The WTO - a force for good

It troubles me that the perception of the World Trade Organization has been stained by the left, and that no real analysis of what actually happens in the WTO occurs anymore.

This struck me hardest the other day when I was searching for videos about the WTO on YouTube. The only thing I could find were videos of rioters, numerous videos from anti-trade (and anti-capitalist) non-government organisation, Oxfam and even a video of a colleague whom I met when I studied briefly at the World Trade Institute in Bern.

All videos completely misrepresented the operation and function of the WTO. In doing so, an anti-free trade, anti-capitalist agenda was pushed. All commentators sadly got it completely wrong.

It’s now time to set the record straight and separate fact from fiction.

Fact: the WTO is an organisation based on the consensus of its members in which each individual nation has equal voting rights.

Any agreement struck by the members will only become enforceable once the members of the WTO vote on it. Under the General Agreement on Trade and Tariffs (GATT) Article 9:1 provides for a system of consensus voting. Consensus voting requires that no one member votes against the proposed decision. If only one member objects, the policy or agreement can be blocked (though abstentions don’t stop this process). This accords tremendous power to individual nations, who are singly able to block the motion by their own vote against it.

While some circumstances require unanimous positive votes, such as amending already executed agreements (under GATT Article 10), most situations require consensus, which means that no one opposes it.

The only exception to this voting mechanism is in the case of the adoption of reports by the WTO’s own Panel and Appellate Body. In those circumstances, reverse consensus is required, that is, a report is deemed to be adopted unless there is a consensus against adopting the report. While formerly consensus voting applied to adoption of reports, it was scrapped when the Dispute Settlement Understanding was executed. This eliminated a huge problem that once plagued the effective operation of the dispute settlement arm of the WTO whereby losing parties of a dispute could simply vote against the adoption of the report to avoid its application.

This system of voting accords much more power to individual nations than any other international organisation.

Unlike the United Nations that lefties so adore, the WTO has no majority voting system, and no Security Council which creates a membership hierarchy. Each of the 157 WTO member states (correct as at July 2007) has one vote, and one vote only. It is for this reason that flexible coalitions operate so effectively within the WTO to influence policy and shape decision-making.

This is best exemplified by the efforts of the G90 group of developing countries in demanding reform to agricultural subsidies in developed economies. Without the pressure exerted by the G90, the Agreement on Agriculture would never have been executed in the Uruguay round, and Agriculture would still be beyond the realm of the WTO. The Agreement on Agriculture forced countries to turn their quantitative restrictions into tariffs, and set the stage for the first reductions in tariffs and limitations on subsidies.

Fact: the WTO affords member states policy space to pursue their own non-trade objectives.