Developing Countries Should Be Exempted From WTO Rules - Essay Example

Developing countries should be exempted from WTO rules. Discuss. There are many sound supportive arguments for the view that developing nations haveto be exempt from WTO rules. This essay will look into these in detail, while also presenting the rationale behind opposing viewpoints. Foremost among the arguments supporting exemption is the historical disadvantage suffered by developing countries. For example, most of the countries whose economies are in transition today are erstwhile colonies of European imperialist states. As a result of exploitation and usurpation of resources during the process of imperialism, these nations were left highly indebted and economically weak. Hence, there is a strong case to be made for WTO rules exemption from a post-colonial reparation perspective. Alongside several emerging economies, many other countries that presently fall under the Heavily Indebted Poor Countries (HIPC) category are former colonies for European imperialism (Cappelen, 2007). Moreover, the prevailing political chaos in most of these countries is partly due to the abrupt transition of power from the imperialists to the local elite – a transition that did not make provisions for the establishment of democratic institutions and processes. Already, the implementation of the HIPC Initiative, which was conceived and proposed by the World Bank and its agencies, is one of the methods through which some developing nations are exempted from paying their debt. But countries such as India, China, Russia, Brazil, among others, which do not qualify for the HIPC program, are presently made to compete with advanced economies of North America and Europe, which is a little unfair, given that the they too have a claim for post-colonial reparations (Mcclough, 2006). The process of economic globalization and attendant free trade practices promoted by WTO has become ubiquitous in the new neo-liberal world order of the last few decades. However, all too often, the flaws inherent in this system have caused distress to sections of population in the developing world. Moreover, free trade “means that countries that do not enjoy a comparative advantage have to move resources to more productive sectors or activities, which is usually a painful process. The benefits of liberalized trade are equally distributed among all consumers, but categories of producers suffering from cheap imports may oblige the state to intervene. So many governments are tempted during recessions to slow the adoption of open trading policies in order to secure national independence. Where production is essential for national defence, it may be supported directly through procurement practices rather than indirectly by protection. In other sectors of the economy, tariffs and contingents are still powerful instruments of the state when the national interest requires the survival of inefficiently operating firms or sectors. (Jilberto & Mommen, 1996) Since business corporations are the façade of the process of globalization, the free trade rules are seldom concerning sovereign nations alone. In reality, the free trade practices promoted by WTO are driven by powerful business interests. Often, the power and influence of transnational corporations transcends and transgress the sovereignty of nations and the constitutional rights of local populations. The loopholes of international business law allow these Multinational Corporations (MNCs) to go scot-free and evade accountability toward the citizens of the countries in which they operate in. While the activities of MNCs in developing countries can either be bolster up the Gross Domestic Product of the country, recent evidence suggests that the effects on living standards minimal to none for a majority of the population. The primary criticism levelled against existing WTO rules is that it perpetuates lack of accountability and irresponsibility on part the practitioners of the neo-liberal agenda (Narlikar, 2003). While global financiers and speculators can accurately evaluate the values of tangible assets, more often than not the measure of intangible consequences of a business corporation’s operations are not accounted. In other words, certain ‘externalities’ such as pollution of water sources, global warming, internal displacement of people are not accounted for, which makes prevailing WTO rules quite unfair (Colares, 2009). Hence there is a strong case for exempting developing countries from select WTO rules on these grounds. The WTO and the United Nations have always argued that an international free trade system without specific exemptions to any country is a sound policy. These institutions state that developing countries have to adopt WTO rules as they exist in order to meet the Millennium Development Goals (MDGs) set for 2015. In this regard, “international trade is recognized as a powerful instrument to stimulate economic progress and alleviate poverty. Trade contributes to eradicating extreme hunger and poverty (MDG 1), by reducing by half the proportion of people suffering from hunger and those living on less than one dollar a day, and to developing a global partnership for development (MDG 8), which includes addressing the least developed countries needs, by reducing trade barriers, improving debt relief and increasing official development assistance from developed countries”. (Cordoba & Bouhey, 2008) Despite this rhetoric from WTO and the UN, the ground realities happen to be quite different. For example, globalization has led to the practice of exploitation of cheap labour in developing countries. A highly publicized recent case is the operations of sportswear maker Nike in countries such as Indonesia and Philippines. Documentary filmmakers have recorded the inhuman working conditions offered to labourers in Nike plants in these countries. Moreover, these workers were never offered medical insurance or prescribed minimum wages. As a consequence of this negative publicity, many consumers in the West have refused to consume products that were manufactured through exploitation of labour in developing nations. While the condition in manufacturing hubs of Taiwan, Thailand and China are not as harsh as in Indonesia and Philippines, they only barely adhere to international human rights standards (Colares, 2009). So, while global capitalism is further developing the length and breadth of its reach, it benefits certain sections of people while disadvantaging others. While each country has its own set of labour laws that specify the minimum wage and acceptable working conditions and duration of work, it is common knowledge that these laws are easily circumvented. Given that several developing nations do not have robust law enforcement mechanisms and robust democratic institutions to carry out the mandate of the people, there is a case to be made for broadening the scope of organizations