World Trade Organization: Success or Failure

It has been more than 20 years since the World Trade Organization (WTO) came into existence. However, there is still considerable debate as to whether it has been a success or a failure. The objective of the World Trade Organization (WTO) was to foster efficient economic activity across the globe. This was to be done by promoting mutually beneficial trade and opposing trade wars between nations.

The general perception is that the World Trade Organization (WTO) has failed to meet its objectives. However, there are many who still believe that this organization is doing a great job. In this article, we will understand both sides of the argument.

Reasons behind the Failure of World Trade Organization (WTO)

  • The developing countries do not believe that the World Trade Organization (WTO) works for their benefit. The general perception is that dominant economic powers like the United States and Europe have hijacked the system. The organization seems to be trying to achieve the impossible. Each of the 164 members has their own protectionist agendas. So much so that governments are being elected to forward this agenda. Consider the case of “America First” policy of Donald Trump. This has led to retaliation in other nations as well. The World Trade Organization (WTO) seems to be fighting a losing battle trying to get parties with opposing agendas on the same side!
  • The World Trade Organization (WTO) activities seem like wastage of taxpayer’s money. They only hold expensive conferences at exotic locations each year. There is no outcome from these conferences. Even if the World Trade Organization (WTO) were to achieve some sort of a breakthrough, the administrative cost of achieving this would far outweigh any benefits. It is therefore imperative that World Trade Organization (WTO) be held accountable for the money they spend. They must be coaxed to generate value i.e. some sort of a return on investment. In the absence of such a compulsion, the World Trade Organization (WTO) is turning into an inefficient and useless international bureaucracy.
  • Thirdly, the World Trade Organization (WTO) has simply failed the interests of developing nations. Countries like India, Pakistan and African nations are still largely dependent on agriculture. Their prices would be competitive in the international market if it was not for subsidies provided by Western nations. Countries like United States provide subsidies to their farmers. As a result, they can afford to sell at lower prices as compared to farmers from developing nations. These developing nations have lobbied World Trade Organization (WTO) to get rid of this practice. However, until now they have been unable to do so. As a result, the common person in developing nations views the World Trade Organization (WTO) as an oppressive body which aims to colonize the developing world. The common belief is that the WTO is merely a proxy for safeguarding Western interests.
  • Lastly, the World Trade Organization (WTO) can be considered of as being a forum which is used by nations to further their hidden agendas. Governments use it as a forum to bestow economic benefits on their political allies. Nations tend to form alliances that benefit only a handful of wealthy people rather than benefiting the nation as a whole. Instead of facilitating trade, the World Trade Organization (WTO) has become a body wherein political favors are being traded on an international level.

Reasons behind the Success of World Trade Organization (WTO)

  • The proponents of World Trade Organization (WTO) think it has been successful in meeting its objectives. Firstly, they point out to the fact that there have been no trade wars for the past twenty-two years! Also, the average tariff was close to 35% when World Trade Organization (WTO) came into existence. This means that there were high barriers to trade during those days. Twenty-two years after the formation of this international trade body, the tariffs are now down to an average of 9%! Free trade seems to be flourishing across the globe after the creation of the World Trade Organization (WTO).
  • Nations across the world do not have any other option. The World Trade Organization is by far the largest trade body in the world. It encompasses more than 85% of the population in the world. 95% of the trade that happens across the world is done by WTO members and follows the rules and regulations laid down by this organization. The success of WTO can be gauged from the fact that many countries routinely petition it to resolve trade disputes.
  • The WTO has many extra provisions for developing nations. The developing nations are given more opportunities as compared to developed nations. Developed countries are expected to lower import barriers to promote trade with these countries and let their economies grow. Many developing nations also benefit from the most favored nation (MFN) policy which has been implemented by the WTO.

To sum it up, there is no real consensus on the success or failure of WTO. There are many people who believe that it is an unfair organization that works for the benefit of already developed nations. These people believe that the interests of developing nations are marginalized by the WTO. However, there are many others who believe that WTO has greatly improved the standard of living and trade opportunities available to developing nations.


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