Analysis Of The World Trade Organization's Impact On Poorer Nations - Essay.

Question 1 

Watch the following video presentation:

Based upon the content of the presentation and what you have learned in the course, provide a detailed analysis of whether you agree with the following statement and why.

“The WTO has failed poorer nations”

In answering the above statement, provide an analysis of your argument ensuring that you make appropriate reference to the WTO legal framework and topics covered within class.

Question 2

Describe the process by which the WTO resolves disputes between member nations.

Provide an analysis of whether the above methodology is like that of the Australian legal system.

Provide an analysis of the effectiveness of the WTO dispute resolution mechanism and whether you believe it is appropriate to achieve the stated aims of the WTO.

Question 3 

The nation of Esperanto is a member of the WTO and is a producer of wood chips. In recent years, it has been receiving substantial imports of wood chips from the nation of Yee which it claims is causing its domestic industry to become uncompetitive and sluggish.

Yee is also a member of the WTO and asserts that it has not engaged in any conduct to cause harm to Esperanto’s domestic industry.

1. Beyond the complaints of Esperanto, what is the protocol, evidentiary burden and legal position necessary to prove dumping.
2. Assuming Esperanto is successful in its case against Yee, what, if any, are the mechanisms by which the WTO moves to compensate the conduct of Yee.

Question 4 

The WTO is approached by two nations who are completing the consultation phase of their dispute and it appears that matter will proceed for complaint.

Makato produces and exports unroasted pistachio nuts. Balari imports unprocessed freshly picked pistachio nuts which it subsequently exports to many countries Makato.

Recently, Balari has been sending substantial quantities of fresh picked green unwashed pistachio nuts to Makato. Makato has placed a tax upon this product on the basis that it is substantially different to the type of pistachio produced and exported by Makato.

Provide an analysis of the above situation ensuring you answer the following:

1. Considering the position of Makato and Balari, are the pistachios in dispute to be considered a like product
2. How would such a likeness be determined and what criteria should be applied
3. What factors should the WTO look at in making its determination of likeness
4. What will occur if it is shown that the products are indeed like products within the meaning of the WTO law and what are the consequences for Makato.

Overview of the World Trade Organization

Question 1

The World Trade Organization, commonly abbreviated as WTO  has control over the global trade and economy[1]. It had its 10th summit in Nairobi in Africa. This was the foremost ministerial summit on the grounds of Africa. The WTO, when launched back in January 1995 had undertaken a massive body of targets and responsibilities for the enhancement of trade, equal distribution of wealth and income among the member nations and the prevention of accumulation of wealth amongst the richer countries.

But with the passage of time WTO could not deliver all of its objectives. It could not be successful in maintaining its aims and objectives towards the nations. Consequently the developed nations have gained a lot while the developing and the underdeveloped could not do much of it. The WTO has failed poorer nations[2].

There has been ample reasons for such failure but the government specifically has held the Doha round agenda to be responsible. The agriculture and the economy have been trapped especially. The production from the farms are sold at very low rates, compared to the heavy labor given by the farmers. For instance, there has been a substantial decrease in the cotton plantation in Kenya. The farmers state that after a year of working heavily the desired results are not got. A farmer earns an average of $300 after a year of tremendous work pressure.

Gradually they are leaving such works. After their produce of the cotton they are transported to other places where the factories are located to give them the ultimate shape. The total income that they gain is just 10% of the total output. The needs of the farmers cannot be met and it lowers the standard of living. This aggravates poverty to a great extent. The national income can in no way rise and the gross domestic product either lowers down or remains constant. There is absence of growth in the nation and it is complementary to trade becoming unsatisfactory[3].

The urgent need of the developing nations is the requirement of more and more trades with more deals. But this cannot be done because of lack of contribution from the WTO. Moreover, the richer countries do not agree to this notion of new trade. The richer countries possess developed economies themselves and they do not understand the urgency to resolve the problem. The richer countries have developed their own regional and global arguments. It is always recommended that the poorer nations should opt for similar measures but they do not possess sufficient resources to do the same. The Doha round agenda has contributed in the failure of the poorer nations in a big way[4]. This was an agenda of the WTO which began in 2001 in Qatar.

