Poverty and the WTO: Impacts of the Doha Development Agenda (Trade and Development)

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A developing State will be a very vulnerable player in the global economy if its comparative advantages lie solely in primary commodities and low-skilled manufacturing, which is the situation of most developing States. Despite the brilliance of the market economic theory developed by Adam Smith and accepted and elaborated by subsequent economists, it is intrinsically difficult to understand how economies in the relatively primitive stages, depending heavily on the production of primary products, can build industries that would yield higher income without some deliberative effort on the part of the government, particularly when the private sectors lack both resources and information to do so.

Free trade theory focuses on static comparative advantages, which are of low quality in many developing States, rather than dynamic comparative advantages, those that are created by targeted economic policies, and provides no means for a State to graduate from the former to the latter and broaden its industrial base. An alternative path to swift trade liberalization is that of infant industry protection.

This strategy involves the temporary protection and development of select industries by government policies for example, regarding tariffs and subsidies. Those industries are gradually exposed to greater competition until they near maturity, when liberalization is feasible and even necessary to ensure competitive and innovative practices.

What is the WTO?

Instead, high tariff barriers were erected to protect US manufacturing. Infant industry protection ideally takes place in stages, with the first stage industries leading to diversification into second stage industries, which again need to benefit from a period of protection, and so on. For example, a State might choose to protect the production of textiles, and then diversify into the higher value and higher skilled arena of textile machinery.

Indeed, all successful industrializers went through a phase of protecting infant industries, with the exceptions of the city territory of Hong Kong, Chile, and perhaps, in the nineteenth century, Switzerland and the Netherlands. The US for example reverted to protectionism to protect its industries from the UK after a period of ill-considered liberalization between and Colonies, which had liberal economies forced upon them by colonizers, experienced sluggish economies and de-industrialization.

The economic situation was exacerbated by colonial policies which discouraged competition with the colonizer and the upgrading of industrial capacities beyond primary production. States should therefore target and nurture niche industries to facilitate the development of dynamic and sustainable comparative advantages.

It is now an acknowledged success story of globalization. It is therefore legitimate for developing States, in their own self interest, to resist pressure towards rapid liberalization.

The Doha Development Agenda in relation to the 10th Ministerial Conference

However, many of the strategies used to build successful industries, which have catalysed high quality growth in certain East Asian economies, are now restricted or banned under WTO rules. The modification of tariffs however does not address some of the other policy restrictions outlined above. Furthermore, a State must negotiate with affected Members and provide compensation to them in order to utilize this exception. Negotiation can take considerable time, entailing significant delays, while the provision of compensation is burdensome and therefore a disincentive for developing States.

A gradual sequenced approach to liberalization in underdeveloped States, incorporating the development of appropriate institutional capacities and dynamic niche markets, is preferable to the reduced policy space entailed in rapid and potentially premature liberalization.

The starting point should be the recognition that the purpose of multilateralism is not to impose common rules or a free market blueprint on all countries with different p. It would accord with the human rights version of the principle of non-discrimination as opposed to the trade version , which dictates that unequals need not and sometimes must not be treated equally.

Indeed, lesser policy autonomy is needed for emerging economies, such as China and India, but such States cannot be treated as if they are already developed: both States contain massive populations of poor people, and remain far poorer than the States of the North. There are of course economic arguments against such proposals. Greater policy space for developing States could undermine their resolve to innovate and create competitive industries.

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Many economists believe that the widespread use of protectionist policies by developing States, particularly in Latin America, in the s and s, have discredited the infant industry argument. Those policies led to false dawns in terms of economic growth until the early s, but those economies flat-lined in the s and crashed in the s.

Government failure in the management of the infant industry process is of course possible. Indeed, an absence of failures would probably indicate that infant industry policies are overly timid.

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In this regard, Rodrik has suggested that the dangers of government abuse of policy space could be tempered by the placement of procedural conditions on States. In particular, protectionist policies should be targeted, maintained and reduced by an open and transparent process within a State, to help to ensure against undue influence by influential sectors at the expense of society at large. As noted in Chapter 8 , corruption can arise during the process of opening up markets as well as in the process of regulating markets.

The varying scenarios for underdeveloped States arising from the restoration of policy space to facilitate potential protectionism contrast with the extreme p. At the same time, the general benefits of market access for the South to the North are clear. An optimal outcome for the South from future WTO negotiations is therefore true asymmetry, arguably reflecting the intended spirit of the Enabling Clause of , as well as certain sentiments in the preamble to the Marrakesh Agreement.

