The World Trade Organization and its Rules for the World :

What does the WTO do? Why should it matter to Latinos and Latin America? Here, an explanation for the uninitiated

by Rachel Barron
photos by Avra Goldman


Known as the “Supreme Court of international trade,” the World Trade Organization (WTO) states that its mission is to create consistent trade flow, through a self-created system based on rules and negotiations between governments. This global power house is comprised of 135 countries that together account for over 90 percent of world trade.

While the most powerful trade body in the world wheels and deals its way to ever-greater clout, many non-governmental organizations (NGOs), developing nations, and environmental and humanitarian activists have maintained a critical stance against the WTO. These groups question just how far the WTO, with its profit-oriented motives, will go to gain global economic stability, and at what cost to people and natural resources.

The WTO was birthed out of a need to gain a firmer legal grasp over the full range of trade issues. Created on January 1, 1995, the WTO encompassed the General Agreement on Tariffs and Trade (GATT) — which dealt with tariff reductions, anti-dumping, and non-tariff measures — and expanded the reach of international trade rules to include goods, services and intellectual property.

How the WTO Works

The WTO operates what is called the “multilateral trading system.” Through this system, agreements bind governments to keep their trade policies within established WTO limits. Agreements are negotiated and signed by WTO members, and ratified in their parliaments. When conflict arises, trade friction is settled by the WTO’s dispute process. More than 150 cases have been brought to the WTO since it was founded. The WTO requests that countries settle their differences through consultation. Failing that, they can follow procedures that includes seeking a ruling by a panel of experts and an appeal.

However, WTO tribunals operate in secret, and once a final WTO ruling is issued, losing countries have only three choices: change their nation’s law to conform to the WTO requirements, pay compensation to the winning country, or face trade sanctions.

Organizations that are suspicious of WTO activity say that in the cases that came up during the WTO’s first four years, all decisions made by the non-elected WTO panels have favored corporations over laborers, public health and the environment.

The following information and rulings have been gathered from WTO watch groups who want to inform the public of human and environmental rights violations that have at time have led to the veto of a sovereign nation’s vote.

© 2000 El Andar Magazine


A Fast-Track Look at WTO Controversies


• In accordance with UNICEF guidelines, Guatemala banned baby formula packaging that depicted healthy, plump babies. The UNICEF code aims to support health experts’ concern that the advertising can sway mothers away from breast-feeding, and to stop illiterate mothers from associating the formula with healthy infants, since many infants have become ill or died after drinking formula diluted with contaminated water. After the U.S. threatened Guatemala with breaking WTO trademark rights sanctions of a corporation, Guatemala dumped the law.

• In 1999, the WTO ruled that the European Union’s (EU) objections to U.S. beef that had been injected with synthetic hormones was invalid. The EU originally banned the imported hormonally-treated beef on the grounds that it may increase certain cancers and health problems, such as reduced male fertility. The WTO ruled that the EU failed to show sufficient scientific justification for its ban, in spite of the European Parliament 1996 vote, where 366 to zero were in favor of reauthorizing the ban.


• The U.S. Marine Mammal Act embargo on tuna caught with dolphin-killing methods was found to be WTO-illegal. After Mexico placed a grievance against the U.S., complaining that this U.S. protective action closes markets to foreign competitors, the WTO found the law in conflict with GATT rules. The U.S. has since eliminated this portion of the law.

• In 1998 the WTO ruled against the U.S. Environmental Protection Act (EPA) that required domestic and foreign shrimp fishers to use nets with turtle-excluder devices to protect endangered sea turtles. From 1989 to 1998, the EPA had cut the amount of sea turtles drowning in shrimp nets by about 2,000 from an estimated 150,000 annually. Several Asian nations sued, claiming that the U.S. cannot use import bans to influence fishing behavior outside of U.S. borders. The WTO agreed


• The main labor-related provisions that WTO has established is the prohibition of forced prison labor and the endorsement of cooperating with the International Labor Organization to develop core labor standards. However, at present the WTO has avoided in-depth discussions on the incorporation of labor standards into the multilateral trading jurisdiction.

• Human rights NGOs and watchdog groups have accused the WTO of failing to regulate labor rights, which they believe generates a “race to the bottom” by rewarding countries who can lower factory costs by exploiting workers.

• In January of 1999, a non-elected WTO panel ruled that the European Union could no longer provide Caribbean nations with preferential treatment in banana imports. This WTO ruling overturned the EU, which for twenty years had purchased two-thirds of its bananas from financially-burdened former EU colonies. The loss of the banana trade with the EU is expected to adversely affect thousands of people across the Caribbean who depend on this industry. These Caribbean crops represent the three percent of bananas produced worldwide not under contract to the top three corporations Chiquita, Dole and Del Monte.