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Policy Debate: Does the U.S. economy benefit from the WTO?


Issues and Background

Activists have passed some impressive animal protection laws in the last two decades. The United States banned dolphin-deadly tuna and enacted sea turtle protection laws. The United Nations set a global moratorium on high-seas driftnet fishing, and the United States followed up with the High Seas Driftnet Fisheries Enforcement Act. Meanwhile, the European Union (EU) banned the use of the steel-jaw leghold trap and the testing of cosmetics on animals where alternatives are available. Too bad none of these laws could withstand the World Trade Organization (WTO).
~ Humane Society of the United States, 2003
Opponents of the World Trade Organization have tried to make "sanctions" sound like a tax on America, imposed by a world government in which the United States would be vastly outvoted. But a trade sanction is a tariff on imports. The country that "won" a dispute settlement case would get the right to put a tax on its own people who import goods from the country that the WTO panel found to be violating the GATT rules.
~ Joe Cobb

The World Trade Organization was created in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT). There are 149 members in the WTO; these member countries account for over 90% of world trade. The responsibilities of the WTO include:

  • administering international trade agreements,
  • facilitating trade negotiations,
  • resolving trade disputes, and
  • providing technical assistance and training to developing countries.

Major decisions involving the WTO are discussed and voted on at Ministerial Conferences that occur at least every other year. The ministerial conference in Seattle, Washington (November 30 - December 3, 1999) was marked by an extensive array of protests by environmental groups, labor advocacy groups, farmers, and many other interest groups. These protests became violent at times and local law enforcement officials responded by introducing curfews and calling in the National Guard. Tear gas was used at times to subdue the protesters.

One of the basic issues at the heart of the WTO controversy is whether free international trade benefits or harms the U.S. economy. This issue is already examined in an online debate on "foreign trade." The focus of the current debate is on the more narrow topic of whether our participation in the WTO benefits the U.S. economy.

Supporters of the WTO argue that it has been remarkably effective in removing trade barriers that had long restricted international trade. This makes it possible to realize international gains from trade that result when each country specializes in those activities in which it possesses a comparative advantage. Free trade also is expected to provide firms with a greater incentive to innovate and to engage in efficient production.

Free trade benefits consumers but results in lower profits and employment in some industries. Trade barriers are often passed by Congress as a result of extensive lobbying efforts by special-interest groups that represent workers and firms that benefit from trade barriers. Since the WTO has the ability to impose sanctions against countries that impose such trade barriers, it is not very popular with groups that benefit from trade restrictions.

Union opposition to the WTO is partly based on concern over lower wages and job loss in some industries. In addition, however, unions argue that free trade may provide advantages to manufacturers in countries in which there are no child labor laws, no workplace safety requirements, and no minimum wage laws. They argue that manufacturers may shut down higher cost U.S. production facilities and relocate their manufacturing facilities in countries in which there are fewer laws protecting workers.

Environmentalists are concerned that free trade may harm the global environment by limiting the ability of countries to enforce laws that protect endangered species. One of the cases that was much discussed by environmentalists at the Seattle WTO meeting was a case involving shrimp harvests and the protection of sea turtles. The U.S. had banned the sale of any shrimp that were caught in nets that were not modified to protect sea turtles. When other countries argued that this interfered with their ability to sell shrimp in the U.S., the WTO forced the U.S. to reverse its ban on imported shrimp that were not caught using the modified nets. Environmentalists fear that such actions by the WTO will discourage countries from passing laws that protect endangered species.

There is also concern that international firms may locate more of their production facilities in those countries that have the least stringent environmental regulations. Environmentalists argue that it becomes increasingly difficult to improve global environmental conditions under such a situation.

Proponents of the WTO respond to the concerns of unions and environmentalists by arguing that free trade encourages economic growth. They suggest that a wealthier world community will find it easier to afford better working conditions and more stringent environmental protection. It is also argued that increased global cooperation through the WTO may make it easier to negotiate international treaties that protect workers and the environment.


Primary Resources and Data

  • World Trade Organization
    The World Trade Organization's web site contains a history of the WTO, information on current trade disputes, online presentations of research conducted at the WTO, world trade statistics, and links to other source of world trade statistics and information.

  • United States Trade Representative
    The Office of the United States Trade Representative is a Cabinet level agency that is charged with establishing and administering U.S. trade policy and negotiating trade agreements. Relevant background material contained on this web site includes an document library containing speeches, press releases, congressional testimony, and reports. (To view these documents, the Adobe Acrobat viewer plugin is required. You may download this viewer by clicking here.)

