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The WTO's 'Development' Dimension cannot be Secured without Stronger Synergies with the World Bank - Interaction Theories There are two hypotheses implicit in the title of this contribution. The first is that trade is an important ingredient in the 'development recipe'. The second hypothesis is a logical consequence that flows from the first one: trade and development institutions should collaborate in order to 'hit two birds with one stone'. In other words, the WTO's 'development dimension' could not be secured, or more accurately, could not be effectively secured outside the trade matrix and without stronger synergies between the World Bank and itself.
The key role of trade in achieving development has been emphasized throughout this article. But the exact quantification of the importance of trade to development relies heavily on the socioeconomic standpoint one will adopt. We have seen that many WTO provisions reveal the economic logic behind its trade-oriented development instruments.21 Other development organizations have espoused a similar, though not entirely tautological development perspective. 22 “Trade and trade liberalization are not ends in themselves...[but] they can enhance a country's access to a wider range of goods, services, technologies and knowledge.” (Organization for Economic Cooperation and Development (OECD), 2001, p.17) In this report, it is mentioned that the World Bank's participation should be reinforced with regard to funding adjustment assistance for developing countries.
The Preamble to the Marrakesh Agreement “recogniz[es] that the relations of [the Parties to the Agreement] in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development...” and “recogniz[es] further that there is need for positive efforts designed to ensure that developing countries, especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development.” (WTO, 1994).
The Preamble of the International Development Association (IDA) Articles of Agreement establishes a “[...] mutual cooperation for constructive economic purposes, healthy development of the world economy and balanced growth of international trade foster international relationships conducive to the maintenance of peace and prosperity” and considers that “an acceleration of economic development which will promote higher standards of living and economic and social progress in the less-developed countries is desirable not only in the interests of those countries but also in the interests of the international community as a whole”, see IDA (1960). Also, Article I paragraphs 1 and 3 of the International Bank for the Reconstruction and Development Articles of Agreement include: “the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes” and the promotion of “the long-range balanced growth of international trade and maintenance of equilibrium in balances of payments by encouraging international investment for the development of the productive resources of members”, see IBRD (1989). Finally, according to the U.N. Resolution “the right to development is an inalienable human right by virtue of which every human person and all peoples are entitled to participate in, contribute to and enjoy economic, social, cultural and political development, in which all human rights and fundamental freedoms can be fully realized”, see UN. General Assembly (1986).
Can the 'Development Dimension' of the WTO Be Secured Without Stronger Synergies Between WTO and World Bank?
These different economic mentalities about trade, development and their interrelation explain and justify the reason why there exists a mass of international organizations, each of which has its own field of expertise and armoury for the attainment of its mandate-prescribed objectives. Tinbergen's theory of economic policy corroborates such a conclusion. According to its 'father', the main condition is that same economic policy instrument cannot accommodate two different economic policy objectives; better still, the number of policy instruments should equal the number of policy targets (Tinbergen, 1991, pp.247–248). In this vein, the jurisdiction of the WTO is confined to tariffs and trade, the World Bank and its affiliates address development issues without any regulatory authority to proscribe trade policies, and so on.
The second, more nuanced condition is that these separate instruments, because of their specialization, are supposed to interact among each other (Hallett, 1989). As a matter of fact, today's institutional reality is not at variance with this principle (Petersmann, 2001, pp.1–2). Not only collaboration between international institutions is no longer an anathema but, on the contrary, it has been elevated to a policy goal. The rhetorics of omens (financial crises, environmental depletion etc.) that multiply by day and transcend national borders is one way to narrate the story of international cooperation. Inquiring into the phenomenon of institutional cooperation through the lens of GPGs is another. The GPGs approach has both normative and systemic implications for development policies.
To begin with, the GPGs paradigm has effectively linked together challenges and problems that have traditionally been treated as separate. For example, it has brought together under a single frame global inequalities, threats to peace and security, international financial stability, trade, and development.
These overarching imperatives cut across nations as well as international organizations and catalyze collective actions at all levels.
Second, the GPGs concept draws attention to the limitations and inefficiencies of current political, legal, and institutional arrangements for addressing development issues. Although their role is not annihilated, states are increasingly aware of their incapacity to supply 'public goods' without voluntary cooperation and participation in international organizations which increasingly become the platform for creating international public goods and encourage harmony between national policies. Hence, GPGs could be supplied “without 'international governments' through internationally agreed restraints on national policy instruments with harmful effects on other countries.” (Petersmann, 1991, pp.217– 218) Third, GPGs can be further projected onto a globalization framework; a matrix within which the authorship of public policies has been redefined as the product of collaboration between private and public actors or solely between public actors, and has rebranded the question of compliance to the question of problem-solving on a global level. Contemporary globalization has given rise to a worldwide discontent because GPGs are not provided or are ill-provided. Specifically, Kaul (2001) has argued that global policymaking suffers from jurisdictional, participation and incentive gaps that lead to the under-provision or mal-provision of GPGs. Bridging these gaps will require reengineering of international cooperation among states and national stakeholders to create a clear jurisdictional loop. By the same token, linkages between organizations with overlapping mandates should tighten to reduce the inefficiencies and redundancies which result therefrom, as well as the antagonistic tendencies that occasionally develop between them.
