After more than 10 years of talks, the members of the World Trade Organization just this year have ended the Doha round of negotiations. This has left world leaders thinking about how they make a more efficient global trading system. This failed round of negotiations has left many less developed countries hurting as they are now forced more then ever to export their cheaply made goods to richer countries and further undermines the integrity of the WTO as an efficient multilateral trading system.
In 1994, during the Uruguay Round, world leaders agreed to make the World Trade Organization (WTO). It has been one of the most successful international institutions due to its commitment to multilateralism after the fall of communism in the Soviet Union in 1990. Its primary objectives were to reduce tariffs, eliminate trade barriers and quotas, and expand coverage of services, intellectual property, foreign direct investment and agriculture by encouraging fair trade practices. Its agreements have helped developing countries through increasing confidence in the international media and have progressed in terms of settling disputes regarding trade between nations.
Since 1948, when the International Trade Organization (ITO) was formed, trade grew yearly at an average of 6% annually in real terms and total world trade was valued at $58 billion. By the year 1994, world trade was valued at over $4 trillion. Fast-forward 21 years later to 2015 where total world trade in goods and services amounted to $23 trillion. The European Union, China, and the United States, in this order are the largest international trade participants measured in real terms.
Thus the WTO has provided consumers a bevy of choices and opportunities to choose from, has raised international income levels, has prompted more economic growth, and increased standards to live. The WTO has also helped to advance world peace as world economies are more willing to embrace the international trade and investment policies. This multilateral trading system has also allowed countries to specialize in areas where they have a competitive advantage and or absolute advantage in producing certain goods and services contributing to better overall standards of living throughout the world, both in developing and developed countries.
A country that fits this model very well is China. It has been a great beneficiary of free trade and investment since its acceptance to the WTO in December of 2001 and it also greatly contributed to world trade. Only 20 years ago, China was just barely scratching the surface on its potential in the international trading field. Last year it dominated trade as it represented about 17 percent of the world’s total GDP.
However, cross-border free trading zones and the increased use of electronic communication and Internet usage among many other factors have further globalized companies and nations economies. With the further globalization of the world economies, the WTO simply cannot control all major trading between countries. Due to the standstill of the Doha round 12 years ago, countries have instead chosen to make regional trade agreements to address issues that should be discussed at the WTO. A few main examples of regional trade agreements are the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (T-TIP) among many others.
Text of Kamal Nath’s address at the ICRIER Conference “WTO & the Doha round: The Way Forward” in New Delhi on 6th April, 2006
I believe the WTO can still continue to play a crucial role in International Trade. In order for The WTO to regain notoriety, it will need to engage directly with businesses of all size and regulators to make sure that is works to addresses priorities on trade issues that will have a significant positive impact on the broader global economy. As Roberto Azevedo, the director general of the WTO articulated perfectly,” In the end, the WTO represents the willingness of its members to cooperate. It represents the recognition that their national interests are increasingly intertwined with their collective interests,” (Azevedo).
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Dadush, Uri. “A Bright Future for World Trade?” Carnegie Endowment for International Peace. March 6, 2014. Accessed April 01, 2016. http://carnegieendowment.org/2014/03/06/bright-future-for-world-trade.
Khor, Martin. “Global Policy Forum.” The Rise & Decline of the WTO’s Doha Talks. May 5, 2010. Accessed April 01, 2016. https://www.globalpolicy.org/globalization/globalization-of-the-economy-2-1/world-trade-organization-2-9/49092.html.
“WORLD TRADE ORGANIZATION.” WTO. October 20, 2014. Accessed April 01, 2016. https://www.wto.org/english/news_e/pres14_e/pr728_e.htm.