It was initiated to decrease the obstacles related to trade and the enhancement of the international economy and trade. The main objective was to make the flow of trade easier amongst the nations of the world so that no country would suffer. It was inaugurated with utmost ambition and objectives but the greatest challenges with regard to the agricultural tariffs and subsidies of farms remain unsolved with demarcations clearly indicated. It could not reach the targets it had aimed for. The reason for such failure can be justified by saying that this development agenda was launched way back in 2001.

Reasons for the Failure of the World Trade Organization to Deliver on its Objectives

At that time the world work in different manner as compared to the contemporary era. The ways of the world have changed, new issues and challenges have arisen. But the solutions are still sought for the older problems. New issues are paid heed to resulting in deterioration and increase of backwardness. United States clearly suggests in abandoning the Doha round because it does not deal with the hottest issues. It fails to understand that the world undergone a primary alteration. Moreover there has been alterations in the political economy. The legal infrastructure too needs to be understood thoroughly[5].

The 14 year old long struggle by the World Trade Organization has been criticized heavily because the struggle proved to be futile. The basic loop holes were not emphasized that resulted in the inability of the poor countries to improve their position in the globe. The poorer countries have been aggrieved because of its failure to reach its objectives. Many nations like that of India, Kenya and Pakistan have been wanting WTO to compel the developed countries like United States of America, China to provide more subsidies of farm to the poor farmers.

The overproduction has been disrupting their loves to a great extent. This creates a great hindrance for the developing nations to develop further. If this scenario continues, the developing nations can never reach the level of developed nations. It often under debate that the bargains under WTO are heavily dominated by the developed nations. The richer countries have a great influence upon the negotiations of WTO. The super powers like USA, European Union possesses massive control over the world trade. This against the principle of equality and  bar to the development of poorer nations.

Another factor which creates an obstruction for the development of the poorer nations by the WTO is the hunger for arms and ammunitions. The international arms and ammunition industry is developing at a rapid rate. The super powers especially create an environment for the industry to thrive upon. It is similar to every developed nations that has been preparing for war at the cost of the poorer countries[6].

Since the ceasing of the cold war the industry has been booming up to higher limits. Naturally the budget is shifted towards these rather than upon the required fields. Around 100 countries across the globe possess a power upon the arms industry. It is USA, EU and China that have the maximum interest to purchase these. The booming imbalance between Middle East and Asia has compelled the Gulf states to participate in the arms competition. A similar scenario is prevalent between India and Pakistan as well[7].

Question 2

The resolution of conflicts is an essential feature of the WTO because it is only after the conflicts are resolved, there can be progression. Without an organized dispute settlement system, the regulation based system cannot be enforced. It makes the WTO more stable and safer. The dispute redressal system consists of various stages to make it uniform and organized among the member states. The major importance is laid upon the issues and settlement is provided in fastest and most appropriate ways. The major aim is to avoid aggrieving the parties to the maximum possible extent. There is space for appeal as well[8].

Impact of the Doha Round Agenda on Poorer Nations

The disputes are based upon the principles, which were once agreed to be followed but now have been infringed. The rules and regulations of the organization is needed to be followed. A dispute usually starts when certain steps are taken differing from the intended policy measures. It is the task of the Dispute Settlement Body to resolve the conflicts. This body consists of the WTO members. This authority can make panels upon their searches and consequences. It keeps a track upon the enforcement of the rulings and ideas and measures can be taken against those who infringe those rules.

The process of WTO Dispute resolution mechanism includes the following steps:

The primary step includes consultation to 60 days. The nations under conflict without opting for other measures must sit and have a talk to clear all the misunderstandings. In case they can settle it amongst themselves there is no need to proceed as the problems fall into their places. In case it is unresolved, the WTO director general can look into the matter himself to resolve the case[9].

