Jeepers, is the WTO Really This Irrelevant?

♠ Posted by Emmanuel in , at 7/10/2009 09:05:00 AM
I was surprised to find that no one in the blogosphere has linked to this 6 July Pascal Lamy op-ed in the Wall Street Journal--surely no obscure publication--concerning aid for trade. Recently, the WTO held another gathering concerning this ongoing program of trade facilitation: aid in the form of giving LDCs help with how to trade. Here's a quote from Lamy that describes aid for trade's essence:
One key component of this is the creation of adequate physical infrastructure -- roads, ports, telecommunications, electricity supply, storage facilities -- to ensure the consistent and reliable flow of goods, services and information that underpin global trade. Another is to ensure that producers are trained in meeting global product quality and safety standards [sanitary and phytosanitary measures to you trade enthusiasts] demanded by the world's consumers. Improving physical and human capacity will further assist countries in diversifying their production and reaching new markets.
There's a large 4.5MB PDF file you can download from the WTO site concerning aid for trade entitled Maintaining Momentum. However, in addition to Pascal Lamy's speech barely registering a blip on the media radar, neither has the accompanying report. Indeed, all I've managed to find is this commentary from the Warsaw Business Journal by Zambian Richard Mbewe repeating standard bash-the-WTO rhetoric:
This week, the World Trade Organization held a Global Review on Aid for Trade meeting in Geneva. Participants of this meeting included representatives of major financial institutions and regional development banks. The objective of the meeting was to effectively monitor Aid for Trade flows, improve the assessment of trade development needs for developing countries and to strengthen regional trade in the Aid for Trade framework. In short, the intention was to improve the capabilities of developing countries to fully participate in international trade. The Director-General of the WTO, Mr. Pascal Lamy's wrote a commentary entitled “Developing Countries Need Trade” that appeared in The Wall Street Journal on July 6, that fully illustrates the shortcomings of this policy.

Whilst Mr. Lamy states the obvious, he fails to explain how developed countries can help developing countries. His text contains phrases like “pledged,” “commitments,” “supply side constraints,” etc. – phrases that have no practical meaning for developing countries. Apart from that, these phrases have so much ambiguity in their meaning that they can be interpreted at any time to mean anything except allowing developing countries to enter the developed countries' markets!

Mr. Lamy fails to address the key issue – access to the markets of developed countries by producers and labor from developing countries. This must involve products and labor in areas where developing countries can effectively compete with developed countries. These are in agriculture and labor-intensive industries. But it is these very markets that are closed to developing countries. Of course, the major culprits are the European Union and the US.

Therefore, when Mr. Lamy boasted that the meeting would be centered on the theme “Aid for Trade,” I find it hard to understand his optimism, especially since research has shown that aid does NOT help developing countries. Instead, it destroys them. Secondly, former US President Bill Clinton coined the slogan “Trade and Not Aid,” but slogans were all that came of it. So what is so unique about Aid for Trade that makes Mr. Lamy optimistic?

Thirdly, this new initiative will be negotiated in the framework and structure of the WTO. One of the major shortcomings of WTO negotiations is the failure by real developing countries (not the BRICs) to be fully represented by seasoned, highly-qualified negotiators. Thus, the role of developing countries during such meetings is reduced to selling their votes to the highest bidder (usually the EU or UK), who does not necessarily have the same interests as the developing countries.

Fourthly, developing countries are poorly represented at these meetings, because just a handful of these countries have got an ambassador or representative fully dedicated to the WTO.

The failure of the Doha Development Round should have opened the eyes of the likes of Mr. Lamy to fully address the shortcomings of the WTO's negotiating process and decision-making procedure to make fully representative by all countries involved. But this has not happened.
There are valid and invalid points here:
  1. Lamy's language is technical and opaque to avoid entanglement over the extent of others' commitments. In his defense, he doesn't speak on behalf of the EU or US but as WTO Director-General;
  2. Aid for trade is not primarily official development aid (ODA) but technical assistance. Nobody is claiming that technical assistance will result in economic development, but instead will help spur trade which can help the process along;
  3. Lack of trade experts among LDCs--especially trade lawyers who can pursue cases at the Dispute Settlement Mechanism (DSM)--is something that aid for trade aims to alleviate by familiarizing more LDCs with WTO processes. That wealthier developing countries like Brazil and India as well as--to a growing extent--China are already seasoned trade negotiators is a valid point. Moreover, their faster rate of progress increasingly means that they will have diverging interests from those of less advanced LDCs;
  4. Ditto.