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Wto and Developing Countries - Essay Example

GATE and the WTFO coexisted until December 1995, when the embers of GATE met for the last time. Although the WTFO replaced GATE, the trade agreements established by GATE in 1994 are part of the WTFO agreement. However, the WTFO has a significantly broader scope than GATE. GATE regulated trade in merchandise goods. The WTFO expanded the GATE agreement to include trade in services, such as international telephone service, and protections for Intellectual property-?that Is, creative works that can be protected legally, such as sound recordings and computer programs.

The WTFO Is also a formally structured organization whose rules are legally binding on its member states. The organization revised a framework for international trade law. Members can refer trade disputes to the WTFO where a dispute panel composed of WTFO officials serves as arbitrator. Members can appeal this panel’s rulings to a WTFO appellate body whose decisions are final. Disputes must be resolved within the time limits set by WTFO rules. All of the 128 nations that were contracting parties to the new GATE pact at the end of 1994 became members of the WTFO upon ratifying the GATE pact.

By 2005 the WTFO had 149 members. Another 32 nations and 7 organizations enjoyed observer status. Member and observer nations account for more than 97 percent of world trade. The WTFO is based in Geneva, Switzerland, and is controlled by a General Council made up of member states’ ambassadors who also serve on various subsidiary and specialist committees. The ministerial conference, which meets every two years and appoints the Wet’s director-general, oversees the General Council.

Since Its creation, the WTFO has attracted criticism from those concerned about free trade and economic globalization. Opponents of the WTFO argue that the organization is too powerful because it can declare the laws and regulations of sovereign nations in violation of trade rules, in effect pressuring nations to change these laws. Critics also charge that WTFO trade rules do not sufficiently protect workers’ rights, the environment, or human health. Some groups charge that the WTFO lacks democratic accountability because Its hearings on trade disputes are closed to the public and press.

WTFO officials have dismissed arguments that the organization is undemocratic, noting that its member nations, most of which are democracies, wrote the WTFO rules and selected its leadership. WTFO supporters argue that it plays a critical role in helping expand world trade and raise living standards around the world. Principles of the trading system The WTFO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games.

Five principles are of particular importance in understanding both the pre-1994 GATE and the WTFO: Non-Discrimination. It has two major components: the most favored nation (MFC) rule, and the national treatment policy. Both are embedded in the main WTFO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFC rule requires that a WTFO member must apply the same conditions on all trade with other WTFO members, I. . A WTFO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTFO members. Grant someone a special favor and you have to do the same for all other WTFO members. ” National treatment means that imported goods should be treated no less favorably than domestically produced goods (at least after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers to trade (e. G. Technical standards, security standards et al. Discriminating against imported goods). Reciprocity. It reflects both a desire to limit he scope of free-riding that may arise because of the MFC rule, and a desire to obtain better access to foreign markets.

A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalizing; reciprocal concessions intend to ensure that such gains will materialism. Binding and enforceable commitments. The tariff commitments made by WTFO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish “ceiling bindings”: a country can change its bindings, but only after estimating with its trading partners, which could mean compensating them for loss of trade.

If satisfaction is not obtained, the complaining country may invoke the WTFO dispute settlement procedures. Transparency. The WTFO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTFO. These internal transparency requirements are supplemented and facilitated by periodic country- pacific reports (trade policy reviews) through the Trade Policy Review Mechanism (HTTP).

The WTFO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports. Safety valves. In specific circumstances, governments are able to restrict trade. There are three types of provisions in this direction: articles allowing for the use of trade measures to attain uneconomic objectives; articles aimed at ensuring “fair competition”; and provisions permitting intervention in trade for economic reasons. Exceptions to the MFC principle also allow for preferential treatment of developed countries, regional free trade areas and customs unions. . 3. Summits The Wet’s Hong Kong Declaration WTFO and the global trade system remain in crisis. The Hong Kong agreement contains proposals that will further threaten the global environment and the livelihoods of the world’s poorest people. Non-Agricultural market access The Wet’s current trade negotiations on MAMA have been reaffirmed. Under pressure from the EX. and its allies, governments have agreed to an extreme form of liberationists by introducing a ‘Swiss formula’ for tariff reductions on all manufactured goods and natural resources.

Developing countries risk having to cut their tariffs drastically. The negotiations still include proposals from various countries to completely liberalize markets in forest products, fish and fish products, gems and precious metals, primary aluminum and oil, with no mention of the potential and possibly widespread environmental and social impacts that such liberalizing could have. A specific reference to sector negotiations has been reinserted in the final Declaration, presumably by the US and Canada, who had previously objected to the fact that this text was missing.