The next step includes the contribution of the panel. It takes 45 days for a panel to be created and an additional period of 6 months. In case the primary step cannot be effective, the nation initiating the conflict can create a panel the nation ‘in dock’ can obstruct the panel creation once. But if they Dispute Settlement Body meet again such an appointment cannot be obstructed further.

The panel usually aids the dispute settlement body for the rules and the recommendations. But since the report of the panel can be declined by the majority in body of settlement dispute, its conclusions are tough to avoid. The agreements made are the basis on which the proofs of panel depend. The final report of the panel must be submitted to the parties in dispute within a period of 6 months. In cases of emergency, or that of goods exposed to danger the period is reduced to 3 months[10].

Talking about the agreement as stated before, it consists of details as how these panels exercise. Before the initial begins, each party to the dispute presents its case to the panel. The presentation should be in writing. The nation which is filing the complaint and the nation against whom it is filed along with all other member states who have declared their interest in the dispute can provide their case at the initial hearing of the case. The nations which have participated project Rebuttals and submit them in written format. An oral presentation can be given from the second hearings. In case, certain issues are raised which fully technical or scientific in nature an expert opinion can be taken from experts to come to a conclusion upon the basis of other evidences, which is called the advisory report[11].

The panel then submits an argument with every detail desired with sections of the report from both the parties to dispute within 2 weeks. However the findings and the conclusions cannot be put in it. The panel then provides a temporary report which contains the conclusions and the findings from both the parties. After this a period of 1 week is provided for the purpose of review. The period of review cannot extend 2 weeks. Extra meetings can be conducted by the panel to facilitate the dispute resolution mechanism. The final report is then submitted to both the parties and after a span of 3 weeks, it is spread over to all the members of WTO.

Domination of Developed Nations in Negotiations of the WTO

In case it is resolved and found that no rules were violated under WTO a confirmation is required for the same with the actual rules of WTO. Such final report becomes a ruling or a recommendation under 60 days without a majority declines it or sends it for appeal. When the evinces are not enough or the aggrieves party is not satisfied with the final report an appeal can be made for a better decision. The appeal is made before 3 members out of a 7 member body which is created under the dispute resolution mechanism. Every such member has a tenure of 4 years and an experience in the legal fraternity to resolve the disputes.

The appeal can alter or reverse or decline the final reports within a span of 60 days but not more than 90 days period. It is the responsibility of he dispute resolution mechanism to either take or decline the findings of the appeal within 30 days. The declining can be done only by a majority[12].

The effectiveness can be determined if success is achieved from the dispute settlement mechanism process. The settlement by WTO has proved to be effective in resolving the disputes greatly. This is because it is a steady process involving an impartial system of judgment. The final report is given only after extensive research and study of the evidences. Reasonable period of time are also provided to work upon the issues as stated above. The modes of settlement through consultation and panel proves effective.

The system of appeal has widened the scope of achieving justice among the nations. The rules are followed strictly and violation of the WTO regulations are dealt with efficiently. After having a look at the analysis, it is at par with the Australian government. The methods of arbitration, appeals, majority decisions etc are followed by the Australian government to resolve disputes that arise[13].

Question 3

The facts of the case includes that a member state of WTO is Esperanto. It produces woodchips. Lately, it received ample imports from another fellow nation under WTO, called Yee. Yee has the indigenous industry of Esperanto weak and devoid of competition. Yee denies and states that it has not violated the codes of conduct or caused threats to the indigenous industry of Esperanto.

Dumping means a scenario where the costs are differentiated. It arises when a product is sold in the nation importing it at a lower price when compared to the cost of the product in the market of the nation exporting it[14]. It can be recognized easily when the costs of the product is put under comparison between the markets[15].

Anti-Dumping agreements have been set forth under WTO which stated that the imported goods would not be exposed to internal taxes or other alterations more than those put upon the indigenous products. It empowers the putting of particular anti-dumping duties on imports from a specific source. An examination and recognition of it becomes essential.

