Globalisation and the WTO Guyana and the wider world by Dr Clive Thomas Stabroek News December 17, 2000 The effort The purpose of this series is to raise the level of our understanding and hence discourse about Guyana's future on matters related to globalisation. Sometimes it may require a little extra effort to follow the discussion. I believe, however, it is worth it to do so, since what is raised here is not beyond the scope of the average reader. Last week's article is an example of one that required a little extra effort. In that article I summarized the assumptions that lie behind the mathematical proof economists use to show that global free trade would maximize global welfare. As I showed, this maximization is nothing more nor less than the formal statement: that as the world moves closer towards free trade everyone will be better off. When we arrive at the free trade position, no one person in the world could be made better off, without at the same time making at least one other person worse off. I should point out that this theorem has a broader application in economics than trade theory. It is what is called the "fundamental theorem" of standard economic analysis. It is the basis from which policies promoting the new world trade order, de-regulation, private sector led growth, a minimal role for governments, liberalisation and market-led development are all rationalized. The purpose of indicating the assumptions behind this theorem, is to let the average person be aware of the extremely restricted economic basis on which the case for global free trade rests. WTO-scope The World Trade Organisation (WTO), is the umbrella institution under which the new liberal world trade order is expected to evolve. Everyone knows of the WTO, but few of us realize the awesome scope and authority of this organisation, which is still in its very early infancy at six years old. The WTO came out of the Uruguay Round of trade negotiations that ended in 1994. Popular perception is that it is an agreement confined to tariffs and quotas in world trade. In truth, however, it is far more than this. It covers in addition to tariffs and quotas, several other areas of global activity, five of which I briefly indicate below. Separate agreements The first of these is that there are about a score of separate agreements within the WTO arrangements. These relate to such diverse topics as trade and environment; trade in agriculture, trade in textiles and clothing; dumping; subsidies; trade-related investment measures (TRIMS); state-trading; and, the formation of free trade areas and customs unions. Administrative matters related to trade are also covered. For example, customs valuation, rules of origin, and pre-shipment inspection of traded goods. Services Secondly, the WTO arrangements represent, for the first time in history, a global trade agreement that includes services. As readers are aware from earlier articles in the series, global trade in services now exceeds, and continues to grow faster than, trade in goods. This is one of the more striking features of globalisation. The agreement on trade in services is referred to as GATS (the General Agreement on Trade in Services). Intellectual property The exceptional growth of global trade in services reflects the growing importance of technology in the production system. The WTO agreement recognizes this and covers trade-related intellectual property rights (TRIPS). These trade-related intellectual property rights include a wide range of concerns, such as copyrights, patents, trademarks, industrial design, geographical indication, and undisclosed information. Enforcement The authority of the WTO is also remarkable. For the first time in history a global trade agreement has a built-in mechanism for settling trade disputes, and better still, enforcing penalties to secure compliance with the terms of its settlement. It is difficult to overestimate the significance of this. While in the past countries ignored and broke trade agreements at their will, in the new dispensation this is no longer acceptable. Countries ignore their WTO obligations at their own peril. Surveillance The agreement also provides for the regular review of trade policy of member countries. This is reminiscent of the type of regular surveillance, if not as detailed, which the IMF exercises over countries payments and exchange rate systems. We in Guyana know only too well the consequences of this. Finally, there exists within the WTO arrangements, agreements which are not signed by all member countries. These are referred to as plurilateral agreements. They cover such areas as civil aircraft, government procurement, and dairy and bovine meat. Remarkable The short description given above reveals the remarkable developments that have occurred in global trade in a short period of time. As we saw, presently trade is not only subject to precise rules based on the goal of global free trade, but it has a judicial mechanism tied to it in order to ensure that it works. As we have also seen the WTO agreements have been extended into hitherto unchartered territory like trade in services, intellectual property rights, and trade-related investment measures. As things presently stand, we can say with certainty that the WTO constitutes the most remarkable architecture to govern global trade in history. The ultimate consideration in all this, however, is that the WTO is in its very early infancy. As we shall see next week, when it came into force it already had further agenda items for future discussion built-in to the agreement! Indeed, over the past few years a long list of other new agenda items have been added. If agreed to these would literally extend the scope of the WTO to cover almost every economic activity on earth, and for that matter in space as well. Follow the goings-on in Guyana in Guyana Today