Trade and Development: An Introduction to Understanding ... · The WTO’s predecessor, the General Agreement on Tariffs and Trade, was established in 1948 as part of the post-war

TRADE AND DEVELOPMENT:

AN INTRODUCTION TO UNDERSTANDING AND PROMOTING SUSTAINABLE TRADE

IN THE WTO

NEWLY INDEPENDENT STATES WTO/NCSD PROJECT

Background Paper prepared by the International Institute for Sustainable Development

September, 2002

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1. Introduction ..................................................................................................3 2. The Road to Doha: The Development and Dynamics of the Rules-Based Trading System ...................................................................................................5

Failed Expectations from the Uruguay Round ......................................................................7 The Lead-up to Doha .............................................................................................................9

3. Living Up to Its Name: Can the Outcome of Doha Address the Imbalances? .......................................................................................................10

Background to the Doha Work Programme ........................................................................10 Implementation Issues..........................................................................................................11 Market Access: Textiles .......................................................................................................11 Market Access: Agriculture .................................................................................................12 Market Access: Industrial Goods.........................................................................................13 Special & Differential Treatment (S&DT), Technical Assistance and Capacity Building..15 Trade-Related Aspects of Intellectual Property Rights (TRIPs)..........................................16 Rules – Subsidies & Countervailing Measures and Anti-dumping......................................17 Competition..........................................................................................................................18 Trade and Transfer of Technology ......................................................................................18 Trade, Debt and Finance .....................................................................................................19 Small Economies..................................................................................................................20 Services ................................................................................................................................20

4. Conclusion...................................................................................................21

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1. Introduction International trade connects our lives, from Buenos Aires to Bombay, Toronto to Tokyo; the liberalization of trade and investment have emerged as one of the key drivers of the process of what has come to be known as ‘globalization’ and, with investment, arguably the most controversial. Critics point out, often rightly, that the economic rewards of trade liberalization have accrued largely to richer, more developed countries and large, multinational corporations. In developing countries, the benefits of trade have tended to be captured by a relatively small, powerful elite, serving only to exacerbate inequality there further.1 The links between trade and development are multiple – both positive and negative – and opinions about the relationship between them innumerable. This paper will explore the key issues for trade and development in the context of the evolution of the international trading system. The first two sections will address the system’s growth and failures; the last two evaluate potential new directions for the system in the wake of WTO Ministerial Conference in Doha in November 2001. Traditional trade theory argues that trade liberalization will create larger markets and greater competition, encouraging the creation of the best products at the best price (made using the fewest resources) – or in other words, leading to specialization, innovation, efficient resource allocation, and economic growth.2 Conflict is less likely between countries whose fates are intertwined. Trade liberalization was supposed to benefit all countries, but it seems to be turning out the best for the richest, most developed countries, less favourable for middle-income countries, and even negative for many of the poorest countries. Critics of globalization draw links between liberalized trade and social justice issues. They point out that, in recent years, rising inequality in East Asia has slowed the rate of poverty reduction, and that export growth has often been accompanied by extreme exploitation of female workers.3 They observe that liberalization has often reinforced poverty, and charge the organizations that determine the international macroeconomic order – the IMF, World Bank, WTO, G8, and World Economic Forum, for example – with undermining the public sector, destroying social welfare networks, and disregarding the environment. Even the link between trade and peace is far from clear – countries that rely on exports of primary commodities for much of their income are at dramatically higher risk of intra-state violent conflict.4 1 Mark Weisbrot, Robert Naiman, and Joyce Kim, The Emperor has No Growth: Declining Economic Growth Rates in the Era of Globalisation, CEPR Briefing Paper (Centre for Economic Policy Research, May 2001); http://www.cepr.net/globalization/The_Emperor_Has_No_Growth.htm 2 This idea is predicated on the notion of ‘comparative advantage.’ It posits that countries should specialize in the production of the goods that they produce the most efficiently. Even if a country produces all goods more efficiently than its partners, it is still in its interest to specialize in the production of the good(s) that it produces the most efficiently relative to all other goods. Critics say that the theory ceases to work if capital flows freely, and that the Multilateral Trading System’s (MTS) inclusion of free movement of capital – inconceivable to its 19th century promulgators – renders the idea of comparative advantage invalid. The deceptive simplicity of the notion of comparative advantage is put into perspective when one considers that Adam Smith, attributing America’s rising wealth to their specialization in agriculture, advised the Americans to stay on the prairies rather than industrialize, and instead trade their food for Britain’s manufactured goods. 3Rigged Rules and Double Standards: Trade, Globalisation, and the Fight Against Poverty, Oxfam International, 2002, pp. 7. http://www.maketradefair.org/assets/english/Report_English.pdf 4 Mark Halle, Jason Switzer, and Sebastian Winkler, Trade, Aid and Security: Elements of a Positive Paradigm; A Working Paper (Geneva and Winnipeg: International Institute for Sustainable Development, 2002), pp. 13. http://www.iisd.org/pdf/2002/envsec_positive_paradigm.pdf

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Liberalized trade can, if properly managed, be a powerful force for the improvement of peoples’ quality of life. Indeed, sustainable development -- "development that meets the needs of the present without compromising the ability of future generations to meet their own needs” – can remain only a distant dream as long as poverty exists on a scale so massive that people are forced to destroy their natural environment in order to satisfy the most basic needs of life. And wealth created by trade is crucial to alleviating this poverty. Export-led growth, albeit accompanied by heavy protection of domestic markets, helped East Asian countries achieve some of the fastest poverty reduction rates recorded over the past 40 years. According to Oxfam, “If Africa, East Asia, South Asia, and Latin America were to increase their share of world exports by one percent, the resulting gains in income could lift 128 million people out of poverty.”5 However, in order to realize the fruits of trade, barriers to trade must be removed. Developing countries require access to first-world markets – trade barriers there make poverty alleviation more difficult. Extensive agricultural subsidies in North America and Western Europe not only breed poverty among developing country farmers by driving down the price they would receive for their products but, by providing artificial incentives for overproduction to the agricultural industry, contribute in significant measure to extensive land degradation. Trade liberalization, in concert with policy measures aimed at appropriate environmental and social goals – in particular, the internalisation of environmental costs to ensure that the true cost of goods and services is reflected in their price – would contribute significantly to sustainable development.

Given that rich countries protect their industries with subsidies, tariffs, and special trade rules – things that can be heavily affected by the power imbalance in bilateral agreements – the best solution is a rule-based trading system, with all members obliged to follow a strong set of multilateral rules. Appropriate exceptions ought to be made, of course, to help poor nations up the development ladder. In addition to these rules, trade liberalization requires the creation of a mechanism to achieve the peaceful settlement of disputes between countries; a rules-based system can ensure that trade sanctions are used responsibly, and only when fair and necessary.

