Working out the World Trade Organisation: its rules count, everywhereSeptember 9th, 2008
By Keith Nuthall
The World Trade Organisation (WTO) is the globe’s deal making forum. When conspiracy theorists claim the there is a plot to create a world government, they often accuse the WTO as being a nascent international authority. And guess what? They have a point. WTO agreements are global in scope, and enforceable within the organisation’s disputes settlement procedures.
And so member governments have to obey. If a dispute settlement body panel rules that a government is breaking a WTO rule, then they must change a policy or even a law, if it is at fault. And this would apply even if that law itself was based on rules laid down by a regional international grouping such as the European Union (EU) or the North American Free Trade Agreement (NAFTA). So WTO agreements reign supreme – although there is no system yet to solve conflicts between WTO agreements and conventions approved by other arms of the United Nations system.
In a sense the World Trade Organisation is misnamed. Because reflecting the fact that in today’s globalised economy, many facets of economic life are interlinked, the WTO has approved agreements that go far beyond the classic trading issues of lowering tariffs and production subsidies. It has agreements on intellectual property, access of services to overseas markets, telecommunications, food and drink health issues. The WTO has its finger in many pies, and every time it updates its agreements, their scope gets wider and wider. For this reason, businesses and industries simply have to understand the workings of the WTO. The way they operate worldwide can be affected by a detail within a WTO agreement. And if they want something changed, it is a tough and difficult process, one that only companies and public services with good knowledge of the system should really attempt: either that – or those that hire excellent lobbyists.
The key to remember here is that the WTO, for all its modern globalising image, goes about its business in a very old fashioned way – by the culture of the deal. It is a fact that for a basic WTO agreement to be approved – such as the General Agreement on Tariffs and Trade (GATT), it must be supported by all 152 member governments. Everyone has a veto at the WTO, no matter how small or poor. Barbados could decide to hold up an agreement supported by every other member country. This enables all member governments to fight their corner and secure concessions important to their economies. And they do. They make deals: a slash in duties for pickled fish for better access for Internet service providers. Formal or informal. Watching the WTO at work is like witnessing a stock market of governments. Trade concessions are bartered and in the end, agreements reflect the market power of those governments doing the negotiating. Everyone wants a slice of the US market – it is in a good position to win lots of concessions for its businesses. By contrast, Cambodia has less clout, despite its formal veto rights. If it wants to gain concessions at the WTO, it has to offer something useful to other member states and on it goes.
So what exactly are the WTO’s agreements and how are they formed and policed….? Well…
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