However, the text does direct governments to determine whether sector negotiations have sufficient support to continue, thus opening a door for the removal of these natural resource sectors from the sector aspect of the MAMA negotiations (meaning that they would not have to be completely liberalized). Negotiations to ‘reduce or eliminate’ environmental and health standards (known as non- tariff barriers, Ants, in the WTFO) will also be intensified.

Current notifications include a breathtaking array of challenges to labeling and certification requirements, national standards and extractions, export restrictions, restrictions on foreign investment and measures to promote local economic development. The sectors covered include mineral products, automobiles, chemicals, electronics, environmental goods, fertilizers, fish and fish products, food, footwear, forest/wood products, mineral products and petroleum oils, shrimp, and textiles and leather goods.

Fisheries Fisheries remain a proposed sector negotiation under MAMA, supported by countries including New Zealand, Norway and Iceland. The fact that increased liberalizing in this sector could further damage already seriously depleted wild fish tock are not taken into account. The world’s supply of fish is nearly exhausted: over 60% of wild fish stocks have been fully exploited, overexploited, or depleted, and a further 10% are recovering.

Nearly 40 million people rely on artisan fishing for their food and livelihoods worldwide, but the potential impact on them of greater liberalizing in fisheries is also ignored by most countries. However, Japan and South Korea have opposed – and the EX. now does not support – the fisheries sector, meaning that it could be removed from negotiations since it does not enjoy sufficient purport. However, the agreed intensification of negotiations on non-tariff barriers could also have a significant negative impact on measures taken to conserve fish stocks.

A number of countries, including Norway, have already objected to requirements to provide information about the provenance of fish, for example. Similarly, the Philippines have challenged trade restrictions required by CITES, in relation to freshwater fish, saltwater fish and fish for aquaria. Additionally, Argentina has notified regulations establishing maximum contents of heavy metals in certain fish products. Forests and Bio- diversity ‘considerable environmental and social costs due to downsizing of the industrial capacity and closing some industries entirely.

According to the FAA, ‘more than 350 million people living in or next to dense forests rely on them for subsistence or income’. Sixty million indigenous people are almost wholly dependent on forests. A further 13 million people are employed in the formal forestry sector. Again, however, Japan opposes the forestry sector and the EX. is not supporting it. It could therefore be removed from the negotiations in the near future. Yet again, the agreed intensification of negotiations on Ants means that challenges already notified by countries, relating to wood and wood products, could proceed.

These are likely to be based on notifications already listed by Australia, Egypt, Japan, Malaysia, New Zealand, the Philippines and the US, covering testing, certification, standards and regulations, and labeling. In contrast to their position on tariff liberalizing in this sector, Japan and the EX. have also challenged export restrictions that countries apply to their forest product exports, which may be in place to protect biodiversity or remote domestic economic development in the exporting countries.

Bio-Diversity and TRIPS In addition, at Hong Kong, rich countries’ governments rejected attempts by India, Bolivia, Colombia, Ecuador, Peru and other developing countries to begin to recognize the rights of local communities and indigenous peoples over their own traditional knowledge and genetic resources. The TRIPS agreement obliges the 149 WTFO member countries to protect intellectual property rights (APRs) relating to plant varieties and microbiological processes, using patents and similar PR systems.

The agreement undermines the rights of farmers, indigenous peoples and communities by allowing large biotechnology companies to ‘buy and patent the seeds, crops, medicines and traditional knowledge of indigenous peoples and local communities. TRIPS further piracy, the prevarication and unauthorized use of biological resources by entities such as corporations. Women are particularly affected, as they are often responsible for collecting food and medicinal resources for their families and play a major role in traditional seed-saving systems.

Agriculture The crux of the Hong Kong ‘deal’ is agriculture, with a date for eliminating export besides having been set at 2013 and developing countries gaining an exception for special products (which they may ‘self-designate’) and safeguard measures in case of import surges. But the date for the elimination of export subsidies is far in the future. Furthermore, the text of the Declaration does nothing to advance the setting of limits on the bulk of subsidies, domestic support subsidies that will allow the continued the dumping of EX. and US products on developing countries.

In addition, developing countries could be forced to open their agricultural markets as a result of he tariff cuts they will be required to make. Intensive agricultural practices and liberalized international trade are leading to social disruption, environmental damage and even hunger, particularly in developing countries. Small-scale farmers are particularly vulnerable to market-opening pressures and are often forced from their land when it is converted to plantations or planted with crops for export.

Services After huge controversy about whether services liberalizing should become eventually force them into liberalizing a range of environmentally-sensitive sectors. Strong text regarding bilaterally negotiations remains in place, including language that requires that countries ‘shall consider’ requests. The local environmental impacts of oil exploration and extraction and pipeline construction and transport include deforestation, toxic contamination, and frequent impacts on gender and human rights and the rights of indigenous communities.

