Development in World Trade law

• Author: Dr Priscilla Schwartz
• Position: Lecturer in Law University of Leicester E-mail priscilla.schwartz@le.ac.uk
• Pages: 61-71

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I Introduction

The process to development or its discourse has been likened to an ideology that is operationalised (by the World Bank) not according to some clearly discernible unitary model which renders predictable development decisions.¹Rather, it relies on conflicting contestation of meanings that eventually shape the form of intervention that constrains and transforms development process in a way that makes it easier to apprehend for political mobilization.² The notion of development is not static, having evolved from the 'grips of colonialism and the liberating movement of the New International Economic Order'.³ It has a fragmented constitutional and normative character and function in international law, owing largely to the differing perspectives on ways to facilitate development.

According to Qureshi and Ziegler, some basics characteristics define the normative framework of development in international law. First, there is 'traditional model' of rights and responsibilities of developed and developing members of the international community. Second, there is the 'facilitative and cooperative framework' that includes development assistance and preferential treatment in trade. Third is the 'integrationist framework', which facilitates the full participation of developing states in the international economy. Then there is 'externally oriented regulatory framework', a standards setting structure within the international economy. Finally, there is the 'communal framework' ensuring that common resources are shared by all. The normative content of the various spheres may be hard, soft or aspirational.⁴

The history of development found beginnings in individual projects and the concept of the "production function". Its objectives derived from input-output models and macroeconomic projections.⁵ A reconceptualisation of development began with growing recognition that markets do not create conditions for their own success separate from local context. This reconceptualisation decentres the focus on economic growth to a concept of development broadened by pursuit of human development (of which income is only an aspect) and requires equal consideration to 'political, social and legal development'.⁶ These multiple aspects of development are compounded in Sen's concept of 'development as freedom', which has a goal to enhance people's capacities and choices,⁷ and together they reflect in the promotion of a "Comprehensive Development Framework" which incorporates a social agenda in policy recommendations. ⁸

In international law, certain fundamental principles relating to development are identifiable. Foremost is the notion of developing countries especially with regards the distribution of rights and duties, differentiation between states according to the level of their development and special needs, and in economic relations, the cost, andPage 62 benefits arising from membership of international organisations.⁹ Another principle is the "right to development," recognised as a process involving the development of economic, social cultural and political aspects of human life.¹⁰ Next is the principle of sustainable development, a norm of customary international law, which aims at reconciling development goals and environmental objectives.¹¹

At the turn of the millennium, globalisation concerns engendered the reconditioning of development objectives as a global agenda, with emphasis on collective responsibility for achieving the millennium development goals (MDGs).¹² The MDGs aim at ending poverty and hunger, universal education; gender equality; improving child and maternal health; combating HIV/Aids and environmental sustainability.

The MDG goals further reiterated the need to develop global partnerships for development particularly in relation to developing further an open trading and financial system that is rule based, predictable and non- discriminatory while addressing the 'special needs' of developing countries with targets for development aid, debt relief and enhanced tariff and quota-free market access .¹³ With no multilateral regime which covers the 'gambit of development issues'; aspects are integrated into international trade and monetary law.¹⁴ However, there are several institutions with mandate to address international development issues.

So far, we see an explicit inclusion of rule-based trading system within the broader framework of development goals. This inclusion could, from a legal perspective pose a conflict between the challenge of discerning the law from the aspirations of nation states, and the principal economic quest to fathom optimum ways of facilitating development. 15 Within the mainstream development community, debates now largely focus upon the way to conceive and merge economic/social agenda, the relationship between the social, and the macroeconomic or financial dimensions of globalisation and the means by which social concerns are to be furthered.¹⁶ At the WTO, even a traditional multilateral trade round was reinvented as a 'Development agenda'¹⁷. Article 2 of the Doha Ministerial Declaration is explicit on the objective of promoting economic development and alleviation of poverty in poor countries.¹⁸ Development is now at the heart of the WTO agenda, with a special committee for trade and development.

In spite of the centrality of the 'development principle' 'the development dimension has neither been sufficiently articulated, nor coherently structured in the architecture of international trade agreements'.¹⁹ Its meaning remain implicit, uncertain or submerged.This anomaly represents a basis for tensions among the developed and developing members, such as, on questions over whether or not new negotiations should fundamentally alter balances of rights and obligations of the Members in pursuit of development objectives.20 Definitional uncertainty also underscores criticisms of the "trade and" linkages. One such is that trade only recuperates the legitimacy of other regimes for itself,²¹ and allowing for the creation of dissention, disagreement, incoherence and indeterminacy.

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To overcome such consequences it is important to ascertain the meaning and scope of development in WTO law. Should we look for its fulfilment from substantive norms, procedural rules, or trade objectives? Should development be determined in terms of trade income, investment capital, individual welfare gains, or distributional issues; or should one construe development from the global economic outcome of trade liberalisation? All these questions call for judgements on the importance of trade to development, the role of trade in the global development agenda and the impact of trade on development. However, this is not the focus of this paper. Nor is the focus to list provisions that tend to favour developing countries or to discuss their fairness or effectiveness.

Rather the paper will analyse the content of relevant WTO rules to ascertain the development dimension of trade terms. It will draw to some extent on the paradigm of development principles in international law discussed above to contrast trade-led development from broader development goals. It will also establish the co-relation between 'developing' status, special treatment, and development 'needs'. In addition, using economic rationality and prevailing theories of law and development, and WTO concept of building trade capacity, the paper will unravel trade and development complexities. The article then recommends an appropriate direction of development in trade terms.

2. Evolving concept of development in world trading system

The notion of development has been a long-standing objective of the GATT/WTO-as demonstrated by the preamble paragraphs to GATT 1994, the WTO Agreement, and the Doha Ministerial Declaration of 2001. Some of the objectives include raising standards of living, ensuring full employment and growing volume of real income, expanded production of effective demand of goods and services trade, and environmentally sustainable development. "Encouraging development and economic reform" is also among the fundamental principles of WTO law. Others include Most-favoured-Nation (MFN), idea of non-discrimination amongst trading partners; National treatment, advocating equal treatment of foreign and domestic products and freer trade through lowering trade barriers; predictability and stability of the system assured through 'binding' commitments, transparency and surveillance of national trade rules and policies.²²

Starting in the 1950s, GATT rules were changed several times to address development concerns. Almost all these amendments conferred on developing countries special and differentiated treatment (SDT), by making exceptions to the basic GATT structure of non-discrimination and reciprocity. SDT was based on the rationale that equal treatment or unequal economies simply perpetuated economic inequality and that only SDT could mitigate the negative effects of economic asymmetries between the developed and developing countries.²³ However, with the Uruguay round, and inception of the 'single package' deal, SDT provisions focused not on problems that poor states face because of economic under development, but on the problems they face as parties to the deal. The new arrangement, according to Dunnoff, moved from "non-reciprocal approach to obligations to a non-reciprocal approach to implementation"²⁴

2. 1 'Developing' Status, Differential treatment and Preferences

Developing countries are a highly diverse group often with very different views and concerns, who increasingly look to trade as a vital tool in their development efforts.²⁵...