It was with the purpose of ensuring that trade flows as freely as possible, that the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), were created. The WTO is, in theory, based on the principles that the trading system

- Should not discriminate – a country should equally accord all trading partners Most-Favoured-Nation status, with no differential treatment between its own and foreign products or services; no nation can use its power to alter its terms of trade;

- Should be freer, more competitive and more predictable – with negotiated reductions

leading to the elimination of barriers, and protections to ensure that trade barriers are not raised arbitrarily; ‘transparency’ dictates that trade rules are identical for foreign and domestic companies, and are made explicit to both;

- Should be more beneficial for less developed countries (what is called Special and

Differential Treatment) – giving them more time to adjust allows them access to

5 Ibid., pp. 3

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developed country markets, necessary for exports, without having to immediately open their import markets.6

For small developing or transition countries, being a member of the international trading system is highly desirable in order to guarantee continued access to export markets. This, however, is complicated by the fact that there are significant risks that accompany the potential rewards. For example, though international competition may force efficiency improvements in domestic firms, if the doors are opened too quickly and the existing domestic firms are too weak, they will simply be killed off by the competition; cheap imported goods will flood the market, affecting employment, income, and equity. Increased dependence on global markets can make an economy highly vulnerable to external shocks – particularly when economies are dependent on primary commodity export or low value-added manufacturing, since that is where their comparative advantage lies. For example, the recent collapse in world coffee prices, a result of oversupply, has had major effects on the economies of Central American coffee producers such as Honduras, Guatemala, Costa Rica, devastating the lives of some 1.6 million people who were already in the poorest strata of society to begin with.7 There are also non-economic considerations, such as those of national security or self-sufficiency (especially with staple foods) that motivate governments to make decisions that are not optimal in strict terms of economic efficiency.

Thus, liberalised trade can be a major driving force in economic growth and sustainable development. But the mere implementation of trade liberalisation under the structure of the WTO agreements is no miracle cure. The existence of adequate fundamentals – communications and transportation infrastructure, domestic producers capable of innovation and competing on the international export market – is a necessary prerequisite for positive change. The transition economies are new to the trading system; as such it is not yet possible to determine which issues will affect them the most. The paper focuses on the issues faced by developing and developed countries – presumably, the transition economies will share many of them. Following this brief outline of the debate over the potential impacts of liberalised trade, we turn our attention to the development of the dynamics of the multilateral trading system , a brief examination of the circumstances leading up to the November 2001 Doha Ministerial Meeting of the WTO, and a contrast between the benefits and losses that were expected of the system versus those that were actually realised.

2. The Road to Doha: The Development and Dynamics of the Rules-Based Trading System

The WTO’s predecessor, the General Agreement on Tariffs and Trade, was established in 1948 as part of the post-war Bretton Woods system that was created to govern the international trading and finance system and manage development. It introduced the concept of the surrender of a degree of sovereignty in the form of ceding absolute control over trade barriers in exchange for the guarantee of a more open international trade market.

6 WTO: The World Trade Organisation (Geneva: WTO 1995, 2000, 2001). http://www.wto.org/english/res_e/doload_e/tif.pdf 7 ECLAC (Economic Commission for Latin America and the Caribbean; a UN organization) report quoted in Imagen: The Latin Voice, http://www.imagenlatinoamericana.com/general/general_en.asp?articleId=231

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The GATT initially focused almost exclusively on what happened to manufactured goods when they arrived at borders – i.e. on tariff and quota measures. Much of the modification to its trade rules was accomplished through a series of large, multilateral trade meetings known as ‘trade rounds’ – it was advantageous to attempt to establish packages of several different regulations at the same time since it meant that participant countries could discuss a wide variety of issues, and unpopular concessions in one sector could be exchanged for economically attractive benefits in other sectors of the economy.

The initial trade rounds focused almost exclusively on reducing tariffs. The Kennedy Round in the mid-sixties expanded GATT’s purview to non-tariff barriers in order to prevent ‘dumping,’ i.e., when goods are sold below cost in a foreign country. The rules governing non-tariff commitments were ‘plurilateral’ – they applied to a country only if it chose to accept them.8 The mid-1970s Tokyo round further examined such barriers, particularly those related to the farm trade. Out of the Tokyo round emerged more agreements on a variety of non-tariff barrier issues such as subsidies, technical barriers to trade,9 and anti-dumping, but only a handful of mostly developed countries chose to become party to them.

With the increasing complexity of international trade, the system was proving to be somewhat limited. Trade in services, for instance, was of increasing importance. Member countries were concerned about the functioning of the dispute settlement mechanism and the exploitation of loopholes in the rules. The Uruguay trade round (1986-1994), which aimed to address these problems, resulted in a radical reform of the world’s trading system. It was also the first time that a round was marked by significant participation on the part of developing countries. Indicative of this was the importance to these negotiations of textiles and agriculture – of crucial interest to developing countries. The 1994 Agreement on Agriculture committed member countries to a market-oriented agricultural trading system based on significant reductions of export subsidies, domestic support, and import duties. Significant reform was also sought in the important textile sector, where low wage costs gave developing countries a comparative advantage in labour-intensive textiles. Largely upon the initiative of the United States and other developed countries – and overcoming the opposition of some developing countries -- the trading system was extended into several new areas – services, investment, and intellectual property. Another goal was the creation of a system to review trade policies and practices of member countries. When it was limited to border controls for manufactured goods – such trade occurred mostly between developed countries – the nature of the international trading system was not seen to be a significant development issue. However, with this expansion of the trade agenda into areas such as the protection of intellectual property, developing countries found that their development policy space was becoming seriously restricted. Gains resulting from increased market access in sectors like agriculture were to serve as compensation for the decreased number of policy options available to these countries. This was what University of Toronto professor Sylvia Ostry has called the ‘Grand Bargain’ of the Uruguay Round – “the opening of OECD markets to agriculture and labour-intensive manufactured goods, especially textiles and clothing, [in exchange] for the inclusion into the trading system of trade in services (GATS), intellectual property (TRIPs), and (albeit to a lesser extent than originally

8 WTO: The World Trade Organisation, pp. 9-10 9 These refer to the unreasonable imposition of labelling, technical, certification, and other such requirements as conditions for market access; protectionist behaviour, since it amounts to a de facto denial to imported goods of equal market access.

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demanded) investment.”10 The deal struck at the Uruguay Round established the WTO in January 1995.11 In the new system, the “single undertaking” replaced plurilateralism, with all members bound to almost all of the agreements. Crucially, the decisions by the WTO dispute resolution panels became binding – under GATT, a single country could block them – representing an historic change in the scope of impact for trade law.

