Essay on What’s Wrong With the WTO and How To Fix It

Wilkinson, R. (2014). What’s Wrong with the WTO and How to Fix It. John Wiley & Sons.

According to the Agreement Establishing the World Trade Organization (WTO), the ultimate goal is to provide a platform where parties enter into reciprocal and mutually beneficial agreements aimed at reducing trade barriers, tariffs, and discriminatory practices in international business. This statement was drafted with the understanding that trade relations should result in improved living standards, full employment, growing incomes, growing demand, and expanded production and exchange of goods in a manner that guarantees the optimal use of resources and sustainable development (WTO, 1994: para. 1). In short, the WTO was intended to provide a way to ensure that international trade is conducted in a manner that results in mutual benefits to all stakeholders. Recently, the organization has been criticised for its failure to contribute to development in some parts of the world notably the poorest (Walker, 2011; Wise, 2009). In his 2014 book, Wilkinson (2014) argues that the current WTO system is broken because it has historically produced asymmetrical agreements that benefit the rich industrial countries at the expense of the poor undeveloped countries. Towards the end of the book, Wilkinson (2014) outlines a few reforms to the WTO.

In the introduction to the book, Wilkinson (2014) begins by providing a summarised version of the argument. The rest of the book is organised into two parts. The first part (chapters 1, 2, and 3) focuses on the problems of the current multilateral trade governance system under the WTO. The first and second chapters are dedicated to describing the current multilateral system and the challenges revealed by outcomes of liberalization under WTO in the post Second World War period. In short, the section of the book argues that the WTO is defective because it does not serve the interests of all members equitably. In the second part of the book (chapters 4, 5 and 6), Wilkinson (2014) outlines recommendations for WTO to ensure that international trade results in equitable development for all members. This review follows the book’s outline followed by concluding and critical comments.

In chapter one, Wilkinson argues that the current international trade governance has overseen the deterioration of conditions in poor sections of the world. In addition to this, the chapter argues that multilateral trade system has only undergone a patchwork of reforms that have successively entrenched the dysfunctional status quo since it was established. The chapter traces the history of the multilateral trade system from the end of the World War II. According to Wilkinson (2014), that post war multilateral trade systems are based on and often entrench practices and principles from US. As a result, the system was biased in a way that favoured US and other industrial economies. For instance, GATT facilitated the liberalization of trade in the manufacturing sectors where the industrialised economies had an advantage but did not guarantee the same to the agriculture and textile sectors where the developing and least developed countries could have benefitted. While a number of reforms have been implemented under GATT and WTO systems, Wilkinson (2014) contends that they have tended to create or expand trade openings in areas that benefit industrial economies while maintain or closing other trade openings in areas that benefit the poorest countries.

Chapter two explores why the current multilateral trade system is the way it is described in chapter one. According to Wilkinson (2014), the international trade governance system is broken because it pits countries of unequal economic and technical capabilities in a competitive environment modelled after the US system. Due to the principle of reciprocity, trade negotiations conducted under the WTO are competitive in nature. Like in any other competition, these negotiations would be fair if they were on a level playing field and the competitors had similar technical and economic capabilities (Garsia, 2017). However, this is not the case. First, the economic significance of the different countries to international trade varies among WTO members. Representation is another factor that limits the ability of some countries to contribute to the WTO negotiations. This is evidenced by the notable differences in the number of people per country assigned to handle WTO matters. In light of these, WTO negotiations almost always result in asymmetrical agreements favouring the industrial economies. In chapter three, Wilkinson posits that the world has failed to realize the dysfunction in the WTO due to how multilateral trade discourses are held. The debate has been historically charged, highly contentious and involve blame trading. In addition, multilateral trade debates tend to treat the WTO as the instrument of free trade despite the flaws in the system.

