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The World Trade Organisation - An Australian Guide
- 2006 Edition
-
Download the PDF version of this guide here

The World Trade Organisation

History

In 1944, in the shadow of WWII, the world's major powers came together in the US town of Bretton Woods to create an architecture for global economic governance. At the conference, they agreed to create three institutions: The World Bank (WB), International Monetary Fund (IMF), and the International Trade Organisation (ITO). While the ITO never emerged, in 1948 one element of it came into effect – the General Agreement on Tariffs and Trade (GATT), which in 1995 became the World Trade Organisation (WTO).

Early on, the GATT was fairly inoffensive, being limited to reducing tariffs (import taxes) and subsidies (government to industry payments) for industrial goods traded between the GATT's mostly rich-country members. Negotiations were conducted in "rounds" where all countries agreed to reduced tariffs and subsidies to particular levels.

But in 1984, the GATT was transformed dramatically with the launch of the "Uruguay Round" of negotiations. The Uruguay Round massively expanded the mandate of the GATT to include areas of agriculture, quarantine, services, and "intellectual property".

The Uruguay Round culminated in 1995 with the transformation of the GATT into the WTO. The WTO works to "liberalise" the world economy by reducing "barriers to trade" and encouraging countries to adopt an export-driven, corporate based economic system. The ultimate outcome of all this "liberalisation" is the commercialisation, privatisation and deregulation of the world's economies. It is a process whereby governments progressively negotiate away their regulatory authority, and control is placed in the hands of large multinational corporations, far removed from the control of citizens.

The WTO, which now has 148 member countries, directs this "liberalisation" by establishing rules for the global economy and policing countries which don't follow them. The rules are made through agreements between all member countries, and aim to eliminate all "barriers to trade". The WTO has international status equivalent to the United Nations, but unlike almost every other international body, it has the power to enforce its rules.

Trade Barriers


The cleaner air case

On behalf of its oil industry, Venezuela challenged a U.S. Clean Air Act regulation that required petrol refiners to produce cleaner petrol. Venezuela claimed this rule was biased against foreign refiners and took the case to the WTO. The WTO ruled against the U.S. law. In 1997, the US Environmental Protection Authority (EPA) was forced to lower its minimum requirements for petrol, allowing Venezuela to sell dirtier petrol in the U.S., which deteriorates air quality and public health. The WTO gives big business a special avenue to challenge policies, like the Clean Air rules, which have withstood domestic challenges (34).

For most of the last century, "barriers to trade" meant tariffs (import taxes) and subsidies for agriculture and manufacturing industries, and trade agreements proceeded slowly and quietly. However in the 1970s and 80s, with the rise of neo-liberal ideology, all this changed. Notions of "free trade" and "trade barriers" vastly expanded. No longer were only tariffs and subsidies barriers to trade, but so were government regulations themselves.

Labour standards, quarantine laws, environmental regulations, and even local content rules for media all became targets as "barriers to trade." Indeed, the WTO now aims to have agreements which cover all domestic laws that impact trade. These agreements can override domestic laws and regulations, limiting what policies countries can implement or maintain. If countries make laws which the WTO judges to limit trade in any way, it can overrule that country's laws, and force the country to comply using trade sanctions.

WTO & Democracy

The WTO claims to operate on the basis of consensus, where every country agrees on all decisions. The reality is very different. Most of the WTO's decisions are made by a small group of powerful countries using processes like the "Green Room" and "mini-ministerials" (see below), and imposed on the rest of the members.

The WTO meets in Geneva – one of the most expensive cities in the world. Negotiations occur all year round, but many developing countries can't afford permanent delegations and so are deprived of both representation and participation opportunities, while richer countries negotiate in their absence.

Even though WTO decisions affect billions of people around the world, it is completely unaccountable. Ordinary people have no avenue for input into the WTO's decisions. Unelected bureaucrats and trade ministers make decisions which will affect billions of people without consulting national parliaments or ordinary people.

Issues surrounding the effects of WTO agreements are rarely debated in national parliaments. There has never been a popular referendum on WTO membership or WTO agreements in any country in the world. In Australia, Federal Cabinet ratifies WTO and other trade agreements without any need for parliamentary debate or a vote on them.

WTO's Anti-Democratic Processes

There are a number of anti-democratic measures used within the WTO which give the lie to the WTO's claim of "consensus" decision-making.

The Green Room


"We have been unhappy about the manner in which relatively small groups are convened for substantive discussions with . . . the Director General, on specific portions of the draft Ministerial Declaration – the so-called green room meetings. . . . The process of invitation to the small meetings is . . . highly unsatisfactory."
– Letter to the WTO chairman from WTO missions of Bolivia, Honduras, Cuba, Mauritius, Dominican Republic, El Salvador, Guatemala, Uganda, Paraguay, Panama, Djibouti (35).

Green Room meetings are named after a room at the WTO where they often take place. They are invitation-only, closed-door meetings called mostly by the US or EU to build a consensus among a few countries for the agenda they want to push through. This is then presented to the rest of the WTO membership as a take-it-or-leave-it package, making it almost impossible for smaller developing countries to have their needs or objections included in the final agreements.

Mini-Ministerials

Mini-Ministerials are another process that the richest countries use to push through their own agendas inside the WTO. Like the Green Room meetings, they are invitation-only meetings called usually by the US or EU and including a small group of other "strategic" countries (and excluding the rest). Mini-ministerials have occurred before the WTO Ministerial meetings in Singapore (1996), Seattle (1999) Doha (2001) and Cancun (2003) to promote the goals of the major developed countries, and bring a select group of smaller, powerful countries into line on these agendas (36).

WTO Dispute Settlement

The WTO allows countries to challenge each other's laws and regulations, but the Dispute Settlement Process is conducted in almost absolute secrecy. Documents, hearings and briefs are confidential. Only national governments are allowed to participate, even if a state or local law is being challenged. National parliaments do not have to be informed that their law is being challenged.

WTO disputes are decided by a panel of three unelected trade bureaucrats on the basis of trade law. There are no conflict of interest rules and the panelists often have little appreciation of domestic law or of government responsibility to protect workers, the environment or human rights.   Thus, it's not surprising that - with only one exception - every single environmental or public health law challenged at the WTO has been ruled illegal.

There are no outside appeals. Once a final WTO ruling is issued, losing countries have a set time to implement one of only three choices: change their law to conform to the WTO requirements, pay ongoing compensation to the winning country, or face trade sanctions.

Next Section: WTO, Food & Farming

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