Wto and Its Effect

The purpose of the WTO is to ensure that global trade commences smoothly, freely and predictably. The WTO creates and embodies the legal ground rules for global trade among member nations and thus offers a system for international commerce. The WTO aims to create economic peace and stability in the world through a multilateral system based on consenting member states (currently there are slightly more than 140 members) that have ratified the rules of the WTO in their individual countries as well. This means that WTO rules become a part of a country's domestic legal system. The rules, therefore, apply to local companies and nationals in the conduct of business in the international arena. If a company decides to invest in a foreign country, by, for example, setting up an office in that country, the rules of the WTO (and hence, a country's local laws) will govern how that can be done. Theoretically, if a country is a member to the WTO, its local laws cannot contradict WTO rules and regulations, which currently govern approximately 97% of all world trade.

Free trade fosters investment into other countries, which can help boost the economy and eventually the standard of living of all countries involved. As most investment comes from the developed and economically powerful into the developing and less influential economies, there is, however, a tendency for the system to give the investor an advantage. Regulations that facilitate the investment process are in the investor's interest because these regulations help foreign investors maintain an edge over local competition. Controversy over what is the best course of action in the creation of a global economic system - one that fosters free trade and free choice - will persist.

The WTO is the international governing body of 149 member-countries on global (free) trade and even conflict resolution; and, its mission is to boost international trade by encouraging its member-countries to lessen obstacles to trade and by creating policies or laws that are instrumental in trading and business ('World Trade Organization', 2006). As such, the WTO appears to be good and truly beneficial. But is it really so? This paper briefly reports how the WTO has affected the global economy in a bad way. The bad effects of WTO exist in the aspects of job, farming/agriculture, medicine, environment, and also it contributes to growing poverty.

Job Losses

There are two bad effects of the WTO when it comes to jobs, labor or employment. (2001) argues that the world trade system only gives rise to employment insecurity. How? In this author's own words,

"The expansion of trade and the growth of incomes in OECD countries has not increased employment in developed countries. The globalization of the employment market and the mobility of companies and capital has also increased instances of firms moving to take advantage of lower wages and weaker labour laws. Threats to relocate also allow companies to force reductions in environmental and social standards around the world. Mergers, acquisitions and corporate restructuring are also increasing employment insecurity."

Ironically, WTO, the champion of free trade, creates a condition among countries for job losses. When multinational corporations are dissatisfied with a certain country, they can easily get out and shift to another country where conditions are favorable to them.

There is more than just job loss as one of the WTO's bad effects. (2006) stands in the view that job stability is at risk because huge corporations can just move from one country to another where there is a lesser production cost opportunity; or if not, first world countries are bound to eat away the rights of workers. Thus, the second bad effect of the WTO with regard to jobs is that it deprives the workers of their right to better compensation. This could even be the reason why there is child labor (recall the young Chinese kids who create Nike shoes).

Farmers from Third World Countries

There is truth behind the claim of (2000) that the WTO's policy called Agreement on Agriculture by the United States of America (along with its international agribusiness corporations) leads to the loss of farmers from the Third World Countries. How so? These farmers are not able to compete against the cheaper imported products coming from these global agribusiness corporations. Imports become cheaper because Third World Countries are asked by the WTO to lower them by 24% and all other barriers to their entry in the market of these countries. What even makes the cost of production of these agricultural products by the global agribusiness corporations is the subsidies they obtain from their government - US - in terms of asset, fertilizer, marketing, and facilities. The following is going to reveal more to this point.

A great number of cheap corns from the US overflows in Mexico, because the former is reported to back agribusiness corporations up with huge amount of subsidies (2003). Corns are just one, vegetables are another. (2005) reports that the farmers from the province of Benguet and Mt. Province