Environment and Trade Developments in Developing Worlds - Research Paper Example

Environment and Trade Developments in Developing Worlds Student’s Name: Institutional Affiliation: Environment and Trade Developments in Developing Worlds Introduction The developing countries have in the past had an incredibly low role to play in GATT and WTO systems; this problem is likely to adversely affect the developing countries even more, especially given the explosion of newly emerging issues. WTO, for instance, is currently spreading its wings at a sparkling high rate to new regions. The impact of these systems is also, in addition, much deeper and wider in developing countries. Developing economies are also quite vulnerable and likely to be highly shocked by external factors, in this case, the GATT and WTO systems. In the past, the actions of GATT mainly influenced a country’s exports and imports, but currently with the expansion of WTO activities across the globe, a country’s entire economy is as well affected.1 The disciplines on intellectual property rights and services, which are the new additions into the system, have a further impact on financial institutions, technological developments, production process, modern infrastructure, and so on. The recent developments in the field of electronic commerce and information technology goods will be a further hallmark on revenue resources. Pressure still exists on extension of new developments, such as the social clause and protection of entrepreneurs’ rights, a result that will see widening and deepening of the effects of WTO activities. If the investment proposal for instance gets amended, this will have a far reaching effect on the balance of payments and on the regional and sectoral balance of trade in a country. With so much development in store, the developing countries should play a more vigorous role in the WTOs affairs. Some of the developing countries have already started to play a more proactive role in the running of WTO. The Uruguay concluding round played a principal role in bringing to the limelight the effects of the activities of WTO and the negotiations implications. Developing countries are still debating on the way forward and what the future holds for the WTO implications on these country’s economies. Even with the countries that have come over the effects of WTO implications, Das notes that these countries have only done very little to meet the WTO requirements.2 A large number of the developing countries are yet to comply with the WTO requirements, something that have left these countries hanging on a loose thread in terms of international trade positioning. The WTO is run on the policy of democracy where every member country is entitled to one vote. This promises a shiny future to the developing countries due to the right for equal representation. The developing countries should take this as an opportunity or an institution likely to bring massive improvements in these countries’s economic future. Unfortunately, this opportunity still remains widely unexploited, and more must be done to achieve the same. This paper will critically examine and explore the effects of GATT/WTO on developing countries, and how these countries may utilize the up for grab opportunity as a tool towards economic development. Opportunity, Challenges and Response The GATT system was initially an American and UK agreement that was entered in the 1940s. The two countries held negotiations between each other with the inclusion of several developing countries being part and par saw of these negotiations. The agreements are grounded on the reciprocity principle making it suitable for countries at similar levels of economic developments. To enhance the participation and retention of developing countries, the principle of reciprocity in exchange of concessions is not greatly emphasized. The developing countries benefited from the concessions made by the developed countries through MFN treatment clause, which emphasized equality among member’s states. There were, in addition, other benefits that accrued from membership in GATT. The agreement set the engine rolling over the importance and benefits of bilateral trade between countries. The negotiations further ensured protection for the ill positioned partners via a dispute settlement system. There was a dire need in the 1960s to strengthen the differential and special treatments for the developing countries. As compliance to the same, the developing countries grievances were included in Section IV of the GATT. The idea of non reciprocity was also included among the changes implemented then to further strengthen the developing countries position in the block. A later conference that was held in Tokyo made it possible for the developing countries to enjoy special tariff rates. On a sad note, the developing counties have not up to date been able to take maximum advantage of GATT/WTO, a factor associated to under developed supply capacity. Some countries have though succeeded in building their supply capacity, benefiting from the opportunities inherent in trading with other countries. These countries have more than doubled their exports and industrial production. Examples of countries under this category include Latin American countries, though these countries have not shown a recommendable trend in the future. Several East Asian countries and South-East Asian countries have sustained an upward trend in adherence to GATT/WTO agreements, resulting to increased growth in exports and industrial production. These countries took advantage of the opportunities apparent in the developed countries in developing and expanding their economies. A significant number of developed countries have benefited from the benefits of the GATT/WTO agreements. Past Challenges As much as we are talking about benefits resulting from the GATT/WTO agreements, several challenges have been experienced in the past. A rapid explosion of exports is likely to have an adverse effect on a country’s balance of payment. This triggers the developed countries to instill protection measures to limit the level of exports in their countries. Such protection measures include such methods like raising the tariff levels and imposition of quotas all in the name of protecting their local industries. These measures have compromised the trading position of the developing countries limiting them from acquiring the benefits of these agreements. The developed countries further employ innovative means of restrictions by associating trade to their country’s labor standards. With the growth of the developing countries textile industries, the developed countries felt challenged due to a looming rise in competition on a global level. This triggered the developed countries to interfere with the free trade mechanism. They introduced a regime in the textile sector which they named MFA, in contrast