The World Trade Organization's purpose is to raise members' "standards of living...in accordance with the objective of sustainable development...in a manner consistent with their respective needs and concerns at different levels of economic development." Trade is not an end in itself, but a means to achieve economic development.
Unhappily, the reality seems to indicate to the contrary. National treatment, most-favoured nation treatment, and reciprocal market access have become the central focus of trade rules which do not necessarily reflect developing countries' "needs and concerns at different levels of economic development."
The structural features of the WTO regime are quintessentially those of dominancy. The developed countries at the Uruguay round (1986-94) pushed their agenda of trade liberalisation in sectors most advantageous to them, eg, investment, services, and intellectual property, and shaped the substantive framework of the WTO and its goals, ie, freedom of trade, liberalisation, reciprocity, most favoured nation treatment, level-playing fields, and so on.
And there was the ostentatious readiness of academicians and policy makers to flatter the developed countries by echoing the slogans of free trade and liberalisation. It was the seductions of intellectual fashion. As a result, the WTO regime, characterised by its "single undertaking," includes more onerous demands on developing countries.
The paucity of enthusiasm shown by developing countries to the Doha talks, however, indicates that they have not been bought in, but more fundamentally, they know that they are getting raw deals under the WTO regime. Their present expectations about Doha resonate with Karamazov's lament: "Besides, too high a price is asked for harmony; it's beyond our means to pay so much to enter on it. And so I hasten to give back my entrance ticket, and if I am an honest man I am bound to give it back as soon as possible."
Liberalisation, the hallmark of the WTO regime, benefits primarily developed countries; it is inherently advantageous for the strong and powerful. It is an arena for gladiators. It is an open field, and the prize to the strongest. The entire ethical foundation of free competition is built at the expense of the weak and unfit. Darwinism is the mistress of free trade. The premia attached to the ability to make adjustments to a changing environment and emphasis on productivity and efficiency by streamlining business processes underpin the development of neo-Darwinism.
The World Bank, the IMF and the WTO have preached the gospel of "free trade" as a pathway to global economic nirvana as a matter of faith, but let us not forget that all developed countries had gone through the stages of protectionism one time or another until they became strong enough to enjoy free trade. History attests that economic development does not correspond to the integration and harmonisation of national economies with the global economy. India and China, two most talked-about economic super idols of globalisation today, were controlled and command economies, respectively.
Evidence is abundant that economic development took place in tandem with the development of domestic institutions through the adoption of new know how from abroad and experiments of domestic innovations based on local knowledge. The key to East Asia's success, long preceding the present success of India and China, was selective liberalisation pursued under strategic protectionism driven by the government.
It included educational policies, establishment of public enterprises, credit subsidies and tax incentives for priority industries, and export promotions, including duty-free access to inputs and capital goods. Under the WTO regime, however, most of these strategies are now prohibited.
Economic development is the allocation of resources to produce and distribute more and better goods and services. Developing countries should be allowed to decide which industries should be promoted and nurtured by the governments in accordance with their respective strategic objectives.
The WTO rules do not allow developing countries to make the selective liberalisation of trade in accordance with their own priorities set by "their respective needs and concerns at different levels of economic development." Rather, the WTO rules as the "single undertaking" resulted not only in the curtailment of developing countries' freedom of choice under special and differential (S&D) treatment in GATTT Article XVIII, but also in the eventual convergence in standards of conduct for developing and developed countries.
The S&D treatment originally codified in GATT Article XVIII was radically altered in form and substance into transition periods over which developing countries would assume the same levels and scope of obligations as developed countries.
Globalisation does not mean uniformity in practice on the basis of a monolithic global formula. Paradoxically, the more globalisation progresses, the more opportunities for diversity will develop. The fundamental empirical basis of such pluralism and diversity is reciprocal respect for freedom of choice of the individual human being.
Let each developing country develop its strategy, set its developmental priorities, and promote institutional diversity that will meet its "needs and concerns at different levels of development" and that at the same time will be compatible with the process of sustainable development through globalisation. To achieve these objectives, how should we modify WTO rules?
The myth about the "single undertaking" of the WTO regime must be deconstructed first by recognising that every member has different needs and levels of capacity. The Enabling Clause adopted in 1979 was a fundamental departure from the MFN provision. It required no reciprocity in according preferential treatment. We should expand the scope of preferential treatment on a non-reciprocal basis in a parallel development similar to the establishment of the Exclusive Economic Zone within the Law of the Sea. The law regulating freedom of the sea has accommodated a non-reciprocal, exclusive zone. This will be an answer to the Group of 77's question on the Doha Plan of Action in June, 2005 to operationalize the concept of policy space for development.
A call for the establishment of a trade sub-regime equivalent to the EEZ will aim at carving out a special and differential treatment zone out of the WTO's "single undertaking" by broadening the scope of special and differential (S&D) treatment in GATT Article XVIII. This new sub-regime can be called "A Zone for Special and Differential Treatment," that is designed to help developing countries' freedom of choice under the S&D treatment. The S&D Treatment Zone will provide national policy space for development.
It should encourage bilateral deals as part of the legitimate exercise of freedom of choice. We need to redefine and expand the scope of S&D treatment in such a way to allow developing countries to exercise broader policy discretion with respect to their own domestic markets. In particular, substantive policy discretion will require a different demarche for capacity and competitiveness building than merely providing an extended period of waiver from some of the compliance obligations. The Group of 77 should prepare and organise themselves for a new round of negotiations beyond Doha for the development of the S&D Treatment Zone, and say "Adios, Doha."
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