Published: International Trade Forum – Issue 1/2006
By Robert J. Evans
It’s not all plain sailing, but the WTO system can be made to work for everyone, say four new books.
Books on the WTO have been rolling off the presses around the globe this past year, the organization’s tenth anniversary, as any Internet search will show. Some are critical, some anecdotal and some impenetrably analytical. Few provide the insight on practical experience in negotiating entry and on drawing maximum advantage from membership that developing country diplomats and negotiators, business groups, individual firms, civil society bodies and even academics and specialist journalists often say they need. Three recent additions to the trade library go some way to plugging that gap, while a fourth argues that the WTO can be a powerful support for sustainable development if its members can decide how to tackle the problematic issues that it involves.
Joining the WTO and operating within its framework has been a frustrating experience for many developing countries. Some who have entered over the past decade, or are still seeking admission, speak openly of the bitterness they sometimes felt during the prolonged accession process. Others voice the disappointments they say they have encountered as members, particularly over the past four years of the Doha Development Agenda. Yet, none of the current 149 WTO members shows any desire to pull out and nearly 30 more, both relatively rich and extremely poor, are lining up to join. Only one country, the Pacific island state of Vanuatu, whose case is reviewed in Managing the Challenges of WTO Participation, has withdrawn from entry negotiations to consider its options.
Getting the best from the system
What then is the attraction of the WTO? According to authors and contributors to each of these volumes, it is mainly the widespread conviction that it can be made to work for everyone.
That message is delivered succinctly in the foreword to Managing the Challenges of WTO Participation. Its editors affirm that the 45 studies, a majority of which were written by authors from developing countries, highlight dilemmas that a range of less advanced economies faced and “show that when the system is accessed and employed effectively, it can serve the interests of poor and rich countries alike”.
This view is echoed from the perspective of five South Asian nations — Bangladesh, India, Nepal, Pakistan and Sri Lanka — by the Secretary-General of CUTS (Consumer Unity & Trusts Society), Pradeep S. Mehta, in South Asian Positions in the WTO Doha Round. “The South Asian region has full faith in the multilateral trading system and [the five countries] realise that the Doha Development Agenda offers tremendous opportunities for these countries to achieve their overarching objective of sustainable development and poverty alleviation,” he writes in the volume published by his independent research centre. Siphana Sok was former Secretary of State in Cambodia’s Ministry of Commerce and its main negotiator on WTO admission and is now Director of ITC’s Technical Cooperation Coordination Division. In his memoir, Lessons of Cambodia’s Entry into the World Trade Organization, he explains that his government used the accession process as a stimulus to “irreversible trade liberalization and more broadly based reforms”.
Gary P. Sampson, a former divisional director at the WTO and now Professor of Economic Governance at the United Nations University in Yokohama, Japan, engages a much wider perspective in The WTO and Sustainable Development, arguing that, by identifying and developing discussion on issues where trade and sustainable development intertwine, the WTO could enhance its role as a key instrument in global poverty reduction.
All the editors of Managing the Challenges have long been involved with the WTO or its predecessor, the Secretariat for the General Agreement on Tariffs and Trade. Peter Gallagher was an Australian trade diplomat who now heads a leading consultancy; Patrick Low is currently WTO Director of Economic Research and Statistics; and Andrew Stoler is a former United States trade negotiator and lawyer who served recently as a WTO Deputy Director-General before moving into academia. Their book does not pretend that negotiating entry to the organization or exercising effective membership is plain sailing. The case studies it sets out are wide-ranging. They include the experiences of some of the world’s poorest, middle-income and even a handful of its richest economies, with failures and successes in acceding to the organization, handling disputes, conforming to health and safety standards, applying intellectual property rules and expanding trade in services.
Involve all stakeholders
The studies show, the editors say, that “joining the WTO and taking advantage of WTO membership is not something that can be left to governments alone”. That message comes through clearly from many of the cases the book reviews in detail. Examples include the story of a Bangladeshi rock band which found one of its songs had been pirated by an Indian film producer; Kenya’s discovery that its own legislation was a barrier to importing low-priced AIDS drugs; Vanuatu’s ill-fated effort to join the WTO; and Nigerian industry’s struggle to remove import restrictions that had political backing but pushed up production costs to the extent that the country’s export performance was suffering.
