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January 24, 2024

World Trade Organization & Trading

World Trade Organization & Trading


World Trade Organization (WTO) is the sole universal body that regulates the global economy through the establishment of universal trade laws and monitoring the implementation of trade accords. The agency also settles disputes and promotes the development agenda of developing countries in addition to balancing tariffs and ensuring fair economic competition (WTO n.p). The discussion paper will evaluate the validity of the WTO and its policies by identifying the challenges of the current system concerning building new trade environments. The article will also highlight proposed reforms and measures by experts to remedy the limitations.

The validity of WTO based on the Limitations of the Current System in Relations to Building New Trade Environments

The validity of the WTO is well evaluated based on how the institution is satisfying delegated responsibility. One of the main limitations is the failure to conduct negotiations on intellectual property rights and agricultural appropriations fortuitously. Lack of amicable talks has led to member states opting to plurilateral, bilateral and regional free trade accords (Hoekman, Bernard & Petros 49). Another challenge is the weakening of the dispute settlement function. WTO multilateral trading system has weakened due to disagreements that have led to member states adopting bilateral agreements (Ciuriak n.p). For example, the WTO has failed in its arbitration of the business conflict between China and the United States. Both states have imposed tariff policies on each other. The US alleges China has been practicing unfair trade as well as intellectual property theft. According to Swanson (n.p), in 2017, WTO allowed China to impose tariffs on American products to recoup the duties imposed by the US without following the trade rules enacted by WTO.

World Trade Organization & Trading

World Trade Organization & Trading

The decision led to the current US Administration breaching the global body’s rules to place tariffs on Chinese products worth three hundred and sixty billion US dollars. Such a situation shows the lack of faith by the US government in the WTO. Accusations on China entails offering subsidies to its industries that produce inexpensive products that positioned their opponents out of business. The appellate body also lacks enough quorum to make decisions on appeals on trade disputes after the expiry of two-judge terms with only one active judge leaving many trade disputes without the final verdict (Wagner 79). It is as a result of the US blocking new appointments of judges to the appellate body to weaken it. The administration has also undermined WTO by sidestepping the WTO system and enforcing unilateral actions.

Failure to uphold the Doha development agenda has proven a challenge to the WTO in efforts to promote a new trade environment. The plan aimed at promoting developing countries by developing universal agricultural trade. Such a move would protect emerging nations that depend on agricultural export from the competition of developed countries that offer a subsidy for agricultural export. The negotiations process for the agenda failed in 2008 due to disagreements on the grants as WTO proposed developing countries to raise tariffs to protect farmers (Amadeo n.p). Farmers and labor groups alleged that the WTO overemphasized on corporate interest than their affairs.

Proposed Reforms and Measures by Experts to remedy Limitations mentioned above

Experts Criticism

Critics have observed that WTO rules override national sovereignty as was the case with the US, and as such, it would impede efforts towards labor and environmental protection. The ruling against the genetically modified products where the European Union had appealed to put restrictions on importation of the said products in the protection of the general public (Swanson n.p). Environmentalists claim that such a move overlooked the health and safety of consumers and also the democratic rights of individual member states to protect their citizens. Other issues relate to what WTO terms as discriminatory environmental labelling.

World Trade Organization & Trading

Another significant issue relates to the impacts of import competition on labor dimensions. The Economic Policy Institute of US projected that China’s entry into the WTO resulted in the disappearance of approximately more than three million opportunities in the US. It was as a result of China’s much cheaper imports leading to downsizing of locally competing firms (Research n.p). Such claims are backed up by US labor unions accusations of WTO being unable to protect wages by addressing the labor standards.

Martin Khor, a former executive director representing developing countries, affirms that the WTO is partisan in its oversight of a universal economy through the systemic bias that harms developing countries that lack negotiating powers (Wagner 72). He elaborated that rich countries have the financial strength to promote high quotas and import duties on privileged products hindering imports from developing countries.  Additionally, the use of non-tariff barriers, for instance, the anti-dumping permitted contrary to developing countries. Similarly, he points the high level of agricultural protectionism in developed countries while the developing are coerced into opening their markets, therefore, calling for the abolishment of the body.

World Trade Organization & Trading

Proposed Reforms

Several reforms have been proposed by experts and member states to improve the functionality of the WTO. Matters suggested ranges from negotiation, functionality and the restructuring of differential along with special treatment (Hoekman, Bernard & Petros 34). These reforms have been pushed by political pressures on the body to dispense its mandate effectively. Criticism of judicial overplays where the rulings of the WTO override the sovereignty of associate countries.

Proposed reforms to the dispute settlement system include member states to evaluate suggestions that would be sufficient to alleviate their concerns. Negotiation specialists have suggested that a review of the laws of the universal trading system to accommodate changes since the inception of the body (Board n.p). The system should be able to adapt to all types of economic policies from the market economies to the capitalistic economies. Evaluation of the decision-making framework is also part of the proposal. Similarly, the failure by countries to comply with WTO notification stipulation is an issue of concern. For instance, government subsidy programs. Experts have recommended the implementation of penalties for non-compliance.

World Trade Organization & Trading

Consideration of trade liberalization is also in the proposed reforms. The proposed improvements included a detailed classification and description regarding the composition of a first world and a middle economy at the WTO to prevent affiliate countries from self-designating their status (Ciuriak n.p). Notably, more than nine of the G20 nations have claimed developing state status at the WTO. Abolishment of the corporate globalization model and its underlying policies as it does not exclusively promote the balancing of free trade and protectionism as it purports. Still, it represents the interest of large multinationals with increased corporate profits and stalled wages. Notably, matters of quotas and tariff wars have been rampant in the recent past, along with increased government subsidy on state-owned organizations. According to Schneider-Petsinger (n.p), there is a proposal that WTO should be empowered to sanction countervailing duties to offset the subsidy subsidies granted.


The global economy is undergoing a lot of changes. With advanced technological advancements, there is increased competition between the developed economies on who is to become the leading economic power. Such commercial rivalry needs to be regulated, and the WTO is the only organization that has the mandate to execute such function (McBride, James & Andrew n.p). With the increased need for reforms inspired by the ministerial conference held in Buenos Aires in 2017 along with US retaliation to both China and WTO, the expectation is to have a raft of changes that will improve the efficiency and functionality of WTO. MLA.