The World Trade Organization was created to replace the GATT. This replacement was necessary because GATTs framework was not structured to function in a globalized economy that emerged in the 1980s. The WTO is a worldwide organization which assists member states and producers to smoothly and fairly carry out their business across international borders (Young, 2018). The WTO achieves such through its agreements, negotiated as well as signed by most of trading nations in the universe.
The WTO offers three significant benefits to member states which determine the general benefits. To start with, the organization grants members a most favored nation status that orders member states to treat one another fairly. They are no privileged trade benefit to one member over the rest (Altbach, 2015). Secondly, it offers lower trade barriers between member states. Such barriers include regulations, import quotas, and tariffs. Lower barriers enable members to enter global markets and create of more jobs, realize greater sales, and rapid economic growth. Thirdly, the majority, developing countries are granted access to the developed market at favorable (lower) tariff rate that provides many opportunities for the infant industries.
However, WTOs policies are still unfavorable for the countries with a young economy. The free trade prevents the growth of infant industries in the developing countries. The WTO is also overshadowed by The Transatlantic Trade and Investment Partnership (TIPP) trade deals. Realizing a consensus is difficult, and it is hard to progress. The trade deals under this institution protect specific areas such as the agricultural sector which in turn benefits richer countries (Altbach, 2015). Lastly, the rules of the body favor multinationals which in turn goes against its key principle of most favored nation.
Dispute resolution in WTO is done in a formal way. The first step is consultation, followed by setting up a review panel and dispatching the report to the disputing parties. After giving the disputing parties the report, the panel reports to member states. Later, if there is no appeal, the dispute settlement body adopts the report presented.
Canada and Australia are in dispute over Canadian measures governing the sale of wine in the country. On January 12, 2016, Australia launched a request for consultations over actions that were put in place by the Canadian Government and Ontario, British Columbia, Nova Scotia, and Quebec provinces over the sale of wine (Young, 2018). Australia reported that the unfavorable and uncertain policies adopted by these parties affected its wine industry by reducing their sales. Australia is the 4th largest wine exporter in the world, and such policies by Canada have adversely affected its industry.
However, before this dispute, the US had launched a similar complaint concerning Canadas actions. The WTO has a role in helping both Canada and Australia come to terms through dialogue or WTO actions against the wine restrictions. However, although Australia started to seek resolution through consensus in 2016 when the US to complain about the same issue, the Canadian government has not done enough to honor WTO guidelines of the issue in question (Young, 2018). The Canadian government has continuously stressed that it will look into the matter for its respect for multilateral trading, but there is no sign of progress.
Due to the delay in solving the issue through dialogue, Canada is going to face WTO actions that were started by the US federal government on the wine restriction by the Canadian authorities. It is a fair resolution because the actions by Canada are killing one of the best wine industries (Young, 2018). For what the multilateral trading system has achieved, it is justified for Australia to launch a WTO action against Canadas restrictions. If a member state does not respond to dialogue calls, then WTO actions must be adopted.
Altbach, P. (2015). Higher education and the WTO: Globalization run amok. International Higher Education, (23).
Young, A. (2018, January). Government starts WTO action against Canada's wine restrictions. Retrieved from https://www.theshout.com.au/news/government-starts-wto-action-canadas-win-restrictions
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