April 2002 WTO and Development 1

What does the WTO do for the the Developing Countries?

Leverhulme Lecture, Nottingham 22 April 2002

Sam LairdChief, Research,

Division for International Trade, UNCTAD

April 2002 WTO and Development 2

Overview

Developing countries in the GATT Development issues in the WTO

– Lessons from Seattle

– Trade and trade policy developments

The « Doha Development Agenda »

April 2002 WTO and Development 3

The ITO and the GATT

The Havana Charter 1947– Chapters on employment and economic activity,

economic development and reconstructions, restrictive business practices, intergovernmental commodity agreements, and the establishment of the ITO

ICITO & the GATT Development reforms in the GATT

– 1954-55 – Article XVIII, Article XVIII bis– 1964 – Part IV– 1979 – the Enabling Clause

April 2002 WTO and Development 4

Key GATT ideas Freer (not free) trade in goods through reciprocity

in negotiations Tariffs not NTBs Non discrimination (MFN & national treatment) But RTAs allowed, unilateral preferences under

Enabling Clause and waivers (Cotonou, CBI, etc) Rules for trade – progressive coverage of

disciplines Dispute settlement (consensus to accept)

April 2002 WTO and Development 5

GATT to the WTO Establishment of new organization, 1995 Inclusion of services and intellectual property Revised dispute settlement mechanism

– Unified, consensus to reject, Appeal Body

Single undertaking New market-access commitments in goods &

services Revised rules

April 2002 WTO and Development 6

Seattle - 1

Organizational problems Text too long, too ambitious

– Need to include TA and LDC measures?– Were all “Trade and…” issues ripe for deal

(investment, competition policy)?– Should all issues be in WTO (environment,

labour standards)?

April 2002 WTO and Development 7

Seattle - 2

Implementation problems– Where is the cheque?– Barriers loaded against developing countries– Backloading– Contingency protection– Need for TA, longer transition periods

April 2002 WTO and Development 8

Seattle - 3

Change in membership – 80 CPs in Punta del Este, 135 Members in

Seattle (143 in Doha) Increased complexity of WTO Most WTO Members now in RTAs

– Did they try hard enough?

April 2002 WTO and Development 9

Seattle - 4

Two conflicts of vision about WTO– WTO as key legal framework for

intergovernmental economic relations, protector of rights, rules of law Trade negotiations as a cooperative game Consensus rule-making (veto>vote)

– WTO intrusive, secretive, undemocratic lack of transparency controversial DSM cases

April 2002 WTO and Development 10

The road from Seattle to Doha

Launching of mandated negotiations in agriculture & services - BIA

Mandated reviews of WTO agreements LDC package – EBA, AGOA Work on TA budget Accessions – especially China Transparency (internal cf external)

April 2002 WTO and Development 11

Addressing implementation concerns

Problems in implementation of UR results– Textiles, DSM, AD, GPA, TBT/SPS, TRIMs, TRIPS,

RTAs S&D issues

– “Best endeavours” to take account of interests of developing countries

– Operation of GSP – not an issue– Lesser obligations by developing countries and longer

transition periods– Technical assistance

Special mechanism, committee work

April 2002 WTO and Development 12

Policy developments

Trade policy reforms in developing & transition economies in last 10-15 years– NTBs eliminated or reduced– Tariffs rationalized and cut to 10-20%– More to be done

Tariff peaks, escalation, growth of AD measures, licensing systems, local content plans, technical barriers

Protection bias against developing countries

April 2002 WTO and Development 16

Anti-dumping actions by Groups 1980-99

Source: WTO.

0

20

40

60

80

100

120

140

160

Year

No.

