Is WTO a Rich Mans Club and Is it a correct assessment of

WTO?
The world trade organisation popularly known as the WTO is an
international body that regulates the international trade. It is a
worthwhile fact that the scope of the WTO unlike its name is not only
limited to trade only but its roots extend to

The Agreement Establishing the WTO

Goods and investment the Multilateral Agreements on Trade in

Goods including the GATT 1994 and the Trade Related Investment
Measures (TRIMS)

Services the General Agreement on Trade in Services (GATS)

Intellectual property the Agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS)

Dispute settlement (DSU)

Reviews of governments' trade policies (TPRM)

The WTO succeded from the GATT (General Agreement on Tarrifs and
Trade) in the year 1995 as a result of the Uruguay round that held
between 1986-94. Now the question arises what was GATT? GATT was
established soon after the first world war when almost the whole world
was facing economic crisis and the United Nations was recently
established.

At

that

time

it

was

the

ITO

(International

Trade

Organisation) which was to see the agreements regarding not only

trade but matters related to trade, including employment, investment,

restrictive business practices, and commodity agreements. But the ITO
treaty was not ratified by the USA and few other signatories and hence
never effected. Thus it was the GATT which was regulating trade for
more that 4 decades untill the WTO took over from the parent
organisation.
Today, the WTO has 132 Members with another 31 in the process of
accession. 98 out of 132 Members are developing countries. 27 of the
developing countries are classified as least-developed countries
(LDCs), also the countries with the lowest incomes.
WTO IN PRINCIPLES
Non-Discrimination:- It has two major rules viz. MFN (Most
Favored Nation) rule, and the National Treatment Policy. Both
these rules are embedded in the main WTO rules on goods,
services and IPR(Intellectual Property Rights). The MFN rule
requires that a WTO member must apply the same conditions on
all trade with other WTO members, i.e. a WTO member has to
grant the most favourable conditions under which it allows trade
in a certain product type to all other WTO members. "Grant
someone a special favour and you have to do the same for all
other WTO members." National treatment means that imported
goods should be treated no less favourably than domestically
produced goods (at least after the foreign goods have entered
the market) and was introduced to tackle non-tariff barriers to
trade (e.g.

technical

standards,

security

discriminating against imported goods).1

1 B. Hoekman, The WTO: Functions and Basic Principles, pg. 42.

standards

et

al.

 Reciprocity:- In simple words nations should try to provide similar

concession for each other.
Transparency:- The member countries must publish their trade
regulations and negotiations and process must be fair and open
with rules equal for all.
Safety Valves:- In Certain cases, the governments are able to
restrict trade if the environment is being harmed or if the public
health, plant health or animal health is at stake.
REALITY OF WTO
Rich countries are able to maintain high import duties and
quotas in certain products, blocking imports from developing
countries
e.g. clothing
The increase in non-tariff barriers such as anti-dumping
measures allowed against developing countries.
The maintenance of high protection of agriculture in developed
countries while developing ones are pressed to open their
markets.
e.g. the Fairtrade Foundation revealed last year how the
$47bn in subsidies paid to rich-country producers in the past
10 years has created barriers for the 15 million cotton farmers
across west Africa trying to trade their way out of poverty, and
how 5 million of the world's poorest farming families have
been forced out of business and into deeper poverty because
of those subsidies.
In 2001, the 25,000 US cotton growers received roughly $3.9
billion in subsidy payments, for producing a cotton crop that
was worth only US$ 3 billion at world market prices (One
Arkansas cotton grower received US $ 6 million, equal to the

combined annual earnings of 25,000 cotton farmers in Mali).

Such are the glaring inequalities, that an American cotton
farmer on an average receives US $ 10.7 million a day as
subsidies.
The case of Central America. The debt crisis that inflicted the
Central

American

countries

in

the

1980s,

was

very

conveniently used as the right opportunity to shift the

cropping pattern to non-traditional exports. Aided and abetted
by the United States Agency for International Development
(USAID), farmers were lured to the illusion of greener pastures
in the developed world. They shifted to crops like melons,
strawberries, cauliflower, broccoli and squash that were
shipped to the supermarkets, mainly in America. In turn, these
Central American countries disbanded cultivation of staple
crops like corn and bean, and have now become major
importers and that too from the United States.
In India, which has only three decades back emerged from the
shadows of massive food imports, the strategy is the same.
World Bank/IMF have forced successive governments to adopt
policies that forces farmers to abandon staple crops like
wheat, rice and coarse cereals, and diversify to cash crops.
Punjab, the countrys food bowl, is presently engaged in a
desperate effort to shift from wheat-rice cropping pattern to
cultivating cut flowers and the likes. Andhra Pradesh, in south
India,