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  • Even worse, adherence to current WTO rules is counterproductive in some situations for the development of the economy of developing States. Indeed, the Uruguay round reportedly delivered 70 per cent of its benefits to developed States, while some of the poorest States in the world were net losers. WTO rules may be removing or weakening essential policy levers needed to pursue development p. For example, the generation of further unemployment in some developing States, through de-industrialization brought about premature trade liberalization represents a retrogressive step with regard to the right to work in Article 6 of the ICESCR.

    The right to work does not equate with an unconditional right to be employed, especially given that it is a progressive right. A classical economic response to this argument would be to say that further jobs will be created in the long term through liberalization. However, further jobs could perhaps be saved in the short term without sacrificing long term societal employment prospects by adopting policies of gradual liberalization along with well-targeted protectionism.

    What's Next for the WTO?

    The failure of States parties to take into account their legal obligations regarding the right to work when entering into bilateral or multilateral agreements with other States … constitutes a violation of their obligation to respect the right to work. The previous paragraphs focus on the impact of WTO rules on the capacity of a State to fulfil its human rights obligations to persons within its territory. This issue is discussed in Chapter 8. Current WTO rules are unfair to developing States. This unfairness is undermining the ability of the WTO to fulfil its mandate, mentioned in the WTO preamble, to improve living standards across the world.

    A more controversial proposition is that further liberalization across all States is not a panacea for alleviating ongoing poverty in developing States, as it could lead to premature liberalization.

    Special and differential treatment provisions

    A preferable policy trajectory within the WTO is for policy space to be preserved and indeed restored to poorer States within the WTO, while markets for developing States within developed States are opened. Alas, as will be seen in Chapter 9 , such proposals are not reflected in current Doha proposals. There are also other criteria, relating to low levels of human resource development and high degrees of economic vulnerability.

    Greece received a loan in A Member may not impose tariffs above those bound rates. Full trade liberalization under the EBA outside the arms field has only recently been completed, as liberalization for bananas, rice, and sugar was phased in over a decade. In principle, these exemptions should have been withdrawn by Annex II, para 6 , and must at least be reviewed and be the subject of current negotiations.

    See also below, text at notes — See also Chapter 3 , text at notes 52— See also Stiglitz and Charlton, above n 18 , 47 —8.

    What's Next for the WTO?

    That is, short term consequences are not necessarily justified under international human rights law, even if the long term benefits do arise. See also —6. See also Wolf, above n , See also Chang, above n 84 , 27 —8. See also World Development Report , above n 58 , See also Kinley, above n , 27—8. See Save the Children, Freedom from Hunger for Children under Six Save the Children, India, , for a recent disturbing report on the continuing severity of child malnutrition in India despite the fast growth in its economy.

    On inequality in China, see Pogge, above n , 6—7. See also Oxfam, above n 5, Wolf, above n , and In contrast, few poor people have access to a television set or a computer. See also Stiglitz and Charlton, above n 18, See also Lamy, above n 15, 5. Slums dominated urban centres in Sub-Saharan Africa Slum populations soared during the s, and the same is likely to have happened in the s. See also Stiglitz, above n 87, —9. See also Chang, above n 85, 27 and World Commission on the Social Dimension of Globalisation, above n , xiii. See also UNDP, above n 90, See also Lee, above n 33, 7—8.

    See also Stiglitz and Charlton, above n 18, 24; Chang, above n 84, See also World Development Report , above n 58, At —12, he states that infant industry arguments should be re-examined in the context of WTO obligations. See also Trubek and Cottrell, above n , —6; Stiglitz and Charlton, above n 18, All Rights Reserved. OSO version 0. University Press Scholarship Online.

    The Doha Development Agenda - Impacts on Trade and Poverty

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    gohu-takarabune.com/policy/localizar-por/reky-rastreo-de.php Search within book. Email Address. Library Card. Poverty and Human Rights Violations Some characterize living in a state of poverty as a human rights abuse in itself. This bias will in the long run not be sustainable and it is therefore necessary to correct it if we want the multilateral trading system to thrive… In sum, while the political decolonization took place more than 50 years ago, we have not yet completed the economic decolonization.

    At the same time their underdeveloped industries have been exposed to competition from the developed world.