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If Not This World Trade Organisation, Then What?: [2004] I.C.C.L.R

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If Not This World Trade Organisation, Then What?: [2004] I.C.C.L.R CORE Metadata, citation and similar papers at core.ac.uk Provided by Birkbeck Institutional Research Online MACMILLAN: IF NOT THIS WORLD TRADE ORGANISATION, THEN WHAT?: [2004] I.C.C.L.R. 75 is made to the negotiating positions of some of the WTO member states, especially as those positions If Not This World Trade manifested themselves at Cancu´ n. The article at- Organisation, Then tempts to assess the validity of the various argu- ments with a view to determining the way forward. What? If the WTO, in its current manifestation, is para- lysed by the intransigence of its member states and stigmatised by opposition from a wide range of interest groups, is there any approach to the cre- ation of international trade rules that might serve us better? PROFESSOR FIONA MACMILLAN Professor of Law, Birkbeck, University of Why not this WTO? London As the following discussion demonstrates in a number of places, the enterprise of dividing the anti-WTOarguments intothoseemanatingfrom the Introduction pro-liberalisation perspective, those coming from an anti-liberalisation perspective and those that are In its relatively short life, the World Trade Organ- politico-structural is a rough and rather slippery isation (WTO) has come in for brief praise and a one. While some of the arguments fall relatively remarkable barrage of criticism. Most of the pub- neatly into these categories, most of the more licly expressed praise is located somewhere within nuanced arguments present challenges to the dili- the mantra that ‘‘weneed international trade rules’’. gent categoriser. Despite these reservations, the Criticism of the WTO, on the other hand, is diverse. following attempt at categorisation is optimisti- It is made from a wide range of perspectives that cally undertaken on the basis that it provides ana- embrace, at one end of the spectrum, the view lytical assistance. that the WTO and/or trade liberalisation is an inherently undesirable thing, to, at the other end, a criticism of the WTO based on its failure to Arguments from the pro-liberalisation camp achieve sufficient trade liberalisation. At the recent Fifth WTO Ministerial Conference in Cancu´ n, the In their purest form, criticisms of the WTO from the negotiating positions of member states and aspirant pro-liberalisation camp tend to be predicated on members ranged across this spectrum. As might be the basis of the economic doctrine of comparative expected, no state appeared to embrace the extreme advantage. The doctrine, which was developed in anti-WTOor anti-liberalisation position. However, the work of nineteenth-century classical econom- there was considerable resistance to further liber- ists,2 argues that optimal allocation of international alisation in some sectors, motivated either by con- resourceswillbeachieved ifeachcountryproduces cerns about its economic and social effects or by the only the commodities that it can most efficiently desire to secure tit-for-tat liberalisation. While op- produce, and trades those commodities with other position to trade liberalisation was generally quali- countries in order to obtain the commodities that it fied, a strong pro-liberalisation position was in does not produce.3 There are a number of difficult- evidence. It appears, in fact, that the failure of the ies in using the doctrine of comparative advantage Ministerial Conference to achieve a final consensus asaspiritual guideforthedevelopmentoftheworld in the form of a substantive Ministerial Declaration trading system. Foremost among these is the fact is largely a consequence of developed-country dis- that it has always been unclear whether the doc- satisfaction with the lack of liberalisation.1 trine is prescriptive or merely descriptive of the This article considers a range of interrelated process of international trade.4 Even if the doctrine criticisms that have been made of the WTO. The is capable of being used prescriptively, problems concern of the article is not only with criticisms emanating from the pro- and anti-liberalisation 2. e.g. D. Ricardo, Principles of Political Economy and camps; it also discusses what might be described Taxation (1817), reissued as The Works and Correspon- as politico-structural objections to the WTO. In dence of David Ricardo (Straffa ed., 1951), Vol.1. 3. For an analysis of this doctrine, see J. Leonard, Pol- assessing these criticisms and objections, reference lution and the Struggle for the World Product: Multi- national Corporations, Environment and International Comparative Advantage (1998), Ch.1. 1. See CAFOD, The Cancu´ n Ministerial Meeting, 4. As Leonard notes, n.3 above, p.1: ‘‘A ... neutral way of September 2003: What Happened? What Does it Mean for thinking about the concept of comparative advantage is Development?, Submission to the International Develop- that it describes the array of social, economic and political ment Select Committee, September 2003, www.cafod. forces that account for the general export and import org.uk/policy. patterns prevailing between nations.’’ [2004] I.C.C.L.R., ISSUE 2c SWEET & MAXWELL LIMITED [AND CONTRIBUTORS] 76 MACMILLAN: IF NOT THIS WORLD TRADE ORGANISATION, THEN WHAT?: [2004] I.C.C.L.R. arise about its current applicability. The efficiency illustrates this particular criticism of the WTO. It is and welfare advantages predicted by the doctrine clear, however, that what developing countries want are based upon the movement of commodities, in and need is a more equitable system of trade liberal- the form of raw materials and manufactured goods, isation and not unfettered liberalisation. This is across borders. The twentieth century, however, evident in developing-country arguments for im- marked an increase in the movement of the means proved systems of Special and Differential Treat- of production across borders. This generally occurs ment (SDT).7 It is also clear that their resistance at by means of foreign direct investment by multi- Cancu´ n to the so-called Singapore issues8 was not national enterprises, which establish subsidiary merely due to the need to take an aggressive nego- undertakings in another country for this purpose. tiating position in order to bolster their arguments The prevalence of foreign direct investment, which about access to agricultural and textile markets. is facilitated by the WTO agreements, appears to Developing countries are clearly apprehensive about raise some questions about the current applic- the conclusion, in particular, of a WTO Multilateral ability of the doctrine of comparative advantage as Investment Agreement (MIA),9 which they consider a prescription.5 Furthermore, it seems unlikely that would further compromise not only their ability to the doctrine of comparative advantage is capable of control their economy but also their sovereignty. addressing the current comparative disadvantage This concern is clearly related to more general anti- of developing countries. liberalisation objections to the WTO and is con- Despite the shortcomings of the doctrine of com- sidered in more detail below. parative advantage, a prevalent criticism of the While some developed countries stood in the WTO is that it is incapable of realising the benefits way of significant liberalised concessions in promised by the doctrine because, rhetoric aside, it agriculture and textiles, it is clear that developed is not really concerned with removing barriers to countries in general were unhappy with the out- international trade. Rather, the argument goes, it is come of the Cancu´ n Ministerial Conference be- a pretext for keeping up protectionist barriers in cause of the failure to secure greater liberalisation some areas. In particular, it is argued that the WTO in relation to the Singapore issues.10 There is con- rules are dedicated to keeping up protectionist siderable evidence to suggest that the implosion of barriers for the developed world so that enterprises the Ministerial Conference was a consequence not based in the developed world have access to of the disputes over agriculture and textiles, but of the markets they want, while enterprises of the the aggressive pursuit by the developed countries developing world do not have access to the markets of agreement to proceed towards the conclusion of of the developed world that would be particularly an MIA.11 As noted above, this was resisted by valuable to them. A version of this argument was a developing countries. For reasons that are further central concern of the Cancu´ n Ministerial Confer- explored below, it is also likely tobea focal point for ence,wherethedevelopingcountrieswerepushing staunch resistance by activists and campaigners for reductions in developed-country subsidies for around the world. The controversy does, however, domestic agricultural production and in developed- illustrate the point that the developed countries country tariffs in order to improve developing- have a somewhat schizophrenic position on trade country ability to compete in world agricultural markets. The failure of the developed world to make concessions, even on the specific issue of Summary of 12 September 2003 (www.wto.org/english/ access to the international cotton markets,6 starkly thewto_e/minist_e/min03_e/min03_12sept_e.htm, accessed September 13, 2003). 7. See Christian Aid, ‘‘Recipe for Disaster 2: Special and 5. See F. Macmillan, WTO and the Environment (Sweet & Differential Treatment’’, Recipe for Disaster: Cancu´n Maxwell, 2001), pp.226–230. Briefing Papers/09.03, www.christian-aid.org.uk/cancun/ 6. This issue was raised by Benin, Burkina Faso, Chad briefing.htm (accessed September 12, 2003). The concept and Mali: see WTO, Poverty Reduction: Sectoral Initiative of SDT has itself come under attack from those advocating in Favour of Cotton—Joint Proposal by Benin, Burkina a more rigorous liberalisation of international trade: see, Faso, Chad and Mali (WT/MIN(03)/W/2, 15/8/03); and e.g. H. Nottage, ‘‘Trade and Competition in the WTO: WTO, Poverty Reduction: Sectoral Initiative in Favour Pondering the Applicability of Special and Differential of Cotton—Joint Proposal by Benin, Burkina Faso, Chad Treatment’’ (2003) 6 Journal of International Economic andMali—Addendum(WT/MIN(03)/W/2/Add.1,3/9/03).
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