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GLOBALISATION AND THE WORLD TRADE ORGANISATION
International trade influences people's every day life in a variety of ways:
consumption quality and choice, the manner in which employment is created or lost,
economic and social policies, distribution of income and the gap between rich and poor.
Yet the implementation of trade agreements has gone unnoticed among the
majority of politicians, NGOs and citizens. What little media interest there has
been in the new World Trade Organisation (WTO) was created by trade wars between the
major trading powers - the EU, USA and Japan. Ministers and officials claim that the WTO
is an instrument for globalisation and a means of maximising opportunities for economic
growth, jobs and reducing marginalisation by the promotion of free trade.
However, the evidence suggests that this is not true, particularly for the least
developed countries.
WHAT IS THE WTO?
In January 1995 the World Trade Organisation (WTO) became
operational and replaced the GATT (General Agreements on Tariffs and Trade).
The main task of the WTO is to implement the trade agreements negotiated in the
Uruguay Round (1986-1994). These agreements serve to open markets for
agricultural produce, industrial products and services (e.g. banking,
tourism, communications) and to protect the intellectual property (e.g. designs,
copyrights) of traded goods.
HOW DOES IT WORK?
The WTO constitution provides for a ministerial conference at least once
every two years to ensure that the trade ministers take responsibility for the
organisation's functioning and future direction. This Ministerial Conference is the body
with overall control of the WTO and is serviced by the General Council which
oversees the functions of the WTO throughout the year. The General Council is responsible
for guiding and taking high-level decisions on the activities of three other
councils on Trade in Goods, Trade in Services, and Trade Related Intellectual
Property Rights, plus their committees.
In addition, the General Council reviews the Dispute Settlement
Body which ensures the functioning of the judicial system of the WTO for trade
disputes and breaches of rules; and the Trade Policy Review Body, which discusses and
publishes regular country reports about trade policies, application of WTO commitments and
trade liberalisation. A significant feature of the WTO is that, unlike GATT, it can impose
binding arbitration in trade disputes.
The WTO Director General is Renato Ruggiero from Italy. In terms of
trade the EU is counted as a single country, and is represented by Leon Britain, EU
Commissioner for Trade. The lead UK Government office for the WTO is the Department of
Trade and Industry (DTI).
WEAKNESSES
The main weakness is that the WTO benefits rich countries more than
poor developing countries. Many developing countries cannot afford to have a
representative in Geneva and have difficulty participating in the complex WTO
system. They are still trying to come to grips with the GATT agreement signed in
1994 and have little awareness of resources for their obligations to the WTO.
The same is true for the dispute settlement system,
where the legal expertise and resources required are beyond the means of
some developing countries. In the first year of the WTO's existence, of the 50 trade
disputes it dealt with, 18 involved the United States, which won 17. Some believe that
if the WTO did not support US policy the United States would withdraw making the WTO
impotent without such an economically and politically powerful nation.
In addition, the WTO's decision-making process has little
transparency, accountability and equity. Like the World Bank and the
International Monetary Fund (IMF), the WTO operates outside the United Nations system.
Access to the WTO is limited, meetings of the WTO bodies are open only to diplomatic
representatives of member states, WTO Secretariat staff and staff from other
intergovernmental organisations with observer status, such as the IMF.
OUTCOME OF THE FIRST WTO MINISTERIAL MEETING
In December 1996 the first Ministerial Meeting of the WTO took place in
Singapore with 126 countries participating and 30 more, including China, waiting in the
wings to join.
The highlight of the meeting was the biggest ever trade deal in a single
sector abolishing tariffs on information technology such as computers, software,
micro-chips, and telecommunications. This IT Agreement was backed by 30 countries
representing more than 80% of information technology products. This reflects
the change in global trade flows, with developed nations like the UK increasing trade in
services, such as banking and telecommunications, of which the UK is a net exporter,
rather than manufactured products.
Other main commitments were: - to encourage observance of internationally
recognised core labour standards as set out by the ILO, (although the inclusion of a
Social Clause in international trade agreements was rejected); - to improve the
availability of technical assistance to assist developing countries comply with
their WTO commitments; - to establish WTO working groups on investment, competition
policy, transparency in government procurement and simplification of customs procedures.
WHAT DOES IT MEAN FOR DEVELOPING COUNTRIES?
The poorest countries and people in the world are missing out on the
benefits of the new world trade system. The least developed countries (LLDCs) - 48 nations
with a combined population of 570 million - have seen their share of world trade more than
halved over the past 20 years. They represent 12% of the world's people, but participate
in only 0.4% of international trade.
For developing countries which still rely heavily on
commodities and basic manufactured products, and for people living in villages with
no water or electricity supplies, the new IT Agreement will bring little
benefit.
In the global free market promoted by the WTO, all products have to
compete with each other. Developing countries often lack the things which contribute
to competitiveness such as technology, communications and
information, capital and credit, foreign direct investment (FDI), training and education,
management, know-how (intellectual property rights), cheap and skilled labour, large
consumer markets, adequate support and government infrastructure. This deficit is
even worse for LLDCs which depend almost solely on cheap labour and a few commodities or
products, such as coffee, tea and copper, for which prices have been declining since the
1970's and are forecast to fall still further.
The principle of unequal countries and economies competing equally is, in
fact, unfair: it depresses economic activity in the weaker economies and undermines their
ability to compete. For example, although the net annual inflow of FDI to developing
countries nearly quadrupled between 1990-95 to more than US$90 billion, Africa's share was
only 2.4 per cent.
In response to concern for the least developed countries the WTO
has agreed in principle to a plan of action which takes into account
LLDC's problems by allowing duty-free access on certain goods from certain countries. The
WTO is now planning a meeting with UNCTAD (UN Conference on Trade &
Development) with the participation of aid agencies, multilateral financial
institutions and the LLDCs "to foster an integrated approach to assisting these
countries in enhancing their trading opportunities."
CAFOD would like to see clear development
objectives - such as poverty reduction, food security and environmental sustainability -
in WTO trade agreements, with the needs of the poor receiving more explicit
attention. These include: more support for least developed countries; more
transparency, accountability and consultation between the WTO and civil society;
regulation of transnational companies and foreign direct investment; and monitoring of the
impact of WTO policies on the poor in developing countries.
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