WTO Trade Agreements Essay

Are WTO trade agreements unjust?

With its membership of 163 states and with its ability to affect the process of policy-making in these countries, the World Trade Organisation (WTO) is considered one of the most influential international organisations. The main conceptual premise, which justifies this Organisation’s continual existence, is that the removal of trade barriers on the way of a free flow of goods and services throughout the world does contribute to the facilitation of global prosperity (Walton 2013; Stiglitz & Charlton 2005).

In its turn, the mentioned assumption helps to establish the Organization’s legitimacy, as such that has the principle of bilateral beneficence embedded into the very philosophy of its functioning, and to promote the idea that by applying for the membership in the WTO, the developing countries will be able to revitalize their economies.

As Sutherland (2008) noted, “In an era of broadening and deepening globalization, small or struggling economies thrive only in an environment that generates opportunity and supports entrepreneurship. Much of what the WTO does is, in fact, about helping achieve good or better governance” (p. 19). It is understood, of course, that such an idea is hardly consistent with the suggestion what the

Organization’s trade-agreements can be unjust, by definition. Nevertheless, once subjected to an analytical inquiry, these agreements will be indeed exposed utterly inequitable, in the sense that they make it impossible for the developing country-members to become fully developed. In my paper, I will explore the validity of this statement at length while explaining what accounts for the Organization’s true (and rather unsightly) agenda.

Even though the WTO top-officials never cease stressing out the Organisation’s apolitical and ideologically neutral nature, this is far from being the actual case. The reason for this is apparent – the manner, in which the WTO settles trade-disputes between country-members and provides the sets of recommendations, with respect to what should be the essence of economic reforms in these countries, is reflective of the foremost provisions of the ideology of Neoliberalism.

They are as follows, “The state needs to reduce its interventionism in economic and social activities… labour and financial markets should be deregulated… Commerce and investments should be stimulated by eliminating borders and barriers” (Navarro 2006, p. 18). The actual logic behind these discursive assumptions that it is namely the ‘invisible hand of the market’, which should be made solely responsible for defining the socio-economic dynamics in just about every country on this planet – the main key to prosperity.

The WTO is there to merely provide an additional momentum to this process (Walton 2010). However, the Organisation’s continual functioning implies that the mentioned ‘invisible market-hand’ is not quite as unseen and impartial as the advocates of free-trade would like us to believe, because it does not represent much of a challenge defining the place from where this ‘hand’ actually extends – the West.

Therefore, there is nothing too surprising about the fact that if anything, the WTO was able to succeed only in one thing – enforcing the so-called ‘Matthew effect’ (the rich get richer and the poor get poorer) on a global scale. This simply could not be otherwise – since the time of its founding in 1994, the WTO was conceptualised to serve the purpose of allowing the West to pursue with the policy of neo-colonialism in the Third and Second world countries, without having to invade them militarily.

In this respect, Irogbe (2013) came up with the insightful observation, “The developed, former imperial powers have simply converted themselves into power brokers within the WTO. Mostly they do not have to send troops in to open up a country’s economy for foreign investment and privatization… Today, they can simply threaten the country with economic collapse” (p. 190). The fact that the

Organization’s trade-agreements can be unjust, by definition. Nevertheless, once subjected to an analytical inquiry, these agreements will be indeed exposed utterly inequitable, in the sense that they make it impossible for the developing country-members to become fully developed. In my paper, I will explore the validity of this statement at length while explaining what accounts for the Organization’s true (and rather unsightly) agenda.

Even though the WTO top-officials never cease stressing out the Organisation’s apolitical and ideologically neutral nature, this is far from being the actual case. The reason for this is apparent – the manner, in which the WTO settles trade-disputes between country-members and provides the sets of recommendations, with respect to what should be the essence of economic reforms in these countries, is reflective of the foremost provisions of the ideology of Neoliberalism.

They are as follows, “The state needs to reduce its interventionism in economic and social activities… labour and financial markets should be deregulated… Commerce and investments should be stimulated by eliminating borders and barriers” (Navarro 2006, p. 18). The actual logic behind these discursive assumptions that it is namely the ‘invisible hand of the market’, which should be made solely responsible for defining the socio-economic dynamics in just about every country on this planet – the main key to prosperity.

The WTO is there to merely provide an additional momentum to this process (Walton 2010). However, the Organisation’s continual functioning implies that the mentioned ‘invisible market-hand’ is not quite as unseen and impartial as the advocates of free-trade would like us to believe, because it does not represent much of a challenge defining the place from where this ‘hand’ actually extends – the West.

