Bad Effects of the World Trade Organization (WTO) Worldwide
Category : Economics
Bad Effects of the World Trade Organization (WTO) Worldwide
The WTO is the international governing body of 149 member-countries on global (free) trade and even conflict resolution; and, its mission is to boost international trade by encouraging its member-countries to lessen obstacles to trade and by creating policies or laws that are instrumental in trading and business (‘World Trade Organization’, 2006). As such, the WTO appears to be good and truly beneficial. But is it really so? This paper briefly reports how the WTO has affected the global economy in a bad way. The bad effects of WTO exist in the aspects of job, farming/agriculture, medicine, environment, and also it contributes to growing poverty.
There are two bad effects of the WTO when it comes to jobs, labor or employment. (2001) argues that the world trade system only gives rise to employment insecurity. How? In this author’s own words,
“The expansion of trade and the growth of incomes in OECD countries has not increased employment in developed countries. The globalization of the employment market and the mobility of companies and capital has also increased instances of firms moving to take advantage of lower wages and weaker labour laws. Threats to relocate also allow companies to force reductions in environmental and social standards around the world. Mergers, acquisitions and corporate restructuring are also increasing employment insecurity.”
Ironically, WTO, the champion of free trade, creates a condition among countries for job losses. When multinational corporations are dissatisfied with a certain country, they can easily get out and shift to another country where conditions are favorable to them.
There is more than just job loss as one of the WTO’s bad effects. (2006) stands in the view that job stability is at risk because huge corporations can just move from one country to another where there is a lesser production cost opportunity; or if not, first world countries are bound to eat away the rights of workers. Thus, the second bad effect of the WTO with regard to jobs is that it deprives the workers of their right to better compensation. This could even be the reason why there is child labor (recall the young Chinese kids who create Nike shoes).
Farmers from Third World Countries
There is truth behind the claim of (2000) that the WTO’s policy called Agreement on Agriculture by the United States of America (along with its international agribusiness corporations) leads to the loss of farmers from the Third World Countries. How so? These farmers are not able to compete against the cheaper imported products coming from these global agribusiness corporations. Imports become cheaper because Third World Countries are asked by the WTO to lower them by 24% and all other barriers to their entry in the market of these countries. What even makes the cost of production of these agricultural products by the global agribusiness corporations is the subsidies they obtain from their government – US – in terms of asset, fertilizer, marketing, and facilities. The following is going to reveal more to this point.
A great number of cheap corns from the US overflows in Mexico, because the former is reported to back agribusiness corporations up with huge amount of subsidies (2003). Corns are just one, vegetables are another. (2005) reports that the farmers from the province of Benguet and Mt. Province in the Philippines are losing its vegetable crops to the imported ones from China, and the farmers from the former are asking their government to place no reduction in tariffs on the latter’s cheap products (). These are just a few testimonials to the bad effect of the WTO that it kills farmers from Third World Countries. These farmers are indeed likely to be doomed simply because they are not subsidized by the government, unlike the farmers from the First World like US and Europe. It can likewise be said that being supportive of First World Countries only is another bad effect of the WTO when it comes to farming/agriculture.
The WTO has created a bad effect on the medical field. (2006) has identified the bad effect of such policy among developing or Third World Countries as that it prohibits these countries to create an alternative to the medicines or drugs of the First World, which are quite expensive. This has something to do with one of its policies called Trade-Related Intellectual Property Rights (TRIPS). According to (2004), WTO members are asked to act in accordance with the TRIPS, which is about patent protection and copyrights (p. 18). It has been learned from this author that indigenous knowledge has been patented by the rich countries. And now, the real owners of these indigenous knowledge have to reclaim it (by money, of course!).
According to (2000), “multinational companies neglect the diseases of the tropics, not because the science is impossible but because there is, in the cold economics of the drugs companies, no market (2006). Therefore, another bad effect of the WTO is that it intensifies the sicknesses, which are actually curable, of people from poorer countries. The WTO is interested in trade only, and not the real idea of interdependence at all as what it proclaims given that it is an entity of globalization.
Furthermore, drugs or medicines are not treated as products that cure but products that profit. (2006) states that the WTO promotes the pharmaceutical industry in terms of researches that yields really high profits at a global level.
The WTO has undermined the sovereignty of some of its member-countries. What it does is that it reviews the laws or policies of its member-countries and if it has found one that is perceived to be a barrier to trade, then it aggressively asks the member-country to remove it from implementation. Therefore, even when the law or policy is meant to protect the natural environment of a country, it is just impossible to do so. According to (2003), a (multinational) company, due to WTO provisions, can legitimately take legal action against a country against an environmental law by the simple ground that it is a barrier to free trade. The bad effect of the WTO in terms of the environment is that it legitimately supports the destruction of the natural environment.
The bad effect of the WTO can perhaps be summarized into: that the WTO makes the poor countries even poorer. The WTO is actually for the First World Countries. In reality, it is advantageous exclusively to them. Even though it is made up of mostly poor countries, it is the rich ones that grow and develop further. (2003) states that in actuality, rich countries talk among themselves and set the rules, which are of course for their own good, without taking into account the negative impact it is going to bring to the poorer countries. The worst part of it is that, the poor country is left between the choices – protest and receive ruthless economic sanctions or abide.
For instance, Africa has only suffered from an immense influx of imports while exports grew only vaguely (2006). This is part and parcel of the free trade ruling of the WTO. How can indeed poor countries get their way out of poverty when the WTO asks them to buy or consume products that come from other countries? Naturally, it is the rich countries that grow economically, because local products are not being bought the most. The same is true in the case of agriculture. How can the local farmers succeed and generate profit from their produces when the WTO dictates consumers to buy imported and cheaper ones? Therefore, the WTO exists to legitimately put the poor countries still (or forever) in a poor condition.
The WTO is supposed to govern the different countries of the world to be economically interdependent by having a free trade among each other. However, it turns out that only the rich and powerful countries benefit from it. The WTO not only makes jobs gone but also worst. The WTO kills the farmers from Third World Countries by asking these countries to compete with imported yet cheaper products. The WTO enables poor countries to be sick all the more. The WTO even fosters the destruction of the natural environment of the powerless countries. Lastly, the WTO only makes the rich countries richer and the poor ones poorer.