Success, as these and other cases show, is best guaranteed by involving all stakeholders in a single economy. It requires, the three editors say, a high level of interaction, information exchange and collaboration between business, civil society bodies and governments in elaborating trade policy. When this is absent or when it breaks down, the outcome is generally problematic. The conclusion, they suggest, can only be that the success or failure of an economy within the global trading system is home-grown rather than determined by the WTO itself and the constraints its rules impose.
In this context, another of the book’s case studies — on how Barbados liberalized its telecommunications industry — illustrates the role that local media can play in bringing home to the public at large the issues that are at stake and in helping form a national consensus. Despite complaints from the island’s business community and the vital tourist sector over high prices and limited services of its monopoly provider, there was considerable resistance to the government’s proposal to participate fully in the WTO’s 1997 telecommunications agreement by opening the sector up for competition. For the ordinary Barbadian, the argument could have remained too technical — and the proposed changes slightly threatening — if the island’s lively newspapers and radio stations had not seized on the issue. Through editorials, investigative reports and radio talk shows and debates, the public was made acutely aware of exactly what was at stake and how liberalization would affect individual citizens and their families. Thus, says case study author Linda Schmid of ITC, the media became a key driver in shaping popular support for reform.
Build support for accession
In accession negotiations, Gallagher, Low and Stoler argue, the need for cooperation among all stakeholders is just as vital. However, the case studies show that when an applicant country’s business community is no more ready than its government to comprehend the likely impact of WTO rules, serious problems can follow.
A Mongolian contributor to their volume records that both the private and the public sectors in his country were so conditioned by its 60-year experience as a command economy that they expected automatic benefits from accession. This led to ill-prepared negotiations, less than perfect accession terms and — as the effects of these began to be felt — disillusion with the WTO. In Vanuatu, another study shows, lack of resources to inform domestic stakeholders on, and involve them in, the accession process led to negotiations whose impact was heightened by the absence of any national consensus on what needed to be achieved.
Cambodia’s accession in 2004 as the first least developed country to join the WTO after 1995 sparked fierce controversy, centring around the terms of its admission. Non-governmental organizations involved in international development insist that extortionate conditions were imposed on a government anxious to win entry as part of a strategy to rejoin the global mainstream after three decades of civil war. Cambodia’s Government defended its decision, claiming that the obligations, though tough, will help propel needed reforms in the country, noted two prominent Cambodian economists in Managing the Challenges. But they believe not enough effort was made to take the country along with the negotiations and prepare it for the changes that joining the WTO would bring. Siphana Sok’s account of accession in Lessons from Cambodia’s Entry differs, but it underlines the same message: that broad cooperation among all economic actors is vital to ensure entry negotiations bring real benefits to new members. In his country, he suggests, the prime initial task was to ensure strong political commitment to the accession negotiations from the entire national administration. Then every effort was made to involve the private sector and the public at large in the process, and his book details how this was approached. In the end, he says, Cambodia used its admission strategy “to obtain favourable terms of accession while at the same time protecting its sensitive national interests”.
Negotiate in common interest groups
Developing countries negotiating in the WTO, especially those with limited global trade weight, say they have often felt vulnerable to pressure from heavyweights. The emergence of the group of 20 developing countries — the G20 — at the Cancún Ministerial Conference in September 2003 was widely welcomed as providing a solid base for cooperation across a broad range of issues in the Doha round. But, as suggests, forging smaller regional alliances — perhaps around a large partner — is a useful way to promote aims shared by a group of neighbours. In fact, the book itself is the product of collaboration between CUTS, an association based in India, and four other research organizations in Bangladesh, Nepal, Pakistan and Sri Lanka. The aim of this joint effort is to establish common ground and possible negotiating strategies between the five countries across the major areas of the Round: agriculture; market access for non-agricultural manufactured goods or NAMA; services; trade facilitation; and the development dimension that the Doha agenda was billed at its 2001 launch as primarily intended to promote.