Failed Expectations from the Uruguay Round The developed countries had hoped to expand market access for their agricultural and industrial goods, by reciprocally granting access in agriculture and textiles. The agreements on intellectual property rights12 and services13 were also driven primarily by developed countries, the former to provide strong protection for their patents and copyrights. The developing countries, however, found that these ‘new rules,’ which they had neither pursued nor particularly wanted, coupled with the conversion into binding obligations of the previously optional Tokyo Round agreements, left their policy options highly constrained. Both greatly increased the level of developing countries’ obligations, rendering impossible several trade, industrial, and technology policy measures – policies that, incidentally, had historically played a large role in the development of many of the same countries that were now advocating their prohibition. Moreover, developing countries found that bringing domestic laws in line with WTO regulations was proving extraordinarily expensive -- one World Bank study estimated that a typical developing country must spend US$ 130 million just to implement three of the six main WTO agreements.14 On top of this, poorer countries have found it expensive, and sometimes impossible, to maintain and support a sufficiently staffed delegation in Geneva to represent their interests at the innumerable WTO meetings adequately.

It is not readily apparent that the rewards of the bargain have been worth their cost. Market access benefits have not been as high as expected. Trade remedy measures have been consistently used (and misused) to prevent exports from reaching developed country markets.15 Tariff peaks16 and tariff escalation17 -- both can be powerful forces against industrialisation in developing countries – remain pervasive, and developing countries, with the exception of some of the East Asian Newly Industrialising Economies (NIEs), continue to

10 Sylvia Ostry, “The Uruguay Round North-South Grand Bargain: Implications for Future Negotiations,” presented at the University of Minnesota, September 2000, (http://www.utoronto.ca/cis/Minnesota.pdf) 11 WTO: The World Trade Organisation, pp. 13 12 The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs) 13 The General Agreement on Trade in Services (GATS) 14 See Finger, J. Michael and Philip Schuler. Implementation of Uruguay Round Commitments: The Development Challenge (1999). 15 An example of such misuse would be if, say, a developed country that wants to protect a domestic industry could say – without real grounds – that the imported good is being dumped, i.e., sold below cost, giving the country the right to impose a duty on it. Several developing countries, famously the United States, have made use of these so-called ‘countervailing measures.’ 16 When tariffs on a class of goods are low, but those on a particular type of good in that class are high – thus blocking imports in it. A hypothetical example would be if Canada had low tariffs on textiles in general, but high tariffs on certain kinds of cotton fabrics. This would hurt developing countries with low labour costs such as Bangladesh – the white cotton T-shirts in which they have a comparative advantage would be denied unrestricted market access. The fact that they could export, say, nylon tents to Canada without facing high duties would be immaterial, since their comparative advantage does not lie in the production of such goods. 17 When the tariffs are higher on processed goods than on the raw materials required to make them. Naturally, this discourages primary-good exporting countries from trying to produce and export goods with higher value added.

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depend on primary commodity exports and low-value-added manufacturing. In fact, despite the fact that the manufacturing content in the composition of developing country exports has risen from 20 to 70 percent over the last four decades, the value of these exports has not shared in this growth, indicating that they are essentially exporting their ‘comparative advantage’ in cheap labour rather than benefiting from development-stimulating value-added manufacturing. Tellingly, the UNCTAD Trade and Development Report, 2002 adds that “none of the countries which have rapidly liberalised trade and investment in the past two decades is in this group [of countries that have seen sharp increases in their shares in world manufacturing value added which matched or exceeded the increase in their share in world manufacturing trade]…”18

Wealthy countries continue to protect their agricultural sectors from developing country imports by the use of non-tariff barriers such as domestic subsidies and food safety and other product standards.19 On the other side of the coin, agricultural and industrial import liberalisation in developing countries has harmed the livelihoods of small farmers and led to lost employment and reduced production in local industrial sectors. It is necessary to emphasise the divergent interests of developing country food importers and developing country agricultural exporters. Reductions in developed country agricultural subsidies mean that the market is no longer quite so flooded with cheap agricultural products – thus driving up the cost of importing foods. According to the Marrakech Ministerial Decision20 that concluded the Uruguay round, net food-importing developing countries were supposed to be protected from price spikes caused by the implementation of the Agreement on Agriculture (AOA). However, when prices rose, industrial country members refused to implement this. The AOA, in fact, has managed to engender “widespread dissatisfaction among all categories of developing countries, whether they are agriculture exporters… food-importers, small single-commodity exporters…[or] predominantly agrarian economies.”21

Increased foreign direct investment (FDI) has not yielded the anticipated amounts of technology transfer, and the Trade-Related Intellectual Property Rights (TRIPs) agreement has removed the possibility of traditional technological development strategies such as reverse engineering,22 thus changing the terms of engagement for the transfer of technology. Even the provisions for Special and Differential Treatment (S&DT) – the main instrument for development in the WTO and an important part of developing countries’ calculations of expected benefits, and thus their willingness to accept the package – have proved disappointing. The extended time periods allotted for implementation of WTO obligations are set on the basis of negotiations rather than on developmental realities, and furthermore fail to make room for the proper sequencing of reforms, a necessary step for full and beneficial

18 UNCTAD Trade and Development Report, 2002: Overview, pp. VI-VII. http://www.unctad.org/en/docs/ldc02ove.en.pdf 19 Shishir Priyadarshi, “Reforming Global Trade in Agriculture: A Developing-Country Perspective,” Trade, Environment, and Development (Carnegie Endowment for International Peace, September 2002); http://www.ceip.org/files/pdf/TED_2.pdf This is in spite of the adoption of measures directed at curbing the unfair use of health and technical standards as trade barriers. 20 ‘Ministerial Meetings’ are meetings of the international trade ministers of member countries; they are an important part of the negotiation process. The representatives of various countries debate the provisions of various drafts of the statement to be produced by the meeting, and arrive at a consensus to produce a final Ministerial Declaration. 21 Ibid. 22 The process of studying a finished product to figure out how it was created, and then manufacturing similar products.

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adjustment to occur. In addition to all this, Special and Differential Treatment clauses are non-binding in nature, and thus suffer from enforceability problems.

It is not difficult, therefore, to understand the disenchantment felt by many developing countries towards the WTO system. Many of them remain convinced, in the words of Sylvia Ostry, that the Uruguay Round was ‘less a grand bargain and more a bum deal.’ this resentment played a major role in the collapse of the Ministerial meeting in Seattle in 1999.