has

already

embarked

on

misplaced

rural

development vision that aims at industrial agriculture at the

cost of its millions of small and marginal farmers. As if this
alone is not enough, biotechnology companies are being doled

out with State largesse and prime real estate so as to

encourage corporate farming.
Thus the staple foods which is the basic necessity, the
developed countries are earning profit on them and the
developing nations are producing non-staple foods which is not
that much important and that too in a meagre quantities than
the developed nations. And all this is happening as a result of
pressure from the WTO
The TRIPs agreement which limits developing countries from
utilizing some technology that originates from abroad in their
local systems (including medicines and agricultural products)
without paying Royalty is actually strangulating the poor
countries as the rich and developed nations has more
technologies, products and medicines patented that those of
the developing nations due to easy and rich availability of
resources. Thus for example the developing nations are paid
royalty for one product developed by them but at the same
time it is made to pay for 10 other products mostly developed
by the G-7 nations or better say developed nations.
The child labour and human and human rights issue which is
mostly a concern for the developing nations is widely ignored
by the WTO as, The WTO encourages a race to the bottom in
wages by pitting workers against each other rather than
promoting internationally recognized labor standards. The
WTO has also ruled that it is illegal for a government to ban a
product based on the way it is produced, such as with child
labor. It has also ruled that governments cannot take into
account non commercial values such as human rights, or the
behavior

of

companies

that

do

business

with

vicious

dictatorships

such

as

Burma

when

making

purchasing

decisions.
Even the basic necessities are being promoted to be privatised
by the WTO.
For ex:- In the case of Latin America where the water supplying
unit was privatised and the water prices rose so high that
person from lower strata could not even afford a glass of
water.
Just to promote monopoly of the private beef companies in
Europe on the alluring ground of quality, beef ban import was
prohibited by the WTO which ultimately again led to rise in
price and the poor could not afford the same.
WTO supposedly operates on a consensus basis, with equal
decision-making power for all. Involvement of the poor
countries is less in the decision making process and they have
less bargaining power. Many countries do not even have
enough trade personnel to participate in all the negotiations or
to even have a permanent representative at the WTO.
On the name of dispute resolution, the WTO takes years to
settle a certain dispute and most of the time it is more than 5
years and this is the reason why even if there is some cause of
action to the developing nations, they prefer to be silent.
That while importing nations cannot distinguish

how

something is made when trading, though it sounds good at

first along the lines of equality and non-discrimination, the
reality is that some national laws and decisions for safety and
protection of peoples health, environment and national
economies have been deemed as barriers to free trade. The
following as a very small set of examples:
Countries cannot say no to genetically engineered food

 or milk that contains genetically engineered growth

hormones known to cause health problems
or trees that have been felled from pristine forests and
so on.
Guatemala took efforts to help reduce infant mortality,
in accordance with the World Health Organizations
guidelines, and to counter aggressive marketing by
baby food companies aimed at convincing mothers
their products are superior to the more nutritious and
disease-protecting breast milk for their babies. The
result? The affected corporations managed to take this
to GATT (the predecessor to the WTO) and get a
reversal of the law amidst the threat of sanctions.
Profits prevailed.
The WTO fails to alleviate suffering when it has the opportunity
to do so. In the case of natural disaster, in Pakistan it took
almost two years to agree and implement temporary trade
concessions for Pakistan, where severe flooding displaced 20
million people in 2010 and caused $10bn of damage. Those
measures, according to the International Centre for Trade and
Sustainable Development, would have boosted Pakistan's
exports to the EU by at least 100m this year.
WTO is in todays world is like a necessary evil and thus its role cannot
be 100% examined as to whether it has always been pro rich or pro
poor.
ARGUMENTS IN FAVOR OF WTO
The WTO has not only enhanced the value and quantity of
trade but has also helped in eradicated trade and non - trade

barriers. WTO has also broadened the trade governance scope

to trade in investment, services and intellectual property.
It has emerged as a greater institution than GATT and
expanded the agenda by including developmental policies
which further helped in settlement of disputes and improved
monitoring by introducing the Trade Policy Review and the
World Trade Report as well as increased transparency by
removing green room negotiations.
WTO also encouraged sustainable trade developments. As
trade expands in volume, in the numbers of products traded,
and in the numbers of countries and companies trading, there
is a greater a chance that disputes will arise. The WTO system
helps resolve these disputes peacefully and constructively - in
reality, a lot of international trade tension is reduced because
countries can turn to organizations, in particular the WTO, to
settle their trade disputes. The increasing number of disputes
brought to GATT and its successor, the WTO, does not reflect
increasing tension in the world, it rather reflects the closer
economic

ties

throughout

the

world,

the

GATT/WTOs

expanding membership and the fact that countries have faith

in the system to solve their differences.
The fact that there is a single set of rules applying to all
members greatly simplifies the entire trade regime. The WTO
cannot claim to make all countries equal. But it does reduce
some inequalities, giving smaller countries more voice, and at
the same time freeing the major powers from the complexity
of having to negotiate trade agreements with each of their
numerous trading partners.

