[asia-apec 306] FOCUS-on-APEC#9 Part 7

[gonzalo]

The WTO: Towards a Resolution of the World Crises or an 
Impending Disaster?

The aim of completely liberalising trade in the many areas covered 
by the WTO, or Ôfree tradeÕ, is often made out to be the best 
solution to many of the problems countries are facing today. In the 
past, however, we have seen different economic theories coming 
into vogue and going out of fashion again, as solutions do not seem 
to be forthcoming. 

Likewise with the current trend. Although free trade is often made 
out to be the necessary path to tread by its proponents, it remains 
an economic theory. The world is its laboratory. In fact, the exact 
formula, the chemicals and their quantities used in this particular 
laboratory test are arbitrary, and are largely decided, as the 
experiment progresses, by the most powerful economies. The 
chemicals prescribed are those which these rich economies have in 
abundance. The poorer countries find that they have to pay a very 
high price in order to partake in this experiment.

Take for example the issues and areas in the WTO where most 
work is being carried out. The developed countries have been 
dragging their feet in the liberalisation of areas that would most hurt 
their economies. Developing countries had consented to having the 
Multifibre Agreement (MFA) in the early 1970s because they had 
been promised that market restrictions in textiles and clothing in 
the developed exporting countries will be reduced after an interim 
adjustment period. However, the MFA was instead renewed every 
4-5 years for the next two decades with no sign of liberalisation. 
This situation changed only with the completion of the Uruguay 
Round. Even then, there has hardly been any progress in 
liberalisation in this area. Likewise, although the removal of direct 
subsidies to farmers in the EU and US would mean fairer trade in 
agriculture and would stop the destruction of the agricultural sector 
in many developing countries, progress here is also slow. Since it 
would impinge on the interests of the US and EU, there is little 
political will to hasten the liberalisation processes.

In contrast, almost total liberalisation in new areas such as IT and 
telecommunications are being implemented within a short period of 
time. Here, liberalisation is put on the fast track with the reasoning 
that it is beneficial for everyone. What sectors and issues should be 
made a part of the global Ôfree tradeÕ agenda therefore really 
depends on which countries hold more clout in the trading regime 
and hence are poised to have their wishes implemented. At the 
same time, the reigning ideology propagated is that the particular 
path set out is the only possible and best path to take.

Furthermore, no one really knows what the exact benefits of this 
Ôfree tradeÕ experiment will be for the poorer countries. The 
benefits of the complete implementation of the Uruguay Round 
had been estimated at $500 billion at the end of 1994. The WTO 
economists have found that this was too liberal an estimate and has 
brought the figure down to the range of $300 billion. According to 
most accounts, the actual effects by many of the poorest countries, 
a large number of these are in Africa, will in fact be negative. In 
response to this, Richard Blackwell, the chief economist of the 
WTO at the SMC said that this was because these studies had 
focused mainly on the lack of market access African countries had 
in terms of world trade. In contrast, WTO estimates positive gains 
by these countries because they factored in the gains of small 
economies by having a rules based trade organisation with a dispute 
settlement system. Despite the optimism about the benefits of 
such a structure, to date, none of the LLDCs have yet to bring a 
dispute to the WTO Secretariat. The country that is using the 
system most frequently is still the US. 

So while the effects of what is being implemented now, especially 
on the majority of poorer countries have not been thoroughly 
looked into, the work of the organisation charges ahead. Its effects 
changing the lives of millions worldwide. 

The Secretariat is also proud of the fact that there are a string of 
countries knocking at the door of the organisation wanting to 
become members. This is used as justification of the good and 
desirable work of the body. In reality though, poorer countries 
have little choice in the matter. They either get themselves 
registered as a member of the laboratory experiment, or get totally 
isolated. Many only begin to realise the implication of GATT / 
WTO decisions after these have been agreed to.

A continuation of the way the WTO currently functions will lead 
the world head-long towards a catastrophic end, especially if 
domination by certain countries remains the status quo without 
any regard for the needs of the poorer economies.

Ultimately, such as system will essentially mean the rich countries 
institutionalising and justifying, through a supposedly rules and 
consensus-based global organisation, their colonisation over the rest 
of the worldÕs resources.

If the WTO is to truly work in the interest of all its members, it 
must change its bullying tactics. As a global body, the excuse that it 
works in a non-transparent manner for greater efficiency is a flimsy 
one, and greatly threatens the credibility of the organisation. 

In order to be an organisation which governs multilateral trade and 
one which aims to work for the benefit of all its members, it has to 
be cognisant of the fact that a power imbalance exists in the 
organisation and the current process employed only reinforces this 
imbalance. It must therefore hold as top priority, the righting of 
such an imbalance. This would mean keeping in focus, the needs of 
its diverse members, especially the majority developing countries. 

There should not therefore be a dichotomy drawn between trade 
and development. It is commonly assumed that the WTO should 
engage in trade issues and leave the development concerns of its 
members to other international agencies. The reality, however, is 
that while the WTO does not concern itself very much with the 
development needs of its poorer members, it certainly is extremely 
concerned with those of its richer members. Hence, its 
preoccupation with IT; the introduction of services and intellectual 
property rights into the GATT, the WTOÕs predecessor; as well as 
attempts to bring in such issues as the liberalisation of investment 
under its auspices. These are obviously areas that would benefit 
the richer countries given their particular stage of economic and 
industrial development.

Since the patterns of trade will impact positively or negatively on 
all countries in myriad ways and also affect the development 
concerns of countries, these development needs must be kept at the 
forefront. For example, the WTO must make it its concern that 
there are 800 million suffering from chronic hunger amongst its 
member countries. The fact that there are 1.3 billion who occupy 
the ranks of extreme poverty - a fifth of the worldÕs population, 
and that this poverty is a feminised phenomena should also be a 
concern. Furthermore, it must also keep in view the fact that the 
crisis of today is an ecological one. 

Since these are the conditions many WTO members are grappling 
with, the organisation can only claim to meet the needs of its 
members if it continually evaluates its policy impact on these 
realities and allows itself to be an enabling factor in the resolution 
of these crises. 

In this process, it must ensure that it gives countries the 
sovereignty and right to choose the path of development that meets 
their needs. There is no blanket solution for all economies. 
Countries must not be arm twisted into liberalisation. Trade 
liberalisation can be enabling, but how much and in which areas 
must be decided upon on a country-by-country basis and with 
great discretion. 

*Aileen Kwa is a research associate of Focus on the Global South. 
She is also currently pursuing her Phd in Development Studies at 
the University of Auckland. 
______________________________________________________