, many see it as a tool used by the powerful nations to frustrate leaders in the developing economies.
WTO operates in secrecy and hurts third world
According to Third World Network (2003), this organization has never been open to the third world countries when making some major economic decisions. In most of the cases, the policies are brought for discussion when they are already fine-tuned when members are called upon to discuss it. At this stage, the relevant countries shall have known its real benefits to them while, on the other hand, the representatives of the developed countries will be forced to have a short period to analyse it and make a decision. For this reason, some policies are passed that do not favour these developing nations. This has hurt third world countries. The policies of this organization do not focus on how to lift their economic needs.
Criticism of WTO Aims and agreement on free trade
There have been claims that the aims of this organization are focused on empowering the developed nations. According to World Bank (2001), most of the developed nations are very unfair when developing their tariffs. China and the United States know that they need rare earth minerals from parts of Africa in order to manufacture electronic and other complex products that define their booming economy. For this reason, it charges very minimal tax on these products in order to increase their availability in their economy. To control their prices, they ensure that they control their extraction or the entire market. These developing countries have never found a reason to highly tax exports on these products because they do not have the companies that can make use of them. However, a country like China heavily tax any export of their rare earth minerals as a way of limiting their exportation. These loopholes in the international trade exist, but this organization has never seen any need to come up with measures to regulate them. These acts are detrimental to free trade, and they have a negative impact on the developing nations.
Financial crisis of 2007-2009 and WTO
A section of the society has been critical of the World Trade Organization over what the society believes was its role in the 2007-2009 financial crisis that affected many nations, including the developing economies. According to UNCTAD (1999), it is the responsibility of this organization to ensure that the economic woes of one country do not have a ripple effect on the world’s economy. Economic analysts have positively identified the bust of the United Sates housing bubble of 2005-2006. The fact that American financial crisis affected almost every continent in the world clearly shows how much this organization has made the world depend on the United States. Greece has been suffering from economic woes for years, but this has not affected even its neighbouring countries that have been experiencing an economic boom. However, the power that World Trade Organization has given the United States makes its economy so influential that any impact on it will have a ripple effect on various other countries in the world (Wainio, Gibson & Whitley 2001).
As mentioned before, the World Trade Organization is a social evil that the third world countries must learn to live with in order to achieve some of their economic aims. According to UNCTAD (2002), in spirit, this organization has the best capacity to put the developing nations into a path of economic prosperity. Although the organization has receiving massive criticism from various quarters, Treisman (2000) says that the critics have overemphasised on the negativities making it difficult for the global society to see the real benefits of this organization. This scholar has been calling for a fair analysis of this organization in order to enhance its performance in delivering service to the member states. Criticism without offering clear solution may not be beneficial to this organization. It is necessary to identify specific advantages and disadvantages of the organization in order to determine the way forwards in an effort to improving its service delivery. At this stage, would be important to analyse some of the advantages and disadvantages of this organization to the third world countries.
Advantages of World Trade Organization to the Third World Countries
The third world countries have been struggling to develop their economies in a very competitive global market. In order to achieve economic growth, these economies must have powerful companies that can trade favourably in the global market. This may not be easy given the strength of some of the major companies from the leading economies. The World Trade Organization has been very helpful to these countries in various ways in this tough economic battle. Some of the specific areas that this organization has come out strongly in support of the third world countries include the following areas.
- This organization has been helpful in the creation of a forum where the interests of the developing countries can be listened to, and taken into consideration by all member states. This organization offers individual countries among the developing economies to discuss issues relevant to their economy, and seek direct help from member states. For instance, there are cases where third world countries have sought for the help of this body to protect their young companies from more competitive companies for a specific period (UNDP, 2002). This way, the specific industry, will be protected for a specific period in order to grow, before other competitors can be allowed into the market. It has helped many companies in the developing economies gain competitive strength in their local or even regional markets.
- The World Trade Organization has played an important role in offering direct economic help to the third world countries as a way of boosting their struggling economies. The organization has been working very closely with The World Bank and International Monetary Fund to help government finance their budget deficits. The two institutions have been offering soft loans to these governments to help them boost their economies. These two institutions have also been offering grants occasionally to some of the deserving nations.
- The Word Trade Organization has played a major role in opening the international financial market to companies in the developing countries. According to UNDP (2004), companies in these countries have been struggling to fund their operations in order to become globally competitive. This has not been easy because some of the local banks have been offering loans at very high rates. Others have been ignoring other firms, especially the small and medium firms. The World Bank, through various intermediaries in these countries, has come up with soft loans and grants to some of the deserving companies, especially those in the green energy sector. This has not only improved their productivity within their countries, but also their competitiveness in the global market.
