Describe about the International Trade and Enterprise for World Trade Organization.
World Trade Organization (WTO) is an intergovernmental organization which regulates the international trade. It is the only global international organization which deals with rules and regulations of trade between nations. It officially commenced on January 1st, 1995 by replacing the General Agreement on Trade and Tariffs (GATT). The basic objective of WTO is to improve the living standard of the people of its member countries, as well as, to provide full employment to the people of member countries, in addition to increasing the trading of goods and services (Marceau, 2010). It also aims at ensuring that the developing countries, secure the maximum benefits from expansion of the international trade.
WTO’s major policy relates to the trade review policy. The main objective of trade review policy is to increase trade transparency among the member countries, as well as, to have a better understanding of trade policies and practices of member countries. Though, WTO has helped poor countries members, but its aim of trade liberalization policy to generate wealth from export, and to make payments for import does very little help for the developing countries. Thus, in this report we will not only cover about the WTO, its structure, its objectives, policies, and functions, but will also highlight the reasons about countries, which do or do not, get benefited from the WTO.
World Trade Organization
World Trade Organization (WTO) is an international organization which deals with the trade of goods, services, and intellectual property amongst its member countries. It came into existence on January 1st, 1995 after replacing the General Agreement on Trade and Tariff (GATT) (Bernhardt, 2014). WTO presently has around 153 members, which together account for the majority of the trade across the globe. WTO’s major focus is on regulating the trade practices and to lower the trade barriers for effective working of international trade (Bagwell, Bown and Staiger, 2015).
The Doha agreement focuses on these trade practices (DiMatteo, et al. 2003). The main aim of this agreement is to achieve reforms in the international trading system, through lowering of the trade barriers, as well as, by revising the trade practices. Briefly describing about WTO meetings, its decision making body is the ministerial conference, which meets at least once in every two year. Beneath it is the General Council which meets for a number of times throughout a year. General Council also acts as the dispute settlement body and meets as the trade policy review body. This meeting is held at the headquarters of WTO, at Geneva.
Objectives of WTO
The objectives of the WTO include the following:
To implement the world trade as determined in the agreement,
To promote such world trade which benefits every member country,
To ensure that the developing member countries, secure the maximum benefits from expansion of the international trade,
To enhance the trade of goods and services,
To demolish all hurdles to an open world trade system, and to ensure the renewal of the economic policies by countries, in order to foster economic growth, as trade contributes towards a major portion of the economic growth,
To enhance the competitiveness amongst its trading partners, so as to benefit the consumers,
To ensure full employment to all the people of its member countries, by promoting increase of production along with productivity,
To ensure optimum utilization of world resources, promote sustainable development and to protect the environment.
Policies of WTO
There are a number of policies of WTO. The first policy relates to the assistance, development, and transition of the economies. This policy is designed to give support and to help the developing countries, as well as, the least developed countries with their trade and tariff data to help them in export. The second policy relates to the specialized help for exporting. This policy is made to provide specialized help to the developing countries, with respect to the formulation and implementation of the export and import operations. The third policy relates to the cooperation in global economic policy making. This policy is to provide cooperation to the International Monetary Fund, the World Bank, and other organizations, in making economic policies. The fourth policy relates to the routine notifications. Members of WTO are required to notify while taking relevant steps. This is to ensure that whether members are following the rules and regulations made by the organizations. However, WTO has provided a lot of help to its member countries but there are cases where it has flawed in benefiting its members, especially those in the developing countries.
The most important policy of WTO is the Trade Related aspects of Intellectual Property Rights Agreement (TRIPS) (Sol, 2007). Besides having regulations on the trading of the goods and the services, the WTO has also focused on trade related aspects, of intellectual property rights. TRIPS agreement set out the minimum standards of protection to be provided by each of the member country. The agreement specifies the areas where protection is required, the subject matter which has to be protected, the rights have to be protected and the duration for protection also has to be clearly defined, along with the exceptional permission relating to those rights have to be mentioned. Further, TRIPS enforcement requires the member countries to make certain domestic procedure and remedies for the effective enforcement of intellectual property rights. It further specifies the details about the procedures and remedies available, so that the right holders can enforce their rights.