Ata broader level these operations make major contributions to climate change, the expansion of energy service operations will worsen these impacts, and GATES rules could make it increasingly difficult to adopt and enforce environmental and natural resource retention measures. ‘Environmental services’, as currently defined in GATES, is essentially a misnomer used to describe sizeable industries involved in waste disposal and treatment. The current classification includes sewage services, refuse disposal services, sanitation and other services, and other environmental services.

The core services in this sector are thus so-called ‘end of pipe’ disposal services, not environmental services directed towards prevention or remediation of environmental damage. Water distribution and wastewater treatment fall under the ‘environmental services’ classification. Access to water is a fundamental human right. However, some WTFO members insist on turning water into a commodity and an industrial ‘service’ sector, granting transnational corporations the right to manage water exploitation and distribution.

Water liberalizing has been bad news in recent years for many people and communities, from Cohabit, Bolivia, where water prevarication brought an immediate 68% price rise, to Manila, Philippines, where prices increased 500% over a six-year period. The deadlines agreed at Hong Kong are (1) revised requests by 28 February 2006; (2) first offers by 31 July; (3) revised offers by 31 October. This could mean that countries will rush into making commitments before having a full picture of their environmental, social, gender and employment implications.

Environmental Negotiations The text of the Declaration moves forward problematic negotiations concerning the relationship of the WTFO to multilateral environmental agreements (Mesas). Many environmental groups have opposed these negotiations. The current WTFO negotiations have not only failed to provide any further institutional and legal clarification, but also threaten to set rules and criteria for the use of trade measures n both current and future MESAS. This could hamper the ability of governments to implement MESAS and regulate trade in favor of the environment.

It is highly unlikely that the negotiations in the Wet’s Committee on Trade and Environment will lead to a ‘safety net’ for MESAS. Furthermore, environmental technology (e. G. Solar panels and wind turbines) is mostly produced in industrialized countries. A tariff reduction could thus reduce developing countries’ chances of developing their own environmental industries. Development Assistance Governments meeting in Hong Kong, supposedly to offer the poorest countries a development’ deal have repackaged old aid, disguising it as new money for developing countries.

Furthermore, promises of loans for infrastructure projects will increase debt burdens and open developing countries to further corporate exploitation. It is ironic that some of the poorest countries in the world are still being even when they have protested that this could lead to denationalization and increased poverty and unemployment. On ‘duty-free quota-free’ market access (that is completely free market access for the poorest countries), the US will be allowed to continue to protect 420 product tariff lines.

The Main Points from the Doth WTFO Declaration Ministers from the 142-member World Trade Organization wrapped up a six-day conference in Doth on Wednesday, approving a declaration outlining an agenda for a new round of multilateral trade talks. Here is a summary of some of the meeting’s principal conclusions: AGRICULTURE- Ministers adopted a text calling for negotiations with a view to “phasing out” agricultural export subsidies, as demanded by the United States and an alliance of exporters known as the Cairns Group.

But the European Union, which strongly resisted pressure to make any commitment to end besides, managed to win the insertion of language making it clear that participants would take part in such negotiations “without prejudging the outcome”. The EX. had long argued that a firm engagement to eliminate export subsidies would interfere with its own timetable for farm sector reform. PUBLIC HEALTH- The conference, in a concession to developing countries, determined that a WTFO agreement on intellectual property rights “does not and shout not prevent (WTFO) members from taking steps to protect public health”.

Developing countries had demanded authorization from the WTFO to override patents held by big pharmaceutical impasses in order to make cheaper, generic drugs available to their people in times of medical crises. But the text likewise reiterates a commitment to the WTFO accord known as TRIPS (trade related aspects of intellectual property rights). The United States and Switzerland had warned that any weakening in TRIPS would discourage companies from investing in critical research.

ENVIRONMENT- The text goes some way to meeting EX. calls for negotiations to determine the relationship between trade and environmental protection. The EX. wants to ensure that governments neither exploit the environment to gain market share nor use environmental protection laws to block imports. Developing countries resisted any such linkage, fearing that industrialized nations will in fact use environmental clauses in trade pacts to protect their markets. The text stipulates that negotiations on trade and the environment will be held but adds that their outcome should not be prejudged.

LABOR RIGHTS- The conference concluded that the International Labor Organization is the appropriate venue to discuss the place of core labor standards in trade accords. While the EX. had sought stronger language, making it clear the WTFO also has a role o play in enforcing core labor standards, developing countries objected + suspecting that the West would use such standards for protectionist purposes. INVESTMENT- Negotiations on liberalizing investment policies were put off until after the next WTFO ministerial meeting in 2003.

