Redesigning the World Trade Organization for the Twenty-first Century

13. Accommodating Developing Countries in the WTO: From Mega-Debates to Economic Partnership Agreements

363 13 Accommodating Developing Countries in the WTO: From Mega-Debates to Economic Partnership Agreements GERHARD ERASMUS I. Introduction The debate about accommodating developing countries in international organizations is an old one. International trade arrangements have achieved some success in this regard, such as the recognition of least developed countries (LDCs) as a special category and the adoption of the Everything but Arms program. Developing countries also enjoy flexibility when it comes to compliance with many of the standard rules applicable to Members of the World Trade Organization (WTO).1 The concept of special and differential treatment has been built into many provisions of WTO law. During the Kennedy Round, Part IV of the GATT 1947 was adopted, requiring developed countries to accord high priority to the reduction of trade barriers to products exported from developing countries. It also introduced the concept of non-reciprocity for less developed contracting parties . The special efforts of the United Nations Conference on Trade and Development (UNCTAD) resulted in the launching of the Generalized System of Preferences (GSP) in 1968. It has been observed that the ‘single undertaking’ approach of the Uruguay Round did not put an end to the granting of special and differential treatment and that there are no fewer than 145 such provisions.2 There remain a number of unresolved issues and new complications with respect to the accommodation of LDCs. The special preferences have not worked as intended. Specifically, they have not solved the problem of the marginalization of developing countries. Special preferences have produced some negative economic consequences, and certain economists argue that‘little benefit has in fact accrued to developing countries’through preferential schemes.3 Many developing countries have become trapped by preferential schemes, often resulting in failures to implement domestic reforms. In addition, GSP schemes are unilateral, grantor states determine the product coverage (developed country lobby groups are not inactive), and preferences have become dependent on other conditions. The Sutherland Report makes the valid point that ‘recipient countries have been burdened with obligations unrelated to trade, which are expressed as conditions to receiving preferences. Thus, it can be argued, that preferences are no longer unreciprocated’.4 Preferential treatment has also caused or contributed to structural conditions and legal arrangements that work against the integration of many developing countries into the global economy. The African, Caribbean, and Pacific (ACP) countries are an obvious example.Practically all ACP countries have continued to trade with their main trading partner, the European Union (EU), outside of normal rules. The special arrangements concluded for this purpose (the Cotonou Agreement and its predecessors) required WTO waivers. These waivers have now expired, and the majority of these states are not prepared for the ‘normal’ rules-based system. Catching up becomes tougher. The rules of the game introduced by the establishment of the WTO can fully apply only to the players inside the system. The ACP countries have largely traded in arrangements outside this system.Although most of them are Members of the WTO, they have also been ‘outsiders’.5 This chapter endeavours to contribute to the discussion by making three points. The first is that the mega debates about trade and development have produced limited success. It would be more constructive to address smaller or more focused sets of problems. The WTO could, for example, allow the Economic Partnership Agreements (EPAs), currently being negotiated between the European Union and theACP countries,to include a development-promoting dimension by applying less strict rules regarding WTO compatibility of regional trade arrangements. The EPAs have to comply with Article XXIV GATT and Article V GATS. This challenges the WTO to link development aims to regional integration issues.Will the WTO allow these free trade agreements (which will not be based on the Enabling Clause)6 enough flexibility when they have to comply with the rules for regional trade arrangements? The second point made in this chapter is that technical assistance and ‘implementation assistance’are not necessarily the same thing. The latter allows for technical assistance directed at the needs of a specific developing country (or groups of them) with regard to the implementation of particular obligations or specific regional arrangement. This approach should focus on domestic requirements, including legal and institutional reforms and capacity building aimed at specific outcomes. International assistance programs will show better 364 Part VI Regional Trade Agreements and the WTO results if undertaken in smaller, focused contexts. It is not practical...