Therefore, there is nothing too surprising about the fact that if anything, the WTO was able to succeed only in one thing – enforcing the so-called ‘Matthew effect’ (the rich get richer and the poor get poorer) on a global scale. This simply could not be otherwise – since the time of its founding in 1994, the WTO was conceptualised to serve the purpose of allowing the West to pursue with the policy of neo-colonialism in the Third and Second world countries, without having to invade them militarily.

In this respect, Irogbe (2013) came up with the insightful observation, “The developed, former imperial powers have simply converted themselves into power brokers within the WTO. Mostly they do not have to send troops in to open up a country’s economy for foreign investment and privatization… Today, they can simply threaten the country with economic collapse” (p. 190). The fact that the

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Organisation’s spokesmen often do express their concern with such issues as ‘global poverty’ or ‘global hunger’ is nothing but a publicity stunt, on these people’s part – the WTO’s very existence contributes to the sheer acuteness of the mentioned issues more than anything else does.

This simply could not be otherwise. The concerned Organisation functions as a huge vacuum machine – ensuring the steady flow of valuable natural and human resources out of the Second and Third world countries to the West, which in turn makes it quite impossible for these nations to be able to get out of poverty.

The fact that this is indeed the case can be illustrated, in regard to the following

The WTO prescribes its newly joined members (consisting of the underdeveloped countries) to refrain from enacting the policies of economic protectionism. The Organisation’s official explanation for this is that the concerned practice “ultimately leads to bloated, inefficient producers supplying consumers with outdated, unattractive products” (The case for open trade 2016, para. 7).

However, the actual rationale behind such an anti-protectionist policy, on the part of the WTO, is much more unsightly – the Organisation’s stance, in this respect, is meant to eliminate any chances for the countries ‘underdogs’ to be able to ensure the proper functioning of the industrial sector of their economies.

After all, it has been well proven throughout the history that no country is able to develop an industrial/manufacturing capacity, unless having enacted the policy of economic protectionism throughout the process’s initial phase. The example of the so-called ‘Asian tigers’ (Singapore, South Korea, and Taiwan) proves the validity of this suggestion perfectly well.

Once stripped of the politically-correct rhetoric, the Organisation’s anti-protectionist policy becomes fully explainable – while acting on behalf of the ‘collective West’, the WTO strives to suppress even a hypothetical possibility for the Western-based industries to end up facing too much competition from abroad. As Hart-Landsberg (2006) aptly pointed out, “The WTO is the vehicle used by the imperial powers to crush the infant industries in the underdeveloped countries in the interests of their MNCs” (p. 8).

To illustrate the full soundness of this idea even further, one can refer to what accounted for the actual consequences of joining the WTO, on the part of such Baltic countries as Lithuania, Latvia, and Estonia. Prior to the development in question, there were many properly functioning industries in these countries, concerned with the production of cars, electronics, and heavy industrial equipment. Moreover, these countries used to be considered the major producers of electrical power in Europe.

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However, once members of the EU (and consequently WTO), Lithuania, Latvia, and Estonia have been effectively stripped of their industrial capacities, which in turn resulted in the dramatic rise of the unemployment-rate and consequently – in bringing about the situation that, as of 2013, 60% of these countries’ citizens ended up having no choice but to seek seasonal (and often illegal) employment in Europe (Hansson & Randveer 2013).

While settling trade-disputes between country-members, the WTO usually takes the side of the most economically developed ones – even at the expense of violating the very principle of ‘free trade’. To exemplify the legitimacy of this suggestion, we can refer to the Organisation’s 1999 decision to order some countries of the EU to stop purchasing bananas from the Caribbean region – all because the concerned practice was inconsistent with the interests of the U.S.-based Chiquita Corporation.

The way in which the WTO handled the matter shows once again that, contrary to what its representatives proclaim, the Organisation never ceases to be driven by the essentially political considerations while trying to ensure ‘economic fairness’ across the world – something that implies the actual absence of the latter, in the first place.

There are a number of indications that this is indeed the case. For example, the WTO refused to take any action against the U.S., on the account of this country’s continual attempts to apply much political pressure on European nations to persist with imposing economic sanctions against Russia (another WTO-member).

After all, the mentioned activity, on the part of the U.S., stands in striking contradiction to the most basic provisions of the WTO statute – yet, the Organisation’s top-officials prefer to turn a blind eye on it. This simply could not be otherwise – in order for the WTO bureaucrats to retain their chairs within the Organisation, they must make ‘proper’ (that is, Western-friendly) decisions.

According to Irogbe (2013), “The unelected three-panel of bureaucrats as dispute judges (in the WTO), are appointed by the director-general… who must have the blessings of the Quads (US, EU, Japan, and Canada)” (p. 177). It is understood, of course, that this undermines the prospect for WTO trade-agreements to be just, by definition.

