The World Trade Organization (WTO) - success and failures

Résumé du document

In order to make the world trade as free as possible, the World Trade Organization (WTO) relies upon principles. Firstly, the non-discrimination principle ensures that no country benefits more from trade than another country. The WTO wants to promote equality among the members. Moreover, the non-discrimination principle also ensures that a country does not differenciate between foreign and national products and services in applying taxes to foreign goods and services in order to make local products more competitive. However, there are some exceptions, notably for developing countries who are not obligated to follow the non-discrimination principle. Secondly, the members of the WTO have a transparency obligation. Indeed, they must publish and inform the WTO when they modify and add new laws or regulations about trade. Thirdly, the countries have to open their borders to facilitate the trade between members by lowering tariffs and non-tariff barriers to trade. To conclude on WTO principles, the organization wants to promote a more free world trade and avoid unfair competition. How can we identify and asses the economic benefits that might occur as a result of a successful conclusion to the current and recent trade negotiations at the WTO? How can we use economics to identify the beneficiaries of the current failure to reach agreement?

Extraits

[...] Economically, developed countries are positively impacted by the Uruguay Round agreements. These agreements allow for increasing their GDP. French GDP increased from in 1995 to in 2000 (IMF data Mapper, 2009). However, developed countries' GDP is not experiencing a great increase like China; that can be explained by the fact that developed countries have suffered by the entrance of developing countries into the agreements which have reduced their competitiveness. Developed countries, and China as an exception, are taking advantage of the WTO agreements in terms of exports and imports. [...]

[...] Moreover, concerning the foreign investments, these negotiations wanted to reinforce the power of investors abroad. Thanks to the collapse of the investment negotiation, developed countries will not be subjected to the exigencies of foreign investors. In addition, failure of talks about public market transparency does not augment the multilateral trade constraints in terms of intellectual property. Consequently, developing countries have more power of innovation as they are not burdened by addititional intellectual property constraints. Secondly, the regulation of the competition rules wanted by developed countries would not benefit developing countries. [...]

[...] Today's trade liberalization is demonstrating the theory of comparative advantage. Countries export the production in which they have a comparative advantage. Undeniably, China's manufactured goods exports have exploded from $299 billion in 2001 the date the country signed its membership to the WTO - to $1,061 billion five years later (IMF data Mapper, 2009). Undeniably, China's goods exportation has exploded from $299 billion when the country signed its membership at the WTO to $1,061 billion five years later (IMF data Mapper,2009). [...]

[...] These improvements include the extension of negotiations to new trade subjects such as intellectual property rights, agriculture, services and investments. Against protectionist measures, the Uruguay Round wants countries to use their comparative advantage by opening borders. Thus, a country can benefit from the comparative advantage of another country. This theory has been advanced by David Ricardo who stated that, country has a comparative advantage over another one when it can produce a specific product at a lower price, then this country should specialise itself in the production of this product' (Krugman, P., 1991). [...]

[...] In other words, they would have the feeling that the organizations would take control of their national procedures. Moreover, this failure allowed developing countries, notably African countries, to not spend big amounts of money to implement these reforms which would have weakened their budgetary balance. The failure of the Doha agreements shows certain protectionism from wealthy countries, the same is evident for poor countries. However, even if the figures are not objectives, given that they do not take into account all market interactions, developed countries have taken benefit of the principal advantages, mainly on the protection of the subsidies which is granted to them in the agricultural sector. [...]