THE NOTION OF FREE TRADE AND THE FIRST TEN YEARS OF THE WORLD TRADE ORGANIZATION: HOW LEVEL IS THE ‘LEVEL PLAYING FIELD’?

Abstract

This article is designed to provide a critical analysis of the successes and failures of the World Trade Organization (WTO) in certain key areas of international trade during its first decade. The WTO, which came into existence on 1 January 1995, celebrated its tenth anniversary in 2005, with the WTO officials claiming that the past ten years had been a success for the organization. Indeed, it has seen an expansion of its activities in recent years and has thus become one of the most important international organizations. Nearly 150 states, developed and developing, small and big, powerful and weaker, have now become members of this organization. Towards the end of 2005 a major WTO agreement, the TRIPS, was amended in favour of public health and full liberalization of trade in textile and clothing also became a reality in 2005.

However, the WTO, established as it was primarily to further liberalize international trade, is supposed to create a level playing field in a number of other key areas, including agriculture, in order for it to enable nations to compete on an equal footing across the board. Has the WTO lived up to its expectations over the past ten years? Has the level playing field become truly level in all major areas over the past decade? After examining these questions in some detail, this article argues that the WTO has limited success in some of the core areas and the playing field has not become as level as it should have been by the time it entered its second decade. The Doha Development Round of multilateral trade negotiations, which began in 2001, has not made any substantial progress.

The Sixth Ministerial Conference held in Hong Kong in December 2005, the closing month of the tenth anniversary of the WTO, failed to make a breakthrough. Although the failure in Hong Kong was not as disastrous as was in the third conference in Seattle in 1999 or in the fifth conference in Cancun in 2003, the deadlock witnessed in Hong Kong, especially with regard to the liberalization of trade in agriculture, has put the WTO itself at a crossroads. Since the Hong Kong meeting a series of deadlines for various stages of negotiations for moving the Doha Round negotiations forward have been missed. A formal meeting on 1 July 2006 of the Trade Negotiations Committee, which comprises the entire WTO membership, resulted in a failure. The WTO members could not agree on formulas for reducing tariffs and subsidies, various flexibilities, and other disciplines, especially on the liberalization of trade in agriculture. Achieving a truly level playing field should be about balancing the interests of various groups of states as well as the respective environments and interests of different traders and consumers living in different countries and the WTO has a long way to go to achieve this objective.