- The organization offers individual third world countries the largest single market forum for selling their products. They have a mandate to export their products to these countries without any restrictions. Conversely, they are also offered wide supply sources for any product they may need. In the world market, these companies can easily choose where to buy their products based on the quality desired or price when looking for some of the technical products (United Nations, 2000). They can go to the United States, Germany, or the United Kingdom when they need highly functional products. They can go to China when they need cheap products. In such an environment, success is easily achievable.
Disadvantages of World Trade Organization to the Third World Countries
It is important to note that, despite the above benefits that the third world countries stand to benefit from this organization, there are some disadvantages that need to be addressed in order to make the organization more beneficial to them.
- This organization has ignored some of the policies developed by the developing nations to bring equity and fair trade among partners. In most of the cases, their views are ignored, making it difficult for them to make an impact in the global business environment.
- This organization has deliberately given excessive power to the United States and European Union, making the two bodies the main decision making units. This has seen most of the developing nations forced to accept multilateral trade agreements that have negative impacts on their economy.
- The World Trade Organization has been used by the developed economies to undermine the sovereignty of some of the developing economies. There have been cases where the United States and European Union have issued threats of economic consequences to governments of countries in the third world countries that ignore their demands. Given that this organization will be expected to implement such punitive policies, it has been seen as a tool to frustrate some governments in the developing economies.
- The third world countries have also complained that this organization is not helping them to fight countries that lead in the pollution of the environment, but instead give them more power. This makes it difficult to win the war against environmental pollution. Developing nations are the biggest losers in this battle. A country like China is rich enough to develop proper mechanisms to deal with such issues as cyclones. On the other hand, countries such as Bangladesh are always affected by such forces massively.
To be a member or to be excluded from World Trade Organization
As previously mentioned, the developing economies cannot avoid the membership to World Trade Organization. Although they have raised some credible complaints against this organization, the benefits of this organization far outweigh the disadvantages. Developing economies need this organization as much as it needs the developing economies. The mutual benefits that are derived from this relationship cannot just be ignored. The only move that can be taken by this organization is to develop policies that would be acceptable to all its members.
Conclusion and Recommendations
Since its formation in 1995 to replace GATT, the World Trade Organization has been focused on the promotion of trade among the member states and on elimination of trade barriers that may exist unfairly in these countries. Most of the developing economies have found themselves into this organization as they struggle to achieve economic success. However, there have been complaints that this organization is not taking care of the interests of the developing nations. The organization has been more concerned of protecting the interests of the developed nations at the expense of the developing economies. This has brought a strained relationship as a section of the membership feels neglected by this organization. In order to achieve success, these feelings should be eliminated. The organization should consider implementing the following recommendations.
- The World Trade Organization should consider implementing the recommendations of World Federalist Movement to form a parliament that represents all member states. The parliament should be the sole decision-making body in the organization.
- This organization should detach itself from direct control by individual countries or specific regional blocks such as European Union or the United States.
- The secretariat should develop policies that would help the body finance its activities from the contributions of all members other than depending on individual states.
- The World Trade Organization should consider exercising its economic powers to force countries like China to cut down on their emission of greenhouse gases.
Limitations
The study involved a comprehensive research using books, journal articles, and credible online sources to develop the research. However, the researcher appreciates the fact that it would have been more appropriate to interview people who have directly taken part in negotiating deals for the third world countries or some of the economic experts from these countries. This was considered a limitation.
Future research
Research is a continuous process and it is expected that scholars will want to expand on this body of knowledge. I recommend that the future research should focus more on how to empower emerging economies in order to make them have a greater bargaining power within this organization.
References
Balding, C. (2010). Joining the World Trade Organization: What is the Impact? Review of International Economics, 18(1), 193–206. Web.
Basudeb, G. (2003). The Impact Of The WTO Regime On Developing Countries. Washington: CGD-GDN. Web.
Broadman, H.G. & F. Recanatini (2000). Seeds of Corruption: Do Market Institutions Matter? Washington, DC: World Bank Policy Research Working Paper, No 2368, 2000. Web.
Food and Agriculture Organization. (2000). Synthesis of the Country Case Studies, in Agriculture, Trade and Food Security: Issues and Options in the WTO Negotiations from the Perspective of Developing Countries, Volume II, Country Case Studie. FAO Rome. Web.
