The Current Crisis in the World Trade Organization
The World Trade Organization is an institution that involves many member states in the world. It is an organization whose establishment was to oversee the liberalization of trade among nations, bringing in the board countries that had little significance in trade and enforcement of trade negotiating rules. The forum created by the organization has several critical functions at a global level. First, it is the global venue for settling trade disputes between countries that can hardly reach a consensus for agreement. The majority of countries found it hard to get a middle ground because they thought that the other countries would either overrule them or have the upper hand in trade. Moreover, the countries with little influence were thought to have an inferiority effect while handling issues such as a dispute, neutral matters of prosperity in business and in-house issues. Another issue that the World Trade Organization has handled is finding a place for addressing business problems. It is a place where the member governments meet so as to solve the trade problems affecting them collectively and the ones they face with each other. The reason for it being a place for addressing issues is because negotiations have led to its foundation. Another role played by the organization is the establishment of rules governing member states. Overseeing the setting up of rules that govern trade at a global standard is essential for international commerce. The rules are set on a legal ground in the form of a contract that binds governments to adhere to the agreement of trade policies. The purpose of ensuring the deal is to help trade flow as intended and to be transparent among the member states. Finally, it helps in the settling of disputes and points of difference. For many governments, there are various ways of operating business that are the genesis of conflicting interests. For this reason, the foundation created for settling differences is aimed at solving conflicting points. Based on the rules for the foundation of the World Trade Organization, the current paper intends to discuss the on-going crisis faced by the organization in light of the agreements binding member states.
The causes affecting the World Trade Organization have led to the global economic crisis (Meltzer par. 1). The primary cause of the crisis is the Doha round which entailed trade negotiations on trade liberalizations. The liberalizations were meant to achieve reforms in international trade with the help of member states which had an impact on various other countries. The liberalizations have broken the trade barriers that existed between countries, and this was a factor that was geared upon the reduction of the trade tariffs. Secondly, since the Doha Round was a major factor, there existed other minor factors that influenced it directly. These include agricultural subsidizations, Singapore issues that led the European Union to exit the trade market, and the General Agreement on Trade in Services (GATS) that contributed to multilateral trade negotiations. The Doha Round was directly affected by these factors as they were critical to multilateral trade liberalization because of the international trade policymaking (Meltzer par. 2-3). The third cause of the WTO crisis was the influence of Uruguay Round in terms of finding points of consensus. Finally, the other main reason was legitimacy issues within the World Trade Organization that resulted in establishing transparency and free markets. The legitimacy factor re-established its global governance based on wider links to the more open trade. Describing the Doha Round and the factors that influenced it such as agriculture, Singapore issues and the General Agreement on Trade Services, the Uruguay round and the legitimacy issues forming the pillars of development and liberalization explain the impact of various factors on the World Trade Organization.
The major cause that has led to the current crisis is the Doha Round. According to the World Trade Organization, the global income had risen by more than $ 510 billion because of trade liberalization since the year 1995 (par. 1). The principal aim of the Round was spearheading trade negotiations among the member states to achieve reforms in international trading. The system adopted by an agenda was geared towards lowering trade barriers and revising the trade rules to ensure that all countries could participate equally and comprehensively in the attainment of the trade vision and also ensuring that developing countries participate effectively. The Round was launched in November 2001 in Doha, Qatar when members attended the fourth conference. During this time, ministers voted for a decision addressing the problems which are faced by the developing countries regarding the implementation of the WTO agreements under the Doha ministerial declaration (par. 2). Efforts were put to secure shares in the trade commensurate guided by their need for economic development. The major factors that were to oversee this were balanced rules regarding the sustained and well financed technical assistance and comprehensive programs that enhanced market access to international trade aid (Wilkinson 121). According to the European Commission, politics influenced member participation in the World Trade Organization because it affected transparency, discrimination, trade equality, and the promotion of development and economic reforms (par. 3-6). The WTO that was to become a new version of the GATT had turned against its member in the promotion of discrimination. The discrimination and other factors of international trade negatively affected the members since there was no transparency; as a result, some governments suffered at the expense of the others. According to a Brookings report of 2011, approximately 140 member states adopted Free Trade Agreements (FTA) that was concluded among the countries out of the World Trade Organization. The trade agreements concluded under FTA fostered the member states to gain a breakthrough into new markets while exploring new issues in commerce that would enhance their power in trade deals which were not addressed under the WTO burner (Meltzer par. 3). The affected members were the developing countries. The major factors that led to the crisis are discussed below and include agricultural subsidies, Singapore issues and the General Agreement on Trade in services among other factors.
