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by Anup Shah This Page Last Updated Monday, July 02, 2007 This page: http://www.globalissues.org/article/42/the-wto-and-free-trade. To print all information e.g. expanded side notes, shows alternative links, use the print version: o http://www.globalissues.org/print/article/42
The World Trade Organization, (WTO), is the primary international body to help promote free trade, by drawing up the rules of international trade. However, it has been mired in controversy and seen to be hijacked by rich country interests, thus worsening the lot of the poor, and inviting protest and intense criticism. This web page has the following sub-sections: 1. 2. 3. 4. 5. 6. 7. 8. WTO principles Reality different from the principles Trade-Related Aspects of Intellectual Property Rights (TRIPS) The Multilateral Agreement on Investment The General Agreement on Trade in Services (GATS) The Seattle Millennium Round of the WTO Chinas Entry into the WTO Corporate Influence at the WTO
WTO principles
Founded in 1995 after the 8-year Uruguay Round of talks, it succeeded the General Agreement on Tarrifs and Trade (GATT), which was created in 1948 to lower trade barriers. The scope of the WTO is greater, however, including services, agriculture, and intellectual property, not just trade in goods. The main principles of the WTO boil down to the following: Non discrimination National treatment implies both foreign and national companies are treated the same, and it is unfair to favor domestic companies over foreign ones. Some countries have a most favored nation treatment, but under WTO the policy is that all nations should be treated equally in terms of trade. Any trade concessions etc offered to a nation must be offered to others. Reciprocity Nations try to provide similar concessions for each other. Transparency Negotiations and process must be fair and open with rules equal for all. Special and differential treatment
A recognition that developing countries may require positive discrimination because of historic unequal trade. Back to top
Being very opaque and not allowing enough public participation, while being very welcoming to large corporations. (That doesnt help the claims of free, open and democratic!) That while importing nations cannot distinguish how something is made when trading, though it sounds good at first along the lines of equality and nondiscrimination, the reality is that some national laws and decisions for safety and protection of peoples health, environment and national economies have been deemed as barriers to free trade. Take the following as a very small set of examples: o Countries cannot say no to genetically engineered food o or milk that contains genetically engineered growth hormones known to cause health problems o or trees that have been felled from pristine forests and so on. o Guatemala took efforts to help reduce infant mortality, in accordance with the World Health Organizations guidelines, and to counter aggressive marketing by baby food companies aimed at convincing mothers their products are superior to the more nutritious and disease-protecting breast milk for their babies. The result? The affected corporations managed to take this to GATT (the predecessor to the WTO) and get a reversal of the law amidst the threat of sanctions. Profits prevailed. o Canada complained to the WTO about Frances ban on asbestos. (The previous link also makes the point of how the victims views are not heard in WTO proceedings, nor ar they part of the debate, even though there may be thousands of them.) o The United States attempt to ban shrimp caught using apparatus that were harmful to endangered sea turtles has been ruled as WTO-illegal, forcing the US to reverse its decision. Lori Wallach, Director of Global Trade Watch, provides further examples in a video clip (6 minutes, transcript) also noting that various global trade agreements have been pushed in such a way that they often undermine local laws and constitutions. If for example, health or environmental protections get in the way of the trade agreement, then they often have to be revoked or changed in favor of trade agreements: Lori Wallach, Free TradeThe Price Paid (Part Two), April 13, 2005, Big Picture TV
That instead of respecting the reasons why there has been special and differential treatment for developing countries, rich countries instead want to push poor countries to reciprocate equally, in what would therefore actually be an unequal result (as it would maintain the unequal terms of trade.)
A number of countries have also spoken out against the WTO saying that there needs to be more co-operation between the North and South (a general term to refer to the Rich and Developing countries, respectively) with regards to international trade.
During the week of May 20, 1998, celebrations marked 50 years of multilateral trade. However, as the following link mentions, the African nations did not feel that there was much to rejoice at and said that it was a party where only the rich nations has something to celebrate. Most people in the world have not benefited from the current form of multilateral trading systems. At a Mercosur (South Americas Southern Common Market) summit, then South African President, Nelson Mandela, had spoken of the need to ensure that there is more fairness in the globalization process. Mercosur is the worlds fourth largest economic power, after the United States, European Union and Japan. There have been so many examples, it is impossible to list here. For more, see other parts of this sites section on Trade, Economy, & Related Issues.
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TRIPS aims to prevent imitation of products (which is ironic, given that this would allow further competition and better prices for drugs and other products, which is something that transnational corporations have often sung as being the benefits of free trade and corporate-led capitalism with minimal restrictions).