such as WTO, World Bank and the IMF. For example, in Southeast Asian nations of Indonesia, Thailand; Asian nations of Bangladesh, India and Pakistan, and several East European countries such as Belarus, Georgia, and Croatia and to a lesser extent in China, the levels of corruption have increased since the opening up of their economies (Narlikar, 2003). The misuse of public power for private gain is growing into epidemic proportions in developing nations. As of now the WTO is a purely economic institution, restricting itself to facilitating cross-national trade and money flow. If it takes upon itself the responsibility of social justice as well, then the results of neo-liberal globalization would be much different in the developing world. The implication being that along with exempting developing nations from certain WTO rules, a valid claim is to be made for broadening the existing rules as well (Frieden, 2003). It is a reflection of the unfairness of existing WTO and World Bank policies that there have been instances of protest and demonstration against policies made in these institutions. The issue of globalization and the resultant injustices to the developing world, such as exploitation of labour and degradation of environment, has outraged intellectuals and community leaders in these nations. This movement for an equitable and just economic system is termed in the mainstream media as “anti-globalization” movement. But this is a subtle ploy to undermine the movement, as those involved in it refer to it as the “social justice” movement. Generally, the issue of globalization has divided the world into two opposing camps (Siddiqi, 2006). Government institutions and business corporations from developed countries are predominantly in support of it and they also happen to possess most of the wealth and power. The majority of those opposing it are from the developing world, including the continents of South America, South Asia and Africa. Events such as the World Social Forum are conceived and conducted in the developing world and purport to serve as alternatives to the policies initiated by the World Economic Forum and its allied institutions such as the WTO. It is no coincidence that the WEF takes place in Davos in Switzerland, a country that is a banking haven for the rich. The World Social Forum events that are conducted with periodic intervals are proving to be a great success in invoking the spirit of resistance in the impoverished people of the world. WSF events in Porto Allegre in Brazil and Mumbai in India have seen large participation from people all developing nations. Intellectuals such as Vandana Shiva and Arundhati Roy (both from India) and the poet Marcos (from Mexico) are at the forefront of the movement for social justice. These developments show the inherent drawbacks in the policy framework adopted by the WTO towards developing nations (Siddiqi, 2006). Unless it recognizes this and adopts a more equitable policy framework – one that caters to the needs of all people including the poor – the relevance and legitimacy of WTO would remain dubious. Many people in the academic world have also have raised concerns about the inequities and injustices witnessed in the developing world as a result of WTO rules. Scholars such as John Mickelethwait and Adrian Wooldridge endorse the status quo on the grounds that it has increased economic opportunities for many people as well as providing a counterbalance for political hegemony. But somehow, this assessment does not weigh up to the ground realities of a vast majority of people who fall under the category of ‘losers’. In this regard, the proposal made by Indian born economist Amartya Sen makes more sense. Sen had done extensive studies on poverty and famine in Third World countries and has come to the conclusion that globalization under current WTO norms is not completely fair. He argues that unfettered capitalism across national borders is to be encouraged, but the accrued wealth has to be more evenly distributed among the people. In other words, what Sen proposes is a benign form of globalization, whose benefits reach all strata of society (Bhattacharya, 2008). Renowned economist Joseph Stiglitz is also not in favor of WTO rules for the developing world as it exists today. He condemns the prevailing system as following market fundamentalism and suggests that proper governmental regulation is essential for reducing disparities in wealth. References: Bhattacharya, R. (2008). Are Developing Countries Going Too Far on Trips? a Closer Look at the New Laws in India. American Journal of Law and Medicine, 34(2/3), 395+. Colares, J. F. (2009). A Theory of WTO Adjudication: From Empirical Analysis to Biased Rule Development. Vanderbilt Journal of Transnational Law, 42(2), 383+. Cordoba, S. F., & Bouhey, A. (2008, March). Trade and the MDGs: How Trade Can Help Developing Countries Eradicate Poverty. UN Chronicle, 45, 16+. Cappelen, Alexander W., Rune Jansen Hagen, and Bertil Tungodden. "National Responsibility and the Just Distribution of Debt Relief." Ethics & International Affairs 21.1 (2007): 69+. "Developed Countries Commitment at G8." Presidents & Prime Ministers July 2000: 32. Frieden, Jeffry A., Global Capitalism: Its Fall and Rise in the Twentieth Century, Published in 2003. Frank Lechner and John Boli, The Globalization Reader, Published by Wiley-Blackwell in 2007. "How Can the Poorest Countries Catch Up?." World Economic Outlook : 113. Jilberto, A. E. & Mommen, A. (Eds.). (1996). Liberalization in the Developing World: Institutional and Economic Changes in Latin America, Africa, and Asia. New York: Routledge. Jones, K. (2004). Whos Afraid of the WTO?. New York: Oxford University Press. Kwa, A. (1999, December 7). WTO and Developing Countries. Foreign Policy in Focus, 4, 1. Mcclough, D. (2006). Negotiating Trade: Developing Countries in the WTO and NAFTA. American Economist, 50(2), 83+. Narlikar, A. (2003). International Trade and Developing Countries: Bargaining Coalitions in the GATT & WTO. London: Routledge. Rasmussen, Robert K. "Sovereign Debt Restructuring, Odious Debt and the Politics of Debt Relief." Law and Contemporary Problems 70.4 (2007): 249+. Sarkar, R. (2001). The Developing World in the New Millennium: International Finance, Development, and Beyond. Vanderbilt Journal of Transnational Law, 34(2), 469. Siddiqi, M. (2006, October). Crunch Time for World Trade Deal: Once Again the Developing Countries Have Failed to Convince the Rich Nations to Play Fair in World Trade. the Doha Treaty, Which Would Reduce Poverty in the Developing World While Keeping the Rich Wealthy, Has Been Shuttling Backwards and Forwards with No Agreement in Sight. the Implications of a Stalemate Are Serious. African Business 32+. Tarullo, D. K. (2002). The Hidden Costs of International Dispute Settlement: WTO Review of Domestic Anti-Dumping Decisions. Law and Policy in International Business, 34(1), 109+. Read More