December 2014
  • WTO Disciplines and Economic Development:
    A Reform Proposal

    Yong Shik Lee

International trade is essential for developing countries: all economically successful developing countries since World War II have achieved such success through international trade. It is imperative that the regulatory framework for international trade, currently under the auspices of the World Trade Organization (WTO), enables developing countries, presently making up a large majority of the WTO, to adopt effective traderelated development policies. However, the current regulatory system exhibits a “development deficit”, with its provisions preventing the adoption of key trade-related development policies. This article discusses the problems with the current regulatory system and proposes specific regulatory and institutional reforms to better facilitate economic development.

international trade; international economic law; World Trade Organization; economic development; developing countries; General Agreement on Tariffs and Trade.

The recent failure of the World Trade Organization (WTO) to strike a deal on customs rule due to serious opposition by India illustrates the challenges that the international community faces in establishing universal trade practices. In December 2013, WTO member countries (Members) negotiated a major agreement to streamline customs procedure, whose purpose is to facilitate international trade, and they were expected to ratify the agreement. However, India stated that it would veto it unless the deal includes more concessions on crop subsidy and stockpiling; ie developing countries, including India, attain more regulatory freedom to subsidize and stockpile crops for food security without breaching their international obligation under WTO disciplines. India’s objection concerns what trade rules and concessions are necessary to protect the economic interest of developing countries, which has been a core agenda at the latest trade negotiation round, namely “Doha Round”.

International trade being of essential importance to the economic development of developing countries, rules of international trade have a significant impact on the ability of developing countries to adopt efficient development policies. Yet, the current international trading system, represented by the WTO, does not adequately address the development concerns of developing countries, and the rules of international trade (WTO disciplines) applying to all WTO membership fail to facilitate their economic development. The Doha Round was launched in 2001 with a view to promoting the development interests of developing countries, but its progress has been sluggish, reflecting large gaps in positions on development issues between developed and developing countries.

Even if the current Doha Round is concluded successfully, with its negotiation agendas and objectives met in the final negotiations, it would not be sufficient to fill the regulatory gap in the current WTO system for development facilitation through international trade, nor does it address the fundamental problem and imbalance in the current organizational structure of the WTO. The negotiation agendas and mandates of the Doha Round are not sufficient to bring about the kind of reform necessary to put right deficiencies in the regulatory framework and in the institutional apparatus of the WTO. Reform will have to be considered and discussed in a subsequent round.

This paper, based on the author’s previous works, provides a brief account of the “development deficit” in the regulatory framework of the WTO and its organizational apparatus. It also presents reform proposals to meet the development needs of developing countries, as mandated by the WTO Agreement itself. The next section examines the importance and relevance of international trade and trade rules for economic development. Section 3 highlights deficiencies in the current regulatory framework and proposes a set of development-facilitation provisions, called the Agreement on Development Facilitation (ADF). Section 4 discusses the “development deficit” in the current WTO structure and proposes organizational reform. Section 5 presents some conclusions.