Main Issues in the New Multilateral Agenda - Essay Example

?Main issues in the new multilateral agenda and reasons why the interests of developed countries differ from those of developing countries University: Course: Tutor: Date: Main issues in the new multilateral agenda and reasons why interests of developed countries and those of developing countries have differ. Introduction Multilateralism entails cooperation among several nations in addressing a particular global affair. History of Multilateralism dates back to the formation of League of Nations which aimed at preventing further war (Keet, 2000). A multilateral agreement can be referred to as an accord among three or more governments or agencies. Multilateral trade entails agreements among several nations on the quantity, price and tariffs of the trade (Keet, 2000). Multilateralism enables nations to solve complex global problems especially on issues that entail the use of force. Barfield (2001) is of the opinion that multilateral rules should promote greater transparency and consistency through minimising the distortions caused by the discriminatory practices of some nations. The agreements should also provide legal security in dispute resolution and increase equity in market access among the member nations. The agreements should also consider the interests of the developing countries such as the need of harmonized trading systems that eliminate a lot of bureaucracies (Kulovesi, 2011). The World Trade Organisation (WTO) was created in January 1995 can be termed as the biggest reform in multilateral trade since the end of the 2nd World War. General Agreement on Tariffs and Trade (GATT) was established in 1947 and arranged 8 world rounds. At the Tokyo round, 102 GATT participating countries resolved to cut custom duties by a third in the major industrial markets thus bring the custom duties to about 4.7 percent compared with a high of 40 percent at the inception of GATT in 1947 (Schott, 2000). However, the recessions of early 1980s forced many countries in North America and Europe to start bilateral agreements with competitors and enhance the subsidies in order to remain competitive. WTO was founded on the principles of non-discrimination of the foreign and local companies, transparency in trade negotiations, reciprocity in concessions and differential treatment since developing countries could require favourable treatment and positive discrimination (Blackhurst 1998). There are numerous reasons why WTO was created to replace GATT. GATT only covered trade on merchandised goods unlike WTO that includes trade in intellectual property and services (Barfield, 2001). GATT only entailed set rules and instructions that had no institutional foundation unlike, WTO which is a permanent institution with a fully recognised secretariat. The member countries wanted a new multilateral trade system with faster dispute resolution unlike old GATT system (Blackhurst 1998). The GATT agreements and provisions were subject to the discretion and willingness of the member countries in the implementation thus many countries declined in implementing certain provisions for own reasons, unlike the WTO guidelines that are compulsory and permanent. Agricultural products, textiles and services were exempt from GATT regulations and some member countries administered anti-dumping duties and voluntary export restrains that led to trade distortions (Keet, 2000). There are numerous challenges facing the WTO such as the labour standards. Labour organisations have asserted that WTO guidelines permit the exploitation of labour and ultimate destruction of the environment. According to Mitchell (2005), the WTO standards undermine the country regulations that are designed to conserve the environment and ensure the health and safety of its citizens. The major controversy is whether WTO is the right institution to enforce the global labour standards especially in developing countries whose economic production is labour-intensive. Although WTO indicated that it would work with the International Labour Organisation (ILO) since 1996, it seems to have abandoned the issue of labour standards thus leading to exploitation of labour. Although some developing countries use child labour for family survival, WTO applies sanctions to countries that utilise child labour in the production process (Mitchell, 2005). Another challenge affecting WTO is dealing with African agricultural industry. A majority of African countries are developing countries and mainly rely on agriculture for economic growth and development. In this case, developed countries’ regulations on the quality standards and export restrictions have created barriers to the access of the international markets (Blackhurst 1998). WTO is also experiencing intense pressure from the third-sector organisations who want the institution to increase transparency and accountability in the decision-making process. The non-governmental bodies want WTO to include human rights issues in promoting trade liberalization across the globe (Keet, 2000). The developing countries are concerned with the complex WTO rules and guidelines. D’Anieri (2010) asserts that some developing countries have observed that the