It may not be just to incorporate all the producers of similar goods under the indigenous industry. Hence the member are stopped from including the indigenous industry producers in relation to exporters or importers[16]. It clearly states a producer can be accused of dumping in case of prevalence of power over the relationship subsists. For the need of putting the anti dumping measures the authorities of investigation must have an examination upon the injuries. Injury can be both to the indigenous industry or the material deterioration of the setting up of an indigenous industry. The key ingredients to understand whether the injury spoken about was real or not includes a hardcore proof of the above. A totality of products imported or under suspicion that it was dumped should be calculated accurately[17]. A fixed column for the measurement and the prices should also be made.

Impact of Overproduction on Farmer's Lives

The result of such imports which are dumped upon the indigenous producers of the same product. The key ingredients which proves that had been a warning to cause damages of injuries then the account of upgradation and degradation of the import and export taxes are necessary to be calculated. It need not be a detailed account but needs to be calculated. However, while describing the material injury it is not specified whether it should be emphasized upon textual facts or materials or the percentages of the difference of the exports and imports due to dumping.

A thorough examination is needed by the authorities to understand whether there has been an increase or decrease in the dumped goods. Another factor which needs consideration is the cost for the dumped products, as to whether they lessen the price range to a great deal or prohibits the rising in the cost of the products (Brown & Tovar, 2011).

The regulation of tariffs and putting them in the same way for the partners doing trade together is the most desired and efficient way to increase the trade. In case of dumping which is going on and there is clear evidence of the same the government can take appropriate steps to prohibit the same. Moreover, the measurement as to degree of dumping done must be enabled. There should be clear proof as the injuries caused or the material losses caused because of dumping. The nation aggrieved can take measures against nations guilty of dumping. This measure is under Article 6 of the Anti-Dumping Agreement which includes the imposing of an extra import duty upon a specific good from the specific country exporting it.

This in turn would be a step closer to bring the costs at par with the regular costs. It would also  be effective in picking out the injury of the indigenous industry in the nation importing it[18]. Calculating the degree of dumping is not all. These measures can be successfully applied to if it is proved that it caused considerable damage to the nation with respect to trade.  Hence it is essential that a detailed examination should be conducted to find out the real facts of the case.

In case of a situation whereby an examination is conducted and the indigenous industry is getting damaged then the nation exporting can apply for the increasing the costs to a level agreed upon and it would avoid the anti dumping import duties. When the margin of dumping is magnificently lesser than 2% of the export cost, then the anti dumping examinations are futile because there has been no dumping. However the anti dumping examinations can begin if the quantity from one nation is lesser than 3% of the complete imports of the goods. But the examination can easily be made when there are many nations out of which each contribute lesser than 3%  but when evaluated together, they contribute a minimum of 7%.

In the current scenario Esperanto can prove dumping against Yee only after a thorough investigation of the records of the imports and exports of the country. All the evidences would be checked thoroughly to measure the system of dumping protocols. If the level of cost difference is below 2% there can be no dumping scenes and no steps would be allowed to be against Yee. But in case, it is proved that Yee is guilty of the dumping threats then the anti dumping measures can be taken against Yee according to the anti dumping agreement. But the proof that there has been dumping, it is highly essential that it must be proved to all extents (Wiejia, 2012).

Influence of the International Arms Industry on the WTO's Decisions

It must also be proved that the dumping was a resultant factor leading to injuries and damages in the trade of Esperanto. If Esperanto fails to prove the same beyond reasonable doubt, against the member state of Yee then the anti dumping measures cannot be taken. Yee must compensate Esperanto for the losses and the injuries faced by it for its ill conduct in the trade. The WTO members must follow the above protocols .

Question 4

The facts of the case include the following facts: 2 nations under WTO are undergoing the consultation stage due to their conflict. Their issue has approached to file a complaint. Makato produces an exports unroasted pistachio nuts while Balari imports freshly picked pistachio nuts and further exports it to other countries. Lately, Balari has been giving huge quantities such pistachios to Makato. Makato has imposed a tax upon this good on the ground that was diverse from the kind of pistachio produced and exported by Makato.

