WTO: The Catch-22
The WTO is a democratic organization. What happens though when member countries
convene a meeting of the WTO is rich developed countries winning out over less
developed countries. Moreover, WTO rules are written by and for corporations
with inside access to the negotiations. The US Trade Representatives, for
example, gets heavy input for negotiations from 17 “Industry Sector Advisory
Committees”. Simple requests by citizens for information are denied, and
proceedings are held in secret. Apart from this, the WTO, though strongly
committed to trade liberalization, does not implement its philosophy
evenhandedly, in particular free trade arguments are employed to open up the
markets of developing countries while developed countries retain all sorts of
protectionist measures.
Free trade is staunchly founded on mainstream trade economics—particularly
comparative advantage theory—which implies that free trade is an optimal
system, significantly, it is even good for poor developing countries, hence,
the WTO’s 5th principle is about development. But some people in
development studies and development economics doubt if free trade and
deregulation are in fact good for developing countries or the best paradigm for
development. In fact it is often felt that free trade is actually bad in a
variety of ways for poorer countries and beneficial mainly to richer ones. This
observation supposes serious problems in the WTO’s philosophy and mutually
contradictory principles.
Free Trade Sounds Great, But is It?
Nearly all industrial powers in the past had a policy of high tariffs, and
only recently have lifted their import restrictions. This protected their
infant industries.
In an open market, the domestic products of developing countries will have
to compete with the established products of big foreign companies. It is a
well-observed fact that consumers prefer imported ones, especially when imports
would cost about the same or even cheaper than those locally made, since these
foreign manufacturers do not have startup costs and have the most efficient
production and marketing methods in the world.
On the other hand, if there was a tariff on imported products, the consumers
would be encouraged to buy local products, since the quality local products
would be cheaper than the imported ones. Anyone who insists on buying imported
would be helping the government by giving them additional tariff taxes, and the
local industries would be proving jobs to thousands.
In the Philippines, sugar
farmers in Negros export sugar to Hershey’s in America, and then it is exported
back to us in the form of chocolate bars. The Americans get more of the work;
the Americans get most of the profit. Not us,
Imagine, if an entrepreneur was to venture into the chocolate manufacturing
business, how could he hope to compete with a company such as Hershey?
Multinationals—manufacturing “offshore”, selling all over the world and with
incomes so huge in fact it is greater than that of many third world countries
(Citibank, for instance, has assets much greater than the Philippines entire
GDP)—provide much needed employment. But overall, multinational corporations
probably end up hurting, not, helping the economy of poor countries such as the
Philippines.
They provide jobs, but the profits they generate go right back to their
corporate offices, not to local entrepreneurs.
An export-oriented, import-dependent
economic set-up costs jobs and stunts economic growth.