Since its creation in 1995, the World Trade Organization (WTO) has worked to maintain and develop international trade. As one of the largest international economic organizations (alongside the International Monetary Fund (IMF) and the World Bank), it has strong influence and control over trading rules and agreements, and thus has the ability to affect a country's economy immensely. The WTO policies aim to balance tariffs and other forms of economic protection with a trade liberalization policy, and to "ensure that trade flows as smoothly, predictably and freely as possible". Indeed, the WTO claims that its actions "cut living costs and raise standards, stimulate economic growth and development, help countries develop, [and] give the weak a stronger voice." Statistically speaking, global trade has consistently grown between one and six percent per annum over the past decade, and US$38.8 billion were allocated to Aid for Trade in 2016.WTO, WTO Annual Report 2019, introduction (WTO 2019), 6.
Yet several criticisms of the WTO have arisen over time from a range of fields, including economists such as Dani RodrikDani Rodrik, “The WTO Has Become Dysfunctional.” Financial Times, August 5, 2018. https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/the_wto_has_become_dysfunctional_financial_times.pdf (accessed April 26, 2020). and Ha Joon Chang,Ha Joon Chang. Kicking Away the Ladder: Development Strategy in Historical Perspective. London: Anthem, 2002. and anthropologists such as Marc Edelman,Edelman, Marc. “Bringing the Moral Economy Back In…to the Study of 21st Century Transnational Peasant Movements” American Anthropologist 107, no.3 (2005). ISSN 1548-1433 (accessed March 26, 2020). who have argued that the institution "only serves the interests of multinational corporations, undermines local development, penalizes poor countries, [and] is increasing inequality", and have argued that some agreements about agriculture and pharmaceutical goods have led to restricted access to food and healthcare, thus causing large numbers of deaths. Several factors are alleged to contribute to these conditions, including but not limited to: the most favoured nation rule (MFN), national treatment policies, and failure to regard the infant industry argument. Critics argue that the policies that support these principles fail to protect developing nations, and in some cases take advantage of them. For example, UNCTAD estimates that market distortions cost developing countries $700 billion annually in lost export revenue.
Martin Khor Martin Khor argues that the WTO does not manage the global economy impartially, but in its operation has a systematic bias toward rich countries and multinational corporations, harming smaller countries that have less negotiation power. Some suggested examples of this bias are: Rich countries are able to maintain high import duties and quotas in certain products, blocking imports from developing countries (e.g., clothing); According to statements made at United Nations Conference on Trade and Development (UNCTAD, 2005), the use of NTBs (non-tariff barriers), based on the amount and control of price levels has decreased significantly from 45% in 1994 to 15% in 2004, while use of other NTBs increased from 55% in 1994 to 85% in 2004, such as anti-dumping measures allowed against developing countries; The maintenance of high protection of agriculture in developed countries, while developing ones are pressed to open their markets; Many developing countries do not have the capacity to follow the negotiations and participate actively in the Doha Round; and The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement, which limits developing countries from utilizing some technology that originates from abroad in their local systems (including medicines and agricultural products).
Khor argues that developing countries have not benefited from the WTO Agreements of the Uruguay Round and, therefore, the credibility of the WTO trade system could be eroded. According to Khor, "one of the major categories of 'problems of implementation of the Uruguay Round' is the way the Northern countries have not lived up to the spirit of their commitments in implementing (or not implementing) their obligations agreed to in the various Agreements." Khor also believes that the Doha Round negotiations "have veered from their proclaimed direction oriented to a development-friendly outcome, towards a 'market access' direction in which developing countries are pressured to open up their agricultural, industrial and services sectors." Jagdish Bhagwati asserts, however, that there is greater tariff protection on manufacturers in the poor countries, which are also overtaking the rich nations in the number of anti-dumping filings.
Agriculture Agriculture has been one of the central issues that the WTO has attempted to tackle over the course of more than two decades, and it provides a critical window into criticisms surrounding the organization. As an increasingly globalized and multilateral market sector, agriculture has become implicated in various issues, including trade, phytosanitary measures, intellectual property rights, animal and human health, environmental policy, human rights, biotechnology, gender equity, and food sovereignty.Edelman, Marc. “Transnational Peasant and Farmer Movements and Networks” in Global Civil Society, edited by Mary Kaldor, Helmut Anheier, and Marlies Glasius, 185-220. London: Oxford University Press, 2003. Therefore, analyzing the effects of the WTO on agriculture inevitably links it to other sectors and sheds light on general criticisms against the organization.