Developed

Developing

Transition

April 2002 WTO and Development 17

NTBs in OECD - by major sector1996

ISIC

Description Aus EU Jpn NZ Nor Mex Tur CH USA

1 Agric., forestry & fishing 0.5 7.2 7.0 0.0 0.0 5.2 0.0 0.6 2.8

2 Mining & quarrying 0.0 6.7 0.4 0.0 0.0 24.5 0.0 0.0 0.4

21 - Coal mining n.a. 42.9 n.a. n.a. 0.0 0.0 n.a. 0.0 0.0

22 - Crude petroleum n.a. 0.0 n.a. n.a. 0.0 46.2 n.a. n.a. 0.0

23 - Metal ores n.a. 4.4 n.a. n.a. 0.0 0.0 n.a. n.a. 4.0

29 - Other n.a. 3.6 n.a. n.a. 0.0 0.0 n.a. 0.0 2.3

3 Manufacturing 1.7 5.4 2.5 0.0 0.9 12.9 0.3 0.1 8.1

31 - Food, bevs., tobacco 8.3 11.1 8.6 0.0 0.0 1.9 0.0 0.8 1.2

32 - Textiles & apparel 0.0 75.4 28.7 0.0 24.3 70.6 0.0 0.0 68.3

33 - Wood & wood prods 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8

34 - Paper & paper prods 0.0 1.9 0.0 0.0 0.0 0.0 0.1 0.0 1.3

35 - Chem. & pet. prods 0.6 1.6 1.4 0.2 3.7 3.8 0.0 0.0 3.2

36 - Non-metallic min. prods 0.5 0.0 0.0 0.0 0.0 0.4 6.6 0.0 6.1

37 - Basic metal industries 0.0 0.6 2.6 0.0 0.0 36.5 0.1 0.0 30.4

38 - Fabricated metals 0.2 0.0 0.0 0.0 0.0 15.1 0.0 0.0 6.1

39 - Other 0.0 0.0 0.0 0.0 0.2 31.9 0.0 0.0 1.7

  Total 1.5 5.6 2.8 0.0 0.4 11.8 0.2 0.1 7.2

April 2002 WTO and Development 18

Trade developments

Developing countries share of world trade highly variable– 33% in 1947, 20% in 1973, 28% in 1999– Countries which have diversified to

manufactures have generally done better– Decline of 2 percentage points following Asian,

Russian, Brazilian crises, but strong recovery Few trade policy reversals

April 2002 WTO and Development 19

Doha – The New Agenda Extended market access - potential gains

– BIA - Agriculture - $70bn, Services - $300bn?– PLUS - Manufactures - $70bn – added at Doha

Other immediate negotiations– AD, subsidies, environment

New negotiations in 2003? Subject to consensus– investment, competition policy, transparency in government

procurement, trade facilitation Further study

– electronic commerce S&D provisions, technical assistance

April 2002 WTO and Development 20

Doha – Other parts of the deal

TRIPS Subsidies Implementation Cotonou Agreement Bananas Labour standards - ILO business

April 2002 WTO and Development 21

Issues: To what extent does WTO system contribute to economic development?

Promotion of good policy:– Transparency, Tariff reduction & binding, elim. of

QRs, licencing TBT/SPS, state trading, RTAs

– GATS, agriculture, textiles (at last?!)

– BUT: AD/CV, BOP. Subsidies? Safeguards? TRIPS?

Significant direct implementation costs:– Customs valuation, AD/CV, TRIPS, TBT/SPS, textiles

Significant investment (indirect) costs:– Customs valuation, GATS, TRIPS, TBT/SPS

April 2002 WTO and Development 22

Issues: To what extent does trade contribute to economic development?

Linkages between investment, trade and growth plus debt and poverty

Effects on income distribution, wages and employment

Need for social safety nets, structural adjustment programmes

April 2002 WTO and Development 23

Development links with some specific issues

Other issues– Environment– TRIPS– DSM– Trade and … issues– TBT/SPS– RTAs

April 2002 WTO and Development 24

Is Doha a time bomb? Development issues – now a top priority

– Genuine concern or fear of stalemate in WTO?

Is a development friendly outcome of the DDA guaranteed?

What is the future of S&D treatment?– More enforceability? Greater differentiation? Issue-

oriented treatment? More “policy space”?

Regionalism and/or multilateralism?