Category: World Trade Organization

Introduction

The World Trade Organization (WTO) is a well known body in the business world. It is an organization that is charged with the responsibility of supervising and liberalizing international trade. It has existed for a considerable period of time, having officially started in 1995. The WTO regulates trade operations among participating nations. This is made possible through the provision of a framework that governs the negotiation and formalization of trade agreements.

There is also another critical aspect of the World Trade Organization; the provision of a dispute resolution process that is aimed at ensuring that all the participants holds fast to WTO agreements. The agreements are quite serious to a point that they are signed by the member governments’ representatives and approved by the government’s parliaments.

Over that recent past, the World Trade Organization has suffered from a crisis of legitimacy. This has been attributed to many factors. It can particularly be seen in the trade negotiation by the name Doha Development Agenda or Doha Round. The negotiation has been faced with a lot of disagreements making its future to be full of uncertainties. There has been heated debate on the World Trade Organization legitimacy.

The debate revolves upon questions that try to bring into light the function and purpose of WTO and more so, whether it meets a certain criteria or degree of legitimacy (Hoekman, Mattoo and English 24). This piece of work gives an in depth discussion of the World Trade Organization (WTO) and the crisis of legitimacy. Much emphasis will be given to the factors that surround the legitimacy crisis for instance the reasons behind it, the current situation and the way forward or recommendations.

Reasons put forth for the legitimacy crisis at WTO

There are a variety of reasons that have been identified to have been connected to the legitimacy crisis that is faced by the World Trade Organization. The major reason has however been termed as lack of political transparency and accountability. According to Keohane and Nye (280), effective politics and politicians are crucial in allowing for strong and desirable legitimacy. Politicians are needed who can link specific organizations and policies with a broader range of public issues through electoral accountability ‘ (Keohane and Nye 280).

The authors assert that legitimacy is not a simple concept and thus it should not be taken just as an element of popular autonomy and decision making governed by majority vote. There is much to this. For instance, apart from legitimacy that is gained through democratic elections, institutions are deemed to obtain legitimacy and authority as a result of their capability to deliver desirable results as well as their general ties established with other institutions.

This can be understood through checking on an organization’s checks and balances. This therefore translates that the World Trade Organization should consider all these areas in an effort to improve its situation and image among various parties (Lawrence et al 57).

Another accusation of the World Trade Organization in regard to its legitimacy position is that it has been involved in the widening of the gap that prevails between the poor and the rich. This is despite the fact that it claims to be fixing the same. Legitimacy is an element that can also be seen with respect to decision making function.

Most critics have seen the decision making system at WTO to be ineffective. To be specific, the system has been termed as too much simplified, non-inclusive as well as unrepresentative. This has led to a breakdown in the process of consensus building since there have been many active participants involved in the operations of the organization, with each having varying interests and objectives. This has in a way complicated the overall decision making process of the World Trade Organization.

This aspect is compared to the earlier regime, the GATT where the decision making was considered effective due to the fact that fewer countries were actively involved and that there were no strict rules advocating for adherence of all the nations to the results (Howse 107). To solve this problem, the decision making process should be restructured in a manner that is more accountable and transparent.

WTO and Legitimacy crisis

The World Trade organization has no been in crisis all through but rather it has been able to achieve much with respect to its main goal; ensuring that trade flows as efficiently, easily and in a predictable manner as possible at all times. The World Trade Organization has been evolved with a variety of functions and operations that are meant to make its main goal come true or rather to fulfil its tasks and responsibilities.

According to Shaffer and Meléndez-Ortiz, the World Trade organization has been able to deliver considerable global economic benefits. This has been achieved through liberalization of world trade that has in one way or the other facilitated smooth running of operations among member countries. “As the key institution for global governance of international trade, the WTO has also stabilized the rules on trade and provided an effective dispute settlement mechanism to manage trade conflicts.” (Shaffer and Meléndez-Ortiz 47).

Just as any other life issue, the World Trade Organization has not had a smooth path all through but rather, it has been faced with a lot of challenges and crisis. This has come out through various ways, the main one being its inefficiency in solving the issues contained in the Doha Round.

Other noteworthy challenges that have been identified in the course of running the World Trade Organization operations include the allegations of the rise of large developing nations for instance Brazil, China and India, the swift growth of bilateral free trade agreements as well as failure to resolve the Doha Development Agenda.

The Doha Round is however the most contentious challenge. This is because despite the efforts being put forth, there has been little progress, if any. It has been a relatively lengthy affair, consuming a lot of time and resources but unfortunately, delivering frustrating results (Stoll and Schorkopf 12).

Most of the challenges that are faced by the World Trade Organization are nonetheless associated with a changing economic environment that necessitates quick change of the organization’s operations, an aspect that is not easy since it requires critical decision making and planning as well as proper allocation of resources to the various trade operations.

This is nonetheless not a justification of the World Trade Organization’s failure since a successful organization ought to have set up strategic measures that allow adoption of the appropriate actions where need be. The challenges have played a critical role in exposing the WTO inefficiencies and hence the emergence of a lot of criticism from various angles (Rodrik 342).

The legitimacy crisis facing the world trade organization is a reality. It is a concept that has drawn a lot of attention and concern from different sources and parties. For this reason, there is a dire need for the World Trade Organization to take strategic measures aimed at improving the situation to allow for efficiency and also improve its image and regain legitimacy and public acceptance, an aspect that is incredibly essential in bringing it back to a position that is characterized by success and efficiency (Shaffer 106).

The legitimacy crisis that is facing the World Trade Organization can be best understood by looking at the different aspects that surround the operations of the organizations and what has been put forth by various individuals and groups with respect to the legitimacy crisis. Esty (7) asserts that the World Trade Organization faces a legitimacy crisis despite the fact that there was a successful initiative of a new round of bilateral and multilateral trade negotiations that was held at Doha.

“Protests continue to rock major international economic meetings and the WTO’s role in globalization is being questioned by many observers” Esty (7). This therefore shows that there is a need for WTO to re-establish its legitimacy especially in regard to free trade. The World Trade Organization should also enhance its reputation to achieve efficiency since in the modern world; there is more to success than just economic growth and development.

A good way to achieve success and regain public acceptance and legitimacy is to serve the interests of the world community in an appropriate manner. This could only be achieved through practicing or pursuing the organization’s economic goals in a manner that do not seem to concentrate much on only the economic benefits to be achieved but also on other societal need and values. These include environmental protection and conservation, public health promotion as well as strategies for poverty alleviation among others.

Another positive measure that could contribute to long term success in the Worlds Trade Organization’s processes and procedures is the establishment and implementation of an appropriate and comprehensive structure of global governance which will be capable of facilitating all the aspects that are related to trade for instance the provisions of checks and balances.

This will allow for the identification of any fault and taking of appropriate measures to avoid major damages. An effective global governance structure will also play a critical role in the reinforcement of the legitimacy associated with the process of international trade policy making. This will help in the maintenance of the concepts of accountability and transparency which will in turn enhance the various trade processes and operations for achievement of overall success (Harms 180).

Although the World Trade Organization has been continuously accused especially with regard to its legitimacy, it is deemed to be in the fore front of the economic integration process. However, the problem comes is because the organization tends to be involved with ineffective or dated actions particularly with respect to decision making. It is consequently clear that proper management of interdependence is an essential aspect that should be taken with a lot of seriousness if success is to be achieved. For this reason, there is an urgency to resolve the legitimate issues that surround the World Trade organization and its operations.

Research indicates that much of the criticism that has been laid in regard to the WTO legitimacy is baseless. However, there exist facts that support the argument especially with respect to the current and future situation of the organization that is largely influenced by globalization.

There are various legitimacy concerns. Economic integration and the process of globalization and its effects have to a large extent resulted in the legitimacy crisis faced by the World Trade Organization and other international trade related organizations. Public preference has also become an issue such that apart from concentrating on the core functions, an organization should also consider that factors that are of essence to the general public.

This includes environmental protection and poverty eradication and human rights. Distributional issue is also of great concern. The benefits that are linked with economic integration and trade liberalization are in most cases not equally distributed and hence some regions and people are favoured than others (Reinecke 174).

Irrespective of the nature of legitimacy concern raised, it is clear that there prevail a legitimacy crisis in the operations of the World Trade Organization. The legitimacy is questioned by a variety of parties each laying down its claims. For this reason, the situation of public acceptance of the authority and legitimacy as well as the decision making strategy in regard to the World Trade Organization should be taken seriously in all the countries that are involved.

Legitimacy is considered to be a relatively sophisticated concept of governance. It could be gained through various means for instance through democratic election and a majority vote or through reason and usefulness of the results that are derived from an organization’s operations.

With respect to trade relations, the decision making systems are of essence (Tully 118). As opposed to legitimacy that is derived from election of accountable officials, trade organizations mostly gain legitimacy through their activities and the value attached to them. This is a constituent of international economic management structure. The public perception in regard to trade and trade policy making policy have significantly changed.

Trade has now been considered as a process that affects various individuals and it is no longer left in the hands of the technical experts. Public attention has become of great essence in all trade issues. This calls for significant change in the operations of trade organizations in order to maintain a high level of legitimacy (Joerges and Renaud 114).

Conclusion and Recommendations

From the discussion, it is evident that the World Trade Organization has suffered from a crisis of legitimacy. This can be seen in its efforts to perform its tasks and responsibilities where in most cases, it is faced with a lot of obstacles and ends up not achieving the desired results.

Despite the legitimacy crisis, it is clear that all is not lost and there are steps that should be taken by World Trade Organization in an effort to improve its current situation and ensure that its future is brighter and desirable. All in all, WTO must be viewed as a critical element with respect to the emerging international governance system. The challenge of defining the major principles, rules and procedures that are needed for managing interdependence should be acknowledged and dealt with appropriately.

However, despite the condition facing the World Trade Organization, there are still some hopes of improvement. The World Trade Organization is capable of recuperating a broad legitimacy and public acceptance. However this will necessitate taking some efforts for instance streamlining of the trade regime’s substantive rules and procedures for effective performance (Mearsheimer 27).

The world’s complex interdependence is one major factor that has led to the legitimacy crisis that the World Trade Organization faces. For this reason, there is a need for adoption of effective decision making processes that are well understood and accepted.

Another measure that could be taken by WTO in an effort to improve its situation is broadening of its base in global governance as well as establishing a system of check and balances that are responsible for spreading authority both horizontally and vertically. This entails spreading authority across international organizations as well as global and local scales respectively (Nichols 858).

The World Trade Organization should also strengthen its legitimacy through a commitment to more transparent procedures and provision of a forum that allows for a broader global-scale political dialogue. This will significantly help in rebuilding its reputation for efficiency and effectiveness. Good governance is of optimal essence.

The WTO should also make a point of adopting rules and procedures that assist in balancing of the competing goals that are associated with aspects such as investment liberalization, trade, economic efficiency and economic integration on one side and human rights, environmental protection and equity among others on the other side.

Works Cited

Esty, Daniel. “The World Trade Organization’s Legitimacy Crisis.” Faculty Scholarship Series. 2002, Paper 433. 29 November 2011. <https://digitalcommons.law.yale.edu/fss_papers/433/>

Harms, Brian. “Holding Public Officials Accountable in the International Realm: A New Multi-Layered Strategy to Combat Corruption”, Cornell International Law Journal, 2000,.33: 159, 180-181.

Hoekman, Bernard M, Mattoo, Aaditya, and English Philip. Development, Trade, and the WTO: a Handbook, Part 1. UK: World Bank Publications, 2002. Print

Howse, Robert. “The House That Jackson Built: Restructuring the GATT System.” Michigan Law Review, 1999, 20: 107.

Joerges, Christian, and Renaud Dehousse. “Good Governance in an Integrated Market.” The Collected Courses of the Academy of European Law, 2002, Vol. XI, Book 2.

Keohane, Robert, and Nye Joseph Jr. The Club Model of Multilateral Cooperation and Problems of Democratic Legitimacy’, in Roger Porter et al. (eds.), Efficiency, Equity and Legitimacy: The Multilateral Trading System at the Millennium, Washington DC: Brookings Institution Press, 2001. Print

Lawrence, Robert et al. A Vision of the World Economy: Openness, Diversity, and Cohesion. Washington DC: Brookings Institution Press, 1996. Print

Mearsheimer, John. The False Promise of International Institutions, International Security, 1995, 19 (Winter): 3.

Nichols, Philip. “Realism, Liberalism, Values, and the World Trade Organization,” Pennsylvania Journal of International Economic Law, 1996, 17: 851, 856-860.

Reinecke, Wolfgang. Global Public Policy. Washington DC: Brookings Institution Press, 1997. Print

Rodrik, Dani. Has Globalization Gone Too Far? Washington DC: Institute for International Economics, 1997. Print

Shaffer, Gregory. Defending Interests: Public-Private Partnerships in WTO Litigation. London: Brookings Institution Press, 2003. Print

Shaffer, Gregory, and Meléndez-Ortiz Ricardo. Dispute Settlement at the WTO: The Developing Country Experience. Cambridge: Cambridge University Press, 2010. Print

Stoll, Peter-Tobias, and Schorkopf Frank. WTO: World Economic Order, World Trade Law. New York: Martinus Nijhoff Publishers, 2006. Print

Tully, Stephen. Corporations and International Lawmaking. New York: BRILL, 2007. Print

Bello’s article offers an assertive critique on the functioning of the WTO. The article is an important document which offers valuable insights on the nature of global markets. Bello argues that the WTO is only serving the interests of the wealthy countries and not the poor. In his arguments, Bello gives an assertive assault on the operations of the WTO, which are aimed at benefiting the wealthy countries.

