Understanding the World Trade Organization (WTO) and International Trade
Understanding the World Trade Organization (WTO) and International Trade
The World Trade Organization (WTO) is located in Geneva, Switzerland. It is composed of approximately 150 member governments, representing 95% of international trade. The WTO’s supreme decision-making body is called the General Council. The principle of decision-making is crucial: to adopt only agreements to which all member countries agree. There is no voting; decisions are taken by consensus. This measure, although democratic, can slow down the process.
Only governments have a voice in the WTO, as representatives of the people, accountable to their respective civil organizations. Security and predictability in international trade are the main interests for countries wishing to belong to the WTO. These rules encourage all countries alike, given that the rules are equal for all without discrimination.
WTO Meetings and Their Purpose
WTO meetings are held for various purposes, including:
- Adoption of trade agreements (General Council)
- Accession of new members
- Resolution of trade disputes
Trade Dispute Resolution Process
In the case of trade disputes between two countries, the following process is followed:
- Consultations between the parties concerned (dialogues, negotiations)
- Bringing the negotiations to a special group, with members designated by the affected countries
- If no agreement is reached, there is an appellate body. Its decisions are binding.
Challenges Faced by Developing Countries
Underdeveloped countries often do not file many complaints because they may lack expertise. Although there is a center for legal advice, an independent service that is sometimes free, designed to help these countries. These underdeveloped countries enter the WTO to be less vulnerable to trade abuses by other countries and to use the dispute settlement system.
Everyone benefits from international trade, according to the argument of comparative advantage. International trade generates wealth for all participating countries, without guaranteeing equality. A temporary measure within a plan of gradual opening to international trade can be considered legitimate, such as protectionism by developed countries. Smaller delegations, having few members, find it difficult to attend all meetings, resulting in decreased participation. To overcome this problem, a training program has been created.
Historical Context and Evolution of the WTO
In 1973, during the global oil crisis, the General Agreement on Tariffs and Trade (GATT), born after the Second World War, gave rise to the WTO. The 1999 negotiations in Seattle, marked by major demonstrations critical of the WTO, are considered the birth of the alter-globalization movement. To help NGOs better understand the WTO, various seminars have been organized.
In Doha, Qatar, in 2001, a Ministerial Conference was held with the aim of eliminating international trade rules that hurt poor countries, further increasing their participation. Tariff progressivity involves lower tariffs for raw materials and higher tariffs for finished products.
Agricultural Negotiations and Multifunctionality
In agricultural negotiations, the WTO focuses on:
- Elimination of subsidies for domestic production
- Elimination of export subsidies
- Market access
The multifunctionality of agriculture recognizes that it is not only about food production but also encompasses an entire lifestyle. For example, Norwegian farmers benefit from the public subsidies they receive.
Least Developed Countries (LDCs) and International Trade
For Least Developed Countries (LDCs), international trade is key to their development. It ensures access to foreign markets for their products and provides the money earned through exports to acquire what they need.
Country-Specific Examples: Norway and Brazil
Norway, in agriculture and fisheries, protects agriculture from imports and boosts international exports of fishery products. Brazil’s strategy is to gain access to the international market for its products, complaining about unfair WTO rules regarding agricultural trade. For instance, European sugar beet, despite having a much higher cost than cane sugar, is sold in the European market due to high tariffs levied on cane sugar.
Protectionist Measures and International Trade
Representatives of developing countries claim that rich countries advocate for the opening of international trade by poor countries while increasingly supporting protectionist measures against the poorest countries.