The WTO now also works to get rid of non-tariff barriers and can be used to challenge environmental, health, and other regulations that may serve legitimate social goals but may be regarded as impediments to international trade. The 1995 replacement of GATT by the WTO heightened concern among critics because its stronger enforcement powers represent a further shift in power from citizens and national governments to a global authority run by unelected bureaucrats. Business, academic, and government supporters applaud the WTO as a more muscular sheriff of the world trading system (Anderson and Cavanagh, 1997).
One of the WTO’s strengths, however, is in its power to impose penalties for unfair practices, a way to ‘keep countries honest.’ Countries that breach WTO regulations must change what they are doing or they may have to pay fines or change their domestic laws. This means that disagreements are less likely to spill out into larger, perhaps military, disputes. The WTO has enormous potential to reduce global poverty if it can regulate trade in a way that’s fair to all countries, particularly the poorest. Currently, these countries don’t have the bargaining power or resources to negotiate effectively with powerful trading nations.
However, critics say that the after-effects of WTO policies are undemocratic because of the lack of transparency during negotiations. Opponents also argue that since the WTO functions as a global authority on trade and reserves the right to review a country’s domestic trade policies, national sovereignty is compromised. For example, a policy that a country may wish to establish to protect its industry, workers or environment could be considered barriers to the WTO’s aim to facilitate free trade. A country may have to sacrifice its own interests to avoid violating WTO agreements. Thus, a country becomes limited in its choices. .