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What does the WTO do for the Developing Countries? Leverhulme Lecture, Nottingham 22 April 2002

What does the WTO do for the Developing Countries? Leverhulme Lecture, Nottingham 22 April 2002. Sam Laird Chief, Research, Division for International Trade, UNCTAD. Overview. Developing countries in the GATT Development issues in the WTO Lessons from Seattle

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What does the WTO do for the Developing Countries? Leverhulme Lecture, Nottingham 22 April 2002

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  1. What does the WTO do for the Developing Countries?Leverhulme Lecture, Nottingham 22 April 2002 Sam Laird Chief, Research, Division for International Trade, UNCTAD 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 » 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 XXVIII bis • 1964 – Part IV • 1979 – the Enabling Clause 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) WTO and Development

  5. GATT to the WTO • Establishment of new organization, 1995 • Inclusion of services and intellectual property • Revised dispute settlement mechanism • Single undertaking • New market-access commitments in goods & services • Revised rules • Extended membership of developing countries • Increased complexity, decision making harder WTO and Development

  6. Seattle Issues • Were all “Trade and…” issues ripe for deal (investment, competition policy)? • Should all issues be in WTO (environment, labour standards)? • Implementation problems • Where is the cheque? • Backloading, AD, Safeguards • Need for TA, longer transition periods WTO and Development

  7. Seattle - 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 • WTO intrusive, secretive, undemocratic • lack of transparency • controversial DSM cases • Consensus rule-making (veto>vote) WTO and Development

  8. 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 (Pay off in March 2002) • Accessions – especially China • Transparency (internal cf external) • Addressing implementation problems • Textiles, DSM, AD, GPA, TBT/SPS, TRIMs, TRIPS, RTAs WTO and Development

  9. 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 • Increase in RTAs WTO and Development

  10. Post-UR Tariffs by Sector WTO and Development

  11. 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 NTBs in OECD - by major sector 1996 WTO and Development Source: UNCTAD TRAINS Database.

  12. Anti-dumping actions against groups 1980-99 Source: WTO. WTO and Development

  13. Trade developments • Developing countries share of world trade highly variable • 20% in 1973, 28% in 1999 • But 33% in 1947 • 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 WTO and Development

  14. 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 WTO and Development

  15. Doha – Other parts of the deal • TRIPS • Subsidies • Implementation • Cotonou Agreement • Bananas • Labour standards - ILO business WTO and Development

  16. Issues: To what extent does WTO system contribute to economic development? • Promotion of good policy: • Transparency, Tariff reduction & binding, QR elim., licencing, TBT/SPS, state trading, procurement, RTAs • GATS, agriculture, textiles (at last?!) • BUT: AD/CV! BOP! Infant industry protection? Subsidies? Safeguards? TRIPS? Future: Investment, competition policy? • Significant implementation costs: • Customs valuation, AD/CV, TRIPS, TBT/SPS, textiles • Future: Competition, investment policy? Trade facilitation? Government procurement? WTO and Development

  17. Issues: To what extent does trade contribute to economic development? • Long term gains, short-term costs • Linkages between investment, trade and growth • Effects on income distribution, wages and employment • Need for social safety nets, better designed structural adjustment programmes WTO and Development

  18. Is Doha a time bomb? • WTO not a development institution • Many elements are good policy, but some bad signals • Protectionist bias against developing countries • Too much or too little latitude for developing countries? • 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? WTO and Development

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