Developing Countries and the World Trade Organization

Introduction to the WTO and Developing Countries

The World Trade Organization (WTO) was established as an international organization in 1995 as a successor to the General Agreement on Tariffs and Trade (GATT) ("World Trade Organization" 2009). The negotiations that extended for seven years — also known as the Uruguay Round — gave birth to the WTO, with vastly expanded responsibilities for handling and administering economic affairs at the international level. Since then, the WTO has unquestionably played a major role in the field of global governance. Its rules and processes have affected the economic standards and political orientation of member countries (Sampson 2001).

Compared with GATT, the World Trade Organization has operated with considerably more authority, owing to its strong institutional foundation and proficient dispute settlement system (Kwa 1998). GATT rules had their main influence on the imports and exports of a country, whereas WTO agreements greatly emphasize a country's overall economy (Das). Member countries that do not comply with WTO trade rules and regulations must ultimately face consequences through formal dispute proceedings. The WTO system allows member developing countries to satisfactorily address their legitimate concerns, and the organization does not impose investment or market-access requirements on developing countries in unreasonable or irrational ways (Skinner 2010).

However, there are several charges, criticisms, and accusations that the WTO has faced for a long time (Kwa 1998). Among the most prominent are the following:

The WTO's governing framework, its processes of agreement implementation, and its highly regarded dispute settlement system are criticized for serving the interests of developed countries while marginalizing the interests and concerns of developing member nations (Kwa 1998).

The least developed countries (LDCs) are sidelined when it comes to global trade. The products produced in LDCs also face continuous tariff escalations (Kwa 1998).

Because each member country has vastly different economic circumstances, the uniformly applied WTO rules have generated inequality (Kwa 1998). Free trade is simply not a viable option for the majority of countries.

Poor countries have been penalized and local development has been undermined by the WTO. Under its rules, the development policies pursued by industrialized countries in earlier decades cannot be replicated by today's developing countries ("Top Reasons to Oppose the WTO" 2011).

WTO Definition of Developing Countries

The WTO provides no formal definitions of "developed" or "developing" countries. It is the countries themselves that declare whether they are "developed" or "developing." Certain rights are extended to members that claim developing country status — for instance, they are granted longer transition periods following the provisions of some WTO agreements and are provided with required technical assistance ("Who are the developing countries in the WTO?" 2011). It can be concluded that "the WTO may not be the most protective organization of non-trade values, but it is the optimal system to integrate competing concerns and advocate on behalf of sustainable development" (Skinner 2010).

The Role of Developing Countries in the WTO

Developing countries have several priorities that motivate them to join international organizations. These include seeking relief from economic difficulties, persuading industrialized countries to open their markets, and pressing the WTO to be more sensitive to development needs. They are also concerned about the ever-expanding mandate of the WTO, which they see as favoring developed countries (Bradlow 2001). Developing countries also demand special and differential treatment from the WTO to protect their manufacturing sectors (Sugathan 2010). It is also worth noting that while developed countries typically seek access to textiles and clothing markets, the main commodities that developing countries trade through WTO membership include copper, fuels, cotton, vegetable and oil seeds, wood products, and minerals ("Poorest Countries Must Improve" 2008).

Despite the fact that developing countries constitute a large share of WTO membership, the WTO framework does not allow them to exercise the same power as developed countries. Domestic policy-making deficits are among the main factors that account for their weak participation in the organization (Sally 2001).

Although developing countries have the collective power to influence the agenda and the results of trade discussions through their votes, there are no recorded occasions on which they have used this power to their advantage. The economies of several developing countries are dependent on the United States, the European Union, or Japan. The security and interests of developing countries that resist WTO agreements may be threatened if they fail to comply.

Negotiations and trade-offs also tend to occur between developed countries and only a small number of more capable developing economies. Very limited human and technical resources are available in many developing countries, making it impossible for them to attend the 40 to 50 weekly Geneva meetings. When they do attend, they are rarely as well prepared for negotiations as their developed counterparts.

Not every developing country is able to secure the best legal expertise when consulting the WTO dispute settlement system. Moreover, the system is widely considered too costly for smaller economies (Kwa 1998).

Conclusion

Since the Uruguay Round, there has been a dramatic change in the multilateral trading system. It was not until this round that developing countries had a meaningful participation in the negotiations. Things have changed considerably since then. Developing countries are now actively seeking WTO membership and have access to advantages they did not enjoy as members of GATT. They receive the full benefits of membership and can offer their own concessions in exchange for the benefits provided by developed members. Developing countries now participate in the WTO on a reciprocal basis (Moore 2001).

On the other hand, critics and analysts argue that the WTO has failed to keep its promises to the developing world. This situation reflects a broader problem facing the global community. Global economic problems can only be resolved when genuine cooperation replaces competition between developed and developing countries (Walker 2011).