«EUI Working Papers RSCAS 2012/23 ROBERT SCHUMAN CENTRE FOR ADVANCED STUDIES Global Governance Programme-18 MULTILEVEL GOVERNANCE OF INTERDEPENDENT ...»
The Ministerial Conference in Cancún in 2003 intended to be a reaffirmation of the Doha agenda and timetable. Instead, it ended in an acrimonious division over agriculture and the 'Singapore issues', with the U.S – E.U. standing on the one side, and the 'G20+' 9 on the other extreme. The former pressed for reduction in developing countries' industrial tariffs, whereas the latter called for deep cuts in agricultural tariffs and correction of market distortions in agriculture that dated back to the Tokyo Round (1973-1979). The Hong Kong Ministerial in 2005 yielded only commitments on Aid for Trade and Duty-Free and Quota-Free (DFQF) market access to least-developed countries, thus confirming what was already suspected: that the Doha Agenda could not live up to its moniker as a development round. The July 2008 Ministerial in Geneva shared the same destiny: it failed and the blame was once again put on diverging national interests to which the negotiators had succumbed, particularly those of farmer lobbies. Every attempt to reinvigorate the round ever since has been doomed with the last one (Easter 2011) coming to an abrupt end when China and the U.S. did not agree on 'sectorals'.
Post-Doha Round literature thrives in explanations about the causes and the consequences of its stalemate. Among the most prominent are the ones that emphasize “the 'member-driven' consensus practices in the WTO negotiations and the lack of powers of the WTO Director-General to initiate proposals defending the collective interests of its members.” (Petersmann, 2005, p.23). Another element to appreciate when considering the standstill of the Doha Round is the GATT/WTO's institutional vision and stance towards development. Development remains a controversial notion, premised, paradoxically, on a well-founded tenet, which is that trade liberalization paves the way to development. 10 The elusiveness of development under the auspices of the GATT/WTO has translated into a bifurcated development approach motivated by divergent economic rationales, which, nonetheless, converge into a common aim: facilitation of trade liberalization. This assumes the nature of technical assistance and capacity building. Moreover, the offer of development aid has served as a 'collateral' for keeping developing countries on the negotiation wagon with the ultimate goal of integrating them into world's economy and guaranteeing obstacle-free, open markets.
Trade preferences and non-reciprocity Development and the 'special needs' of developing countries laid in the core of the 'Special and Differential Treatment' (SDT) program, a concept that emerged early in the GATT days, 11 became (Contd.) facilitation, and trade and environment, respectively. Technical assistance provisions are also included in paragraphs 2.2, 3.5-3.6, 5.1, 5.4 and 14 of the Decision on implementation-related issues and concerns (WTO Ministerial conference, 2001). See, also, World Trade Report (WTO Secretariat, 2003b, p.xix),, which emphasizes the inclusion of technology transfer for the first time on the GATT/WTO agenda.
The 'G20+' does not refer to the Group of Twenty comprised Finance Ministers and Central Bank Governors. Rather to a 'coalition' of several developing countries. The original membership was Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, Egypt, El Salvador, Guatemala, India, Mexico, Nigeria, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand, Venezuela. Since then, there have been some additions but also some losses.
There is undisputed evidence that trade liberalization has contributed majorly in promoting growth and prosperity in the period after the Second World War. There is also strong evidence suggesting that further liberalization of trade by both industrialized and developing countries to the benefit of both groups of countries. Paragraph 1 of the Doha Ministerial Declaration noted that the “multilateral trading system embodied in the World Trade Organization has contributed significantly to economic growth, development and employment through the past fifty years” and that “international trade can play a major role in the promotion of economic development and the alleviation of poverty.” (paragraph 2), see above, note 8.
Part IV of GATT 1947 is dedicated on 'Trade and Development' as well as 1979 GATT Decision on 'Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries' (GATT, 1979); Also, see Low and Keck (2004).
Can the 'Development Dimension' of the WTO Be Secured Without Stronger Synergies Between WTO and World Bank?
effective through the so-called 'Enabling Clause' and has remained intact in the Doha Agenda. 12 SDT calls for preferential market access for developing countries, curbs reciprocity in negotiating rounds to levels 'consistent with development needs' and enables developing countries to employ practices otherwise prohibited by the GATT/WTO regime (Hoekman, 2005, pp.1–2). The 'infant industry' trade protection (GATT Article XVIII), (for an interesting analysis of the ‘infant-industry’ exception, particularly from an economic perspective, see Xu, 2006) and the 'preferential access to developed countries' market' (GSP) (Pal, 2007; also Antimiani et al., 2006) are also justified under the same rationale: trade liberalization through the Most-Favoured Nation (MFN) principle does not necessarily ensure growth of developing countries and the industries therein situated, which cannot compete with the developed countries industries on a level playing field (due to lack of technology, infrastructure, distribution channels etc.) and are, therefore, in need of protection from competition for a certain period. As Ismail has noted, this concept is essential in order to “ensure that there is proportionality in the commitments undertaken between developed and developing countries, reflecting their different levels of development and gains from the trading system.” (2005). Stiglitz and Charlton (2004) seem to agree with this proposition, and have insisted on unilateral concessions on behalf of developed countries to redress past injustices as well as to further the development of developing countries.
However, economic theory has questioned the soundness of this leeway granted to developing countries with regard to certain obligations they have accepted under the GATT. Economic evidence has shown that developing countries would benefit more from their steady and full integration “into the reciprocity-based world trade regime rather than continued GSP-style special preferences” (Özden
and Reinhardt, 2003, pp.1, 22), and has steered WTO development efforts into a different direction:
enhancing the capacity of developing countries to participate in shaping, understanding, interpreting, and enforcing international trade rules and also assisting them with the cost of implementation of these
rules. And this is exactly the rationale that dominates the second development-oriented WTO strategy:
capacity-building and technical assistance.
