The World Trade Organization Controversy – Literature review Example
The paper "The World Trade Organization Controversy" is an excellent example of a literature review on macro and microeconomics. The World Trade Organization is a global body tasked with the role of enhancing trade on the international front. It works to reduce barriers to trade while ensuring that countries worldwide reap the most benefits from commerce. However, the WTO has historically received a backlash from both developed and developing countries. On the one hand, the richer countries claim the organization should not exercise its power over them, while, on the other, the poorer countries regard it as a representative of the rich countries. However, its purpose to promote trade interests through opening up barriers, thereby encouraging imports and exports in equal measure, means that huge multinational companies will have access to global markets. This is a cause for concern for the agricultural and food sector. Kenner & Pearlstein (2012) note that the growth of such companies as, say, Tyson, is disadvantageous to the consumer and competitors. The expansion of trade to a global level is also discouraging the sovereignty of nation-states, and reducing the level of control over the quality of food products produced, putting the health of consumers at risk. The role of the World Trade Organization is to expand trade throughout the world, with a move towards globalization. However, globalization has its fair share of criticism; the most outstanding one of which is that less powerful nations have less of a say in the direction such debates take. It appears to the poorer nations that their more powerful counterparts make decisions that have an impact on the course of their lives on their behalf, pushing them to the sidelines. However, the WTO has countered this allegation. Legrain (2004) supports the WTO efforts, bashing the claim that developed countries’ opinions matter less. He refers to Ecuador’s example on bananas, in which the EU had turned down their exports and imposed a host of restrictions that made trade difficult due to the increased cost of export. However, the author fails to mention the fact that exports from developed countries far outdo those from developing ones. Case in point, Chinese exports have flooded the world economy, while their imports have been kept at a minimum. Multinational companies are discouraging competition by allowing their tremendous growth at the expense of smaller players. In the production of food, the Ecuadorian case to which Legrain refers is just an outstanding one in an ocean of multinational corporation exports. Consider, for instance, the role of Tyson. According to Kenner & Pearlstein (2012), Tyson is the world’s largest producer and packager of meat products. Its rise has been attributed to a discovery of ways to reduce the cost of production. One of the ways through which the company has achieved this is by, for instance, using supplements to decrease the amount of time chicken takes to fully grow. By expanding such operations to an extremely large scale by incorporating even small scale farmers, Tyson has grown tremendously over time. Economies of scale dictate that producing things in bulk lowers the unit cost. Due to the magnitude of Tyson’s operations, it is difficult for smaller companies to match their level. Therefore, even though Ecuador does show a benefit of breaking down barriers to trade, multinational companies are set to reduce this impact through their international expansions. Since the rise of McDonald’s, fast food restaurants have increased throughout the world. Even companies such as KFC, Domino’s, and Pizza Hut that were traditionally reserved to developed countries have started encroaching into growing markets in Latin America and Africa. The greatest criticism such restaurants have received is the quality of their foods, which has contributed to the rise in obesity. The WTO’s efforts to encourage foreign investments has enabled the ease of access to such markets. French (2000) notes that foreign direct investments have increased by a whopping 1500 percent over the two-decade period ending at the turn of the millennium. That should be encouraging. However, local governments often have little or no control over what these companies produce, and the effect of such foods to personal health. Kenner & Pearlstein (2012) describes the deplorable conditions under which chickens are kept at the pens while being grown at an incredibly fast rate. The supplements fed to them and the denial of exposure to sunlight means that their health is compromised, which flows over to the consumer. The WTO’s operations are on the state level. Therefore, they may not pay attention to such concerns, so long as countries have access to foreign markets. Another challenge of globalization is expounded well by Stiglitz (2007) – environmental degradation. He argues that while countries such as India and China have industrialized over the last several decades, the environmental cost of this has grown. The low oxygen levels in large cities such as Beijing should not be replicated in any other country. In recent years, many global companies have relocated their production to China with the aim of reducing cost. If this trend continues in any other place on the globe, the consequences will be environmentally detrimental. Different countries may form trade pacts in line with WTO’s dictates of eradicating barriers to trade. However, the organization does not have the ability to enforce any rules it puts forth. If, for instance, an entire region agrees to allow free trade, foreign investment in the form of such foreign companies may completely disregard regulations on the environment, and with the huge amounts of money at their disposal, cut corners to avoid accountability. Since the WTO cannot prosecute or sanction anyone, environmental rules will easily be flouted without consequence. In conclusion, the WTO’s main objective is to promote trade. However, concerns about the power of multinational companies over small local competitors and, sometimes, entire governments, has adversely affected sovereignty. Governments cannot control the quality of foods, affecting the health of consumers. Furthermore, the environment has suffered due to the expansion of industry, such as steel. There is a need to ensure less-developed countries have a bigger say in the affairs of global trade since they are also affected. In addition, trade should not only end at profits, other concerns, such as human welfare and the environment should also take center stage.