to the GATT agreements. These restrictions led to a downfall in the textile industries of the developing countries. The developed countries extended these restrictions to other sectors, further weakening the trade position of the developing countries. An example of such restrictions was the imposition of quotas for leather products and jute products, products chiefly produced by the developing countries. Imposition of quotas was later extended to the steel industry leading to a further fall in the economy of the developing countries. The members of the developed countries do not hesitate to impose restrictions on the export in to their countries. These countries do this, with intent of maintaining a sound balance of payment. It should be noted that plenty of exports may make a country experience a deficit balance of trade. The developed countries imports are subjected to anti-dumping duties and anti-dumping investigations. Even though the developing countries exports are not affected by these measures, the onsite of investigation is already a barrier in itself to effective international trade. The GATT agreement consists of a general exception clause that allows the developed countries to alter the initial terms of agreement. Emerging Trends The various developing trends in WTO/GATT have further facilitated the weakening of the developing worlds in international trade. This is quite a severe challenge even to the developed world, especially given that they still stand to benefit from the dealings of international trade. The developed countries, on the realization of this threat, have embarked on strengthening WTO, a move that has received massive backing from all the involved parties. Measures of solving disputes among member’s states have also been improvised to ensure compliance to the WTO agreements. Developed states are also working tirelessly towards the expansion of WTO agreements to incorporate new subjects that are unrelated to the initial GATT agreements. Efforts are also underway to ensure a more environmental coverage of these agreements. The concern over the increased competition levels have also been addressed to avoid a repeat of bringing WTO down as evidenced with the GATT. The developed countries have still improved their efforts towards expansion of the market access of their services and products. An incredible instance is government procurement, introduced for the purpose of incorporating transparency and increasing market accessibility of the developed countries products. All these developments threaten explosion of new challenges to the countries that are still in their development stages of their economy. There are four main features that threaten the future of WTO agreement. First, the pattern and subject of negotiations have grown into more complex levels ever than before. For instance, the idea on liberalization of financial services has raised massive debates among member countries. Likewise, the process of launching a dispute is extremely bureaucratic either as the plaintiff or as a defendant. This has seen the developing countries in a very tricky position. The process requires the formation of a panel to solve any arising dispute between member states. The second feature emanates from the increased roles of the developing countries in WTO agreements. The past had been occasioned with special concessions and low interaction levels of the developed countries. Recent negotiations offer more concessions to the developed countries. Thirdly the developed world has started entering into more negotiations with the developing countries as a way forward to more trading territories. The developed country’s approach and altitude towards the developing countries has significantly changed in the recent past. Developed worlds no longer just propagate their own self interest, but have learnt the great potential mutual benefits apparent in international trade. Finally, the developing worlds coordinate their activities more than the developing countries. The developed states have a deep confidence level in the way that they conduct their activities. Weaknesses in Developing Countries Despite all these challenges, the developing countries are positioned in a very weak spot. This weakness is noticeable in various ways, some of which include: one, the fact that the developed countries have continued receiving an unequal treatment in these trade agreements. The developing countries also make huge levels of concessions to the developed countries with a minimal reciprocity of the same. Thirdly, multiple differential and special treatments for the developing world also stand unimplemented. This has further compromised the position of the developed countries in these trade agreements. Areas and subjects of interests for the developing countries have also been ignored for a long span of time. These weaknesses are addressed in finer details as below. Less Treatment There have been calls for the developing countries to receive differential and special treatments in the WTO/GATT agreements. This is seen as a move likely to boost the participation of the developed countries in these agreements. There is discrimination in the manner through which obligations and rules are administered in WTO/GATT agreements. The developed countries do not always hinder to the set rules and procedure, something that the developing countries view as discriminatory. The process of resolving disputes among or between member states is also quite complex and discriminatory to the less developed countries. The process is so costly and complex, leading to some countries harboring a feeling of discontent. To the developed countries, the process is an ease one, and much favorable to their part. The developing countries are locked out of filling complainants report due to the high cost involved in the dispute settlement process. These weaknesses leaves the developing nations poorly placed in the WTO agreements relative to the developing countries. Participation of the Developed Countries without much Return The developing countries do not benefit much from the activities of the WTO agreements. This may be attributed to the fact that most developing countries deals with primary goods, and mainly the agricultural produce. Agricultural products exhibits an elastic demand, and thus the developing countries are not in good positions to negotiate their product prices. Most of the developing countries are price takers in the global market while the developed countries dictate the prices of their products. Differential and Special Treatment not Implemented The developing nations are supposed to be accorded differential and special treatments as laid down in Section IV of the GATT agreement and in the Uruguay Round agreements. Those especially listed in the Part IV of the GATT agreement are essentially important. In these agreements, the developed