World Trade Organisation

READING TIME 15 mins
World Trade Organisation

About the WTO

The World Trade Organisation (WTO), with 162 member governments, is the only forum in which most of the world’s countries come together to try to negotiate global trade deals. It has a number of founding agreements, the most important of which are the General Agreement on Trade in Tariffs (GATT) and the General Agreement on Trade in Services (GATS). The ultimate decision-making body of the WTO is the ministerial conference, which meets every two years. The organisation also functions to resolve trade disputes between members via its dispute settlement mechanism.

So what's the problem?

The WTO trade agreements are extremely problematic because they largely prioritise liberalisation and deregulation in the private interest over national (and potentially international) regulation in the public interest. Ironically, in areas where certain 'liberalisation' policies could potentially have a range of social and environmental benefits (e.g. in policy areas such as export support, fisheries subsidies, market access for textiles and the flexible use of intellectual property rights), exceptions have been made in practice and the trade system has again been used to benefit the few, rather than the many. The challenge facing the international community is to make the trade system reflect the concerns of civil society and work for poverty eradication and sustainable development.

When it was founded in 1994, the rules agreed were heavily biased in favour of rich country priorities, to the detriment of poorer countries. In 2001, the Doha round of negotiations was launched; in theory this was to be a ‘round for development’, however there is yet to be a conclusion to the talks and at the 2015 ministerial, rich countries refused to renew their commitment to completing the round. Poorer countries are still insisting that the WTO must deliver on its Doha promise, whilst richer countries want to introduce a raft of new issues, many of which are not in the interests of developing countries.

The WTO has set a precedent for the direction of travel for trade for many of the world’s bilateral and multilateral agreements. In particular, it establishes the principle that all other non-trade policy measures must not unnecessarily restrict or create obstacles to international trade (via the Agreement on Technical Barriers to Trade). The WTO has also established a set of rules on subsidies, public procurement, standards and the protection of international investment that directly influence bilateral and plurilateral deals.

In depth

Developing country issues sidelined

At the end of the Uruguay round of talks that established the WTO, developing countries outlined a series of demands to address their priorities. Progress on these issues has been extremely slow.

Key issues for developing countries include:

  • Ending trade-distorting agricultural subsidies: as of early 2016 developed countries are supposed to have eliminated remaining scheduled agricultural export subsidies. So for example the EU will bind export subsidies at zero with significant potential benefits for LDC cotton producers, amongst others. However the gains from this are undermined as many subsidies have in fact simply been transferred to the WTO ‘Green box’ (schedule of permitted subsidies).
  • Duty-Free, Quota-Free market access for developing countries selling into richer country markets: on paper there has been significant progress in this area:  only a small number of tariffs (mainly in the US) remain. However tariff levels globally have fallen considerably, reducing the gains for developing countries – this phenomenon is referred to as ‘preference erosion’.
  • Special Safeguard Mechanism to protect from import surges. This is a long-time priority for developing countries, for example the Group of 33 developing countries (G33) submitted a number of proposals to the 2015 WTO ministerial. However nothing has been agreed so far.
  • Cotton: this is a major priority for the ‘Cotton 4’ (C4) developing countries Benin, Burkina Faso, Chad and Mali. They currently struggle to compete with bigger producers, including EU producers like Greece. There has been little movement on market access barriers or development assistance. The current position on rules of origin under the WTO offers no more than non-binding guidance on implementation. This means that rich countries are under no obligation to take steps to make changes to their arrangements for trade in cotton.
  • TRIPS permanent waiver This is a long-standing demand of LDCs that would allow them not to implement intellectual property agreements. LDCs want a permanent waiver, they have for 20 years been offered only temporary waivers.
  • Public stockholding for food security – aimed to allow developing countries to protect against volatile food prices. India is seeking a permanent solution to allow countries to keep stocks of food. Whilst a temporary solution was agreed in 2013, no permanent solution has yet been agreed. not achieved in 2015. Ministerial also failed to address the issue of monetization of food aid (particular issue for the US). 

Bullying tactics

WTO negotiations have been characterised by bullying tactics on the part of developed countries towards developing countries. Countries have been actively prevented from entering negotiating rooms and it is routine for larger countries to break off into smaller negotiating groups to try and resolve issues between themselves.

Negotiations in stalemate

The WTO as a negotiating body is looking extremely weak. At the 2015 ministerial countries were unable to agree whether or not to continue negotiations under the Doha mandate. The EU and US are the strongest proponents of ending Doha (the UK was also a strong supporter) and of introducing so-called ‘21st century issues’, most of which are in fact the ‘Singapore issues’ rejected for inclusion into the negotiating rounds by developing countries in 1996. Details of the new issues have been slow to emerge, however ‘e-commerce’ is a strong priority with the potential to have very broad issue coverage (goods, services, intellectual property, investment, competition, government procurement, global value chains), potentially introducing controversial issues by the back door.

What is TJM calling for?

Addressing concerns about WTO negotiations were one of the main things that brought TJM’s membership together in the early 2000s. TJM are calling for a fundamental rethink of the purpose and powers of the WTO. In particular, a redesigned WTO should:

  • Ensure full democratic scrutiny by the public and politicians, as well as equal participation of all members;    
  • Support the goals of international agreements, including those on labour rights, human rights, the environment and international development;
  • Allow flexibility for developing country implementation of agreement and make greater use of non-reciprocal measures in areas of importance to developing countries;
  • Support developing country capacity that goes beyond technical assistance for negotiating and implementing trade agreements and helps with impact assessments and the capacity of politicians and civil society to scrutinise trade policy;
  • Offer meaningful special and differential treatment. Small and vulnerable economies must be able to retain the flexibility to shelter vulnerable sectors from competition in order to achieve overall national development goals;
  • Addresses rich country trade barriers such as tariff escalation and non-tariff barriers;
  • Ensure trade rules promote sustainable agriculture both in terms of the environment and livelihoods for rural populations;
  • Allow governments to ensure populations have access to basic services such as water, housing, health and education, with no pressure to privatise and no penalties for renationalisation where the government deems it necessary;
  • Ensure maximum availability of for example medicines and green technology by limiting the length and scope of patent protections in developing countries;
  • Exclude negotiations on investment and competition from multilateral negotiations – the multilateral forum is not the appropriate place for these discussions to happen; 

Further information