Evaluating effects of world trade agreements on developing countries

In accordance with the WTO's commitment to supporting sustainable development, further negotiations are expected to give greater consideration to the impact of trade-related measures on developing countries, particularly the least developed countries, than was the case in the Uruguay Round negotiations. It is generally recognised that economic development, social development and environmental protection are interdependent and mutually reinforcing components of sustainable development, and that further trade liberalisation should be accompanied by whatever measures may be needed to enhance the contribution of trade to the wider sustainable development objective.

The European Union has proposed a number of policies and measures to ensure consistency between trade liberalisation and sustainable development in the developing and least developed countries: (1) All industrial countries should commit themselves to tariff free treatment on essentially all products from the least developed countries, to be implemented by 2003; (2) Assistance should be provided to developing countries in implementing WTO agreements; (3) In the new areas like investment and competitive measures, international rules and agreements should support the exercise of national sovereignty, discipline anti-competitive practices, and not diminish a member's capacity to manage broader economic and monetary policy; (4) Further support for capacity building should be provided, which goes beyond standard forms of technical assistance. This would include co-operation to address human resource and infrastructure constraints, particularly in least developed countries. This should be developed as part of a longer term programme of cooperation with other international organisations aimed at achieving better policy coherence with regard to assisting developing countries; and (5) Measures to simplify WTO procedures and structures to facilitate the greater participation of developing countries with limited resources.

The WTO Preamble commits the organisation to achieving trade liberalisation that is consistent with development objectives. A large majority of the WTO members consists of developing and least developed countries whose interests and needs should be accorded equal weight to those of the developed countries in the setting of WTO priorities, and in particular, in the design and adoption of mitigating and enhancing measures. This need is particularly evident in the case of the least developed countries whose existing level of sustainable development – as shown in the current level of their economic, social and environmental indicators – is already near to or, in some cases, below the minimum level needed for sustainable development.

The underlying issue of freer trade versus development surfaced as early as 1947 in Geneva discussions preparatory to the Havana Trade Conference. At that time, the underdeveloped countries argued that asymmetries in economic structure were incompatible with trading regimes that placed equal responsibilities on all countries. Today, these asymmetries have not disappeared; rather, they have been aggravated by the process of globalization. And the global financial crisis, which started in Thailand in July 1997, indicated that simultaneous trade and financial liberalization can have severe and unexpected consequences that have adversely affected only the developing countries.