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Wto

Essay by   •  September 19, 2010  •  1,442 Words (6 Pages)  •  1,327 Views

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Although there are many famous riots and controversies connected to the World Trade Organization (WTO), most American citizens don't know what the WTO actually is or what it does. Because there's so much the average person doesn't understand, we need to look at the background of the WTO before we can discuss any further details; then we will look at possible explanations of why people protest, and finally we'll focus on whether or not any protests were justified.

The World Trade Organization is designed to create the rules involved with trade. These trading rules include all countries, not just the US, and can therefore be a little tricky at times. "The WTO establishes a framework for trade policies, it does not define or specify outcomes" (Bagwell, K. and Staiger, R. W. 2002). As we can see, the rules of trading are simply set as guidelines and cannot guarantee a certain outcome for each individual agreement between countries. There are five main rules that the WTO depends on to operate smoothly on a daily basis and they are as follows: nondiscrimination, reciprocity, enforceable commitments, transparency, and safety valves. First, we will look at nondiscrimination. There are two main concepts to understand when looking at the nondiscrimination rule: Most Favored Nation (MFN) and National Treatment Principle (NTP) (Hoekman, B. 2001). MFN involves one country, usually a larger, more developed country, deciding that it wants to trade with another country, usually a smaller country, and give them certain benefits that other countries might not get because the bigger country doesn't like them as well. For example, if England decided that it wanted to trade with Australia, but didn't want to have as much of a dependency on the US, it could make exporting and importing more beneficial to Australia by overlooking tariffs and taxes it might impose on the US. National Treatment Principle can be best explained in terms of goods being treated equally, regardless of the origin of the product. For instance, if Florida wanted to sell its bananas to Oregon and so did Australia; Oregon wouldn't be able to impose a tax on the bananas from Florida unless it imposed the same tax on the ones from Australia. This rule it supposed to keep trading fair between nations.

Second, reciprocity is an important part of negotiation where, ideally, each side makes mutual changes in trade policy that bring other changes into play, which affects the amount of imports and exports each country is allowed to handle (Bagwell, K. and Staiger, R. W. 2002). An example might be when France meets with Spain to negotiate terms for their blossoming lily industry; each country might have a few trade concessions in mind and work to create a balance between them. Third, we will consider how "enforceable commitments are crucial in ensuring market access commitments are implemented and maintained" (Hoekman, B. 2001). They restrict tariffs from going up and down too much. If tariff changes happen that don't coincide with the WTO guidelines, the government usually makes it their duty to change the policies. Because the WTO is an intergovernmental agreement they can handle their own cases, unlike private organizations, which do not have the same legal footing.

Fourth, transparency is important for the WTO because it "requires members to publish their trade regulations, to establish and maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO" (Hoekman, B. 2001). This includes trade regulations and establishing institutions that allow for change. Transparency has many benefits, including reduced pressure on the dispute settlement system. If one country complains about another, meetings can be arranged to discuss the issues that violate WTO policies, which helps both sides to avoid confrontation or violent conflicts. Fifth, safety valves are extremely important to the WTO for one main reason: so the government can restrict trade if they need to (Hoekman B. 2001). There are three rules that dictate when the government can restrict trade: articles allowing the use of trade measures to attain non-economic objectives, articles aimed at ensuring fair competition, and provisions permitting intervention in trade for economic reasons. When competition gets too fierce and trading is to a breaking point, the government may need to step in and enforce these rules.

Now that we understand what the WTO is, we can discuss why there's always so much turmoil connected with the name and it's dealings. One of the reasons the WTO is so controversial is because of what it deals with on a daily basis. The WTO is just a symbol of a bureaucratic metaphor for the power of the world market, which benefits the big corporations and the super-rich, at the expense of workers and poor farmers (Bello W. 2001). People protest the meetings and agendas the WTO handles, not the actual organization itself. If the WTO is trying to be so fair, then why must the protests continue? One possible answer could be that the protestors think the government has no right to bully some of the poorest people in the world. Trade should be fair, everyone agrees, but at what expense? Globalization is another possible answer to protestors'

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