NeoLiberalism 101

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WTO and Neoliberalism

August 19th, 2008 · No Comments

The World Trade Organization, (WTO), is one of the built-in mechanism for promoting and enforcing global free trade. It helps to draw the rules of international trade. However, it has been mired in controversy and seen to be hijacked by rich country interests, thus worsening the lot of the poor, and accordingly inviting protest and intense criticism.Source:

WTO principles

Founded in 1995 after the 8-year “Uruguay Round” of talks, it succeeded the General Agreement on Tarrifs and Trade (GATT), which was created in 1948 to lower trade barriers. The scope of the WTO is greater, however, including services, agriculture, and intellectual property, not just trade in goods.

The main principles of the WTO boil down to the following:

Non discrimination

National treatment implies both foreign and national companies are treated the same, and it is unfair to favor domestic companies over foreign ones. Some countries have a most favored nation treatment, but under WTO the policy is that all nations should be treated equally in terms of trade. Any trade concessions etc offered to a nation must be offered to others.


Nations try to provide similar concessions for each other.


Negotiations and process must be fair and open with rules equal for all

Special and differential treatment

A recognition that developing countries may require “positive discrimination” because of historic unequal trade.

Reality different from the principles

However, in reality, power politics has meant that the WTO has received criticized by various groups and third world countries for numerous things, including:

  • Being very opaque and not allowing enough public participation, while being very welcoming to large corporations1. (That doesn’t help the claims of free, open and democratic!)
  • That while importing nations cannot distinguish how something is made when trading, though it sounds good at first along the lines of equality and non-discrimination, the reality is that some national laws and decisions for safety and protection of people’s health, environment and national economies have been deemed as barriers to free trade. Take the following as a very small set of examples:
    • Countries cannot say no2 to genetically engineered food
    • or milk that contains genetically engineered growth hormones known to cause health problems
    • or trees that have been felled from pristine forests and so on.
    • Guatemala took efforts to help reduce infant mortality, in accordance with the World Health Organization’s guidelines, and to counter aggressive marketing by baby food companies aimed at convincing mothers their products are superior to the more nutritious and disease-protecting breast milk for their babies. The result? The affected corporations managed to take this to GATT (the predecessor to the WTO) and get a reversal of the law amidst the threat of sanctions3. Profits prevailed.
    • Canada complained to the WTO about France’s ban on asbestos4. (The previous link also makes the point of how the victim’s views are not heard in WTO proceedings, nor ar they part of the debate, even though there may be thousands of them.)
    • The United States’ attempt to ban shrimp caught using apparatus that were harmful to endangered sea turtles has been ruled as WTO-illegal, forcing the US to reverse its decision.
  • That instead of respecting the reasons why there has been special and differential treatment for developing countries, rich countries instead want to push poor countries to reciprocate equally, in what would therefore actually be an unequal result (as it would maintain the unequal terms of trade.)

A number of countries have also spoken out8 against the WTO saying that there needs to be more co-operation between the North and South (a general term to refer to the Rich and Developing countries, respectively) with regards to international trade.

  • During the week of May 20, 1998, celebrations marked 50 years of multilateral trade. However, as the following link mentions, the African nations did not feel that there was much to rejoice at and said that it was a party where only the rich nations has something to celebrate9.
  • Most people in the world have not benefited from the current form of “multilateral” trading systems.
  • At a Mercosur10 (South America’s Southern Common Market) summit, then South African President, Nelson Mandela, had spoken of the need to ensure that there is more fairness11 in the globalization process. Mercosur is the world’s fourth largest economic power, after the United States, European Union and Japan.
  • There have been so many examples, it is impossible to list here.

Tags: political economy