14 July 2009 - Why do We Need the W.T.O.?

Several times over the past five years I have asked this question on Samuelson Sez, "Why do we need the W.T.O, the World Trade Organization?" What is it doing to at least enable fair trade among the trading countries on the planet? Every time I ask the question I hear from trade officials who say "We do need the World Trade Organization because it sets rules for countries to trade by and serves as a platform to settle differences in the trading community."

But let's talk about settling differences for a moment. The World Trade Organization cannot settle its own differences; the members of the W.T.O. have been working now for five years to reach a new trade agreement. They don't seem to be any closer today than when they started. But I guess we do provide thousands of jobs for trade officials from 160 countries around the world, to sit in Geneva, Switzerland and attend meetings every day that really don't seem to bring them any closer to an agreement.

Beyond a global agreement, let's focus on current disputes awaiting settlement in just the beef industry as examples of the W.T.O. failure to resolve differences. American beef has been shut out of the European Community for decades because of the beef hormone issue. That should be resolved by the W.T.O.because even the scientific community in the EU says the beef is safe; but the ban is still in place. Speaking of artificial trade barrier bans, check the number of countries that still have total or partial bans on American beef imports because of Mad Cow Disease. Countries like Japan and South Korea still have a ban on beef from older animals despite assurances from the world scientific community that the meat is safe. The Japan ban is especially frustrating because that country has had many more cases of Mad Cow Disease than the U.S. and again, there is no action from the W.T.O.

Now South Korea says beginning in 2010 it will require traceability of all imported beef. It has already established laws to set up traceability in South Korea for the domestic producers, but come 2010 it means that any American beef going to South Korea will have to provide traceability. Once again, it seems to me, artificial trade barriers are being put in place, despite the fact that the World Trade Organization says "We're here to resolve those disputes."

Well, the disputes are not being resolved, so again "Why do we need the W.T.O.?"

My thoughts on Samuelson Sez.