Capacity-building and technical assistance Senior economists of the World Bank have indicated that WTO regulations little do appreciate the capacities of the least developed countries to carry out the functions that sanitary and phyto-sanitary standards, customs valuation, intellectual property and other regulations entail. For most of developing and transition economies money spent for that reason is money unproductively spent (Finger and Schuler, 2000, p.511; also Finger, 2001).
Until the creation of the WTO, technical assistance took the form of 'trade courses' taught in Geneva (for an interesting summary of the Technical Assistance and Training Plan Products, see Shaffer, 2005, pp.208–209). In 1995, with the perpetual proliferation of WTO rules and the increasing number of developing countries participating, the WTO launched a fund for technical assistance for LDCs. Consequently, in 1996, the WTO published guidelines for WTO Technical Cooperation to In paragraph 44 of the Doha Ministerial Declaration Member States “[...] reaffirm that provisions for special and differential treatment are an integral part of the WTO Agreements. We note the concerns expressed regarding their operation in addressing specific constraints faced by developing countries, particularly least-developed countries. In connection, we also note that some members have proposed a Framework Agreement on Special and Differential Treatment (WTO General Council, 2001). We therefore agree that all special and differential treatment provisions shall be reviewed with a view to strengthening them and making them more precise, effective and operational...”. Also, acknowledging the seriousness of the concerns expressed by least-developed countries, Member States recognized in paragraph 42 that “[...] the integration of the LDCs into the multilateral trading system requires meaningful access, support for the diversification of their productions and export base, and trade-related technical assistance and capacity building...” and committed themselves “[...] to the objective of duty-free, quota-free market access for products originating in LDCs...”, as well as “[...] to additional measures for progressive improvements in market access for LDCs...”. Finally, paragraph 14 calls for “modalities for further commitments, including provisions for special and differential treatment […] be established no later than 31 March 2003.”
“improve knowledge of multilateral trade rules” and “to assist in the implementation of commitments and full use of its provisions”. Training courses, materials and specialized seminars were once again the first modes of delivery of assistance (WTO Committee on Trade and Development, 1996). With the inauguration of the Doha Development Agenda Global Trust Fund, the trade-related assistance and capacity building augmented both in terms of program objectives and budget. The new strategy announced therein had a triple objective: making technical assistance more demand-driven; creating financial stability through the above-mentioned fund; and, enhancing the capacity of the WTO Secretariat to deliver assistance in accordance with its mandate and developing countries' needs (WTO Secretariat, 2001).
Trade facilitation Part of the infamous 'Singapore issues', trade facilitation has been one of the few loopholes the Doha Round has managed to close. The negotiations on trade facilitation correspond to the same rationale as that of technical assistance and capacity-building: developing countries have not fully exploited the development opportunities that international trade has to offer to them due to their limited access to developed countries markets but also to their own trade restrictions. The World Bank has estimated that, for example, the costs of shipping have been particularly high, adding a significant cost to trade, particularly in less effective markets. 13 Stricto sensu trade facilitation addresses issues of transporting goods through ports and subsequently moving customs documentation associated with cross-border trade. Lato sensu trade facilitation, on the other hand, would include “the general environment in which trade transactions take place” (transparency, professionalism of customs and regulatory environment), as well as standard harmonization and integration of networked information technology (telecommunications for data flows and financial infrastructure etc.) (Wilson et al., 2004, pp.842–843). The Doha mandate has viewed it as a way of clarifying and improving relevant aspects of GATT Articles VI, VIII, and X ('freedom of transit', fees and formalities connected with importations and exportation', and 'publication and administration of trade regulations' respectively), “with a view of further expediting the movement, release, and clearance of goods, including goods in transit”, recognizing, though, that these improvements will require substantial funding and enhancement of technical support and capacity-building (WTO General Council, 2004, annex D, paragraph 1).
Development: A WTO and World Bank Joint-Venture The outcry for more substantial and practice-oriented technical assistance and capacity-building – rather than 'power-presentations' in Geneva regarding developing countries' obligations to fully integrate into the WTO regime and respect the obligations arising therefrom, is a parameter to be taken into account when considering the collaboration between the WTO and the World Bank. In broad strokes, the Bank has come through with what the GATT/WTO seems to have been lacking: a significantly greater amount of funding and expertise, as well as a broader spectrum of products and development strategies that permeate national institutions and societies ('behind-the-border' measures) and implicate a broader array of stakeholders.
The Doha Development Agenda (DDA) has given a new impetus to the relationship between the GATT/WTO and the World Bank, 14 but the collaborative efforts of the two institutions in the area of Director-General Pascal Lamy, in a speech at the World Customs Organization said that the implementation of the Trade Facilitation measures could reduce total trade costs by 10%: “Every extra day required to ready goods for import or export decreases trade by 4%.” (2011).
In the Doha Ministerial Declaration, Members committed to continue to work with the Bretton Woods institutions (IMF and the Bank) towards achieving greater coherence in the international economic policy-making (2001, paragraph 5).
Can the 'Development Dimension' of the WTO Be Secured Without Stronger Synergies Between WTO and World Bank?
development go back in time. From a formalistic legal point of view, these efforts are premised on two cooperation instruments: the Marrakesh Coherence Mandate and the Cooperation Agreement.
In 1994, WTO Members annexed to the WTO a normative instrument encouraging coordination, the Ministerial Declaration on Achieving Greater Coherence in Global Economic Policy Making. This instrument contained the so-called 'Coherence Mandate', which urges the WTO to strengthen its ties with the IMF and the World Bank to the aim of promoting their common objectives (improving living standards, achieving sustainable development, expanding international trade) (Pascal Lamy, 2006;