 WTO members are now reducing the subsidies and the trade
barriers which give consumers more choices, and a broader
range of qualities to choose from.
The system shields governments from narrow interests the
GATT-WTO system which evolved in the second half of the 20th
Century helps governments take a more balanced view of
trade policy. Governments are better placed to defend
themselves against lobbying from narrow interest groups by
focusing on trade-offs that are made in the interests of
everyone in the economy.
The World Trade Organization is the single most effective
international agency. With the pending inclusion of China,
governments

that

represent

85

percent

of

the

worlds

population and about 95 percent of world trade have chosen to

bind themselves to the WTOs rules and dispute settlement
procedures.
The WTO has been so successful that numerous groups have
petitioned to use the WTO to enforce a range of nontrade rules
affecting labor, the enivronment, and competition policy.
The WTO is the worlds only international organization that
supervises

95%

of

the

worlds

global

trade.The

WTO

agreements include numerous provisions giving developing

and least-developed countries special rights or extra leniency
special and differential treatment. Among these are
provisions that allow developed countries to treat developing
countries more favourably than other WTO members. The
General Agreement on Tariffs and Trade (GATT, which deals
with trade in goods) has a special section (Part 4) on Trade and
Development which includes provisions on the concept of non-

reciprocity in trade negotiations between developed and

developing countries when developed countries grant trade
concessions to developing countries they should not expect
the developing countries to make matching offers in return.
Both GATT and the General Agreement on Trade in Services
(GATS)

allow

developing

countries

some

preferential

treatment. Other measures concerning developing countries in

the WTO agreements include:
i. extra time for developing

countries

to

fulfil

their

commitments (in many of the WTO agreements).

ii. provisions designed to increase developing countries
trading opportunities through greater market access (e.g. in
textiles, services,technical barriers to trade)
iii. provisions requiring WTO members to safeguard the
interests

of

developing

countries

when

adopting

some

domestic or international measures (e.g. in anti-dumping,

safeguards, technical barriers to trade)
iv. provisions for various means of

helping

developing

countries (e.g. to deal with commitments on animal and plant

health standards, technical standards, and in strengthening
their domestic telecommunications sectors).
MFN Treatment: Non- discrimination between countries the Most
Favoured Nation principle is one of the most fundamental
principles of the WTO. It requires member states to accord the
most favourable tariff and regulatory treatment given to the
product of any one member and/or non member at the time of
export or import of like products to all other WTO members.
Under the Most Favoured Nation rule, should WTO member state
A agree in negotiation with state B, which needs not to be a WTO
member, to reduce the tariff on the same product X to five

percent, this same tariff rate must apply to all other WTO
members as well. In other words, if a country gives favourable
treatment to one country regarding a particular issue, it must
handle

all

members

equally

regarding

the

same

issue.

MFN and national treatment are designed to secure fair

conditions of trade. So too are those on dumping (exporting at
below cost to gain market share) and subsidies. The issues are
complex, and the rules try to establish what is fair or unfair, and
how

governments

can

respond,

in

particular

by

charging

additional import duties calculated to compensate for damage

caused by unfair trade.
REFORMS SUGGESTED
The WTO should put as top priority the development needs of its
members.
Parts of agreements which work to disadvantage developing
countries must be changed - agriculture, TRIPS, textiles and the
dispute settlement system.
USs leadership of the WTO should be reconsidered. Decisionmaking should be democratic and governments should consult
regularly with the broader society on trade deliberations.
A radical change from a trade creates wealth perspective to a
development-centred perspective is necessary if trade is to bring
about better living standards for all and long-term sustainability
of resources. At present, the WTOs brand of free trade has
expanded the freedom and powers of transnational corporations
but has severely curtailed the interests of developing countries.
The WTO instead should emphasise greater self-sufficiency of
economies nationally and regionally. Domestic markets, rather

than foreign markets, should be the main stimulus of growth.