Historical background The WTO's foray into the agricultural sector began with the breakdown of Bretton Woods policies. The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT)—itself a Bretton Woods institution—had explicitly excluded agriculture during its establishment in 1947. As a result, additions to the Agreement regarding the agricultural sector during this time were both limited in scope and had no agreed-upon methods of enforcement. However, the tides turned with the 1980s farm crisis, wherein the US produced a high surplus of grain, leading to plummeting land and commodity prices, soaring interest rates, and an increase in defaulted loans.189 Edelman 2003 This put agriculture in the spotlight of international trade diplomacy, and GATT began the Uruguay Round in 1986 with the focus of “developing a powerful institutional framework…to regulate the rules of [multilateral] trade for world agriculture.”298 Pritchard At the conclusion of the rounds in 1993, GATT dissolved in favor of the newly formed World Trade Organization, which was to expand into other sectors such as agriculture and “cover trade in services and intellectual property”WTO, “History of the multilateral trading system,” WTO. https://www.wto.org/english/thewto_e/history_e/history_e.htm (accessed April 11, 2020). as well as the scope of goods previously managed under GATT.
Agreement on Agriculture In order to join the WTO, there are several requirements, or mandates, that a country must fulfill. The Agreement on Agriculture (AoA) is one of the mandates that was established at the inception of the organization. At its core, the document sets “a series of ceiling and timetables that circumscribe[s] the extent to which signatory governments could provide protective assistance to agriculture.”300 Pritchard First, there is an argument about the weakening of national sovereignty: in dictating the budgets to agriculture within each nation (as opposed to between nations), this began a series of “internationally-binding set of rules that would progressively eliminate nations’ capacities to subsidise their rural economies,” and also created a system in which when national governments join the WTO, they “relinquish their ability to set their own food and agricultural policies.”300 ibid Critics also argue that in dictating limits on how much countries protect their agricultural sector, the organization leaves farmers—especially peasant farmers, who make up a significant portion of the population in many developing countries—vulnerable to food insecurity, and thus breaking international law about food as a human right.
Economic effects Since its inception, the WTO has imposed policies that have encouraged the growth of neoliberalism and aggravated the divide between the Global South and North. For example, its protectionist policies consistently seem to favor the Global North, with OECD countries providing its farmers with “support equivalent to 40.43% of the value of farm gate production” in 1986–88.301 ibid Although this level of support makes sense given the farm crisis of the 1980s, the figure was still at a staggering 40.07% in 1999. In addition, in the US alone, “about 50% of total producer revenue for US milk, sugar and rice is attributable to farm programmes.” Meanwhile, agriculture in the Global South and poverty has been increasingly linked with one another, with national poverty rates correlated with the number of agriculture-specialized households.296 ibid This is because the neoliberal reforms demanded by the WTO have destroyed guaranteed prices and state-sponsored extension services, and governments of the Global South have had to dismantle programs for food security and rural assistance in favor of those that would help them meet WTO mandates, often at “significant political costs.”301Pritchard For example, since its joining the WTO, Mexico has been enforcing “repeasantization” programs, which has two parts: first, to promote urbanization, thus breaking down the rural population into smaller and even more rural communities, and second, to encourage “growth and development” in the agricultural sector. These development methods include pressures for farmers to use certain pesticides and fertilizers; graft fruit trees; and grow produce that is too expensive for they themselves to consume. This has led to the “disintegration of peasant household enterprises…[and the destruction of] subsistence security.”336 Edelman 2005
Conversely, research conducted by united efforts from the Centre for Economic Policy Research, Center for Economic Studies, CESifo Group, and the Maison des Sciences de l’Homme shows that the significant impact of potential WTO policies, both protectionist and liberal, would assuage the widening gap between developed and developing countries. In developed countries, agriculture tends to have relatively low impact on the economy; only 8% of the total income of US farm households comes from the farm, with the numbers increasing to 10% in Canada and 12% in Japan.300 Hertel et al However, most peasant communities of the global South depend primarily on agriculture for the main source of household income; as a result, while trade reforms would lead to “serious losses…to large, wealthy farmers in a few heavily protected sub-sectors” in the US, the aforementioned research groups estimate that poverty reduction could be in the double digits and “could lift large numbers of developing country farm households out of poverty.”290 ibid