The WTO erects obstacles on the way of the free circulation of scientific knowledge throughout the world by the mean of coercing every country-member to sign the so-called Trade Related Intellectual Property Rights (TRIP) agreement. This is being done to enable the overwhelmingly Western patent-holders to charge high royalties for just about every line of the internationally manufactured hi-tech products (Correa 2000).

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The mentioned Agreement, however, does not take into account the fact that throughout the course of the last few decades, the seemingly fast pace of scientific progress in the West has been achieved by the mean of ensuring the drainage of ‘brain power’ out of the developing countries in the Westward direction.

Moreover, the Agreement’s advocates prefer to remain arrogant as to the fact that just about any type of scientific knowledge cannot be discussed in terms of a ‘thing in itself’ – the new scientific discoveries take place because of the earlier achievements in the various fields of science. What it means is that scientific knowledge belongs to the public and not corporate domain – something the WTO simply refuses to acknowledge.

One of the negative consequences of this is that many people in the Second and Third world are denied the chance to receive a life-saving medical treatment. After all, it is namely due to South Africa’s membership in the WTO that this country is forbidden to produce drugs for alleviating the symptoms of AIDS in patients – despite the fact that this country is affected by the concerned disease more than any other, and the fact South Africa has a developed pharmaceutical industry.

As noted by Curti (2001), “The WTO unreasonably restricts the trade of pharmaceuticals in order to protect the profit margin of Western drug producers at the expense of infected populations in developing countries” (p. 369). This alone raises a certain doubt as to the Organisation’s ability to serve the cause of progress and development.

The WTO encourages country-members to eliminate the economically ‘unfeasible’ social programs/services, meant to facilitate the fair distribution of national wealth and to ensure the uninterrupted pace of social progress in these countries. According to Esty (2002), “The WTO seeks to privatize education, healthcare, energy, and water. Privatization means the selling off public assets… to private, often foreign, corporations, to be run for profit instead of the public good” (p. 15).

Therefore, there is nothing too surprising about the fact that the drastic lowering of living standards usually follows the implementation of the ‘free-market’ reforms, recommended by the WTO. One does not have to go far to prove the validity of this idea, because the illustrating examples are all around us. Probably the most convincing of them has to do with the ‘progress’ made by Ukraine, in the aftermath of having joined the WTO.

It is not only that Ukraine’s ‘smart move’, in this respect, resulted in the country’s complete deindustrialisation, but also in the fact that, as of today, Ukraine’s systems of healthcare and education have de facto ceased to exist (Yurchenko 2012). According to the WTO, such a situation makes perfectly good sense. Why should the Ukrainian government invest in healthcare and education, if no short-term profit can be gained from it? As seen by the WTO bureaucrats, the country’s population is too large and ‘useless’, as it is.

Therefore, it will only be logical to expect that, for as long as the Ukrainian government continues to cooperate with the WTO, the likelihood for this country to disappear from the world map in the near future (due to depopulation) will remain thoroughly realistic. After all, such a development would be thoroughly consistent with yet another officially proclaimed goal of the WTO – to enable the unrestricted repositioning of ‘workforce’ throughout the world (Armstrong 2012).

In light of what has been mentioned earlier, WTO trade-agreements do seem utterly unjust – at least when assessed from the point of view of the developing (or underdeveloped) countries. The reason for this is quite apparent – the Organisation’s approach to facilitating free trade exposes the agenda of Western countries to conserve the current situation with the ‘division of labour’ on this planet.

On one hand, there are the ‘privileged’ WTO members (Western countries), allowed enact a number of the clearly protectionist policies (such as providing farmers with heavy subsidies). On the other, however, there are the Organisation’s ‘underdogs’ (such as the earlier mentioned Lithuania, Latvia, Estonia, and Ukraine), which are forbidden to even think of doing the same – all because their membership in the WTO assigns them with the informal status of Western colonies, at least in the economic sense of this word.

It is true, of course, that due to being concerned with the removal of trade barriers across the world, the Organisation allows the most expedient accumulation of wealth on a global scale. This, however, does not necessarily mean that all the affiliated contributors are entitled to a fair share of it. Quite to the contrary – the WTO is there to help the West to maintain its neo-colonial grip on the developing countries, which is detrimental to the interests of the latter.

It is understood, of course, that this hardly contributes towards helping the Organisation’s policies to be perceived thoroughly fair by the underprivileged majority of its members. As Kapstein (1999) noted, “(Economic) institutions that discriminate against some players or fail to provide equal opportunity to the least advantaged cannot be considered just, though of course they might be efficient” (p. 533).

