The WTO can ...
...cut living costs and raise living standards
...settle disputes and reduce trade tensions
...stimulate economic growth and employment
...cut the cost of doing business internationally
...encourage good governance
...help countries develop
...give the weak a stronger voice
...support the environment and health
...contribute to peace and stability
...be effective without hitting the headlines
Trade is nothing more than a means to an end. It could never be more important than protecting the environment or raising the quality of life. What WTO agreements do is to try to make trade support the things we really want, including a clean and safe environment, and to prevent governments using these objectives as an excuse for introducing protectionist measures.
How this works is not always understood.Take a WTO dispute ruling that says a measure designed to protect the environment is illegal under WTO rules. Often, this is misinterpreted to mean the measure is illegal because it conflicts with trade.
In fact, the ruling would say that the action violates trade rules. Typically this could be about discrimination: the measure is tougher on products from some countries than from others or is tougher on products coming from other countries than from domestic producers. If it were equally tough (or equally lenient) on goods from all sources, it would be legal.
That was the basis of a ruling in a WTO legal dispute about gasoline in the 1990s. The same applied in a case dealing with shrimp imports and the protection of sea turtles, when the WTO’s Appellate Body went out of its way to stress that WTO members can, should and do take measures to protect endangered species and to protect the environment in other ways.
The importance of these concerns is enshrined in the rules. The Marrakesh Agreement Establishing the WTO includes among its objectives optimal use of the world’s resources, sustainable development and environmental protection.
Globalization is not a policy choice – it is a fact. But all of us face a choice. We can work to shape these powerful forces of change to the benefit of our people. Or we can retreat behind walls of protection – and get left behind in the global economy. We must build a trading system for the 21st century that honours our values as it expands opportunity. We must do more to make sure that this new economy lifts living standards around the world, and that spirited economic competition among nations never becomes a race to the bottom in environmental protections, consumer protections and labour standards. We should level up, not level down. Without such a strategy, we cannot build the necessary public support for the global economy. Working people will only assume the risks of a free international market if they have the confidence that this system will work for them.
— Bill Clinton, 50th anniversary of the multilateral trading system, Geneva
The WTO, like all other institutions, has its shortcomings. But the main objections cannot be addressed by the WTO itself. The task of the WTO is to lay down ground rules for international trade; it is not designed to pursue other social goals. So the trouble is thus not really with the WTO, but with the lack of similarly powerful and effective institutions devoted to these other social goals. Indeed, the most fundamental problem of the present global order is that the production of private goods has taken precedence over social development – i.e. the provision of public goods.
Not only is the WTO not designed to deal with environmental protection, food safety, human rights and labor rights, but its modus operandi is unsuitable for the provision of public goods.
The strength of the WTO lies in its enforcement mechanism which states are willing to accept because they want the benefits of trade. They will not, however, accept it in other areas.
— George Soros, “Fixing, not Sinking, the WTO”, Project Syndicate
In the 50 years of the GATT [General Agreement on Tariffs and Trade] we have surely learnt enough – despite the de facto exclusion of many, many developing countries – to vastly improve on the management of the world trading system to the mutual benefit of all nations and people. We are firmly of the belief that the existence of the GATT, and now the World Trade Organization, as a rules-based system, provides the foundation on which our deliberations can build in order to improve. However, to realize the aspirations of all requires wise work to be done. The WTO came into existence precisely as a response to the need for a more effective regulatory, supervisory and enforcement environment for world trade and investment than the GATT could then provide. But now we can see that the success of the system agreed to in Marrakesh in 1994 will depend on the wisdom with which it is implemented and taken forward.
— Nelson Mandela, 50th anniversary of the multilateral trading system, Geneva
This is backed up by a range of provisions in the WTO’s rules. For example, they allow countries to curb trade to protect human, animal or plant life or health, and conserve exhaustible natural resources. They allow subsidies for environmental protection. These provisions can be found in more general rules and in specific agreements on product standards, food safety, intellectual property protection, and so on.
Reforms under the rules, such as cutting industrial and agricultural support, help to reduce waste and environmental damage, and encourage efficient use of resources.
The same applies to health. Here, the greatest attention has been on pharmaceutical patents. The intellectual property (“TRIPS”) agreement is all about balance. In public health, it protects inventors’ rights for a limited period in order to encourage research into new and more effective treatments, but it also allows governments room to manoeuvre so that the treatments are affordable. Developing new medicines and allowing governments some flexibility both contribute to better health.
Pharmaceuticals The WTO’s intellectual
property agreement protects
inventors’ rights and allows
governments room to make
Opinions differ on whether the balance is right. The present consensus agreement — including a rule change in 2003 — is the result of compromises on all sides. Meanwhile, the WTO, the World Intellectual Property Organization and the World Health Organization are collaborating to improve our knowledge of how to make patenting and other policies work better together in the interests of public health.
Then there’s the question of whether traded goods are safe. An agreement on food safety and animal and plant health (sanitary and phytosanitary measures) deals with governments’ actions on contaminants in food and the spread of disease, and how to prevent these from being excuses for protectionism. Another on technical barriers to trade includes issues such as food labelling and product safety standards.
Broader, more complex issues such as food security, handled by the Agriculture Agreement, are also important for health. And finally, dispute settlement rulings have also confirmed that WTO agreements give priority to health and safety over trade, such as one that upheld a ban on asbestos products.
Product labelling A WTO agreement on
technical barriers to trade
covers issues such as