Thursday, February 16, 2006

The WTO - a deficit of legitimacy

The age of the nation state is coming to an end - its demise began with the collapse of the Soviet Union, which paradoxically created a plethora of new nation states. To take its place is the age of global corporations, whose influence and reach extends into many nation states. The age of global corporations has been long in the making - but only now is it really emerging as a successor to the traditional Westphalian-based model.

Within this context, the future of the WTO seems uncertain. The WTO remains a dinosaur among many other dinosaurs - a traditional international organization based on the cooperation and agreement of member states. The global corporation has no role within the WTO, and the WTO lacks the capacity to regulate such corporations.

Furthermore, the WTO's ability to enforce its regulations appears to be limited to the Western nations and the developing countries who hope to improve their economic status through WTO membership. With Russia and Saudi Arabia aiming to becoming WTO members, the question of how effective WTO regulations will be on their economies looms large, particularly with regards to Russia.

Russia is in many ways the antithesis to the WTO - its economic policies could not be more diametrically opposed to the principles underlying the WTO if it tried. While China has an ostensible excuse in that it is a Communist country, Russia purports to be a democracy while lacking such basic elements of economic liberalization as even minimal transparency, a climate favorable to foreign investors and non-protectionist measures.

Furthermore, Russia's fingers are deeply embedded in myriads of pies throughout the former Soviet republics, particularly in the energy sector. The WTO has never dealt with the economic issues surrounding energy from a production standpoint - only from the consumer end. It seems unlikely that the WTO will suddenly find itself motivated to act once Russia becomes a member, even if other member states file complaints. China has largely managed to remain aloof from WTO interference, and it seems likely that Russia will as well.

The WTO is only able to deal with large economic powers when they are themselves willing to accept the rulings and enforcement-mechanisms imposed by the WTO. The legitimacy of the WTO lies in the acquiescence by such countries to the decisions of the WTO panels and Appellate Body. With China already undermining this legitimacy, the accession of Russia to the WTO would further undermine its already limited effectiveness.

Without the structure and mechanisms to deal with global corporations, the WTO will find itself increasingly marginalized as the world moves towards a more corporate-based model. Simultaneously, failure to enforce basic regulations vis-a-vis the non-Western large economic powers such as China and Russia will erode what legitimacy the WTO still has. In the end, the WTO will find itself limited in its role to dealing with highly technical minor decisions while global corporations run wild, harkening back to the corporate capitalism that was rampant in the United States during the days of Rockefeller and J.P. Morgan. Here, however, instead of individual tycoons, the power will be housed in corporate boards, behemoths of international trade and new order capitalism.

Without significant systemic changes, which are unlikely to occur due to the unwillingness of member states to enact such widespread amendments, the WTO will remain entrenched in the 20th century, lacking the regulatory power, the legitimacy and the scope to deal with a world where nation states are no longer the main players on the international scene and where global corporations vie with each other for domination of the various economic sectors.


Blogger satmandu said...

Paging Jennifer Government...

Cute title btw.

Are you trying to argue that the WTO will end up lacking legitimacy to the constituents of its member nations due to an (argued) inevitable lack of performance/efficacy from (future) toothless enforcement mechanisms?

Does this argument suppose that corporations are the relevant constituents (or are not) of the WTO (and indeed all multilateral Westphalian institutions)?

I'm a little confused.

12:44 PM  
Anonymous Anonymous said...

A crucial problem is missing: Russia got raped backwards by the "liberation" from Communism, by less than a dozen truly evil oligarchs and by the ever-present Chicago boys. Between Putin's rescue, which could've been more democratic but which also could've been a "mature" capitulation to the theives, and the global failure of neoliberalism, what seems more important than this academic business of legitimacy (who is it that guarantees the "legitimacy" of the Haitian government when it is overrun by marines?) is how the World Bank/IMF/WTO system is the new devil for potentially dictatorial rulers like Putin and Chavez to define themselves against. I don't understand what legitimacy means here -- are you thinking of the people who democratically elected the WTO -- er, no, there never was any such election. Or the referendum to submit to it, or NAFTA, or to make the still terrifying PRC a Most Favored -- no, again, all of these trade rigamoraoles are decided for you by your betters. No legitimacy whatsoever, not enough for for Thomas Paine anyway. Maybe I'm missing a crucial point out of ignorance but I'm more worried about how we can slice open the throats of these parasites who want to starve uis all to death without a Vladimir Putin. Legitimacy doesn't enter into it.

11:00 PM  

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