Criticism of WTO Practices and Structures

Is the WTO Undemocratic?

This is one of the most common criticisms of the WTO:

‘A basic cause of the Seattle debacle was the non-transparent and undemocratic nature of the WTO, the blatant manipulation of the organization by the major powers and the refusal of many developing countries to continue to be on the receiving end.’1

But what does it mean for an organization to be democratic? Generally we think of democracy as simply being a system of government that includes popular elections. But this is not all. To demonstrate consider the example of ten person committee that needs to elect a chairman where each person has one vote. Imagine that one of these ten had the power to threaten the others to vote in the way he/she wanted. Now even though the system would be structurally democratic many people would not consider it ‘truly’ democratic. This is because in general our notion of democratic includes not just the structural notion but also that people are free to exercise their rights (as in free and democratic elections) and that the system leads to a tolerably fair outcome. In summary (following Ricupero - see Docs Page) I propose the following three principles as the basis for an institution such as the WTO to be considered democratic.

  1. Universal membership and accession mechanisms.
  2. Participatory and effective decision-making
  3. A fair sharing of the benefits of the system

How does the WTO match up?
1. (910) Despite complaints about WTO’s slowness admitting new members (China and others) WTO does have close to universal membership (144 member countries as of 30/01/2002) and open, fair accession mechanisms.
2. (810 for structural democracy, 610 for practical democracy) The structure of the WTO is admirably democratic (see Structure section here) not only in voting methods (all important decisions must be taken by consensus) but in having an open and reasonably fair rule system and dispute settlement procedure, hence the 810. However as in the example above though the WTO is democratic in structural terms in practical terms it is less so. In general it does seem that the rich developed countries have power control disproportionate to their numbers (if not to their wealth or power in the world). How much this is the fault of the WTO is a good question. Rich, powerful countries have almost invariably used their position to sustain and reinforce their position (often by exploiting the less powerful). The fact that this happens in the WTO is not necessarily the WTO’s fault (a good example being that rich countries are more likely to possess and be able to use the trade lawyers needed in cases before the DSB). Of course one could argue that the WTO allows a greater degree of power/exploitation etc to the rich countries than would otherwise be the case but this seems doubtful (or at least clearly unproven) and in fact it seems plausible that WTO would provide an enviroment where less powerful countries are actually less vulnerable to exploitation etc (e.g. Seattle ministerial conference failed to achieve anything in part because many LDCs were unhappy with what was happening and were able to block it). Thus overall the WTO does do a reasonable (though far from perfect) job of being democratic.
3. (410) This is the area in which the WTO is most noticeably failing and the reason why many are unhappy with it. This issue is going to be dealt both in the section below on Implementation and in the section on the WTO’s (free trade) philosophy (see here).

Unfair Implementation of WTO principles

A crucial issue in this debate is what we mean by fair. In general two interpretations seem to predominate:

  1. ‘Negative’ fairness: this means (potential) equal access for countries, equal status in trade disputes etc, i.e. no special treatment for anyone.
  2. ‘Positive’ fairness: actual equality between countries in negotiations, treatment etc. (Note this terminology is not suppose to indicate any preference but follows a distinction of Isaiah Berlin in reference to negative and positive forms of liberty) Thus ‘Negative’ fairness is more about the rules and ‘Positive’ fairness is more about what actually happens. For example while all countries are entitled to have a representative on the General Council of the WTO many poor countries cannot always afford adequate representation.2 Similarly while all countries in theory negotiate on the level in reality there is a large difference between a country that can afford a large team of negotiators and experts and a poor country that can afford only one person. In both these cases the WTO is ‘negatively’ fair but is not ‘positively’ fair. This is the case in general. The WTO is strongly committed to creating a level (free trade) playing field. WTO principles include ‘Trade without Discrimination’ and ‘Promoting Fair Competition’, and the WTO has rules to prevent unfair behaviour like dumping. If the WTO does explicitly favour any group it should only be poor and undeveloped countries that are being assisted. However there are several examples where the WTO (through design of policy or implementation or both) signally fails to even be ‘negatively’ fair and in fact favours a particular group (often the better off, developed countries). For example:

    • Agriculture - This is probably the most blatant violation of the WTO principles. WTO Agreement on Agriculture commits governments ‘to improve market access and reduce trade-distorting subsidies in agriculture’.3 However a combination of pressure when the agreement was written and manipulation since mean that the world market in agricultural commodities is not fair at all but is actually heavily slanted in favour of the rich northern countries. In particular while many poorer countries have liberalized and removed subsidies (sometimes with disastrous consequences) the US and the EU have not. For example in 1995 OECD countries spent $182 billion subsidising agriculture and a OECD report in 2000 put US, EU and Japan subsidy rates at $20,000 a farmer4. For details and a more substantial analysis see the relevant section of the CAFOD article on Food Security and the WTO (Available on site via documents page). Finally it is worth remarking that the AoA was actually supposed to be slanted towards worse off countries and to benefit them considerably. World commodity prices were supposed to rise and the EU and US proportion of the world market was supposed to drop thus benefiting Southern producers. Neither of these outcomes has been achieved and the benefits of the AoA seem dubious at best.
    • Multi-Fiber-Agreement (MFA) and the Agreement on Textiles and Clothing (ATC) - pre-WTO and from 1974-1994 clothing quotas were negotiated bilaterally and governed by the MFA. As is clear from the word quota the world of trade in clothing and textiles was most definitely not one of free trade. Given that it is often developing countries that wish to export textiles they were often the losers from this arrangement. The ATC is a transitional agreement running from 1994 to 2004 and is supposed to govern a changover period in which textiles and clothing are progressively incorporated into the GATT’s framework. In doing so it perpetuates (but to a lesser extent) the protectionist legacy of the MFA. (see documents page WTO section on textiles for more information).

One exasperated African negotiator told CAFOD, “On an average day there are 10 or 12 meetings, on different issues, all starting at the same time. It’s not workable. They know you are weak and you walk out frustrated. I’ve been attending meetings for four years, and it’s hard to write two lines about how my country has benefited.” When the pace of negotiation steps up, the imbalance grows. One NGO attending the Seattle ministerial meeting counted 594 representatives of the EU and its member states, while many developing countries had only one or two delegates.’ CAFOD - Rough Guide to the WTO. See Docs Page

Last Updated: 2003-Jan-31
Created: 2002-Jan-16
IP Policy

  1. M. Khor writing for corpwatch 9/11/2001, Source. A good summary of the criticisms is to be found on the FoE website here [return]
  2. ‘The large governments maintain permanent negotiators in Geneva, and fly in experts on particular issues from relevant ministries. Nearly half of the least-developed country members of the WTO have no representation in Geneva and those that do have only one or two people to cover the WTO, ILO, UNCTAD and other international bodies based there. They simply can’t keep up. [return]
  3. WTO (checked 05/02/2002) Source [return]
  4. $182 billion figure - FOE website. See here. OECD figure from OECD (2000) Agricultural Policies in OECD Countries, Paris. This document is on the web, to find search in Google. [return]