Agriculture is described as the greatest component that affects the World Trade Organization, as it has led to the prosperity and failure of the Doha Round. The reason it was a hallmark of the World Trade Organization is that it had influenced the post-World War II multilateral trade systems, the GATT rounds and the loopholes resulting in abuses that accompanied the progress of the marketplace system of trade. Regarding the subsidization costs of export, Adam explains that they have led to the persistent distortions of the trade-off sale price of the agricultural goods in the marketplace (par. 3). During the previous agreement in the Uruguay Round, some reforms were enforced to oversee the attainment of the marketplace measures which had trade-distorting effects. The issues related to market system protected developing members from putting focus on market opening, subsidies on exports and the domestic support measures. It was observed that the subsidization of exports had a great impact on the farmers in developing countries. In an example given by Adam, it was observed that subsidies amounting to the US $ 1 billion per day had a far-reaching impact on the prices of foreign goods, the competitive chances and the farmers’ wellbeing (par. 3). While this was in place, several measures and subsidies were faced off in the Doha signatories act owing the central actors known as the Cairns and Cancun Group. This group was comprised of many industrialized countries led by Australia and Brazil. Their negotiations resulted in the elimination of subsidies that affected the developing countries and were a facet of the WTO crisis.
Singapore issues were also one of the leading causes of the crisis stipulated in the WTO. The crisis led to the drop out of the European Union and Singapore. The European Union was trying to establish a linkage covering agricultural issues which put Singapore in the limelight. In the discussion, Singapore issues turned out to be a major concern that contributed to the collapse of the Cancun Ministerial. Scholars indicate that a definitive reason explaining emphatic demands by the European Union was absent (Erfied 5). Politically, the countries with influence such as the United States took a wait-and-see opinion while other countries such as Korea and Japan offered support so that the European Union could integrate the investment plan. However, the developing countries in Africa took a wide stance from the negotiation table because of the tactical reasons that were imputed to them based on principle. In my view, the Singapore issues were not appropriately settled because some countries knew that they were not directly affected by the stance and therefore took minimal duty to ensure the integration of the treaty. It was an appropriate act for the member states which depended on the level of development because member countries were to make sure that a substantial number of legal and institutional conditions were met by implementing measures. Conversely, the other reason I think it was right for them to take the positions explained above, is because the WTO was restricting the policy space that was at their disposal. Another reason is the ability of governments to regulate the awards of domestic enterprises and the provision of subsidy-like incentives. Though the European Union was determined to come back to the negotiations table, the set of restrictions on trade facilitation had an adverse impact on particular member states. Countries in the WTO were to accept technical improvements in the areas of transport procedures that were a measure of reserve for the majority of developing countries. Based on this reason, the majorly affected group of members of the World Trade Organization sought to make their opinions heard by stating that it was a good agenda that could oversee the development of their ports; however if other ministries such as the Ministry of Education demand for the same with equal magnitude, it would mean that the trade ministers’ tabled issue would be overseen (Adam 6). This was a major mistake they made by allowing various countries to shape opinions and make overruling decisions that capitalized other nations while demeaning others. It was a detrimental factor in the WTO crisis.
The other major factor that affected the Doha Round was the General Agreement on Trade in Services (GATS). The GATS was a treaty that was placed under the leadership of the WTO since its conclusion in 1995. Apparently, it is the primary reason for the multilateral trade negotiations that were integrated into the Doha Round and the single undertaking. One scholar called Adam states that the GATS had a significant role to play in the WTO because it had the most important principles that ensured that members would come back to a progressive liberalization course. Politically, Adam explains that the GATS was different from the “request and offer” procedure in which the member states always presented their cases, expectations and suggestions that delineated them to the specification of the sectors and conditions which they were comfortable with before obliging (8). The earliest deadline that was initially set for market opening requests had been a point of concern that was also followed by the Cancun ministerial. The WTO crisis was also initiated by the GATS because the multilateral negotiations had been far below expectations (Lester par. 9-15). Though deadlines were improved for member states to make tangible offers, they did not yield to it. Developing countries felt overburdened because it was an inflexible deal to them since they found it illogical to advance offers in a non-transparent sector. The reason for the position and stance that the developing countries took is because they were afraid of losing their autonomous policy space over time in every conference that threatened them in the sense of a growing market penetration even though they knew the vitality of the sector in the course of their economic development. Adam explains that the crisis of the WTO heated up because of the in-consider-ability of the developing countries that were put upon the preying vulture issue of liberalization of the movement of natural persons that was a critical issue in the developing countries (8).