Any dispute with regards to TRIPS is resolved by the WTO dispute resolution panel. TRIPS promised meaningful implementation of the intellectual property rights, which require extensive domestic changes in the legal, as well as, the judicial system. It is understood that this is a difficult task and so the WTO gives an additional time to the least developed along with the developing countries, an additional time to implement the treaty. However, with the passage of time, the implementation of this policy seems to be more costly. Thus, implementation of TRIPS became a problematic task for the developing countries (Helfer, 2004).
Whether Developing Countries Benefit from the Policies of WTO?
Briefing firstly about the developing country India, this country has benefited from the various WTO agreements, to a certain extent. Certain benefits like increase in the foreign exchange earnings due to growth in the export of both the goods, as well as, the services. With regard to the increase in the export of goods, like agricultural goods, the major reason was the reduction of the trade barriers at the international level, which resulted in the increase of the requirement of the agriculture product at the international level (Thakur, 2007).
Further, goods like textile and clothing contributed to an increase in the foreign exchange, by removal of the multi fiber arrangement (MFA) (Stern, and Mattoo, 2003). Further, as per WTO- Trade related Investment Measures (TRIMS), which provides for the withdrawal of restrictions on the foreign direct investments. This has helped India in increasing its foreign trade investments. Further, multi lateral trade and discipline, has helped India in achieving the global economic growth. Thus, it can be said that the WTO benefited India as a result of its various policies because of which, India was able to become a strong economy, globally, which was the objective of the WTO (helping the developing countries to foster maximum economic benefits from international trade). Thus, it can be said that India is a winner country with respect to the WTO policies (Sheshagiri, Honkan, and Vaikhunthe, 2011).
Another example of country benefiting from WTO policies is Kenya. A remarkable development in trade policy formulation in Kenya relates to the emergence of the various civil society groups. In most cases, they include the poor and these groups represent the poor, regarding issues in the WTO. These groups then ensure the implementation along with the monitoring of the WTO policies in the country. Further, Kenya largely participates in the WTO for the issues relating to agriculture (Odek, 2002).
Kenya’s economy revolves around the agriculture. Recent report covered that Kenya’s real GDP has declined, though its foreign trade has increased. But the report further stated that the country had failed to earn huge foreign currency exchanges, because Kenya’s major imports includes the goods like machinery, equipments and oil products which creates an imbalance in the foreign currency flow, along with more of the foreign exchange flowing outside the country, compared to amount of foreign currency inflow in the country (WTO, 2000). Thus, it can be said that Kenya is hardly in the winning situation. Moreover, it is more towards the losing situation, as even after becoming the member in all of the WTO policies, for instance TRIPS and the Agreement on agriculture, Kenya is still dealing with a large number of unemployment. A country where poor population was quite high before joining the WTO, even after representing the issues related to the poor, in WTO meetings, no real difference has been made in this regard. Thus, Kenya is a loser in this case.
Sri Lanka is again a developing country. The country’s trade policies as well as its practices are in form of an open market regarding the manufactured imports, which has lead to privatization. Foreign direct investment has been welcomed in the country, which has helped in the development of the clothing and the tourism industry. Like all other members of the WTO, Sri Lanka is also bounded by all the tariff barriers, on its agriculture products. However, with all the reforms regarding the trade being implemented, Sri Lanka’s growth of export has been comparatively slower than its import (WTO, 2016). Again, like Kenya, Sri Lanka was also not benefited much from the WTO policies.
The landmark reform of the WTO, which benefited South Africa, is the Anti-Dumping regime. South Africa, by adopting the anti-dumping regime policy of the WTO, in its domestic antidumping policy, proved to the other nations regarding the successful application of the WTO policies, in order to ensure that its domestic policies meet the international policy criteria (Bown and McCulloch, 2010). After, transformation of South African Government to the Democratic Government, it opened its economy to the world, to become a more competitive economy, and to participate in world economy.