From an economic perspective, Bello’s arguments are a critique of the WTO. The article demonstrates the nature of exploitation the wealthy nations exert on the poor nations by adopting the WTO. The article is comprehensive in demonstrating the nature of global trade, which is facilitated by GATT-WTO in favor of developed nations particularly the US.

In his critique, Bello demonstrates the manipulation of trade tariffs by removing barriers of trade so as to create markets for developed nations’ products. The WTO and GATT are criticized for creating a liberal global market which is aimed at killing domestic industries in poor countries by encouraging imports at low or no tariffs. In light of this analysis, it is true arguing that the WTO serves the wealthy not the poor countries.

From a personal perspective, Bello’s arguments are authentic. It is true that the WTO is serving the interests of rich countries at the expense of poor countries. The WTO among other trade institutions like GATT, IMF, and World Bank are instituted by the developed nations. It is logical to argue that the developed nations have made these institutions to protect their interests.

The US brought agriculture to GATT-WTO in 1995 to ensure the developing nations rely on US food products. The expansion of WTO jurisdiction was motivated by US interests of eliminating trade barriers. This was not aimed at benefiting the poor nations but rather help the developed nations market their products. The overall policies and guidelines offered by the WTO are aimed at encouraging cross-border trade without restrictions.

This is a strategic plan by the developed nations to exploit the poor nations due to their weak competitive power. The dispute-resolution mechanisms adopted by the WTO are maliciously aimed at exploiting the developing nations.

The WTO operations are compromised by the interests of wealthy countries who seek to reduce and eliminate trade barriers. This subjects poor countries to undue competition, which leads to killing of domestic industries.

Bello’s critique is appealing and authentic in addressing the issue of international trade. The critique is positive and acceptable based on the factual support offered by the author.

The involvement of US in WTO affairs by pressurizing the incorporation of agriculture in GATT-WTO, free cross-border trade, formidable dispute-resolution, and expansion of WTO jurisdiction are maliciously made to benefit the US and other developed nations. The WTO caused more harm than good to the poor nations. Poor nations are pressurized to eliminate import and export tariffs.

This only benefits foreign trade and multinationals owned by the wealthy nations. The structural adjustment programs initiated by WTO, IMF and World Bank are exploitative to the poor nations. These initiatives by the WTO are aimed at liberalizing trade, which in turn benefits wealth nations who are more competitive.

The developing nations have been manipulated to enter into WTO, whereby these poor nations have been committed to eliminating restrictions on import tariffs and a pledge of not raising other tariffs on imports.

The World Trade Organization (WTO) plays an enormous role as a global trade regulator that contributes to developing and strengthening the bonds between countries through facilitating mutually beneficial partnerships aimed for selling and buying goods and services. Unfortunately, despite WTO positions itself as a global organization that claims to be open for all, does not seem to represent each country’s interests equally. The particular issue is economic dispute settling mechanism that WTO considers to be functioning flawlessly but in fact generates no profit for developing countries that have only a nominal access to it. That brings up an issue of underrepresentation of such countries in the system of WTO dispute settlement. There is a clear need for studying the question of whether and how the situation could be amended. This problem has been given attention in the number of scholarly researches, which can be a ground for a systematic review. Such method is thought to allow testing a following hypothesis: Saudi Arabia can influence other countries in WTO to address the problem of developing countries’ access to the WTO dispute settlement mechanisms.

Literature Review

In his article, Najah Hassan Salamah (2016) has reviewed the state of the Kingdom of Saudi Arabia (KSA) in the WTO and whether the decision to join the organization was right for the economy of the state. The study uses quantitative approach to measure the support of private companies within the country for membership in WTO. The article pays a great deal of attention towards outlining the main mechanisms and principles Saudi Arabia can utilize to effectively use the potential WTO possesses to enhance KSA global trade perspectives. From the point of view of this research the study performed by Salamah provides a valuable insight into the place of Saudi Arabia in WTO. The possible downside of this research is the methodology design that seems to incorporate a certain bias connected to the self-reported data that is used as a main data source, on the basis of which all the assumptions are made.

Another valuable research that will possibly be used for the current study is a comprehensive work performed by Kristin Bohl. Bohl (2009) presents an extensive overview of WTO as an international organization that plays the role of a dispute settler. He vividly underlines the problem of underrepresentation of developing countries as one the main problems that harms the WTO’s prestige and its ability or desire to influence trade relationships globally. He builds a solid case uncovering statistical evidence and discussing implications for trade in developing countries. One of the main problems of such state of affairs Bohl (2009) names finding facts, absence of adequate connection between private business and governments, and a lack of political will that obstructs proliferation of the spread of healthy trading relationships between countries.

The above-mentioned paper seems to present the issues using the author’s work experience and scientific knowledge as a ground for conclusions. Apart from WTO documents and other research that proves his point of view the research does not seem to offer many other opinions on the matter. However, Bohl (2009) has conducted a solid research into the foreign issues of developing countries and the problems they encounter in connection with mechanisms of economic dispute settlement in the setting of WTO. His research could become a valuable addition to the current research, as it presents statistical and empirical data on participation of developing countries in WTO dispute settlement. Additionally, it provides an analysis of major WTO program documents that regulate the dispute settlement issues.

In his research, Bohl (2009) mentions that there is a need to review current mechanisms of influence that are available within the WTO organization for alleviation of the issue of underrepresentation of developing countries in dispute settlement programs. The current research could provide such a review. Also he notes that the issue needs to be influenced from within and be advocated for by countries whose weight in the organization is enough to affect other countries policy decisions or at least draw the attention of other members to this problem. It could be argued in the current paper that Saudi Arabia is capable of doing that. Thus, the research would address the gap of knowledge on methods of influencing opinions within WTO to address the issue of inaccessibility of dispute settling services to developing countries.

Hypothesis

The present study is aimed to research into the Saudi Arabia as an international agent whose influence on the international arena seems to grow with each passing year. Since KSA represents a growing market for high quality products that it might sell or purchase from other countries that are not that developed, there is a need for steady partnerships and trusty mechanisms that would allow KSA trade with other nations and have WTO protection working for both developing countries and Saudi Arabia (Salamah, 2016). In the reviewed literature, researchers raise a problem of poor functioning of WTO dispute settling programs which makes developing countries vulnerable.

Vulnerability of trade partners in its turn projects additional risks on KSA (Salamah, 2016). Since the voice of these countries in the WTO is rather inaudible as compared to the US or EU countries, there is a need of an advocate with a strong economy and promising agenda that will include strengthening themselves and their trade partners on the international arena. Such advocacy seems to be a wise proactive step that build long-term steady relationships with foreign counterparts and, provided the initiative would be successful, KSA would gain additional political points. Due to those assumptions and literature review a hypothesis for the current study could be the following: Saudi Arabia can influence other countries in WTO to address the problem of developing countries’ access to the WTO dispute settlement mechanisms in order to gain stabile trade partners and political influence.

Methodology

The research will use quantitative methods to identify specific markers in the literature that will allow to answer the question of whether KSA could advocate for change in the policies of WTO. Data collection tools will include Google Scholar search engine and university library catalogue. The sample will include quantitative, qualitative, meta-analysis, and literature reviews published in scholarly journals for the last ten years. The size of the sample will range from 15 to 30 sources, depending on the amount of literature addressing or touching the topic that will be available. The study will specifically search for methods and historical cases mentioned or studied in the sample sources that will allow to confirm the above mentioned hypothesis. The tools for analysis tools may include descriptive statistics such as mean and mode values.

Timetable and Available Resources

The research is projected to occupy a span of 4 weeks. The first week will be allocated to finding the necessary literary sources in the university library and in Google Scholar. On the second week, the sources will be scrupulously studied and specific citations will be marked for use in the body of the paper. On the third week, quantitative analysis tools such as descriptive statistics will be used to analyze data. The fourth week will be occupied with drawing discussion and conclusion sections together with formatting the final research paper. Available resources include university library, and Google Scholar data base of scientific papers.

Conclusion

This study could help address the gap in the scientific literature that is devoted to analyzing the role of KSA as a mediator in international relations in organizations such as WTO. It is also a paramount task to research into problems of developing countries as Saudi Arabia is close to Egypt and Sudan, India, which could be perspective partners in trade. Strengthening economic and political ties to developing countries could produce a substantial incentive for local businesses to produce goods and services to export. This will provide a boost to the country’s economy by diversifying it. Learning of existing and newly emerged methods that could be used by KSA to gain influence on international scale will contribute to forming positive image of Saudi Arabia in the WTO and in the world. Implementing the diplomatic experience of other nations could be potentially beneficial for gaining political influence both in domestic affairs and foreign ones. Overall, the project could provide a scientific basis for further study of foreign trade policy of KSA, economic relations, and WTO membership.

References

Bohl, K. (2009). Problems of developing country access to WTO dispute settlement. Chicago-Kent Journal of International and Comparative Law, 9(1), 131-197.

Salamah, N. H. (2016). The impact of the Kingdom of Saudi Arabia’s joining the World Trade Organization (WTO) on local marketing of national products. International Journal of Business & Economic Development, 4(3), 64-75.

The mandatory patent license issued by India to Nexavar bears several legal implications. According to the legal provisions on Patents Act in section 84 of the Indian laws, the price of the drug was too high and beyond the reach of most Indians. Also, this section of the Patents Act highlights that a compulsory license may be issued to a particular drug if the invention or intellectual property deal was not originated within the home county. The two provisions captured the case of Sorafenib that was traded using the name Nexavar (Chaves and Oliveira 54).

The market price of the drug was relatively high compared to the generic versions of the drug manufactured locally. For instance, Nexavar was trading at slightly over $5,000 US per patient per month, while the generic one was going for only $165 per patient per month. The huge difference in market price triggered the litigation process because the state argued that it was not reasonably affordable.

Nonetheless, the aspect of compulsory license has been vividly addressed in section 84 of India’s Patent Act. To begin with, when a patent has been granted for three years, any interested individual is free to apply to the Controller requesting the concerned department to impose a mandatory license to a patent. However, such a request ought to be within the provisions of the law as stated in section 84. If any person feels that public interest has not been satisfied by a given patent, then he or she can forward an application for a compulsory license (“Trips: Text of the Agreement” par. 5).

Second, the law requires that any given patent should be readily affordable to members of the public. If the cost of purchasing the product is beyond the reach of most people, a compulsory license may be granted upon request. Third, a compulsory license is granted if the invention was not carried out within India. Article 83 clearly states that the reasons for granting patents are not just for facilitating the patentees to harvest the benefits of single-handed importation of the patents. Also, the functionality of a patented invention is not tantamount to mere importation, as indicated on page 43.

Imposing an involuntary contract is the basic tenet of the compulsory patent license. In this case, the patentee is Bayer, who is also the manufacturer of Nexavar. Using patented technology attracts compensation to the patentee. The latter is usually part and parcel of the agreement.

The TRIPS agenda has to be included in the intellectual property ideals as adopted across the globe. In any case, the growth of world trade coupled with the rising importance of international intellectual property rights has brought a sharp focus on matters related to patents as was the case for Bayer. Section 84 of the Indian laws read above ought to be investigated to establish whether it is in tandem with the WTO TRIPS provisions. The existing provisions may be inadequate.

The following entails some of the relevant WTO TRIPS provisions worth discussing at this point. It is crucial to mention that the provisions are related to the aspect of patents’ rights and intellectual property. By comparing the Indian and WTO TRIPS patent rights provisions, it is possible to come up with a fair conclusion regarding the compulsory license granted to Nexavar.

TRIPS agreement emphasizes the enforcement of laws and regulations regarding patent rights. Other provisions include terms of protection, revocation, unauthorized use, exceptions to patent rights, disclosure requirements, the scope of patent rights, and the criteria used for patentability as well as patentable subject matter.

Article 27 of the TRIPS provision prohibits all acts that are inclined towards discrimination. This article assures the fair availability of patents when it comes to the enjoyment of rights provided by the patents. The article emphasizes that discrimination must not be exercised at all costs. In light of these legal provisions, the article points out three key considerations. They include locally produced items or those imported, the technological field, and the place where the invention took place.

Article 31 of the TRIPS agreement is keen on unauthorized use. The article points out and highlights the reasons why compulsory licenses may be granted by a state. They comprise conditions and guidelines to be followed by governments before considering issuing involuntary licenses. The conditions are meant to protect the patent rights of the owner of a product. There are instances when state governments may unjustifiably abrogate such rights. Also, article 31 clearly states that all the terms and conditions must be followed by officers who grant a compulsory license.

It is also crucial to explore the key features of Article 31 as contained in the WTO TRIPS agreement. To begin with, all the applications made to the control board that deals with patents ought to be individually considered as stated in 31(a). Second, reasonable efforts by the proposed user are necessary when it comes to the process of acquiring authorization. This implies that the user should be knowledgeable enough regarding the terms and conditions to be used. The terms must be of a commercial nature and well thought out. Additionally, the individual case presented is supposed to occur within a reasonable length of time.

