Thursday, May 23, 2013

Global business strategy 'Three Worldviews on WTO'

Global business strategy 'Three Worldviews on WTO' Abstract The WTO which was formed in 1995 is engaged in the making of agreements, negotiations and the signing of such agreements between the different nations of the world regarding trade. WTO is engaged in engages in the administration of the trade agreements, provides a forum in which trade negotiations, monitoring of the trade policies, resolution or settlement of trade disputes, outreach and cooperation with other non governmental organizations and the building of the capacities of the member states. The dispute settlement by WTO takes 1 year when there is no appeal. In case there is an appeal, the process takes 1 year and 3 months. There are a number of WTO agreements for instance Multifibre Arrangement (MFA) and the Agriculture Agreement. The three main worldviews that will be explored include liberalism, structuralism and economic nationalism. The WTO is effective to a certain extent although there have been instances where the ineffectiveness of the organization has been noted for instance the EU-US steel tariff dispute. Table of Contents Abstract 2 World Trade Organization (WTO) and what does it deal with. 4 Purpose and functions of WTO 4 Settling disputes mechanism of WTO and panel process 6 The WTO agreements 7 The three-worldviews implications on the WTO 7 Effectiveness of WTO 8 Conclusion 9 World Trade Organization (WTO) and what does it deal with. The WTO was established in 1995 and is a brainchild of the Uruguay Round Table negotiations that took place between 1986 and 1994. As at August 2012, WTO had a total of 157 member countries. The headquarters of the WTO are found in Geneva, Switzerland. The WTO deals with the different rules that govern trade between different countries. WTO deals with the making of agreements, negotiations and the signing of such agreements between the different nations of the world. The agreements that are reached are then ratified by the parliaments of the nations. The main goal of the WTO is to be able to aid the producers of services and goods as well as the importers to be able to carry out their businesses (WTO, 2013a). WTO mostly deal with the issues of trade especially the development of agreements that ensures that the trade is free especially of barriers that result from the negotiation, is predictable i.e. there is not arbitrary raising of trade barriers whether they were tariff or non-tariff barriers and that the international trade is without any cases of discrimination (WTO, 2013b). Purpose and functions of WTO The WTO has a number of functions that it undertakes. First, WTO engages in the administration of the trade agreements (WTO, 2013b). The member countries and states engage in the negotiations about the different trade agreements, but it is the WTO that has a secretariat composed of experts that ensures that the member states are assisted on a day to day basis and that the negotiations take place in a smooth manner and that the different rules that govern international trade are applied and enforced correctly. Secondly, the WTO provides a forum in which trade negotiations between the different member states are undertaken (WTO, 2013b). The forum that is provided by WTO is used to discuss a number of issues for instance the principles of liberalization that can be applied and the exceptions if any. The WTO also provides a platform in which the countries can be able to renegotiate the agreements due to the non-static nature of the agreements that are reached between the different countries. One such forum that is provided by the WTO is the Doha Development Agenda which was launched by the trade ministers from the WTO member states. Thirdly, WTO also engages in the monitoring of the trade policies of the member states. The WTO ensures that the member states operate in a transparent climate where all the trade agreements can be properly implemented (WTO, 2013b). WTO scrutinizes the trade practices and the policies of the member countries. Forth, WTO is also involved in the resolution or settlement of trade disputes that may arise (WTO, 2013b). The WTO has a procedure that can be used to solve the problems that may arise as a result of the trade quarrels between member states. The countries whose rights under trade agreements are being infringed usually take the disputes to the WTO. The disputes are resolved through judgments delivered by experts who interpret the provisions of the agreements that the members enter into as well as the commitments that they were undertaking. Also, WTO is engaged in outreach and cooperation with other non governmental organizations (WTO, 2013b). Regular dialogue is maintained between the NGOs and WTO, between the general public and the media and WTO so that they can be able to understand the various aspects of the WTO especially the operations that are taking place at Doha negotiations. The main aim is to increase the awareness levels of the organizations regarding the various activities that WTO is involved in. Finally, the WTO also helps the building of the capacities of the member states through technical training and assistance (WTO, 2013b). The WTO provides support to the organizations so that they can be able to implement the commitments and agreements that they reached as well as support the member states to be able to build their trade capacities and implement the standards that are to be upheld under the agreements. WTO holds annual trainings in Geneva for government officials so that they can be able to increase their capacity to understand the agreements and the commitments that are reached between the countries. Settling disputes mechanism of WTO and panel process The disputes under WTO are usually settled by the different member states. The sanctions that face any one country as a result of the going against the agreements and the commitments are usually imposed by the member states and not WTO. The decision of the panel i.e. the ruling of the member countries