South Africa became a party of all the WTO agreements, including the agreement on anti-dumping. Anti-dumping are the measures to protect the domestic industry, from the import of goods at prices lower than its nominal value (Bown, 2008). Due to extensive tariff liberalization, South African export had increased significantly, but the export goods remained limited. South Africa trade agreement included the SACU, which contains the membership of South Africa, Botswana, Lesotho, Namibia, and Swaziland. It focuses on the regional industrial development, the trade facilitation, and the revenue sharing. Further, its open economy was appreciated, as it allowed foreign direct investment in the country.
However, the only concern raised was that the South African economy was opened way too much, for an economy (Minter, 2001). But in end, things turned in the favor of South Africa, as the committee of WTO considered South Africa, as a country playing major role amongst all the other developing countries. Thus, another positive conclusion was arisen, which was unlike the cases of Kenya and Sri Lanka, as South Africa was benefited from the WTO policies. So, South Africa was a winner country, amongst the members of the WTO.
Whether the Developed Countries Benefit from the Policies of WTO?
The discussions, till now were regarding the developing countries. Now, a discussion has been made regarding whether the policies of the WTO have benefited the developed nations like Australia, and United States.
While discussing about the policies of WTO associated with Australia, the discussion has been made on the common grounds of the developing nations, pertaining to the agriculture trade policies of WTO. Australian government is continuously working towards the global agriculture trade, and to provide a wider market for the Australian agriculture exporters. Australia has reduced its tariff and other protections on the agriculture and the food products (Parliament of Australia, 2016). This provide a competitive, as well as, a productive agriculture sector, with an assurance that Australian farmers can provide high quality product, without any financial support, and trade distorting practices, as are followed by some countries. By implementing this policy, Australia became one of the world’s most efficient agriculture producers.
The intellectual property policy also needs to be discussed when discussing about the WTO policies. Australia, being a leading trading nation, with strong research tradition, and with needs to access to the new technologies, has agreed to the policy regarding the intellectual property rights. Australia implemented these policies in its work, to ensure effective implementation of WTO’s agreement (WTO, 2015). Thus, whether it is an agreement regarding the intellectual property rights (TRIPS) or the agreement regarding agriculture, Australia has only benefited from it, at any given point of time. g a, discussiculture producer. ucer. anylture firstly.out australia sion was benefited from WTO policies. It is a winner country.
The United States was one of the leading forces which led to the establishment of the WTO in 1995. The agreements relating to the reduction in trade barriers, across the globe, allowed the farmers, businessmen, as well as, the working people of the United States in creation of new opportunities, new jobs and in raising the standard of living of the families. The thriving economy of the United States is a result of the trade gains which the country achieved, as a result of the WTO Agreements, as well as, some other trade policies. As per the studies conducted, the result of a complete implementation of the agreements of the WTO would be a boost in the GDP of the United States by $125-250 billion per year, and this was the case of 1998. So, the benefits have just grown for the country (IATO, 2016).
The policy of the United States is focused towards the multilateral reforms regarding the agricultural policy, in accordance to the policies of the WTO. These policies of the WTOO act as the key opportunity for the country to achieve profits in the share of market. The country’s support for the reforms related to trade, within the WTO, relate to the changes in the farm programs of the country, which is expected to be beneficial for the country, in the coming years.
The country has also entered into trade agreements with the Republic of Korea, Panama, and Colombia, in 2012, which includes the new IP standards for these countries, along with the new consultative mechanisms, amongst these countries and the US (WTO, 2014). So, being the leading force in the establishment of WTO has majorly benefitted the country. Further the implementation of the various policies of the WTO, have made the United States, a winner in comparison to the other nations.
From the above discussion, it can be concluded that the WTO is a universal body, which helps its member countries, in growing and developing. This is done by the implementation of the various policies of the WTO, which cover the objectives of the WTO. Though, even after implementation of these policies, there has been a disparity in the success of these policies. As analyzed above, some of the countries have benefitted from these policies, while the others have proved as a loser in this segment. Though, the developed nations have only benefitted from these policies and the disparities in the success of these policies, is only present in the case of the developing countries. So, it can be right concluded that each nation has a different response to the success of the WTO policies.
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