The world is
gradually becoming a singular borderless economy. This process, known as
“globalisation”, involves an increase in international trade and foreign direct
investment between countries and has been defined as “[g]rowing interdependence between different peoples,
regions and countries in the world as … economic relationships come to stretch
worldwide.” This is
a result of technological developments making it easier for people from different
countries to interact. As such, international trade has increased, but so has
the dependence of countries on its success. Therefore, anything that causes
international trade to suffer can be detrimental to the economies of the world.
In his speech to
the Federation of Indian Chambers of Commerce and Industry the Director-General
of the World Trade Organization,
Pascal Lamy, pointed out that today’s world
faces many problems, including a worldwide economic recession, poverty and
disease, each of which has contributed to a decline in trade between countries
resulting in a chain-reaction of events creating further problems for the
world. This
has been accentuated by the stagnation and eventual collapse of multilateral
discussions between WTO members at the Doha Development Round in 2008.
According to some observers, the impact of these problems is felt on a more
acute level by African countries, where negotiations on greater market access
Agricultural products are essential to economic progress.
The Doha Development Round
In 2001 when the
members of the WTO through the Doha Declaration committed to a series of
negotiations conducted by the Trade Negotiations Committee (TNC) the aim was to
fulfil the objectives set out in the WTO Agreement to “establish a fair and
market-oriented trading system through a programme of fundamental reform.” Since 2001, several discussions with
Ministers from different countries, have taken place including in Cancún, Hong
Kong and Geneva in 2004, 2006 and 2008. At an informal meeting in New
Delhi in September 2009 Ministers representing 35 WTO members agreed to
conclude the Round by 2010.
The Round has been subject to criticism and
controversy. It has been described as unsuccessful and a disappointment because of failure to meet deadlines and resolve various issues at, for example
the Cancún meeting in 2003 where members were unable to agree on anything. When
negotiations collapsed after the 2008 Meeting in Geneva Pascal Lamy stated that
negotiations failed “because Members have simply not been able to bridge their
differences.” In 2009, the Director General in a report to the Trade Negotiations Committee
re-emphasised the importance of the multilateral negotiations of the Round but
criticised members for failing to implement the agreements. He pointed out that
it is not enough for participants in the negotiations to agree on measures to
be taken, they must put these agreements into effect:
“[WTO Ministers
at a meeting]… stressed that reinforcing the multilateral trading system
through the conclusion of the Doha Round was essential in the context of the
current economic crisis. They acknowledged that the political signals emanating
from previous meeting had not translated into action in Geneva. That mere
reaffirmation of commitment was not enough unless this was converted into
effective instructions to negotiators to re-engage so that the Round could be
concluded in 2010.”
Solutions
If Members are willing to “bridge their
differences” and effectively negotiate while ensuring that their agreements are
put into action, the issues that may rise on the agenda at the Round to solve African
countries’ problems being that of free-trade, regulation of the tariff measures
countries may take while focusing on the interests of developing and least
developed countries.
Free-trade
involves global measures aimed at creating a level playing field for world
markets in international trade. It is the idealistic result of globalisation
where “all nations prosper and develop
fairly and equitably” and it becomes easier for countries to trade by allowing
the market, and not state policy, to determine needs, supply and demand. WTO law, embodied in the agreements General Agreememnt on Tarrifs and Trade
(GATT), the General Agreememnt on Trade in Services (GATS) and the Agrememnts
on Trade-Related Aspects of Intellectual Property (the TRIPS Agreement) already
regulates and enhances free trade through its rules on Subsidies, Anti-Dumping
and its principles of Most Favoured Nation and National Treament.
However, even though globalisation and free-trade
should ideally benefit all countries this is not necessarily the reality. Globalisation
has been criticised as merely being a cause of dependence of the economies of
developing countries on those of developed countries. This is because in a
globalised world developed nations would, for example, want their multinational
firms to be treated the same as domestic firms in the foreign countries which
they may enter, but this is to the disadvantage of less established firms and
businesses of the same nature in the developing countries. As a result, developed countries are always in the advantage when it comes to
their interaction with developing countries.
Tariffs
Tariffs are a
way in which countries hinder the market access of goods from other countries
into their own by imposing, for example, customs duties or charges on goods
when people import goods. Tariffs are a source of revenue for governments but they can also be used to
protect the local industry from competition by goods from other countries. In
his speech, Pascal Lamy laments the increase of tariffs by countries as a
result of the economic crisis and says that they have a “chilling effect” on
trade. WTO Members are encouraged to, and have negotiated and reduce tariffs.
In fact, under the Ministerial Declaration establishing the Doha Development
Round in 2001, the parties agreed to enter into negotiations to reduce or
eliminate tariffs for agricultural products taking “fully into account the
special needs and interests of developing and least-developed country
participants”. If all
countries participating in the Round can effectively cooperate to reduce
tariffs on all goods then healthy competition between goods from different
countries would exist this would in turn stimulate the world economy.
Unfair Trade and the Interests of Developing Countries
A concern raised
by the Director General was the need to ensure that developing countries are
not at a competitive disadvantage in the world market in light of unfair trade
practices and competitive disadvantages. Unfair trade practices exist where
countries in a dominant position in the world market abuse their power for
their own benefit to the detriment of non-dominant countries. Examples of such
practices include price fixing, dumping and subsidisation. Dumping, which
occurs where a product is brought into an importing country a lower price than
it valued at in its exporting country, and subsidisation of goods are condemned
by WTO law and countries are entitled to take measures to protect their
industry if it causes or threatens to cause material injury to the domestic
industry.
When the Doha
Development Round founded the founding Members did acknowledge that lesser
developed countries are at a disadvantage in international trade and took
particular notice of least-developed countries (LDCs) by promising to integrate
them into the global trading system. The Ministerial Declaration, under
paragraph 42, states:
“… We recognize that the integration of the LDCs
into the multilateral trading system requires meaningful market access, support
for the diversification of their production and export base, and trade-related
technical assistance and capacity building. We agree that the meaningful
integration of LDCs into the trading system and the global economy will involve
efforts by all WTO members."
Any negotiation
meeting between countries will have to address the issue of preventing unfair
trade and the consequences they have on countries with less market power.
In conclusion, global cooperation is a necessary and
inevitable when it comes to solving the world’s problems because of the way
that countries are growing increasingly interdependent. While countries may
interact on the world stage they are not in an equal position to trade.
Developed countries, and those with a strong presence in particular markets,
are always at an advantage in comparison to developing and least-developed
countries, despite or even with ‘free-trade’
taking place. Therefore, when country representatives meet at, for example the
Doha Development Round in 2010 for the last time, they must take these facts
into account when negotiating a new world order.
