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What the WTO holds in
store
Reviewed by Kamal
Siddiqi
As much of the developing world takes up the issue of opposing
the World Trade Organization, there are many in Pakistan who
have been swept up in the anti-WTO sentiment that prevails. At
the same time, there is a much larger number in the country
who are having sleepless nights on account of the free trade
regime that will come into force in parts of the world by next
year. Many Pakistani businessmen are still trying to
understand all what WTO stands for and what this will mean
once the WTO-invoked international trading system comes into
force.
Even the Pakistan government is trying to look ahead and
seriously chalk out a plan of action as the WTO regime will
have a direct impact on the balance of trade in the coming few
years.
The common thread in all these is the predicament that they
face. This is the absence of literature by an independent
expert from the developing world written in a clear and
concise manner that explains in some detail this new global
trading system, its history as well as what it stands for. Now
we have a book that seems to fill that vacuum and explains to
us the intricacies of the WTO in a somewhat clear manner.
Surendra Bhandari, a lecturer at a university in Nepal as well
as the director of the Kathmandu-based Interdisciplinary Study
Centre, has explored the new world trading system. But his
view is one of an academic. He writes in detail about the WTO
as a catalyst to a rule based international trading system
bringing global peace, prosperity and proper equity
distribution.
Bhandari works on trying to expose and weed out, in his words,
the bane of protectionism, unilateralism and monopolization of
the international trade and markets. The book explores the
controversy behind the conclusion of the WTO in its historical
perspective. It is primarily written from the developing
countries' point of view, it takes into account other economic
events like the birth of UNCTAD, the Generalized System of
Preferences, and the growing importance of developing
countries in world trade.
Bhandari argues that the major challenge posed to developing
countries and least developing countries (LDC's) is no more
the extraneous one. The major problem is caused by their own
structure and system of government and administration. In
this, the author recognizes the WTO as "both opportunity and
risk" to developing countries, particularly to the LDC's.
The contents of this book include the basic information about
the WTO, the dispute settlement mechanism of the WTO and its
reform from the GATT doctrine, the question of harmonization
or diversity, developing countries and their role in the WTO
and the Singapore ministerial conference.
The book is very contemporary and relevant in the present
scenario of liberalization and globalization. The WTO, with
its 132 members, is the strongest multilateral trading
organization ever to have taken shape. It has taken almost 50
years for such an organization to have been born, after the
International Trade Organization, the progenitor of the GATT,
failed to take off in 1947. Interestingly, Pakistan was one of
the signatories to the ITO.
What is significant is that the ITO had strong support from
developing countries, in contrast to the WTO, which has been
negotiated mainly at the instance of developed countries under
the aegis of GATT at its Uruguay round of multilateral trade
negotiations.
Recently, the WTO round of talks that opened in Cancun created
some fireworks as developing nations took on the might of the
developed world, particularly the European Union, in a bid to
level the playing field for international trade.
The previous round of talks at Doha in 2001 have been termed
the development round, as these talks addressed some of the
major trading obstacles placed by the rich countries in
trading with the poor and developing countries. This theme was
expected to be pursued at Cancun.
The conventional wisdom that preceded this round of talks was
that if the rich countries are able to level the trading field
for their poor trading partners, the resulting benefit to the
poor countries would mean a reduction in their dependence on
aid that is doled out to them each year.
This is what Bhandari also argues in his book. However, the
major point of contention in the Cancun round of talks was the
subsidies given by the European Union and the United States to
its farmers and the high tariff walls that have been set up to
protect their agricultural sector.
The World Bank has estimated that some $300 billion a year is
spent by the US and the EU in subsidizing their farmers. The
other issues that need to be tackled include the resistance of
the developed world to value added items as these seem to
attract higher tariffs than more basic ones.
This is a disincentive for developing countries wishing to
move up in the production chain. The absence of financing for
developing countries has to be looked into as this gives
producers in developed countries an unfair advantage.
This is the imperfect world that Bhandari says will change
once the WTO comes into force. He illustrates in his book by
way of examples and references the objectives and agreements
that are in place to make this happen. In the chapter on
developing countries and globalization, Bhandari says that
globalization is conceptualized as a world society, which
procures two dimensional change in international relations.
They are, one, institutionalization of trans-border relations
and two diffusion of actors. The world society requires a new
culture, a new political vision and new institutions based on
globalization.
Throughout his book, the author remains optimistic of the
effects of WTO and argues that the problem lies not in the
idea but in the way it is being implemented. He points out
that the WTO is considered as a significant step drowning out
the developing countries from the paradoxical rapture of "no
rule situation" on access to the international market,
ensuring their comparative advantages and better competitive
environment.
In this regard, the dispute resolution system is one of the
important efforts to face up to the intricate problems
associated with interdependent international economic
activity.
In conclusion, it can be said that the book is a good read for
anyone wanting to better understand the workings of the WTO
and the trade regime, along with the history of this
arrangement and how it was brought about. It can also serve as
a ready reference to interested quarters in Pakistan and
elsewhere considering the amount of information that the
author has systematically given in the publication.
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Pakissan.com;
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