Friday, January 12, 2007

The WTO

From, again, Environmental Science: A Global Concern:

WTO judges are trade bureaucrats, usually corporate lawyers with ties to the industries being regulated. There are no rules against conflicts of interest, nor are there requirements that judges know anything about the culture or circumstances of the countries they judge. No appeal of WTO rulings is allowed. A country that loses a trade dispute has three options: (1) amend laws to comply with WTO rules, (2) pay annual compensation -- often millions of dollars -- to the complainants, or (3) face nonnegotiable trade sanctions. Critics claim that the WTO always serves the interest of transational corporations and the world's richest countries...

Among the most controversial issues brought up in this round of WTO negotiations are agricultual subsidies, child labor laws, occupational health and safety standards, protection of intellectual property, and environment standards. Environmentalists ... were outraged by a 1998 WTO ruling that U.S. laws prohibiting the import of shrimp caught in nets that can entrap sea turtles are a barrier to trade. The United States must either accept shrimp regardless of how they are caught, or face large fines. Some other WTO rulings that overturn environmental or consumer safety laws require Europeans to allow importation of U.S. hormone-treated beef, Americans must allow importation of U.S. hormone-treated beef, Americans must accept tuna from Mexico that endangers dolphins, and the U.S. Environmental Protection Agency cannot bar import of low-quality gasoline that causes excessive air pollution. In some pending cases, Denmark wants to ban 200 lead compounds in consumer products; France wants to prohibit asbestos; and several countries want to eliminate electronic devices containing lead, mercury, and cadmium. Under current WTO rules all of these caes probably will be ruled illegal.


Why can't countries sort out their trade barriers between each other? If, as neoclassical economics tells us (and as I mostly agree with) trade subsidies and tariffs only hurt the countries perpetuating them, then why can't the countries deal with it themselves? And why has the WTO still not ruled the enormous US agricultual subsidies illegal?

And what about the aforementioned selective tax breaks to certain sectors? (I'm referring to the oil sector.) Are those not a form of subsidies? What about government healthcare -- does that not reduce the burden of the corporation? What about the high corporate taxes in some countries? (Corporate taxes aren't a great idea.) The point is that the global market is never very free, even if the obtrusive subsidies and tariffs are eliminated.

Subsidies and tariffs are sometimes effective tool for change. At this point I'd say the world would be better off without the WTO entirely -- let countries sort things out between themselves.

2 comments:

Lynda Walldez said...

LOL. When I saw the title to this post, I got nearly dislexic and thought it read NWO (New World Order) instead. Gee, you know what, I have never heard of Kiekegaard. What is that? By the way, I finid it pretty interesting that you were educated in a religious institute, but are an atheist. He he.

ADHR said...

The basic idea behind an organization like the WTO is sound. Negotiations between parties only work for mutual benefit if the parties are approximately equal. Given that there are a handful of very rich countries, and a heaping pile of poor ones, it follows that negotiations will not be equal when conducted between the two groups. If the negotiations are not equal, then this raises the risk that the weaker party will be exploited by the stronger. So, having a third party that can conduct the negotiations on a reasonably level footing is not a bad plan in itself.

Now, it's possible, of course, for poor countries to bloc together in order to consolidate power and solve the problem that way. But that seems to just move the barrier around; i.e., instead of having a power imbalance between a rich country and a poor one, we have a structural imbalance (the poor countries have to form a consortium first, then negotiate, while the rich countries can simply negotiate).

The point can also be generalized to negotiations within the two groups I have identified, for as long as there's enough of a power difference between the negotiating parties, the party with more power has an unfair advantage. (Canada and the US are a good example of this.)

The WTO, as it is, is pretty bad. But, given we're in a non-ideal world, there has to be something to try to make the negotiations fair (or, at least, more fair than they otherwise would be).