The Ambiguous Name and the Possible Redefining of a Developing Country in the WTO

[ 作者]: 胡加祥      [ 发布时间]: 2009-10-27     [ 独著/合著]: 独著     [ 期刊号]: 跨国法评论第一辑

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                   The Ambiguous Name and the Possible

Redefining of a Developing Country in the WTO

                                                        

 

                                                      Jiaxiang Hu*

 

    中文摘要: 世贸组织在其成立宣言中明确指出,将广大的发展中国家纳入到世界贸易体系之中是其今后努力实现的目标之一。九年来,世贸组织一直致力于使广大的发展中国家融入于世贸组织这个国际大家庭。然而,1999年世贸组织部长级会议召开期间发生在西雅图街头的暴力事件,以及随后出现在世界许多地方一浪接一浪的反全球化示威游行,向人们传递着这样一个信息,当今的国际贸易制度还存在着一些不尽如人意的地方。目前,世界各国贫富悬殊,两极分化,形成这种局面的原因是多方面的,其中也包括国际贸易制度中的某些不合理因素。虽然乌拉圭回合签订的多边贸易协定中有许多照顾发展中国家的条款,但是,世贸组织对发展中国家界定不明成了有效实施这些条款的主要障碍。本文从比较关贸总协定成立初期与世贸组织在制定国际贸易规则时对发展中国家的不同规定入手,分析多边贸易协定中为发展中国家制定的特别条款的法理依据,列举了部分多边贸易协定中特别条款的实际执行情况。在参照了世界银行提供的数据以后,提出了世贸组织应该以一个国家的人均国民收入等一些客观的经济指标为依据来划分发达国家与发展中国家,并在此基础上重新调整援助发展中国家计划这样的设想。  

 

 

I. Introduction

Despite the short history, the fact that most of the existing States(Russia is one of the few exceptions in terms of its influence in the world) have become its Members has already made the World Trade Organisation one of the most universal international organizations. The participants of the GATT, the predecessor of WTO, consisted of “less-developed contracting parties” and “developed contracting parties”, which have been transformed into “developing country Members” and “developed country Members” under GATT 1994. But the criteria to define whether a WTO Member should be a developing country Member or a developed country Member were not discussed in the Uruguay Round of Multilateral Trade Negotiations. Under the current practice, each country or separate customs territory can select whether it will be taken as a “developing country” or “developed country” when it enters the WTO. This self-selection mechanism has blurred the division of “developing country Members” and “developed country Members” in theory, and made the aid programmes to the developing country Members being implemented more difficult in practice. This article aims to analyse the evolutionary status of developing countries from the GATT to the WTO, the rationality of special and preferential treatment to the developing country Members, then put forward some criteria of how to define a developing country Member in the WTO.

         

II. An evolutionary status of developing countries from the GATT to the WTO      

      The future of developing countries is one of the most pressing issues of international economy in our era, and the resolution of this issue will profoundly affect the lives of the people from both developing countries and developed countries. The intense desire of the majority of the human race to escape its debilitating poverty and join the developed world is a determining feature of international politics. Yet in the final decades of the twentieth century, bitter controversy still exists regarding the causes of and possible solutions to this problem.1

      The causes of this tragic situation for most developing countries are various, both historically and politically. The predatory exploring of their natural resources by the powerful countries in history, the mismanagement of domestic affairs by their own leaders after independence and, the lack of external financial aid and internal technological innovation are the most substantial ones. Aware of this huge gap between the developed countries and the developing countries, and its potential effect upon international politics, some international institutions began to reflect on the way to narrow this gap, and the GATT is just one of them.

      GATT policy towards developing countries owed nothing to the past. There was no Golden Age that pointed the way. Before the World War II, the organising principle for rich-poor relationships had been colonialism. Most of the countries in Africa and Asia were colonies de jure. A goodly portion of those in Central and South America were colonies de facto.2 This colonial past was not what the Bretton Woods system was looking for.3 The GATT started its function to discipline its contracting parties in international trade on a most-favoured-nation and non-discrimination basis.4 Despite the fact that, among the founding States of the GATT, almost half of them could be deemed as “less-developed countries”,5 the first draft of the Charter of the proposed International Trade Organisation(ITO), which was put forward by the United States, provided for a set of rules for all the potential members.6 There were no specific provisions on economic development, nor were there any special rules or exceptions for developing countries.7

      After the failure of the ITO, the GATT took the role to regulate international trade in the global community. Although the GATT was formed on a contractual basis, the GATT rules were no less efficient than those made by many international institutions. The power to govern in the context of an international institution usually brings with it, according to most twentieth-century political norms, a duty to take care of the disadvantaged members of the community to be governed. The GATT had no money to give, only rules. Thus, rule assistance was naturally the core help that most developing countries could seek for in the GATT history.

      The demands for the special and preferential rules during the first years’ operation of the GATT were only limited to some dependent overseas territories of the former colonist powers. A Working Party was set up, by a decision of the CONTRACTING PARTIES on 17 January 1955, to examine the proposal of the United Kingdom relating to the special problems of its dependent overseas territories. The decision to set up the Working Party originated from a discussion, in a Plenary Session, of a proposal by the United Kingdom government to introduce an appropriate article into the General Agreement.8 Since it was considered that the preferential arrangement for the dependent overseas territories contained in this proposal would constitute in effect an amendment to Article I of the General Agreement and would therefore require unanimous acceptance by the CONTRACTING PARTIES, the United Kingdom was advised to change its proposal to a draft waiver, which it accepted.9 

      The 1960s saw some dramatic changes in the GATT, not only in terms of its size, but also in terms of its contents.10 The first significant step made during this period is the Declaration on Promotion of the Trade of Less-Developed Countries, which was adopted by the CONTRACTING PARTIES at their nineteenth session on 7 December 1961. Recognising that there was need for a rapid and sustained expansion in the export earnings of the less-developed countries if their development was to proceed at a satisfactory pace, the CONTRACTING PARTIES demanded that the governments of the contracting parties should give immediate and special attention to the less-developed countries on the following issues: (a)quantitative restrictions; (b)tariff reductions; (c)revenue duties; (d)state-trading; (e)preferential treatment within the customs unions or free-trade areas; (f)the use of subsidies; and (g)the disposal of commodity surpluses.11

      The 1961 Ministerial Declaration set some general principles which demanded the developed countries to give their special and preferential attention to the less-developed countries. Shortly after that, the CONTRACTING PARTIES adopted an amendment to the General Agreement, which became Part IV of GATT 1947.12 Part IV, with the general title Trade and Development, consists of three articles, i.e. Article XXXVI(Principles and Objectives), Article XXXVII(Commitments), and Article XXXVIII(Joint Action). As professor Robert E. Hudec pointed out: “the importance of Part IV is not easy to describe. From a technical point of view, Part IV added nothing to the existing legal relationship between developed and developing countries. Part IV was merely a slightly more impressive statement of the urgent but non-binding texts that the Action Programme had been issuing over the proceeding five years, giving them a permanent form in the text of the General Agreement. The language of Part IV was a bit more legalistic, giving the illusion of greater commitment. Indeed, the title of the new Article XXXVII, ‘Commitments’, actually said so. In fact, however, the text of Part IV contained no definable legal obligations.”13

      Despite its non-binding nature, Part IV did lay the rationale and morale for the developing countries in the GATT to ask for special and preferential treatment, and their constant demanding eventually resulted in the Generalised Special Preferences(GSP) schemes which were adopted in the GATT in 1971.14 In the Ministerial Decision of 23 June 1971, the CONTRACTING PARTIES decided that GATT Article I(General Most-Favoured-Nation Treatment) would be waived for a period of ten years to the extent necessary to permit developed contracting parties to accord preferential tariff treatment to products originating in developing countries and territories without according such treatment to like products of other contracting parties.15 The Ministerial Decision of 26 November 1971 permitted developing countries to exchange tariff preferences among themselves.16 These two ministerial decisions laid the landmark that the GATT’s new relationship with developing countries had been defined.

      Shortly after the GSP was established, the United Nations adopted two major resolutions in 1974, one calling for the establishment of a new international economic order and the other declaring a Charter of Economic Rights and Duties of States. Developing countries regarded these UN resolutions as their victories in the contending with developed countries for more political and economic rights. Using these resolutions as their moral base, they pressed developed countries for more special preferences, which culminated in a series of legal texts known as the “Framework Agreement”.17 The Framework texts included a decision of the CONTRACTING PARTIES, called the Enabling Clause, which was a de facto amendment of the MFN obligation in GATT Article I. The Enabling Clause gave permanent legal authorisation for: (a)the Generalised System of Preferences; (b)preferences in trade between developing countries; (c)more favourable treatment for developing countries in other GATT rules dealing with non-tariff trade barriers; and (d)specially favourable treatment for the least-developed countries.18

      Facing the constant demanding from developing countries, many developed countries changed their strategies. On the one hand, they continued to use the GSP policy selectively, either to bargain for commercial advantage in return or to punish those developing countries whose behaviour was somewhat found wanting. On the other hand, they used the Kennedy Round(1962-67) and Tokyo Round(1973-79) negotiations to codify the international trading rules in some important areas like subsidies and anti-dumping.19 Different from the WTO practice of “buying one, buying all”, which requires the participants to accept all WTO agreements(except the plurilateral agreements) for their membership, the participation for the GATT contracting parties in these codes was optional. Professor Hudec criticised, in this respect, that the code approach had very important implications for the legal relations between developed and developing countries. It proposed a new legal community, limited to those members who were willing to subscribe to the rules. If developing countries wished to participate in the new community, they would have to accept equal obligations. If, on the other hand, they continued to insist on a one-sided relationship, they would find themselves excluded from the really serious work and left with only a GATT membership increasingly empty of any substance.20

      From the non-discrimination basis of GATT 1947 to the permanent status of the GSP, developing countries seemed to have gained much in legal terms in the GATT after almost four decades of struggle. They were able to export some of their products to the developed countries at low tariffs or with no tariffs without giving the same treatment to them. They were supposed to be given more help from the developed world both in legal terms and financial terms. However, the current situation is that, except some “industrialised” countries, most developing countries did not use these specialised preferences efficiently and found the gap with developed countries even bigger when they were requested to co-operate with developed countries in making those all-binding trading rules during the Uruguay Round negotiations. Under these circumstances, it sounds only natural when these developing countries raised such a question: “are the world trade rules fair to us?”

