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PART TEN
692 International Economics
The WTO Protests

Various Protest Groups Have Angrily Targeted the Imposing labor standards on low-income developing countries
World Trade Organization (WTO). What Is the (hereafter, “developing countries”) would raise labor and produc-
tion costs in those nations. The higher costs in the developing
Source of All the Noise and Commotion?
countries would raise the relative price of their goods and make
them less competitive with goods produced in the advanced
The WTO became known to the general public in November 1999, countries (which already meet the labor standards). So the trade
when tens of thousands of people took part in sometimes violent rules would increase the demands for products and workers in
demonstrations in Seattle. Since then, international WTO meetings the advanced countries and reduce them in the developing
have drawn large numbers of angry demonstrators. The groups in- countries. Union workers in the advanced countries would
volved include some labor unions (which fear loss of jobs and labor benefit; consumers in the advanced countries and workers in the
protections), environmental groups (which oppose environmental developing countries would be harmed. The trade standards would
degradation), socialists (who dislike capitalism and multinational cor- contribute to poverty in the world’s poorest nations.
porations), and a few anarchists (who detest government authority Not surprisingly, the developing countries say “thanks, but no
of any kind). Dispersed within the crowds are other, smaller groups thanks” to the protesters’ pleas for labor standards. Instead, they
such as European farmers who fear the WTO will threaten their want the advanced countries to reduce or eliminate tariffs on goods
livelihoods by reducing agricultural tariffs and farm subsidies. imported from the developing countries. That would expand the
The most substantive WTO issues involve labor protections demand for developing countries’ products and workers, boosting
and environmental standards. Labor unions in industrially advanced developing countries’ wages. As living standards in the developing
countries (hereafter, “advanced countries”) would like the interna- countries rise, those countries then can afford to devote more of
tional trade rules to include such labor standards as collective bar- their annual productivity advances to improved working conditions.
gaining rights, minimum wages, workplace safety standards, and The 149-nation WTO points out that its mandate is to liberalize
prohibitions of child labor. Such rules are fully consistent with the trade through multilateral negotiation, not to set labor standards
long-standing values and objectives of unions. But there is a hitch. for each nation. That should be left to the countries themselves.

QUICK REVIEW 35.3 The World Trade Organization
As indicated in Chapter 5, the Uruguay Round of 1993
• A tariff on a product increases its price, reduces its
consumption, increases its domestic production, reduces its established the World Trade Organization (WTO) . In
imports, and generates tariff revenue for government; an 2006, the WTO, which oversees trade agreements and
import quota does the same, except a quota generates rules on disputes relating to them, had 149 member
revenue for foreign producers rather than for the nations. It also provides forums for further rounds of trade
government imposing the quota.
negotiations. The ninth and latest round of negotiations—
• Most rationales for trade protections are special-interest the Doha Round —was launched in Doha, Qatar, in late
requests that, if followed, would create gains for protected
industries and their workers at the expense of greater losses 2001. (The trade rounds occur over several years in sev-
for the economy. eral geographic venues and are named after the city or
• The Trade Adjustment Assistance Act of 2002 is designed to country of origination.) The negotiations are aimed at
help some of the workers hurt by shifts in international trade further reducing tariffs and quotas, as well as agricultural
patterns. subsidies that distort trade. One of this chapter’s questions
• Offshoring is a major burden on American workers who lose asks you to update the progress of the Doha Round (or,
their jobs, but not necessarily negative for the overall alternatively, the Doha Development Agenda) via an
American economy.
Internet search.
As a symbol of trade liberalization and global capitalism,
the WTO has become a target of a variety of protest groups.
This chapter’s Last Word examines some of the reason for
the protests, and we strongly suggest that you read it.

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