WTO. Race to poverty.

Recently there are a lot of discussions about the WTO, its enlarging and members. Especially the role and effectiveness of the organization discussed. This topic is also relevant in my country due to current process of joining. So I decided to analyze it.

The World Trade Organization was founded in 1995 with the aim of liberalization of international trade and regulation of trade and political relation between members. The WTO is successor of temporary organization the GATT (the General Agreement on Tariffs and Trade), and includes agreements such as the General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Service (GATS), TRIMS (the agreement on Investments), Agreement on Subsidies and etc. The basic ideology is the theory of “free trade”. (wto.org)

Currently the WTO is responsible for developing and implementing new trade agreements and also monitor compliance of agreements by all members. The WTO is not part of the United Nations and do not obey the laws of the UN, it is states’ responsibility. But in general it should have positive effect on economies, but in fact, the opposite happens.

Even that the WTO slogan says: “WTO eliminate the poverty”, poverty in the countries who joined the WTO has increased according to UNCTAD reports. (UNCTAD) The share of developing countries in the world trade system has not grown and even fell in some cases despite the promises before entering the organization. For example, underdeveloped countries’ share has decreased. (UNCTAD Report 2002)

The WTO keeps repeating that the only way to develop the economy and industry is “to be open” to the world market in the partnership with the IMF and the World Bank. (Schott) (Schott) However, this ideology of “free market” hides the fact that industrialization in the countries, that are considered developed and rich today, was conducted by the model of protectionism and a state played the important role in trade, investment and subsidies. Even the successes of industrialization in the Asian countries аs Malaysia, Singapore and China, occurred not because of “free market” but because of the strong role of the state and government. In contrast, Asian countries that opened their markets to foreign capitals, got in an economic crisis.

The WTO right is above the national laws and provides the only possible path of the economy. WTO members are obliged to liberalize, privatize, deregulate ( to open access to TNCs and banks) sphere of its economy (Bourgeois). A state that has acceded to the WTO cannot just change its policy аs a sovereign state anymore. To change conditions is only possible tree years after entry to the organization with compensation to partners who have losses.

The WTO has its own court – Dispute Settlement Body. With the help of this body the WTO may force national governments to abolish federal and regional laws. For example, when the EU banned the import of GMOs (genetically modified organisms) on its territory, the US appealed to the court to protect interests of American corporations. The EU had to pay huge penalties and soon the EU gave up, allowing to import GMOs, but with labeling. (Bourgeois)

The rules of the WTO are not equal for al countries. Thus the WTO does not allow periphery countries to protect their industries by customs duties, but the countries in the “center” continue to pay. The US imposed quotas on steel to protect American steelmaking concerns from foreign competition. Аs far, the WTO exists and functions not in the interests of the members, but in interests of transnational companies which mostly belong to the United States and Britain, who have their unfair advantage because of the unlimited emission of money. (Irwin) So, WTO members in fact give the control over their economy to whom, who has more money – de jure to the transnational companies, - de facto to the US and the UK. (Ehlermann)

That for I do not see benefits for Russian Federation to enter the WTO, it is difficult to believe that it would positively affect social-economic wealth of the country., especially now, when we cannot offer anything for sale, except oil and gas that we already sell cheap enough and we do not want to buy what we can produce on our territory а Ukrainian example shows by buying vegetables from Europe. And the main point against is lost of sovereignty because a member decision-making ability will be limited. (news)

Works Cited
Bourgeois, Jacques. "The European Court of Justice and the WTO: Problems and Challenges." (2001): 71-125.
Ehlermann, Claus-Dieter. "Decision-Making in the World Trade Organization Is the Consensus Practice of the World Trade Organization Adequate for Making, Revising and Implementing Rules on International Trade? ." Journal of International Economic Law (2005).
Irwin, Douglas. "Causing Problems? The WTO Review of Causation and Injury Attribution in U.S. Section 201 Cases." The National Bureau of Economic Research (2003).
news, BBC. "Profile: World Trade Organization." 2011 September 2011.
Schott, Jeffrey. "Decision Making in the WTO." The WTO after Seattle (n.d.).
UNCTAD. "UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT." International Trade and Commodities. Activity Report 2010
ustr.gov. Office of the United States Trade Representative. 5 December 2011.
Wolff, Alan. "Problems with WTO Dispute Settlement." AEI Conference: American Sovereignty: Issues for the New Administration and the New Decade (n.d.): 417-427.
wto.org. Official website of the Wirld Trade Organization. 5 December 2011.