 

III. Are the world trade rules fair to developing countries?

      The issue of developing countries had caught the attention of GATT contracting parties even before the Uruguay Round negotiations. Early in the 1982 GATT Ministerial Declaration, the CONTRACTING PARTIES acknowledged that “many countries, and particularly developing countries, now face critical difficulties created by the combination of uncertain and limited access to export markets, declining external demand, a sharp fall in commodity prices and the high cost of borrowing. The import capacity of developing countries, which is essential to their economic growth and development, is being impaired and is no longer serving as a dynamic factor sustaining the exports of the developed world. Acute problems of debt servicing threaten the stability of the financial system.”21 In light of this situation, the CONTRACTING PARTIES decided to: (a)instruct the Committee on Trade and Development22 to examine how the developed contracting parties had responded to the requirements of GATT Part IV; (b)urge GATT contracting parties to implement more effectively Part IV and the Enabling Clause; (c)urge GATT contracting parties to work towards further improvement of GSP or MFN treatment for products of particular export interest to the least-developed countries, and the elimination or reduction of non-tariff measures affecting such products; (d)strengthen the technical co-operation programme of the GATT; (e)instruct the Committee on Trade and Development to carry out an examination of the prospects for increasing trade between developed and developing countries and the possibilities in the GATT for facilitating this objective.

      Pushed by the 1982 Ministerial Declaration, the CONTRACTING PARTIES began to amend the trade rules made during the Tokyo Round negotiations. The task was so huge that another round of multilateral trade negotiations seemed necessary. In 1986, the Punta del Este Declaration marked the start of the Uruguay Round of multilateral trade negotiations.23 The declaration reaffirmed the principle of differential and more favourable treatment towards developing countries, urged developed countries to further remove tariff and non-tariff barriers. Meanwhile the declaration demanded GATT contracting parties to give more attention to the particular situations and problems of the least-developed countries and to the need to encourage positive measures to facilitate expansion of their trading opportunities.24

      Different from the “codes” made during the Tokyo Round negotiations, the multilateral trade agreements made during the Uruguay Round negotiations are implemented as a “single package”, which means that the precondition to be a WTO Member is to “buy in” all the results of the negotiations with only limited exceptions. Here, one fact deserving our notice is that a large number of former colonies became GATT contracting parties without experiencing the accession negotiations,25 they did not have the opportunities, neither were they required, to familiarise themselves with the GATT rules. During the Tokyo Round negotiations, except some “industrialised” developing countries, most developing countries kept themselves away from the codifying process, devoting their efforts to asking for more special and preferential treatment.26 In the Uruguay Round negotiations, developing countries, half-exhorted and half-threatened by the developed countries, agreed to integrate themselves into the global community. But even then, few of them could predict what impact of these trade rules would have upon them. When the WTO rules began to bind all its Members, developing countries came to realise that they already had no choice but to accept.

      It is important, in this context, to assess how the WTO agreements have been implemented in sectors of international trade covered by the WTO where developing countries have a significant stake. During the 1996 and 1998 Ministerial Conferences of the WTO,27 several developing countries called for such an assessment to be made, so that the benefits expected to flow from the Uruguay Round negotiations to developing countries could be properly evaluated, to see whether the attempt to enable these countries to effectively participate in, and benefit from the WTO system had succeeded.28 The WTO itself had noted in 1996 that “some Members have expressed dissatisfaction with certain aspects of the implementation of the Uruguay Round agreemnts”.29 It was pointed out that trade was “an instrument of development, to raise standards of living, expand production, keeping in view, particularly, the needs of developing countries and least-developed countries”.30 However, despite calls for such an assessment to be made prior to the launching of any further round of trade liberalisation negotiations, the WTO was prevented by developed countries from doing so in a coherent manner.31

      The impact of the WTO rules upon developing countries is uneven in different trade sectors. A panoramic assessment of these impacts seems difficult, if not impossible, in light of the multitude of the WTO rules and the comparatively short period of implementation. A more important factor accounting for this difficulty is the huge difference among developing countries themselves in terms of their development level. In order to be more specific and convincing, the discussion of this part is only limited to those areas of greater interest to the developing countries, such as textiles and clothing, agriculture, trade-related intellectual property rights, and trade in services.

      The textile and clothing industry has always occupied a sensitive position in national economies. It was, after all, the bedrock of the industrial revolution in many developed countries like Britain and Japan. While extremely labour-intensive, textile and clothing production is not particularly capital-intensive, and is often regarded as the first stepping-stone out of an agrarian society. In recent times, when many developing countries attempted to produce textiles and clothing products for the same over-supplied world market, they found that this particular sector had already been kept outside the purview of the GATT system.32 Liberalising this trade sector had been the demand of many developing countries in the GATT for almost four decades. The outcome of the negotiations on this subject during the Uruguay Round is the Agreement on Textiles and Clothing(ATC), which provides a 10-year transition period (1995-2004) for phasing out the quantitative restrictions(quotas) imposed arbitrarily under the Multi-Fibre Arrangement(MFA) by the United States, the European Union, Canada and Norway on imports of textiles and clothing products into their markets.33 Although the phase-out mechanism gives developing countries some assurance that this particular sector will be completely integrated into GATT 1994 from 1 January 2005, it is still disappointing to observe that developed countries, in the initial stages, opened their markets only to the products which were not commercially significant.34 As regards those products which have already been integrated into GATT 1994, developing countries will still possibly meet the barriers raised by developed countries by invoking Article XIX of GATT 1994(with the title Emergency Action on Imports of Particular Products), Anti-Dumping Agreement, and Agreement on Safeguards despite the fact that the use of these measures may become more politically costly. Therefore, the disadvantageous status of developing countries in the textiles and clothing sector has not been changed fundamentally merely because of the implementation of the ATC.   

      The Uruguay Round negotiations resulted in the Agreement on Agriculture(AOA), which is to be implemented over a six-year period beginning from 1995(extended to a 10-year period for developing countries).35 In the AOA, five broad areas were negotiated into the text of the agreement to address the concerns of developing countries. These negotiated areas are market access, food security(with specific reference to net food importing countries), domestic support commitment, export subsidy commitment, notification requirements and technical assistance. From the perspective of developing countries, the conversion of those original restraint measures into ordinary customs duties should give them a more predictable market access. However, as in the sector of textiles and clothing, the implementation of these commitments has not been satisfactory.36 According to Article 20 of the AOA,37 the WTO started the negotiations to review the implementation of the AOA on 27 March 2001. Altogether 125 WTO Members(counting the EU as 16) out of a total of 140 submitted 44 negotiating proposals and three technical submissions in the first phase of the negotiations.38 This reflected the general concerns of the WTO Members, especially the developing country Members, to the ineffectuality of the AOA, and their expectations to reform the present agreement. On 26 April 2001, the WTO Secretariat circulated a detailed study on the post-Uruguay Round market access conditions in three areas: industrial tariffs, agriculture and service,39 which acknowledged: “As required by the Uruguay Round Agreement on Agriculture, all agricultural tariffs are bound, but in many cases these bindings are at very high rates and offer limited market access opportunities”, while “the products of greatest export interest to the least-developed countries---many agricultural products together with clothing and other labour-intensive manufactures---are among the most heavily protected in the markets of their current and potential trading partners”. At the outset of the new round of agriculture negotiations, the impenetrability of the language of the initial agreement, and the lack of substantial reforms of agricultural policies in some developed country Members are serious disadvantages. Without political consensus on such issues as the most desirable size of farming units, the role of food security and environment protection, the influence of multinational agribusiness, and the principal intended outcomes of any further reform, the next agreement on agriculture is likely to remain as obscure in its general aims and effects as the first one.   

      In the years leading up to the Uruguay Round negotiations, the developed countries, those capable of making huge investment in industrial innovations, had constantly urged the newly industrialised countries to cease their practice of mass copying of products that had cost dearly to develop. The reluctance of those countries to continue providing market access to the newly industrialised countries in the event of a continued failure to honour intellectual property rights is understandable. The traditional, uni-focus intellectual property conventions could not possibly persuade the countries of the developing world to alter their domestic regimes, since these conventions had no broader economic leverage over the offending parties.40 Along with the new dispute settlement mechanism, and the “buying in, buying all” acceptance requirement for prospective WTO Members, for the first time, there is a chance that even the most recalcitrant intellectual property violators could be made to provide legal protection for non-national rights holders. But from the point of view of the developing world, paying the full cost of industrial innovation to wealthy corporations is unthinkable, if only because under the existing situation, copied products could be delivered on a mass scale to populations generally unable to pay the price of intellectual property rights. The standards of protection, set out during the Uruguay Round negotiations, “are at a level comparable to those in the major industrial countries today”.41 The benefits guaranteed by the transitional provisions of the TRIPS Agreement42 for developing countries have already been offset by the high standards of protection which have become the WTO norm. Many developing countries, by distancing themselves from the debate in the WTO on these standards of protection, have unwittingly endorsed this approach. This will have major repercussions for them after the end of the transition period, when their intellectual property rights protection regimes will be required to meet the same criteria as those of developed countries which already have a mature market and a complete intellectual property rights protection regime. The consequence of this over-emphasis on the protection of intellectual property rights has diverted peoples’ attention away from the spirit of both the preamble and substantive provisions of the TRIPS Agreement, which deals with the issues of relevance to the developing countries.43 During the first five years of operation of the WTO, attempts by developing countries to seek access to technology on realistic terms have been substantively obstructed by the stance of developed countries,44 creating a new form of protectionism to the international economic order. Two examples can be used to illustrate the favour to the developed countries and the disfavour to the developing and least-developed countries in the TRIPS Agreement. One is Article 23. This article is used to regulate the protection for geographical indications for wines and spirits, of which the developed countries have much advantage, while there are no similar provisions to protect those manufactures of relevance to the developing countries. The other example is that although Article 65(Transitional Arrangements) provides a five-year transition period for developing countries to apply the TRIPS Agreement, pharmaceutical and agricultural chemical products, however, are excluded from this transition period according to Article 69(8). This has already brought much impact on the development of many developing countries. This is also the main reason for the dispute raised by the United States against India’s patent protection regime for pharmaceuticals and agricultural chemical products.45    

      The integration of services into the international trade sphere is another negative impact upon the economy of most developing countries. The General Agreement on Trade in Services (GATS) is designated to regulate the supply of a service: (a)from the territory of one Member into the territory of any other Member; (b)in the territory of one Member to the service consumer of any other Member; (c)by a service supplier of one Member, through commercial presence in the territory of any other Member; (d)by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member(Article I:2 of the GATS). In its contents, the GATS almost covers all modes of internationally traded services which include business services(e.g. professional services, computer and related services, research and development services, real estate services, rental/leasing services without operators, advertising and other miscellaneous services); communication services(e.g. courier services, postal services, telecommunication services, audio-visual services); construction and related engineering services, distribution services; educational services; environmental services; financial services(e.g. insurance services, banking and other financial services); health and related social services; tourism and travel-related services; recreational, cultural and sporting services(e.g. entertainment services, news agency services, libraries, archives, museums and other cultural activities, sporting and other recreational services); and transport services(e.g. maritime transport services, internal waterways services, air transport services, space transport services, rail transport services, road transport services, pipeline transport services, and services auxiliary to all modes of transport).46 The GATS is remarkable for the fact that it marks the first step in making it difficult(perhaps impossible) for the WTO Members to refuse rights of participation in their domestic economies, in almost any capacity, to non-nationals. Along with the GATS, those separate protocols on such heavily regulated sub-sectors as financial services, telecoms and transport indicate that for the first time in economic history, not only the nationality of goods, but also the nationality of economic structures, may be about to crumble. Although the GATS guaranteed a “progressive liberalisation” of markets to the developing countries, the backwardness of basic facilities and low level of education have made it difficult for most developing countries to compete with the developed countries in most service areas in a feasible future. Even in those labour-intensive areas like construction and tourism, in which some developing countries do have competitive advantages, the reality is that those developing countries still cannot earn as much as expected either because of the barriers raised by developed countries under the grounds of licensing or certification of the service suppliers, or because of the low efficiency of those developing countries.47

      In the light of the huge gap existing between developed and developing countries, it is necessary to make the rule-based international economic system more responsive to the challenges which many developing countries are encountering. This becomes more significant with regard to the operation of their economic and legal infrastructures which have to meet the twin demands of economic liberalisation and socio-economic development. Although the special and preferential treatment for the developing countries embedded in the WTO rules has received wide recognition from WTO Members, the rationale behind these rules has rarely been studied in detail. A careful study of this issue will help us to understand the current world trade rules in a more co-ordinated way.