The Lead-up to Doha In addition to the failure of the Uruguay Round to meet its promise, a major part of the context of the Doha meeting was the antagonism between developing and developed countries over ‘Singapore’ and implementation issues. The EU, Japan, and other developed countries were eager to launch negotiations on the “new” issues brought forward at the 1996 Singapore Ministerial – investment, competition policy, trade facilitation and transparency in government procurement23– presumably in order to set up tradeoffs for agricultural and other concessions they might have to make under a new round. Most developing countries opposed the inclusion of these new areas as negotiating items. With a range of previous commitments still unimplemented, they were reluctant to engage in talks that could lead to new commitments before the balance was restored.24 Developed countries responded by saying that the changes the developing countries seek would, if implemented, have repercussions on Members’ ‘rights and obligations,’ and thus required the re-negotiation of certain agreements. As such, they explained, there would have to be concessions made elsewhere as compensation.25

In spite of the power imbalance, the developing countries have demonstrated increased power and determination to make their agenda heard at international trade negotiations. In particular, the Like-Minded Group, a group of thirteen developing countries including India, Egypt, and Kenya, articulated its positions on a variety of negotiation items prior to the Doha meeting. In addition to the refusal to address the Singapore issues, the group expressed support for increased market access with no protectionism in the guise of environment or labour standards, and greatly emphasised the links between TRIPS and public health.26 Zimbabwe (speaking on behalf of African members) and India threatened to withhold consensus on agriculture and other parts of the Declaration if the language of the agriculture

23 In most countries, governments and their agencies together comprise the biggest purchasers of good and services of all kinds. Governments not unpredictably come under pressure to favour domestic rather than foreign suppliers. The Agreement on Government Procurement, one of the WTO’s plurilateral ones, sought to open this sector as much as possible to international competition, by “…[making] laws, regulations, procedures and practices regarding government procurement more transparent and [ensuring] they do not protect domestic products or suppliers, or discriminate against foreign products or suppliers…” (http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm9_e.htm#govt) At Doha, the developed countries sought a multilateral agreement on ‘transparency in government procurement.’ This was limited to transparency aspects, and at least in theory, will not lead to restrictions in the ability of developing country governments to give preferential treatment to domestic supplies and suppliers. 24 “No Consensus on New Round Despite Release of Pre-Doha Drafts,” Bridges Monthly Review 5 (8) (Geneva: International Centre for Trade and Sustainable Development, October 2001), pp. 2 25 Bhagirath Lal Das, UNCTAD's former Director of International Trade Programmes, has said that implementation of commitments was not something which required such bargaining, adding that it "should be considered a systemic matter, rather than an enhancement or reduction of a particular right or obligation." (See Das, B.L. The New Work Programme of the WTO, 2002) 26 ‘Like Minded Group Sets Out Positions Before Doha,’ Bridges Weekly 5(26), 10 July 2001, (Geneva: International Centre for Trade and Sustainable Development)

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text that made special and differential treatment for developing countries ‘an integral part of all elements of the negotiations’ was weakened.

3. Living Up to Its Name: Can the Outcome of Doha Address the Imbalances?

This section will examine key issues in trade and development in the context of what the WTO calls the ‘Doha Development Agenda,’ i.e., the outcome of the Doha Ministerial meeting. In terms of a framework for this analysis, we identify three main areas where deficiencies exist and in our view, lie at the root of the imbalances. These are:

• Market Access for Developing Country Products; • Policy Space for Effective Trade-related Development Policy; and • Human, Industrial, & Institutional Capabilities Building

Background to the Doha Work Programme The Doha 'Development' Agenda is the outcome of the 9th round of multilateral trade negotiations, and was launched by the 144 WTO members, following much negotiation, on 14 November 2001. It is expressed primarily in three relevant documents: the Ministerial Declaration (WT/MIN (01)/DEC/W/1), the Decision on Implementation-Related Issues and Concerns (WT/MIN (01)/DEC/W/10), and where relevant the 27 October 2001 document entitled Compilation of Outstanding Implementation Issues Raised by Members (JOB (01)/152/Rev.1).27

The Ministerial Declaration (the 'Declaration') lays out the agenda for negotiations and collective study, and describes the terms and infrastructure for these activities. In addition to agricultural and services negotiations, it addresses industrial tariffs, antidumping and subsidies, rules on regional trade agreements, dispute settlement, and environment and fisheries subsidies. The Declaration does mention the needs of developing countries; the preamble speaks of placing “… the needs and interests of developing countries at the heart of the work programme…” It goes on to call for the continuation of "[...] positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in the growth of world trade commensurate with their development needs." Reference is made to their particular needs, with the recognition that "[...] enhanced market access, balanced rules, and well-targeted, sustainably-financed technical assistance and capacity building programmes have important roles to play...”. However, in the face of strong opposition from many developing countries, the Declaration also established that future negotiations would indeed address the Singapore issues: investment, competition policy,

27 Other relevant agreements include:

- Decision on the ACP-EC Partnership Agreement (Cotonou arrangement) (WT/MIN (01)/15) - Declaration on the TRIPs Agreement and Public Health (WT/MIN (01)/DEC/2) - Subsidies-procedures for extensions under Article 27.4 of the Subsidies Agreement (G/SCM/39)

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transparency in government procurement, and trade facilitation, subject to an agreement on the modalities of such negotiations at the 2003 WTO Ministerial meeting.

The Decision on Implementation-Related Issues and Concerns (the 'Decision') contains almost 50 paragraphs detailing continued work and/or changes in specific provisions of the WTO Agreements where developing countries had been seeking resolution or re-balancing.

Implementation Issues The developing countries wanted the developed countries to fully implement their Uruguay Round market access commitments; they saw this as necessary to help them actually realise the benefits that liberalised trade had promised. In their view, they had fulfilled their part of the bargain whereas the developed countries had not. Therefore, the implementation of prior commitments was a prerequisite for even discussing concessions on other issues – they did not want to risk having to make further tradeoffs for market access that they had already been promised, market access that they had already ‘paid for.’ The industrialised countries followed the US and EU position linking implementation issues to the broader trade agenda. The Doha ‘consensus’ saw their arguments prevail, and implementation issues were included, alongside the Singapore issues, in the agenda for the new round of negotiations. The Declaration sets specific negotiating mandates for certain implementation issues-; - in particular, most of the important ones like agriculture, subsidies, anti-dumping, and investment measures. The Declaration goes on to say that the ‘other implementation issues’ must be ‘addressed’ for ‘appropriate action’ by the end of 2002, although it does not specify what the terms ‘address’ and ‘appropriate action’ entail. It would appear that there are no immediate obligations placed on developed countries in return for the concessions that will be demanded of the developing countries. Thus, the developing countries will have to 'pay again’ for a chance to rectify the shortcomings of the Uruguay Round. Unless developed countries start paying extremely close attention to developing countries’ needs and concerns, it is likely that this will simply result in the exacerbation of an already troublesome predicament.