Another factor that has led to the crisis was the difficulty in the adoption of the Uruguay Round. Towards the final phase of the Uruguay Round, the developing countries were supposed to take up the responsibilities of the developed countries. Although the World Trade Organization had an agreement that had a provision for the transition period, member states were not given time for making adjustments. The influence of politics led to a bitter decision made at a ministerial conference that resulted in the adoption of criteria according to which better-off countries would accelerate the process of implementing core processes in the market access. The better-off countries were to take up the responsibilities which the less developed countries would accomplish because the less developed countries would require more technical assistance. For example, the developed countries had commitments on the exportation of goods with little or no duty. Despite this fact, the developed countries started exporting without allowing any fees on any goods that were imported into their countries. Although the World Trade Organization saw this as a process through which the less developed countries could learn the process, it brought about a great challenge to the adoption of the Uruguay Round agreements. Developing countries needed flexibility in the implementation of the systems agreement provided by the General Agreement on Trade and Tariffs (World Trade Organization par. 12). The principle reason explaining this is because the developed countries saw more benefits that made them influential in the World Trade Organization. These developed countries used this chance to benefit themselves in the trade blaming the technical assistance loophole of the WTO. While this opportunity was given to the less developed countries in order to incorporate them in the trade deal globally, they remained at the bottom of the institution of trade due to the superiority and inferiority in the development of the member states. The reason why the crisis hit the developed countries greater was because the WTO contributed more to their development. The system that was created was supposed to give them time to inherit the earlier rules in the World Trade Organization while allowing concessions; however it led to competition, discrimination, nation favors and the lack of transparency.
Another issue that faced the World Trade Organization was the legitimacy crisis. In the new round in Doha, the WTO faced protests because the globalization issue was being questioned by many other states that were not members and this intensified conflicts in the course of negotiations (Herwig 167). The conflict of globalization under discussion has led to the indirect ties to popular sovereignties. It means that members like the United States would link directly with the United Kingdom, but because the UK has relations with Egypt, the latter could access the United States because of the long relationship built by the United Kingdom. The national governments involved in decision making in the WTO were significantly engaged in forming the contours that provided a weak foundation for the trade forming authorities which is a significant role in the structure of global governance. The political arena claims that global governance of the World Trade Organization was based upon certain countries with interest which claimed the legitimacy issue that influenced contempt and members questioning the reputation (Herwig 168). For the organization to be seen as serving the global communities’ interest and making up its reputation, it is required to pursue its economic goals along with the economic development and sustenance while pursuing important goals such as the alleviation of poverty, fostering of the environmental protection and the promotion of public health. Although Esty explains that the criticism of having no truth concerning the future that is seen and claimed in the anti-globalization rhetoric, the legitimate concern accuses the WTO for creating losers (9). Even though the economic trend tends to be positive from a futuristic perspective, the global labor market may set a low bid for prospected wages that is a major fear of job securities. Furthermore, the globalization in the global market is seen as a venue that will threaten the traditions and cultures locally such as the evolving lives in France (Esty 8). The majority of member countries are going for commercial prominence of the brands produced globally. The global prominence in the worldwide use of media implies that there will be an exaggerated emphasis on the materialism and economic growth that will override the values of human rights and the environment in light of the economic dynamics of the global competition. Furthermore, the unlikeness of fair distribution in trade liberalization and economic integration instigates dominance in the political prowess and economy due to the World Trade Organization’s globalization idea which allows the developed countries to claim and accumulate disproportionate shares of the ‘gains’ of the free economic trade that runs at the expense of the low-developed and developing countries globally. The major crisis in legitimacy is the majority vote issue of the representative. In view of the representative issue, the World Trade Organization solely depends on the popular sovereignty and the efficacy of the broad system, which the decision-making process dwells on, in addition to electoral accountability and perceived rationality of the member states. Although the GATS-WTO system ensured quality in decision making and commitment that was used during the previous decades in the Uruguay Round, the current generation perceives trade as an open and transparent policy. Crisis is pushed by the trade issues and the initiatives which are