WTO has failed miserably in its promise of fairness and justice. Despite its commitment to improve access to its expensive legal system and make it easier for poor nations to file suits, nothing much has been done
The era of colonialism is over. However, exploitative trade practices by First World countries against poor nations are still alive and kicking. Overly biased import policies by richer nations, who weave a complex web of tariffs and duties, set the tone of discrimination against Third World countries.
For instance, Bangladesh-made garments entering the United States market are slapped with duties and taxes/tariffs that are in general 20 times higher than those imposed on UK-made garments. Similarly, made-in-India garments face import tariffs of around 19 per cent, as compared to the zero-to-one per cent charge applicable to European and Japanese garment imports. Such discrimination debilitates the value additions made by producers from poor countries. According to Brazil’s internal estimations, its agricultural exports earning has reduced by more than $10 billion because of trade barriers in the West. For Mozambique, exports to the EU are lower by $100 million a year because of restrictions that are almost equal to the total amount of financial aid it receives.
Free trade, as advocated by World Trade Organisation, is nothing but a myth. Richer nations, led by the US, spend a billion dollars a day in subsidies to their farmers. The figure is six times the amount of aid they provide to poorer nations. These domestic subsidies, extended by rich nations to their farmers, work in two ways against poor nations. First, they act as export barriers against poor countries — as the generally low-priced produce from the latter then becomes relatively costlier in the export market. And second, the surplus produced in the rich nations, because of protection and supportive subsidies, is dumped easily at lower prices in developing countries, thus putting the local producers in these poor nations out of business.
The discriminatory and potentially catastrophic policies pursued by developed nations are endorsed and even backed by the WTO. The deals struck through the framework of the WTO more or less protect the interests of the rich countries while turning a blind eye to poorer nations — one reason why the WTO’s General Council Meeting last month turned out to be a big failure, with members failing yet again to agree on a trade deal.
The WTO has also failed miserably in its promise of fairness and justice. Despite its commitment to improve access to its expensive legal system and make it easier for poor nations to file suits, nothing much has been done. In the last one and a half decades, no African nation has been able to file a suit or was a complainant; only one ‘less developed nation’ filed a claim.
In a paper titled Is WTO Dispute Settlement System Biased against Developing CountriesIJ An Empirical Analysis, Fabien Besson and Racem Mehdi of the University of Paris write, “Within the context of trade disputes increase, the position of developing countries draws special attention. There is evidence that developing countries have a disadvantageous position in the WTO DS system. Park and Panizzon (2002) provide statistical documentation of the WTO disputes initiated between 1995 and 2001. Roughly one third of WTO disputes (80 out of 235) have involved developing countries as plaintiffs, which is slightly higher than their share of disputes initiated under the GATT period. On the other hand, developing country defendants have been the target of roughly 45 per cent (109 out of 242 disputes) of WTO disputes, which is much higher than was the case under the GATT. Most developing and all the least developed countries have not used the system even once since its inception, whereas the G4 countries (EC, US, Japan and Canada) are over-represented.”
In addressing Blue Box subsidies (unfair trade subsidies in rich countries), which directly contradicts the vision of the WTO, no timetable has been finalised by the organisation to decide its fate. The stubbornness of the EU and the US in holding onto their stands is made easy by passive (and sometimes even active) support of the WTO and other global economic bodies.
The EU’s refusal to offer anything beyond its common agriculture policy, which is an already agreed reform, demonstrates the attitude of Western nations towards the developing ones and highlights the helplessness of the WTO in resolving unfair trade practices pursued by the West. Despite the WTO’s stand for free trade, the EU, Switzerland, Norway and Japan have been able to protect their so called ‘sensitive products’, with no voices raised against them by the organisation.
To be fair, not many global forums or organisations have been able to uphold their founding motives and core objectives; still, the WTO is one that leads the list of such organisations. Instead of bridging the gap between two worlds, it is doing exactly the reverse. The WTO, through its policies, is only facilitating the process of rich nations growing richer at the cost of the growth of poor countries. Fundamentally, its allowing the West to gain economic and political control over the developing and underdeveloped world. The era of colonialism begins, again.
(The writer is a management guru and honorary director of IIPM Think Tank)