February 11, 2010

Dilemma of the World Trade Organization (WTO) and Developing Countries

Introduction

Technological advancements and innovations have been dictating the turn of the present modern civilization. The current setting at present upholds an environment that answers to the global needs of the world. Collectivism in the concept of global community has been the popular ideal for the last couple of years wherein development and progress of nations are becoming more and more dependent to each other. Internationalization of industries is now the current trend amongst business organizations in its aim to increase market share and accumulate larger profit. However, this is not always the case especially among nations with poor living quality which at present cannot go hand in hand with the more economically progressive and developed nations.

 

Countries living in the poverty line have long been exhausting means and resources to alleviate the living conditions of its people. Third world countries in particular have been in the hopes of gaining economic stability that will assure the future of the descendants of today's population. These nations at present place their stakes in the market entrance of foreign investors that provide capital for local business ventures that will employ the people in the locality. In the past decades, most especially after the Tsunami disaster and hitherto Dafur crisis, we have seen a new agitation and concern by the international communities to come to the aid of poverty striking communities and/or countries by increasing foreign aid and debt cancellation. The aftermath of this disaster has brought to the fore the need for all the stakeholders in the globalized world to act to restore confidence and stability in the world system.

 

The World Trade Organization (WTO)

The WTO's institutional directive is obviously indicated in its instituting charter, the 1994 Agreement Establishing the World Trade Organization (WTO Agreement). The introduction of this global agreement highlights that the aims of the WTO are that trade and economic connections among WTO Members are supposed to be carried out with an outlook to elevating the standards of living, guaranteeing full employment and a great and progressively developing degree of real income and efficient demand, and increasing the construction of and trade in goods and services, at the same time as permitting for the most favorable utilization of the world's resources in line with the purpose of sustainable development, looking for both to look after and conserve the environment and to improve the means for doing so in a approach in agreement with their individual needs and concerns at diverse levels of economic growth" (WTO Agreement, 1st preambular clause).

 

Furthermore, developing and particularly the least developed among them, secure an allocation in the development in international trade corresponding with the requirements of their economic growth (WTO Agreement, 2nd preambular clause). Briefly, the principal purpose of the WTO is to double as the instrument through which global trade can turn out to be the means for sustaining the economic growth of Members, specifically the developing and least-developed Members. The economic growth of developing nations, and the employment of trade to attain such growth, has been a very old intention of the multilateral trading system and of the global governance construction of which the WTO is an element (The 2001 WTO Doha Ministerial Declaration, paras. 2 and 3). This intention is ultimately entrenched in the entitlement of individuals to take pleasure in higher standards of living, complete employment, and states of economic and social growth and progress" (United Nations Charter, art. 55(a)) in agreement with the right to sustainable development under international law (The 2000 United Nations General Assembly Millennium Declaration, para. 11).

 

Developing Countries

Developing countries, similarly labeled to as less developed, underdeveloped or Third world countries can be characterized by several major determinants (Narlikar, 2003). These includes economic underdevelopment, articulated in low Gross Domestic Product (GDP), imbalanced division of income, poor infrastructure and low energy utilization; social underdevelopment articulated as low Human Development Index and political underdevelopment, conveyed as the deficiency justifiable, responsible, convincing and reasonable government.

 

Under current WTO customs, there are a couple of categorizations of developing countries. One is Least Developed Countries (LDCs), as characterized by the United Nations, and other developing countries, which are self-declared (WTO, 2005). Self-declaration has brought about a condition whereby a number of countries with per capita incomes over $9,385, which is the World Bank's ceiling for low-income country positions, are provided for with Special and Differential treatment. The International Policy Council on the other hand, has its own classification of countries (International Policy Council, Food and Agricultural Trade). These include Least Developed Countries (LDCs), Lower Middle Income Developing Countries (LMIDCs), and Upper Middle Income Developing Country (UMIDCs). The LDCs are characterized by the IPC as countries with per capita income under $900. LMIDCs on the other hand, are defined by the IPC as those with gross national per capita within the means of $901 and $3, 035. This is comparable to the World Bank's definition of middle income developing countries with gross national income per capita of $765 and $3, 035. And the UMIDCs adopted the World Bank definition as the nations with gross national income per capita within $3, 035 and $9, 385. 

 

Dilemmas of WTO and Developing Countries

Globalization of both the economy and the society has confronted the world over the past decade (Kim & Weaver, 2000; Ohmae, 1990; Naisbitt & Aburdene, 1990). Among the important contributors to world confederacy and the global economy are the advances in computerization, telecommunications, and other forms of information technology. A shift of focus and interest from the local market to the international setting has demanded innovation not just in corporate leadership as new information, forms of communication, and technology. These are being offered to be utilized in encouraging and reinforcing interaction among individuals and the operating enterprise.