  • United States International Trade Commission
    The United States International Trade Commission (USITC) is charged with providing information to Congress and the executive branch on international trade issues. The USITC's web site contains a listing of all U.S. tariffs as well as an extensive collection of statistics on U.S. trade (including trade data with specific trading partners and for individual products).

  • National Trade Estimate Report on Foreign Trade Barriers, 2006
    This report, provided by the Office of the U.S. Trade Representative, contains a detailed discussion of foreign trade barriers for most foreign countries that engage in a significant amount of trade with the United States. Many of the trade barriers listed are topics for current and future trade discussions in which the WTO will be involved. (To view the documents contained in this report, the Adobe Acrobat viewer plugin is required. You may download this viewer by clicking here.)

  • 2006 Trade Policy Agenda & 2005 Annual Report of the President of the United States on the Trade Agreements Program
    This document provides a description of trends in U.S. trade, international trade agreements, and trade policy issues. (To view this document, the Adobe Acrobat viewer plugin is required. You may download this viewer by clicking here.)

  • U.S. Foreign Trade Statistics
    This Census Bureau web site contains recent and historical data on U.S. imports, exports, trade balances, and other relevant measures of trade. U.S. trade statistics with major trading partners are also provided.

  • Lex Mercatoria
    The Lex Mercatoria web site contains an extensive collection of links to web pages that provide information related to international trade law.

  • Trade and Commercial Relations
    This site, provided by Tufts University, contains links to the full text of the major international trade treaties and agreements.

  • Trade and Environment Database
    The Trade and Environment Database provides an extensive collection of cases involving conflicts between international trade law and the environment. These cases may be sorted by a variety of criteria or listed by geographical region.

  • World Trade Organization, "The 3rd WTO Ministerial Conference"
    This site contains information about the November 30 - December 3, 1999 WTO Ministerial Conference in Seattle, WA. At this site, you can find summary information concerning the issues raised at these meetings.

  • Wayne M. Morrison, "China-U.S. Trade Issues"
    Wayne M. Morrison discusses some of the major U.S.-China trade issues in this April 13, 2001 Congressional Research Service Issue Brief. He notes that U.S. - China trade has been growing quite rapidly in recent years. Morrison summarizes the major issues involved with China's admission to the WTO, including issues concerning intellectual property rights and trade barriers.


Different Perspectives in the Debate

  • Renato Ruggiero, "From Vision to Reality: The Multilateral Trading System at Fifty"
    In this speech delivered at the Brookings Institution on March 4, 1998, WTO Director General Renato Ruggiero describes the impact of the GATT at the 50th anniversary of it's initiation. He argues that the success of the GATT is due to it's "rule-based nature." Ruggiero notes that under GATT average industrial tariffs declined from approximately 40% to less than 4%.

  • World Trade Organization, "The Case for Open Trade"
    This document, provided by the World Trade Organization, provides a clear and succinct summary of the economic arguments for free international trade. These arguments, of course, also serve to support the role of the WTO in maintaining a system of free trade.

  • World Trade Organization, "10 Benefits of the WTO Trading System"
    The World Trade Organization provides a listing of 10 ways in which the world benefits from a system of free international trade. A detailed explanation is provided for each of the 10 benefits.

  • World Trade Organization, "10 Common Misunderstandings about the WTO"
    On this page, the World Trade Organization provides detailed counterarguments to ten of the most common objections to the WTO. This site provides a useful summary of the major arguments concerning the role of the WTO.

  • Humane Society of the United States, "World Trade Organization/Free Trade Agreements (FTAs)"
    This document, provided by the Humane Society of the United States describes concerns about the effect of the WTO and Free Trade Agreements on attempts to protect animals from inhumane treatment. They observe that the Humane Society and other environmental and animal rights groups have become more active in participating in the creation of trade agreements.

  • Richard L. Trumka, "China and the WTO: Compliance and Monitoring"
    In this February 05, 2004 statement, Richard L. Trumka (Secretary-Treasurer of the AFL-CIO), raises concerns over U.S.-China trade issues. He argues that China violates human rights and worker rights. Trumka also indicates that China engages in a variety of unfair trade measures.

  • United States Information Agency, "The USA and the WTO"
    An extensive collection of links to recent press briefings concerning trade issues may be found at this United States Information Agency web site. This is a good place to visit to find the administration's views on trade issues.