As Bangladesh’s former Commerce Minister, Amir Khosru M. Chowdhury, notes in his foreword to the book, published on the eve of the WTO Ministerial meeting in Hong Kong, China in December 2005, the economies of the five are far from identical. India and Pakistan are populous countries with a strongly-established agriculture and a significant industrial base, while Bangladesh, Nepal and Sri Lanka are net food-importing countries. However, says Mr Chowdhury, the outcomes they all need from the Doha round — i.e., improved access to Western markets for their agricultural produce while maintaining safeguards to protect their small and highly vulnerable farmers — are both similar and complementary. One chapter in the book shows clearly that all five countries have a strong communality of interest in the talks on ser-vices, particularly in ensuring freer movement around the globe for their low- and semi-skilled workers who provide labour-intensive services. They also face similar issues in NAMA talks, where their businesses, especially garment manufacturers, regularly experience severe problems with complicated rules of origin in the Western markets they hope to enter. For Mr Chowdhury and CUTS’ Pradeep Mehta, the aim should be to establish common negotiating grounds and a common agenda across all these sectors as well as in the round’s discussions on development and trade facilitation.
Trade facilitation: an area to promote
Trade facilitation — primarily easing the passage of goods across borders — is a new area of the Doha talks, introduced at the Cancún Ministerial Conference after developing countries had firmly rejected talks sought by major powers on establishing rules for investment and competition policies and for government procurement. Although there had been strong suspicion among poorer nations that the concept was a device to impose on them rules that mainly benefit the larger trading economies, discussions over the past year in the WTO have brought the realization that the advantages of reducing delays due to detailed customs processing and harmonizing documentation can accrue to both rich and poorer countries. Most, however, are still opposed to establishing binding rules that could be enforced under the WTO’s dispute settlement system.
“South Asian countries acknowledge that existing inefficiencies in trade facilitation need to be tackled if they are to become more competitive in international markets,” say two Sri Lankan contributors in the CUTS volume. But they also accept that the political will to implement trade facilitation measures is lacking in some countries and that there is little pressure on politicians from the business community, which “is not fully conversant with the benefits of trade facilitation”.
A sustainable-development inventory
Gary Sampson’s book, says WTO Director-General Pascal Lamy in a foreword, “is a crucial first step in identifying and exploring the issues that fall under the umbrella of sustainable development and the expanded agenda of trade policy”. For the author himself, the WTO has already “by design or default” gravitated towards becoming what he calls a “World Trade and Sustainable Development Organization”. He points to issues of subsidies that have risen high on the WTO agenda — specifically in agriculture and fisheries — that can lead to environmental degradation, but suggests there are many other areas of interface that have emerged into the trade arena and surface in the WTO in different forms through the dispute settlement system. Examples are endangered species, import restrictions justified on the grounds of protecting public health and the question of genetically-modified organisms.
Sampson argues that many of these issues have come to the WTO, forcing on it a wider role than was ever intended, because nations are less willing to cede areas of national sovereignty and government control over policy to specialized agencies of the United Nations which would more logically be their home. Apart from the overall environmental issue, he points in particular to the hugely divisive area of labour conditions, which some major countries have sought to incorporate into the agenda at different points over the past decade.
The danger of this, suggests Sampson, is that the WTO “is a trade organization and was not conceived of as an environment or labour organization”. If it had been, its membership would not have been as almost-universal in terms of trading nations as it is now. To solve the dilemma, he proposes a “stocktaking” of the issues at the interface of trade and sustainable development. The book offers an inventory of the areas such an exercise could include and ideas on how they can be tackled.
What can we learn from these cases?
Trade is not a nebulous affair, relevant only to a few in the know. It has real impact on people’s lives. Get it right (open, fair, inclusive) and it can benefit all kinds of people, contribute to their well-being and thus to more developed, secure societies. Get it wrong (restricted) and there is a risk of aggravating poverty, social divisions and unrest.
With trade becoming more and more a global activity, it is important for countries to “get trade right” in the global rule-making forum that is the World Trade Organization. As countries negotiate the rules for trade, they need to be prepared for their far-reaching consequences on human activity and development. The best way to do this is to bring more speakers and topics into the trade debate. To really serve development goals, “trade talks” should not be the reserve of government officials. They need the voice and support not only of a range of business people, but also of others, such as the media, the public and non-governmental organizations. Trade talks are about more than trade policy. They are about development. And development depends on mobilizing more than just a narrow section of society.
The examples in these books can help countries on the road to development learn from others’ experiences and improve their own practices.
Prema de Sousa, Associate Editor, Trade Forum
Robert J. Evans is a freelance writer and media consultant based in the Geneva region. He specializes in trade and WTO issues.