Market Access: Textiles Low wages give most developing countries a comparative advantage in the production of labour-intensive textiles. It stands to reason, therefore, that they would benefit from large-scale reductions in tariffs on textiles by developed countries. Indeed, the Uruguay Round called for the phased removal of tariffs on textiles by 2005. However, this issue has been complicated by the fact that many developing country exporters have signed quota agreements with importing countries. Several of these countries oppose the reduction of tariffs by developed countries, since it would lead to a reordering of the market based on competitiveness – and could therefore leave their export levels below those under the quota system. Nonetheless, while developed governments claim to be living up to their 'legal' obligations - i.e. that of gradually phasing out all quotas by 2005 and fully integrating clothing and textiles trade into normal WTO rules - textile-exporting developing countries point out that most significant quota restrictions, those on products in which low-wage countries have the highest

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advantage, have not been removed, allowing for market adjustment only at the very last moment. Developing countries have claimed that the slow rate of removal of trade barriers in textiles is another violation the spirit of the grand bargain, by delaying some of the gains that were to serve as compensation for the concessions they made during the Uruguay round. At Doha, little progress was made. In keeping with the strategy of demanding more concessions in return for the implementation of past commitments, the United States and Canada summarily rejected enhanced textile access, and the EU’s position was only somewhat more generous. “In fact,” writes Kamal Malhotra, “the final [Ministerial Declaration] text makes no real commitment on textiles, simply referring the proposal to the relevant committee in Geneva.”28

Market Access: Agriculture Barriers to agricultural trade are against the interest of all exporters of agricultural goods. Improved market access remains of crucial importance for developing country agricultural exporters, since obstructions to trade deny them much needed revenue. Supports for agricultural production in developed countries, provide a more complicated picture, since they divide developing countries. They hurt developing country agricultural exporters by driving down prices; however, in spite of their negative effects on the environment and the livelihoods of farmers in several poor countries, they benefit developing country food importers, since they keep import costs down. Available measures for agricultural support have been classified on the basis of their potential to distort trade as falling into one of these three boxes. Green box measures have no or insignificant impact on trade and production, e.g. support for research, disaster relief, structural adjustment, and in some cases environmental protection and rural development. These forms of support may be used without restraint. In the Blue box are direct payments to farmers, but only those payments that have minimal trade and production impacts, such as support for limiting production, or payments not linked to production levels. These also are allowed for the time being. All other measures fall into the Amber box – most significantly, those that are linked to production levels, and thus trade-distorting. They are subject to reduction or elimination. The danger with this system is that countries might attempt to have measures shifted into the Green box in order to escape reduction commitments. Certain countries believe that some Green box measures can sustain uncompetitive farming in the developed world, thus distorting trade, and therefore want a review (e.g. putting a monetary limit on the Box) to minimise their influence on production and prices.29 If these arguments have any validity, maintaining the Green box unchanged would not bode well for poor agricultural developing countries that cannot compete.

In June 2000, eleven developing countries proposed the creation of a ‘Development Box’ – its main objective would be ‘food security,’ i.e., protecting developing countries’ domestic food production capacity, particularly in key staples, and would apply only to developing countries, with a focus on low-income and/or resource-poor farmers.30 The Declaration commits members to "comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export 28 Kamal Malhotra, ‘Doha : Is It Really a Development Round?,’ Trade, Environment, and Development (Carnegie Endowment for International Peace, May 2002); pp. 4, http://www.ceip.org/files/pdf/TED_1.pdf 29 Das, B.L. (2002). 30 Shishir Priyadarshi, ‘Reforming Global Trade in Agriculture: A Developing-Country Perspective’, pp. 6-7

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subsidies; and substantial reductions in trade-distorting domestic support."31 It is therefore seen as driving forward the process of liberalisation and reform started during the Uruguay Round. This commitment, however, is diluted by the qualification that the negotiations will be carried out "without prejudging the outcome." The statement can mean different things to different interests – Cairns Group (major agricultural exporters) representatives, for one, are pleased with finally getting a 'commitment' to the elimination of export subsidies, while EU officials have stressed that Members are only committed to 'working in the direction of' such elimination, with no deadline set for reaching the goal. The level and speed of these reductions, however, will continue to be at the centre of difficult negotiations. Furthermore, confusion exists about the kinds of subsidies that the negotiations will seek to phase out, as well as what amounts to a ‘substantial’ reduction in ‘trade-distorting ‘agricultural support. Does ‘all forms of export subsidies’ imply explicit subsidies alone, or all supports for agricultural exports? These factors will affect the level of market access and consequent benefits accruing to many developing countries and economies in transition for whom benefits from trade liberalisation are synonymous with meaningful benefits from agricultural trade liberalisation. Furthermore, in keeping with the insistence of India and Zimbabwe, the language in paragraph 13 also upholds Special and Differential Treatment (S&DT) for developing countries as "an integral part of all elements of the negotiations," one to be "embodied in the Schedules of concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to effectively take account of their development needs, including food security and rural development." [Italics added] This language would appear to facilitate developing countries seeking increased policy space for agriculture, and recognizes the need for provisions to mitigate the possibly negative impacts of agricultural trade liberalisation on developing countries – for whom it is imperative that development needs, which they see as requiring greater flexibility within the WTO system, not be lumped together with the ‘non-trade concerns’ of developed countries.

To sum it up, the Doha agenda does create space for a number of important development concerns. In particular, it allows “for a system of special and differential treatment that would enable developing countries to take appropriate domestic policy measures.”32 The development concerns of small single-commodity exporting countries that are net food-importers could also be addressed under this, by improving their market access or compensating them for the loss of preferential trading relationships. Whether these concerns will be addressed in significant ways, however, will only become apparent with implementation.

Market Access: Industrial Goods This issue is of particular concern to acceding countries or recently acceded members – such as those in the NIS - who have already made heavy concessions on tariffs as part of the accession process. They are concerned that the next round will compel them to make further cuts to tariffs on industrial goods; the ensuing influx of cheap imported goods could drive fledgling domestic industries out of business.33 Their reservations are shared by many of the 31 Declaration, paragraph 13 32 Shishir Priyadarshi, pp. 2 33 This can be a double-edged sword. Most industrialised countries, with the United States as the foremost example, used tariff barriers to allow domestic industries to develop at some point in their history. On the other

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middle and lower income countries. The least developed countries (LDC) group cited empirical evidence that falling tariffs have retarded industrialisation in many developing countries, and made it clear that it was against negotiations pending further study on the impact of trade liberalisation.34 Several developing countries supported the LDC demands, and called for an end to tariff peaks and escalations. In spite of these reservations and even outright opposition from several members, industrial tariff negotiations have been included in the new agenda. The LDC objections are not adequately reflected in the Declaration, although it does provide for "appropriate studies and capacity-building measures" to assist LDCs to participate effectively in the negotiations. On the other hand, the promise that the negotiations shall aim to reduce, or "as appropriate" eliminate, tariff peaks and escalations, as well as non-tariff barriers "in particular on products of export interest to developing countries," ought to benefit developing countries, for reasons discussed above. The mandate also outlines that no sector shall be "a priori" excluded from the negotiations. This makes it difficult for developed countries to simply choose not to negotiate reductions in tariffs on products they want to protect.

