Magazine article Foreign Policy in Focus

WTO and Developing Countries

Magazine article Foreign Policy in Focus

WTO and Developing Countries

Article excerpt

Crafting the declaration for the 3rd WTO Ministerial Conference in Seattle was a contentious process. The industrialized countries proposed the inclusion of a host of new issues (in addition to the mandated talks about services and agriculture) for negotiations in Seattle and beyond. Their suggested WTO agenda reflected their desire to gain even greater access to markets in the developing world. But they demonstrated no interest in ensuring that the most pressing concerns of developing countries--i.e., a review and repair of imbalances arising from past agreements--would be addressed before the WTO launches any discussion to expand economic liberalization.

The August 1999 Trade and Development Report bolsters the contention by developing countries that the Uruguay Round (UR) agreements harmed more than helped their economies. Published by the UN Council on Trade and Development (UNCTAD), the report's preamble states: "The predicted gains to developing countries from the Uruguay Round have proved to be exaggerated.... Poverty and unemployment are again on the rise in developing countries.... Income and welfare gaps between and within countries have widened further." The UNCTAD report cites two primary reasons why developing countries want to create some balance in the implementation of the UR agreements:

These agreements have done little to improve market access for developing country exports of goods and services.

WTO rules are unbalanced in several important development-related areas, such as protection of intellectual property rights and the use of industrial subsidies, while the "special and differential" treatment that the agreements promised has been inadequate.

Unfortunately, the promises that recent trade liberalization measures would benefit developing countries have not been realized. The increase in imports and the continued decline in their terms of trade mean that growth in developing countries is now associated with higher current-account deficits. GATT/WTO trade rules and the structural adjustment programs imposed by the

IMF and World Bank have obligated developing country governments to adopt liberalization policies--with disastrous results. Food imports have surged; many economic sectors have been deindustrialized; and contrary to IMF/World Bank/WTO predictions, the majority of developing countries have not been able to increase their export revenues.

In the Uruguay Round, developing countries signed on to proposals advanced by industrialized nations in return for certain concessions in market access and special treatment. There is widespread conviction among developing countries that the UR agreements were a bad deal because of the imbalance in the rules as well as the failure of developed countries to implement special treatment and market access rules. …

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