The world Trade Organization (WTO)

Introduction

WTO and Trade Libralization

“The world Trade Organization (WTO), is the only global international organization monitoring and controlling the rules of trade between nations. It was formed in 1995 with the General Agreement of Trade and Traiffs (GATT) as its basis.” (Paul and Aserkar, 2010:1)

The Doha Development Agenda

The fourth ministerial conference in Doha, in its November 2001 declaration, highlights the directives of negotiations around 21 subjects and the problems faced in their execution. The declarations support the WTO agreement objectives in order to amend the restrictions and biases in the world agriculture markets. (http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm#subsidies)

The member countries are entitled to focus on the following facts:

• Access to Market
• Subsidies on Export
• Reduction in domestic support.

For developing countries like Africa and Latin America, the Doha Declaration provides a differential treatment during the negotiations with some special provisions to monitor if the countries meet with the basic needs like food security and overall development.

Competitive Environment

“No prohibitions or restrictions other than duties and taxes whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting country on the importation of any product of any other member country.” (GATT 1947)

According to the original GATT, introduction of non-tariff barriers such as subsides and import quotas, creates an unfair environment, highly distorting the agricultural trade especially with the use of export subsidies. (http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm#subsidies)

The Multilateral Agreement in the agriculture sector produced in the Uruguay Round laid the foundation to a fair competition with minimum distortions, through constant restructuring in the negotiations. (http://www.wto.org/english/tratop_e/agric_e/agric_e.htm)

Africa and Latin America have predominantly large population especially in the rural areas, wherein the prime focus of these groups is agriculture. As per the FAO 2000 reports, agriculture occupies 50 percent and 20 percent of the total employment in the African and Latin American countries. (Morrison and Sarris, 2007: 340)

The European Union and The United States trade polices play a major role in promoting the overall progress of the developing nations by providing adequate support in accordance to the WTO agreements. No doubt that, agricultural products occupy a major share in exports of the developing countries. The United States and European Union impose higher controls on the agricultural exports of these developing nations by excising or imposing subsidies.

However it would be quite unfair on their part, just to focus on either Africa or Latin America or only on the agricultural products and no other major industries or sectors. Moreover they are not legally obliged to focus on the concerns of other countries for their own benefits. In this competitive world, the big players should promote equal opportunities for all the countries, especially the developing ones. The core sectors need to be classified and equally promoted for a balanced overall growth.

As in most developing countries, the rules and procedures of the multilateral trading system are regarded as unfair by the developing countries. They view the rules and procedures as favouring the developed countries. For example, although the WTO is supposed to be a member-driven organization, important issues and decisions are taken in “Green Room” meetings and African countries do not have proportionate and adequate representation at these meetings. In addition, because of their relatively low bargaining power, countries in the region have difficulties setting and influencing the agenda and pace of negotiations. The lop-sided power structure of the multilateral trading system is evident in the fact that developed countries managed to get the Singapore Issues on the agenda of the Doha Work Programme at the WTO Ministerial Conference in Doha despite mounting opposition from developing countries, who comprise more than two-thirds of the membership of the WTO. The Singapore Issues contributed to the failure of the 2003 WTO Ministerial Conference in Cancun and three of the four issues were eventually taken out of the Doha Agenda. (Morrison and Sarris, 2007: 344-345)

To stabilize farmers’ incomes and preserve a practical, diverse agricultural system is by combining the supply management and the price supports. In order to be effective, The United States and European Union should impose superior tariff controls along with the price supports on the imported farm goods. However such a policy prescription, of course, runs completely counter to the entire neoliberal thrust of the last twenty-five years, and would effectively remove US farm policy from the regulatory jurisdiction of the WTO, signalling the end of the WTO’s Agreement on Agriculture. (http://www.foodfirst.org/backgrounders/subsidies)

References

1. Justin Paul and Rajiv Aserker (2010) 5th edn. Export Import Management. New Delhi: Oxford University Press
2. WTO (n. d.) WTO | DOHA Declaration [online] available from <http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm#subsidies> [1 May 2011]
3. WTO (n. d.) WTO | Agriculture Gateway [online] available from <http://www.wto.org/english/tratop_e/agric_e/agric_e.htm> [1 May 2011]
4. Morrison and Sarris (2007) WTO rules for agriculture compatible with development. Rome: fao.org
5. Karl Bietel (2005) ‘U.S. Farm Subsidies and the Farm Economy’. FOOD FIRST 11 (3), 3