The concept of free trade advocated by the WTO found its original embodiment in the doctrine of the Washington Consensus in 1989. The WTO related to the Ricardian model of open trade theory based upon comparative advantages inherent to all world countries. It claimed that free trade was the only efficient solution for the world to share the wealth and progress of the leading world economies. Eager to receive these benefits the developing world opened its economies (Naim 2000). As a result of this trend, the developed world gained control over the regional trade and financial policies and made fortunes from FDI and exploitation of resources and economic vulnerability of the developed countries (Williamson 2000). Unprepared to international competition in trade and currency regulations, the developing world was plagued by crises (East Asia (1997-1998), Latin America (1994), Russia (1998), and the recent financial crisis of 2008) and poverty (Teunissen and Akkerman 2004).
For the most part, the WTO is criticized for structural imbalances, the weakening impact towards national environmental legislation, and the tendency to discriminate among member countries in favor of transnational corporations. Some economists claim that WTO’s only purpose is to promote the growth of transnational corporations by forcing the developing country-members to pursue the only way of economic evolution, i.e., liberalization, privatization, and deregulation (Rodric 2001).
Most of this criticism both from the developed and the developing world is warranted because it is raised in response to factual negative consequences the world bears from the one-sided WTO policy. For the developing world, these are the increase of prices for medical supplies, degradation of the agricultural sector, the gap between import and export, the growth of domestic unemployment and inflation, and reduction in output. The developed countries suffer inaptitude to limit the import of genetically modified products as the WTO penalizes such bans arguing lack of officially acknowledged proof for real danger of those products to human health (Gershman and Chang 2003).
In the wake of the recent economic meltdown, the future holds serious doubts as to the purpose and implications for the WTO activity. Economists claim that the current economic situation in the world proves that the WTO has failed to coordinate, open, and align fair trade relations among country members. Therefore, there is an open dialogue for an alternative path of the global economy (other that liberalization of national economies), e. g., regional trade agreements, and restriction of the influence the WTO currently exercises upon the economic policies of its members (Lozada 2013).
- Gershman, John and Ha-Joon Chang. 2003. “Kicking Away the Ladder: The “Real” History of Free Trade”. Foreign Policy in Focus (December).
- Lozada, C. 2013. “Does the World Trade Organization Actually Promote World Trade?” The National Bureau of Economic Research.
- Naim, M. 2000. “Washington Consensus or Washington Confusion?” Foreign Policy 118 (Spring): 53-97.
- Rodric, D. 2001. “The Global Governance of Trade as If Development Really Mattered”. United Nations Development Program (October).
- Teunissen, J. and A. Akkerman. 2004. “Diversity in Development: Reconsidering the Washington Consensus”. FONDAD (December).
- Williamson, J. 2002. “Winners and Losers Over Two Centuries of Globalization”. NBER Working Paper 9161 (September).