More specifically, in the context of GPGs, institutional cooperation is not a question about primacy or finding the preferred organization but a way to compensate for the absence of a 'super' organization equipped with all these competences that are necessary to achieve a plethora of interrelated international goals. A normative reading of Article 26 of the Vienna Convention on the Law of Treaties (VCLT, 1969) could be seen as dictating such a 'duty of cooperation among international institutions' with regards to all policies that they have in common. It is titled ‘Pacta Sunt Servanda,’ and stipulates that “Every treaty in force is binding upon the parties to it and must be performed by them in good faith.” Pursuant to this, the member states of each of the organizations commit
themselves to fulfilling the goals they have signed up to. The principle holds true for international organizations in their capacity as subjects of international law (for an analysis of international organizations as legal subjects of international law, Akande, 2006, pp.277–304). In the present case study, the WTO and the World Bank have pledged to promote development and they should do so with all the means at their disposal, including attempts to collaborate with each other.
Jurisdictional considerations aside, inter-institutional synergies are central to the provision of GPGs in terms of resources, knowledge transfers, negotiations and rule making (Kapur, 2002). Binger notes that “the information generated helps reduce transaction costs; create links across issues; and diffuse ideas, norms, and expectations.” (2003, p.8). The collaborative initiatives undertaken by the WTO and the World Bank illustrate how this framework could become a structure of incentive-giving and financial assistance towards developing and least-developed countries, with the World Bank providing a cushion against the negative shocks endemic in trade integration. This inter-institutional network of governance posits that international institutions generate operational policies and procedures which ensure that GPGs would be made available.
The third strategic obstacle (Kaul, 2001) has identified is the participation gap that is attributed to the international cooperation being essentially intergovernmental, thus excluding from multilateral arenas non-governmental and otherwise supra-governmental actors that nonetheless contribute to GPGs. The GPGs approach suggests that closing the participation gap require that all the relevant stakeholders gather around the same negotiating table to seek consensual solutions. But is cooperation between international organization truly an antidote to this lack of representation of all affected groups? Sceptics will immediately respond in the negative, claiming that cooperation between poweroriented organizations with 'underground policy-making procedures' cannot add but to the lack of transparency, accountability, and fairness. And, although they may have a point when arguing that there is still ground to cover for the creation of a democratic international governance system, we counter argue that such cooperation cannot but enlarge the pool of participants and increase the number of voices necessary for defining regulatory objectives and allocating responsibilities for GPGs. The World Bank, for instance, through its presence in many developing countries and its contacts with local governments, communities, businesses, and other marginalized groups could convey messages that would not otherwise reach the WTO.
All in all, the normative impact of the GPGs concept to development policies pushes for a 'humanization' of globalization and an infusion of broader social, economic, and technological considerations into trade practices. 23 For that to happen, development strategies have to supplement and complement each other under a common vision of development, which itself is a prerequisite for nations to take full advantage of the benefits of GPGs.
Conclusion Since the inception of the international economic order the relationship between the WTO and the World Bank has evolved in parallel with their missions. Development, in shifting shapes and shades, has always been part of their mandate. The 'added value' of the Doha Round, independently of its potential success, or its ultimate failure, lies in the fact that it is has placed development squarely on the WTO agenda and has rendered the Bank's complementary assistance a sine qua non counterweight to the adverse effects that integration into the trading system may cause.
Already in 2006 the Director-General of the WTO called for the creation of a new “Geneva Consensus”, recognizing that:
“trade opening is necessary, but is not sufficient in itself. It also implies assistance: to help the least-developed countries to build up their stocks and therefore adequate productive and logistical capacity; to increase their capacity to negotiate and implement the commitments undertaken in the international negotiating system” (Lamy, 2006b).
Can the 'Development Dimension' of the WTO Be Secured Without Stronger Synergies Between WTO and World Bank?
More specifically, the Zedillo Report, already in 2001, argued that the prospect of poverty eradication and further development of developing countries depends heavily on their capacity to reap the benefits of trade liberalization; to this end, effective participation of developing countries in the multilateral negotiations through secure and predictable financing of technical assistance and capacitybuilding as well as enhanced cooperation of the relevant stakeholders are required (Zedillo, 2001). The Aid for Trade has been conceived along these lines but the critical voices already talk about additional funding, improved organizational set-up and more coherence.
Recognizing the potential of the WTO and the Bank in promoting the balanced supply of GPGs necessitates their upscale engagement in promulgating coherent institutional strategies that will complement each other as well as complement national 'policy space'. In this respect, some
suggestions, in lieu of a future agenda, would be:
Facilitating a common understanding of development;
Adopting a clear, common and coherent vision of the kind of development international institutions are after and how trade policies could improve the prospects of achieving development goals;
Ensuring that existing policy-making and financial mechanisms have the necessary robustness and flexibility to deal with GPGs funding needs;
Assigning institutional responsibilities and intensifying collaborative arrangements for GPGs so that inefficiencies of having many separate initiatives for the supply of GPGs are avoided;
Incentive-giving and encouraging domestic policies designed to strengthen national market institutions for the harvesting gains from trade and productivity.