countries agree to give low tariffs and less restriction to the developing countries as a way of integrating them in the international trade. In contrast, most of these agreements hardly get implemented, a result attributed to self interests of the developed countries. Strategies that the Developing Countries Employ in the WTO The methods that the developing countries use as a positioning strategy are two folds. These countries may either opt to maintain silent and just watch the unfolding or they may also stage total oppression. These methods are discussed as below: Silence and Indifference A vast number of the developing countries opt to remain silent in matters pertaining to WTO affairs. They leave the ground for the developed countries to implement policies, although these policies still affects them. These countries still have the feeling that these policies do not affect them or they are not aware of how these policies may affect them in the future. The developing countries still languish in fears of opposing the policies of the developing worlds due to the implications involved. The developing countries may use their development levels as tools through which they attack the developing countries. Stiff Opposition Other developing countries oppose those policies implemented by the developed countries in WTO agreements. The only major problem with those countries that employ this strategy is that they risk a great risk of being sidelined by the developed nations. Issues that needs to be addressed A fair ground must be laid to ensure adherence to the WTO/GATT agreement aimed at ensuring a fair representation in the agreement. Some of the issues that need a redress include appropriate implementation of WTO agreements. This will entail formulation of procedures and legislation, removal of import control measures and establishment of machinery and institution. It is possible to implement a large chunk of these policies now, while others may still be implemented in the future. Laws that ensure all the members comply with the laid down rules and procedures must be put in place without aspects of discrimination. All parties should enjoy an equal treatment in terms of the WTO negotiations. Members that do not implement the WTO agreement should face stiff penalties or face deregistration. The recent past has experienced numerous developments in terms of environmental and trade issues with special reference to the developing nations.3 The world has, through the utilization of technology, been integrated into a global village. Thanks to the advancement in online trading technology, it is now a reality for countries to trade from different destinations across the globe. This is a great boost to the volumes of international trade. This advancement has though not been fully implemented in a majority of the developing nations due to limitation of resources4. Developing countries lag behind in terms of developments in trade, and they should work more towards the improvement of their trade positioning. It is only through such a manner that these countries may benefit from the developments in the field of trade.5 Most developing countries rely on their industries as their major sources of income. These industries are known to produce high levels of pollution to the environment, a factor that has solicited ranging debates. The developing countries, on the other hand, are still in their stages of economic developments something that the developed world feels may be a detriment to the environment. Developed countries cite such instance as the deforestation of the rainforest as likely to have an adverse effect on global climate. The developing nations as a way of curbing these environmental hazards should try to improvise ways aimed at reducing the pollution levels to tolerable levels. This is the only possible way that these developing nations may benefit economically from their industrial activities. The lobby groups for development in industries argue that growth of industries provides food security assurance to masses and thus an increased standard of living. They further argue that since most of the natural resources are renewable, then their exploitation should be encouraged.6 To the contrast, those groups against this move argue that we have already wasted more than enough exploitation through the exploitation. They view this as likely to pose an enormous peril to posterity. They thus advocate for the utilization of other resources, and especially renewable ones to save the future generations. Economic development is a likely cure for the multiple problems evident in the developing countries. The developing countries should thus be more aggressive in exploiting their nature resources to mitigate the multiple problems they face. Appropriate measures should also be put in place to ensure that these countries comply with the environmentalist requirements. It is only through such means that the industries will be deemed as having acted in a socially responsible manner. Conclusion The world and especially the developed countries face numerous trends in terms of trade and environmental issues. These issues are of great importance to these countries and they require an immediate address. The idea of incorporating trade agreements aimed at improving the world’s level of trade and strengthening the levels of mutual agreements between the involved players is a very noble one. The developing nations are supposed to be accorded differential and special treatments as laid down in Section IV of the GATT agreement and in the Uruguay Round agreements. Those especially listed in the Part IV of the GATT agreement are essentially important. In these agreements, the developed countries agree to give low tariffs and less restriction to the developing countries as a way of integrating them in the international trade. Environmental issues have also been focused on this paper. The developing nations need to implement appropriate and effective measures to ensure compliance to environmental requirements. This will enhance the conduct of business in a more socially acceptable manner. References Commonwealth Business Council. (2002). Developing Countries and the WTO Trade Debate: A Compelling Case for Full Participation in the New Round. London: Commonwealth Secretariat. Das, B. Strengthening Developing Countries in the WTO. Retrieved April 18, 2012 from http://www.twnside.org.sg/title/td8.htm Diane Publishing Company. (1998). Trade and Sustainable Development: A Survey of the Issues and a New Research Agenda. New Jersey: Diane Publishing. Sell, M. (2009). Trade, Climate Change and Sustainable Development: Key Issues for Small States, Least Developed Countries and Vulnerable Economies. London: Commonwealth Secretariat Szirmai, A. (n.d). Developing Countries and the Concept of Development. 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