Nevin Shaw and Arthur J. Hanson
The World Trade Organization (WTO) was established on 1 January 1995, to oversee the administration of improved or new trade rules which resulted from the Uruguay Round of Multilateral Trade Negotiations. It is more global in membership than the General Agreement on Tariffs and Trade (GATT) and much wider in scope of commercial activities covered. It will begin to reverse protectionism in textiles and clothing, agriculture, services and other sectors. In this context, it is asserted by many governments and business that the Uruguay Round will significantly improve future prospects and policy alternatives to promote a transition to sustainable development, including protection of the environment. However, detailed analyses and implications, positive as well as negative, remain to be carried out in light of the actual manner of implementation of trade commitments made.
The optimistic forecasts of the impact of the Uruguay Round immediately face at least two kinds of reactions. First, this will not bring about an equitable distribution of income. Second, it will not result in an efficient allocation of resources as there are imperfections in various markets. In particular, markets fail to allocate resources in keeping with social goals where social interests fail to coincide with those of individuals. For example, the cost of harm to the environment is not incorporated in the private cost of production, consumption and disposal of a product. Such a cost is increasingly claimed to be significant, but related practical and ethical issues have yet to be resolved.
The 1992 United Nations Conference on Environment and Development tried to address these issues through a statement of principles in the Rio Declaration and to give effect to the principles through an integrated programme of domestic and international action, Agenda 21. Chapter 2 of Agenda 21 concluded that domestic policies must be supported by a dynamic international economy and an open, equitable, secure, non-discriminatory and predictable multilateral trading system. In particular, there must be better market access for exports of developing and transition economies, a provision