  • Oxfam, "Loaded Against the Poor: World Trade Organisation"
    This November 1999 Oxfam position paper argues that the WTO does not pay enough attention to the problem of poverty. It is argued that the developed economies have been the major beneficiaries of recent trade liberalizations. Oxfam suggests that protectionist behavior by developing countries have limited growth in developing economies. It is recommended that agricultural subsidies be eliminated in developed economies to provide developing economies with better access to foreign agricultural markets.

  • Mark W. Frazier, "Coming to Terms with the 'WTO Effect' on U.S. - China Trade and China's Economic Growth"
    In this September 1999 National Bureau of Asian Research article, Mark W. Frazier analyzes the possible consequences that might result from China's admission into the WTO. He argues that China's admission would result in a modest increase in economic growth in both the Chinese and U.S. economies. (To view this document, the Adobe Acrobat viewer plugin is required. You may download this viewer by clicking here.)

  • United States Chamber of Commerce, "Traderoots"
    The U.S. Chamber of Commerce presents its arguments in support of the WTO on this web site. Among other issues, it is argued that China should be admitted into the WTO.

  • Joe Cobb, "The Real Threat to U.S. Sovereignty"
    In this August 1, 1994, speech at the Heritage Foundation, Joe Cobb provides a conservative's argument in support of the WTO. He argues that the WTO does not threaten U.S. sovereignty in any manner. As Cobb notes, the only enforcement power granted to the WTO is an ability to endorse sanctions against countries that are found to have engaged in trade practices that violate international treaties. If a country is found to have committed such a violation, "the country that 'won' a dispute settlement case would get the right to put a tax on its own people who import goods from the country that the WTO panel found to be violating GATT rules."

  • Public Citizen Global Trade Watch
    This page, provided by Ralph Nader's Public Citizen organization, contains links to a variety of pages detailing this organization's opposition to existing and proposed free trade agreements. It is argued that free trade agreements lower domestic employment, reduce environmental quality, and eliminate protections on the quality of food consumed in the United States. The World Trade Organization page on this site also contains arguments and testimony suggesting that WTO policies should be modified.

  • Public Citizen, "A Citizen's Guide to the World Trade Organization"
    This online document provides a critical analysis of the history and operations of the WTO. It is argued that the WTO enhances short-run corporate profits, but does not take other societal values into account. Furthermore, it is suggested that the WTO has issued many decisions that have harmed the environment and endangered health. (To view this document, the Adobe Acrobat viewer plugin is required. You may download this viewer by clicking here.)

  • Fred L. Smith, "Free Trade for All",01318.cfm
    In this article, Fred L. Smith, the President of the Competitive Enterprise Institute, argues that free international trade increases the wealth of all trading countries. Smith notes that there is substantial evidence that higher national wealth increases the likelihood of better environmental protection.

  • Elizabeth May, "Examining Canada's Priority Interests at the WTO/FTAA Negotiations: Or, How Not to Promote Environmental Protection"
    Elizabeth May argues, in this July 8, 1999 online article, that the WTO has issued several discussions that have adverse environmental consequences. It is suggested that greater efforts should be made to focus on environmental problems.

  • Ana I. Eiras and Brett D. Schaefer, "Trade: The Best Way to Protect the Environment"
    In this September 27, 2001 Heritage Foundation article, Ana I. Eiras and Brett D. Schaefer argue that international trade protects the environment by encouraging trade and economic growth. They note that wealthier countries display greater concern over environmental issues. Trade agreements, by increasing incomes in less developed countries will, in this view, increase environmental protection.

  • Greenpeace, "Why is the WTO a Problem?"
    On this web site, Greenpeace provides a collection of arguments for more stringent international environmental protection. It is argued that the WTO should redirect its efforts to negotiating multilateral environmental protection treaties and to encourage countries to adopt sustainable consumption and development paths. Greenpeace also argues that countries should be given greater latitude in restricting trade based on legitimate environmental concerns.

  • National Center for Policy Analysis, "Tariffs and Other Trade Barriers"
    This site, provided by the National Center for Policy Analysis, contains information about current trade disputes. Summaries of studies that investigate the cost of trade barriers are also provided here.

  • Global Exchange, "World Trade Organization"
    Global Exchange presents its arguments against the WTO on this website. Global Exchange argues that the WTO supports the interests of multinational corporations over the needs of "local communities, working families, and the environment."

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