 

Since globalization represents the shift of the main venue of capital accumulation from the national to the supranational or global level (Teeple, 2000) and due to the adverse effects of such phenomenon, international businesses plan to venture into new horizons catering to the needs of the new markets and countries. Over the past half century, the developing countries have grappled with their relationship to the world trading system, the role of their trade policies in their economic growth, and the influence of the world economy on their prospects for growth (Krueger, 1995). The eventual recognition of the developing states and their contribution to the world economy enable firms to expand and apply their operations to such countries.

 

A major and foremost disadvantage for developing countries in acceding to the WTO is their capacity to be heard in the decision making of the organization. Issues and proposals for restructurings in the WTO's decision-making processes increased in eminence first following the fall down of the 1999 Seattle Ministerial Conference, on account of which Members undertook to have debates associated to internal transparency and involvement. The last foremost formal debate among Members on these concerns transpired for the duration of the July 2000 assembly of the General Council. Throughout that gathering, the then-General Council Chairman, Ambassador Kare Bryn of Norway, required to recognize, anchored on his discussions with Members, what he sensed were the typical of the debates (WTO, September 2000) with regards to internal accountability and involvement towards acquiring a consensus (WTO, February 2001).

 

Succeeding WTO procedure-associated documents, like the TNC Negotiating Principles and Practices (WTO, February 2002) and the draft manuscript of the Procedures for the Appointment of Directors-General have indicated to Ambassador Bryn's declarations as pinpointing of "best practices" in the context of internal accountability and the involvement of Members in decision-making in the WTO (WTO, February 2003). Nonetheless, a number of Members have carried on expressing reluctance, exemptions, prerequisites or commentaries relating to Ambassador Bryn's declaration (WTO, July 2002). This successfully denotes that there is no consensus, particularly from developing nations, on the points acknowledged by Ambassador Bryn as "best practices" for WTO decision-making procedures with regard to internal accountability and the involvement of Members.

 

Official WTO decision-making processes are presided over by Article IX of the WTO Agreement. Consensus decision-making is profoundly entrenched in the WTO decision-making arrangement (Narlikar, 2001), and has its origins in GATT 1947 decision-making procedures (WTO Agreement, Art. IX.1). Article IX.1 of the WTO Agreement specifically points out that an inclination for consensus decision-making above that of conventional majority voting (Steinberg, 2002). Consensus is characterized in the WTO Agreement as the organization involved shall be believed to have made a decision by consensus on an issue presented for its consideration, if no Member, in attendance at the assembly when the decision is obtained, officially opposes to the suggested decision (WTO Agreement, Art. IX.1). The description of consensus in Article IX.1 of the WTO Agreement rests significance on the actual and learned or informed attendance of a Member's delegate throughout the meeting in which the decision is completed; and the compliance of such Member, throughout the meeting, to officially and clearly point out that it is in opposition to consensus on the suggested decision. In this type of "passive" consensus, both nonattendance from the assembly and silence or non-objection throughout the assembly are corresponding to joining in the recommended consensus.

 

The consensus-based decision-making form under Article IX.1 of the WTO Agreement efficiently obstructs developing nations from getting the best of their equal position with industrial nations by means of the one-country one-vote arrangement which denies them of the advantages of prescribed voting and can work in opposition to them even supposing they hold the majority outlook on a subject" (UNDP, 2003). Conversely, consensus-based decision-making has similarly facilitated developing nations in a number of cases to efficiently stress their right to be heard in GATT and WTO decision-making (Steinberg, 2002). The most recent instances were in Seattle (1999), when a collection of African, Caribbean, and Latin American states opposed to their marginalization from the decision-making procedures that transpired for the duration of that ministerial conference and affirmed that they could not adhere in any consensus coming up from such defective procedure. It is also reflected in Cancun (2003), when Members could not arrive to a consensus on the subject of whether negotiations on the "Singapore issues" (Steinberg, 2002) were to have effect subsequent to the ministerial conference, in consequence of which Ministerial Conference Chair Minister Derbez of Mexico came to a decision that consensus could not be acquired and chose to adjourn the conference.

 

However, given the capacity and resource constraints that many developing countries face in terms of their representation and participation in the WTO's day-to-day business in Geneva, developing countries might not be able to fully maximize the potential of the consensus decision-making approach indicated in Article IX.1 of the WTO Agreement in guaranteeing that their outlook and points of view are unmistakably attended to and completely emulated in the concluding outcomes of the procedure. To deal with the underperformances of the existing "passive" consensus regulation in the WTO, Members could probably aim to spell out the manner through which consensus could be put across.

 

An "active" consensus could be sought after that would necessitate an active approval by all Members of the suggestion under debate, rather than merely the lack of opposition (Narlikar, 2003). This change requires being in addition to sufficient and understandable stipulation of information to all Members of the time and program of meetings in which such "active" consensus is required. "Active" consensus can be perceived as a feasible option to that of the "passive" consensus as indicated in Footnote 1 of Article IX.1, or to that of majority ballot under the final sentence of Article IX.1 of the WTO Agreement. The Ministerial Conference, or the General Council in the interim linking assemblies of the Ministerial Conference, can officially generate such an alternative ways of decision-making under Article IX.1 of the WTO Agreement without having to make changes with the WTO Agreement by merely simplifying the form through which Members can articulate their consensus.

