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18 Seiten, Note: B
Evolution of the trading system
Relationship between development and trade
Special and differential treatment
Negotiating objectives of specific country coalitions within WTO (NAMA)
Effects of WTO negotiations on developing countries
How should the WTO accommodate the interests of developing countries?
The fourth WTO Ministerial Conference at Doha, Qatar in November 2001, dubbed the “Doha Developmental Round”, signalled a significant shift in focus within the World Trade Organisation (WTO) as it recognized the economic developmental needs of low income countries. This paper will assess the development dimension of the negotiations focussing on the extent to which this offers developing countries policy space and flexibilities to pursue developmental objectives.
The WTO advocated the implementation of special and differential (S&D) treatment in order to assist with the plight of developing countries. This paper acknowledges the importance of S&D treatment, but argues that it is not sufficient as a solitary approach to development. In an adaptation of Amartya Sen’s conceptualisation of development as the process of expanding human freedoms; Faizel Ismail highlights four elements of the development dimension of the multilateral trading system, namely: fair trade, capacity building, balanced rules, and good governance.
The paper will begin with a brief overview of the evolution of the trading system itself, from GATT to the WTO. Thereafter it will look at the Relationship between development and trade, focussing particularly on NAMA and S&D treatment. Following this will be a brief analysis of the effect of WTO negotiations on developing countries; ending off with a look at how the WTO can be restructured to accommodate the interests of developing countries.
The General Agreement on Tariffs and Trade (GATT) was established in 1947 with the objective to free global trade. It’s most important aspect is the Most Favoured Nation (MFN) principle which states that any concession that one state receives from another should be provided to all other states (McGowan and Nel, 2002:81).
The evolution from the General Agreement on Tariffs and Trade to the World Trade Organisation WTO came about after a series of negotiations, referred to as ‘rounds’. The WTO replaced GATT in 1995 after the final round of GATT, known as the Uruguay Round, was wrapped up in 1994 following its commencement eight years earlier (McGowan and Nel, 2002:89).
The three predominant changes to trade regulations in the world economy that came about after the Uruguay Round dealt with agricultural protectionism, Trade Related Intellectual Property Rights (TRIPS), and Trade Related Investment Measures (TRIMS). Furthermore tariff and non-tariff barriers, as well as other protectionist measures, were reduced significantly. This makes it more difficult for developing countries to protect young industries as well as their agricultural sector (McGowan and Nel, 2002:89).
Where GATT was created by the United States and its allies, promoting liberal trade values and objectives corresponding with U. S. political and military strategic objectives, the WTO tries to manage the entire international trade system by means of a multinational effort, not a by means of a hegemon imposing itself on the rest. The difference between the two is that GATT was just a treaty, but the WTO is a fully-fledged international organisation. Thus the WTO packs a lot more punch as their ‘dispute–settlement mechanism’ clearly illustrates. This gives them the authority to impose trade sanctions on member states that are not loyal to trade agreements (Balaam and Veseth, 2001: 120-121).
The WTO is headquartered in Geneva, Switzerland, consists of 151 members and accounts for more than 90 percent of world trade (WTO, 2007). Its main function is to implement the latest GATT agreement and to act as a ‘round-table’ in the negotiation of new trade deals. It reviews national trade policies, functions as a mediator in the settling of trade disputes, and provides assistance to least developed countries (LDCs), by means of technical assistance and training programs, with regard to trade policy issues. The members themselves seek consensus when it comes to decision making. The WTO’s decision-making structure consists of a general council composed of ambassadors and delegation heads that meet several times a year in Geneva and a ministerial conference that meets at least once every two years. (Balaam and Veseth, 2001: 120)
Catherine Grant (2005:20) argues that the multilateral trading system cannot be strengthened, unless development concerns are effectively addressed. Bernard Hoekman goes as far as to suggest that in effect “the medium-term viability of the global trading system is dependent on an effective mechanism that allows all developing countries (that is the majority of the WTO membership), to fully benefit from increased international trade” (Grant, 2005:20).
The World Trade Organisation aims to make the multilateral trading system more inclusive with regards to its membership and desires a greater command over trade-related issues. In order to gain popular support for its mandate it assures that doing so will benefit all of its member countries. A different picture is painted in reality as major differences between developed, developing and least-developed member countries persist. It is for this reason that the WTO needs to attend to these disparities, especially when it comes to the unequal distribution of proceeds brought about by multilateral trade negotiations (Oyejide, 2004:68).
Low-income countries constitute approximately 70 per cent of the WTO. These countries, with a per capita income of US$1,000 or less, argue that the multilateral trading system does not take their development concerns into account despite the organization aspiring to globalism. These countries criticize the multilateral trading system for: being more concerned with the interests of high-income countries; preventing pro-poor growth, by leaving trade barriers intact; making the maintenance of trade-related institutions – created by WTO Agreements – too costly for low-income countries to have any significant impact; and negotiating multilateral trade-related rules which are not conducive to the environment and practices found in low-income countries (Oyejide, 2004:68-69).
The fourth WTO Ministerial Conference at Doha, Qatar in November 2001 proved to be a significant shift in focus within the WTO as it recognized the economic developmental needs of low income countries. The primary objective of the organization’s developmental strategy was poverty alleviation; something which the international community has taken seriously with the intention of cutting poverty by half by 2015 (Oyejide, 2004:69).
The Doha negotiations incorporated negotiations already initiated, on agriculture and services, during the Uruguay Round WTO Agreements. The highly developmental focus, dealing with developing country issues, resulted in the negotiations being referred to as the Doha Development Agenda. With its developmental focus, particular attention was given to the important role that special and differential treatment plays in the growth of these countries. The negotiations sought to eliminate export subsidies and increase market access in the agricultural sector (United States Department of Agriculture, 2007).
The developing countries were unhappy that the developed countries were providing domestic agricultural subsidies as well as export subsidies. Some of them formed a bloc known as the G20, consisting of countries like China, Brazil, South Africa, Kenya and India. Not only did they want the subsidies to be eliminated, but also sought to protect their farmers by maintaining their own tariffs against agricultural imports (Bailey, 2003). Other important issues included market access for non-agricultural products; trade-related aspects of intellectual property rights (TRIPS); and special and differential treatment of course (WTO, 2007).
According to Faizel Ismail (2005:11) there is an important development dimension to international trade, the realization of which can be dated back to GATT, where the interests of developing countries became paramount. This can best be illustrated by the major differences in economic power between the developed and developing countries in global markets. Furthermore, the protectionist policies of developed countries brought about significant distortions in global markets, further marginalizing developing countries. For these reasons developed countries decided that the provision of special and differential treatment to developing countries was necessary in the GATT and WTO.
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