10 common misunderstandings about the WTO
Is it a dictatorial tool of the rich and powerful? Does it destroy jobs? Does it ignore the concerns of health, the environment and development? Emphatically no. Criticisms of the WTO are often based on fundamental misunderstandings of the way the WTO works.
The debate will probably never end. People have different views of the pros and cons of the WTO’s “multilateral” trading system. Indeed, one of the most important reasons for having the system is to serve as a forum for countries to thrash out their differences on trade issues. Individuals can participate, not directly, but through their governments.
However, it is important for the debate to be based on a proper understanding of how the system works. This booklet attempts to clear up 10 common misunderstandings.
The 10 misunderstandings 1. The WTO dictates policy 2. The WTO is for free trade at any cost 3. Commercial interests take priority over development … 4. … and over the environment 5. … and over health and safety 6. The WTO destroys jobs, worsens poverty 7. Small countries are powerless in the WTO 8. The WTO is the tool of powerful lobbies 9. Weaker countries are forced to join the WTO 10. The WTO is undemocratic
organization. That means:
The WTO does NOT tell governments what to do
The WTO does not tell governments how to conduct their trade policies. Rather, it’s a “member-driven”
• the rules are ratified by members’ parliaments, and • decisions taken in the WTO are virtually all made by consensus among all members.
adopting the findings of a panel of experts or an appeal report. Even then, the scope of the ruling is narrow: it is simply a judgement or interpretation of whether a government has broken one of the WTO’s agreements—agreements that the infringing government had itself accepted. If a government has broken a commitment it has to conform. In all other respects, the WTO does not dictate to governments to adopt or drop certain policies. As for the WTO Secretariat, it simply provides administrative and technical support for the WTO and its members. In fact: it’s the governments who dictate to the WTO.
• the rules of the WTO system are agreements resulting from negotiations among member governments,
In other words, decisions taken in the WTO are negotiated, accountable and democratic. The only occasion when a WTO body can have a direct impact on a government’s policies is when a dispute is brought to the WTO and if that leads to a ruling by the Dispute Settlement Body (which consists of all members). Normally the Dispute Settlement Body makes a ruling by
The WTO is member-driven
The WTO is NOT for free trade at any cost
It’s really a question of what countries are willing to bargain with each other, of give and take, request and offer. Yes, one of the principles of the WTO system is for countries to lower their trade barriers and to allow trade to flow more freely. After all, countries benefit from the increased trade that results from lower trade barriers. But just how low those barriers should go is something member countries bargain with each other. Their
negotiating positions depend on how ready they feel they are to lower the barriers, and on what they want to obtain from other members in return. One country’s commitments become another country’s rights, and vice versa. The WTO’s role is to provide the forum for negotiating liberalization. It also provides the rules for how liberalization can take place. The rules written into the agreements allow barriers to be lowered gradually so that domestic producers can adjust.
They have special provisions that take into account the situations that developing countries face. They also spell out when and how governments can protect their domestic producers, for example from imports that are considered to have unfairly low prices because of subsidies or “dumping”. Here, the objective is fair trade....
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