World Trade Organisation, Assessment Example

Abstract

This paper tackles the origins of the World Trade Organization, its function and operations. This paper also discusses one of the disputes that the organization has heard concerning its international trading system.

Origins

World Trade Organization is a governing body that deals with the trading rules between governments and nations in a worldwide level. Basically speaking, World Trade Organization is a regulatory body that sets our regulations and rules that guide countries and governments in the way in which they conduct business with each other. This is an important role in the complex global and trading marketplace. The activities of the economy are moving very fast. Goods such as clothes, electronics and even food need to move from one country to another. This will not happen without agreement and rules that are essentials to make trading possible between two or more countries. The World Trade Organization, then, is the one responsible why government and countries have a smooth trading system of goods and services even when the procedure cross and reach international borders. In order to do this, the World Trade Organization sets out agreements to regulate trading system (Stiglitz, 2006). These agreements are enforced after all the trading nations have negotiated the terms and signed the same. Once the documents are signed, these agreements become a contract that must be honored by the signatories. More imperatively, these contracts are the legal basis and charter that in which the trading nations have to conduct their business among each other. It is also important to note that there are also various groups within the umbrella of the World Trade Organization. One of these groups is the Ministerial Conference. This group is the highest body under inside the World Trade Organization that has the power to decide on all trade cases and disputes that are presented before them by its members comprised of trading nations.

Historically speaking, it was in 1995 when the World Trade Organization was established to be the replacement of the General Agreement on Tariffs and Trade (GATT) which was established in 1948 after World War II ended. It has to be noted that the International Trade Organization was the first initiative that was created to regulate the global trading system. However, the treaty on the International Trade Organization did not reach implementation and enforcement due to the lack of approval from the United States of America and some of the other countries. Therefore, it did not come into effect. Yet, the trading system continued and as the economies of the world started to grow stronger and bigger, it turned out to be that the General Agreement on Tariffs and Trade (GATT) was not structured to handle the disputes that may arise from international trading. There were many issues that have arisen over trading in an international scale and the General Agreement on Tariffs and Trade was not able to properly address and solve such issues. Therefore, in 1986, the World Trade Organization was created as a direct result of the biggest trade negotiation event known as the Uruguay Round. This event took place in Punta del Este, Uruguay. In 2001, the World Trade Organization started working on the Doha Development Agenda that aims to establish new agreements and negotiations (Reis, 2009).

Since then, the organization has been responsible for the monitoring of all the policies involved in the global trading industry and dispute handling. It is also responsible for the enforcement of the agreements that were covered and under the General Agreement on Tariffs and Trade. These agreements are focused on eliminating the barriers to a successful trading in the international scale and reduction of tariffs and other issues such as discriminatory trading practices in the international market.

Although the meetings of the World Trade Organizations are held in closed and private sessions, the organization’s main focus is the promotion of agreement between members. A lot of people have heavily criticized the practice for being anti-democratic. This is due to the fact that international trade agreements affect every member and to settle and hear disputes in the privacy of the organizations chambers seems to be barring the freedom to know.  In addition, although the World Trade Organization is an international agency that is specializing in regulating trades, it is not a part of the United Nations. Meaning to say, it is not connected to the United Nations nor is it an agency of the said organization.

Operations

In a layman’s term, the World Trade Organisation is the arena where its members go in order to try and settle trade disputes they have against each other. As of November 2015, the World Trade Organization has 162 members and 22 observer governments. The organization does not require its members to be a full-independent nation. However, it is important that a nation is able to exercise independence in its relationship and trading businesses with other nations. The main functions of the World Trade Organizations are as follows:

• Making sure that the agreements negotiated and signed by its members are properly implemented, operated and administrated.
• Settle trading disputes between its members in a proper forum and chamber. It allows for negotiations in relation to the settlement of disputes.
• Focuses on the propagation of policies concerning national trade and review existing ones.
• Ensures that the trade regulations and polices are transparent and coherent. In order to do so, the organization makes continues effort to investigate the movement of the global economy and create policies based on them.
• Makes sure that training is being afforded to developing and low-income nations. This is to help these nations to adapt to the rules, policies, disciplines and regulations of the World Trade Organization.
• Conducts regular assessment of the trade in the global and international scale to include in its yearly research and reports.
• Work closely, cooperate and collaborate with other agencies such as the World Bank and the International Monetary Fund.

The aforementioned are just some of the functions of the World Trade Organization. But with the growing industry of trading and globalization, it is imperative that an organization is able to make sure a fair and effective trading system is in place. It cannot be denied that the increasing volume of trades happening on a daily basis comes with increasing issues as well. These issues can be on the existence of barriers that hinder successful trading, rampant defilement of the intellectual property, protectionism, discrimination, and subsidies among others. These issues are brought about by the fact that every nation has varying rules on trading. In order to mitigate the effects of these differences in rules, the World Trade Organization acts like a mediator between two trading nations. With the fast growing trading economy and market activities, it is important that a third and independent party can help in solving issues and maintain the peace needed so as to not disrupt the market and the economy. It is true that the World Trade Organization was created due to globalization. But it is important to point out that it is one of the most important organizations in this world.

