Trium Global Executive MBA Module 1

Business in the Global Political Economy Course
Business and World Trade

Essay Title
Is the WTO acting irresponsibly by not permitting the use of “non-traditional” trade measures to assist in the protection of the environment and public health, enforcement of labor standards and other social objectives?


Total Word Count ( excluding charts , tables and references)

More than 400 disputes have been brought to WTO since its inception. principles and objectives around which it was formed to address such issues. WTO has a very stringent dispute settlement system (Sampson. public health. hence this essay will discuss the thesis by . binding and rule based trading framework to facilitate the world trade with a much strengthened dispute settlement mechanism. The main objective was to provide a permanent. the scope of trade was extended to cover the services and Intellectual Property Rights. Also. wildlife etc.1 Introduction During a rather extended discussion about the Shrimp – Turtle issue in our “Business and World Trade” class at LSE last month. one of my fellow students commented. Although his comment was made in a lighter note but apparently he was rather confused on why this issue was being discussed in the “WTO” class? The World Trade Organization (WTO) was formed in 1995 as an evolution of The General Agreement on Tariffs and Trade (GATT) (Hoekman. 2002). enforcement of fair labor standards. some of these cases are pertaining to what we call as “Non. Introduction and Overview. 2009) and that is what makes it unique as compared to some other international organizations. The whole class burst into a roar of laughter and that is where the discussion ended. The shrimp – turtle case mentioned above is one such case which was brought to the WTO and the ruling in this and some other such cases appeared that WTO has acted irresponsibly but that has not been the case. it’s difficult to express all the thoughts within the given limitation of the size of the essay. “It’s amazing that there is so much of discussion and noise about saving the turtles and no one is even thinking of saving the poor shrimps”. Actually WTO has acted responsibly and within its framework.traditional” trade measures like environment protection. However. legal. Due to the very vast and varied nature of the topic.

g. WTO was never ready to accept the disputes of this nature which started flowing in its direction mainly due to the increased understanding of the member nations of its dispute settlement system. embedded within the sections. The WTO’s agreements and rules does support the cause of environment protection leading to sustainable development . and how those are applied or not applied in addressing the non-traditional trade measures. As discussed above. which means that the development in trade must ensure that we are not depriving the future generations of the resources which we use today. one of the key improvements over GATT and also the reason of WTO’s success is its very strengthened and effective dispute settlement system. the boundaries of its framework and rules. The essay will then conclude by reaffirming WTO’s changing role and the go forward path with an understanding that cropping up of issues of this kind will only increase in future. The environment protection has not been an agenda of many governments even in the late 80s and was definitely not a main consideration in the Uruguay round. The WTO’s agreements permit members to take measures to protect not only the environment but also public health. The essay will also include. Tuna and asbestos packaging landing in WTO’s lap. elements of discussion on why the argument which suggests that WTO has acted irresponsibly to handle non-traditional trade measures is invalid. WTO is a trade organization and its primary objective is to promote world trade. The United Nations (UN) through its various committees. programmes and agencies supposedly addresses some of these specific causes E. Out of some 400 odd dispute cases reported to the WTO since its inception and with WTO through its enforceable rules has been able to settle most of the 400 odd dispute cases reported announcing a verdict which is binding. The success resulted in many “Nontraditional” issues like the Shrimp – turtle. WTO and not WTSDO First and the foremost. United Nations Environment .2 evaluating the objectives of the WTO. animal health and plant health. conferences.