Hence, a well-documented period of time is crucial before such applications can be presented to the patents control board. Section 31 (c) states that the stipulated laws are expected to govern both purpose and scope. In section 31(d & e), the WTO TRIPS agreement notes that the applications must be non-assignable and non-exclusive. Unauthorized use also highlights the need of a product to benefit the local market first. Hence, the benefits of a patent should be first enjoyed locally even when it comes to the pricing of products.

However, the TRIPS agreement allows forthwith termination of patents rights if the original purpose of issuing it no longer exists or the perceived benefits are likely to be missed out on continually. The article also emphasizes that adequate remuneration ought to be part of the benefits to be enjoyed. It is a requirement to review all decisions that touch on matters related to unauthorized use.

The decision made by India to issue a compulsory license to Bayer bears several implications. The patent controller in India argued that Nexavar failed to meet the basic threshold in the Indian market. In other words, reasonable public needs were not met by the patented drug. The controller also observed that the price of the drug was too high.

The Canadian case elicits yet another point of legal perspective regarding the TRIPS agreement. The Canadian panel reported on safeguarding pharmaceutical products and observed that article 27 of the TRIPS agreement demands all the exclusions of article 30 be adhered to. The panel argued that the place of production, the technology used, and discrimination are the only exclusive limitations pointed out in article 27. Therefore, it implies that specific challenges that may be encountered in certain product areas cannot be addressed by the concerned control boards. Bonafide exceptions are not prohibited in article 27. When deliberating on the issue of discrimination, it means differential disadvantageous treatment and therefore it is a pejorative and normative term.

The TRIPS agreement also contains three key features that are worth considering in light of the compulsory issuance of licenses. The most important feature is the standard being used, especially when executing a fair trial in intellectual property disputes. Each member is supposed to offer basic standards of protection as stated in the agreement. For example, specific rights are supposed to have permissible exceptions. Conferring of rights must also be made clear. Moreover, the subject matter to be safeguarded ought to be well known.

Enforcement is the second feature of the TRIPS agreement. Intellectual property rights must be enforced using well laid down procedures at the local level. Several general principles have been laid down by the agreement. Hence, all IPR enforcement processes should follow established guidelines. The last crucial feature of the TRIPS agreement is dispute settlement. All the obligations of TRIPS ought to be respected when undertaking the processes of settling disputes.

Going through the Paris Convention under article 5(a), a few crucial legal implications of patent rights stand out. For instance, if the patentee decides to import in a country where patent rights were issued earlier, the patent cannot be forfeited at all. Legislative measures may also be taken by any country that belongs to the union on matters regarding the issuance of compulsory licenses.

The latter may be triggered by several factors, such as failure to work as stipulated in the patent. Section 5(3) of the Paris Convention notes that if there are any significant abuses by the patent holder, the patent can be forfeited, followed by mandatory issuance of the license. Before two years expire after the initial granting of patent rights, patent rights cannot be revoked. Forfeiture proceedings cannot be initiated either (Seckelmann 51). Insufficient working or failure to work cannot be used as benchmarks for granting compulsory licenses before the legally stipulated period expires (three years).

TRIPS and the Paris Convention display several similarities that cannot be ignored. For example, Intellectual Property Conventions are covered in Article 2. Members are supposed to adhere to all of the first 12 articles as well as the nineteenth article as contained in the Paris Convention. There is also an emphasis on the need to avoid derogating from the laid down rules and regulations as documented in the earlier conventions held by TRIPS. Respect for integrated circuits is necessary.

Key findings are evident in India’s compulsory issuance of the license. First, only about 2 percent of the targeted patients were reached by Nexavar, according to the Controller. However, the Controller ignored some crucial points of consideration. The market was actively supplied by the alleged infringer. Moreover, eligible patients also had the option of buying substitute medicines from the Indian market, and so Bayer was not operating as a monopoly. At the point of granting the compulsory license to Nexavar, it has a very limited role. The drug was also subjected to innumerable market conditions.

The decision made by India to issue a compulsory license leads to the second most crucial finding. Nexavar was not affordable to most of the eligible patients in India. According to the controller, buying the drug at slightly above $5,000 per month per patient was not economically justifiable.

The third finding was that the working requirement required local production. The controller argued that since Nexavar was not manufactured in India, the patent held by Bayer was used in overseas production (Seckelmann 44). Therefore, it contradicted the local legal requirements. The mandatory working requirement cannot be satisfied when the drug is imported from overseas facilities. Therefore, manufacturing the drug outside India whereas the patent was issued in India contravenes the local legal provisions according to the government Controller.

Terms and conditions for the compulsory license also exist in India. Natco is supposed to sell its generic drugs for less than $176. This refers to the supply for a whole month for an eligible patient. Additionally, Bayer receives a 6 percent royalty from Natco. The patient term that remains is equal to the length of time that the license will remain valid.

Hence, regarding analyzing the decision taken by the Controller to issue a compulsory license, it is evident that the TRIPS agreement was violated to some extent. In particular, article 27 prohibits discrimination of any kind. Hence, the decision violated the anti-discrimination provision. As much as working requirements are allowable, the agreement stipulated by TRIPS safeguards the patentee’s basic rights when it comes to meeting the threshold of a state’s working rules and regulations, especially on aspects such as local manufacture of goods or importation of goods produced outside a country.

It is crucial to state that issuing a compulsory license has its safeguards that ought to be followed. In the Nexavar case, the Controller did not stick to the set of legal provisions. The TRIPS agreement under article 31 clearly states the necessary safeguards (Frankel and Gervais 1210). From a legal perspective, the case-by-case basis is one of the notable violations in the decision taken by the Controller. The Controller was also supposed to negotiate with the patentee in advance before granting the compulsory license. If the reason for granting the compulsory license is no longer evident, the whole procedure can be revoked. That is yet another violation committed by the Controller.

Articles 31 (a) and (b) of the TRIPS agreement also elaborate on the legal provisions of granting the compulsory license. For example, individualized consideration requirements are ignored through the justification of the license and the reasonable pricing trigger. Furthermore, the Indian public is highly likely to argue that the products are costly, bearing in mind that they are covered by patents. Article 31(a) appears to be in tandem with the reasonable pricing need as applied.

A closer look at article 31(b) in the TRIPS agreement reveals there is no evidence that Natco received a license on appropriate terms and conditions within a sound timeframe. Second, the only piece of communication that Bayer received from Natco was the plan to request a license. Article 31(b)’s requirements cannot be satisfied with a mere notification from Natco (Cardwell and Ghazalian 273).

Questions

Therefore, India’s Compulsory License constitutes unlawful discrimination based on the above arguments. Whether a product is imported or manufactured locally, the TRIPS agreement abhors any act of discrimination. It is also vital to mention the fact that the Paris Convention 5(a) permits countries to grant a compulsory license under certain conditions.

Compelling local manufacturers and avoiding working patents in a country solely through importation are not permissible according to the Paris Convention (Jain 36). The rule partially survives the TRIPS agreement because the latter allows a few exceptions when importing goods from outside. For example, if the initial conditions no longer exist, article 3(g) of the agreement highlights that compulsory licenses may be stopped the moment the stipulated conditions are no longer functional.

Article 27’s banning of discrimination in making patent rights “available” and “enjoyable” imply that individuals, groups, and companies have the right to be safeguarded with patent rights. The same rights are supposed to be enjoyable in the sense that the legal provisions can accommodate various concerns while safeguarding their interests. However, granting a CL for lack of local working violates this part of article 27, especially if the appropriate length of time has not been completed. Granting a compulsory license is not anticipated to take place before three years elapse even if there is evidence that it does not work (Cardwell and Ghazalian 270).

Advanced negotiation with the holder of the patent before a mandatory license is granted is a legal requirement. However, the CL can be structured in such a way that the initial laid down agreements contain the clauses for compulsory license and when they can be granted without consultations. The WTO panel ought to assess the cost of operation undergone by the firm, carry out a cost-benefit analysis, and eventually compare their findings with some of the notable past case studies to decide the adequacy of remuneration.

Works Cited

Cardwell, Ryan, and Pascal Ghazalian. “The TRIPS Agreement as a Coercive Threat: Estimating the Effects of Trade Ties on IPR Protection Regimes.” Global Economy Journal 15.2 (2015): 257-275. Print.

Chaves, Gabriela Costa, and Maria Auxiliadora Oliveira. “A Proposal for Measuring the Degree of Public Health-Sensitivity of Patent Legislation in the Context of the WTO TRIPS Agreement.” Bulletin of the World Health Organization 85.1 (2007): 49-56. Print.

Frankel, Susy, and Daniel Gervais. “Plain Packaging and the Interpretation of the TRIPS Agreement.” Vanderbilt Journal of Transnational Law 46.5 (2013): 1149-1214. Print.

Jain, Tarunz. “Compulsory Licenses under Trips and Its Obligations For Member Countries.” ICFAI Journal of Intellectual Property Rights 8.1 (2009): 27-50. Print.

Seckelmann, Margrit. “From The Paris Convention (1883) to the TRIPS Agreement (1994): The History Of The International Patent Agreements As a History Of Propertisation?.” Journal Der Juristischen Zeitgeschichte 14.1 (2013): 38-60. Print.

Trips: Text of the Agreement 1994.

The forthcoming WTO round table negotiations to be held in Doha, Qatar will help to open up the international market, thereby ensuring increased export and import of goods and services. As such, manufacturers and exporters in Canada are convinced that the participation of Canada in the WTO negotiations is a very crucial decision. More than ever before, businesses in Canada are today enjoying friendlier rules and regulations on investment and international trade.

Since 1989, Canada has witnessed a two-fold increase in the dollar value of goods and services exported (Canadian Manufacturers and Exporters 5). 1989 is an important milestone for the Canadian Manufacturers and Exporters (CME) because in this year, the Free Trade Agreement between the country and its neighbor, the United States, was launched. It is also important to note that at the moment, Canadian exports are enjoying a three-fold rate of growth, in comparison with the country’s rate of economic growth.

On the other hand, manufacturing production in Canada is mainly export-oriented, and has witnessed a two-fold rate of growth in comparison with the country’s Gross Domestic Product, a clear indication that the Canadian economy is rapidly relying on a secure and open access to the global market.

This is a further justification that indeed, Canada needs to engage in the international trade in order to sustain the growth of its export/import sector. In addition, Canadian organizations have lately been seen to invest more in their abroad markets. This has seen an increasingly larger number of Canadian companies opting to open up and expand their operations in the international market (Canadian Manufacturers and Exporters 5).

What this means is that there shall be an increase in foreign direct investment flowing from Canada to the international markets where the various Canadian companies have made their investments. This is bound to increase Canadian’s export opportunity in the years ahead. In addition, this is also a chance for the various businesses in Canada to assume a participatory role in ensuring that their investments in the international markets are not subjected to discriminatory and unfair treatment.

The forthcoming WTO negotiations are being held at a time when the global economy is recovering from a period of economic slowdown. As such, the new round of WTO talks is important in helping to promoting economic recovery and growth. The WTO negotiations are aimed at reducing distortions and trade barriers in as far as international trade is concerned. This is an important undertaking because it will help to improve the living standards of not just the developed nations, but also the developing ones.

Will the expansion of free trade would be beneficial to the Canadian economy?

The expansion of free trade would be beneficial to the Canadian economy because of the revenues generated though the sale of goods and services to consumers across the globe. This will translate into good-paying jobs and as a result, the living standard of the Canadians shall also improve. The Canadian’s economy largely depends on the ability of the country to manufacture and sell its goods and services all over the globe (Canadian Manufacturers and Exporters 5).

Even among the Canadian population, the importance of trade in elevating their economic well-being is well understood. For example, according to the results of a poll survey commissioned jointly by both the departments of International Trade and Foreign Affairs, and which was undertaken by EKOS Research Associates Inc., it emerged that 85% of Canadians are of the opinion that international trade contributes greatly to the country’s economy.

68% of the respondents to the same poll were also optimistic that when there is an increase in trade, this usually results in better paying jobs for the Canadian workforce. Canadian’s exports account for 45.6% of the country’s GOP, and this represents a 25% increase as recorded in 1990 (Canadian Manufacturers and Exporters 6).

What this indicates is that Canada’s exports relative to the country’s GOP are four-folds those of the United States and three times that of Japan. As such, this is a clear indication that Canada is an export-oriented nation. Besides the apparent growth in Canada’s exports, there has also been a change in terms of their composition, largely because the country has now embraced the concept of a knowledge-based economy.

Although such commodities as minerals, timber and grains are still important components of Canada’s merchandise exports, nonetheless, in recent years, Canadian companies have been seen to shift towards the provision of financial, environmental and engineering services, and are now regarded as global leaders in the provision of these services.

Consequently, such non-resource categories as equipment, machinery, as well as high-voltage products now account for over two-thirds of the merchandise exported from Canada (Canadian Manufacturers and Exporters 7). As such, the WTO negotiations shall enable Canadian companies to fully benefit from new opportunities emerging in the international market, and more so in the field of service provision.

However, CME is fully aware than open trade due to free trade in the international market shall impact positively and negatively on the country’s export and import market. Once of the issues that the CME needs to take into account is the issue of competition. Nonetheless, the CME need not fear being faced with competition. This is because the uninterrupted flow of capital, goods and service across the Canadian borders shall ensure that the Canadians benefits fully from the international market.

Access to the international market shall enable the Canadians to access the best goods and services from all over the world. In addition, Canadian exporters shall have the chance to sell their goods and services to the most promising markets across the globe. For example, they shall be in a better position to choose the best partnership and investment opportunities, effectively enabling them to access a poll of capital from across the world.

