Trade Policy Roundtable

Developing Countries in the WTO System (October 20, 2004)

WITH the prospects for an eventual Doha Round agreement on agriculture looking better, the next problem to be overcome in the WTO negotiations is the development dimension, for there are divisions over special-and-differential treatment, not only with developed countries but also among developing ones.  Moreover, the bulk of S&D demands relate to agricultural trade, which may yet jeopardize progress on the agriculture front.

Development Dimension of the Doha Round

The developing countries, accounting for two thirds of the WTO membership, have to be satisfied in whatever final package is agreed.  But on the development dimension of the negotiations, governments appear to be at cross purposes, which suggests the issues need to be thought through more carefully � as Peter Sutherland, the first WTO Director-General, proposed in April last year.

On the one hand, developing countries are pressing for �special-and-differential treatment� through (i) preferential access to markets, (ii) relief from reciprocating fully in market-access negotiations, (iii) exemptions or deferrals from some WTO rules and (iv) technical assistance in implementing WTO agreements.  Some of them are bent on pre-serving �policy space� for the future and a number of others worry about �preference erosion� with the prospect of MFN tariffs being further reduced or eliminated.

On the other hand, those familiar with the system point out that the WTO is not a development entity, but a framework of contractual agreements, setting out internationally agreed rules that promote transparency, predictability and stability � important to businesses in the conduct of international trade and trade-related investment.

But the trouble there, some say, is that WTO rules are often asymmetrical, reflecting conditions in industrialized countries, as with those on subsidies, anti-dumping actions and intellectual property rights. 

Non-discrimination as the Way Forward?

The most intractable Doha Round issues, liberalizing agricultural trade and trade in labor-intensive manufactures, essentially arise out of discrimination by country and by pro-duct.  Studies at the World Bank have shown that generalized tariff preferences, in place since the early 1970s, are not significantly benefiting developing economies and that, more recently, the proliferation of preferential trade arrangements is adversely affecting developing economies as a whole, even if each one may benefit the parties directly involved.  The studies are drawn together in the Bank�s forthcoming Global Economic Prospects 2005 report on trade, regionalism and development � to be published in November.

On other aspects of S&D treatment, some new ideas are being explored, but need to be reconciled with the WTO as a contractual framework. 

In seeking to liberalize trade in agricultural products and light manufactures, to make sure WTO rules apply equally to all members and to integrate developing countries into the world economy, the time may have come to begin restoring non-discrimination to its original position as the cornerstone of the multilateral trading system.   

PROGRAM

CHAIRMAN     Clayton Yeutter � Of Counsel, Hogan & Hartson LLP, attorneys-at-law, Washington, DC; former U.S. Secretary of Agriculture and onetime U.S. Trade Representative

09:30-10:00  State of the WTO System and Developing Countries

Legal flexibility accorded to developing countries joining the old GATT system � Failure of the North-South dialogue � Full participation of developing countries an unstated objective of developed countries in the Uruguay Round negotiations � Early breakdown of the consensus on the purpose of the new WTO system and thus of the Doha Round negotiations.

SPEAKER        Hugh Corbet � President, Cordell Hull Institute, Washington, DC

10:00-11:00  WTO Rules, Institutional Stability and Development

Hangover from the Uruguay Round and the Doha Round agenda � Do rules inhibit growth and development? � What�s meant by �ensuring rules support development�? � Pursuit of S&D treatment via tariff preferences, less than full reciprocity, flexibility in applying WTO rules and longer transitions in implementing new rules � What are the options? � Would a soft-law approach in interpreting WTO rules be workable in practice? 

SPEAKER        Carlos Prima Braga � Senior Economic Adviser in Europe, International Trade Department, World Bank, Geneva

11.30-13:00  Importance of the Principle of Non-discrimination

Why discrimination is not good for either development or the multilateral trading system � Evidence of experience with generalized tariff preferences � Preference erosion a significant issue for only a few countries � Has  S&D treatment in the Uruguay Round agreements been effective?  Need for trade liberalization on an unconditional MFN basis with financial aid to help poor countries adjust to global reforms. 

SPEAKER          L. Alan Winters � Director, Development Research Group, World Bank, Washington, DC

13:00-14:30  Luncheon and Address

                   Free Trade, the Doha Round and U.S. Trade Policy

Support in the international business community of developed countries for integrating developing countries into the world economy � Importance of the WTO system in promoting a stable institutional environment � Cost of failure of the Doha Round negotiations � What is needed in the coming years? � Way forward in the WTO negotiations.