the focus of public attention and discussion among members (Esty 9). Regarding the trade issues and initiatives, the WTO needs a new foundation that will restore the legitimacy under attack. In my view regarding the legitimacy, unlike the WTO, the General Agreement on Tariffs and Trade (GATT) was successful because it generated a program that sustained its reign over an extended period. It put up a record that accomplished favorable settlement of international economic disputes through several rounds of successive negotiations and a legitimate program. The program in regard to trade liberalizations provided a forum according to which there was a commitment to tariff reductions and the global creation of international commerce guidelines. Apart from the political activity and the interests of individuals in the World Trade Organization, the trade beneficiaries and the member states that are always losing in the global trade liberalization influence the majority of the public through the choices they make. As described by Petersmann in Esty’s report, the legalization program crisis has a negative impact (7). The reason for this is because governments are united in making long-term deals to avoid protectionist alarms. The deals that are concluded behind doors lower tariff barriers with open markets benefitting the general public. Based on the above reason for people operating behind the bars, they see the WTO as a black ground where those grounded deep in the system have and take advantage of others while accessing the levers of power in the World Trade Organization. Since there is fear concerning the denomination of those with particular interest, many developing countries have worries even when incorporated into the system. The lack of a transparency system that would oversee the entire policymaking process to ensure that the member states are well represented in decision-making negatively affects the states with little influence. This explains why the legitimacy crisis was a factor that pushed the WTO to another level where issues would rarely get a negotiations ground due to the lack of a global constitution. The presence of the global constitution would define the core principles governing the world market and dealings besides the establishment and governance of the international standards for member states. The formulation of institutions dealing with interdependence of countries in regard to the dependency component has led to a boiled crisis because it will possibly take decades of discussions to refine the concept. If members subscribing to this deal understand the essence of exercising the global regime and individual effects on decision making, the WTO will resolve the crisis.
In conclusion, the current crisis of the World Trade Organization needs specific reforms in order to bring back the member states that have defaulted to the negotiating platform. The European Union and such states as Singapore require proper settling of their issues from their origin to the exit from the WTO. Analyzing the causes of the crisis from a cause-and-effect perspective is essential to determine other core issues on which different states remained silent including the developing countries. For instance, the reported conflict and association of states out of the WTO such as the European Union with the United States are a ‘hit’ to the founding agreements of the WTO. Azevado, the World Trade Organization’s director general called it the most detrimental and serious situation that led to the crisis whose solution is moving away from the decision-making consensus that would possibly jeopardize legitimacy even though it would be based on the WTO’s founding core principles (World Trade Organization par. 1). Besides, it will involve like-minded closed door negotiations of the primary states such as the EU and US, while the other main players such as China, India and Brazil would have non-WTO talks. The Doha Round that was launched in Qatar had the agenda of having a prompt decision making program to implement policies that would promote equality and delineate discrimination among member states. However, in various conferences, it was evident that the core states that had influence such as the United States and the European Union had a great impact on other countries while the developing countries from Africa had little impact. The factors that majorly affected the Doha Round were agricultural subsidies that were given to the developing countries with restrictions on their mode of trade to give them time to learn and adapt to the system. This form of an indirect advantage accompanied with disadvantages has made other member states initiate individualized states’ deals among themselves. Another factor was the Singapore issues that led to the exit of the European Union from the negotiating table. Apparently, it had failed to agree on the given agenda. During the stipulated period there was a crisis in which some countries supported the EU while others were on a wait-and-see such as the United States. The multilateral trade negotiations under the General Agreement on Trade in Service banner had specific interest in liberalization. The Uruguay Round had an impact on the crisis on the basis of giving member countries a transition period for adoption and technical assistance. It became a loophole for countries to by-side the regulations set by the WTO. Finally, according to the legitimacy claims the member states wanted a global constitution with core principles describing the global market arena that is distinct to the influential countries. It led to disagreements since governments would be chained in trade dealings that may have a negative impact, and therefore result in the crisis. The paper has addressed the Doha Round and other factors that had a great impact on the WTO.