Reading 16: The World Trade Organization 12/5/12 1:25 AM
International trade has grown faster than world economic output in every
decade since 1950 and flows of foreign direct investment have grown faster
than international trade since the mid 1980s.
• Formed in 1995
• Origins date back to 1948, GATT
• 142 member countries ! most recent Taiwan and China
• budget in excess of 80 million USD
• headquartered in Geneva
UN founding members envisioned an organization that would regulate world
trade and international investment towards economic recovery and
international financial stability.
Serves to limit the restrictive and protectionist polices brought about by the
• 23 of the richest countries did not approve of the charter, withdrew
and formed GATT
• ‘weaker’ institution
• contract between countries, not an organization
• designed to encourage free trade and prevent trade wars
• ‘national treatment’: must treat participants in their economies the
same as domestic firms
• ‘most favoured nation’: aims to ensure that any concession granted
to one trading partner is extended to all
The WTO upholds GATTs principles but is much stronger as it has legal
status and its rules are binding.
The WTO has a dispute settlement body.
The WTO also includes areas such as services and patents.
Many fear the WTO has too much power.
Commodity prices do not fall under the power of the WTO, but finance and
Voting is un-weighted, each member receives one vote.
The World Bank Inspection Panel
1993: created the Inspection Panel
• in response to the international environmental and human rights
campaigns and criticisms
• North-South campaign against India’s Narmada dam
This panel is illustrative of the power of civil society organizations to effect
change in the operation of an international financial institution.
• Composed of non-world bank development experts
• Citizens of developing countries can make grievances regarding the
environmental and social costs of World Bank projects
o Must be directly affected by the project
o Must be due to World Bank failures
o Must have been brought to the world bank before
• Has 21 days to respond to the claim
• Most claims to date have focused on resettlement, environmental
impact assessment and indigenous people’s policy violations
Arun III dam in Nepal ! only claim leading to a victory for the claimants
Factors Constraining Impact of the Panel
• Relatively autonomous, but remains a world bank institution
• Many civil society actors remain unaware of the Panel’s existence or
of the World Bank’s social and environmental safeguard policies
• Focuses only on mandatory World Bank policies, rather than
recommended good practice
• Substantial costs and risks involved for civil society groups
Agreeing A New Round of Negotiations for the WTO in Doha
Major victory for developing nations: TRIPS, bringing down the cost of
First time, the WTO will discuss the relationships between its rules and the
multilateral environmental agreements
US Agricultural Policy
Increased production in the late 19th century declined prices and bankrupted
many farmers. 20th century was a prosperous time for U.S. farmers as they
provided food for Allied Troops during WW1. But, many farmers lost their
fortunes during the Great Depression. WW2 increased profits, yet again.
Then prices decreased until the US created grain trade agreements. The
farm sector faces higher operating costs and lower revenues. Since the
green revolution, US exports have become uncompetitive due to value of the
US dollar, cost of technology, cost of seeds, fertilizer etc…