Misconceptions of the World Trade Organization

Singer outlines four commonly made charges against the World Trade Organization (WTO) that critics use to show that globalization is failing. The first charge is that the WTO places economic considerations ahead of concerns for the environment, animal welfare, and even human rights. The second charge is that the WTO erodes national sovereignty. The third charge is that the WTO is undemocratic. The fourth charge is that the WTO increases inequality or it makes the rich richer and leaves the world’s poorest people even worse off than they would otherwise have been. Singer presents evidence that most of these charges seem to have some validity to them, however the underlying issue seems to be the structure of the WTO.
Theoretically trade has the ability to expand each country’s GDP through comparative advantage. That is that each country specializes in producing the good in which their relative advantage is to other countries. According to Singer this type of trading has been estimated to increase Japan’s real income by 65 percent. However with this type of global trading changing the way labor and capital markets function, barriers are often put up by countries to protect young industries and products or labor that are needed to produce fruitful life for their citizens, often with the negative effects of higher consumer prices. Barriers are what cause organizations such as the World Trade Organization to have to be in place in order to promote free and fair trade. However most often, fair trade is out of the question and as Singer shows there are many problems with how the WTO conducts business.
Many of the WTO’s problems evolve from its structure. Rather then set up like a global government where countries are represented in a voting structure it is set up similar to a town meeting where consensus must be reached in order for things to occur. However just like many town meetings, the more wise and experienced have more influence and therefore direct policy; just as the major, highest income countries control much of the lobbying and policy direction. Singer does a very good job of showing how this proves the third charge to be correct. Due to this structure the WTO rules make it seem and historically have shown that economic considerations have been placed ahead of concerns for the environment. This is because of rules that essentially state that a country cannot stop trade due to unacceptable practices if in the country that erects the barrier is still practicing that practiced. I know that sounds a little confusing but that is the WTO for you.
The WTO might not be the answer but in order to find a solution one of two things must occur. Either there must be a stronger international regulatory agency to promote free and fair trade as well as protect the environment, that is recognized by all countries; or their must be a restructuring of the WTO to include environmental concern aspects as well as well as a coalition with the IMF to encourage foreign direct investment in developing countries so that they have the technology to successfully trade and not be left behind by trade. For it could be that the only thing holding back developing countries is the lack of technology preventing them from trading successfully.

The Complexion of Globalization

Singer is right in that we do indeed live in “one world.” Furthermore, his assessment, on whether or not the United States can remain the world’s leading power in this time of globalization being dependent upon the U.S. acting ethically in accordance with the idea of all the countries functioning as “one world,” is valid. However as Wolf, Stiglitz and Freeman point out there are other factors and actors that make this concept of being apart of “one world” virtually impossible.

If individuals expect globalization to occur smoothly then they are greatly mistaken. Every country has a different heritage, leadership and values, which will affect how countries view others actions and policies. Additionally the idea of self-interest still looms large and will forever preside in a democratic form of government. This is because in order for leaders to be elected they must do what is best for their constituents. In other words as much as the global interest is important, the fact is that the global community does not vote for the President of the United States. However Stiglitz acknowledges that globalization has the potential to work and help benefit every country through free and fair trade. In order for this occur there needs to be stronger trade protection to prevent poor countries from being exploited by a version of market economics that embraces corporations. China and India are perfect examples of success in globalization, but the developing nations of Africa are examples of where globalization has actually increased the poverty level.

Critics of globalization say that globalization is really represents Americanization of the world. Part of this is true, with much of the world’s wealth located in the Western hemisphere it is hard to see globalization occur without an exchange of cultural ideas and values. Many Americans feel that because their way of life has been so successful that it should be the developing world that embraces their lifestyle in order to taste similar success. Critics say that this erodes the culture of the developing nation and creates hostility that is most often expressed in acts of violence against the western world. The West can also be seen as a loser in the unskilled labor market. Freeman reports a positive correlation between the increase in imports from developing nations and a decrease in wages for unskilled labor in the United States. Furthermore this relationship holds in Europe as an increase in trade has shown an increase in the unemployment rate of the unskilled. However Freeman notes that as countries specialize they can actually be more successful and cause the economies that trade together to grow together.

No matter what globalization is a sticky process. On one hand with corporations, governments, individuals and ideas all conflicting with each other, it may indeed be ethics that keep the world in harmony, or the other hand could it be free markets and democracy that truly unites the world. In the short run there may be winners and losers but as technology develops globally everyone may be a winner in the long run.

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