Geopolitical Damnation 26: The WTO

The WTO, or World Trade Organization, is an intergovernmental organization that regulates international trade, and one you need to be intimately familiar with if international trade is core to your business. Officially commencing operations twenty point five years ago on January 1, 1995 as a result of the Marrakech Agreement, signed by 123 nations, it replaced the General Agreement on Tariffs and Trade (GATT) that had governed international trade since 1948.

It serves to provide a framework for negotiating trade agreements and for establishing a dispute resolution process for alleged breaches of WTO agreements. Now, it is true that most of the agreements negotiated, as well as most of the mediations that take place, are between nations and, more specifically, their governing bodies, but the agreements that are negotiated, and mediated, limit what your private sector organization can import and export.

Being aware of what is going on is critical if you are involved in trading a commodity that is governed by an agreement being mediated or enforced by the WTO; if your government body is trying to enforce buy local or foreign exchange restrictions (as measures requiring the use by an enterprise of domestics products or measures restricting access to foreign imports to export amounts are explicitly prohibited as all members of the WTO agreed to the Agreement on Trade-Related Investment Measures [TRIMs]); or if your organization is trying to protect, and enforce, its intellectual property rights internationally as the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights [TRIPS] governs IP with respect to trade, for example.

Similarly, it’s important to be up to date on what’s not going on. For example, the current round of negations between member countries, which was dubbed the Doha Development Round, which was supposed to make globalization more inclusive and help the world’s poor by slashing barriers and subsidies in farming, has been ongoing since November 2001, with no end in site. As a result, many countries are resorting to establishing their own bilateral trade agreements, which they may or may not be all too public about until the agreements are signed. Case in point — The Trans Pacific Partnership (which is so egregious it is a Damnation in itself).

But if you keep up with what’s going on, you know whether the material, product, or service you’re interested in is covered under a WTO (mediated and regulated) agreement, whether it’s a bilateral agreement between your country and the country being exported from or imported into, or whether an agreement is being negotiated that will cover the material, product, or service and, more importantly, whether your lobby group, or your local manufacturers’ association lobby group, should be sticking their nose where the government may not want it to make sure that the negotiators understand all of the issues and what is good for private industry.

It’s important to remember that these agreements not only define the framework of international trade, but the bilateral agreements being negotiated now by those countries too impatient to wait for the close of the Doha round (which could take another decade) define the tariffs that private industry has to pay. And if tariffs come into effect that are too high on your primary product lines, your organizational existence could be in jeopardy. Unless Supply Management can find another source (or sink) in another country, the organization could be forced to change product or service lines or even go out of business.

For the most part, having framework and agreements is a good damnation, but it’s still a damnation nonetheless.