They have to care

They tend to be better employers. They tend to import modern production processes that add efficiency and safety to the old ways. They pay more attention to the environment. They often invest strongly in local communities. Their governance standards are usually high. And they tend to stick around, despite troubled times. They are seldom fly-by-night operators.

The wto's fountain of youth

In my view, we need to get back to what the WTO is for. While it will serve development, it is not primarily a development institution. Nor is it a redistributive mechanism to rebalance artificially the economic conditions of its members.

It is simply a means of pushing towards more open markets and keeping open markets open and competitive. That simple purpose is achieved by restraining governments from pursuing their worst instincts. That is the job of the WTO rules.

Where politicians would prefer to respond to narrow, vested interests, governments are required by the WTO to base their decisions on much wider interests. Those rights are principally the negotiated rights of all other WTO members – but also those of domestic consumers, taxpayers and other industries.

A pact with the devil, or…

That is the Faustian bargain if you like. But it is a bargain that, on the whole, has worked to everyone's benefit. It has its own checks and balances – including, of course, the dispute settlement procedure.

Above all, it is a bargain that gives the most powerful players reason to play by multilateral rules 0 and to restrict their room for executive and legislative action in the domestic arena in the trade field.

The only approach

For the most part, with a few slips here and there, those rules do exactly that.

That is why I firmly believe that unilateralism, bilateralism, regionalism and most of the other "isms" may all have their places. But they offer no durable, adequate or wise alternatives to ambitious global decision-making. Multilateralism is the only approach that offers that.

2. Look through the text again and pick out the key words and expressions

3. Make a summary of the text

4. Read the text to find out the answers to the following questions

1. According to the article, what is the main WTO’s merit?

2. Comment upon the arguments against the WTO.

3. Why were the GATT and the WTO necessary?

4. Comment upon the opinion that the WTO is failing to manage public relations and is strengthening the opposition.

5. Why is there a danger for the WTO to become a trade regulator?

Who is responsible for the WTO’s success in future?

Text 2. Who Needs the WTO?

This week’s events in Seattle make one wonder whether, through no fault of its own, the global trade body has ceased to be a force for good .

For five decades the world’s multilateral trade-liberalising machinery – known first as the General Agreement on tariffs and Trade (GATT) and recently as the World Trade Organization (WTO) – has, in all likelihood, done more to attack global poverty and advance living standards right across the planet than has any other man-made device. A bold claim? Definitely, and all the more so when you remember that the men who made and developed this device were politicians, many of whose works this century have subtracted from, rather than added to, the sum of human happiness. But such is the power of trade: both as a spur to innovation and as the surest way of spreading the fruits of economic growth worldwide. For anybody who supports liberal trade, the mere possibility that the WTO might now become a cause of economic retardation is deeply disturbing.

To say this is not to support the preposterous non-arguments with which the WTO has been assailed these days. The danger is not that globalization has gone too far (whatever that might mean), nor that expanding trade is impoverishing the third world, or workers in the rich countries, nor that the WTO has usurped the proper role of national governments, nor that trade wracks the environment, nor any of the rest of this rubbish: all these claims are either meaningless or demonstrably false. The problem is that the WTO is only a good thing to the extent that it succeeds in liberalizing, rather than blocking, trade – and that may soon be in doubt.

The WTO and its predecessor were in truth a pact made with the devil, or, to be more precise, with the doctrine of mercantilism. In economic logic, the case for free trade is the case for unilateral free trade. If you lower your trade barriers, the main benefits flow not to your trading partners, but to you. It is your consumers who get access to cheaper and better products, and your producers that are forced, through the competition, to become more productive and technologically advanced. In economic logic, that is, lowering trade barriers makes sense in much the same way that building a network of highways makes sense. And refusing to lower your own trade barriers unless your trading partners reciprocate by lowering theirs is just as senseless as refusing to invest in roads, education, or other public infrastructure until other countries promise to do the same.

This much has been well understood since Adam Smith. Why then was the GATT necessary? The thinking was that trade liberalization is politically demanding. It harms tightly focused vested interests, while spreading its benefits widely and, for that reason, thinly. If governments could liberalize in a coordinated way, exchanging “concessions” in the form of lower trade barriers, it would be easier to defeat the interests that oppose themselves to reform. Moreover, once trade barriers were lowered, a framework of international agreements would tether them down, making it easier to resist future demands to raise them again, in short, the GATT and the WTO existed principally a) to take care of public relations and b) to consolidate and entrench successive advances towards liberal trade.

After the riots in Seattle little need to be said about the WTO’s success as a manager of public relations. Not only is it failing, for the moment, in its role of helping governments sell free trade to their electorate, it is actually helping otherwise ill-assorted groups to form alliances whose only common goal is to restrict trade. In other words, it is strengthening the opposition, not undermining it.

Governments are to blame for this, not the WTO or its officials (least of all its impressive new boss, Mike Moore). It is rich country governments, especially America’s, that have greatly compounded the original drawback of the pact with the devil. This drawback was that governments tacitly accepted that trade liberalization was a cost for which countries needed to be compensated – the idea being that enlightened governments, wise to this fib, would use it to the tactical advantage of liberalization. But governments have thrown this subtle logic out of the window.

All the macho posturing of trade negotiations – taking a “tough line” on this and that – is now undertaken with total conviction. This tells the protesters, and public opinion at large, that they are right to oppose reform. America’s enthusiasm for bringing labour standards and environmental protection into the WTO’s remit works the same way. Implicitly, the administration is conceding the argument that trade, unless properly regulated, really does militate against good labour standards and a clean environment. No wonder Bill Clinton wanted to invite protestors in: he agrees with them.

So add to the obvious danger that the WTO will serve as a rallying point for disgruntled anti-capitalists (and the president of the United States) the risk that , thanks to labour standards, the environment and other “new issues”, the body will become a trade regulator rather than a trade deregulator. This second risk directly threatens the system’s other great virtue, up to now, as a consolidator of reform. And again thanks to the pact with the devil, the mechanisms for such a reversal are in place. Under the WTO’s dispute settlement rules, for instance, a country that brings a successful complaint against another is allowed to retaliate by raising new trade barriers of its own. (If another country refuses to build more roads, the WTO allows you to tear up your own.)

Whether the WTO overcomes this week’s setback and becomes the powerful force for good it could still depend not on the organization itself, but on governments, and especially America’s. It is they who will decide whether this powerful but anomalous apparatus will be used to advance trade or throttle it. The outcome can no longer be taken for granted.

5. Look through the text again and pick out the key words and expressions

III. Post-Reading Tasks

1. Discussion.

1. Do you agree that there are no reasonable reasons to criticize the WTO, and that the WTO itself has no credible alternative nowadays?

2. Do you agree that the WTO pushes back poverty? Can you give examples to support your point of view?

3. Discuss the current problems of the WTO.

4. WTO: “a pact made with the devil” or “the powerful force for good”?

2. Simulations

In groups make a list of possible improvements that can be made within the WTO framework. Share the results with the rest of the group and answer your group mates’ questions.

3. Make a summary of the text