This year’s report of the World Trade Organization’s annual review of the trade policies of member countries has just been published. Ever since the WTO’s third ministerial meeting in Seattle in 1999, developing countries have argued that the Uruguay Round promised liberalization of markets. This has not happened thanks to continued restrictions in agriculture and textiles and garments and new forms of protectionism. Such protectionism in developed countries does not violate existing WTO agreements. A new trade negotiating round should primarily focus on revamping these agreements and delivering market liberalization, even if technically no WTO agreements are presently being violated.
The Uruguay Round offered this carrot to developing countries and least developed countries as a quid pro quo for accepting issues like intellectual property rights, investment measures and services on the agenda. Without implementing this liberalization agenda, it would be inappropriate to overload the new round’s agenda with issues like government procurement, trade facilitation, investment, competition policy and labour and environmental standards. The fourth ministerial meeting in Doha effected a compromise. Partial negotiations on environment are part of the Doha development agenda. Labour standards have been referred to the International Labour Organization and a decision about inclusion of the other issues deferred to the fifth ministerial in Mexico in 2003. Thus the import of the WTO’s new report is primarily strategic, since there is little in the report that was not already known.
The report highlights continued protectionism in developed countries in textiles and garments, agriculture and also in manufactured goods, through specific duties, peak tariffs and tariff escalation. On an average, 5 to 6 per cent of tariff lines in developed countries face tariff peaks, usually concentrated in items of export interest to developing countries. If such protectionism is removed, there will be annual welfare gains of anything between 400 and 800 billion dollars. Since these are welfare gains, consumers in developed countries also benefit through reduced prices. But developing countries will also gain through enhanced exports amounting to between 100 billion and 350 billion annually, contributing to growth and a drop in poverty ratios by 13 per cent in developing countries by 2015. The report thus substantiates developing country positions and is a prelude to complicated negotiations on the DDA agenda, due for Mexico in 2003. Thanks to the AIDS scare, intellectual property is already being questioned. Brazil and India have submitted papers questioning not only inclusion of investment, but also the existing trade-related investment measures agreement. Much of this is indeed strategic posturing and the WTO’s report has provided further ammunition to developing countries and LDCs. This ought to dispel the myth that the WTO pursues developed country interests alone and may also reflect the fact that the present director-general is from a developing country.