The trouble with World Trade Organisation (WTO)

With Americas’ announcement of tariffs on steel and aluminium, there are fears of a global trade war. If a trade war starts is WTO strong enough to intervene and stop it?

Over the last decade, numerous stalled negotiations have beset WTO credibility. The Ministerial Conference in Kenya in 2015 for the first time failed to support the Doha mandate. An ineffectual WTO will hurt everyone, but the most significant impact will be felt by the poor. In 2010 the Millennium Development Goals achieved one of its objectives, and that was to cut extreme poverty by half. Achieving this objective was aided by economic growth in poorer countries that took advantage of low tariffs and open markets where WTO played an essential role in overseeing trade rules are appropriately negotiated, implemented and monitored.

A possible trade war and a weak WTO will result in wealthier countries uplifting their tariffs and introducing other protective measures. The current playing field, as it were, would be ineffective, and the strong countries would push poorer countries to accept harsher trade deals. Currently, all members have one vote each, allowing even a small nation a genuine say. The negotiations are therefore consensus-based.  The dispute settlement mechanism also enables members of one country to take another to court if they violate trade rules, thus strengthening the hand of poorer nations.

A full-out trade war will affect the rich countries as they will also lose out on low tariffs access to, for example, cheap clothes, fuel and foods. America’s increase in traffic may benefit them in some industrial sectors, but for others where they import steel (as other countries would retaliate), cost of production would go up. Take China; for example, they are the second largest importer of agricultural goods from the US. What would happen to American exports and farms if tariffs from China increased for agricultural in response to the steel tariffs? The more impoverished Chinese people would suffer disproportionately from the lack of agricultural imports. The farmers in America would also be adversely affected but not as much as some of their Chinese customers. A trade war is a lose-lose situation.

Decision making in the WTO is still based on consensus diplomacy by 160 members with different outlook and views working on the principle that nothing is agreed until everything is decided. The last round of multilateral talks to further liberalise trade (known as the Doha Round) went on for five years. Many believe that WTO was too ambitious when they estimate that Doha Round will increase world GDP by $150 billion. The talks eventually failed in 2006.

At the Ministerial conference in Buenos Aires, 2017, the WTO failed even to produce a Ministerial Declaration. WTO seems to be in limbo with its ability to oversee negotiations being called into question. This is happening at a time when we seem to be heading towards a period of protectionism.


* Tahir Maher is a member of the LDV editorial team and the Chair of the English Party

Read more by .
This entry was posted in News and Op-eds.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

If you are a member of the party, you can have the Lib Dem Logo appear next to your comments to show this. You must be registered for our forum and can then login on this public site with the same username and password.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

Please complete the name of this site, Liberal Democrat ...?


Recent Comments

  • User AvatarAndrew Melmoth 20th Jan - 11:50pm
    Jeff The article you cite is an exercise in disinformation. Under the SGP the EU can recommend the UK govt reduce its deficit but by...
  • User AvatarJeff 20th Jan - 11:23pm
    Chris Cory 20th Jan '20 - 6:45pm: No alignment, and therefore there will have to be a border between N. Ireland and the republic, or...
  • User AvatarDavid Becket 20th Jan - 10:22pm
    3 posts looking at Gender Balance, 3 Posts looking at Racial Diversity. As others have said nothing outward looking, nothing on major issues like climate...
  • User AvatarHywel 20th Jan - 9:59pm
    For most of the time I was a party member some wing or another was saying that just around the corner was some split in...
  • User AvatarJeff 20th Jan - 9:48pm
    Andrew 20th Jan '20 - 9:05pm: I was assuming membership of the EU or at least the customs union and single market in my original...
  • User AvatarTonyH 20th Jan - 9:41pm
    I'm totally with John and Ian on this. I too have served my time on party committees over the years, often discussing these kind of...