Having established the problems challenging the current multilateral trade system and why they have persisted so long in part one, part two of the book focuses on proposed solutions. In chapter four, the author posits that the international trade fraternity needs to rethink both the WTO and how the organization is perceived. The book proposes radical reforms that align the trade governance structure with the organization’s purpose and ensure that it delivers equitable value to member states. Like many multilateral engagements, reforming the WTO is a challenging process because of the multiplicity of members (). Wilkinson (2014) argues that the enormity of the challenge should not be cause to limit ambitiousness. Meaningful reforms should consider creating policies that are particularly intended to benefit the poorest nations.

Chapter five of the book describes Wilkinson’s vision of what the WTO should be. According to him, the WTO should focus on planning and strategizing to realize wider and socially progressive goals worldwide. In addition, the organization should facilitate the equitable flow of trade information and establish a fund for stimulating economic growth in economically deprived parts of the world. Wilkinson (2014) proposes that the WTO should be reorganized to function for all members by eliminating the competitive system of negotiations that is currently used at WTO. In chapter six, the book outlines proposals for how the WTO can transform from what it is today to what it should be. Wilkinson (2014) proposes that reforming the WTO requires compromise and willingness among the members. Next, the reform process requires an initiator. According to Wilkinson (2014) this role is best played by an influential member state that is willing to start and press for radical reforms needed.

In conclusion, Wilkinson (2014) argues that the WTO system is broken. He admits that the WTO is crucial for smooth international trade. However, the WTO favours the industrialised economies at the expense of poor nations as it is currently constituted. This suggests that the organisation has failed to achieve its purpose to facilitate mutually beneficial trade relations among members. According to the book, the primary reason why the WTO is broken is that it involves competitive negotiations among unequal countries. As a result, asymmetrical agreements are always bound to come out of WTO negotiations as it is currently constituted. In light of this, the book recommends a few reforms that will enable the WTO to achieve its purpose. Among these recommendations includes a proposal to create a fund to stimulate development in the poorest parts of the world. This carefully written book makes a strong case for radical WTO reforms. Nonetheless, a few critical comments are offered below.

Wilkinson (2014) makes a strong argument of why the WTO has failed to achieve its purpose. Throughout the paper, facts are clearly separated from subjective interpretations and opinions. Wilkinson achieves this by citing authoritative literature and statistical data from credible sources to support arguments. In addition, the book makes expert use of key historical events to describe the evolution of the current multilateral trade system and the problems that have bedevilled it along the way. The study’s reliance on peer reviewed findings and credible statistical data enhances the credibility of the argument. One of the main shortcomings of the book is that it does not offer substantive proof that the WTO has historically worked to the disadvantage of the poor member states. While Wilkinson (2014) asserts it, he does not offer evidence that poor nations have not benefited from WTO negotiations or that the trade system has further widened the gap between the rich and poor nations. Offering such proof would make the argument more plausible and reinforce Wilkinson’s call for radical reforms.

The book is a provocative piece of literature that anyone who is interested in international trade and affairs in general may find interesting. A few groups of people may find this book a particularly worthwhile reading. First, postgraduate level students in fields related to international studies would benefit from this reading. This is particularly more so for students studying multilateral trade. The book does not purport to offer a comprehensive set of solutions. Rather, it highlights a problem and initiates a debate on how to address it. Subsequently, international trade stakeholders including the WTO, member countries, academia, and multinational organizations may find the insights and questions raised in this book offered worth reading.

References

Garsia, F. (2017). Globalization, Inequality & International Law. Religions.

Walker, A. (2011). The WTO has failed developing nations. Retrieved October 21, 2021, from The Guardian: https://www.theguardian.com/global-development/poverty-matters/2011/nov/14/wto-fails-developing-countries

Wilkinson, R. (2014). What’s Wrong with the WTO and How to Fix It. John Wiley & Sons.

Wise, P. G. (2009). Trade our Way Out of the Financial Crisis: The Need for WTO Reform. Americas Policy Brief.

WTO. (1994). Agreement Establishing the World Trade Organization. Geneva: WTO.