IV. The rationale for the special and preferential rules

      International trade exerts a critical influence on the economic development of any country, be it a developed country, a transitional economy country, a developing country, or a least-developed country. Yet, the role of international trade in economic development is far from settled and uncontroversial. While international trade is widely viewed as an “engine of growth”, developing countries disagree profoundly over the role of international trade in the process of their economic development. The focal point of the debate is whether developing countries, as their economy is lagged far behind those of developed countries, should be bound by the same trade rules as those applicable to the developed countries or should be treated differently during their integration into the world economy. This was also a major issue of the Uruguay Round of multilateral trade negotiations. The justifications for those special and differential rules resulting from the Uruguay Round negotiations are numerous. From an economic perspective, any universal legal system must address the particular concerns of developing countries. The actual relative economic positions of developed and developing countries must be acknowledged and somehow reconciled. This acknowledgement and reconciliation is also the political basis for the development of world economy.               

      The traditional neo-classical theory of international trade regards trade as a means of promoting(both productive and allocative) efficiency, equity, stability and growth on a world-wide scale. An interdependent world economy based on free trade, specialisation, and an international division of labour facilitates domestic development. It has long been understood that foreign trade increases the amount and variety of the objects on which revenue may be expended, and affords, by the abundance and cheapness of commodities, incentives to saving, and to the accumulation of capital. Flows of goods, capital, and technology within and across national borders should work to the economic benefits of all countries, exploiting their comparative advantages. Adam Smith, in The Wealth of Nations, argued that the case for gains from the specialisation in domestic economic activities applied equally to specialisation in international trade: “What is prudence in the conduct of every private family can scarcely be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we can make, better buy it from them with some part of the produce of our industry.”48 While free trade may be theoretically attractive, the assumptions upon which this theory is based do not necessarily apply to the contemporary realties of the global economy and the majority of developing countries. In the real world, there exist imperfect competition, unequal trade, and differential human resource and technological growth. Accordingly, the question becomes one of whether international trade is to be a force of equality or inequality in the world economic growth.     

      In contrast to the traditional view of international trade, some modern scholars argue that a liberal capitalist world economy tends to preserve or actually increase inequalities between developed and developing countries.49 Whereas trade was indeed an engine of growth in the nineteenth century, it cannot continue to perform this role properly today because of the combined effects of free trade and the economic, sociological, and demographic conditions, which are prevalent among many developing countries. These conditions include the combination of overpopulation and subsistence agriculture, rising expectations causing a low propensity to save, excessive dependence on unstable commodity exports, and the consequential impact of long-time feudal elite leadership.50 These misfortunes trap those developing countries in a self-perpetuating state of underdevelopment equilibrium from which they cannot escape without outside assistance.51

      Although the globalists argue that flows of trade, investment, and technology diffuse economic development and reduce international inequalities, the real situation seems going in an opposite way in many developing countries. International market imperfections increase inequalities among developed and developing countries as the developed countries tend to benefit disproportionately from international trade.52 While it may be true that the “developing countries” of the nineteenth century, through international trade, did enjoy the so-called advantages of backwardness that enabled them to learn from the experience of the more advanced economies, many of the twenty-first-century developing countries are, however, said to face almost insurmountable obstacles before they develop their national economy: the widening technological gap, their long experiences of marginalisation in the world economy, the lack of social discipline, conservative social structures, inherited population problems, low education level, harassment of indebtedness, and harsh climatic and geographic conditions. These developing countries are thus trapped in a vicious cycle of poverty from which escape is nearly impossible, and free trade may only make their situations become worse. As Ragnar Nurkse put it: “a country is poor because it is poor” whereas “growth breeds growth”.53

      In order to expose the causes of these social injustices, some scholars point out that the world economy is composed of a core or centre of highly developed countries and a large underdeveloped periphery.54 Technical progress that leads to increasing productivity and economic development is the driving force in this system, but technical advance has different consequences for the economic centre and the economic periphery due to their different economic structures and the international division of labour inherited from the past.55 The heart of their argument is that the nature of technical advance, cyclical price movements, and differences in demand for manufactured goods and primary products cause a secular deterioration for developing countries as they can only rely on their exportation of primary products for the importation of manufactured goods from developed countries. In the economic centre, technical progress is said to arise from the spontaneous operations of the economy and to diffuse throughout the whole economy so that employment displaced by increasing efficiency can be absorbed by investment in other expanding industrial sectors. Without large-scale of unemployment and with the pressures of powerful trade unions, there is an increase in real wages. Moreover, monopolistic corporations can maintain the price level despite the increasing of productivity and the decreasing cost of production. In the non-industrial periphery, however, technical progress is introduced from the outside and is restricted primarily to the production of commodities and raw materials that are exported to the economic centre. Inflexible social structures and immobile factors of production make adaptation to price changes impossible. Increased productivity in the primary sector, a shortage of capital due to a low rate savings, and an elite consumption pattern imitative of advanced countries all combine to increase the level of national unemployment. With surplus labour in primary occupations and the absence of strong trade unions, the real wage in the periphery economy then declines, transferring the fruits of technical advance in the periphery economy to the economic centre via depressed prices for commodity exports.56

      Based on this analysis, we can find that the terms of trade between developed countries(the core economy) and most developing countries(the periphery economy) tend to deteriorate constantly to the advantage of the former and to the disadvantage of the latter. As a consequence of this imbalance of the global economic structures, developing countries are unable to reverse this tragic situation, if they do not change the pattern of exportation. They will export ever more primary commodities in order to import the manufactured goods they need. Under these circumstances, even though the developing countries might gain absolutely from international trade, they would lose in relative terms.57 As Arthur Lewis has cogently argued, the fact that the terms of trade for many developing countries are unfavourable is that they are unable to develop their agriculture. The combination of rapid population growth(which creates an unlimited supply of labour) and low productivity in food grains causes export prices and real wages in many developing countries to lag behind those of developed countries.58 Although it is true that there are some developed countries, like Australia, New Zealand, Denmark and even the United States, which are also major exporters of agricultural products, the point here is that many developing countries, unlike the early modern Europe, are unable to improve their industrial productivity based on a prior rapid development of agriculture.59 Low efficiency in agricultural sector and lack of innovations in industrial sector will place many developing countries in an even weaker position in the current integration of world economy.

      The question of whether developing countries are better off to be outward-looking and to promote more exports or to be inward-looking and to substitute domestic production for imports cannot be answered in the abstract. It depends on the domestic infrastructure, current education level, political democracy and most importantly, the willingness to change their economic structures. In either scenario, international trading rules(either adherence thereto or exemptions therefrom) have a substantive economic impact. In some cases, international trade may help the exporting countries to accumulate more capital and raise their competitive capacity. While in others, international trade may draw the exporting countries into a vicious cycle that the more they export, the poorer they become as the earnings of their exports are not distributed to the people in general, but spent by these elite groups, and their national economy becomes less competitive for lack of input. Therefore, neither policy can realistically be pursued without acknowledging and somehow remedying the disparities between developed and developing countries. As an optimal choice at the moment, special and differential treatment for developing countries can be utilised in making the trade rules to promote their exports and/or stimulate domestic production of manufactured goods.

      The rationale behind the special and preferential treatment accorded to developing countries is based on the recognition that “there is a wide gap between standards of living in less-developed countries and in other countries”.60 If the gap cannot be narrowed, or even becomes wider, it will become more difficult for the trading partners to negotiate the trade rules. This is as indicated by the classic Prisoner’s Dilemma theory, in which both sides inhibit trade liberalisation and everyone is worse off. Therefore, to bring the developing countries into the world trade community and to raise their living standards by means of international trade are the indispensable objectives for any trade rule makers. On the other hand, while we are focusing our attention on narrowing the gap of living standards between developed and developing countries, we cannot neglect another important fact that the gap of living standards among developing countries themselves is widening. The traditional division of developing countries and developed countries is being blurred as some developing countries have already become quite “developed” compared with others. Being aware of this, many developing countries tend to ask: “are these special and preferential rules universal or differential?”

 

V. Special and preferential rules: universal or differential?

      The Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations(hereinafter as Final Act) contains many provisions which accord special and differential treatment to developing and least-developed country Members.61 These provisions are found chiefly in the WTO Agreement(Preamble, Article XI), in Part IV of GATT 1947(which has been incorporated into GATT 1994), in selected provisions of the multilateral agreements annexed to the WTO Agreement,62 in the ministerial Decision on Measures in Favour of Least-developed Countries, and in the ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-developed and Net Food-Importing Developing Countries. The WTO Members recognise the special development, financial and trade needs of developing and least-developed countries in the implementation of the obligations attendant their accessions to the WTO. These special needs arise on both a national and international level. Thus, where the WTO Agreement and its annexed agreements impose obligations on the Member governments, either to take affirmative action or abstain from a certain conduct, developing and least-developed country Members may be given more time to fulfill their obligations. Selected exemptions from obligations may also be available to developing and least-developed country Members. Furthermore, to address the special needs of developing countries, particularly the least-developed countries, some of the WTO agreements require developed country Members to provide for developing country Members the necessary technical assistance.

      In situations where these terms are defined, a country’s international status as “developed”, “developing”, or “least-developed” is determined primarily with reference to its Gross National Income(GNI) per capita. M. Bertrand used GNI per capita 8000 US dollars per annum as the dividing line for developing and developed countries.63 However, while the WTO Agreement, its annexed agreements and the related documents make reference to “developing country Members”, nowhere do they generally define the term “developing country”, nor do they specify any numerical criteria. Hence, in the case of accession to the WTO(as it was in the GATT), designation of a country as “developing” occurs somewhat on an ad hoc basis, mostly through self-selection.64 In the light of this situation, developing countries in the WTO can possibly be referred either to countries like Singapore, Korea, or to countries like South Africa, Kenya. In contrast, as for the term “least-developed”, the WTO Agreement provides a benchmark---the Agreement refers to “least-developed” countries as those recognised as such by the United Nations.65          

      According to Alice Alexandra Kipel, the vagueness regarding what constitutes a developing country can be attributed to two factors: (a)lack of consensus as to a definitive standard, and (b)disagreement over the goals sought to be achieved through special treatment for developing countries.66 The lack of consensus on the definition by over 100 countries, which are at various levels of social and economic development and, therefore, have differing perspectives on this issue, is understandable and merits no further analysis.67 The interplay between a flexible definition and the purposes to be served by special treatment for developing countries is more complex. Indeed, the purposes and the concerns addressed are different depending on whether the point of view is that of a developed country or a developing country.

