International Trade Advantages and Limitations

International Trade

Advantages and Limitations of International Trade

The World Trade Organization (WTO) is a resource and a source of great power within the international community. Moreover, the WTO's Web site offers a place for interested parties to visit in order to better understand the dynamics of world trade, and the resources that are embraced when two nations trade with each other, after arriving at an understanding of the monetary specifics of the transaction.

A good beginning in terms of understanding how the WTO works, what the positives and the limitations are, and why it serves as a beneficial tool in the hands of nations all over the world, is to review the "Uruguay Round" of international trade negotiations that culminated in agreements between 123 countries. A positive series of international negotiations had led up to the Uruguay Round -- which was based on the General Agreement on Tariffs and Trade (GATT) that was launched in Geneva in 1982.

The Uruguay Round was originally supposed to be concluded by December 1990, according to the WTO (www.wto.org), but the United States and the European Union had not reached an agreement on how to create workable reforms for agricultural trade. And so the Uruguay Round was extended and a deal was signed in 1994. When things were finally settled, covering "almost all trade, from toothbrushes to pleasure boats, from banking to telecommunications, from the genes of wild rice to AIDS treatments," the GATT became known as "the largest trade negotiation ever, and most probably the largest negotiation of any kind in history" (www.WTO.org).

And so with that arrangement, signed by nearly all the 123 nations that participated, the GATT transitioned into the World Trade Organization (WTO).

What are the advantages of working through the WTO?

First and foremost, 123 countries have an umbrella organization through which to discuss mutually troubling issues, rather than simply go back and forth between each other. Not only do those two nations have the WTO as a place to conduct business on a mutually respectful dialogue basis, but also they have agreed-upon, legislated fundamental rules they must abide by. The GATT discussions that took place over a seven and a half year period concluded in a way that is profoundly useful to all signatories.

Secondly, working with and through the WTO (GATT) goes a long way toward protecting health standards for those internationally active trading partners. For example, the Canadian National Post published a column (June, 2000) that asserted GATT "may abolish regulations' designed to protect health standards and other public interests" (WTO). At stake, the column continued, are "issues as diverse as how strict our standards are for hospitals…and the treatment and testing of drinking water" (WTO). The response to those assertions is that GATT (WTO) has "no power to abolish regulation" and moreover, the "protection of health is explicitly recognized" as a policy of "overriding importance" (www.WTO.org). Article XIV in the WTO / GATT agreement contains a "General Exception" that asserts "nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member [of the 123 nations] of measure necessary to protect human, animal or plant life or health" (www.wto.org).

Thirdly, an advantage of the WTO treaty is that it protects individual privacy when it comes to the "processing and dissemination of personal data and the protection of confidentiality of individual records and accounts" (www.wto.org). That issue came up because consumer advocate Ralph Nader was quoted as saying, "Particularly in the area of Internet privacy protections, the WTO is forcing governments to forego sovereign privacy protections deemed to be overly restrictive to international trade" (www.wto.org). The WTO's answer to that the trade deal signed by 123 nations "has had nothing whatever to do with internet privacy" and indeed a safeguard is built into the General Exceptions in Article XIV regarding processing and dissemination of personal data, as mentioned at the top of this paragraph.

The fourth advantage of international trade under the auspices of the WTO is that deals signed cannot force any country to move towards the privatization of any service within either trade partner. This comes up because a report has been circulated by the "Alliance for Democracy" (called "Don't let the WTO get hold of our water") that asserts the "progressive liberalization" under GATT "means moving towards privatization of all services, including public services" (www.wto.org). The Alliance for Democracy goes on to insist that the WTO / GATT agreement subjects local jurisdictions to global rules that will only benefit the transnational corporations involved. This is simply not the case, the WTO site explains, and indeed the GATT regulations vis-a-vis water distribution allows any trade partner to "maintain the service as a monopoly, public or private" (www.wto.org).