Multilateral trade policy

© Beth A. Keiser/Keystone
The World Trade Organisation (WTO) is the organisation responsible for the multilateral trade system. It sets international trading rules for its approx. 160 member countries. Its highest body is the Ministerial Conference that takes place every two years.

Following the eight negotiation cycles that have taken place since the Second World War, international trade has undergone massive liberalisation. The last highly successful negotiations were held in the framework of the Uruguay Cycle from 1986 to 1994. They opened the way for the creation of the WTO in 1995 (the GATT was the previous institutional framework).

This initiated an important extension to the scope of application for global trade rules that had previously been limited to trade in goods. Since then, trade in services (GATS), intellectual property (TRIPS) and agricultural produce (AoA) have also been regulated. The intensive lobbying by major international corporations has played a decisive role in this process, as was clearly explained in the Public Eye document called “Machthungrige Strippenzieher” (“The power-hungry puppeteers”).

The World Trade Organisation (WTO)

The WTO represents the institutional and legal foundation of the multilateral trade system. It has a dispute resolution body for trade disputes. The rulings it hands out are binding and can impose painful sanctions.

The organisation aims to liberalise international trade and the organisation is the driving force behind economic globalisation. Global trade barriers should be removed to achieve this goal. This includes tolls, restrictions on imports, export subsidies and further applicable border protection measures that serve as barriers to trade.

The main idea behind this is the equal treatment of all members. The WTO follows two principles for this: “national treatment” and the “most-favoured nation”. The first states that foreign economic actors should be subject to the same legislation as domestic actors in domestic markets. The second principle seeks to ensure that trade benefits (e.g. reduced tariffs) are offered to all WTO members rather than individuals. There are various exceptions to these rules however, meaning that free trade agreements or preferential trading agreements with developing countries comply with WTO standards to a greater or lesser extent.

The WTO establishes binding trade regulations for its members. These amount to a corpus of around 30,000 pages and are defined in 30 agreements. The four main agreements are the General Agreement on Trade and Tariffs (GATT), Trade Related aspects of Intellectual Property Rights (TRIPS), the General Agreement on Trade and Services (GATS), and the Agreement on Agriculture (AoA).

The WTO: there is an urgent need for reform

Public Eye is a member of the European and international network of NGOs that are active in the field of trade policy. In Switzerland we demand a multilateral trading system that will allow each country the policy space needed to achieve self-determined development that places human rights and labour norms as well as environmental protection and the climate at the centre of concerns.

However, if this is to be achieved, the WTO must be fundamentally changed: it must become far more transparent and orient itself more strongly towards democratic principles – and not only on paper. Moreover, the disproportionate negotiating power of industrial countries and the undue influence of multinational companies must be reduced. More important still is for the WTO to finally shift its ideology away from that of free trade in favour of sustainability, fairness, solidarity and respect for human rights.

Despite its criticism of the way the WTO currently functions and its ideological orientation, Public Eye firmly supports the concept of a multilateral trading system with binding rules. For, especially in weaker countries, a regulatory framework of that nature is a pre-requisite to ensuring that the rule of the strong does not hold sway.

The Doha Cycle: no hint of a development cycle

Industrialised countries’ desire to increasingly liberalise global trade after the turn of the century initially ran into strong resistance from developing countries. It was only after the promise that the next round would be a “development cycle”, in which their needs and concerns would be central, that the developing countries agreed to take part in a new cycle of negotiations. Thus, the Doha Round was born.

Far from keeping their word, the industrialised countries continued to put their interests first, demanding that the countries of the South make concessions in a process that was anything but a round of development. Under the auspices of Brazil, China and India in particular, the developing countries managed to resist the pressure placed upon them by the countries of the North. As a result, after over a decade of bitter negotiations, the Doha Round is far from being concluded.

Together with Alliance Sud, Public Eye has created a strategic board game called “Big Little World” which enables adults and young people to learn about global trade and how the World Trade Organization works.