When the Canadian market is opened to foreign competition, this shall help to boost the living standards and productivity of the Canadians in a number of ways. To start with, imports penetration shall force the Canadians to concentrate on the comparatively productive exporting sectors and abandon the less productive ones.

This is bound to raise Canada’s overall productivity (Canadian Manufacturers and Exporters 7). On the other hand, domestic suppliers may opt to resist import penetration and as a result, they will be in a better position to improve the quality of their products and services, reduce costs, and enhance their productivity.

Therefore, although foreign competition may not actually result in an increase of the market share, nonetheless, the ensuing spur in competition shall act to sharpen the innovative spirit of the Canadians at home. Therefore, in contrast to the trade negotiations logic, there is need for nations to open up their markets for purposes of economic interest.

Would alternative strategies be suitable?

If at all the world trade is to benefit from multilateral expansion, there is need to consider alternative strategies, for example, by ensuring that rules and regulations relating to the multilateral trading system are followed. This will ensure the expansion of the Canadian export and import industry and by extension, the country’s national economy.

Embracing of the WTO system would ensure impartial and automatic resolution of all forms of controversies that falls under the WTO agreements. Moreover, the system also ensures that the requirements to the agreements are clear, and those who seek to violate them are subjected to the full trade sanctions consequences.

Liberalization of trade, as opposed to imposing of sanctions, would be more suitable in helping to enhance the established mechanisms for settling disputes. In addition, governments should be in a position to impose and improve their own standards, according to the situations facing them (Canadian Labour Congress 5). In addition, the interest of the general public needs to take precedence over the interests of the private sector.

As a member of the WTO, the Canadian government should endeavor to pursue an agenda aimed at zero rating tariffs on services and goods used in pollution control devices. This is a welcome respite that demonstrates that the manufacturing sector in Canada is not just concerned with profits, but is also concerned with helping to reduce environmental pollution.

Trade barriers should also be reduced on the agricultural and energy products. The issue of imposing trade sanctions against some of the WTO member countries who have failed to implement some fundamental labor standards is likely to feature in the next negotiating round table (Canadian Labour Congress 6). Towards this end, the CME has appealed to the Canadian government to oppose any move to impose labor standards sanctions.

The use of trade sanctions as a weapon of punishing poorer countries only acts to cripple the ability of such countries to enhance their domestic labor standards, in the long-term. In addition, in order to ensure the success of the new round of negotiations, it is important for the developing countries to possess the necessary training tools so that they can participate in a more meaningful way.

In this regard, Canada could assume the leadership role by way of hosting/funding projects. In addition, Canada can assist the governments in the developing countries to draft and implement regulatory and economic reforms.

Works Cited

Canadian Labour Congress. Current Multilateral Trade Negotiations: The Need to Reassess Canada’s Priorities. 2002. 02 March, 2011. Web.

Canadian Manufacturers and Exporters. A CME Perspective on WTO Negotiating Issues. 2002. 02 March, 2011 Web.

Introduction

The purpose of this report is to assess the impacts of the World Trade Organization (WTO) on the economy of Saudi Arabia, and this report concentrates on background of WTO, the positive and negative influence of WTO on different sectors.

A Short Summary of World Trade Organization

Background to WTO

The World Trade Organisation (WTO) is the platform established by the victorious nations of the World War II as a long bargained outcome of GATT to ensure the open opportunity of free market entry for the developed countries in the market of less develop and backward nations. At the conclusion of World War –II, the winner countries urged to establishing some institutions those would negotiate and mitigate the conflicts of the developed nations to capture the global market and to make backward nations bound to provide hindrance free market entry for them. The major motivation of the Great Wars were the competition to capturing foreign markets by the imperialist countries for unfair trade and exploitation and the concluding principles of the WW – II¹, were tenacity of resolving and put a stop to war by means of the UN² to removing the economic conflicts by founding global organisations for economic negotiation.

Introduction, Establishment, Membership

Crowley (2) pointed out that, though the WTO has formed in 1995 as a new global organisation, it has rooted from the Bretton Woods Conference of the finance ministers of winning nations towards the end of WW – II³, where the ministers urged for a new global monetary system to prop up post-war modernisation, economic conflict resolution, and establishing peace. The outcomes of the BWC⁴ at first glance generated two of the most significant international organisations such as ‘International Monetary Fund’⁵ and the second one is ‘International Bank for Reconstruction and Development’, which has later shaped as ‘World Bank’ and the third one is ITO⁶.

Due to non-cooperation of US government for ITO, ‘General Agreement on Tariffs and Trade’ was introduced in 1947 with twenty-three introductory members to a settle rules of governing trade among the countries in a decreased import tariffs for the members which turned into 123 countries in 1994 until abolish. The GATT had enacted as a treaty without establishing any formal institution, but included a diminutive secretariat in Geneva with very a few institutional tools to bargain, negotiate different dilemmas among the members, and to rising different barriers for the non-members that would motivate them to joining in this accord.

In 1950, USA has withdrawn its membership from ITO demanding major rectification that speeded up the necessity of alternative platform and in the Uruguay Round of GATT in 1994 has urged to establish World Trade Organization⁷ that came into execution in 1995 by replacing GATT with US support.

All countries or customs territories of the globe that has occupied sovereignty to carry out of its own trade policies and agreed to comply with the terms and conditions of WTO would be qualified to becoming a member of the organization through a four-stage process (WTO, 1). At the first stage, the government of the applying country would place a memorandum of understanding regarding, then negotiate tariff rates, market access commitments with others, get consents from the existing members, signing protocol to joining WTO. All member countries would enjoy the opportunities of the WTO system and must follow the obligatory terms to liberate tariff barrier to ensuring the market access by other members arguing as a means of balance of rights and obligations, no matter how the national economy would be distressed or not.

WTO (1) mentioned that the organisation started its journey with 128 members of GATT who were the signatories of Uruguay Round and the number of current member countries is 153 accounted on 23 July 2008. The organisation also has 31 observer members who are capable to start attainment with WTO negotiations contained by five years of having observers’ member (WTO 1). After a long discussion, like other members, Saudi Arabia gets the member of WTO at the end of 2005.

WTO Profile

The WTO is a single international trade organisation that operated and administered trade affairs among diverse nations globally, born in 1995 after long negotiation of the Uruguay Round (1986 – 1994). Key function of the entity has to negotiate and sign of massive global trade projects and additionally, ratify bin the parliaments. Alternatively, goal and objectives of the WTO is to provide support to the producers in order to export and import of goods and services (Lonympics 1).

Table: Key dynamics of WTO

Source: Lonympics (1)

Saudi Arabia’s Membership in the WTO

Summary about the Saudi economy and the different local sectors

Bertelsmann (13) pointed out that the development plans of Kingdom of Saudi Arabia have emphasised to back up its emergent private sector with significant importance on non-oil sectors along with rising effectiveness in the industrial sector of the country while the concurrent long term planning⁸ has centred on growing FDI inflow, escalating economic diversity, and improving education and human resources. KSA⁹ has announced the largest budget. The kingdom’s ever-prevalent budget of US$ 126.7 billion in 2009 pointing to the increasing job opportunities both in public and private, acceleration of education, social services and technological enhancement as well as Information technology integration while the central bank of KSA aliened to utilise the tools of monitory policy to overcome the impact of global financial crisis.

It is remarkable that the KSA has increased government expenditure for 15.8% while the national budget has sharing out 36% above allotment than the previous year and the budget has also allocated huge amount for housing, social security, non-oil export and agriculture including the improvement of Human Development Index and gender equality. Bertelsmann (14) added that the HDI¹⁰ of KSA is 0.812 and it has placed at the 61^st position in the global index and stands at 92^nd position out of 93 countries for Gender Empowerment Measure of the country.

However, Saudi Arabia is one of the economic powers of seven members of the GCC¹¹ and their economy is purely base on oil and petrochemical industry. More specifically, rapid economic growths of Saudi economy are mostly draw and developed by oil production and import and in addition, globally, Saudi is the largest oil producer as well as importer. Alternatively, 90 % of Saudi national export occupied through the oil industries and almost 75 % annual government revenue earned from this segment. Moreover, one fourth of global oil reserve has kept by Saudi, which is around 263 billion barrels. In describing Saudi economy, here it has to pointed that by constructing and joining in the GCC, Saudi has succeed to foster their both regional economic expansion as well as regional peaceful co–operation. Here are the common economic facts of Saudi Arabia (BNEA 1).

Table: Saudi Economic Profile

Source: BNEA (1)

Since, Saudi Arabian economy grounded on oil-based industry, their economic planning has rather emphasise on foreign investors in order to diversify their economic sectors. Following are the most significant local economic segments of Saudi economy. (OSEC 4)

Oil & gas

With direct involvement of government Saudi always intent to make proper use of Nation’s natural gas, petroleum and petrochemical sectors and as a result, they achieved tremendous oil production capacity of 10 – 12.50 million BPD¹² with an investment of US $ 50 billion. Though during global economic recession, petrochemical projects cost had little bit slowdown but the Saudi Aramco efficiently perform to continuing new ventures and these generates three¹³ new oilfields during June 2009 commencing oil production.

Financial service sectors

Saudi capital market is a significant sector of their local business areas and recently they have approved new Capital Markets Law to encourage more foreign investments. This law has more emphasised on the Stock Exchange where non–banking financial intermediaries has already issued by the CMA¹⁴.

Engineering services

Being a member of GCC and the WTO, Saudi Arabia has already captured major portion of the engineering services market of GCC members. Alternatively, foreign consulting firms have flexible scope of establishing their service centres with or without local partners but in this case, foreign equity should not exceed 75 % of the partnership of the total investment.

Health care and medical equipments

Local healthcare sector of Saudi has earned satisfactory growth in recent years, and meet increasing demand of medical equipment as well as superior healthcare services, Saudi intend to increasing their investment within 2013 from US $ 2.64 billion to US $ 3.48 billion with an expectation of annual growth of (7–12) percentage within 2012.

Pharmaceutical products

Consciousness for better pharmaceutical products of Saudi people has radically developed greater than before, Saudi local pharmaceutical market condition is not yet satisfactory since 98 % of medicine, and other pharmaceutical products needed to import.

Insurance sector

Within last decade insurance market specially health insurance and motor vehicle of Saudi has developed and improved as a safeguard against risky workplace and the end of 2011 total market value of this sector has expected to grow US $ 40 billion.

Transport

In the area of construction especially at transport system¹⁵, Saudi has superior efficient network to connecting their core commercial plans and projects. In recent years, SARO¹⁶ has taken initiative to constructing new railway networks in order to modernize their current local business track.

Electrical power generation equipments

Globally, Saudi is one of the strongest as well as attractive markets for consuming highest volume of per capita power. A recent government circular announced that within 2012, Saudi industry consumption would demand 50,000 MW for the next twenty years and to meet the increasing demand government policy planned to invest US $ 30 billion State’s power generation projects with 7.0 % annual growth rate.

Water resource equipment

Like other natural resources, pure water supply is another demanding local sector of Saudi and government has efficient to produce daily 2.20 billion litters¹⁷ form their 30 desalination water supply plants and in addition, to reassess water tariff government has already taken policies to encouraging State’s water projects.

Telecommunication services

A local telecommunication sector of Saudi is another dynamic local business segment since through privatisation in 1998 and additionally, the STC¹⁸ has currently handled major local telecommunication projects. However, now Saudi telecommunication cannot achieve absolute market growth but entrance of more local and foreign operators would make Saudi the global second largest telecom operators by growth rate and market volume.

Building construction market

With a fierce local competition, Saudi construction market is enough robust for building construction and supply of building products and services.

Processed food and beverage

Locally, Saudi has large scale of processed food¹⁹ manufacturing plants and with their trade partner UAE; several famous foreign companies export those worldwide.

Foreign education and training institutes

Recent Saudi government ruling has paid attention on international education curriculum and training infrastructure by issuing nineteen licences for the international school, 36 college and other higher education campuses here.

The governmental aim of joining the WTO

13 December 2005 Saudi joined in the WTO as their 149^th member after long negotiation of twelve years. Common function of the WTO has to deal with inter-regional trade-offs and additionally, execute as a chief arbiter of global trade clashes. Whenever it was ideal time for Saudi to participate in the global free economic system, Saudi had face great challenges and crisis of business standards to improve their productivity as well as professional efficiencies. Regarding this dilemmas, Saudi government has defined the accession into WTO as an evaluation of turning towards global economy with aspiration of greater range of transparency and accountability. Alternatively, motivation to join in WTO has also considered as generating of higher investment flow as well as vacant of significant number of job scopes. On the other hand, local investors and business holders have also optimist about State’s economic reformation through radical economic changes. Here are the two major governmental motivations of joining WTO (Saudi Arabia News 1).

Higher inflow of FDIs²⁰

Government’s first motivation to positively respond towards entrance of WTO to attract higher FDIs for the development of existing oil production and oil industries as well as expansion of Kingdom’s diversified economic sectors. More specifically, expansion of export sectors through prioritizing State’s local petrochemical industries. On the other hand, competitive price of Kingdom’s natural gas is also an attractive market for the foreign investors and in addition, government has already accounted that Saudi energy sector has grown exponentially with 7 % annually to meet global supply of both principal and intermediate petrochemical products and services.