      Kipel in her article seems to favour a vague definition for developing countries: “a subjective definition likely inures to the benefit of both developed countries and developing countries. If a country is willing to describe itself as developing country and articulates a need for special assistance, there presumably is reason to provide special treatment to enable that country to assume the obligations of the Final Act, thereby helping to ensure that this developing country offers market access and is not a disruptive presence in the international trade arena. Moreover, without a bright-line test, putative developing countries can proffer a variety of justifications in support of their need for special treatment. A rigid definition of the term ‘developing country’, on the other hand, would preclude such a creative approach, thus preventing countries from obtaining the special treatment and assistance which they believe necessary. As such, a country might effectively be blocked from meaningful participation in the world trading system which the Final Act seeks to regulate”.68

      There might be some reasoning in Kipel’s argument, especially for a young international institution like the WTO. Since the WTO Members have resolved to “develop an integrated, more viable and durable multilateral trading system encompassing the General Agreement on Tariffs and Trade, the results of past trade liberalisation efforts, and all of the results of the Uruguay Round of multilateral trade negotiations”,69 a practical way to fulfill this purpose is to attract the WTO Members in a flexible manner. However, the differences among developing countries themselves, in reality, are so huge that a set of vague standards for their definition could only make the special and preferential treatment become impracticable and contradictory. According to the statistics distributed by the World Bank, the world average level of Gross National Income(GNI) per capita in 1999 is 5,020 US dollars, with the average level of high-income countries at 26,440 US dollars, middle-income(including upper-middle-income and lower-middle-income) countries at 1,240 US dollars, and low-income countries only at 420 US dollars. These data profiles also reflect a similar contrast in the areas of technology, infrastructure, trade and finance.70 In the World Bank documents, those low-income and middle-income economies are sometimes referred to as developing economies, but it is not intended to imply that all economies in this group are experiencing similar development or that other economies have reached a preferred or final stage of development. The reference used within the World Bank is just for the sake of convenience. The WTO has no similar criteria to classify its Members. Consequently, some of the WTO Members which label themselves as developing countries are grouped either as high-income countries or upper-middle-income countries by the World Bank.71 Under such a circumstance, if the WTO does wish, as the WTO Agreement proclaims, to raise the living standard of developing countries by means of international trade under the auspices of those special treatment provisions, the definition of developing countries should be clearly-cut, otherwise the treatment accorded to developing countries is not special but universal.

      Furthermore, just as Kipel herself acknowledged, a subjective definition can lead to friction between those countries seeking preferential treatment and the developed countries with whom they have substantial trading relations. For example, much debate and publicity surrounded the application of China for its WTO membership. Among the issues of contention between China and the United States was the question of whether China should enter the WTO as a developing country(the result desired by China) or as a developed country, thereby assuming the full obligations of a WTO Member(the result sought by the United States).72 From 1986, first for the resumption of the contracting party status of the GATT, then for the entry of the WTO,73 China negotiated with all the GATT contracting parties/WTO Members which had significant trade relations with China. It is only about two years ago that the final obstacle in the way of China’s entry into the WTO was removed.74

      Here, one more question which merits noting is that the status of a developing country should not be stationary. Some countries, when they entered the GATT/WTO, were only at the initial stage of their industrialisation process and did need the external help for their fledgling industries. Nevertheless, after these years of development, they are still labelled as “developing countries” even if they have achieved much success and become quite “developed”. In order to maximise the benefits of the special and preferential treatment, and to help those developing countries which still lag far behind others, the WTO needs to specify the criteria for a country which wishes to be accorded the special and preferential treatment. At the moment, to regroup the WTO Members and to redefine a developing country are the practicable means.     

 

VI. Contradictions of the definition and the rationale of regrouping

      We have heard a lot about helping developing and least-developed countries to raise their living standard and to fully integrate into the world economy, but few of us have made any substantive research upon the issue of how we can help them in an effective way. It has been around nine years since the World Trade Organisation came into existence. The real situation is that we are still living in a world which is unsatisfactory---even unacceptable---in many respects. In the words of the former Director-General of the WTO, Renato Ruggiero, “It is a world where…over a quarter of the developing world’s people still live in poverty. About a fifth---1.3 billion---live on incomes of less than $1 a day. And over fifty percent of the global population has less than five percent of global income. These statistics reinforce what our eyes and ears already tell us---that though we are part of an ever more integrated global economy, the distance between the rich and the poor is still intolerably great.”75 This is a tragedy of our times. After we reflect upon why the gap between the rich and the poor is widening instead of narrowing, we may raise such questions: is there anything wrong with the WTO special and preferential rules? how can we help the developing countries in a more effective way?

      The World Trade Organisation has chosen to ensure that developing country Members, especially the least-developed country Members among them, secure a share in the growth of international trade as one of its objectives.76 Most of the multilateral trade agreements annexed to the WTO Agreement contain provisions which accord the special and preferential treatment to the developing and least-developed country Members in their implementations of these agreements.77 However, after these years’ operation, the WTO is still confronted with such a dilemma: on the one hand, the WTO is raising more funds for its technical assistance programmes which are designated to help the developing country Members to benefit these new international trade rules; while, on the other hand, many developing country Members are increasingly dissatisfied with the WTO development policy. Here, the crux is, in the view of the author, that the definition of “developing country” has been blurred by the self-selection mechanism of the WTO.78 At the moment, each country or separate customs territory can select whether it will be taken as a “developing country” or “developed country” when it enters the WTO. This over-flexible method of defining the status of a WTO Member may bring about the following disadvantages. Firstly, the special and preferential rules contained in the WTO agreements, which are designed to help developing and least-developed countries to fully integrate into the global economy and to raise the living standard in these countries, cannot be made in a specific and efficient way. There are altogether 144 WTO Members at the time of Doha Ministerial Conference, eighty percent of them have selected themselves either as developing countries or as economies in transition.79 With the possibility of so many countries applying these special and preferential rules, the real benefits of these rules should be debatable. Secondly, since there is no clear criteria to define a “developing country”,80 it is understandable why the negotiations upon the accessions of some countries to the WTO have taken such a long time. The issue of China’s accession is just one of such examples. Thirdly, the diversified views among the WTO Members upon the criteria of definition may challenge the validity of these special and preferential rules and, eventually, undermine the stability of the current international trade order.

      In order to make the defining process become more precise and predictable, to reduce the conflicts which arise out of the different views to this definition, and more importantly, to help those countries in real need to benefit from the WTO special and preferential rules, the World Trade Organisation needs to clarify the criteria for countries which wish to apply these special and preferential rules. The factors for consideration should include the economic level, development potential, population and a few others. Before I put forward any further suggestions upon this issue, I use a table to depict a real picture of all WTO Members and the observers(countries and separate customs territories waiting for their WTO membership) in terms of the size of their economy.81

Table 1: Size of economy of WTO Members and observers

 

Population

 

 

  million

   1999

Gross national

   income

 

$ billion rank

 1999  1999 

Gross national

  income per

   capita

   $    rank

1999  1999

   Gross domestic

      product

growth per capita

   (%)  growth(%) 

1998-99 1998-99

Albania

    3

   3.1  135

    930  138

   7.2     6.1

Algeria*

   30

  46.5   52

1,550   117 

   3.3     1.8

Andorra*

  

     

          

        

Angola

   12

   3.3  130

    270  185

   2.7    -0.2

Antigua and

Barbuda

 

  

 

       

 

           

 

        

Argentina

   37

276.1  17

  7,550    58

  -3.2     -4.4

Armenia*

    4

    1.9 150

    490  157

   3.3      2.9

Australia

   19

 397.3   15

20,950   27

   4.4      3.2

Austria

    8

 205.7   21

25,430   14 

   2.1      1.9

Azerbaijan*

    8       

   3.7  124

    460  161

   7.4      6.4

Bahamas*

  

     

       

          

Bahrain

  

     

       

         

Bangladesh

  128

  47.1   50

    370  170

   4.9      3.2

Barbados

     

     

       

         

Belarus*

   10

  26.3   61

  2,620   94

   3.4      4.4

Belgium

   10

 252.1   19 

24,650  18

   2.5      2.3

Belize

  

     

       

         

Benin

    6

   2.3  141

    380  169

   5.0      2.1

Bhutan*

  

     

       

         

Bolivia

    8

   8.1   94

    990  134

   0.6      -1.7

Bosnia and

Herzegovina*

 

    4

 

   4.7  114

 

  1,210   127

 

  12.8       9.5 

Botswana

    2

   5.1  109

  3,240    87 

   4.5       2.8

Brazil

  168

 730.4    8

  4,350    73

   0.8      -0.5

Brunei Darussalam

  

     

       

         

Bulgaria

    8

  11.6    81

  1,410   121

   2.4       3.0

Burkina Faso

   11

   2.6   138

   240   193

   5.8       3.2

Burundi

    7

   0.8   174 

   120   205

  -1.0       -2.9

Cambodia*

   12

   3.0   136

   260   187

   4.5       2.2

Cameroon

   15

   8.8    88

   600   150

   4.4       1.6

Canada

   30

 614.0     9      

20,140     30 

   4.6       3.8

Cape Verde*

  

      

      

         

Central Africa

Republic

   

4

 

   1.0   168   

 

 290   181 

 

   3.4       1.7

Chad

    7 

   1.6   155

   210   197    

  -0.7       -3.4 

Chile

   15

  69.6    43

 4,630    70 

  -1.1       -2.4

China

 1,254 

 979.9     7 

   780   142

   7.1        6.1

Colombia

   42

  90.0    37

 2,170   100  

  -4.3       -6.0       

Congo Republic

  

3

 

 1.6   154

  

550   152

 

-3.0       -5.6

Costa Rica

    4

  12.8    79

3,570   80

   8.0        6.1

Cote d’lvoire

   16

  10.4    84

   670   147

   2.8        0.1

Croatia

    4

  20.2    64

 4,530    71  

  -0.3        0.5

Cuba

   11

       

      

           

Cyprus

    

      

      

           

Czech Republic

 

10

 

 51.6   48

 

5,020    66

 

-0.2        -0.1  

Democratic Republic of the Congo

 

   

   50

 

 

    

 

 

       

 

 

          

Denmark

    5

 170.3    23  

32,050      6

  1.7         1.2

Djibouti

  

      

       

           

Dominica

  

      

