adminunder the African, Caribbean and Pacific Group, Group of 20 (G20), Group of thirty three (G33) and Group of ninety (G90).
The negotiations are centred on the following areas among others agriculture, non-agricultural market access (Nama), trade in services, trade facilitation, trade-related intellectual property rights (Trips), trade and environment, WTO rules, dispute settlement understanding development.
Negotiations on agriculture are aimed at substantially improving market access for products from developing countries, reducing and eventually phasing out all forms of export subsidies and trade-distorting domestic support.
The Agreement on Agriculture is based on three pillars, which cover areas of market access, domestic support and export competition.
Negotiations in Nama are aimed at reducing or as appropriate eliminate tariffs including the reduction or elimination of tariff peaks, tariff escalation as well as non-tariff barriers in particular on products of export interest for developing countries.
The negotiations are taking into account special and less than full reciprocity in reduction commitments for developing countries.
WTO members recognised that a formula approach is key to reducing tariffs, tariff peaks and tariff escalations.
The Hong Kong Ministerial Conference held in December 2005 adopted the Swiss formula as the basis for cutting tariffs. Discussions on Nama are mainly focused on specific flexibilities for some developing countries, sectorals, special and differential treatment for developing countries, non-reciprocal preferences and non-tariff barriers.
Negotiations on trade in services are aimed at progressively liberalising the services sectors. Developing countries are calling for improved market access for services sectors and modes of supply of export interest to them.
The mandate of negotiations on trade facilitation is to clarify and improve relevant aspects of Article V (dealing with freedom of transit of goods from other WTO Member States), Article VIII (dealing with trade-related fees and formalities) and Article X which deals with transparency in the regulation and administration of trade regulations.
Negotiations in the Trips Agreement are to set out the minimum standards concerning intellectual property in the form of patents, copyrights, geographical indications and trademarks.
At Doha, ministers stressed the importance of implementing and interpreting the Trips Agreement in a way that supports public health by promoting both access to existing medicines and the creation of new medicines.
Negotiations on this area are of critical importance to health systems in developing countries which include Zimbabwe.
Development is at the heart of the Doha Development Agenda and cuts across all the areas of negotiations.
The Doha package mandates the negotiations to consider all Special and Differential (S&D) Treatment provisions with a view to making them more precise, effective and operational.
S&D is critical for developing countries to enable them to implement their commitments and obligations including providing them with policy space, flexibility and balanced rules.
Second, it outlines recent developments in the global economic architecture. Finally, it explains the challenges and implications of the latest developments in the WTO for regional and global economic architectures as a whole.
Issues of dispute between developed and developing countries in the WTO
There have been several issues of dispute in the WTO Doha Round trade talks between developed and developing countries in the last decade. These issues concern trade facilitation, agriculture and the development of least developed countries.
In the context of agricultural issues, the agricultural and farm subsidies for farmers in the EU and the USA have been divisive issue.
More precisely, the EU has subsidised its peasants and farmers through the Common Agricultural Policy (31,6 percent of total EU budget in 2008).
Furthermore, the USA and the EU have not been eager to reduce their agricultural tariffs and eliminate their farm subsidies. However, for their part, developing and least developed countries do not want to liberalise their agricultural sector, industry and services.
In the WTO Doha Round talks held in 2006 in Geneva, WTO ministers agreed to hear the report of the Task Force on Aid for Trade which suggested the inclusion of the development dimension into the WTO Doha Development Agenda.
The idea was to incorporate trade and development into a package of trade liberalisation. This is known as “development assistance for trade”. Developed countries provide aid in building trade capacity for developing and least developed countries, enabling them to provide competitive goods and services. Developing and least developed countries may benefit from developed countries’ assistance, thereby reducing the negative effects of trade liberalisation for vulnerable and poor citizens.
In short, the developed and developing countries still have divergent positions on the above issues of dispute in WTO Doha Round negotiations.
Consequently, a deadlock in the WTO Doha Round negotiations between the WTO members remains up to the present time.
Developments in the global economic/trade architecture
Against this background, there have been significant developments in the global economic architecture, including the proliferation of bilateral and regional agreements and the emergence of plurilateral trade agreements. A plurilateral trade agreement is an agreement which has a small group of signatories.
There have been four plurilateral agreements negotiated in the Tokyo Round. They concern trade in civil air craft, government procurement, dairy products and meat.
However, in 1997 the agreements on dairy products and meat were terminated, while the others remain active amongst a small group of members in the WTO.
Following this trend, many countries and regional organisations have responded to the long-standing deadlock in the WTO Doha Round negotiations by creating a range of new mechanisms and instruments.