Expansion of Banking Service Options

Expansion of foreign baking service is another prime motivation of Saudi government to be member of the WTO and current scenario of Saudi foreign sectors has exhibited that there has significant number of foreign licensed banks branch with a foreign equity of 60 % with was 40 % before finalization of WTO membership. For instance, BNP Paribas of France has already established their branch in Riyadh and in addition, announced to open additional new two branches in Saudi as soon as possible for more competitive market.

Positive Impacts Locally

WTO membership has many positive Impacts on the different sectors of Saudi economy; such as, Saudi market is now fully open to external markets, establishment of the Supreme Economic Council, and other similar councils, and the government has passed a number of legislation to organize the Saudi market for implementation to the agreements laid down by WTO. However, Saudi Industrial Development Fund stated that KSA’s accession with WTO is usually expected to assist the amalgamation of the Saudi market into the global market, and intended to increase foreign direct investment, reduce unemployment rate, and develop the industrial sector of this country by escalating Saudi products and services’ capacity to reach global markets.

• The KSA’s membership of WTO would create the scopes to increase earning from exports in external markets and this accession will protect Saudi Arabia against unilateral measures, anti-dumping duties as well as biased commercial policies implemented by other countries;
• Though, Saudi customers would also enjoy the advantages of competitive prices, high quality products, and freedom of choice from diversified product line, but open market makes the local companies to be more careful and efficient in the production department to compete with foreign companies;
• Saudi Arabia has maintained stable regulatory system and followed international financial standards, which strengthen banking sector;
• In addition, joining with WTO will encourage to reform the present financial program to develop Saudi economy (SIDF 1);
• Saudi Industrial Development Fund reported that implementation of the investment related agreement would form favourable situation to attract investment inflows, and according to the WTO report, Saudi Arabia was the top recipient of FDI in the GCC countries;
• In addition International and local companies will enjoy greater flexibilities and diversification opportunities, improvement of accessing monetary assets, composition of greater competitive advantage, opportunity for both partners for meeting goals, sharing of modern technologies with raw materials, achievement of economies of scale through size facility, scope of offering preemptive competition, potential influence on government policies, and so on.

However, the accession of WTO has positively influenced the following sectors to shape the Saudi Economy, for instance

Oil and Gas Sectors

Saudi Arabia is the largest oil producer and major suppliers to the US, Europe and Asia and it has already discovered more than 21.0% of the world oil reserves or possessed about 264.1 billion barrels, which considered light, extra light or super light grades of oil; moreover, it has 110 major oil and gas fields along with nine operating refineries. In addition, it is important to mention that oil revenues constituted 85.2% of total revenues in 2009, which influence to develop the operation of other business sectors, for example, a large number of foreign banks started their operation in this country to take the advantages carried out by the expansion of Saudi economy resulted from growing oil revenues.

However, the World Trade Organization has influenced the Saudi authorities to set up a guiding principle that would support the foreign companies to collaborating with of Saudi oil companies to increase production, for instance, long-term joint venture agreement between Sinopec (50%), ExxonMobil (25%), and Saudi Aramco (25%) worth $3.60 bn would held to supply crude oil for the new plant.

On the other hand, Saudi Arabia has been enjoying stable growth in the natural gas sector by successfully utilizing 15% of its total gas reserves and it would be possible to increase the gas production if the oil production is increase gradually; therefore, the accession to WTO would help to boost both oil and gas segments and develop national economy.

Aljarallah conducted a survey to assess the impact of WTO on oil economy, and he found that 50% of total respondents believed that oil-producing countries including KSA had not experienced any particular advantages, 30% respondents stated that it would increase trade, and only 20% respondents said that agreement with WTO provides the opportunity to create new market for the products.

Petrochemical Sectors

Saudi Basic Industries Corporation (SABIC) is the largest petrochemical producers in the Middle East, which established as a non-oil company in 1976 by means of royal declaration alBong with the explicit aim to accumulate value to the hydrocarbon wealth of KSA because byproducts of oil and gas have no direct consumption or market value but left as waste. SABIC also supports the concept of internationalization to return highest value to the stockholders or maximize profit from global operation and it has already captured share in world’s most lucrative market including Europe, America, and Asia. However, This company had to develop its technological infrastructure due to accession of WTO, for instance, it integrates advanced PP Ziegler-Natta catalyst (TiNo) in polymer plant in 2009, and it uses α-SABLIN® technology to commercialize Linear Alpha Olefins (LAO) in chemical market by taking help from Germany. SABIC would like to diversify its product line by sharing raw materials and taking technological help from other foreign companies, for example, acquiring 100% stake in Huntsman Petrochemicals (UK) Ltd by $685m in cash help SABIC to enter UK market and capture the European petrochemical market, and assist to reduce operating cost and minimize business risks from expropriation and nationalization. However, the following examples show the achievement of SABIC after Saudi membership in WTO

• SABIC generates more than 85% of total sales profit from international petrochemical market, particularly in the Far East, where the company is capable to supply its plastic with other items more cheaply than the local competitors;
• In addition, SABIC had signed an agreement with Sinopec Corp to form 50:50 equal share joint-venture company to enter into the Chinese market, which will enhance the function of this petrochemical company because it would like to establish a manufacturing centre for Asia Market;
• Moreover, it has contracted with a famous Italian company Technip in order to share engineering and construction services, and it entered a contract with Japanese company named “Toyo” to develop supply chain management in ethylene and propylene segment.

The membership of WTO positively influenced petrochemical industry because

• Al-Sadoun (1) pointed out that the removal of trade barriers due to WTO bylaws extremely help the petrochemical producers to export at lower prices in the tariff-protected zone, for instance, European, American, and Japanese markets;
• In addition, producers will increase production considering the demand of external market because EU declined from 12.50% to 6.50% tariff on polymers;
• New business environment influenced the management to reduce production and operation cost, increase proficiency level, reduce profit margin, and so on;
• A number of WTO regulations on chemical tariffs and other connected agreements both positively and negatively influenced the petrochemical industry; for example, HS²¹ provided the list of product categories, and uniform tariff classification system, categorize imported goods for functioning the duty and tax collection;
• It is important to mention that the Chemical Tariff Harmonization agreement has positive impact on petrochemical industry though it has no influence on oil industry;
• The Doha ministers-initiated negotiations on the non-agricultural market entrance intended to open trade on non-agricultural products, which incorporate chemicals;
• Over 20 countries have signed CTHA²² which derived from chemical industry proposal and some nations implemented the provisions of the agreement aimed to reduce the tariff rates below the harmonization level, or remove entire tariffs;
• Aljarallah (108) stated that the government of Saudi Arabia will implement growth strategies in order to develop petrochemical industry; in addition, they would like to diversify product range, enter more joint-ventures with large market competitors, concentrate on the identification of current problem and research projects, and improve the quality of the products;

According to the survey report of Aljarallah, about 80% of the total respondents argued that WTO accession has positive impact on the Saudi Petrochemical industry while only 20% stated that this industry has to face unlimited challenge in the local market. On the other hand, more than 65% of the respondents stated that higher entrance to international market will assist Saudi Petrochemical industry to expand and achieved its goals, but 25% respondents opposed this view because affect on the petrochemical industry is ambiguous while WTO offered no particular concession to this industry. More than 95% of the respondents stated that membership to the WTO will assist the country to boost the exports of petrochemical products, and only 5% respondents said that it has no significant impact on this industry; however, majority respondents gave importance on the low rate of tariff to analyze this issue.

Industrial Sector

Saudi industrial segment would affected by following way

• Saudi Industries will positively enjoy administrative facilities and competitive advantages in case of exporting product in the external market, for instance, Saudi Petrochemical industries has prospect to capture large shares global market due to have availability of hydrocarbon materials from oil and gas;
• As the competition for local industry is too high, they have already took measure in order to provide higher quality at lower price and achieve certificates for maintaining international standards;
• The membership of WTO will increase industrial investment to develop technology, manufacture import-substitution products, and boost exports to compete with international industrial sector;
• The government of KSA has already taken measures in order to encourage and support of FDI inflow in the industrial sectors but the authority should also concentrate on some other factors connected with infrastructure and security;
• On the other hand, construction industry experienced few advantages like Multinational Company can enter in the market only buying minority portion of shares, land price is lower for local companies, minimal rates of utility services, and no duties attributable for exporting construction materials, and machineries.

Service Sectors

Insurance

Due to the agreement with WTO, the government of KSA is committed to permit the foreign insurance companies to enter this market and operate its branches directly or establish locally incorporated cooperative insurance joint-venture companies; in addition, existing companies would be able to carry on their business during the transitional period with new services.

Banking Sector

According to the report of Saudi Industrial Development Fund, the Saudi authority committed to open its banking segment for the foreign competition, so, the government has passed new legislation in order to ensure the optimistic business environment that facilitated these banks to keep 60% ownership by foreign banks and rest for local. SIDF further added that the government had issued licenses for ten foreign banks (like HSBC, French BNP Paribas, Deutsche Bank, Swiss Credit Suisse etc) to start operation by opening direct branches while new legislation would empower foreign banks to keeping original name, engage in financial brokerage, uphold management responsibilities, allow for asset management, and enjoy similar treatment like local banks.

Telecommunication

Mahdi (1) stated that Sudi Arabia has to allow up to 70% foreign equity ownership in the country’s telecommunication segment within three years from its accession but public communication services have to provide by the join-stock company, and Alsayrafi (1) argued that entire telecommunication industry will experience robust growth but earlier government monopoly STC²³ would lose additional market share.

Intellectual Property Rights

Moreover, the protection of intellectual property rights is a key promise for the Saudi Arabia under WTO regulation because this country committed to restore investors’ confidence by protecting their technological investments Intel Corporation and SAGIA²⁴ jointly effort $100.0 million venture capital fund to invest in technological firms, which are operating in or connected to the Saudi market.

Agricultural Sector

The KSA has significantly amplified market entrance for agricultural and processed food products by decreasing tariff, reduced limitations on distribution, and established a new SPS²⁵ Regime in order to implement the WTO agreement and meet the global standards by withdrawing controversial “Shelflife” standard and replacing it with the broadly used concept of “use-by” dates. The government of this country has also tried to check and take all other SPS measures, WTO recommendation regarding this sector, eliminate contradictory issues, establish a “Standing Committee” on SPS Measures in order to demonstrate the interest of the government to comply WTO regulations.

Negative Impacts Locally

The Negative Impacts on the Different Saudi Sectors are

• Local companies has to face severe challenge with their products as it would be easy for the international companies to enter Saudi Market due to the agreement with WTO; so, many small companies may fail to carry on their operation in such pressure while multinational will offer quality products at low cost;
• Taking the political and economic credence of Saudi Arabia into consideration, its membership of WTO will permit it to work alongside with other nations possessing analogous interests (emerging economies are primary amid them); in such context, the KSA can use economic strength and manipulate to exploit the globalization movements to its own advantages to the extent that is possible.

Oil Sector

SAMA (26) reported that Saudi Arabia has experienced significant development in spite of the recent global economic downturn and the reduction of the oil price in international market; for instance, Saudi economy has not seriously affected though the average price of Arabian Light descended by 35.2%, and the Kingdom’s daily average oil production reduced to 9.2 million barrels per day. However, initial data of the CDSI²⁶ point out that GDP at current prices (include import duties) evidenced a reduction of 21.2% to Rls 1,409.1 bn and actual oil revenues also declined of 55.8% to Rls 434.40 bn in 2009; as a result, the expansion rate of the oil sector GDP has also fell by 37.9% to Rls 671.10 bn.

Petrochemical Sectors

• It is easy to say that lower tariff will help the petrochemical industry to offer at lower price but practically the number of local petrochemical industry will exit the market if they fail to reduce production cost or offer lower price in this competitive market;

Industrial Sector

Small and Medium Enterprises (SMEs) could confront a large degree of challenges for the reason that interest in these industry-sectors is a comparatively recent development in Saudi Arabia, and the country are still has inadequate marketing and technological development, which is reflected in poor competing capacity both internally and externally. Furthermore, consistency by the means of global principles seems to be an imperative challenge to these sectors, particularly at this time when the regime has devoted to put into practice the deals such as the TRIPS agreement with the World Trade Organisation.

• It would be difficult for high-cost manufacturers in these economies to meet the lower market prices caused by the tariff diminutions and in short-run, they may diminish their production levels and possibly sell at a lower profit margin or at a loss; the petrochemical output in these economies may consequently decline less proportionately than prices. In long run, high-cost manufacturers could egress the industry and thus lessen the number of manufacturers; in reverse, the amplification in demand caused by the lower prices will promote Saudi petrochemical exports.

Service Sectors

MEP (335) argued that the financial service sector of KSA has demonstrated effectual quality and regulation up to seventh dive years planning, but from 2005 by becoming the member of WTO the financial service sector of the county continuously facing the challenges crop up from internal and external forces. They further pointed out that the reality of WTO has thrown the financial service sector of KSA with foremost confronts to address the mounting necessities of financial resources to accelerate private sector and let it to facilitate to creating new job opportunities and financing the local capital market. The implication of the WTO framework of business, KSA needed to amend some existing commercial laws and to some extend it would demand to introduce new legislation such as reformation of Banking sector, effective capital market law for both regulation and operation.