       

           

Dominican

Republic

 

    8

 

  16.1    74

 

 1,920     105

 

  8.3         6.4

Ecuador

   12

  16.8    72

 1,360     123

 -7.3         -9.0

Egypt

   63

  86.5    39

 1,380     122

  6.0         4.1

El Salvador

    6

  11.8    80  

 1,920     105

  3.4         1.4

Estonia

    1

   4.9   112

 3,400      83     

-1.1        -0.6

Ethiopia*

   63

   6.5    99

  100     207

  6.2         3.6

European

Community

 

    

 

        

 

       

 

           

Fiji

    

      

       

           

Finland

    5

 127.8    29

24,730     17

  4.0         3.8

France

   59

1,453.2    4

24,170     21

  2.9         2.5

Former Yugoslav

Republic of

Macedonia*

 

 

     

 

 

 

 

    

 

 

 

       

 

 

   

         

Gabon

    1

   4.0   118

 3,300     85

  -6.2        -8.4

The Gambia

    1

   0.4   190

  330     175

   6.4        3.4

Georgia

    5

   3.4   128

  620     149

   3.3        3.1

Germany

   82

2,103.8    3

25,620     13

   1.5        1.4

Ghana

   19

   7.5    97

  400     166

   4.4        2.1

Greece

   11

 127.6    30

12,110      46

   3.4        3.1

Grenada

  

      

        

           

Guatemala

   11

  18.6    68

 1,680     112  

   3.6        0.9

Guinea

    7

   3.6   126

  490     157

   3.3        1.0 

Guinea Bissau

    1

   0.2   200

  160     202

   7.8        5.7

Guyana

  

      

       

           

Haiti

    8

  3.6    125

  460     161

   2.2        0.2 

Holy See

(Vatican)*

        

              

 

      

 

          

 

           

Honduras

    6

  4.8    113

  760     143

  -1.9        -4.5          

Hong Kong,

China

 

    7

 

165.1     24  

 

24,570      19  

 

   2.9        1.8

Hungary

   10

46.8    51  

 4,640      69

   4.5        5.0

Iceland

  

      

          

           

India

  998

 441.8    11

   440    163

   6.5        4.6

Indonesia

  207

 125.0    31

   600    150

   0.3       -1.3

Ireland

    4

  80.6    40

21,470     24

   9.8        8.7

Israel

    6

  99.6    35

16,310     36

   2.2       -0.2

Italy

   58

1,162.9    6

20,170     29

   1.4        1.3

Jamaica

    3

   6.3   101

 2,430     95

   -0.4       -1.2    

Japan

  127

4,054.5    2

32,030      7

   0.2        0.1 

Jordan

    5

   7.7    96

 1,630    115

   3.1        0.0

Kazakhstan*

   15              

  18.7    67

 1,250    126

   1.7        2.7

Kenya

   29 

  10.7    83

  360     172

   1.3       -0.8

Korea,

Republic of

 

   47

 

 397.9    13    

 

8,490    54

 

  10.7        9.7

Kuwait

    2

      

       

           

The Kyrgyz

Republic

 

    5

 

  1.5    158

 

  300     180

 

   3.7        2.2

Lao PDR*

    5

  1.5    157  

  290     181

   7.4        2.8

Latvia

    2 

  5.9    106

2,430      95

   0.1        0.8

Lebanon*

    4

 15.8     75

3,700      78

           

Lesotho

    2

  1.2    165

  550     152

   2.5        0.2 

Liechtenstein

  

       

        

           

Lithuania

    4        

  9.8     85   

 2,640      92

  -4.2        -4.1

Luxembourg

    

      

        

           

Macao, China

  

      

        

           

Madagascar

   15

  3.7    123 

  250     190

   4.7        1.5

Malawi

   11

  2.0    149

  180     201

   4.0        1.5 

Malaysia

   23

 76.9     42 

3,390      84  

   5.8        3.3

Maldives

  

      

          

                       

Mali

   11

  2.6    139  

  240     193

   5.5        3.0 

Malta

  

      

       

               

Mauritania

    3

  1.0    169

  390     167

   4.1        1.3

Mauritius

    1

  4.2    117

3,540       81 

   3.4        2.1

Mexico

   97

 428.9    12

 4,440      72

   3.5        2.1

Moldova

    4

  1.5    156

  410     164

  -4.4       -4.0

Mongolia

    2

  0.9    172 

  390     167

   3.0        2.1 

Morocco

   28

 33.7     55

 1,190     129  

  -0.7        -2.3

Mozambique

   17

  3.8    122 

  220     195

   7.3        5.2

Myanmar

   45 

      

       

            

Namibia

    2

  3.2    132

 1,890     107

   3.1        0.7

Nepal*

   23

  5.2    108

  220     195 

   3.9        1.6

Netherlands

   16

 397.4    14

25,140     16

   3.6        2.9

New Zealand

    4

  53.3    47

13,990     43

   4.4        3.9

Nicaragua

    5

   2.0   147

  410     164

   7.0        4.3

Niger

   10

   2.0   148

  190     200

  -0.6       -3.9

Nigeria

  124

  31.6    57

  260     187

   1.0       -1.5

Norway

    4

 149.3    26

33,470      5

   0.9        0.2

Oman*

    2

      

         

           

Pakistan

  135

  62.9    44       

  470     160

   4.0        1.5

Panama

  3

   8.7    89

 3,080     89

   3.0        1.2

Papua New

Guinea

    5

   3.8   121 

  810     140

   3.2        0.9    

Paraguay

    5

   8.4    91

 1,560     116   

  -0.8        -3.4     

Peru

   25

  53.7    46 

 2,130     101

   1.4        -0.3

Philippines

   74

  78.0    41

 1,050     133   

   3.2         1.2

Poland

   39

 157.4    25

 4,070      74

   4.1         4.1

Portugal

   10

 110.2    34

11,030      49

   3.0         2.8

Qatar

  

      

        

           

Romania

   22

  33.0    56   

 1,470     120 

  -3.2         -3.0 

Russian Federation*

 

  146

 

 329.0    16

 

 2,250      99

 

   3.2         3.6  

Rwanda

    8

   2.0   146 

  250     190

   6.1         3.5

Saint Kitts

and Nevis

 

  

 

      

 

        

 

           

Saint Lucia

  

        

        

           

Saint Vincent

and the

Grenadines

 

      

 

 

      

 

 

        

 

 

              

Samoa*

 

      

        

           

Saudi Arabia*

   20

 139.4    27

 6,900      60

  0.4         -2.1

Senegal

    9

   4.7   115

  500     156

  5.1          2.3

Seychelles*

        

      

       

           

Sierra Leone

    5

   0.7   180

  130     204  

 -8.1         -9.9

Singapore

    4

  95.4    36

24,150     22 

  5.4          4.6

Slovak Republic

           5

    

20.3    63

 

 3,770     77

 

  1.9          1.8

Slovenia

    2

  19.9    65

10,000     50

  4.9          4.7  

Solomon Islands

        

 

      

     

     

  

          

South Africa

   42

 133.6   28

 3,170     88

  1.2         -0.5

Spain

   39

 583.1   10 

14,800     39

  3.7          3.6

Sri Lanka

   19

  15.6   76 

  820     139

  4.3          3.2

Sudan*

   29

   9.4   86

  330     175

  5.2          2.9

Suriname

  

      

       

             

Swaziland

  

      

       

           

Sweden

    9

 236.9   20

26,750     12

  3.8          3.7

Switzerland

    7

 273.9   18

38,380      3

  1.5          1.1 

Chinese Taipei

  

      

         

              

Tanzania

   33

   8.5   90

  260     187

  4.7          2.2

Thailand

   60

121.1    32

 2,010     103 

  4.2          3.4

Togo

    5

  1.4   160

  310     179         

  2.1         -0.3

Tonga*

  

     

       

             

Trinidad and

Tobago

  

1

 

6.1   104

 

4,750     68         

 

6.8          6.1

Tunisia

    9

 19.8    66   

  2,090    102

  6.2          4.9

Turkey

   64

 186.5   22

  2,900     90

 -5.1          -6.6

Uganda

   21

  6.8    98        

   320    178    

  7.4          4.5

Ukraine*

   50

 42.0    53

   840    138

 -0.4          0.3

United Arab

Emirates

 

    3

 

          

 

       

 

            

United Kingdom

      

60

 

1,403.8    5

 

23,590      23

 

  2.1          1.7

United States

  278

8,879.5    1 

31,910       8

  3.6          2.4  

Uruguay

    3

  20.6    62        

 6,220      64

 -3.2          -3.9 

Uzbekistan*

   24

  17.6    70

  720     146

  4.4          2.6

Vanuatu*

  

          

             

              

Venezuela

   24

  87.3    38

 3,680      79  

 -7.2          -9.0

Vietnam*

   78 

  28.7    60

  370     170 

  4.8          3.5

Yemen*

   17

   6.1   105

  360     172

  3.8          1.1

Zambia

   10

   3.2   131

  330     175

  2.4          0.2

Zimbabwe

   12         

   6.3   102

  530     154    

  0.1         -1.7 

           

Note: Countries with the asterisks are the observers of the WTO

      The World Bank used the Gross National Income(GNI) per capita as the criterion to classify its members(183) and all other economies with populations more than 30,00(207 in total).82 The countries and other economies with their GNI per capita at $755 or less are classified as the low-income group; those with their GNI per capita at $756-$2,995 are the lower-middle-income group; those with their GNI per capita at $2,996-$9,265 are the upper-middle-income group; and those with their GNI per capita at $9,266 or more are the high-income group. According to this classification, among the present 144(excluding Chinese Taipei as there are no data available for it) WTO Members as of this writing, forty-three are in the low-income group; thirty-five are in the lower-middle-income group; twenty-nine are in the upper-middle-income group; and thirty-six are in the high-income group. This is a more specific and practicable classifying method, compared with that of the WTO.

      From the above table, we can find that all those WTO least-developed country Members with two exceptions,83 together with some other WTO Members, are in the low-income group. The GNI per capita in these countries is only around two US dollars or even less a day. Furthermore, twenty-seven among the low-income WTO Members are classified by the World Bank as severely-indebted countries, twelve are classified as moderately-indebted countries, only three of them belong to less-indebted countries.84 In the global terms, the total population of the low-income countries amounts to 40 percent of the world population, but their GNI totally is only 3 percent of the world totality. The average GNI per capita of these low-income countries is $420, compared with $26,440 of high-income countries, and $1,980 of middle-income (including lower-middle and upper-middle) countries.85 Upon this research, the author of this article may put forward such suggestions that the WTO special and preferential rules currently applicable to these least-developed country Members should be extended to all those Members grouped as low-income countries. Since the gross national products and exports of these countries are so insignificant that other countries should eliminate all the duties and other trade barriers for the imports from these countries. The WTO should also focus its technical assistance programmes mainly on these low-income Members. Meanwhile, there should be a “graduation” system, which is so designated that any country, when it reaches a certain level, e.g. GNI per capita at $756 or more, will “graduate” automatically from the low-income group.   

