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Recognition of the Dark Side of the WTO

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Last updated date: 16th May 2024
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Origin of WTO

The General Agreement on Tariffs and Trade (GATT) was signed on January 1, 1948, liberating the world from high tariffs and other restrictions. Establishing a permanent body to promote free trade between countries is one of the most outstanding achievements of the GATT negotiations. This is one of the WTO's most important trade agreements. On January 1, 1995, the World Trade Organisation replaced the GATT organisation, which is why it is called the predecessor of WTO. The World Trade Organisation was established on 1 Jan 1995. It is the only global international organisation dealing with trade rules and regulations between different nations.


World Trade Organisation


World Trade Organisation


GATT


GATT


Nature of World Trade Organisation

  • It deals with sales of trade between nations at the global level

  • It operates to liberalise trade and free flow of goods and services in the international market

  • Settles disputes through some neutral procedure

  • Ensures that the trade flows as smoothly and freely as possible


Roles and Functions

  • Helps in the economic growth of developing countries by giving them preferential treatment

  • Improving living standards and creating employment opportunities.

  • To increase income and effective demand, facilitating increased production and trade.

  • Ensure efficient use of the earth's resources for sustainable development and Promote an environment that encourages Member States to turn to the WTO to alleviate grievances

  • Establishing generally accepted codes of conduct aimed at removing barriers to trade, including tariffs, and eliminating discrimination in international trade relations

  • Acting as a Dispute Resolution Body Ensuring proper compliance with all regulations required by law for the Member States to resolve disputes


Role of the World Trade Organisation in the protection of consumers

The role of WTO in protection of consumers is discussed below in detail-

  • The WTO is a place where governments try to resolve trade issues facing them. The focus is on the WTO agreements that most of the world's trading nations negotiated and signed. But the WTO is not just about trade liberalisation. The rules could help maintain trade barriers, for example, to protect consumers, prevent the spread of disease, and protect the environment.

  • The World Trade Organisation's role is to facilitate international trade in goods and services, but that trade must be secure. This includes ensuring that consumers are not endangered by contaminated food and that imported goods do not carry exotic diseases or pests.


Drawbacks of WTO

  • The world trade organisation’s sole concern is to regulate and maintain the terms and conditions relating to trade and to verify governmental security only in the case of trade. Apart from that, the WTO is not otherwise responsible for ensuring national security.

  • The WTO has been long accused of being unfair to developing country governments. They act where powerful governments and big corporations make policy decisions. Under the WTO, it is inevitable that developing countries will suffer more from the disruption of trade agreements with other countries simply because they have less influence on the global economy.

  • The WTO encourages countries to maintain free trade around the world and encourages them to increase their trade in order to earn more. In the process, countries are creating more industries and technology companies that destroy the environment.


WTO Criticism

The following point explains the WTO criticism in detail-

  • International organisations have often been heavily criticised for supporting powerful countries and allowing them to exploit less developed countries. It has failed to address the problems of developing countries on many levels. Poor countries are sometimes forced to adopt so-called “free trade” practices by removing tariffs from the WTO and other international bodies. The WTO has a history of promoting "free trade" only when it benefits rich countries and promoting it to benefit poor countries is slow at best and slow at worst. Recklessly careless.

  • Several agreements on agricultural products and medicines have reduced access to food and medical care, resulting in many deaths.

  • One of the major disadvantages of WTO is that many policymakers tend to prefer more GDP growth due to trade products rather than the Environmental hazard it is creating.

  • Many criticise the WTO philosophy that the main economic goal is to maximise GDP. In an age of global warming and potential environmental disasters, perhaps the least important thing is an increase in GDP. The WTO should probably do more to promote environmental considerations. Free trade ignores cultural and social factors. National companies tend to reduce cultural diversity and overwhelm local industries and businesses.

  • The WTO has been criticised as undemocratic. The structure is claimed to allow wealthy countries to get what they want. They probably benefit the most. Progress is slow. Trade rounds were notoriously slow, and difficult to reach an agreement.


It is not unfair to conclude that the WTO can never claim to be acting in the interests of all its members unless the WTO undergoes fundamental structural changes. As long as the WTO is ruled by those in power, its actions will always be limited to serving the interests of those in power. On this basis, an ideal global trading system must consider the will of the people of WTO member countries. These countries must be able to impose their will through collective, democratic decision-making processes. Only then will the WTO be able to build a global trading system focused on the economic and social well-being of all its members.


Case Study:

Answer the following Questions-

  1. When was the WTO established? WTO consists of how many members and where its headquarters is situated.

  2. Explain in your own words which institution is not part of the world bank and why.

  • International Bank for Reconstruction and Development

  • World Trade Organisation

  • International Development Association

Ans.

  1. The WTO was established in 1995. It consists of 164 members. It deals with sales of trade between nations at the global level and operates to liberalise trade and free flow of goods and services in the international market Like the GATT, the headquarters of the WTO is also situated in Geneva (Switzerland).

  2. The World Trade Organisation is not part of the World Bank community. The World Bank Group consists of five institutions: the International Bank for Reconstruction and Development, ICSI, the International Development Association, the International Finance Corporation, and the Multilateral Investment Guarantee Agency.


Summary

The World Trade Organisation (WTO) oversees global trade rules between countries to support free trade and open markets. While many economists advocate free trade, politicians and voters argue that globalisation is unfair and undermines economic autonomy. There are many drawbacks of WTO. Free trade advocates argue that the WTO is unnecessary and even disruptive to markets. The WTO has a dark side. For years, critics have argued that the WTO is a vehicle for countries to engage in trade, war, and aggression against developing countries, an unnecessary and expensive layer on top of the natural market forces of international trade. Whether the organisation makes economic sense is questionable, but politically WTO is very important. And the government may continue to support the organisation, with or without citizen support.

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FAQs on Recognition of the Dark Side of the WTO

1. What are the benefits of WTO?

Some of the benefits of the world trade organisation are discussed below-

  • It promotes international peace and the facilitation of international trade.

  • To settle disputes among member countries.

  • It Makes international trade much smoother by establishing standard rules and regulations.

  • Helps in the economic growth of developing countries by giving them preferential treatment

  • Free trade helps provide quality products and improve people's standard of living; it also helps raise their income level. 

  • Free trade helps in increasing the economic growth

  • It also helps in the development of poorer countries.

2. What are the three Major International Institutions?

The International Monetary Fund, The International Bank for Reconstruction and Development (World Bank), and the International Trade Organisation are three major international institutions. These organisations were three pillars of the economic development of the world. While the World Bank was assigned the task of reconstructing war-torn economies, especially the ones in Europe, the IMF was entrusted with the responsibility of ensuring the stabilisation of exchange rates to make way for the expansion of world trade. The primary purpose of the ITO, as they could have foreseen at the time, was to promote and facilitate international trade between member countries by overcoming the various restrictions and discrimination in force at the time.

3. Explain the role of WTO in the protection of the Environment.

Sustainable development and protection and preservation of the environment are fundamental goals of the WTO.  WTO goals include reducing trade barriers and eliminating discriminatory treatment in international trade relations. Although no specific environmental agreement exists, WTO members can take trade-related measures to protect the environment under WTO rules. The WTO contributes to protecting and conserving the environment through its objectives of ensuring sustainable development and avoiding protectionism, its rules and enforcement mechanisms, and its activities in various WTO bodies.