After World War Two, the United States of America invited their allies to form an international trading group. Driven largely by the ideals of certain economists (notably John Maynard Keynes), between 1945 and 1947 the General Agreement on Tariffs and Trade (GATT) was negotiated. For fifty years, this agreement dominated the way in which trade was organised between countries.
By the 1980s it was apparent that the pace of globalisation demanded that world economies look at trade in a different way. The eighth GATT round, which is now known as the “Uruguay Round” (after the country in which the initial meeting was held), was started in September 1986. It was not until April 15th 1994, eighty seven months later, that all one hundred and twenty three countries were able to come to a consensus. This agreement ultimately resulted in the formation of the World Trade Organisation (the WTO), which officially came into existence on January 1st, 1995.
The WTO is responsible for the negotiation and implementation of international trade agreements, and also to provide a forum in which disputes can be resolved. The WTO works closely with the World Bank and the International Monetary Fund to try and ensure that international trade is fair, open, and enforced by binding international agreements.
Although the WTO officially works on a “one country, one vote” system, this procedure has been criticised by many around the world. In reality, decisions tend to be made by consensus. The process through which this consensus is found is largely invisible; there are many meeting behind closed doors, and larger economies tend to carry the most weight. As a result, smaller countries have found that in many decisions they are largely without a voice at all. The WTO has also been criticised for making decisions which are incredibly complicated, and which result in wealth trending away from smaller countries towards larger ones.
Despite this, the WTO has been able to finish some extraordinary deals. The Agreement on Agriculture, while highly contentious, came into effect on January 1st 1995. This agreement encourages the removal of tariffs and other trade barriers, many of which act as an enormous barrier to the growth of developing countries. While this process has been anything but smooth, it is also true that tariffs have been reduced, and export subsidies have also been cut. (It is worth noting that the EU still spends around US$380 billion each year protecting their farmers – this represents more than half of the annual “support” budget, and it is paid to 1% of producers in the EU. Clearly more needs to be done in this area.)
Today, the WTO is negotiating the Doha Round. Started in November 2001, this agreement could help to lift billions of people out of poverty. Although negotiations were officially suspended on July 24th 2006, on February 7th 2007 Pascal Lamy (the Director General of the WTO) said that “political conditions are now more favourable for the conclusion of the round than they have been for a long time”, and by May 9th he suggested that it was still possible for an agreement to be found by the end of 2007. Finding a way for one hundred and fifty countries (the current number of members – Vietnam joined in January 2007) to agree is challenging, but the importance of the goal makes the process worthwhile. As it turns out, there was no agreement by the end of 2007. However, there has certainly been an improvement in the international approach to these negotiations, and so there is some hope that progress will be made in the near future.