 

Actually, there are previously instances in the WTO for changing from "passive" to "active" consensus. For instance, the prerequisite of "explicit consensus" under the 1996 and 2001 WTO Ministerial Declarations relating to conclusions on the subject of the commencement of negotiations, and on modalities for concessions (The 1996 WTO Singapore Ministerial Declaration), of Singapore concerns efficiently needs Members to attain "active" in place of "passive" consensus (The 2001 WTO Doha Ministerial Declaration). These indications are understandable suggestions on the side of the Ministerial Conference that the "passive" consensus decrees in Article IX.1, footnote 1, of the WTO Agreement, is supposed to, for reasons of coming to a decision on Singapore concerns, be adapted. Specifically, Members' approval to the commencement of negotiations on Singapore concerns on top of to the modalities for such negotiations have got to be "explicit" – particularly enthusiastically, unmistakably and decidedly articulated or communicated. Silence or non-objection must not, as a result, be accounted as consent. The commonplace connotation (1969 Vienna Convention on the Law of Treaties) of the concept of "explicit" is that it conspicuously articulates all that is represented; leaving nothing simply indirect or suggested (Oxford English Dictionary). Being "explicit" is becoming exact in communication with such spoken directness and clarity that there is no need for supposition and no space for complexity in comprehending (Merriam-Webster Dictionary). The Ministerial Conference's conditions for "explicit consensus" with regard to verdicts concerning the initiation of Singapore concern negotiations and their modalities, for that reason, are precedent-establishing "active" consensus prerequisites in the WTO framework. Therefore, while keeping hold of consensus as the foundation of WTO decision-making and the underpinning of the legitimacy of its imperatives and agreements for all Members, it may possibly be practical for Members to spell out consensus via decision-making in the WTO as necessitating "active" more willingly than "passive" consensus.

 

References:

1969 Vienna Convention on the Law of Treaties Article 31(1)

 

International Policy Council, Food and Agricultural Trade, "A New Approach to Special and Differential Treatment" Available at: http://www.agritrade.org/Publications/Position%20Papers/13%20SND.pdf. [Accessed 07/11/05]

 

Kim, TS & Weaver, DH 2003, 'Reporting On Globalization: A Comparative

Analysis of Social Patterns in Five Countries' Newspapers', Gazette: International Journal for Communication Studies, vol. 65, no. 2, pp. 121-144.

 

Krueger, AO 1995, Trade Policies and Developing Nations, Brookings Institution, Washington, DC.

 

Merriam-Webster Dictionary, at http://www.m-w.com.

 

Naisbitt, J & Aburdene, P 1990, Megatrends 2000, Morrow, New York.

 

Narlikar, A 2001, WTO Decision-Making and Developing Countries, TRADE Working Paper No. 11. South Centre, November.

 

Narlikar, A 2003, International Trade and Developing Countries: Bargaining Coalitions in GATT and WTO. Routledge. p14

Ohmae, K 1990, The Borderless World, Harper Business, New York.

Oxford English Dictionary, at http://dictionary.oed.com.

 

Steinberg, R 2002, 'In the Shadow of Law or Power? Consensus-Based Bargaining and Outcomes in the GATT/WTO', International Organization, vol. 56, no. 2.

 

Teeple, A 2000, 'What is Globalization?', In S. McBride (ed), Globalization

            and its Discontent, Macmillan, Basingstoke, England.

 

The 2000 United Nations General Assembly Millennium Declaration

 

The 2001 WTO Doha Ministerial Declaration

 

The 1996 WTO Singapore Ministerial Declaration

 

The 2001 WTO Doha Ministerial Declaration, paras. 20, 23, 26, and 27

 

The WTO Agreement

 

United Nations Charter, art. 55(a).

 

UNDP 2003, Making Global Trade Work for the People, Earthscan Publications Ltd.

 

WTO, General Council – Minutes of the Meeting of 13-14 May 2002, WT/GC/M/74, 1 July 2002.

 

WTO, General Council – Minutes of the Meeting of 17 and 19 July 2000, WT/GC/M/57, 14 September 2000, Para. 134.

 

WTO, General Council – Minutes of the Meeting of 7, 8, 11, and 15 December 2000, WT/GC/M/61, 7 February 2001, Para. 196

 

WTO, Procedures for the Appointment of Directors-General, WT/L/509, 20 January 2003.

 

WTO, Trade Negotiations Committee – Minutes of the Meeting of 28 January and 1 February 2002, TN/C/M/1, 14 February 2002, Para. 8,

 

WTO 2005, Who are the developing countries in the WTO?, Available at: http://www.wto.org/english/tratop_e/devel_e/d1who_e.htm/ [Accessed: 07/11/05.]

 

 


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