economic and social costs involved in implementing Tokyo and Uruguay Round rules in new economic industries will exceed the benefits derived from the new rules. Developing countries assert that trade in services, intellectual property protection and agreements of property rights are not a major economic activity in their economic structures. Implementing such agreements will sometimes exceed the costs of providing important services such as healthcare and poverty alleviation to the developing countries’ citizens (D’Anieri, 2010). The developed countries have complied only with the minimum import quota of the Agreement on Textiles and clothing over a 10-year period, despite developing countries hoping to benefit largely from this agreement. Many developed countries have removed the import quota on 49 percent of the textile import volumes on the last years of the 10-year duration thus leading to a major disappointment to developing countries (Barfield, 2001). The developing countries have not secured their share of growth in the international markets thus forcing the developing countries to organise themselves in to other alliances such as Least Developed Countries Group and African Group. Although the Doha agenda aims at phasing out the quotas of clothing exports from developing countries and reforming agricultural trade, most of the developed countries seem to have protected their local textile industries by ensuring low import duties of raw materials and higher duties for the finished textiles thus hurting textile and clothing exports from developing countries (WTO 2013). The developing countries have failed to adapt to the supply-side economics of WTO agreements partly due to insufficient infrastructure, political instability, lack of qualified human capital and agricultural-based economies (WTO 2013). On the other hand, developed countries have continued to apply technical barriers to exports from developing countries through imposing stringent international technical standards on imported industrial production goods and services. Developing countries also need more time for the costly implementation of some WTO agreements. For instance, Trade-related investment measures (TRIMs) and domestic-content requirement provisions have serious negative consequences of the economies of developing countries, thus it may be impossible to adhere to the time-frame of the implementation. On the other hand, developed countries have threatened developing countries with retaliatory measures for non-fulfillment of these agreements (WTO 2013). This means that some developing countries may be forced to pay higher prices for dispute settlements after their default. Further, developing countries have been saddened by the WTO provisions for zero duty on electronic commerce and information technology products (WTO 2013). In addition, developed countries have shown minimal commitment to the Aid for Trade that is geared at enabling the developing countries especially the least developed countries to deal with trading infrastructure obstacles and remove economic constrains to international trade. The developed countries have not channeled enough resources towards the Aid-for-Trade programme 2012-2013 that is geared at ensuring higher regional trade integration and development of the private sector. In this case, developing countries perceive non-committal of the developed countries towards differential treatment of the least developed countries and special treatment provisions of the developing countries (WTO 2013). Conclusion A significant majority of developing countries have complained on the unfairness of WTO agreements towards their main economic activities such as agriculture, textiles and clothing. In addition, allowing multinational corporations from the developed countries to supply essential commodities in the developing countries will hurt the domestic small industries thus limiting the prospects of industrialisation. North American countries subsidise their agricultural producers thus undermining the competitiveness of agricultural products from developing countries in their domestic markets. Reference list: Barfield, C.E. 2001. Free trade, sovereignty, democracy: the future of World Trade Organisation. Washington, D.C: The AEI Press. Blackhurst, R. 1998. The capacity of the WTO to fulfill its mandate: in the WTO as an international organisation. Chicago: University of Chicago Press. D’Anieri, P.J. 2010. International politics: power and purpose in global affairs. Belmont, CA: Wadsworth Cengage Learning. Keet, D. 2000. The challenges facing African countries regarding the WTO trade regime since the third ministerial meeting in Seattle. New York: Institute of Global dialogue. Kulovesi, K. 2011. The WTO dispute settlement system: challenges of the environment, legitimacy and fragmentation. New York: Routledge. Mitchell, A.D. 2005. Challenges and prospects for the WTO. London: Cameron May International Law and Policy. Schott, J.J. 2000. The WTO after Seattle. Washington, D.C: Institute of International Economics. World Trade Organisation (WTO). “Doha development agenda”. (Web). Retrieved on 29th April, 2013 from http://www.wto.org/english/tratop_e/dda_e/dda_e.htm. Read More