Trium Business in the Global Political Economy Individual Assignment

7/30/2019 Trium Business in the Global Political Economy Individual Assignment

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Trium Global Executive MBA Module 1

Business in the Global Political Economy

CourseBusiness and World Trade

Essay TitleIs the WTO acting irresponsibly by not permitting the use of non-traditional trade measures to

assist in the protection of the environment and public health, enforcement of labor standards andother social objectives?

LSE ID201230494

Total Word Count ( excluding charts , tables and references)1994


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Introduction

During a rather extended discussion about the ShrimpTurtle issue in our Business and World

Tradeclass at LSE last month, one of my fellow students commented, Its amazingthat there

is so much of discussion and noise about saving the turtles and no one is even thinking of saving

the poor shrimps. The whole class burst into a roar of laughter and that is where the discussion

ended. Although his comment was made in a lighter note but apparently he was rather confused

on why this issue was being discussed in the WTO class?

The World Trade Organization (WTO) was formed in 1995 as an evolution of The General

Agreement on Tariffs and Trade (GATT) (Hoekman, 2002). The main objective was to provide a

permanent, legal, binding and rule based trading framework to facilitate the world trade with a

much strengthened dispute settlement mechanism. Also, the scope of trade was extended to

cover the services and Intellectual Property Rights. WTO has a very stringent dispute settlement

system (Sampson, Introduction and Overview, 2009) and that is what makes it unique as

compared to some other international organizations. More than 400 disputes have been brought

to WTO since its inception. However, some of these cases are pertaining to what we call as

Non- traditional trade measures like environment protection, public health, enforcement of fair

labor standards, wildlife etc. The shrimp turtle case mentioned above is one such case which

was brought to the WTO and the ruling in this and some other such cases appeared that WTO has

acted irresponsibly but that has not been the case. Actually WTO has acted responsibly and

within its framework, principles and objectives around which it was formed to address such

issues.

Due to the very vast and varied nature of the topic, its difficult to express all the thoughts

within the given limitation of the size of the essay, hence this essay will discuss the thesis by


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evaluating the objectives of the WTO, the boundaries of its framework and rules, and how those

are applied or not applied in addressing the non-traditional trade measures. The essay will also

include, embedded within the sections, elements of discussion on why the argument which

suggests that WTO has acted irresponsibly to handle non-traditional trade measures is invalid.

The essay will then conclude by reaffirming WTOs changing role and the go forward path with

an understanding that cropping up of issues of this kind will only increase in future.

WTO and not WTSDO

First and the foremost, WTO is a trade organization and its primary objective is to promote

world trade. As discussed above, one of the key improvements over GATT and also the reason of

WTOs success is its very strengthened and effective dispute settlement system. Out of some

400 odd dispute cases reported to the WTO since its inception and with WTO through its

enforceable rules has been able to settle most of the 400 odd dispute cases reported announcing a

verdict which is binding. The success resulted in many Nontraditional issues like the Shrimp

turtle, Tuna and asbestos packaging landing in WTOs lap. The WTOs agreements and rules

does support the cause of environment protection leading to sustainable development , which

means that the development in trade must ensure that we are not depriving the future generations

of the resources which we use today. The WTOs agreements permit members to take measures

to protect not only the environment but also public health, animal health and plant health. The

environment protection has not been an agenda of many governments even in the late 80s and

was definitely not a main consideration in the Uruguay round. WTO was never ready to accept

the disputes of this nature which started flowing in its direction mainly due to the increased

understanding of the member nations of its dispute settlement system.

The United Nations (UN) through its various committees, conferences, programmes and

agencies supposedly addresses some of these specific causes E.g. United Nations Environment


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Programme (UNEP) for environment protection, International Labor Organization (ILO) for

international labor standards etc. In fact there is a United Nations Commission on Sustainable

development (CSD) to address this very issue of sustainable development. Almost all of the

WTO member states are a member of the UN too. But the problem is that none of the

international organizations have a dispute settlement system like the WTO and that is the

primary reason of WTO getting bombarded with such issues. Hence, we are witnessing a trend of

World Trade Organization (WTO) metamorphosing into World Trade and Sustainable

Development Organization (WTSDO) (Sampson, 2005).