However, there is even more to the issue – the fact that most of WTO trade-agreements are blatantly unjust, does not merely indicate the Organisation’s commitment to strengthening the Western economic dominance on this planet. Apparently, it is also something that exposes the conceptual erroneousness of the Neoliberal assumption that free (unregulated) trade is the key to richness. Yet, this specific idea defines the essence of the Organisation’s operant principles.

After all, before they are made available in their segment of the market, the commercial goods and services must come into existence first, which in turn presupposes the (planned) creation of the objective preconditions such an eventual development to take place.

And, it is specifically the enactment of the interventionist/protectionist economic policies by the government that has proven the only effective contributing factor, in this respect – especially in the case of those countries that have only recently been put on the path of industrialisation.

Moreover, the WTO’s implicit insistence that people’s consumerist instincts alone define the quality of social dynamics in just about any country simply does not stand any ground, especially if assessed systemically. Even many supporters of Neoliberalism, such as James (2005), do recognise this fact, “Markets generally have large-scale effects that cannot be brought about by particular acts of buying or selling, or by the sole efforts of any particular economic agent” (p. 539).

The reason for this is that the mentioned dynamics never cease to remain highly societal (systemically complex) – even if appear to be solely affected by the supposedly unregulated fluctuations of supply and demand in the ‘free’ market. What this means is that, even if the WTO’s actual agenda was indeed concerned with helping the underdeveloped countries to become economically competitive, the Organisation would still not be able to progress far pursuing it.

The reason for this is that, due to being ideologically driven (Neoliberlaism is as much of an oppressive ideology as Communism); the WTO is very reluctant to allow impartial scientific knowledge to have any effect on the quintessence of its currently deployed approaches for eliminating trade-barriers/settling trade-disputes between nations. This, in turn, removes even a hypothetical possibility for WTO trade-agreements to be just – even if it does appear to be the case on the outside.

I believe that the used line of argumentation, in defence of the idea that WTO trade-agreements are unfair, is consistent with the initially provided thesis. Therefore, it will only be logical to conclude this paper by suggesting that the very existence of the WTO confirms that the workings of the world economy are politically/ideologically charged and that the West continues to benefit from being able to exploit the ‘global periphery’, under the disguise of helping the associated countries to attain ‘economic efficiency’.

References

Armstrong, C 2012, Global distributive justice, Cambridge University Press, Cambridge.

Correa, C 2000, Intellectual property rights, the WTO and developing countries: the TRIPS agreement and policy options, Zed Books, London and New York.

Curti, A 2001, ‘The WTO dispute settlement understanding: an unlikely weapon in the fight against AIDS’, American Journal of Law and Medicine, vol. 27, no. 4, pp. 469-485.

Esty, D 2002, ‘The World Trade Organization’s legitimacy crisis’, World Trade Review, vol. 1, no. 1, pp. 7-22.

Hansson, A & Randveer, M 2013, ‘Economic adjustment in the Baltic countries’, Working Papers of Eesti Pank, vol. 1, pp. 3-21.

Hart-Landsberg, M 2006, ‘Neoliberalism: myths and reality’, Monthly Review, vol. 57, no. 11, pp. 1-17.

Irogbe, K 2013, ‘Globalization and the World Trade Organization from the perspective of the underdeveloped world”, The Journal of Social, Political, and Economic Studies, vol. 38, no. 2, pp. 174-202.

James, A 2005, ‘Distributive justice without sovereign rule: the case of trade’, Social Theory and Practice, vol. 31, no. 4, pp. 533-559.

Kapstein, E 1999, ‘Distributing the gains: justice and international trade’, Journal of International Affairs, vol. 52, no. 2, pp. 533-555.

Navarro, V 2006, ‘The worldwide class struggle’, Monthly Review, vol. 58, no. 4, pp. 18-33.

Stiglitz, J & Charlton, A 2005, Fair trade for all: how trade can promote development, Oxford University Press, Oxford.

Sutherland, P 2008, ‘Transforming nations’, Foreign Affairs, vol. 87, no. 2, pp. 125-136.

The case for open trade 2016, viewed 27 February 2016, <https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact3_e.htm>.

Walton, A 2010, ‘What is fair trade?’, Third World Quarterly, vol. 31, no. 3, pp. 431-447.

Walton, A 2013, ‘The common arguments for fair trade’, Political Studies, vol. 61, no. 3, pp. 691-706.

Yurchenko, Y 2012, ‘”Black holes” in the political economy of Ukraine: the neoliberalization of Europe’s “wild east”’, Debatte: Review of Contemporary German Affairs, vol. 20, no. 2/3, pp. 125-149.

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