Another key element of the mandate in this area is the stipulation that the negotiations "shall take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments." This appears to recognise the problems faced by developing countries, both in securing greater market access for their products (especially value added ones) and of the need for increased policy space to promote industrialisation. What exactly is implied by 'taking into account' the special needs and interests of developing countries including through 'less than full reciprocity' in reduction commitments is not yet clear in terms of concrete provisions. . Clearly, it is critical to ensure that the process of industrial tariff reduction gives domestic industries in developing countries adequate time to adjust and become more competitive while allowing legitimate industrial and development policy objectives to be met. Success on this front may be complicated by the diminished policy options for available for industrial protection. Bhagirath Lal Das has noted that tariffs are the only instrument of protection available for developing countries in the industrial sector. 35 Moreover, given their already low average level in developed countries, future reductions in industrial tariffs could focus largely on developing countries, thus leaving them with even less space in which to allow industries to grow. He suggests that the rules governing tariffs should be modified to enable developing countries to use tariffs as a tool to maintain industrial protection while giving their industries time to adjust, as well attaining the maximum possible market access for their exports.

hand, Jagdish Bhagwati has observed that long-term protectionist tariffs on imported goods in India allowed its domestic industries to remain inefficient and unproductive by international standards. (Jagdish Bhagwati, The Economist, June 22nd 2002) 34 Kamal Malhotra, pp. 5 35 See Das, B.L. (2002). Direct import control measures such as quotas have been virtually abolished and the Balance of Payment (BOP) measures under Article XVIIIB of GATT, which allow countries encountering BOP difficulties to restrict the quantity or value of permitted imports (thus allowing them to safeguard their external financial position and ensure a level of reserves sufficient for the purposes of the economic development programme.)

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Special & Differential Treatment (S&DT), Technical Assistance and Capacity Building Provisions for special and differential treatment – the trading system’s main mechanism to promote development – have thus far been limited to what were essentially grace periods, or extra time given to countries to implement their obligations. It was a simple extra block of time certain countries received in order to implement parts of the ‘single undertaking.’ There are increasing demands for multiple levels of S&DT criteria, contingent on a variety of developmental criteria as opposed to a simple period of time. This would make it a far more powerful development tool. At Doha, the mandate on S&DT turned out to comprise a large portion of the compensation offered to developing countries for allowing the new issue areas (investment, competition, etc.) onto the table. However, as with a number of the implementation-related issues, only time will tell whether the Doha agenda bring the expected development-friendly gains. If the struggle that has been waged on S&DT since Doha is any indication, real gains may only materialize much later down the road and may carry high costs in the form of trade-offs in other areas of the negotiations. Developing countries have been resolute in their demands for the eventual development of concrete and binding agreements for special and differential treatment, warning developed countries that attempts to stall progress in this area would have grave repercussions in other areas of negotiations. They have generally expressed concern that there is little political will in developed countries to make unilateral moves which would serve to address some of the imbalances, and that they will demand concessions in exchange for all potential gains from S&DT. This will not rectify the situation; at best it would maintain the status quo, with several countries that have neither the national institutions nor the capacity required to be a true player in global markets. At worst, it would exacerbate the situation. Nonetheless, a complete assessment of the possibilities for development that spring from special and differential treatment commitments -- whether the commitments will live up to the Declaration’s exhortation that "all [S&DT] provisions shall be reviewed with a view to strengthening them and making them more precise, effective and operational” -- will be possible only after the specifics of those provisions become known. Furthermore, participation in the trading system requires countries to have the capacity to do so – they must know their trade interests, have developed policies and negotiating aims to achieve these interests, and the resources to promote these interests in negotiating fora.36 References to technical assistance and capacity building in developing countries are sprinkled throughout the Declaration.37 It is this broad area that people point to when arguing that the new agenda is development-friendly. Paragraph 38 states that the "delivery of WTO technical assistance shall be designed to assist developing and least-developed countries and low-income countries in transition to adjust to WTO rules and disciplines, implement obligations and exercise the rights of membership including drawing on the benefits of an open, rules-based, multilateral trading system." It provides for priority to be accorded to small, vulnerable and transition economies, as well as to Members and Observers without representation in Geneva. However, the provisions mentioned seem to strongly emphasise 36 Henri-Bernard Solignac Lecomte, ‘Capacity-building and Technical Assistance for Developing Countries After Doha,’ Bridges 6(1), (Geneva: International Centre for Trade and Sustainable Development, January 2002), pp. 3 37 Paragraphs 16, 21, 24, 26, 27, 33, 42 and 43 contain mention of it under other provisions; paragraphs 38-41 make it their exclusive focus.

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the building of capacity in the very areas in which the developed countries are strongest, such as technical assistance in meeting standards, and emphasise much less so (thus implicitly de-emphasising) capacity building in the issues that are of primary interest only to developing countries.

Another concern raised by a number of developing country Members in respect of technical assistance is the inadequacy of the traditional format, that of ad-hoc seminars and one-off workshops. These kinds of activities, they say, are not effective in creating durable institutional capacity and can often be focused with donor country priorities in mind. To be effective, technical assistance and capacity building must be imparted in an impartial manner that enables adequate absorption and internalisation, resulting in long term continuity and positive spill-over into negotiations, policymaking and implementation.

Thus while the Declaration is generously worded with regard to technical assistance and capacity building, much of its potential future impact depends on the quality and nature of the technical assistance and capacity building delivered. For it truly to be a tool in helping to correct some of the imbalances in capacities between the various WTO Members, these imbalances outlined above must first be corrected. Fortunately great potential does exist, especially with the securing of nearly US$ 18 million for a trust fund to stabilise and secure funding for these activities. Whether this potential is realised, however, remains to be seen.

Trade-Related Aspects of Intellectual Property Rights (TRIPs) The protection of intellectual property rights involves finding a balance between rewarding innovation and spreading the benefits of that innovation. Developed countries, where most of the innovation occurs, tend to push for stronger protection, whereas developing countries that need the technologies (an important example being medicines, such as those for the treatment of HIV) but cannot pay high prices for them, would prefer a situation in which they could be replicated without paying high costs in royalties to the patent holder. The outcome of the Doha meeting in terms of TRIPs and public health favours the position of the developing countries – emphasising the public health provisions of the TRIPs agreement, whereas the developed countries’ position limited patent overrides to public health crises; pandemics such as HIV/AIDS and tuberculosis. The developing countries remained unyielding, and eventually most of the countries supporting the second position backed down.38 The TRIPs Declaration on Public Health was a major milestone in that it recognizes the right of countries to override patents during times of public health crises. While this clearly carries significant weight, it is political in nature and there has been no change in the actual legal provisions of the TRIPs agreement. As such, it is up to the WTO Dispute Settlement Body to use this increased space to interpret the agreement in a manner conducive to the enhanced policy space implied in the TRIPs Declaration.

Another significant development was the instruction of the TRIPs Council to examine the relationship between the TRIPs agreement and the Convention on Biological Diversity – thus creating space for the protection of traditional and collectively-held knowledge. Moreover, the TRIPs council shall ‘fully take into account the development dimension,’ and be ‘guided

38 Canada’s support for the second position, for example, looked somewhat ridiculous given that it had threatened to break the patent on the Bayer drug Cipro during the anthrax scare.

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by the objectives and principles’ of certain sections of the TRIPS agreement39 - sections that give countries the power to formulate or amend laws and regulations, adopt measures necessary to protect public health and nutrition, promote the public interest in sectors vitally important to their socio-economic and technological development, and to prevent the abuse of intellectual property rights by rights holders who seek to unfairly restrain trade and the international flow of technology. Together, these could potentially help developing countries achieve development while simultaneously protecting both the environment and the rights of indigenous peoples. However, not only were these matters limited to the regular work programme of the TRIPs Council (as opposed to becoming the subject of negotiations), the stipulation that the measures taken must be ‘TRIPs-consistent’ could render them toothless.