• The services sector (for example insurance and banking) has anticipated to be amongst the first sectors that can confront influences by the KSA’s membership of WTO; on the other hand; the share of foreign partners in commercial banks has programmed to be augmented by sixty percent. In addition, foreigners have expected to be allowed to figure out cooperative insurance companies – as a result, rigorous efforts are required to develop this sector; this can be attained by promoting foreign investment in this area and engaging commercial banks functioning in KSA to modernize their plans and configurations and get occupied in acquisitions to meet challenges of antagonism.

Agricultural Sector

MEP (133) pointed out that throughout the Five Year’s Development Plan up to 1999, the country has gained a real growth of 3.2% per annum in its Agricultural sector including its Forest and Fisheries sector, but it has reduced 5% to 5.3% within 2004 to 2009 and it may considered as a simple impact of KSA’s integration with WTO.

Positive and Negative Impacts Globally

Impact on Asian Emerging Economy

Pérez-Solla (8) argued that the activities of the World Trade Organisation have both optimistic and pessimistic impacts over the Asian emerging economies like China and India. Bhat, Atulan and Mahua (21) stated that according to conformist conjectures, trade liberalization should have benefited the Asian emerging economies more than it benefited leading industrial nations; nevertheless, the trade liberalization actions of the WTO is ought have a greater impact in terms of trade of nations joining the larger integrated global economy than on member nations. It has suggested that the more the change in the terms of trade, the bigger the gain in GDP per capita of the emerging economies – however, the reality is quite different from the proposed theory because since 1940s, the General Agreement on Tariffs and Trade openly exempt low-income nations from the need to dismantle their import-barriers and exchange-controls (Pérez-Solla 14).

The GATT agreement reduced the GDP of today’s emerging economies below expectations, but the permission was unambiguous with the anti global principles customary in former-colonial Asia, where the great depression smacked hard causing the subsequent rounds of liberalization over the first two decades resulting in GATT to bring freer trade and gains from trade mostly to OECD member-states (Dubey 22). However, Wong (4) suggested that these facts do not demonstrate that late 20^th century globalisation preferred developed nations, rather, they demonstrate that globalisation favoured all (industrialized) nations that liberalized and penalized those (pre- industrial) who did not; moreover, some researchers evaluate trade and exchange- control rules in the 1960s and 1970s by considering typical partial- equilibrium estimations of deadweight losses.

It is arguable that in many instances, the emerging economies like China are believed to have benefited from the operational activities of the World Trade Organisation in numerous ways; for example, the country’s attainment to WTO and the resultant declining barriers on import of many foreign products has created extreme concerns to some nations of Southeast Asia (Wong 15). As a new member-state of WTO, China is capable to export more products to the rest of the globe, and these products could contend unswervingly with the ones from Southeast Asia – these worries has based on the proposition that trade liberalization allows China to allocate more of its resources in the exportable segments, leading to development of its exports. According to Bhat, Atulan and Mahua (36), China and many of these Asian countries export similar products and this country, together with some of these Asian regimes compete in similar markets; on the other hand, as the labour costs in China are lower, making the Chinese products competitive (or too competitive) in the third world markets (Dubey 19).

In the Asian emerging economies, trade complementarities can enlarge in two main methods, which are intra- industry trade and inter- industry trade between the two economic territories; in addition, three sorts of indices, to be precise, complementarities index, trade overlap index, and Grubel- Lloyd index, could compute the capacity for trade cooperation as well. All the three indices illustrate that in Indo-China bilateral trade, intra-industry trade seems to play a minor role as there is a huge gap between Chinese import need at individual product level and India’s export to that nation; the revealed comparative advantage index-value demonstrates that India has an advantage over its competitors in primary-products, natural resource, or low-technology manufacturing products. Furthermore, it has identified that India has an advantage over other nations in terms of product groups such as textiles, leather products, engineering, and granite; conversely, India could gain higher market share due to complementarities in product groups of food products as well; nevertheless, India is unable to capture a large share in the Chinese market.

Impact on Sahara & sub-Sahara

Mosoti (34) argued that the conclusion of the Uruguay Round of multilateral trade negotiations was a turning point in the history of global economic relations; apart from accompanying in WTO, the member-states approved to 14 substantive-agreements, many of which specified the exposure and appliance of further general-provisions in GATT that conveyed a definite impetus to the course of further economic-liberalization. While GATT enclosed trade in goods and merely applied to a restricted degree on farming and fabric products, the WTO comprises trade in services and academic asset rights, with trade in all goods, comprising other products of Africa; moreover, there have been strong endeavours to enlarge the WTO’s contact into other areas, for instance, investment, government procurement, and trade facilitation. According to Osakwe (12), though the exemption of trade-facilitation above which World Trade Organisation’s member-states have by now decided to consult, suggestions for negotiations in the erstwhile regions have convened with inflexible confrontation from emerging economies; in this context the Africa Group (AG) in Geneva has played a key role in such areas.

The AG is Geneva-based African trade negotiators formed at the end of Uruguay Round to facilitate African nations pool-up their inadequate human resources jointly and shield their common-interests in multilateral-trade-negotiations; configuration of the AG has augmented the bargaining-power of African countries in the negotiations and made it possible for them to discuss with one voice on important issues (Jauch 13). The group, under the leadership of the African-Union has been relatively effectual in forming alliances to guard Africa’s interests in specific phases of negotiations; for example, during Fifth and Sixth WTO Ministerial-Conferences in Cancun and Hong Kong respectively, AG created the G-90; because of this new alliance, developing nations fruitfully opposed the launching of negotiations on some issue during conference. African nations were mostly absent as players at WTO dispute settlement system in its first decade fueling factors like low-volume trade – 2% of global-trade with export-base characterized by non-contentious single unprocessed-commodities, and complicated and expensive dispute-settlement system; confident assessments of the functioning of dispute-settlement system however cite the superior relative involvement of developing countries when taken as a group. Even though these pretenses off-centered the scenario of developing country partaking, it designates the rising potency of some emerging economies that are energetically utilizing the system to unravel disputes and leverage-influence in enduring Doha-Round of multilateral-trade-negotiations; while confronting peculiarities of developing country attachment, level of participation and articulated concerns of the African Group of countries in the WTO remain absconding.

WTO negotiations influencing fisheries industries in Africa have taken place under a range of courses like tariff negotiations under NAMA and subsidy negotiations under the ‘Negotiating Group on Rules’; the objective of the Doha Round in regard to tariffs is their negotiated diminution on a number of sets of goods, as well as fish and fishery items. In general, one vital issue for African fish-exporting countries is not to obtain lower tariffs in their principal export markets, but to avoid tariff preference-erosion; successful round of WTO-negotiations on reducing or abolishing fishery tariffs would be highly problematic; however, South Africa is an exception as it faces MFN tariff in the EU and might be benefiting from fishery tariff-reductions.

Impact on Developed Countries

Major functions of WTO

Major functions of WTO included, administer WTO trade agreements among different nations by constructing trade forums for trade negotiations. Conversely, the WTO has also assign to mitigate trade disputes regional and international among different nations. Monitoring intra and cross-border trade policies in order to establish member country’s technological support as well as provide necessary support for development training programs and finally, make cooperation among other international trade and humanitarian entities.

Major benefits

Key benefits that provide by the WTO trade programs included that WTO negotiations manners are effective promoting tools for the developed countries to establishing regional and international peace and in addition to handling disputes through constructive strategies. On the other hand, business entities have greater opportunities to enjoy easier life cycle. Alternatively, freer trade has the efficiency to effectively cut costs of trade maintenance and in the area of product and service their trade agreements have offered large scale of product and service line as well as generate larger revenue volume to the producers. Member countries have got benefited through stimulating economic dynamics and consequently growth. Principles of the WTO have great aid to provide higher efficiency to business entity where local government has absolutely free from lobbying and hence, entire system of the WTO has aggregately optimistically encourage good corporate governance. (Lonympics 1).

Major reasons to oppose the WTO

Though there have many more positive implications of WTO deed among nations but following are the significant areas for those developed countries are adversely affected through trade principles of the WTO (Global Exchange 1-2).

Absolute violation of free-trade regulations

Controlling power of the WTO is as much stronger that it can easily affect a developing state’s compel sovereign by changing their domestic constitutional regulations by declaration of violation of the free-trade rules and regulations.

Aid for the rich to be richer

Entire entity of the WTO has operated by the rich nations and as a result, they have worked only for the riches. In this way, they have flexibly weighed up developing nations trade dilemmas. For instance, not yet in this twenty first century solvent nations have not allowed to fully open their trade markets to import products and services from the poor and developing countries.

Violation of human rights

On behalf of the free-trade excuse, WTO has consciously influenced violation of human rights²⁷ in the developing countries through MNCs manufacturing projects.

Undemocratic manners of reducing democratic accountability and transparency

Regulation of free trade offered by the WTO agreement has dramatically reduced democratic accountability and transparency of a developing member State though trade principles by the WTO had written by the nations who has highly appraised to practice of democracy.

Promote privatisation of essential public services

General agreements on trade affairs of the WTO has enthusiastic to enforcing developed countries governments to flexible MNCs operation in order to promote privatisation of essential public services²⁸ and in addition, GATS²⁹ of WTO has already enlisted more than 160 threatened services³⁰ those harshly hampered good governance and public services availability and moreover, encourage racism among global working class communities.

Motivate and mobilise inequality

From 1960 – 1998, global function had improved rapidly but not yet free trade facilities are open for poor countries since WTO trade regulations has motivate and mobilise international and domestic inequality therefore, foreign production projects in developed countries is now seek cheap labour zone. Consequently, valuable workforce and environmental resources have exploited drastically as a result 86 % of global resources are currently consumed by 20 % inhabitants of the world’s richest nation effortlessly where as rest of 14 % is for the poorest 80 %.

Patronize global food crisis

Recent global survey of food distribution reported that world’s 800 million people has suffered from the chronic malnutrition during a year because of the food distribution mechanism has captured by the corporate world. Regarding this issue, agricultural regulations of the WTO has mostly influenced on agricultural policy controlling than food security of a nation and thus WTO patronize global food crisis.

Impact of Oil Economy

Oil economy is the largest market of the Middle East countries where disturbance of oil supply is major cause of political instability. Alternatively, increase of crude oil prices had exognoused regarding to the OECD economies mechanism but significant OECD members have not yet authority of scrutiny in order to crude oil price controlling with the fluctuation of oil demand. Considering this aspects of oil economy and Saudi join to the WTO, there have several robust evidences that WTO oil trade regulations has played a significant role and hence shocks of demand as well as price level of oil composed since establishment of the entity. Hypothetically, oil is a valuable natural asset that unsurprisingly has some prerequisite matter of shocks for demand and supply flow that mobilise real price level during inventory. Conversely, the WTO trade affairs have kept little attention on crude oil inventory therefore, artificial crisis of supply make demand level complex as well as erratic regular oil consumptions. Recent research on WTO impact has pointed that, global financial recession of 2008 influence to increase of real crude oil prices though growth of OECD members and the Asian region strongly emerging for instance, China and India. At the end of this part, it should to quote that, fluctuation oil economic facts has also great impact on US economy along with other significant importing economics like EU. Consequently, importing economics has recently suffered from severe decline of GDP as well as fluctuation of commodity prices though global economy is radically booming. Additionally, WTO impacts on macroeconomic attributes mislead due to fundamental amendment of oil economic policies and WTO policymakers forceful trade-off among fluctuation of oil price with the major economic outcomes. And here it has also significant to remark WTO joining of emerging Asian countries has also greatly affected industrial commodity prices with the change of oil demand (Kilian 28).

The Improvements and Opportunities on the Businesswoman

The CSCCI³¹ of Saudi born to work for mobilising private sectors of the state for rapid growth of national economy. In short, aim of the entity is enthusiastic make an effective role by correlating public, private and women entrepreneurship (ILO 14). Consequence of the statement, the CSCCI has appraised that within last two decades improvements of Saudi businesswomen as well as expansion of their work opportunities has radically progressed. Since creation of the CSCCI, the entity has contributed a pioneering role to reducing obstacles of the interests of Saudi businesswomen. Regarding this aspect, Saudi businesswomen has now got the scope of enjoying vast information accessibility as well as friendly atmosphere to establish new enterprises of both small and large. The CSCCI believed that women entrepreneurs are the significant asset to develop national economy of Saudi sand considering this declaration, in mid 2004 Saudi government had issued following announcement to more expand Saudi businesswomen investments (ILO 69).

All categories of public entities should to allow applications of the women as well as deliver necessary support to make the market more competent and expansion of economic progress.

Based on nature of work and work requirements all of the public entities has oblige to make available separate women departments.

Commerce and industrial department of the government has kept the responsibility to allocate and development necessary land properties where should have industrial business quotas for the Saudi businesswomen.

The HRDF³² of Saudi government has proposed and requested to take prompt initiatives for available training of the Saudi businesswomen therefore; they would more efficient than now to employing their business plan and projects.

Recently, Saudi ministry of labour announced that store holders should have established individual stores selling only for women goods and services with a separate timetable.

Current Constitutional Monarchy is more alert on maternity leave of the Saudi women worker and in addition, government would amend leave duration to preventing their unemployment rate.