This again is a minor concession to developing countries who object to opening their economies to foreign investment until their industries and institutions are able to compete with overseas rivals. ANTI-DUMPING- Japan and South Korea were the big winners in this debate, as WTFO ministers agreed that the imposition of anti-dumping duties on imports deemed to have entered a country at unfairly low prices was a proper subject for debate. Japan and South Korea say the domestic industries such as steel.

US officials say anti-dumping measures are necessary to preserve public support for free trade. By all accounts the United States would have preferred to keep anti-dumping off the table in Doth. 3. WTFO And Bangladesh 3. 1 . The impact of WTFO on Developing Countries Developing countries have never had a decisive role in the General Agreement on Tariffs and Trade (Catchword Trade Organization (WTFO) system; but their weakness ay be much more damaging now than ever before, because of three newly emerging features. First, the WTFO is increasingly spreading its coverage to new areas.

Second, the impact of the agreements of the WTFO (as compared to the GATE) and their operation is much wider and deeper for the economies of countries, particularly the developing countries. Third and perhaps the most important, the economies of the developing countries are much more vulnerable at present than before because of their own weakness and also exposure to the uncertain external environment. Amidst all these challenges in the WTFO, the developing countries are in a very weak session. This weakness is manifested in various ways, some of which can be well- identified.

For example: (I) the developing countries have been getting less than equal treatment in several areas, (it) they have been making significant concessions to major developed countries without getting much in return from them, (iii) several important provisions of special and differential treatment of developing countries have not been properly implemented, (iv) the subjects and areas of interest to the developing countries have been consistently ignored and not attended to, (v) in the irking of the dispute settlement process, important interpretations are evolving which have the potentiality of constraining their production and export prospects, (v’) big loopholes and traps have been left in some agreements which could have possible adverse impacts on the developing countries, etc.. All this needs to be elaborated and clarified by way of illustrations.

Strategies of Developing Countries in the WTFO The strategies of the developing countries and the method of their participation in there is rigid opposition up to a certain extent, followed by abrupt and total capitulation. A Glimpse of the Tasks Ahead The work to be undertaken in the next few years may be divided into four categories, biz. , (I) implementation of the WTFO agreements, review of some provisions of the agreements, (iii) continuing negotiations in some areas and (v) the work in some new areas. The Future Course First and foremost, the developing countries have to have the political determination not to be pushed around in the WTFO forum.

They should also have a resolute will to utilities the forum to serve their interests and minimize the adverse effects on them. In this process they have to move with a degree of confidence, identify their negotiating threaten and use them effectively. Efforts have to be mounted at national level, group level and multilateral level. The biggest strength of a negotiator in a multilateral negotiation lies in having the full support of his or her country behind the stand being taken. This can happen only when the stand of the country is decided after thorough deliberation. Developing countries need to improve and strengthen their decision-making machinery and institutions.

There is also the need for a change in their strategy in the negotiations and for comprehensive preparations for their role in the WTFO. At the same time, they also have to work for a total change in the WTFO negotiating process. Strengthening National Decision-Making Institutions Developing countries have to identify their specific interests and objectives in respect of the subjects of the WTFO. This can be done through the process of a broad-based and in-depth examination of the issues and implications. It requires some institutional changes in the decision-making process. The subjects are so complex and their implications so widespread that any particular ministry in a government would not be fully equipped to handle them on its own.

Almost every issue being taken up in the WTFO involves differing interests of various wings of the government. It also involves a clash of interests among various industry groups and economic operators. The overall interest and stand of the country can be worked out only after balancing and harmonistic all these differing and clashing interests. 3. 2. Change in Strategy and Approach Then there should be a change in the developing countries’ strategy and approach. The current feeling of helplessness that the developing countries cannot have their say in the WTFO should be replaced by a new mood that they can achieve their objectives if a number of them are united and well-prepared.

The developing countries are in very large number in the WTFO and even if one does not expect all of them to come together on all the issues, one can at least expect a large number of them to have a common perception and common stand on a number of subjects. Preparation Process But all this needs the support of detailed analytical examination of the issues involved and identification of interests. The developing countries should undertake such examination, but their capacity is limited. They should build up and strengthen heir capacity. They could sponsor this work in some of the universities and developing countries for this purpose. But considering their limited resources and capacity, it is doubtful if they will be able to undertake studies and analyses on their own on a sustained basis. They need assistance.

Regional and Group Efforts The effectiveness of the developing countries will be enhanced if there is better coordination among them. The exercise of coordination should start right from the stage of identification of interests and formulation of positions and stands. Under the verbal umbrella of the Informal Group of Developing Countries in the WTFO, there may be some smaller groups, based on specific issues and interests, with full transparency and interaction with the other members of the Informal Group. There may also be burden-sharing in preparations in specific areas and exchange of information, which will avoid duplication of efforts and ensure better utilization of their scarce resources.