Overall, in addition to the positive developments with regard to public health concerns, the agenda on intellectual property rights holds potential to add to the basket of rules that help developing countries capture gains from trade. Ensuring their participation in the negotiation of these items will be of paramount importance.

Rules – Subsidies & Countervailing Measures and Anti-dumping Addressing the use and misuse of subsidies, countervailing measures and anti-dumping laws remained a developing country priority in Doha.40 Their concern, incidentally, is shared by several OECD countries; they are particularly concerned about the United States’ use of anti-dumping laws for protectionist purposes, such as the recent 30 percent tariff on several steel products. It should be pointed out that developing countries themselves are increasingly resorting to the use of these measures against cheaper imports, frequently from other developing countries, and so improved disciplines here could restrain this kind of usage as well.

These countries all desire further examination and clarification of the rules governing these measures, a necessary prerequisite for tightening them and ensuring that the application of trade-remedy measures is predictable and justifiable. At Doha, Members agreed to negotiations 'aimed at clarifying and improving disciplines' in the Agreements on Subsidies & Countervailing Measures and Anti-dumping.41 However, the scope of these rule-making negotiations is inherently limited since they are bound to "preserve the basic concepts, principles, and effectiveness of these Agreements and their instruments" (emphasis added). As such, much will depend on what compromise Members will reach on the meaning of the word 'effectiveness' and the scope they will have to oppose any change that would alter the 'effectiveness' of trade remedy measures. There are also concerns that potential amendments will be limited by horse-trading – trade-offs will determine which provisions are brought to the table and which will be left off, since countries will try to insulate their trade remedy laws from WTO dispute settlement challenges.

In terms of development, the very opportunity, however limited, to revisit these two agreements – once so sensitive a topic that they could scarcely be discussed in a negotiating room – could offer potential gains for developing countries. If developing countries were

39 Sections 7 and 8 of the TRIPs agreement 40 33 reform proposals – 20 for subsidies & countervailing measures and 13 for anti-dumping – were included in the compilation on outstanding implementation issues. However, they could well end up classified among the implementation issues that do not have to be resolved until 2005, thus delaying progress. 41Actually called the Agreement on the Implementation of Article VI of the GATT 1994. The statements are in paragraph 28 of the Declaration.

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allowed to regain the right to use, albeit temporarily, policy instruments to foster development, e.g. industrial support measures for export activities, it could prove highly beneficial.

Competition Effective competition policy can check restrictive business practices, inefficient monopolies and undesirable mergers and acquisitions by large transnational corporations. However, the principle of non-discrimination could work against domestic policies designed to enable local firms to build their competitive capabilities – e.g, it would prohibit preferential treatment on the sole basis of domestic ownership.42 The Declaration includes the contentious issue of the interaction between trade and competition policy which, along with investment (the subject of a separate paper), is widely perceived to be an area of rules that will accentuate the imbalance within the WTO system by adding to developing country obligations. The work programme specifies some elements for clarification in the Working Group on Competition Policy, namely, core principles including transparency, non-discrimination & procedural fairness, and provisions on hard-core cartels and targets for voluntary cooperation. Developing countries will be expected to make concessions on competition issues in return for progress on the implementation issues. As previously noted, developed countries are being fairly emphatic in promoting technical assistance and capacity building on competition issues (as with other issues that they are interested in). The implications for trade and development of multilateral rules in competition policy are as yet unclear. The incorporation of the WTO's core principles - transparency and non-discrimination - into domestic competition laws is likely to affect necessary flexibility for each country to have its own model of competition law; particularly one that would serve its domestic developmental interests. Developing countries will thus have carefully to weigh the pros and cons of having these core principles as essential elements of a multilateral framework, especially if they seek to build domestic industrial capacity.

Trade and Transfer of Technology The transfer of technology is a critical issue to developing countries, and is necessary to help foster the transformation that will help their economies move into higher value-added activities. Paragraph 37 states that Members "agree to an examination, in a working group under the auspices of the General Council, of the relationship between trade and the transfer of technology, and of any possible recommendations on steps that might be taken within the mandate of the WTO to increase flows of technology to developing countries." It adds that the General Council will report to the 5th Ministerial Conference (September 2003) on the progress of the examination. It seems clear from this language that developing countries will have to wait some time for concrete provisions to materialize in this regard - if they ever materialize. Changes that result in increased technology flows will necessarily involve an examination of a wide range of WTO Agreements that are relevant to the transfer of technology, most notably the TRIMs (which prohibit domestic content requirements), Subsidies, TRIPs and GATS Agreements.

42 Khor, M. The WTO, The Post-Doha Agenda And the Future Of The Trade System: A Development Perspective. (2002).

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Such examinations would require that certain disciplines be relaxed – a change that will be extremely difficult to extract from those who are happy with the current situation. With respect to monitoring this transfer of technology, and thus making the mechanism more effective, the Decision reaffirms the mandatory nature of Article 66.2 of the TRIPs Agreement,43 which obliges developed-country members to promote technological transfer to the LDC members. It agrees to put in place a mechanism to ensure the monitoring and full implementation of the developed countries’ obligations; requiring them to submit, prior to the end of 2002, detailed reports on the functioning in practice of the incentives provided to their enterprises for the transfer of technology in pursuance of their commitments under Article 66.2. These submissions shall be subject to a review in the TRIPs Council and shall be updated annually by Members. While not necessarily having a mandatory impact on the flow of technology transfer, this step towards monitoring technology transfer obligations on the part of developed countries is a positive sign for countries aiming at enhancements in their industrial capabilities.

Trade, Debt and Finance The close linkages between trade and financial policies imply that improvement of neither can be done in isolation from the other. The need to service a high debt cripples a government’s capacity for policy making in all fields – financial policy among them. Many provisions in the WTO agreements are linked to capital flows and exchange rate fluctuations. These include, for example, liberalisation of financial services, elements in the area of trade and investment, and subsidization of interest on capital lending, etc. Similarly, increased market access in sectors of interest to developing countries (resulting in higher levels of income) will be crucial as part of any "durable solution" to their problem of external indebtedness. This clearly ties back to progress on market access in core areas like agriculture and textiles (and the general gamut of implementation issues). The Declaration (paragraph 36) commits – and limits – itself to a working group "examination" of the relationship between trade, debt and finance under the auspices of the General Council. It agrees, first, to examine possible recommendations on steps that might be taken, within the mandate and competence of the WTO, to enhance the multilateral trading system's capacity to contribute to a durable solution to the problem of external indebtedness of developing and least-developed countries and second, to strengthen the coherence of international trade and financial policies, with a view to safeguarding the multilateral trading system from the effects of financial and monetary instability.