Long Term Expectations for the Different Sectors after 5 Years

Since beginning of the fiscal year 1998, Saudi government had announced the LTS 2025³³ in order to occupy extensive progress for prompt recover of the State’s economic challenges. Regarding this government announcement, this part of the paper has paid attention on next five years (2009 – 14) outcome from different economic sectors of the Saudi. Before account of five years economic progress here, it has to focus that, the long-term vision of Saudi has stand on three consequent strategic pillars where the first pillar defines strategies of clear articulation in order to direct the destination of consecutive 20 years. Whereas, the second pillar assemble required policies for success on vision and finally, the third pillar has expressed implementation mechanism of the assembled strategies. In short, here these three segments can be expressed through three questions: 1) What are the demands of economic growth, 2) How does government would achieve their target, and 3) What is the success rate of implementing these strategies. Following are the short profile of Saudi government’s expectations from their long term planning (UNDP 17).

• Increase of per capita GDP with growth rate of 4.20 % annually that amounted through SR 1189.10 Billion,
• Change of expenditure pattern through diversified economy by massive increase of both government; private and foreign investments with average growth rate of 9.30 % annually,
• For a sustainable economic growth domestic economic trends switch towards the sectoral shares pattern and through this manner government expect to earn sectoral growth rate of 7.10 % annually till 2025.
• By balancing savings as well as investments, government has anticipated economic growth rate of investment will be 27.99 % during 2014,
• Proper utilisation of workforce as well as available and potential employment opportunities would be reducing Saudi unemployment dilemmas around 1.48 %,
• Radical improvement of daily life standards at every aspect of life index quality³⁴ with a least value of 119.61.

Conclusion and Recommendation

Recommendation

• The government should accelerate the establishment of a national centre with database to pay attention of WTO affairs and make available related financial, legal, and administrative technical consultancies to assist the private sector in commerce with WTO’s regulations in case of disputes and dumping aspects;
• Though WTO supports SMEs but developing countries many negative impacts in terms of the operation of local SMEs; therefore, the government of Saudi Arabia should focus on the technological development of the local companies and they have to make use of comparative experience to increase production with higher quality;
• The government should arrange training programme to train accountant, legal professionals, managers, and other consultants in order to help he government organisation and private companies to comply the WTO requirements and regulations;
• It is also important to develop the competence of national worker because quality of the products and the future competitive position depend on the skills of the worker;
• In addition, the management team of industrial sectors should executing and developing the industrial integration idea; for instance, large companies should support other small local companies in order to give production facilities;
• National companies in the service sectors should reform their operating system, and develop quality in order to adjust with new business environment and hold market-leading position in own sectors.

Conclusion

The membership of KSA into WTO is supposed to promote the country in many ways; industries like oil, petrochemical, service, and agriculture have proved to be possible areas of profit for the nation, which is proofed from significant contributions to GDP; additionally, the production capacity of petrochemicals is quite high owing to the activities of companies like Saudi-Aramco, and SABIC. In addition, the economic situation of the nation is also optimistic as it has not been affected largely by the recent global financial crisis and the private sector has received its stimulus through the reforms undertaken; moreover, implementing the policies of the WTO would affect all the sectors and promote more liberalization as well as capitalization.

References

Aljarallah, Abdulaziz. Analysing the Impact of the World Trade Organisation (WTO) on the Sustainability of Competitiveness of the Petrochemical Industry in Saudi Arabia.2010. Web.

Al-Sadoun, Abdulwahab. The Impact of Saudi Arabia’s Accession to WTO on Petrochemical Industries. 2008. Web.

Alsayrafi, Faisal. Saudi Arabia’s WTO Membership and the Implications for its Top Firms. 2006. Web.

Bertelsmann, Stiftung Gütersloh. BTI 2010, Saudi Arabia Country Report. 2010. Web.

Bhat, Parmindar., Atulan Guha, and Mahua Paul. India and China in WTO Building Complementarities and Competitiveness in the External Trade Sector. 2006. Web.

BNEA. Country Background: Saudi Arabia. 2010. Web.

Crowley, Meredith. An introduction to the WTO and GATT. 2003. Web.

Dubey, Muchkund. WTO and South Asian Countries: Developing Unison. 2005. Web.

Global Exchange. Top Reasons to Oppose the WTO. 2008. Web.

ILO. Employers’ Organizations taking the lead on Gender Equality. 2005. Web.

Jauch, Herbert. WTO, NEPAD and Social Clauses: a Trade Union Challenge. 2004. Web.

Kilian, Lutz. Oil Price Volatility: Origins and Effects. 2010. Web.

Lonympics. The World Trade Organization (WTO). 2010. Web.

Mahdi, Wael. Kingdom’s WTO Commitments to Help Liberalize Its Economy. 2006. Web.

MEP. Ministry of Economy and Planning KSA: Eighty Five years Development plan 2009. 2009. Web.

Mosoti, Victor. “Africa in the First Decade of WTO Dispute Settlement”.Journal of International Economic Law. 2005. Web.

Osakwe, Patrick. Emerging Issues and Concerns of African Countries in the WTO Negotiations on Agriculture and the Doha Round. 2006. Web.

OSEC. Saudi Arabia Major Business Sectors. 2010. Web.

Pérez-Solla, Emilio. The Role of WTO in the Fight against Poverty. 2003. Web.

SAMA. Forty Sixth Annual Report of Saudi Arabian Monetary Agency (SAMA). 2010. Web.

Saudi Arabia News. Saudi WTO success heralds economic expansion. 2005. Web.

SIDF. The Kingdoms Membership of the World Trade Organization Opportunities and Challenges. 2006. Web.

UNDP. Saudi Arabia: Long-Term Strategy 2025. 2007. Web.

Wong, Kar-yiu. China’s WTO Accession and Its Trade with the Southeast Asian Economies. 2003. Web.

WTO. The 128 countries that had signed GATT by 1994. 2011. Web.

WTO. The WTO: The Organization, Members and Observers. 2011. Web.

Footnotes

1. World War II
2. United Nations
3. World War II
4. Bretton Woods Conference
5. IMF
6. International Trade Organization
7. WTO
8. Eighth Five-Year Development Plan (2005 – 2009)
9. Kingdom of Saudi Arabia
10. The Human Development Index
11. Gulf Cooperation Council
12. Barrels per day
13. Khurais, Nuayyim and Shaybah
14. Capital Market Authority
15. Roads, marine ports, rail network and airports
16. Saudi Arabian Railway Organisation
17. Annually more than 1 billion cubic meters
18. Saudi Telecom Company
19. Dairy products, meat processing, snack foods, beverages, bread, biscuits and confectionery
20. Foreign Direct Investments
21. Harmonized Commodity Description and Coding System
22. The Uruguay Round Chemical Tariff Harmonization Agreement
23. Saudi Telecom Company
24. Saudi Arabian General Investment Authority
25. Sanitary and Phytosanitary
26. Central Department of Statistics and Information
27. Workers’ rights, child labour, the environment and health
28. Education, health care, energy and water
29. General Agreement on Trade in Services
30. Elder and child care, sewage, garbage, park maintenance, telecommunications, construction, banking, insurance, transportation, shipping, postal services and tourism
31. The Council of Saudi Chambers of Commerce and Industry
32. Human Resources Development Fund
33. The Long-Term Strategy 2025
34. Income and Distribution, Working Life, Transport & Communications, Health, Education, Housing, Environment, Family Life, Public Safety, Leisure and Public Services

Case #1 Binding Policy Maker’s Hand

Topic: Problem with the imposed plan of WTO.

Summary

Since the advent of WTO, the economic scenario of the world has changed drastically. WTO has imposed certain restrictions on tariffs and trade. The core purpose of WTO is to manage trade effectively and efficiently and to guarantee the free flow of trade. Countries are experiencing two types of tariffs these are bound tariffs and applied tariffs. Applied tariffs are the tariff rates on imports that are applied by the country. Similarly, bound tariffs are the rates that are applied by the policymakers of the WTO. WTO sets a limit that the tariffs can’t go beyond that limit. When two or more countries decide to set tariffs then the tariff rates are bound rates rather than applied rates. This issue is not present to that extent in industrial countries and both the tariff rates usually correspond closely especially in manufactured goods. However, in certain developing countries the bound rates are well above the applied rates. Similarly, in certain countries the tariff rates remain unbound. Statistics show that the United States and Uruguay have bound 100 % of their tariffs. The same is the case with Sri Lanka as its bound tariffs on 9.2 percent of its import and 1.4 percent are bounded above-applied rates. There are two reasons why bound rates exceed applied rates. Policymakers due to political pressures can’t manage the tariffs and that’s why bound rates exceed applied rates. Similarly, the negotiations of the policymakers of WTO take usually take more time and in the meanwhile applied rates go above the bounded rates.

Statement of the problem

The main problem in this scenario is that when countries are bounded by the law of WTO then the main issue was of tariffs. All the members of the WTO are agreed on the point that they would reduce the tariffs but the rates under and after the negotiation were the bound tariff rates of the country rather than applied tariff rates.

Solution

The members of the WTO should abide by and must confirm the fact that they should reduce tariffs on all the imports. Policymakers should strictly deal with members of countries that didn’t follow the rules. The applied tariff rates must be lower than the bound rates. Countries must not enjoy the negotiating time and they must ensure that applied rates must not exceed the desired limit of the WTO (Narlikar, 2005). All the member countries must ensure that as they are the members of WTO therefore they have to abide by the rules and for that reason they must follow the bounded rates of the WTO. Training and development must be provided by the individuals of the WTO to the policymakers of those countries that aren’t following the regulations of the WTO.

Learning Objectives

This case study gives us a glimpse of the issues that are related to WTO and the implications of the WTO. The WTO tariffs are an issue every country is dealing with. Therefore, every country should understand the implications of the WTO and they must abide by the rules of the WTO. Tariffs on imports must be similar or lower than the bounded rates and they must never exceed the bounded rates.

Case #2 Does Policy Matter? The Two Koreas

Topic: Comparison between an open and closed economy.

Summary

In today’s dynamic economic environment, no country exists on its own. Some countries stay together while some stay apart. Since the Korea split in 1950’s North Korea took the route towards the autarky approach while South Korea pursued more open economic and trade policies. These two countries highlight an apparent example of open versus closed development strategies. The economic indicators shows a notable difference with North Korea suffering from slow or no economic growth while south’s economic growth reaching new heights despite the Asian economic crisis. Hefty military expenditures and an army of about 1.2 million can be treated as one of the major reasons of the slow growth of North Korea. The countries also face difficulties in buying oil at the world prices and because of that the factories are working below its capacities. As a result of which the exports of North Korea become non competitive because of its low prices. The situation gets so distorted that people of this country were suffering from starvation. The country was living on food aid because of floods and failed crop. Numerous talks have been going on regarding the issue of North Korea and that South should help the North in order to regain its place. The project of Tumen river was developed to help the trade related issues of North Korea. After the Korean War a company of South Korea Hyundai won the approval of the government to collaborate with South Korea. Experts believe that North Korea is running on a stable path and their GDP are expected to grow by 25 to 35 percent. The experts are claiming that a huge amount of trade is engaged in the sale of heroin, illegal drugs and weapons. Moreover, after the September 11 attacks the United States suspended the trade between these two countries.

Statement of Problem

The problem in this case is the closeness of the North Korean economy due to which the country is suffering from serious economic drawbacks with its economy’s growth shrinking year by year. This case clearly highlights the importance of the policies in determining the economic pathways for the nations. The nation attempts to being self sufficient doesn’t helps the economic progress as it is obvious in the case of north Korea but this is not the only problem, the improper distribution of the country’s productivity also leads to serious problems with north Korea’s ample share of output going for military expenditure. Another problem is the focus on limited trade partners which in turns lead to low foreign currency reserves it happened with fall of Soviet Union because that was the only partner of the North Korea and till now its factories are running below capacity.

Solution

The policy is the deciding factor behind the success or a failure of any economy. As this is obvious in this case highlighted by the example of two Korean nations, South Korea being prosperous by following an outward open policy while North Korea suffering badly because of the command economy regime. So the solution seems to be apparent that North Korea has to open its door to other economies of the world, appropriately using its resources for the development. Moreover, international organizations should favor North Korea and on all international forums North Korea must be supported. This would help the people of North Korea to attain self sufficiency in all walks of life.

Learning objective

The apparent lesson from this case that in today’s international business environment it’s inevitable for the countries to adopt an open and outward policies for its growth (Krugman & Obstfeld, 2008). With international trade growing, countries need to gear up their resources and to make them in line with the international standards. The resource needs to be efficiently used in the areas of development rather than focusing on the military and defense. Countries should think in the forward looking manner and they must think positively and they must target the bigger picture in order to achieve efficiency and affectivity in their operations.

Case #3 A Special Case: The Reserve-Currency Country

Topic: Issues related to currency pegging.

Summary

Today’s economic environment with all its dynamism constitutes of many economies trading with each other, thus exchange rates hold real importance in the policies of any country. Countries either explicitly or implicitly choose a single currency as their reserve currency and then the central banks fix the rates between its domestic currency and the reserve currency which it holds as its foreign reserves. This system indirectly produces fixed exchange rate between each pair of no reserve currencies. The Breton Woods system in effect from the end of World War II till 1973, the US dollar served as the reserve currency in most of the countries. Private arbitrage kept cross exchange rates between no dollar currencies fixed, because of the profitable arbitrage opportunity as the inconsistency of the exchange rates created this situation. This system creates a unique situation for the policy makers in the reserve currency country because the reserve currency country never has to intervene in the foreign exchange market as each central bank intervenes to keep its exchange rate fixed relative to the reserve currency. This situation entails that the reserve currency country can use its monetary policy to create internal balance while on the other hand no reserve countries face the failure of monetary policy as they must intervene to cover any balance of payments surpluses or deficits, which will offset the effects of the changes in the monetary policy. While on the other hand reserve currency country can use its monetary policy not for itself but also for the entire set of countries. An expansionary monetary policy in the reserve country shifts the LM curve to the right. This would result in the falling of domestic interest rates and balance of payments moves into deficit. The occurrence of this shift is because the lower interest rates generates outflow of capital from the reserve country to the non reserve country. Thus changes occur in the balance of payment line and when its shifts down then the economy of that would experience a surplus of balance of payments from the capital inflow. This situation goes on and experts suggest that if reserve and non reserve countries experience economic ups and downs like recession and booms then the reserve-country policy across the borders will be embraced.