For example, the number of bilateral, regional and inter-regional economic arrangements has increased since countries and regional organisations have looked upon these arrangements as complementary modes of economic engagement.
The number of Regional Trade Arrangements (RTAs) has doubled in recent years. 75 RTAs have been notified to the WTO between 1958 and 1999. Furthermore, from 2000 to the present, there were 156 additional RTAs around the globe.
During this period, several WTO member states also began to employ a plurilateral approach to reach trade agreements between them within and/or outside the multilateral trading arrangement.
They persuaded other countries which were interested in developing a plurilateral trade agreement. The plurilateral Agreement on Government Procurement (GPA) is a recent example of the legally binding economic treaty in the WTO.
In 1994, the old GPA was negotiated by interested parties in the WTO. These countries and regional organisations renegotiated the old GPA and concluded the new GPA on December 15, 2011.
They formally adopted the Decision on the Outcomes of the Negotiations under Article XXIV: 7 of the GPA.
Challenges and implications for the regional and the global economic/trade architecture
As discussed above, the latest developments in the global economic architecture have affected countries’ and regional organisations’ views on the WTO. There are two possible challenges which may be faced by the WTO.
As mentioned above, the first challenge is that the primary objective of countries and regional organisations has gradually shifted from a multilateral trading arrangement to bilateral/regional or plurilateral arrangements.
There are several supportive arguments as to why these countries select bilateral, regional and plurilateral trade arrangements as their choices rather than the WTO multilateral trade arrangement, they are as follows:
- These arrangements are modes of economic engagement between countries within a region (regional trade arrangements) or from different parts of the world (plurilateral arrangements). The WTO member states and regional organisations have attempted to find alternative approaches in response to the absence of a multilateral trading arrangement.
- These countries can pursue a selective approach in their economic liberalisation through bilateral, regional and plurilateral economic arrangements. They want to protect several crucial economic sectors which may be politically sensitive and economically complex within their domestic economies.
They attempt to provide a balance between global economic circumstances (e.g international economic competition) and domestic constraints (e.g national economic protection).
- In the absence of a WTO multilateral trading system, the majority of WTO member states do not want to be left behind by their neighbours or external partners who have been actively involved in the establishment of bilateral, regional and plurilateral economic arrangements.
They want to ensure that their economic interests are accommodated in the above developments.
- Several WTO member states and interested parties have accelerated their economic co-operation on specific economic sectors (e.g the plurilateral trade agreement on the government procurement).
The above example demonstrates that the interested parties who have adopted the plurilateral Agreement on Government Procurement can exclusively move forward in their economic cooperation compared to other WTO member states.
The next challenge for the WTO is that development aid for developing and least developed countries is essential in order to connect these countries with global trade.
The WTO focuses on assisting these countries through capacity building for government officials with regard to the WTO regulations, establishing networks of ports and roads, and providing automated equipment for customs officers.
However, the latest economic crisis has created difficulties for developing and least developed countries because of their vulnerable economies and their lack of capacity for coping with trade liberalisation on a huge scale, including the implementation of the new WTO regulations.
Furthermore, the recent trend in the world economy is that developed and developing countries pursue trade protectionist measures in order to secure jobs and to avoid an influx of foreign goods and services. This situation challenges the main principles of the WTO which are free trade, non-discrimination and a more competitive market.
Given the above background, the developments in bilateral, regional and plurilateral trade arrangements have implications for the WTO multilateral trading system. These implications are: Firstly, bilateral, regional and plurilateral trade arrangements have fragmented the WTO member states in the development of a current global economic structure.
More specifically, there is a possibility that the complexity of the above economic arrangements may become the dispiriting trajectory in the conclusion of the WTO Doha Round negotiations.
Secondly, many interested parties (e.g business communities) within WTO member states have started to think that the WTO Doha development agenda has run out of business.
They have questioned the relevancy of the WTO’s role as a multilateral trading system since many countries have shown their fatigue and frustration in the WTO Doha round negotiations. Consequently, there is a possible setback for WTO member states and non-state actors regarding the future of the multilateral trading institutions in the WTO.
Taking into account these development rose above, the question one needs to bear in mind is that where do we stand as Zimbabwe? Should Zimbabwe continue with this wave of trade liberalisation in the regional blocs?
GIFT MUGANO is an author and expert in Trade Policies Research and Analysis (ACP-EU, Comesa and Sadc) and PhD candidate (Economics) and a Lecturer of Economics, at Nelson Mandela Metropolitan University. He is based in Port Elizabeth, South Africa. Email: [email protected], Mobile: +27 780 174 112.
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