SPEAKER          Douglas R. Oberhelman � Group President, Caterpillar Inc., Peoria, Illinois

 CHAIRMAN    Harald Malmgren � President, Malmgren Group, business consultants, Warrenton, VA, and Chairman, Malmgren O�Donnell Ltd., London and Washington, DC; former Deputy U.S. Trade Representative

14:30-15:30   Coherence between the WTO and Regional Agreements

Review trade diversion et cetera � This is bad for the WTO system � Maybe preferential trade arrangements help on inside-the-border issues (domestic reforms) � But are they helping? � Can step-by-step approaches be transposed to the regional front? � Can WTO rules ensure that PTAs are building blocks and not stumbling blocks in promoting trade liberalization?

SPEAKER        Richard Newfarmer � Economic Adviser, International Trade Department and the Economic Prospects Group, World Bank, Washington, DC             

 15:30-16:30 Overcoming Discrimination against Developing Countries 

Conclusions to be drawn from the above presentations � Stress that the WTO system is a set of contractual agreements � It is also a forum and so policy discussions may not be out of place � But further flexibility in interpreting WTO rules, even if according to carefully defined criteria, may  resisted by many developed countries 

SPEAKER        John J. Barcel� III � Cromwell Professor of International and Comparative Law, Cornell University, Ithaca, NY

NOTES ON SPEAKERS

JOHN J. BARCELO III is Cromwell Professor of International and Comparative Law, Cornell University, Ithaca, NY, where he has taught international trade law since 1969.  He also specializes in international arbitration and is co-author, inter alia, of International Commercial Arbitration: a Transnational Perspective, second edition (2003). 

CARLOS PRIMA BRAGA has been, since October 2003, the Senior Economic Adviser in Europe, Trade Department, World Bank, based in Geneva, and represents the Bank in its dealings with the WTO and the OECD.  Dr Braga was earlier the Director of the World Bank�s Infomatics Department (2001-2003).

HUGH CORBET, President of the Cordell Hull Institute, was previously at the Woodrow Wilson International Center for Scholars and the Brookings Institution (1990-92), then at George Washington University (1992-97).  Earlier he was the Director of the Trade Policy Research Centre, London (1968-89), and Editor of The World Economy, Oxford (1977-90).

RICHARD NEWFARMER, lead author of the World Bank�s forthcoming Global Economic Prospects report on regionalism, has been Economic Adviser in the International Trade Department, and in the Economic Prospects Group, at the Bank since 2000.  Earlier he was lead economist, Chief Economist�s Office, dealing with East Asia (1997-2000).

DOUGLAS R. OBERHELMAN is Group President of Caterpillar Inc., Peoria, for world-wide manufacturing, marketing and sales of the company�s diesel power system business and for the corporate financial and legal divisions.  He is also a director of the Ameron Corporation, the South Side Bank and the National Association of Manufacturers.

HARALD B. MALMGREN, President of the Malmgren Group, business consultants, Warrenton, VA, and Chairman, Malmgren O�Donnell Ltd., London and Washington, DC, a financial advisory firm.  He played a major role as Deputy U.S. Trade Representative in drafting the Trade Act of 1974 and launching the Tokyo Round negotiations of  1973-79. 

L. ALAN WINTERS has been, since April, the Director of the Development Research Group at the World Bank, on leave from the University of Sussex, where he has been Pro-fessor of Economics since 1999.  He has also advised, inter alia, the OECD, the European Commission, the WTO, UNCTAD and the Inter-American Development Bank.

Hon. CLAYTON YEUTTER is Of Counsel at Hogan & Hartson, Washington, DC, and Chairman of Oppenheimer Funds Inc., New York.  Dr Yeutter was heavily involved in the Uruguay Round negotiations, first in getting them launched as U.S. Trade Representative (1985-88), then in the crunch over agriculture as U.S. Secretary of Agriculture (1989-91).

The Cordell Hull Institute�s Trade Policy Roundtable is sponsored by Akin Gump Strauss Hauer & Feld, Arnold & Porter, Hogan & Hartson, Miller & Chevalier, O�Melveny & Myers, Sidley Austin Brown & Wood, Steptoe & Johnson and Wilmer Cutler Pickering Hale & Dorr