Resources should be used sustainably to support local and
national communities. People and the preservation of the
environment, rather than capital, should be the priority.
For this to come about, a change in the leadership of the
institution is absolutely necessary. Instead of having the US, EU
and Japan at the helm, the WTO should be a democratic
institution providing space for a plethora of voices. Governments
should hold regular consultations with their people especially
when negotiations are in process. Working documents and
minutes of meetings must be readily available to the public.
Mechanisms must be set in place for civil society to participate in
WTO decisions including making representations in the dispute
settlement system.
The sovereignty of nations must be respected. Nations must be
able to protect their domestic industries and laws. Countries must
have the freedom to chose if they want overseas investments
and what kind of investments. They must also be able to decide
on their tariff rates and other trade barriers in order to protect
their industries, as the developed countries have been doing.
Because present rules, the work programme and the negotiation
process all work in favour of developed countries, certain
practices and rules in the WTO must be changed to incorporate
the realities and broader development agenda of the Southern
members.
All members should be enabled with the technical expertise and
human

resources

to

participate

fully

in

the

multilateral

negotiations. Liberalisation on the fast track must be stopped.

Instead changes should be made to rules which effectively
disadvantage the economies of developing countries.

Decision-making in the WTO must also involve all members. This

has not been the case to date, where the quad (US, EU, Japan
and Canada) made many decisions on behalf of all.

The dispute settlement system must take into consideration the

development needs of countries, not just whether free trade rules have
been violated. For instance, the recent Banana Dispute saw the WTO
ruling in favour of the US over the EUs traditional arrangement of
preferential access to the Caribbean banana exporting countries. This
will lead to a big squeeze on the Caribbeans market share and bring
about economic devastation, especially in the small economies which
depend solely on banana exports. The dispute system must instead
ensure the development needs especially of vulnerable economies. In
the area of agriculture, countries should be able to choose to be selfsufficient. If developed and developing country farmers are to compete
in the same markets, then the $280 billion in subsidies OECD countries
provide in a year to their farmers should be reduced to the negligible
amounts

developing

countries

provide.

Otherwise,

developing

countries should be allowed to increase their subsidies as well as to

increase their tariffs in order to protect their markets from the highly
subsidised exports of the developed countries. Small farms in both
developed and developing countries should be encouraged, not
squeezed out, especially in developing countries where farming is the
source of livelihood for millions.
TRIPS, which allows the theft of indigenous knowledge, should be
changed so that patent rights are not granted for naturally occurring
plants and animals or their parts, or the uses of plants and animals.

There should also be an easy mechanism for developing countries to

find out about the applications for patents for naturally occurring
materials, their uses or their transgenic forms.

Extensive and long-term research on the impact of transgenic foods on

the health of consumers as well as the possibility of bio-pollution on
other plants must be carried out before genetically transformed plants
and animals are allowed to be patented.
TRIPS should be amended so that it reinforces, not contradicts, the
principles of the Convention on Biodiversity. Genetically transformed
plants and animals must not be covered by patent rights.
If developing countries are still forced down the path of rapid
liberalisation, the in textiles, the US must give up taking recourse in
technicalities and implement real liberalisation immediately.
Developed countries should eliminate the tariff escalation on product
chains of interest to developing countries.
In services, the subject of the movement of labour should be continued
with the aim of arriving at an agreement for significant liberalisation in
this sector.
The WTO should work together with the relevant UN agencies and use
the international standards established in the UN conventions to
ensure that development goals are in concert with the trade agenda.
The final test of the WTOs success is not the amount of trade flows or
how much trade barriers have been lowered, but whether and to what

extent the living standards of all, particularly the developing countries

- also two-thirds of its members - are improving.

CONCLUSION
WTO critics are right to point out that a multilateral trading system
cannot solve every economic or social problem that comes along, nor
should it be expected to; it is unrealistic to think that all will gain
equally, as there are always some who benefit more than others in
any situation. But, as nearly every country in the world has signed up,
or is intending to join the WTO, any country or region would be foolish
to try and stand alone outside the multilateral global trading system
that the WTO is putting into place.
Globalisation of the world's economies is a fact. All nations are part of
it, willingly or unwillingly. Every economy, no less than others, trade
across borders and rely on other nations to supply them with goods
and services. Thus, it is better to be in the WTO than out, for at least
its regulated structure and disputes settlement procedures go some
way to ensuring that all nations will benefit.
AUTHORS VIEW
It is not the WTO alone which is to blame rather it is the capitalism
which had, has and shall always be the source of exploitation. Thus in
my opinion, no matter how many reforms we bring about, the problems
will persist so long as capitalism is there, it is only socialism that can
help the world in sustainable development. It is the only way by which

the whole world can survive, else, a few will always be ruling and
determinig fates of most of the world. The developed nations are
developed because the developing nations cake is taken by them, it is
time for a revolution when the whole developing nations will boycott
the policies that favours rich, and make a strong group of their own
and negotiate with the developed nation protecting their interest.