Both ENDS


World Trade Organization (WTO)

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These days, free trade seems to be a magic charm for solving all sorts of problems. Since the second half of the twentieth century it was mostly seen as a way to fight poverty and inequality, but in the last three decades free trade seems to have become an aim in itself. In 1948, 23 countries took the initiative for an agreement on tariffs and trade (General Agreement on Tariffs and Trade - GATT) with agreements on free trade and open borders. Over the years, an increasing number of countries joined the GATT. During the GATT negotiations that took place from 1986 to 1993 (the so-called 'Uruguay Round') it was decided to liberalize world trade even further. Furthermore, a new organization had to be founded to strictly monitor international trade. So in 1995, the World Trade Organization (WTO) was established. 

(photo: NeilsPhotography on Flickr)

 

The WTO is one of the most powerful organizations in the world and its sole purpose is to boost free trade. The WTO has its secretariat in Geneva and currently has 162 members (member states), most of which are developing countries. This means that the WTO represents almost 100% of global trade. The WTO is led by the member states themselves and the legislative body is formed by the Ministerial Conference, which meets every two years. Officially, all decisions should be made on the basis of consensus - all members have to agree - and in theory, all member states have the right of veto.

 

In practice, however, the bargaining power of different WTO member states is strongly linked to a country's share of the world market. Moreover, developing countries often have fewer financial resources and manpower to represent themselves within the WTO, and are sometimes literally excluded from certain negotiations. So even though developing countries are a majority within the WTO, in practice, they are much less powerful.

 

The first round of negotiations within the WTO started in 2001 and is currently still ongoing: the so-called 'development round' or 'Doha Development Round'. In Doha, the capital of Qatar, the WTO members agreed that the WTO agreements, which so far had mostly been in the interest of richer countries, would be more in line with those of developing countries .However progress of the negotiations in the Doha Round is very slow: developing countries feel too little attention is being paid to their interests, while richer countries think they are the ones that do not get enough out of it. 

BACKGROUND INFORMATION


What is decided at the conference tables of the WTO can have serious consequences for both people and the environment worldwide, and because of this Both ENDS keeps a close track of all WTO developments. Here is a list of a number of points of the shared WTO critique:

 

People and the environment should be more important than free trade

Free trade is the ultimate goal of the WTO, and free trade agreements often undermine international and national efforts to protect people and the environment. Free trade agreements and the WTO rules often make it difficult for national governments to implement or improve laws and regulations, because such national decisions have to be in line with WTO rules. If WTO members do not comply with these rules, they may be faced with severe sanctions and large fines. So far, about 500 cases have been adjudicated by the WTO.

The European Union and the USA, for example, have long been in conflict about whether or not 'hormone meat' will be allowed onto the European market. The EU has banned this meat since 1981 because of health risks and animal welfare concerns. But according to WTO rules, you cannot ban a product based on reasons how it has been produced, even if that production method leads to severe environmental pollution or other negative environmental or social effects. The EU lost this case and the WTO imposed a fine of 116.8 million dollars per year. At the moment there are also several charges against countries that want to strengthen their sustainable energy sector, such as a recent US claim against India. India wants to support its solar-energy sector, but the US is trying to prevent this. WTO rules on intellectual property can also hamper the availability of affordable medicine or threaten traditional local seed exchange systems.

 

Paying fines or avoiding them

 The same WTO rules can have different consequences for richer and poorer countries. If rich countries are in violation of a WTO rule, they can choose to 'simply' pay the fine, because they can afford it. Developing countries usually cannot pay these fines as easily, so they are more inclined to avoid the risk and to not implement legislation that might go against WTO rules. People and the environment in developing countries are thus more likely to suffer from WTO rules than those in rich countries.

 

A level playing field is not always in everyone's interest

The 'level playing field' of free trade the WTO stands for is often disadvantageous for developing countries. Small-scale producers in these countries are frequently at risk to be forced out of business by larger foreign companies who can produce more cheaply, often thanks to direct or indirect government support. But even without such government support in richer countries, the economies of developing countries would often still not be sufficiently advanced to face up to international competition on a 'level playing field'.

The current WTO rules on agricultural subsidies are quite complicated, but it is clear that they are made up in such a way that they are especially beneficial for richer countries like Japan, the US and the EU. In this way, these countries can continue to subsidize their agricultural sector while developing countries that want to support the sector in a different way are threatened with severe WTO sanctions (see section on India).

 

'All countries are equal, but some are more equal than others'

Although all countries can put claims against each other before the WTO, the results are very much dependent on a country's leverage. The penalty system of the WTO is furthermore such that its effects are disproportionate. So, theoretically, a country like Burkina Faso can threaten the US with an economic sanction if the US violates a WTO rule. However the US could probably care less, because Burkina Faso's market for American products might not be significant anyway. However, if the US threatens to stop importing products from Burkina Faso if the country does not open up its borders to American goods, this might have much more severe consequences for the national economy of the African country.

 

Too little transparency and democracy

The negotiation processes within the WTO are opaque an delusive and national parliaments have little influence on the decisions that are made within the WTO Moreover, part of the negotiations often takes place in 'backrooms' and at informal 'mini tops' where not all countries are invited. In order to achieve 'consensus', countries that do not actively and vocally oppose a proposal are conveniently assumed to be in favour of it. Countries benefiting from this unofficial method often say that this would be necessary because otherwise no decisions would ever be made within the WTO.

ROLE OF BOTH ENDS


The goal of the Doha Round, which started in 2001, is to ensure the interests of developing countries get better representation within the WTO. But rich countries such as the US still act primarily according to their own commercial interests within the WTO. Together with other civil society organizations, Both ENDS is committed to make sure the Dutch government and the European Commission do not do the same, but really put the interests of developing countries first.

 

At the Ministerial Conference of the WTO in Bali in 2013, Both ENDS was an official civil society advisor for the Dutch government. At the upcoming conference, 15-17 December 2015 in Nairobi, Kenya, Both ENDS will assume this role again. This means that a representative of Both ENDS will travel with the Dutch delegation to provide it with information about the views and concerns of civil society organizations during the conference.

 

Besides directly influencing the Dutch government and the EU, Both ENDS continuously forms alliances with civil society organizations in developing countries. We provide these organizations with information so that they can stand up for their interests, and convince their own governments to stand up for their citizens and the environment when they negotiate trade and investment agreements within the WTO and outside of it.

 

 

More information regarding Both ENDS' role during the WTO Ministerial in Nairobi

 

AppleMark

Photo: Free Range Jace on Flickr

BOTH ENDS CONTACTPERSONS


Burghard Ilge [at] bothends.org


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