      The situation of the middle-income countries, however, is not so easy to define. The economic level of those countries contrasts so much that the GNI per capita starts from $756 to $9,265. Even the difference between the lower-middle-income countries and the upper-middle-income countries is so obvious that it is impracticable to accord same special and preferential treatment to the countries from these two different groups. Most of these listed in the upper-middle-income group are the newly-industrialised countries which have diverted their economies of agriculture-orientation to manufacture-orientation and raised the living standard significantly in the recent decades. In contrast, those countries listed in the lower-middle-income group, either encumbered with heavy population and foreign debt, or impeded by the mismanagement of their leaders, can only acquire a subsistent level in their economic development. At the moment, all these countries, from both the lower-middle-income and upper-middle-income groups, select themselves as developing countries in the WTO. Some other countries like Singapore, Kuwait, Qatar, which have already been classified by the World Bank as high-income countries, still have the status of developing country Members. Under such a broad perspective, it is no surprise that about sixty percent of the WTO Members are treated as developing countries. If we apply the WTO special and preferential rules to all of these countries, together with other twenty-nine(about twenty-one percent) least-developed countries, it will become clear that the WTO mechanism to accord special and preferential treatment is neither reasonable nor workable. One practicable way is that the application of the special and preferential rules should be limited in scope, for example, only to those low-income and lower-middle-income countries(about fifty-three percent of the WTO Members), most of which are still devoted to agrarian production, therefore, need more help to readjust their economic structures. The other way available is that the multilateral agreements like the Agreement on Subsidies and Countervailing Measures may set separate criteria for developing country Members to apply their special and preferential rules. For example, Article 27(2) of this agreement stipulates that WTO Members designated as the least-developed countries and those with GNI per capita below $1,000 are not subject to the prohibition of export subsidies. Other developing country Members get eight years of delay, from the date of entry into force of the WTO Agreement, to fully implement this agreement.86

 

VII. Conclusion

      The purpose to regroup developing countries is to remove the ambiguous elements in the definition of developing country Members and to apply those WTO special and preferential rules in a more efficient way. The increasing marginalisation of some poor countries is a big challenge to all of us in the 21st century. Without them, the globalisation can never be in a full sense. The WTO has set one of its objectives as to help developing and least-developed country Members within its ambit, but whether or not these countries have benefited from the current international trade regime is quite another issue which deserves our careful study. To redefine and regroup developing country Members within the WTO is just one of the inspirations based on this study.

 

本文刊登于《跨国法论丛》,2003年第1

 



* BA, MA(Hangzhou University, China), MPhil(Zhejiang University, China), PhD(Edinburgh University, UK). Professor of School of Law, Shanghai Jiaotong University, P. R. China. I am grateful to professor Alan Boyle of Edinburgh University for his comments in the preparation of this article. However, the responsibility for any possible mistakes is still mine.  

1 : See Robert Gilpin: The Political Economy of International Relations, Princeton University Press(1987), p. 263.

2 : See Robert E. Hudec: Developing Countries in the GATT Legal System, Gower Publishing Company Limited(1987), p.6.

3 : About the history of the Bretton Woods system, see John H. Jackson: The World Trade Organisation, Constitution and Jurisprudence, Chapter 2(Bretton Woods, the ITO, the GATT and the WTO), Royal Institute of International Affairs(1998), pp12-35.

4 : The preamble of GATT 1947 states: “The governments…being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce.” See The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations, Cambridge University Press(1999).

5 : The founding members are the Commonwealth of Australia, the Kingdom of Belgium, the United States of Brazil, Burma, Canada, Ceylon, the Republic of Chile, the Republic of China, the Republic of Cuba, the Czechoslovak Republic, the French Republic, India, Lebanon, the Grand-Duchy of Luxembourg, the Kingdom of the Netherlands, New Zealand, the Kingdom of Norway, Pakistan, Southern Rhodesia, Syria, the Union of South Africa, the United Kingdom of Great Britain and Northern Ireland, and the United States of America. In the GATT history, contracting parties consisted of “developed countries” and “less-developed countries”. These nominations have been changed since the establishment of the WTO. Explanatory Note 2(a) to GATT 1994 states: “The reference to ‘contracting party’ in the provisions of GATT 1994 shall be deemed to read “Member”. The reference to ‘less-developed contracting party’ and ‘developed contracting party’ shall be deemed to read ‘developing country Member’ and ‘developed country Member’. The reference to ‘Executive Secretary’ shall be deemed to read ‘Director-General of the WTO’”. Id.  

6 : Proposals for Consideration by an International Conference on Trade and Employment, Publication No. 2411, Commercial Policy Series No.79(Washington: United States Department of State, 1945).

7 : The United States explained the absence of developing-country provisions in the Proposed Charter by saying that the special needs of developing countries would be addressed in the Economic Development Sub-commission of the United Nations Economic and Social Council and by institutions such as the World Bank. In other words, special attention may have been needed, but not in the trade-policy rules. See Clair Wilcox: A Charter for World Trade, New York: Macmillan(1949), p.141. Clair Wilcox served as chairman or vice-chairman of the United States delegation to the various GATT-ITO negotiating conferences in 1946-1948. According to professor Hudec, the initial position of the United States rested on the view that the key to industrial development was capital investment, especially private investment, coupled with an open international market for exports. The United States was unsympathetic to the infant-industry argument on conventional economic grounds---infant-industry protection would merely promote the creation of inefficient local industries, thereby wasting resources. These positions were drawn from, and reinforced by, a global economic and political policy that had two main objectives: (a)the desire to reduce trade protection generally, so that the world would not repeat the destabilising economic situation created by the protectionism of the 1930s, and (b)the desire to eliminate discrimination---partly for the same economic reasons but also because the United States wanted to eradicate the colonial system. To be sure, this global policy also served somewhat narrower visions of self-interest. Under the mercantilist perceptions of national advantage that tended to prevail in these calculations, the over-powering dominance of the United States’ economy during this period made it appear that the United States had the most to gain from an open world market for exports. Robert E. Hudec, see supra note 2, pp.9-10.

8 : The proposed article reads as “A metropolitan country may take action, or invoke any procedure under this Agreement, on behalf of the economic interests and development of a dependent territory for whose external relations it is responsible, and the provisions of the Agreement shall apply for this purpose as if the dependent territory were within the customs area of the metropolitan country; provided always that any measures taken by virtue of this paragraph shall operate substantially to the exclusive benefit of the dependent territories of the metropolitan country concerned.” GATT BISD, 3rd Supplement(1955), p.131. 

9 : Id. The waiver, as agreed by the Working Party, is recommended to the CONTRACTING PARTIES for acceptance in accordance with the procedures of Article XXV(Joint Action by the Contracting Parties)of the General Agreement.

10 : According to Karin Kock, the Swedish expert on the GATT affairs, the issue of developing countries became critical once it became clear that a large number of British and French colonies were soon to achieve independence. “Cold War” competition for the loyalty of these emerging countries intensified when the former Soviet Union began to press for the creation of a global trade organisation, within the United Nations, that would provide an alternative to the Western-dominated GATT. The prospect of a rival United Nations organisation grew more substantial each year and finally materialised in the form of the United Nations Conference on Trade and Development(UNCTAD), formally constituted in 1964. See Karin Kock: International Trade Policy and the GATT 1947-1967, Stockholm: Almqvist & Wiksell(1969), p.236. By the early 1960s, GATT relations between developed and developing countries had become almost totally centred on competition with the UNCTAD. The UNCTAD threat considerably augmented the bargaining power of developing countries. Developed countries believed that a bloc decision not to participate in the GATT would be seriously damaging to Western political interests; they were therefore willing to pay a price to avoid it. Certain other factors are commonly cited as reasons for the substantial increase in the developing-country bargaining power during this period. One is the formation of an effective “bloc” in the early 1960s, the so-called “Group of 77”. Although not all Group of 77 members participated in GATT affairs, the presence of effective bloc behaviour in the international sphere, particularly in the United Nations, probably did increase the bargaining power and thus consolidated the traditional source of developing-country power---the participation issue---in a more effective way. See Robert E. Hudec, supra note 2, pp.39-40.  

11 : See GATT BISD, 10th Supplement(1962), pp28-32.

12 : The scheduling of the UNCTAD conference in the spring of 1964 precipitated an effort within the GATT to demonstrate more forcefully its commitment to the interests of developing countries. The first step was a decision to draft amendments to the legal text of the General Agreement that would consolidate the various strands of the GATT’s emerging policy towards developing countries. Initially, it was contemplated that the new legal text would be placed in Article XVIII(Governmental Assistance to Economic Development). The new text grew so long, however, that at the last moment it was repackaged as a new Part IV of the General Agreement. See GATT BISD, 13th Supplement(1965), p.2(protocol introducing PART IV). 

13 : Robert E Hudec, supra note 2, p.56.

14 : The GATT’s first step towards the GSP was a waiver permitting Australia to give preferences to developing countries. See GATT BISD, 14th Supplement(1966), p.23. The first explicit experiment with preferences on trade between developing countries was a 1968 “decision”(not a waiver) permitting a preference agreement between India, the United Arab Republic and Yugoslavia, open to participation by all other developing countries. See GATT BISD, 16th Supplement(1969), p.17.

15 : See GATT BISD, 18th Supplement(1972), pp.24-26. The terms of the GSP waiver required that preferences should be made generally available to all developing countries, but the details were not defined. Consequently, it was up to the government of each developed country to decide what products would be covered, what the margin of preference would be and what quantitative or other limits would be imposed on preference benefits. Each developed-country government did something different.

16 : See GATT BISD, 18th Supplement(1972), pp.26-28. It should be noted that the legal status of the GSP programme was permissive and not mandatory. In UNCTAD, governments of developed countries had agreed in principle to grant preferences, but that agreement was never reduced to a contractual obligation, either in UNCTAD or in the GATT. The only GATT legal instrument on the GSP was the waiver allowing governments to introduce preferences if they chose.

17 : See GATT BISD, 26th Supplement(1980), pp.203-210, reprinted separately as an unnumbered GATT pamphlet entitled Relating to the Framework for the Conduct of International Trade(1979).

18 : See Decision of 28 November 1979(Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries), GATT BISD, 26th Supplement(1980), p.203.

19 : The result of the Kennedy Round negotiations on multilateral trade rules is only the Anti-dumping Code, while the results of the Tokyo Round negotiations include: Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade(known as the Code on Subsidies and Countervailing Duties), Agreement on Technical Barriers to Trade, Agreement on Import Licensing Procedures, Agreement on Government Procurement, Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade(known as the Customs Valuation Code), Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade(known as the revised Anti-Dumping Code). See GATT Activities(1979), Geneva, pp.21-26.

20 : See Robert E. Hudec, supra note 2, pp.82-83.

21 : See GATT BISD, 29th Supplement(1981-1982), p.9.