The concept of ‘like services’ under the WTO and GATT is still undeveloped. Like products or likeness under the WTO means those goods which are similar in nature. They include under its purview those goods whose nature and characteristics are very similar to each other. However, the concept of likeness is relative and depends upon perception. There is no perfect definition of likeness of a product. In this regard, an example can be taken of two apples. Without the complete specifications of its color, size, taste, quality and other characteristics it would be difficult to judge whether both these apples are like products[19] or not.

The criteria for determining as to whether the products possess likeness of each other are stated below. Initially, the physical or the outer specifications must be looked into. The more of these features are identical to each other level of likeness is more in them. Those products which contain a high level of likeness with each fulfilling the primary ingredient of likeness. This lowers the chance of getting mixed with other products. The likeness in the products involve rules and regulations which throw way the distinctions in their treatment and consider them equal in nature. Another important rule with this regard is that these like products are secured from the unjust and dreadful imports. The concept of competitiveness often arises because of similar characteristics.

An advantage that likeness possesses is that they have the power of substituting each other[20]. There is also a willingness to use each product as a substitute for another in times of need. Another concept is also relevant which is called functional likeness. In such a kind of likeness, the two goods meet similar needs at the same time and the matter of competition arises because both serve equal purposes and the question of a choice remains. Upon such a case, many factors have to be kept in mind to understand how functional these products are (Pierola, 2012). 

Out of the diverse ingredients, the ultimate results and to a lesser extent the choices of the consumers can be described as the most appropriate way of selecting whether the products are under similar likeness. The factors that whether they are of identical or similar natures to a very high degree or that they possess similar characteristics to provide to the customers the same result, satisfaction and do similar work is the ultimate ingredient that whether the products are like products[21]. The concept of ultimate uses also form an importance with the products being used in place of each other more than with each other. The choices of the consumers are highly relevant.

The similar criterions are applied upon the same products to give it the name of likeness. Even thought the classification of the products might be different yet the products if possess the same characteristics are treated as like products. The degrees of likeness with each other can be different from each other but the likeness cannot be different[22]. Thus, the pistachios of Makato and Balari are of similar nature and they fulfill the basic ingredients of the likeness in products. The pistachios cannot be considered to be like products. There lies a basic difference between the two. One product is simply unroasted while the second product were just picked, unwashed and not processed.

There can be differences between the products with regard to their kinds. The description given in the case does not provide similar characteristics for both. Though both the products are unroasted pistachio nuts used for similar purposes of imports and exports for the facilitation of the trade and the growth of the economy. These products do not possess the criteria of substituting each other as well. In case of an emergency each type of these unroasted pistachio are incapable of being used in place of each other.

While determining whether the products suffer from likeness it must be clearly shown that the criterion for fulfilling whether these products are like products or not have to be taken into account. The WTO should identify the products proposed to be under the likeness to possess very similar physical temperaments. The characteristics include the nature, use, function, shape, size, color, the degree of substitutability etc. and others[23].

The key criteria involves that whether these products can be substituted well in place of each other and the customer can be satisfied with such exchange. The exchanged product should provide the same degree of satisfaction, usage and satiety value for he consumers. The values when they are imported or exported to different nations for the purpose of trade should not fall down. The profit margins should be similar like that of before unless unforeseen circumstances appear. These are the essential determinants which the WTO looks into while considering the products to be of like nature.

In case it appears that the both the pistachios are like products following the criterion of the WTO, the dispute with regard to the imports and exports of pistachios for trade would be settled. When both types of pistachios are considered similar products, both of these would possess the quality of substituting each other in times of need. The extra taxes imposed by Makato upon Balari would have to be withdrawn because they imposed upon the idea of them being unlike products. Balari would be entitle to compensation for the costs if any, procured by it for this purpose.

References

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