In fact there is a United Nations Commission on Sustainable development (CSD) to address this very issue of sustainable development. Many have missed the importance of the Appellate Body’s ruling on this case. Hence. This is why the critics of the globalization argue the role of WTO being autocratic and unidirectional towards promoting trade only and that other objectives like environment and sustainable development take a back seat. Let’s examine the shrimp – turtle case. on the contrary. Trade and Environment WTO has a dispute settlement system which even limits national sovereignty. the main growth strategy for these nations is based on their effectiveness to export to richer nations. we are witnessing a trend of World Trade Organization (WTO) metamorphosing into World Trade and Sustainable Development Organization (WTSDO) (Sampson. International Labor Organization (ILO) for international labor standards etc. The following text is from the WTO website. 2005). So any hindrance to this strategy has encouraged them to use the WTO and its effective dispute settlement system and they have been fairly successful in getting their way. “It also said measures to protect sea . and with twothirds members of the WTO now being developing countries. However.3 Programme (UNEP) for environment protection. India etc versus US: ‘shrimp-turtle’). Almost all of the WTO member states are a member of the UN too. (ENVIRONMENT: DISPUTES 8. WTO also has a role to determine if its member states are not using environment protection as a disguise to introduce protectionism. But the problem is that none of the international organizations have a dispute settlement system like the WTO and that is the primary reason of WTO getting bombarded with such issues. WTO. has always reaffirmed its intentions and its evolving understanding of the relationship between trade and sustainable development right from its inception. The Preamble of WTO agreements states this understanding and its evolving.

provided certain criteria such as non-discrimination were met. The US. But the panel ruled that only export restrictions.4 turtles would be legitimate under GATT Article 20 (i. It provided some countries like the Caribbean — technical and financial assistance and longer transition periods for their fishermen to start using the turtle-excluder devices but didn’t offer the same to the four complainant Asian countries (India. where China had put trade measures. XX) which deals with various exceptions to the WTO’s trade rules. Malaysia. China had cited environmental concerns arising from the production of these materials as a reason to restrict their exports. magnesium. WTO rules allow countries to restrict trade to protect the environment. Pakistan and Thailand). with no measures to limit domestic industries from using the materials. it will establish WTO’s efforts on striking a balance between trade and environment and to check any barriers which the states may impose to protectionism under the . fluorspar. coke. 2011). silicon carbide. but upon careful examination. Examining a more recent case. The steel and chemical firms are main consumers of these items. silicon metal. tariffs and minimum export prices on the export of bauxite. which included export quotas . not only because it violated the “like product” principle of WTO but also because it discriminated between WTO members.e. European Union and Mexico had filed a case opposing the measures and the WTO ruling established that China's restrictions on exports of the nine industrial raw materials violate international trade rule. yellow phosphorous and zinc. manganese. Many will argue that the above resolutions do not help the cause of endangered species or environment protection and that these reflect WTO’s lack of responsibility.” But the US still lost the shrimp – turtle case. don't effectively protect the environment (Dalton.

On the contrary. WTO has remained amongst such protests and disputes ever since.The way forward The expectation and criticism of WTO’s role in some of these non-traditional issues as argued above is un-reasonable and this is like making International Labor Organization (ILO) responsible for vaccination and health of children which in essence is World Health Organization (WHO)’s responsibility just because ILO. (THE WTO: SECRETARIAT AND BUDGET. There are about 625 employees who work for the secretariat. 2001) by environmentalists and activists dressed as turtles again questioning the shrimp – turtle case verdict. The criticism which flew towards WTO and became specifically visible due to the mass protests in Seattle during a ministerial meeting – nicknamed “teargas ministerial” (Rodrik. the WTO budget is less than the travel budget of International Monetary fund (IMF) (Sampson. 2000). Although the cited fact about the size was written to point out WTO’s limited possibilities of partcipiation in joint activities with some of the other international organizations but that this also suggests that WTO was not designed to be an environment protection or human rights protection body. supposedly. considering the above facts on its resources. WTO 2. Size does matter The consolidated budget of WTO for the year 2012 is approximately USD 209M. WTO as been doing a tremendous job in conducting its business and this further substantiates the argument made in the previous sections. deals with the issue of child labor. But the role and the face of WTO have been changing ever since and in fact there are gradual changes already being .5 disguise of environment protection or sustainable development while discriminating with their domestic polices or other “favorable” countries. funded by contributions from its members. Just to provide a context. 2012). WTO Secretariat budget for 2012.0 .

