In an effort to “spare men from dehumanizing conditions of extreme poverty”, the World Trade Organization (WTO) was established and sought for in the process of economic globalization as suggested in Bossche (2005: 5). After the Cold War conditions the world was dying for a new phenomenon of a globalized economy and integration with aims to alleviate poor economic conditions in different countries. Abolishing trade restrictions and barriers is the general aim of globalization while promoting flow of goods and capital to people.
In this ambitious stance, the World Trade Organization is tasked to “deal, manage and regulate and implement sound practices beneficial to international trade” according to Dunning and Boyd (2003:141). Meanwhile, the General Agreement on Tariffs and Trade (GATT) as a treaty was also established to harness economic recovery. Its functions however were diminished after negotiations in 1990 and the World Trade Organization took over most of its responsibilities and under it umbrella.
Envisioned to protect the trade system by lowering tariffs and embrace free trade orthodoxy, the WTO was generally seen to protect international trade measures and promote liberalism with an end result of providing real income and full employment or sustainable development. Nations believed that with relaxed trade barriers, cross-border flow of goods and capital will soon be effectively managed by the organization with the expanded availability of railways and travel measures which will prove beneficial to the lives of many individuals and families across the world.
Positive Actions Implemented by WTO While many disbelieve on the substantial effects of the WTO as an organization, many countries have benefited from world trade. Most of those who claimed positive effects of the WTO are industrialized countries satisfied with the outcome of WTO’s policies and negotiations. According to Kanie and Haas, the World Trade Organization are quite successful in managing “non-core issues such as public and environmental health, labor standards, human rights and procedural standards involving institutional transparency” (2003, 52).
The implementation of International Property Rights “illustrated by patents in biotechnology and medicine saw a strong incentive for innovation” (Kanie and Haas, 60). The flow of remittances between countries exporting manpower and services in Asian countries can signify the positive effect of trade. In effect, countries with a shared colonial history and those sharing a common language fare better compared to landlocked countries in a study conducted by Rose (2003,p. 15). Countries in South Asia have definitely seen an economically large increase in their volume of trade.
China for example has economically benefited well in their negotiations with trading partners in agricultural products and export of goods. Negative Impact on the WTO Large differences however still persist in many countries as WTO could not typically force most countries with “favored nation status to lower trade barriers” (Rose, 22). It seems that countries in the G7 prefer to stand unaffected by the rules and policies imposed by the trade organization while insisting on its principles in their favor.
Tariff rates among nations with a “favored status” do not have substantial drops and according to Rose poses a “negative effect on trade encounter and price distortions” (p. 22). Likewise, harm is also inflicted to a domestic industrial nation whose economic intention is to encourage and increase trade and export with other nations while diminishing supplies and creating a negative impact of demand in their own country. Observed within most trading countries is also the problem of monopolies particularly in third world markets and petroleum producing countries.
Goods and merchandise encounter excessive pricing in their domestic country which explains why there is no significant reduction in poverty yet serious harm is created to its own citizens. In effect domestic consumption of their merchandise becomes limited as trade demands are heightened. Likewise, trade and liberalization policies have also seen most Asian nations “participating in random acts of violation of international property rights as economically driven nations strive hard to meet trade pressures” (Kanie and Haas, 63).
The health sector has often encountered problems with fake medicines that has cramped and given health problems to its citizens. Over the cited negative impacts, Rose believed in a statistically driven research that “WTO has little dramatic effect on trade because bilateral trade cannot be strongly and dependently linked to membership” as slower economic growth, inflation and unemployment is left undiminished (p. 24). Labor and Environment- the Stakeholders
Labor activists and environmental groups had demanded inclusion of standards in trade agreements during the Uruguay Round of negotiations. Tariff rates were reduced on “industrial goods and products excluding petroleum and uneven across sectors because rates are higher in labor-intensive manufactured goods” (Levine, 408). Producers and even national governments as a counter-measure in order to boost their economy resort to minimizing costs for labor which is why Asian nations “resort to child labor” in Malaysia according to Levine (409).
With free trade, the working classes are complaining of poor working conditions while general economic conditions remain poor. The environment as another stakeholder tends to suffer from an economic growth and rising living standards. Dunning and Boyd reflected that as working populations flock to cities, low-income developing nations chose to “trade off some environmental damage to achieve higher real wages” for their working sector (106). Such special interest problems are the impeding problems resulting to liberalized trading.
While higher living standards are made available to nations, the working class and the environment suffers at this expense when pressure is placed on both strata to meet the demands. Conclusion: When the stakeholders for development and economic prosperity include a nation’s labor force with the inclusion of its environment, a definite “race to the bottom” is definitely foreseen. Production and consumption activities affect the environment as carbon dioxide emissions increased its harmful effects to plants, animals and the atmosphere.
Pollution problems are generated while forests are denuded and riverbeds contaminated with industrial wastes. While the environment is decapitated, the labor force is pressured to sweat more for a higher income. Coupled with extrinsic forces in the government and work pressures, human health is compromised. The World Trade Organization as an international body tasked to protect international trade and implement safety procedures must therefore enhance regulations that recognize labor efforts without necessarily promoting drastic impacts to the environment as well.
Tasked to handle and manage concerns and policies in trade, the WTO must work for active negotiations among nations and implement the programs and principles without extending favor to its rich member nations. After all, one nation cannot see the downfall of the nations and happily observe culture seeping through the drain because of poverty and degradation.
Kanie, Norichika and Haas, Peter M. Emerging Forces in Environmental Governance. United Nations University, 2004. Bossche, Peter van den.
The Law and Policy of the World Trade Organization: Text, Cases and Materials. Boston: Cambridge University, 2005. Dunning, John H. and Boyd, Gavin. Alliance, Capitalism and Corporate Management. Edward Elgar, 2003. Levine, Marvin J. Worker Rights and Labor Standards in Asia’s Four New Tigers: A Comparative Perspective. Springer, 1997. Rose, Andrew K. Do We Really Know that the WTO Increases Trade? 30 Sept. 2003. American Economic Review. 14 December, 2007 http://faculty.haas.berkeley.edu/arose/GATT.pdf