can only be overturned in case of a reverse consensus. The dispute settlement has a fixed timeline through which the consensus should be reached. First, consultations and mediations between the member countries that are involved in the dispute should be undertaken within 60 days after the dispute is reported to WTO. If an agreement is not reached, a panel should be set up within 45 days. The panel should be made up of panelists who are experts in the area. The panel should submit their final report to the parties in the dispute in 6 months. Three weeks after the final panel report is submitted to the parties, it should also be submitted to the other WTO members. In case, there is no appeal by the parties, the final report of the panelists is adopted by the Dispute Settlement Body after 60 days. In case, there is an appeal, the appeals report will be prepared within 60 to 90 days. Thereafter, the Dispute Settlement Body will adopt the appeals report after 30 days. The dispute settlement takes 1 year when there is no appeal. In case there is an appeal, the process takes 1 year and 3 months (The WTO: more than the GATT, n.d.) The WTO agreements There are a number of agreements under WTO. The Agriculture Agreement that calls for the member states to reduce the levels of their subsidized exports. The agreement is geared towards reforming the sector and making policies that are market oriented. Under textile, there is the Multifibre Arrangement (MFA) is bilateral agreement that established quotas that limited imports especially to the countries whose domestic textile industries were being damaged by an influx of imports. Other agreements have been reached in sectors such as services, plurilaterals, anti dumping subsidies and non-tariff barriers (WTO, 2013c). The three-worldviews implications on the WTO The three main worldviews that will be explored include liberalism, structuralism and economic nationalism. Liberalism mostly focuses on the primacy of the markets over the countries and the states thus the state should have no role in the market. The basis for the analysis is the corporations or the individuals and not the states. Under this view, WTO is not needed as the individuals and the corporations enjoy great supremacy over the state. Under economic nationalism, the state has great primacy over the market. The state plays an important role and the unit of analysis is the state and not the corporation or the individual. WTO agreements have sometimes adopted this worldview especially when protecting the domestic industries from the effects of the flooding of the imports. The states block the access to the domestic market so that local production can be encouraged (Thunderbird, n.d.). Finally, there is the structuralism whose basis unit of analysis is the class; which enjoys primacy over all else. Here, the state is subordinate to the class that is dominant. The class controls the economy of the country. Some of the WTO tariffs have been developed to be able to protect some classes whose interests are above those of the state (Thunderbird, n.d.). President Bush imposed tariff on imported steel due to class pressure from the steel industry that was important for his reelection in 2004. Effectiveness of WTO There have been major argument with regards too whether WTO was effective or not. There have been some arguments that WTO only protects the interests of the rich nations especially due to the push that US has been engaged in for instance the inclusion of services and Intellectual Property under the WTO umbrella. These measures were geared towards protecting the self interest of the US. US wanted to eliminate the barriers of cross boarder trade that were geared towards protecting the industries in the developing countries and the IP inclusion under Trade Related Intellectual Property Rights (TRIPS) was use to protect the cutting edge industries of the US (Bello, 2000). There are a number of instances where the WTO has been effective. US-EU Beef hormone dispute is one of the areas where the WTO can be seen to have been effective. The ruling allowed for the protection of the US domestic beef industry as the floods of imports would lead to a situation where the US beef industry would not be able to support itself. The interest of US as a member state of the WTO had been upheld by the WTO (Thunderbird, n.d.). However, there are instances where there have been cases of gross inefficiencies in the application of the WTO agreements and commitments. An example is the dispute between US-EU over steel tariff. President Bush only imposed the tariff due to the massive pressure from the steel industry especially in the three states where the 2000 presidential elections were closely fought; Ohio, Pennsylvania and West Virginia where there are significant steel mills and industry. President Bush took the law into his own hand to be able to gain the votes of the three swing states (US-EU Steel Tariff Dispute, n.d.). Conclusion It can be stated that the WTO has made a significant stride in helping to deal with the different trade disputes as well as ensuring that the countries engage in regulated trade with each other. However, WTO should focus more on the improvement of the integrity of the organization particularly in the cases where some countries seem to get away with illegal trade practices. References Bello, W. (2000), WTO: Serving the Wealthy, Not the Poor, Ecologist (Sept) The WTO: more than the GATT (n.d.) (Lecture notes), School of Global Management Thunderbird (n.d.), Tools for Analyzing the Global Political Economy: Three Views of the World (Lecture notes), School of Global Management US-EU Steel Tariff Dispute (n.d.) Lecture Notes, School of Global Management WTO (2013a), What is the WTO, http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm WTO (2013b), Understanding the WTO, Basics: Principles of the trading system, http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm WTO (2013c), Understanding the WTO: The Agreements, http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm5_e.htm