Trade and Environment

WTO has a dispute settlement system which even limits national sovereignty, and with two-

thirds members of the WTO now being developingcountries, the main growth strategy for these

nations is based on their effectiveness to export to richer nations. So any hindrance to this

strategy has encouraged them to use the WTO and its effective dispute settlement system and

they have been fairly successful in getting their way. This is why the critics of the globalization

argue the role of WTO being autocratic and unidirectional towards promoting trade only and that

other objectives like environment and sustainable development take a back seat. WTO, on the

contrary, has always reaffirmed its intentions and its evolving understanding of the relationship

between trade and sustainable development right from its inception. The Preamble of WTO

agreements states this understanding and its evolving. However, WTO also has a role to

determine if its member states are not using environment protection as a disguise to introduce

protectionism. Lets examine the shrimp turtle case. (ENVIRONMENT: DISPUTES 8, India

etc versus US: shrimp-turtle). Many have missed the importance of the Appellate Bodys ruling

on this case. The following text is from the WTO website, It also said measures to protect sea


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disguise of environment protection or sustainable development while discriminating with their

domestic polices or other favorable countries.

Size does matter

The consolidated budget of WTO for the year 2012 is approximately USD 209M, funded by

contributions from its members. (THE WTO: SECRETARIAT AND BUDGET, WTO

Secretariat budget for 2012, 2012). There are about 625 employees who work for the secretariat.

Just to provide a context, the WTO budget is less than the travel budget of International

Monetary fund (IMF) (Sampson, 2000). Although the cited fact about the size was written to

point out WTOs limited possibilities ofpartcipiation in joint activities with some of the other

international organizations but that this also suggests that WTO was not designed to be an

environment protection or human rights protection body. On the contrary, considering the above

facts on its resources, WTO as been doing a tremendous job in conducting its business and this

further substantiates the argument made in the previous sections.

WTO 2.0 - The way forward

The expectation and criticism of WTOs role in some of these non-traditional issues as argued

above is un-reasonable and this is like making International Labor Organization (ILO)

responsible for vaccination and health of children which in essence is World Health Organization

(WHO)s responsibility just because ILO, supposedly, deals with the issue of child labor. The

criticism which flew towards WTO and became specifically visible due to the mass protests in

Seattle during a ministerial meeting nicknamed teargas ministerial (Rodrik, 2001) by

environmentalists and activists dressed as turtles again questioning the shrimp turtle case

verdict. WTO has remained amongst such protests and disputes ever since. But the role and the

face of WTO have been changing ever since and in fact there are gradual changes already being


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made in the rules to accommodate the subtle greening of the WTO (Weinstein & Charnovitz,

2001). This is being noticed more prominently under the current Director General, Pascal Lamy.

Lamy has been vocal about the reforms and WTOs support to sustainable development.

Excerpt from his speech at UNEP Global Ministerial Environment Forum in Nairobi on 5

February 2007 (Lamy, 2007) establishes this fact :

Sustainable development should be the cornerstone of our approach to globalization and to the global governance

architecture that we create. If I have come to this forum, it is to deliver a message:the WTO stands ready to do its

part.

Undoubtedly, with the changing needs of the world trade and ever growing need for

multilateralism based on its past success, WTO 2.0 is inevitable. The key is that this doesnt

necessarily need to come by changing the rules of WTO, which will need consensus of 153

countries, but should be achieved by creating awareness about WTOs role and its boundaries on

one side and by empowering other international organizations to work within their specific areas

and setting their own rules on the other. In the process they should manage the issues of the

member states which get drifted towards WTO currently. WTO will continue evolving into WTO

2.0 with trade, environment and other elements of sustainable development embedded in its

DNA but the core mandate still remaining as WTO being a pivotal body to promote trade and

continue to check if sustainable development agenda or environment protection rules set up by

other specific international organizations are not being used as a disguised protectionism.