Problem

The exchange rate regimes all around the world are one of the most important constituent of the economic policies and their importance is increasing day by day with rising trade between countries (Mankiw, 2006). Countries pegging their currencies against a single currency always suffer from the failures of monetary policy because of this system while on the other hand the reserve currency country can even influence the economies of non reserve currency country with their monetary policy. The reserve currency country never has to intervene in foreign exchange market as the other central banks keeps intervening to control their fixed exchange rates. The effects of the monetary policy for the non reserve currency country are short lived as they have to intervene in the foreign exchange market to cover any balance of payments surpluses or deficits. Policy makers in the reserve currency country enjoys a clear advantage from their ability to conduct monetary policy under the fixed exchange rate regime, other countries feel the spillover effects of the monetary policy by the reserve currency country, this situation creates real problem when the economies differ in both the countries.

Solution

The countries need to mutually construct their policies as to come to common grounds with each other while taking on their course of actions otherwise it might create real problems for the non reserve currency countries, as the expansionary policy adopted by the reserve currency country harms the non reserve currency country badly if the economy is in recession as the expansionary policy will result in more money stock in the market creating more problems for the non reserve countries. The non reserve countries should try to peg their currencies with multiple sources so as to overcome the dependency of one single country.

Learning objective

This case very clearly explains the mechanism of the fixed exchange rate regime, the pegging of the currencies and thus educates us about the phenomenon that runs behind the international economy. The effects of the monetary policy also clearly identified and also highlight the dependency of the non reserve currency country over the reserve currency country.

Case #4 Non-Traded Goods and the Real Exchange Rate

Topic: Implications of the Balassa-Samuelson effect on Non-Traded goods and real exchange rates.

Summary

International trade is an essential element in the progress of all the major countries. Workers and the labor force in the country are mobile in nature and they usually switch between the domestic arena rather than international borders. Workers mobility is an important factor in determining the rates of productive and the real wage rates. However, the change in the rates of productivity can result in the change in exchange rate or purchasing power parity. The difference of productive growth and real exchange rates is termed by the economist as Balassa-Samuelson effect. Since the wages are rising and the combination of wages with the no productivity growth in sectors which are treated as non-traded results in the rising of prices in the non- traded goods. This effect is usually referred to situations like when yen was dramatically appreciated in relation to the US dollar in the period of 1960 and this goes on till late 1990s. Japan experienced productivity in the traded goods sectors which results to increased Japanese wages, and labor mobility. The Balassa-Samuelsson affect can be explained by evaluating the patters of traded goods and non-traded goods of United States and Japan. History shows that Japan is moving rapidly in nontrade items as compared to United States. The generalized theory of Balassa-Samuelson affect revolves round the scenario that the price level of the richer countries should be higher than the poor countries because countries that have high GDP have higher price levels. Similarly, another important implication of Balassa-Samuelson effect is why non-traded goods usually are cheaper in poor countries as compared to the richer ones. This implication can be explained like when there is low productivity in traded goods it results in low wages in poor countries. India is the most apt example of this scenario.

Statement of Problem

Immobility of workers across the international borders is one of the most important determinants of the international trade theory, and the differences in the countries’ productivity growth cause changes in the real exchange rates. The case highlights this characteristic of world market using the Balassa-Samuelson effect, the phenomena given states that rapid growth in the trade-goods sector leads to a wage rise and with workers being mobile between the sectors this also leads to a wage rise in the non traded goods sector. A wage increase accompanied with no productivity growth in the non trade goods sector results in higher prices for non traded goods as compared to the trade goods in the local economy and with no productivity growth in the foreign non traded sectors, the relative price of the local non traded goods also raise.

Solution

The Balassa-Samuelson effect clearly shows the role of labor mobility, productivity growth and real exchange rate in the determination of economic indicators. The implications of this effect states that countries with higher per capita GDP have higher price levels than the countries with low per capita GDP, but income itself is not a good enough indicator. The non traded goods are found to be more cheaper in the poor countries than in the rich ones because the low labor productivity results in lower wages which in turns leads to lower prices, this implication is common in the third world countries of the world. These implications of the Balassa-Samuelson model help to understand the differences in the real exchange rates between different countries.

Learning objectives

This case analysis provides a detailed overview of the Balassa-Samuelson effect, with it showing the relationship between the productivity growth, labor mobility, and wages, prices in the trade and non trade goods sector and the real exchange rates between countries. It clearly helps to understand the details at the backdrop of many factors of the international economy (Soleman, 2006). The implications of the international economic theories and the difficult nature of international trade can easily be evaluated in this case.

References

1. Krugman, P., & Obstfeld, M. (2008). International Economics: Theory and Policy. Pearson Education.
2. Mankiw, G. (2006). Principles of Economics. South-Western College.
3. Narlikar, A. (2005). The World Trade Organization: A Very Short Introduction. Oxford University Press.
4. Soleman, J. (2006). Economics. Financial Times/ Prentice Hall.

According to Schorkopf and Stoll (200), WTO is an abbreviation for the international body, World Trade Organization. This body is responsible for being the facilitator of trade around the globe, and entails creating multilateral forums in which agreements are made and disputes, which might arise between governments, are settled. World trade Organization has one hundred and fifty three members who account for about ninety-seven percent of all global trade.

The world trade organization is esteemed by the member countries in that it gives a country prestigious status if it enrolled to be a member. When a country joins the WTO, it gains an international status of being one of the most favored nations. The countries that join the world trade organization should also realize that they are equal at such a level and should treat each other fairly.

It is therefore important for a country to be a member so that it is not being exempted from most business transaction. This is because there will be no preferential trade partners once the country joins the world trade organization but rather preference is given to all member countries instead.

The world trade organization deals with trade barriers for the member countries and this boosts their economies in that the countries can sell their produce to numerous countries without too much bureaucracy. It is also possible for member countries to acquire other necessary items among themselves with ease. Tariffs are the charges that are imposed on goods that a country may want to acquire and is not within that particular trading block.

When two countries trade there is always the import quota that is charged on countries as way of trying to curb dumping of commodities in a country. This can also be strategy for a country in trying to maintain the standards of products they produce by trying to restrict more imports. When a country is a member of the world trade organization, there is a lower import quota imposed on the country and this allows a country to expand its market as it is allowed to import goods at a lower cost.

Countries that trade within the WTO have less restriction on the trading policies, this enables their economies to grow faster as they are able to make more jobs by having sale people travel to other countries to promote goods or commodities, and this boosts their sales.

About seventy-five percent of the countries that are members of world trade organization are developing. Schorkopf and Stoll (214) argue that membership of countries in WHO becomes of importance to them as they can easily venture into the market of countries that are developed at lower tariffs as compared to what they would have spent if they independently decided to trade with the same countries.

The opportunity the developing countries enjoy in the world trade with the developed countries also gives them the opportunity to see how the developed countries carry out their trade. In addition, it will enable them to identify important factors to consider if they decide to put up industries to compete at a global scale, keep up with global competition, and maintain standards that have been set by the developed countries.

The world Trade organization has the dispute settlement system for cases between the countries that may have disagreements. This is one of the obligations of the world trade organization and its worth and status is maintained only if it is able to enforce such roles.

The world trade organization is required to enforce these if one of the county signatories does not comply with the obligations that were stipulated for them on their admission. Once the world trade organization effectively settles the dispute, it then increases the values and the seriousness with which the signatories will enforce themselves in the trading and participation at the global level.

It is important for disputing countries to resolve their problems in a timely manner as this will help in preventing effects that may come up from the unresolved global conflicts in the trade market. The world trade organization also mitigates the balance between the strong and the weak participants by having both attended to and considered at a common ground of the rules stipulated without necessarily favoring any side and this will play a big role in determining a fair outcome from the mitigations.

The world trade organization also helps to foster peace among the member countries, as members cannot fight themselves the same case that a seller cannot fight their customers, as they will need them to carry out various transactions. It can be observed that if trade is carried out in an amicable manner then there is a conducive commercial relationship which leaves very little room for political disputes and hence there is peace among the countries generated to the global peace and understanding.

The world trade organization is based on the rules that govern it rather than power. This is because the world trade organization makes its decisions after a consensus is met and it is ratified by the member countries in their respective parliaments. The rich countries and poor countries and both the developed and under developed countries have equal rights when it comes to settling of a dispute. This becomes easier because the developing countries will enjoy a higher power when it comes to bargaining with the developed countries.

According to Schorkopf and Stoll (230), the developed countries also benefit as they use the forums formed by the world trade organizations to negotiate with their trading partners. This simplifies their process of diplomacy and negotiations as it is done at one sitting during the forums, which are held at regular intervals.

This helps them to come up with similar conditions with the countries hence making most transactions easier and simpler to handle. The rule of non-discrimination that applies for the World trade organization members is necessary in making sure that there are set standards and rules that govern how the trade operates.

The world trade organization also helps in cutting the cost of living since it plays a role in the free trade that happens within the member countries. The world trade organization is responsible in lowering the barriers of trade which happens when the member countries get into negotiations with each other and this goes for the non-discriminatory rule that dictates that if one country agrees on one particular policy it should apply for the rest that want to trade with it within the trading block.

Keesing (13) states that there are direct impacts of this policy such as food becoming cheaper for the people in the member countries. The agricultural trade is sometimes deemed as costly due to the barriers but being a member of the world trade organization through mitigations lowers the cost as food is sold to the country at subsidized price hence making the cost of living cheaper.

The world trade organization is going through a major reformation that promises to see the import restrictions on most clothes and textiles that are imported to the member countries either reduced or removed overall. This also applies for the high duty cost that is imposed on clothes imported to a country and sometimes these clothes are affordable to the citizens as compared to the locally manufactured textiles.

If the reform is agreed upon and passed then the cost of living for the people will be lower. The people in the member countries of the signatory members of the World Trade organization have the opportunity to choose from range of items and this is possible due to the numerous numbers of exports made by the countries as well as what they get from imports.

The wide range of imports in a country also make the local industries improve the quality of the goods they produce so that they can keep up with the current competition in the market, which has similar commodities and some may even be from the developed countries (Schorkopf and Stoll 240).

The world trade organization also helps in raising the income of the countries that are their signatories. Economists have looked into the one of the roles of the world trade organization and realized that if it successfully manages to reduce the tariffs and the barriers of trading by one third it would help various sectors.

This would include sectors such as the agricultural sector and the field of manufacturing and the others to boost the economy of the world by six hundred and thirteen billion dollars. Keesing (20) says that additional income means that the government has increased resources to distribute to areas that have fewer resources or those that do not have any and this will generate more income for the same individuals.

The world trade organization also promotes the economic growth across the various countries and this can mean a great deal even to those that are employed. This can be deduced from the fact that companies that are actively involved in the world trade also have a higher need for employees in the various countries to work for the same objective. When the level of employment increases the income increases and the standards of living improves.

According to Kessing (34), the world trade organization operates on the basic principles that it has set and this makes the economic system very easy to work with. Trade allows labor division and this ensures that the available funds have been properly distributed and utilized to ensure that production is carried out and it is highly prolific. The system also helps to cut cost by making the operations more efficient to run and this is a job well done by the principles already enshrined in the governing system of the world trade organization.

The policy of protectionism used by the world trade organization ensures that the respective governments are protected from the narrow interests that may come by their way and may cost them economically in a great deal. In most countries, restricting imports seems like a good way to ensure that local market is protected and the citizens can easily get employment.

However, on the other side, this makes the products that are obtained locally more expensive as compared to those that would have been imported. This generally puts pressure on their incomes, and this lowers the standards of living. The world trade organization tries to deliberate with the governments to come up with a common decision and a reasonable policy that will apply for the other countries Keesing (35).

Schorkopf and Stoll (267) say that the world trade organization also helps in the improvement of the various governments. Transparency, which is necessary in running of a country, is promoted and emphasized by the world trade organization in many ways.

In addition, protectionism is necessary in that it ensures that the countries treat each other with equal conditions and a government can set this. For a government to work with the world trade organization it has to ensure that it meets the rules that have been stipulated earlier on in the forums that are open occasionally to ensure that the trade activities are going on as planned.

With the world trade organization in place, the principles that help in regulating or settling disputes when they arise regulate the countries that seem to be more powerful from exploiting the less powerful countries. This is important for the member countries as it helps them to be in check and regulates the exploitation that may arise when a developed country ventures into the undeveloped countries and reaches to trade at unconventional terms rather than the ones stipulated by the world trade organization.

Works Cited

Keesing, Donald. Improving Trade Policy Reviews in the World Trade Organization. Salem: Library of Congress, 1998. Print.

Schorkopf, and Stoll, Peter. WTO: World Economic Order, World Trade Law. Leiden: Martinus Nijhoff Publishers, 2003. Print.