This is being noticed more prominently under the current Director General. Pascal Lamy. 2007) establishes this fact : “Sustainable development should be the cornerstone of our approach to globalization and to the global governance architecture that we create. WTO will continue evolving into WTO 2. with the changing needs of the world trade and ever growing need for multilateralism based on its past success.” Undoubtedly. The key is that this doesn’t necessarily need to come by changing the rules of WTO.6 made in the rules to accommodate the subtle greening of the WTO (Weinstein & Charnovitz. which will need consensus of 153 countries.0 with trade. environment and other elements of sustainable development embedded in its DNA but the core mandate still remaining as WTO being a pivotal body to promote trade and continue to check if sustainable development agenda or environment protection rules set up by other specific international organizations are not being used as a disguised protectionism. the volume of world trade has resumed its northward journey. As argued in various sections. Lamy has been vocal about the “reforms” and WTO’s support to sustainable development. Excerpt from his speech at UNEP Global Ministerial Environment Forum in Nairobi on 5 February 2007 (Lamy. it is to deliver a message: the WTO stands ready to do its part.0 is inevitable. Conclusion As the world recovers from the economic downturn. 2001). WTO’s contribution in refueling this cannot be undermined. In the process they should manage the issues of the member states which get drifted towards WTO currently. but should be achieved by creating awareness about WTO’s role and its boundaries on one side and by empowering other international organizations to work within their specific areas and setting their own rules on the other. But there is a need to make sure that the success doesn’t become its own enemy. WTO has evolved into an organization with a broader agenda over the past 17 years which not . If I have come to this forum. WTO 2.

and the Future” (Esty. As Pascal Lamy summed up in his speech at Yale University in October 2007 (Pascal Lamy's speech at the Yale University on 24 October 2007. noting how trade and environment discussion has travelled since those days. The journey is still on and it is able to find its own way. 2007) calling it as “The Greening of the WTO has started” and as a tribute to Yale University’s professor Daniel Esty and his book “Greening the GATT: Trade. 1994). Environment. .7 only limits itself to managing the nuances of traditional trade but has also adapted to manage some of the “nontraditional” trade situations.

Krueger.. 2012. from World Trade Organization: http://www. Environment. M. The Globalization Paradox: Why Global Markets. (n. Oxford: Oxford University Press. WTO Secretariat budget for 2012. (2005). (2000). (n. Sampson. Tokyo. D. (2002). Introduction and Overview. (2007. and the WTO: A Handbook (World Bank Trade and Development Series) ( July 6). D. October 24). (2001). O. Hoekman.wsj. 3-4). P. Sampson. In A. M. 257258).htm Weinstein. Retrieved October 30. S.htm Esty. Washington DC: World Bank Publications.html?mod=wsj_valettop_email ENVIRONMENT: DISPUTES 8. B. November / December).htm Lamy. Retrieved October 30.wto. Pascal Lamy's speech at the Yale University on 24 October 2007. P. United Nations University Press. The WTO: Functions and Basic Principles. Greening the GATT: Trade. Pascal Lamy's address to to the UNEP Global Ministerial Environment Forum in Nairobi on 5 February 2007. The WTO and sustainable development. Retrieved October 23. from World Trade Organization website: http://www. Trade.). 2012. 2012. Retrieved October 30. THE WTO: SECRETARIAT AND BUDGET. & Charnovitz. G. Japan: United Nations University Press. from World Trade Organization: 356-lMyQjAxMTAyMDIwMDEyNDAyWj. THE WTO: SECRETARIAT AND BUDGET. Beijing Sparks Ire of WTO Over Curbs. G.d. (2011.). and Democracy Can't Coexist. Sampson. M. P. WTO and Global Governance: Future Directions (pp. P. Sampson. 2012.wto.d. from Foreign Affairs: http://www. February 5). Retrieved October 24. (2001. In Development. P. Sampson. (2012). Lamy.htm Rodrik. (1994).org/english/news_e/sppl_e/sppl79_e. from World Trade Organization website: http://www. P. M. In G. The WTO as an International Organization (pp.8 References Dalton. Greater Coherence in Global Economic Policymaking: A WTO Perspective. Chicago: University Of Chicago Press. from The Wall Street Journal: http://online. Retrieved October 24. Institute for International Economics. India etc versus US: ‘shrimp-turtle’. 42-49). (2009). (2007. 2012. and the Future. 2012. G. The Greening of the WTO. . P. C.wto.foreignaffairs.