The effect of the 20 year period of a patent protection is to basically deny others (such as developing countries and their corporations) from developing alternatives that would be cheaper. Technology transfer is prevented (again, a direct contradiction to those who support the WTO, free trade in its current forms etc., which includes western multinational pharmaceutical corporations.) Transnational corporations will be able to continue to grow more due to their profits from this, while others will decline further. While there are some provisions, such as compulsory licensing to allow creation of alternatives in cases of emergency and parallel importing to effectively permit shopping around the international market for the cheapest price of the same product, it doesnt go far enough as many nations have faced pressure from the likes of the United States, when they have used these measures (even though they use it a lot themselves.) TRIPS, WTO and general international trade related agreements do not take public health needs into account. Instead, commercial interests are promoted.
As Noam Chomsky points out, The World Trade Organization regime insists instead on product patents, so you cant figure out a smarter process. Notice that impedes growth, and development and is intended to. Its intended to cut back innovation, growth, and development and to maintain extremely high profits. As J.W. Smith of the Institute for Economic Democracy describes, this is partly how inequality is subtly structured into law. These types of agreements strengthen subtle monopoly rights. Oxfam also make important distinctions between reality and rhetoric and point out that TRIPS will Exacerbate the technological divide: There is already a wide technological gap between rich and poor countries. Although developing countries are rich in informal knowledge, they are net importers of the kinds of high-tech goods and know-how protected by TRIPS. Industrialised countries, on the other hand, account for 90 per cent of global research and development (R&D) spending, an even higher share of patents, and are the main exporters of IP. TRIPS will exacerbate this divide by increasing the cost of knowledge-rich goods imported by developing countries. Royalties and licence fees paid by developing countries to patent holders in the industrialised world have been climbing rapidly since the mid-1980s. In 1998, the US received a net surplus of more than US$23bn from its IP exports. Further skew R&D towards rich-consumer markets rather than the basic needs of the poor. There is a massive market failure in R&D into medicines and agriculture. Most global R&D is targeted at the markets of rich consumers rather than at the basic needs of the poor. Less than 10 percent of global spending on health research addresses 90 percent of the global disease burden. Similarly, much agricultural research aims to improve the appearance and taste of produce for consumers in rich markets, rather than to support the sustainable farming of staple foods such as sorghum and cassava, on which many poor farmers depend. Intellectual Property and the Knowledge Gap, Oxfam Policy Paper, December 2001
While this is a large topic itself, to start with, you can start at the following sections of this site that discuss some of the problems in the context of specific issues:
Pharmaceutical corporations and o Medical research. (There are many links here.) o AIDS. Genetically engineered food and food patenting. Global health issues overview provides more details of how TRIPS affects people from a health perspective
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The Seattle section on this web site talks more about the Seattle Millennium Round. Back to top
from a global organization, which, if it is to be reformed or changed in anyway to become more open and democratic, China would need to play a part in? Also, if the Chinese economy is not ready to cope with international competition, then social costs may be high. If entry is subject to the whims of Washington, EU and Japan deciding the criteria for entry for other countries, then this unilateralism would not help serve the drive towards globalism. (Especially when some of these countries, would not pass their own criteria, as mentioned above, and as links below will show.) The real issue is about the way the global economy is being shaped and the legitimasy of the current institutions serving this purpose (IMF, World Bank, WTO, etc). For a more detailed look into these perspectives, that also criticize much better, the mainstream left, right and others reasons and level of discourse for or against China in the WTO you can start at the following:
Dangerous Liaisons: Progressives, the Right, and the Anti-China Trade Campaign by Walden Bello and Anuradha Mittal, looks at how some mainstream political groups in the US have portrayed China, and set about an anti-China campaign and what the real, larger issues at stake are. From Foreign Policy in Focus: o Their look at China and the US Policy debate. You will find many good articles here both pro and against Chinas entry into the WTO and/or permanent NTR status. Like the first link above, these articles provide more in-depth reasoning, not what the mainstream media and other campigns use as their reasons. Examples of their articles include: How to Debate the China Issue Without China Bashing by John Gershman Historic and Strategic Contexts of China Debate by Joseph Gerson Dont Strengthen the WTO by Admitting China by Sarah Anderson, John Cavanagh, and Bama Athreya provides good reasons why China should not be admitted into the WTO. Argument for Engagement by Doug Guthrie provides good reasons why China should be admitted to the WTO. o China and the WTO looks at many of the issues in detail as well. The Right and Wrong Reasons for Opposing Chinas Entry into the WTO by Robin Hahnel
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Where next?
Related articles 1. Global Financial Crisis 2. A Primer on Neoliberalism 3. Criticisms of Current Forms of Free Trade 4. The WTO and Free Trade 5. WTO Doha Development Trade Round Collapse, 2006 6. Deregulation or Protectionism? 7. Some Regional Free Trade Agreements 8. The Mainstream Media and Free Trade 9. Public Protests Around The World 10. WTO Protests in Seattle, 1999 See more related articles
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by Anup Shah Created: Monday, September 07, 1998 Last Updated: Monday, July 02, 2007