22 : The Trade and Development Committee inherited the unfinished work of the Legal and Institutional Committee that had drafted Part IV. The Contracting Parties agreed to create a permanent organ which would have its mandate all the objectives of Part IV. Since then, there was a permanent bureaucracy attending to developing-country concerns and preparing the agenda called for by their agreed principles. See GATT BISD, 13th Supplement(1965), p.76.

23 : At the Special Session of the CONTRACTING PARTIES at Punta del Este, Uruguay on 20 September 1986, ministers of the contracting parties decided to launch a new round of multilateral trade negotiations. A trade negotiations committee was established thereafter, to carry out the negotiations.

24 : There are four paragraphs concerning developing and least-developed countries in the “objectives” of the Punta del Este Declaration. Paragraph (iv) states: “The CONTRACTING PARTIES agree that the principle of differential and more favourable treatment embodied in Part IV and other relevant provisions of the General Agreement and in the Decision of the CONTRACTING PARTIES of 28 November 1979 on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries applies to the negotiations. In the implementation of standstill and rollback, particular care should be given to avoiding disruptive effects on the trade of less-developed contracting parties.” Paragraph (v) states: “The developed countries do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariff and other barriers to the trade of developing countries, i.e. the developed countries do not expect the developing countries, in the course of trade negotiations, to make contributions which are inconsistent with their individual development, financial and trade needs. Developed contracting parties shall therefore not seek, neither shall less-developed contracting parties be required to make, concessions that are inconsistent with the latter’s development, financial and trade needs.” Paragraph (vi) states: “Less-developed contracting parties expect that their capacity to make contributions or negotiated concessions or take other mutually agreed action under the provisions and procedures of the General Agreement would improve with the progressive development of their economies and improvement in their trade situation and they would accordingly expect to participate more fully in the framework of rights and obligations under the General Agreement.” Paragraph (vii) states: “Special attention shall be given to the particular situation and problems of the least-developed countries and to the need to encourage positive measures to facilitate expansion of their trade opportunities. Expeditious implementation of the relevant provisions of the 1982 Ministerial Declaration concerning the least-developed countries shall also be given appropriate attention.” See GATT Activities(1986), Geneva, pp.17-18.

25 : Article XXVI, paragraph 5(c) of GATT 1947 states: “If any of the customary territories, in respect of which a contracting party has accepted this Agreement, possesses or acquires full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement, such territory shall, upon sponsorship through a declaration by the responsible contracting party establishing the above-mentioned fact, be deemed to be a contracting party.” See supra note 4.

26 : A major objective of the developing countries in the Tokyo Round was to seek improved and predictable conditions of access for their increasingly diversified range of exports, an improved legal framework for the future conduct of international trade taking into account their development, financial and trade needs, and special and differential treatment where this was feasible and appropriate, including special treatment for the least-developed countries. They were also concerned to ensure that any liberalisation achieved would be placed on a secure footing. See GATT Activities(1979), Geneva, p.13.

27 : Article IV:1 of the WTO Agreement states: “There shall be a Ministerial Conference composed of all the Members, which shall meet at least once every two years. The Ministerial Conference shall carry out the functions of the WTO and take actions necessary to this effect. The Ministerial Conference shall have the authority to take decision on all matters under any of the Multilateral Trade Agreements, if so requested by a Member, in accordance with the specific requirements for decision-making in this Agreement and in the relevant Multilateral Trade Agreement.” See supra note 4. Although the Minister Conference is the highest-level authority, it is not a permanent body. In most cases, its functions are carried out by the General Council. 

28 : See WTO Focus Newsletter, No.13, 1996, p.20; No.26, 1998, pp.3-6.

29 : Singapore Ministerial Declaration, WTO Document(WT/MIN/1996/DEC), dated 18 December 1996, para.10, p.3.

30 : Ramakrishma Hegde: WTO Issues and India’s Concerns(Speech at the Second Ministerial Conference of the WTO in Geneva, 18-20 May 1998), India and WTO, Vol.1, 1999, No.2, p.3.  

31 : See Asoke Mukerji: Developing Countries and the WTO---Issues of Implementation, Journal of World Trade, Vol.34, 2000, No.6, p.39.

32 : Voluntary export restraints in this sector had been introduced at the end of the Second World War by the United States and the United Kingdom. In 1959, the United States introduced the concept of “market disruption” into the GATT examination of trade in textiles and clothing sector, in an attempt to provide a conceptual justification for import restrictions of these products. In 1961, the United States proposed a conference among cotton textiles producers, which led to the conclusion of a Short-Term Cotton Arrangement(STA), effectively marking the beginning of a long period during which textiles and clothing  trade would be treated as a “special case” for the GATT. The STA was followed in 1962 by the Long-Term Arrangement(LTA), which was replaced in 1974 by the Multi-fibre Arrangement(MFA), which was in force until 31 December 1994. Throughout this entire period, international trade in cotton products, later extending to wool and man-made fibres, and in 1986 to practically every fibre in existence, was kept out of the GATT’s purview, and trade was restricted arbitrarily by import restrictions in the form of quotas which were negotiated and implemented on a bilateral basis. The consequence of this bilateral action was that the cornerstone of trade liberalisation , the MFN treatment, was completely ignored. Id, pp.41-42.

33 : Article 1(1) of the ATC states: “This Agreement sets out provisions to be applied by Members during a transition period for the integration of the textiles and clothing sector into GATT 1994.” Article 2(6) of the ATC states: “On the date of entry into force of the WTO Agreement, each Member shall integrate into GATT 1994 products which accounted for not less than 16 per cent of the total volume of the Member’s 1990 imports of the products in the Annex, in terms of HS lines or categories.” Article 2(8) states: “The remaining products…shall be integrated …in three stages, as follows: (a)on the first day of the 37th month that the WTO Agreement is in effect, products which accounted for not less than 17 per cent of the total volume of the Member’s 1990 imports of the products in the Annex; (b)on the first day of the 85th month that the WTO Agreement is in effect, products which accounted for not less than 18 per cent of the total volume of the Member’s 1990 imports of the products in the Annex; (c)on the first day of the 121st month that the WTO Agreement is in effect, the textiles and clothing sector shall stand integrated into GATT 1994, all restrictions under this Agreement having been eliminated.” See supra note 4.       

34 : The WTO review of the implementation of the ATC, which was conducted in 1997-98, expressed the concern of some developing countries on this issue: “…products selected for integration were concentrated  in less valued-added products such as tops, yarns and fabrics, with only small shares of make-up textile products and clothing; furthermore, the shares of integrated products were substantially lower in terms of value of trade than in volume of trade while more of the integrated trade was being accounted for by imports from developed countries than from developing countries…with over 96 percent of restricted trade remaining to be integrated even after seven years of implementation, there would be no benefits for developing countries.” See Major Review of the Implementation of the Agreement on Textiles and Clothing in the First Stage of the Integration Process, WTO Document G/C/W/105, dated 4 February 1998, para.10, p.3. This concern was shared by the WTO’s collective membership, which stated: “…the integration programme of the major importing Members during the first stage, and as announced for the second stage, included only a small number of products which had actually been under quota restrictions, therefore, leaving a large number of products for which quota restrictions would need to be eliminated during the remainder of the transition period.” Id, para.13, p.4.   

35 : Although the original GATT 1947 applied to the agriculture sector, it had significant loopholes. For example, it allowed countries to subsidise exports and use import quotas. The use of export subsidies, in particular, caused serious distortions of international trade. A major impediment to liberalising agriculture trade was the exemptions built into the GATT by the United States, allowing it to take measures to stabilise farm incomes, enhance export sales and shield US farmers from foreign competition. In 1955, the United States obtained a waiver from the GATT obligations for its farm programmes. This was compounded by the newly formed European Economic Community’s Common Agriculture Policy(CAP), which was built on a foundation of guaranteed prices defended from import competition by a system of variable levies, as well as by a provision for export restitution to dispose of the inevitable bumper crops that guaranteed prices would stimulate. See Asoke Mukerji, supra note 31, p.45.  

36 : For example, although the preamble to the AOA specifies that “developed country Members would take fully into account the particular needs and conditions of developing country Members by providing for a greater improvement of opportunities and terms of access for agricultural products of particular interest to these Members”, the fact remains that the post-Uruguay Round base tariffs of a number of sensitive commodities in many developed countries are higher than the actual tariff equivalents of all border measures which existed in 1986-1988. Id, pp.46-47.

37 : Which states: “Members agree that negotiations for continuing the process will be initiated one year before the end of the implementation period…” See supra note 4.

38 : See WTO Focus Newsletter, 2001, No.52, p.2.

39 : See WTO Special Studies(6): Market Access: Unfinished Business---Post-Uruguay Round Inventory and Issues, pp.3-4. cf. http://www.wto.org/english/res_e/booksp_e/maccess1_e.pdf

40 : Administered by the World Intellectual Property Organisation(WIPO) under the auspices of the United Nations, the principal intellectual property conventions are the Berne Convention for the Protection of Literary and Artistic Works(1971); the Paris Convention for the Protection of Industrial Property(1967); and the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations(Rome Convention)(1961).

41 : Adrian Otten and Hannu Wager: Compliance with TRIPS: The Emerging World View, Vanderbilt Journal of Transitional Law, Vol.29, 1996, p.396.

42 : According to Article 65(Transitional Arrangements), except developing countries, all other WTO Member are obliged to apply the TRIPS Agreement one year after the creation of the WTO(beginning from 1 January 1996). Developing countries and those with a transitional economy are entitled to delay for a further period of four years the date of application(beginning from 1 January 2000). A developing country which previously did not provide product patent protection in any field of technology may be given an additional transition period of five years to provide protection in this field(beginning from 1 January 2005). See supra note 4.  

43 : For example, not much attention has been paid to the preamble of the TRIPS Agreement which states that the WTO should “ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade”. Id.

44 : For example, proposals to examine the compulsory licensing provision(Article 31) and the term of protection(Article 33) of the TRIPS Agreement to ensure the transfer of environmentally-sound products and technologies to developing countries were rejected by developed countries in the CTE. See Report of the Committee on Trade and Environment 1996, WTO Document WT/CTE/W/40, 7 November 1996, paras.137-138, pp.31-32.

45 : See India---Patent Protection for Pharmaceutical and Agricultural Chemical Products, Report of the Appellate Body(distributed on 19 December 1997), WT/DS50/AB/R . On 30 August 2003, WTO Member governments broke their deadlock over intellectual property protection and public health. They agreed on legal changes that will make it easier for poorer countries to import cheaper generics made under compulsory licensing if they are unable to manufacture the medicines themselves. The decision waives countries’ obligations under a provision of the WTO intellectual property agreement. Article 31(f) of the TRIPS says that production under compulsory licensing must be predominantly for the domestic market. This effectively limited the ability of countries that cannot make pharmaceutical products from importing cheaper generics from countries where pharmaceuticals are patented. In the decision, WTO Member governments have agreed that the waiver will last until the article is amended. About the background of this decision, see the website of the World Trade Organisation: www.wto.org        

46 : See Asoke Mukerji, supra note 31, p.58. 