Food and Agriculture Organization. (2001a). A Special Agricultural Safeguard (SAS): Buttressing the Market Access Reforms of Developing Countries, Discussion paper no. 1. FAO Geneva Round Table on Selected Agricultural Trade Policy Issues. Web.
Food and Agriculture Organization. (2001b). Towards Improving the Operational Effectiveness of the Marrakesh Decision on the Possible Negative Effects of the Reform Programme on Least-Developed and Net-Food Importing Developing Countries, Discussion paper no. 2. FAO Geneva Round Table on Selected Agricultural Trade Policy Issues. Web.
Food and Agriculture Organization. (2001c). Review of Basic Food Policies, (this publication replaces Cereal Policies Review published since 1991). FAO Rome. Web.
Food and Agriculture Organization. (2003). Trade reforms and food security: conceptualising the linkages. FAO Rome. Web.
Gibson, P., J. Wainio, D. & Bohman (2001). Profiles of Tariffs in Global Agricultural Markets, Agricultural Economic Report number 796, Economic Research Service. USDA Washington, D.C. Web.
Green, D. & S. Priyadarshi, B. (2001). Proposal for a ‘Development Box’ in the WTO Agreement on Agriculture, CAFOD Policy Papers. Web.
Kaminski, B. (1999). The EU Factor in Trade Policies of Central European Countries. World Bank Policy Research Working Paper, 2239(99), 12-82. Web.
Kaufmann, D. & Zoido-Lobaton, P. (1999). Aggregating Governance Indicators. World Bank Policy Research Working Paper, 2195(99), 34-121. Web.
Kaufmann, D., Kraay, A. & Zoido-Lobaton, P. (1999). Governance Matters. World Bank Policy Research Working Paper, 2196(99), 1-92. Web.
Kern, A. (2003). The World Trade Organization And Financial Stability: The Balance between Liberalisation and Regulation in the GATS. Cambridge: Cambridge Endowment for Research in Finance. Web.
Khor, M. (2005). Implications of Some WTO Rules on the Realisation of the MDGs. Penang: Third World Network. Web.
Maskus, K. (1998). The International Regulation of Intellectual Property, Weltwirtschaftliches Archiv, Vol. 134, (1998), No.2, pp.186-208. Web.
OECD. (2000). Agricultural Policies in OECD Countries: Monitoring and Evaluation 2000. Paris: OECD Secretariat. Web.
OECD. (2005). Agricultural Policies in OECD Countries: Monitoring and Evaluation 2000. Paris: OECD Secretariat, Paris. Web.
Oxfam. (2001). Patent Injustice: How World Trade Rules Threaten the Health of Poor People: Oxfam Briefing Paper. London: Oxfam. Web.
Oxfam. (2002). Mugged: Poverty in your coffee cup. London: Oxfam. Web.
Oxfam. (2004). Truth or consequences Why the EU and the USA must reform their subsidies, or pay the price. London: Oxfam. Web.
Scott, M. & Walmsley, T. (2003). Preferential Trade Agreements and the Optimal Liberalisation of Agricultural Trade. JEL 15(55), 1-16. Web.
Third World Network. (2001). The Multilateral Trading System: A Development Perspective. New York: UNDP. Web.
Third World Network. (2003). Comment by Third World Network on Cancun Text of 13 September. Web.
Treisman, D. (2000). The Causes of Corruption: a Cross National Study, Journal of Public Economics, 76(20), 399-457. Web.
UNCTAD. (1999). Trade and Development Report, 1999. New York and Geneva: United Nations. Web.
UNCTAD. (2002). Economic Development in Africa: From adjustment to poverty reduction: What is new? Geneva: United Nations. Web.
UNDP. (2002). Human Development Report 2000. New York: Oxford University Press. Web.
UNDP. (2004). Sustainable rice production by indigenous women. Web.
United Nations. (2000). Globalization and its Impact on the Full Enjoyment of All Human Rights: Preliminary Report of the Secretary General. Web.
Wainio, J., Gibson, P. & Whitley, D. (2001), Options for Reducing Agricultural Tariffs, Chapter 2 in Agricultural Policy Reform in the WTO—The Road Ahead. London: USDA. Web.
World Bank. (2001). World Development Report 2002: Building Institutions for Markets: Washington: World Bank. Web.
World Trade Organization. (2002a). Doha Declarations Explained. Geneva: WTO. Web.
World Trade Organization. (2002b). Doha Declarations. Geneva: WTO. Web.
World Trade Organization (2005). Ministerial Declaration: Annexes. Geneva: WTO. Web.