Moreover, when it comes to settling disputes raised and failed by the members, the World Trade Organization acts as court. When a dispute is need to be settled, the organization will conduct formal consultations, set-up a panel that will review and examine the case at hand, mediate, take into consideration the obligations of the parties to the case using a legal perspective, and finally prepare a written report to be presented to the Dispute Settlement Body to decide whether to accept or reject the case. Just like the judicial system, the World Trade Organization also has an Appellate Court (Body) that hears cases that might need modification, a reversal of the finding of the Dispute Settlement Body, or to concur what the organization found prior to the appeal process. The Appellate body is comprised of 7 impartial individuals who do not have any affiliations to any governmental body. The Dispute Settlement Body automatically implements the rulings of the Appellate body to be absolute and binding unless there is a compromise against the report. The losing state is given 30 days to comply with the report and to show its intent to follow through. Negotiation of compensation is allowed for cases of non-implementation. However, it is only allowed pending complete implementation. It is the Dispute Settlement Body that has the obligation to ensure that the rulings are implemented and that the recommendations are followed through (Van den Bossche & Zdouc, 2013).

The process of solving disputes can take up to a total of 60 days to get a full consultation. To get a panel review can take as long as one year while appeals can take up to one year and 3 months. The report of the panel is almost always presented to the members involved in the disputes up to 6 months. When the dispute has to do with perishable goods, report is presented within 3 months. Therefore, it can be seen that the organization is trying their best to resolved issues and disputes in a timely manner. However, just like any other tribunal or court, it always takes time to review cases, legal obligations, facts of the case and other variables to it.

Dispute

The World Trade Organization handles all disputes concerning international trading. However, if one country filed an action against another country concerning a dispute that is under the environment agreement that is not within the scope of the World Trade Organization, such dispute will be handled by the Trade and Environment Committee. This is only applicable, however, if both countries signed the environment agreement. If one of the countries did not sign the agreement, the World Trade Organization will provide for the forum to settle the dispute. Notably, this does not mean that the scope of the World Trade Organization does not extend to environmental issues. As a matter of fact it does as proven by the World Trade Organization agreements specifying that panels have the freedom to seek expertise in settling disputes about environmental issues.

One of the most interesting disputes that the World Trade Organization heard was the “shrimp and turtle” case filed by four Asian countries namely: Thailand, Malaysia, Pakistan and India against the United States of America with case number 58 and 61. This case was adopted on the 6^th of November 1998. Although this case was settled a long time ago, this has become a precedent on how the organization handles trade disputes and actions that are environmental in nature. The facts of the case stated that in the year 1997, the aforementioned Asian countries filed a joint complaint against the United States of America’s policy that ban the importation of specific shrimp and other shrimp products. The policy in dispute is the US Endangered Species Act of 1973. Under this Act, seven turtle species were identified and categorized as endangered. These endangered species were being threatened by human activity such as shrimping. In order to protect the turtles, the United States of America imposed the utilization of turtle excluder device especially for the shrimp trawlers.

In lieu with this imposed policy, any shrimp products that were harvested without the utilization of the turtle excluder device will not be allowed into the United States of America. Unless, of course, the harvest did not pose certain form of harm to the sea turtles. Consequently, any countries that had the endangered sea turtles in their jurisdiction were somewhat forced to enforce the same standards that the United States of America had for shrimp trawlers if they wanted their shrimp products to be imported into the country. A certification was required or no import was going to be allowed. It also meant that the shrimp trawlers must use the turtle excluder device at all times to ensure a continued importation and trading practices of shrimp-related products with the United States of America.

The Appellate ruling body stated that under the World Trade Organization rules and agreements, it is the right of every nation, country or government to have trade actions that are geared towards the protection of human, animal and even plant life. The World Trade Organization did not have to allow this action because it is an inherent right of any country. If the endangered species were being threatened by the shrimp industry, a country can take certain actions and use certain measures to ensure the protection of the endangered species, as in the case- the sea turtles. Likewise, the legitimacy of the measures used by the United States of America to protect its sea turtles was uphold the panel taking into consideration the General Agreement on Tariffs and Trade 20 (Jackson, 1998). However, the World Trade Organization’s rules laid out some criteria that must be met as well such as the non-discrimination criteria. Meaning to say, the legitimacy of the measures that were used and will be used by any country in protecting the endangered species must ensure that the measures meet all the qualifying criteria. The absence of one criteria or failure to meet all the criteria can and might result to the invalidation of the trade action regardless of the noble purpose in which it was built on.

Hence, despite the inherent right of any nation to start a trade action that will protect their endangered species, the United States of America lost the case. This is primarily due to its failure to meet the non-discrimination clause of the WTO rules, agreements and policies. The Appellate body found that the United States of America discriminated the Asian members of the World Trade Organization. The case stated that the United States of America provided other western countries, more particularly the Caribbean, with the financial resources and technical assistance needed to transition to the utilization of the turtle excluder devices. Such assistance was not afforded to the complainant. There is also no showing that such assistance was offered at all. While the World Trade Organization acknowledged the right of the US to protect its ecosystem, the organization suggested that the country do it without compromising the integrity of the trading system. Any nation that took and will take a trade action to protect the environment must do so without discrimination and without putting another nation in an arbitrary position.

In this regard, it can be seen that although the World Trade Organization honored the right of every nation to make and start a trade action to enhance its existence, the WTO will not tolerate any forms of discrimination. It is important to note that, in a sense, the existence of the World Trade Organization does not only protect the big players and the super power members. The organization is clearly an impartial tribunal that aims to protect all its members regardless of whether they are less-developed, developing or developed (Pierce, 2013). It cannot be denied that some governments will do everything and anything within their power to be on the top of the world; to become the dominant one; the alpha country. This situation will affect the trading industry especially in the global scale. The WTO balances everything. One nation cannot take advantage of another. In this way, the trading system and the global relationship of all the members of the organization are preserved accordingly.