47 : World Tourism Organisation statistics indicate that arrivals by air account for more than 90% of total arrivals in a significant majority of developing countries. Since many of these countries are far distant from the rich markets which provide their consumers, their export revenues are diminished by the high air-fares caused by low air traffic density and by protectionist aviation policies, which, according to the World Travel and Tourism Council, severely constrain the development of tourism. Protectionism in the air transport sector, at the expense of hotels and other tourist activities whose net revenues are likely to be far greater than those of national airlines, may be a very expensive strategy. See WTO Special Studies(6), supra note 39, pp.131-132.

48 : Adam Smith: The Wealth of Nations, New York: Modern Library Edition, 1937, p.424. Smith’s theory marks the advent of neo-classical theory of international trade.

49 : See Ian Roxborough: Theories of Underdevelopment, London: Macmillan(1979), chapter three.

50 : The history of the twentieth-century China can mirror these social upheavals of a developing country. The 1911 bourgeois revolution ended the feudal elite leadership in China. After that, China was involved in the long-time civil war and the World War II. After 1949 when the Communist Party overthrew the Kuomintang government, China did not concentrate its efforts on the economic development until 1978 when the Open Door Policy was enacted.     

51 : See Gunnar Myrdal: Economic Theory and Underdeveloped Regions, New York: Harper and Row(1971).

52 : According to Alice Alexandra Kipel, apart from those East Asian new industrialised countries, which account for more than two-thirds of the manufactured exports from developing countries, most developing countries export primary products as their main source of foreign revenues, which places them at a disadvantage relative to developed countries. See Alice Alexandra Kipel: Special and Differential Treatment for Developing Countries(in The World Trade Organisation---The Multilateral Trade Framework for the 21st Century and U.S. Implementing Legislation, edited by Terence P. Stewart), American Bar Association(1996), p.618.  

53 : Ragnar Nurkse: Problems of Capital Formation in Underdeveloped Countries, New York: Blackwell (1953), p.4.

54 : See Raul Prebisch: Commercial Policy in the Underdeveloped Countries, American Economic Review, No.49(May), 1959, pp.251-273.

55 : Some scholars consider that even though the former European colonies have achieved political independence, they either have not developed or have at least remained economically subordinate to the more advanced countries. Rather than progressing into higher stages of economic development, some of these countries have in fact increased their reliance on advanced economies for food, capital, and modern technology. See Simon Kuznets: Toward a Theory of Economic Growth, New York: W. W. Norton(1968), p.2, note 2. 

56 : See Robert Gilpin, supra note 1, pp.275-276.

57 : According to Kipel, due to the low income elasticity of demand for primary products, the export performance of developing countries is poor compared with the export performance of developed countries. Income elasticity of demand can be defined as the relation of the quantity demanded of a commodity to the changes in consumer income. It is expressed by the ratio of change in quantity demanded over the changes in consumer income. Relative income inelasticity of demand entails that the percentage increase in quantity demanded increases less than the percentage increase in national income. In the case of primary products, the world demand curve shows that the income elasticity of demand is in general relatively low. By contrast, in the case of manufactured goods, the income elasticity of demand is relatively high. Thus, as income rises in the developed countries, their demand for primary products from the developing countries rises less than proportionately(less than 1 to 1), but their demand for manufactured goods, the production of which is dominated by the developed countries, rises more than proportionately (greater than 1 to 1). See Alice Alexandra Kipel, supra note 52, pp.618-619.   

58 : See Arthur Lewis: The Evolution of the International Economic Order, Princeton University Press(1978).

59 : The current movement of urbanisation in China indicates that the Chinese government has realised that the next stage of modernisation should include the sector of agriculture. Among the 1.3 billion of the population, about four-fifths live in rural areas. The autarkic mode of agricultural production has restricted the further development of the Chinese economy. After entering the WTO, China will face further pressure  of low-price but high-quality agricultural products from abroad. A prior development of agriculture will accumulate more capital and provide surplus labour for a higher level of modernisation.   

60 : Article XXXVI:1(c) of GATT 1994. See supra note 4.

61 : Paragraph 1 of the Final Act states: “Having met in order to conclude the Uruguay Round of Multilateral Trade Negotiations, representatives of the governments and of the European Communities, members of the Trade Negotiations Committee, agree that the Agreement Establishing the World Trade Organisation(referred to in this Final Act as the “WTO Agreement”), the Ministerial Declarations and Decisions, and the Understanding on Commitments in Financial Services, as annexed hereto, embody the results of their negotiations and form an integral part of this Final Act.”(Emphasis original). See supra note 4.    

62 : For example, Agreement on Agriculture(Preamble, Articles 15, 16); Agreement on the Application of Sanitary and Phytosanitary Measures(Preamble, Article 10); Agreement on Textiles and Clothing (Preamble, Article 6[6]); Agreement on Technical Barriers to Trade(Preamble, Article 12); Agreement on Trade-Related Investment Measures(Preamble, Article 4); Anti-Dumping Agreement(Article 15); Agreement on Customs Valuation(Article 20); Agreement on Preshipment Inspection(Preamble); Agreement on Import Licensing Procedures(Article 1[2]); Agreement on Subsidies and Countervailing Measures(Articles 27, 29); Agreement on Safeguards(Article 9); General Agreement on Trade in Services(Preamble, Article IV); Agreement on Trade-Related Aspects of Intellectual Property Rights(Preamble, Article 66); Dispute Settlement Understanding (Article 24), etc. See supra note 4.                                                                                                                                                                                                                                                                                            

63 : See M. Bertrand: Refaire L’Onu: un programme pour la paix, Geneva(1986), p.79.

64 : There are no WTO definitions of “developed” and “developing” countries. A Member country may select by itself the status either as a “developing country” or as a “developed”. However, this does not automatically provide rights under preference schemes such as Generalised System of Preferences(GSP). In addition, other Members can challenge this selection, and this has sometimes happened in specific areas such as intellectual property. This challenge may lead to negotiations to clarify the selected status. For countries which negotiated to join the WTO after 1995, their status depends on the terms agreed in the accession negotiations.

cf. http://www.wto.org/english/tratop_e/devel_e/d1who_e.htm  

65 : Article XI of the WTO Agreement states: “The least-developed countries recognised as such by the United Nations will only be required to undertake commitments and concessions to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities.” See supra note 4. There are currently 48 least-developed countries on the UN list, 30 of which to date have become WTO Members. These countries are: Angola, Bangladesh, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Congo, Democratic Republic of the, Djibouti, Gambia, Guinea, Guinea Bissau, Haiti, Lesotho, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Myanmar, Niger, Rwanda, Sierra Leone, Solomon Islands, Tanzania, Togo, Uganda, Zambia, Vanuatu.

cf. http://www.wto.org/english/tratop_e/devel_e/d1who_e.htm 

66 : Alice Alexandra Kipel, see supra note 52, p.624.

67 : See GATT Analytical Index: Guide to GATT Law and Practice, GATT BISD 13th Supplement(1965), pp.75-76(describing the lack of consensus as to how to identify developing countries).

68 : Alice Alexandra Kipel, see supra note 52, p.625.

69 : See the Preamble of the WTO Agreement. See supra note 4.

70 : cf. http://www.worldbank.org/data/databytopic/class1.htm 

71 : According to the World Bank, 64 countries are grouped as low-income economies(all the 29 least-developed WTO Member countries, except Djibouti and Vanuatu which are grouped as lower-middle-income economies, are included in this group), among which are India and Kenya, 55 countries are grouped as lower-middle-income economies, among which are China and Morocco, 38 countries are grouped as upper-middle-income economies, among which are Korea and Saudi Arabia, 49 countries are grouped as high-income economies, among which are Kuwait and Qatar. Ironically, all the above-mentioned countries, including India, Kenya, Djibouti, Vanuatu, China, Morocco, Korea, Saudi Arabia, Kuwait, Qatar, are defined as developing country Members in the WTO.

cf. http://www.worldbank.org/data/databytopic/class1.htm

and http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm    

72 : See US-China GATT Accession Talks Described as Making Progress, 11 International Trade Report, No.23, 1994, p.899.

73 : China is one of the 23 original signatories of GATT 1947. After China’s revolution in 1949, the  government in Taiwan announced that China would leave the GATT system. Although the government in Beijing never recognised this withdrawal decision, nearly after 40 years later, in 1986, China notified the GATT of its wish to resume its contracting party status in the GATT. Since the negotiations could not be completed before 1995, the year of the establishment of the WTO, China entered the negotiations applying for the WTO membership. 

74 : On 17 September 2001, the World Trade Organisation successfully concluded negotiations on China’s terms of membership of the WTO, paving the way for the text of agreement to be adopted formally at the WTO Ministerial Conference in Doha, Qatar, in November.

cf. http://www.wto.org/english/news_e/pres01_e   

75 : Renato Ruggiero: An Enabling Environment for Development: the Contribution of the Multilateral Trading System, the address to ECOSOC in Geneva, 2 July 1997.

cf. http://www.wto.org/english/news_e/sprr1_e/ecosoc_e.htm

76 : See the preamble of the WTO Agreement. See supra note 4. 

77 : See supra note 62.

78 : See supra note 64.

79 : See China and the World Trading System, the speech delivered by Renato Ruggiero, the former WTO Director-General, at Beijing University, China.

cf. http://www.wto.org/english/news_e/sprr_e/china1_e.htm 

80 : The definition of a “least-developed country” is clear in the WTO. See supra note 65.

81 : The source comes from the World Bank.

cf. http://www.wor1dbank.org/data/wdi20001/wor1dview.htm The data for some Members and observers are not available.

82 : cf. http://www.worldbank.org/data/databytopic/class1.htm

83 : The two exceptions are Djibouti and Maldives, which are grouped by the World Bank as lower-middle-income countries, but no specific data are available to show the Gross National Income and the Gross National Income per capita of these two countries as of this writing.

84 : According to the World Bank, “severely-indebted” means either of the two key ratios is above critical levels: present value of debt service to GNI(80 percent) and present value of debt service to exports(220 percent); “moderately-indebted” means either of the two key ratios exceeds 60 percent of, but does not reach, the critical levels. For economies that do not report detailed debt statistics to the World Bank Debtor Reporting System(DRS), present-value-circulation is not possible. Instead, the following methodology is used to classify the non-DRS economies. “Severely-indebted” means three of four key ratios(averaged over 1997-99) are above critical levels: debt to GNI(50 percent); debt to exports(275 percent); debt service to exports(30 percent); and interest to exports(20 percent). “Moderately-indebted” means three of the key ratios exceed 60 percent of, but do not reach, the critical levels. All other classified low- and middle-income economies are listed as less-indebted. cf. http://www.worldbank.org/data/databytopic/class1.htm  

85 : cf. http://www.worldbank.org/data/wdi2001/worldview.htm

86 : See supra note 4.

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