The ability of this Working Group to address these important areas meaningfully is unproven. A number of commentators have noted that these talks could go in two ways, with one route looking at how to improve the WTO agreements themselves, and the other looking at recommendations to be handed over to 'more appropriate' institutions (like the World Bank & International Monetary Fund). Developments in the Working Group to date would indicate that it will be a long and drawn out battle; Members had difficulty agreeing on a simple title heading for the Trade & Debt area, as some did not want to imply that trade measures could in fact be a cause of, and/or provide a solution to, debt problems.

43 Article 66.2 states that developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base.

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Small Economies Paragraph 35 of the Declaration recognizes the special needs of small vulnerable economies by agreeing to a work programme, under the auspices of the General Council, to examine issues relating to the trade of small economies. Couched in fairly general language, the provision states the objective of the work programme as one of framing responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system. It adds that the General Council shall review the Work Programme and make recommendations for action at the 5th Ministerial Conference.

This area of work is a difficult one, with a number of Members seeking the creation of a new category of Members. As the early discussions on this are demonstrating, there is no unanimity on what a "small economy" actually means. Some indicators that have been put forward include population, size, per capita income and distribution of income, very small share of world trade flows computed either on an aggregate or sectoral basis, and natural geographical factors such as small territorial (which include many small island developing states) or being land-locked. One or more of these indicators and perhaps new ones may have to be taken into account in order for a country to be considered a 'small-economy.' Due to some particular characteristics including those mentioned above, these economies are more vulnerable than others to natural disasters and economic shocks. Others point out that small countries can respond quickly and easily to adjustments required by a changing international economy. However limits on the ability of small economies to diversify economically due to geographical and natural resource limitations could prevent this from happening.

As this is a very new area of work for the WTO, progress is likely to take some time, and thus any rebalancing emanating from here is likely to be far off. Clearly getting this important consideration onto the discussion table is a big gain for these countries. Once again, only time will tell us the long-term impacts of the discussions to come.

Services The possibility of free trade in services has led to fears of forced deregulation among civil society organisations in several countries. Additionally, the benefits of liberalisation of parts of the services sector, namely financial services and telecommunications, have largely accrued to developed countries. Issues related to service provision that are important to developing countries, such as the movement of personnel between countries for the provision of services44 – has been slow. Negotiations on trade in services are to be conducted with a view to promoting "economic growth of all trading partners and the development of developing and least-developed countries," according to paragraph 15 of the Declaration.45

The negotiations are to be based on sections of the GATS that refer to the three most important aspects of development already touched on in the previous section namely - a) 44 ‘The Movement of Natural Persons’ 45 The Declaration reaffirms the 'Guidelines and Procedures for the Negotiations' adopted by the Council for Trade in Services on 28 March 2001 (see document S/L/93) as the basis for continuing negotiations, with a view to achieving the objectives of the GATS as stipulated in the Preamble, Article IV and Article XIX of the Agreement.

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market access; b) policy space for effective trade-related development policy and c) human, industrial and institutional capabilities building. The articles state that the liberalisation process will respect national policy objectives, and allow individual developing countries flexibility for opening fewer sectors and liberalising fewer types of transactions. Market access will be extended along with progression up the development ladder.

As a result of the dominance of developed country service providers, loud calls were heard before Doha for a proper assessment of the effects of services liberalisation on developing country economies prior to the taking on of any new commitments. While this did not materialise from Doha, calls have since been heard for developing countries to utilise the flexibility provided in paragraph 15 of the Declaration and the 'Guidelines and Procedures for the Negotiations' to slow the making of fresh commitments until a proper assessment is made. In addition, many have argued for measures to redress the imbalances caused by the limited supply capacity of developing countries in the already liberalised service sectors in developed countries.

To allay fears of forced deregulation, the Declaration emphasised Members’ right to regulate the supply of services, noting the link to environmental and health concerns. The ‘right to regulate,’ however, is a double-edged sword in terms of development: it could reinforce developing country governments’ recognised need for policy space in these issues crucial to sustainable development. However, it could also be used by developed countries to restrict labour movement in the name of socio-economic considerations.

4. Conclusion This paper has attempted to provide the reader with sufficient contextual basis on the debates surrounding the interaction of liberalisation, and development. Using this context, an analysis of the Doha agenda was undertaken in hopes of looking for some insights into the very real and present question on the minds of many countries engaged with (or looking to engage with) the multilateral trading system: Can the outcome of Doha have a meaningful impact on the longstanding and systemic imbalances in the rules of global trade? The simple response is that it is far too soon to pass judgement. The question then boils down to: “What are the chances of the answer being ‘yes’ when the new round is finally completed?” Given that the negotiations could go in any number of directions, commenting objectively in this regard is difficult. Some subjective impressions follow:

We recall that three main sources of the imbalances were identified: insufficient market access for developing country products; inadequate policy spaces for effective trade-related development policy; and simply not enough human, industrial, & institutional capabilities building. Doha must positively impact these three broad areas directly if it is to begin to restore balance to the system.

Dealing with the 'old' areas, the source of many of the imbalances, must be done in an appreciable manner. Perhaps paramount here is a rejuvenation of a meaningful conception of special and differential treatment that has the potential to make needed in roads in all three of the sources of imbalance (in that it cuts across all specific areas of the system). To win support for provisions that recognise the truly different needs of different Members will not be easy - especially with the hurdle of getting the larger developing countries to accept that greater preferential treatment in a variety of different areas must be accorded not only to the least developed countries, but also the lower and middle income ones, in keeping with their

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particular needs. If this could materialise, perhaps in the form of a binding umbrella agreement on S&DT, the system could take a monumental first corrective step forward.

Doha provides a window for this to happen. The question lies more in whether the political will exists to make it happen. Corrections in key specific areas such as agriculture, textiles, and generally speaking the re-acceptance of effective industrial development measures are also pivotal in the corrective equation. Does Doha provide the space for this to come to pass? Yes. The deciding factor is once again political will. In this respect, the possibilities are there. However, the way the 10 months of negotiations since Doha have unfolded (or not unfolded in many cases) does not bode well.

However, if developing countries were forced to make significant trade-offs in order to attain these needed corrections, the re-balancing forces would be quickly swept away, and the chances for correction irretrievably out of reach. This could lead to a backlash that would put whatever gains globalisation has achieved - indeed, the system itself - in danger of collapse. This could especially be the case if some of the 'new' agenda items were forced upon Members before they were sufficiently prepared. It is the answer to this final question: 'rebalance at what costs?' that will greatly determine the larger answer we seek.

In sum, Doha provides many windows of opportunity, and this very fact shows that it could turn out to be a pivotal success for developing countries. But it must also be recognised that it is merely a first step in what will surely be (and has already been) a protracted struggle. The determination and sophistication demonstrated by developing countries in pursuit of their agenda at Doha did make them gains – in particular vis-à-vis public health and TRIPs. Their needs must be met by the developed world in a spirit of generosity – and long-term self-interest – for the step taken at Doha to translate into an improvement in the lot of billions of people.