Critical Review of Working of WTO

Inequality Within the Structure of WTO

There exists an extreme inequality and it is this inequality only that drives the outcomes. The contents of the agreements are determined by the leverage that the developed nations can exert over the developing ones. The developing nations are bribed to agree and even threatened to be penalized on non-compliance. Thus the basic agreements and subsequent amendments are all biased and stacked in favor of developed nations.

A single undertaking framework was adopted under the Uruguay Round which required every nation to accept all the Uruguay Round agreements irrespective of tehir level of economic development.

TRIPs agreement requires all the countries to adhere to the same IPR standards which have already been achieved in the developed nations. Thus the effective burden of adjustments virtually falls entirely on the developing nations. This burden of adjustment is a hefty one with no commensurate benefits.

Another major inequality is the dispute settlement mechanism adopted by WTO. which is clearly biased in the favor of developed countries and is against poor and developing countries.

Trade Related Intellectual Property Rights.

The protection of IPR has been made even more stringent in the Uruguay Round of negotiations. This has been done to protect the MNCs and developed countries as these are highly weighted in favor of existing patent holders. This has been referred to as anti-competition and anti-liberalization and goes against the spirit of opening up the world economy. It works toward the legalizing of monopoly for MNCs.

How is it against India?

  1. The introduction of the product patents on January 1, 2005 in order to meet the obligations under the TRIPs agreement are going to hinder the growth of Indian Pharma players in several ways. They are bound to face the heat despite several steps taken by the government as they will not be allowed to produce drugs patented by the MNCs. These MNCs can now hike the prices of such drugs thus making them go out of reach for the common people.
  2. Extension of IPR to Agriculture(via patenting of Plant Varieties). This would transfer all the gains to the multinational companies as they are the ones holding all the patents  for almost all the new varieties and these now belong to these MNCs by virtue of their massive financial resources. Control over seed production implies the upper hand over the food supply and this would mean Indian Food Security will be at the mercy of the MNCs.
  3. TRIPs  has extended patents to micro-organisms sector as well. Drastic affects on Pharma sector, Agricultural and biotechnological sector.

Trade Related Investment Measures.

Developed countries achieved almost everything they wanted through TRIMs . In order to make this agreement balanced from the point of view of the developing nations, it was required to introduce rules for controlling restrictive business practices of foreign investors. TRIMs remain silent on this vital issue.

Competition in Services.

There is a huge difference between the development of services between the developed and developing countries. The services have been included in the scope of trade primarily on the insistence of the developed nations who have been arguing that opening up of trade in services is important for globalisation.

India might be benefittd accounting to its large reservoir of experienced proffessionals like doctors, engineers, software experts etc but the movement of natural persons have been restricted by several developed countries.

Trade and Non-Tariff Barriers by Developed Countries.

  • 13 different kinds of non-tariff barriers put up by 16 countries.
  • MFA by EU and USA major barrier in exporting textile and clothing.
  • Trade and  non-tariff barriers following the setting up of WTO have negatively affected India.

Agreement on Agriculture.

  1. It has made various trade distorting practices of developed countries legitimate in their favour.
  2. It restricts the countries not using subsidies in 1986-88 period from usintroducing any new subsidies.
  3. 40-50% of the support provided to farmers in USA and EU is through Green box and Blue box subsidies and are thus exempted from reduction commitments.

Trespassing Sovereignty of Nation-State.

  • WTO granted powers to enact international laws on matters which were earlier under the national jurisdiction.
  • WTO agreements annexes a vast domain of decision making under its control.
  • Developed countries trying to bring other aspects like social causes, labor sevices and issues of child labor, environment protection etc under the new international control regime.

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