Conclusion

As the world recovers from the economic downturn, the volume of world trade has resumed its

northward journey. WTOs contribution in refueling this cannot be undermined. But there is a

need to make sure that the success doesnt become its own enemy. As argued in various sections,

WTO has evolved into an organization with a broader agenda over the past 17 years which not


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only limits itself to managing the nuances of traditional trade but has also adapted to manage

some of the nontraditional trade situations. The journey is still on and it is able to find its own

way. As Pascal Lamy summed up in his speech at Yale University in October 2007 (Pascal

Lamy's speech at the Yale University on 24 October 2007, 2007) calling it as The Greening of

the WTO has started and as a tribute to Yale Universitys professor Daniel Esty and his book

Greening the GATT: Trade, Environment, and the Future (Esty, 1994), noting how trade and

environment discussion has travelled since those days.


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References

Dalton, M. (2011, July 6).Beijing Sparks Ire of WTO Over Curbs. Retrieved October 24, 2012,from The Wall Street Journal:http://online.wsj.com/article_email/SB10001424052702304803104576427740779532356-lMyQjAxMTAyMDIwMDEyNDAyWj.html?mod=wsj_valettop_email

ENVIRONMENT: DISPUTES 8, India etc versus US: shrimp-turtle. (n.d.). Retrieved October23, 2012, from World Trade Organization:http://www.wto.org/english/tratop_e/envir_e/edis08_e.htm

Esty, D. C. (1994). Greening the GATT: Trade, Environment, and the Future. Institute forInternational Economics.

Hoekman, B. M. (2002). The WTO: Functions and Basic Principles. InDevelopment, Trade,and the WTO: A Handbook (World Bank Trade and Development Series) (pp. 42-49).

Washington DC: World Bank Publications.Lamy, P. (2007, October 24).Pascal Lamy's speech at the Yale University on 24 October 2007.

Retrieved October 30, 2012, from World Trade Organization website:http://www.wto.org/english/news_e/sppl_e/sppl79_e.htm

Lamy, P. (2007, February 5).Pascal Lamy's address to to the UNEP Global Ministerial

Environment Forum in Nairobi on 5 February 2007. Retrieved October 30, 2012, fromWorld Trade Organization website:http://www.wto.org/english/news_e/sppl_e/sppl54_e.htm

Rodrik, D. (2001). The Globalization Paradox: Why Global Markets, States, and DemocracyCan't Coexist. Oxford: Oxford University Press.

Sampson, G. P. (n.d.).Sampson, G. P. (2000). Greater Coherence in Global Economic Policymaking: A WTO

Perspective. In A. O. Krueger, The WTO as an International Organization (pp. 257-258). Chicago: University Of Chicago Press.

Sampson, G. P. (2005). The WTO and sustainable development. Tokyo, Japan: United NationsUniversity Press.

Sampson, G. P. (2009). Introduction and Overview. In G. P. Sampson, WTO and Global

Governance: Future Directions (pp. 3-4). United Nations University Press.THE WTO: SECRETARIAT AND BUDGET. (2012). THE WTO: SECRETARIAT AND BUDGET,WTO Secretariat budget for 2012. Retrieved October 24, 2012, from World TradeOrganization: http://www.wto.org/english/thewto_e/secre_e/budget_e.htm

Weinstein, M. M., & Charnovitz, S. (2001, November / December). The Greening of the WTO.Retrieved October 30, 2012, from Foreign Affairs:http://www.foreignaffairs.com/articles/57426/michael-m-weinstein-and-steve-charnovitz/the-greening-of-the-wto

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Trium Business in the Global Political Economy Individual Assignment