Multilateralism versus regionalism Trade issues after the Uruguay Round

Van Dijk and Sideri (eds, 1996) result of the EADI Trade working group is reprinted by Frank Cass in London! I would like to highlight some of the points made in the book and compare the actual developments with what we have predicted. After a summary of the major achievements of the Doha meeting a list of the issues raised in the book will be reviewed and some issues that seem to have come up since will be mentioned. In our book multilateralism (such as the negotiations in the framework of GATT) is confronted with regionalism, the trend to agree on more liberal trade policies within a regional co-operation framework. While the European Union (EU) and North-American Free Trade Agreement (NAFTA) are examples of the latter, the conclusion of the Uruguay Round is an example of successful multilateralism. In part II of the book seven specific issues are discussed: green protectionism, technical standards, intellectual property rights protection, the effects of disarmament on international trade, the effects of abolishing the Multi-Fibre Arrangement (MFA) and the impact of the EU's Common Agricultural Policy.

The points for the negotiating agenda for the next Millennium Round of the World Trade Organization, the successor of GATT are (Financial Times, 15-11-01):

Agriculture: it was agreed without prejudging the outcome, to open markets with a view to phasing out export subsidies and substantially reduce trade-distorting domestic farm supports. Non-trade and development concerns will be taken into account. This is the compromise after France fighting to keep subsidies alive. One danger lies in the phrase 'non-trade concerns', because this may refer to efforts to subsidize agriculture for reasons of protecting nature or the traditional landscape.
Environment: Negotiations on the relationship between multilateral environmental agreements (MEAs) and WTO rules, procedures for exchanging information between the WTO and MEAs and reducing trade barriers to environmental goods and services. Further negotiations for example concerning eco-labeling and win-win deals that benefit trade, the environment and development will be decided at the fifth ministerial meeting of the WTO in 2003
Services: Negotiations to open markets to foreign suppliers of financial services, telecommunications, transport, etc, and make it easier to employ foreign workers on temporary contracts.
Industrial goods: Negotiations to reduce or eliminate tariffs, including very high tariffs on sensitive goods such as textiles, and non-tariff barriers. Special attention to be paid to poor countries' exports.
Rules concerning anti-dumping, subsidies and regional trade agreements: the negotiations aim at clarifying and improving disciplines on anti-dumping measures, subsidies including fishing subsidies and regional trade agreements.
Government procurement and trade facilitation: Negotiations on transparency in government purchasing and on simplifying custom procedures, will start after the fifth WTO ministerial meeting in 2003.
Investment and competition policy: Preparatory work for negotiations that will start after the fifth WTO ministerial meeting in 2003.
Electronic commerce: extension of moratorium on imposing customs duties on electronic transmissions until the next meeting in 2003.
The time table: Negotiations to be completed by January 1 2005.
Access to drugs: the declaration on patent rules for drugs (one type of TRIP) stresses public health rights of poor countries (to not comply with their intellectual property rights). A national health crisis may override the existing patents.
The new members: China and Taiwan were admitted.

What has not been achieved?

The discussion on textile export liberalization (the phasing out of the Multi-fiber agreement) has not moved.
The French were very reluctant to discuss diminishing agricultural subsidies in a year before the general elections in France. However, the diminishing of subsidies on agriculture by the European Union (EU) has become negotiable.
Many developing countries were poorly represented: the Maldives had sent two people, St. Vincent and Haiti one versus 522 representatives from the European Union.
India was not satisfied on all points: implementation issues of the Uruguay Round (including the lifting of quota restrictions on textile exports). It also did not want the inclusion of environmental and labor norms, of competition policy and investment rules in the draft declaration. The almost breaking point was the disagreement over the rules for competition and for trade related investments (Metro, 15-11-2001).

A number of the developments in Qatar are also discussed in the book and significant:

The points of view of developing countries were taken more seriously
Developing countries were speaking with one voice again and in particular the African countries had developed a common point of view and they were able to put their fist up.
There were better coalitions between developing countries and there was more willingness on the side of developed countries to take the interest of the Third world into account.
An agreement has been reached on the agenda for a next round of trade negotiations, almost two years after the failure to do so in Seattle.

The advantages of joining WTO for a developing country like Ethiopia are:

Joining a rule based system with a conflict resolution mechanism
Take part in shaping the global economy, which is the work of the WTO, IMF and World Bank
Lower prices for consumers
Smuggling becomes less interesting
Favorable treatment as LDC

Disadvantages may be:

Risk of having to close non-competitive industries
Receiving less import duties
No right to fix tariffs and non-tariff barriers any more
No illegal copying anymore
Less emphasis on regional integration efforts

The above list summarizes some of the advantages and disadvantages of joining the WTO. For the moment China (after negotiating for 15 years) decided to join, just like Taiwan. Russia is still considering becoming a member. The WTO is one of the international organizations that serves a clear purpose and it should be kept alive.

Meine Pieter van Dijk, Professor of Urban management at the Economic Faculty of the Erasmus University, PO Box 1738 H12-27 3000 DR Rotterdam, the Netherlands tel 31-104081870 and fax 31-104089153, by e-mail: mpvandijk(AT)few.eur.nl