WTO Rounds

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By Naveed Qazi | Editor, Globe Upfront

An interesting debate rages in the global business arena. Tariffs and international policies on trade make up a huge chunk of economic decisions in our world.

Today, many people criticise the trade liberalisation policies around the world. After the end of second world war, the Bretton Woods assemblage of international economic institutions paved the way for one of the most important events in history. International free trade alliances were given an advent for a purpose to stablise the global economy. During those times, there was a natural urge amidst several countries to escape protectionist policies pertaining to economies.

During the years 1948 to 1994, GATT (General Agreements on Tariffs and Trade) saw high growth turnouts in international commerce, which was later constituted as the WTO in 1995. Uruguay Round from 1986 to 1994 was conducted seven times over the years which mainly focused on agricultural subsidies, banking and foreign investment. The Doha Development Round was the next round constituted in 2001,  having missed its deadline of completion in 2005.

The Doha Development Round is mainly aiming to reduce trade barriers around the world. The negotiations, however, have collapsed over special safeguard mechanisms in agricultural trade between the United States, China and India. European Trade Commissioner, Peter Mandelson called it a "collective failure". He believes that the farm bills drafted by the US Congress were 'reactionary' and were harmed by its five-year program of agricultural subsidies. UK Prime Minister, David Cameron, on the other hand, invited ridicule over the timing of the development round at 2011 World Economic Forum held in Davos. In April 2011, the then director- general, Pascal Lamy asked members to think hard about the consequences of "throwing away years of solid multilateral work". In December 2013, director general Roberto Azevedo, presented a part of Doha Round focused on intellectual property issues, trade facilitation, and food security.

Recent study related to Doha Development Round claim that if WTO members reduce agricultural subsidies by 33%, there will be an increase of $574 billion US dollars around the globe. World Bank's lead economist, Kym Anderson believes that the Doha Round deals could yield upto $2500 to $3000 billion that would go to the developing world. Copenhagen Consensus, a project that seeks to evaluate global welfare measures, using theories of welfare economies, ranked Doha Round as the second best for global investment.

WTO, conversely, also has been increasingly gaining adversaries over the years. It has been tainted as being inclined towards the policies of developed countries. World Development Movement has not been in its favour, nor has been the World Social Forum. Martin Khor, director of an inter-government organisation, South Centre believes that WTO policy measures are biased towards developing nations in terms of having access to technologies, high import duties by rich countries, anti-dumping measures allowed against developing countries to name a few.

Subsidies are often paid to rich farmers. Fair Trade argument has not been regulated well. It is also very hard for WTO to reach a common consensus from all its member states, thereby affecting sound decision making. The poorest cannot get good access to medicines. The reach of its legal system is not effective in developing nations.

WTO has also been criticised for adverse job effects like job loss for justified tariffs, an entity which cuts growth in sectors, innovations to maintain high profits, as postulated by Noam Chomsky. When an exported product enters a country, it has the potential to raise the price of domestic goods as well. In that sense, tariff works as a wealth transfer tax for a non-competitive product. The organisation has also been criticised the way it handles dispute resolutions between member states and for its transparency. Its critics view it as a machine for stronger nations to control weaker nations.

John Dearden, chairman of WDM, believes that there have been so many deals going out outside the frays of WTO, which are not pro-poor, especially deals done by the Obama administration. People all over the world want people to shift from corporations to people. These developments haven't been received well by many social movements going on around the world. If we dive into history, the protests of Seattle in 1999, to recent protests of Bali in 2013, all point out towards the same root problems, which are related to bad diplomacy and badly woven trade policies at the international scale.