MULTILATERALISM GLOBAL TRADE

What do African and developing states gain from WTO?

Developing countries' diverse interests make it highly unlikely to arrive at a single deal that will address all their interests.

In Summary

• WTO, as a global multilateral Intergovernmental Organization, promotes monitors and adjudicates international trade.

• It is central to cover all expectations and practices of states with regard to international trade.

Foreign Affairs Cabinet Secretary Amina Mohamed and WTO Director General Roberto Azevedo during the opening of the WTO Summit in Nairobi on December 15, 2015
Foreign Affairs Cabinet Secretary Amina Mohamed and WTO Director General Roberto Azevedo during the opening of the WTO Summit in Nairobi on December 15, 2015
Image: REUTERS

The race for WTO is now leaning towards Africa, which has presented three candidates.

Kenya has nominated sports Cabinet minister Amina Mohamed, while Nigeria has fronted Ngozi Okonjo-Iweala, economist and international development expert, who also served as a minister for two terms. Egypt is also in the race, appointing Abdel-Hamid Mamdouh to participate.

Amina has advocated a liberalised trade system and vowed to reform the global trade agency.

 
 

But what is WTO about and what does it have to offer African and developing countries?

Through globalisation, there has been increased economic openness, growing economic interdependence and deepening economies integration between and amongst countries in the world economy.

This is evident in economic blocs that have integrated to obtain a bigger stake and influence at the international market, for example the EU, the EAC, Comesa, SADC and Ecowas.

WTO, as a global multilateral Intergovernmental Organization, promotes monitors and adjudicates international trade. It is central to cover all expectations and practices of states with regard to international trade. It facilitates free trade on a multilateral basis on a negotiating framework.

However, just as it happens in other integrated organisations, there are always issues in regard to the distribution of costs and benefits in trade. For example, in the context of the East African Regional integration process, these issues came up during the common market deliberations and negotiations on fast racking of the East African Political Federation.

There were strong concerns, especially in Uganda and Tanzania, that Kenya is likely to benefit disproportionately from the enhanced integration process. This has been a concern at the WTO.

While WTO takes credit for a liberalisation that boosts global GDP and stimulates world demand for developing countries’ exports, there are serious concerns that to great extent are detrimental to the developing economies that have been raised against the agency.

 
 

By the fact that WTO operates on a consensus basis during its trade negotiations, “with equal decision-making power for all” is the genesis of the problems.

In reality, many important decisions are made in a process in which developing countries’ negotiators are not even invited – and then ‘agreements’ are announced.

EXCLUSION

Poor countries didn’t even know  what was discussed. Many countries do not have enough trade personnel and experts to participate in all the negotiations or to even have a permanent representative at the WTO.

This severely disadvantages poor countries from presenting their interests. Likewise, many countries are too poor and lack experts to defend themselves from WTO challenges from the rich countries, and change their laws rather than pay for their own defence.

A good example is the “Blair House Accord” by the US and the European Union in 1992, a deal that basically benefited the two actors.

This has stretched to the other issue of top-down negotiations, mainly between the US and the EU, a challenge that saw the global South walk out at the 2003 Cancun Ministerial Meeting.

The meeting failed to take developing countries’ concerns into account and that led to deep divisions among the members. This would perhaps explain why, despite the Uruguay Round Agreement on Agriculture, the global agricultural sector remains highly distorted.

The shifts in the negotiations to include more developing countries’ representatives may in the end lead to a weakened developing country solidarity on agriculture and trade

WTO has also been accused of not being transparent and exclusive. Further, developing countries' diverse interests make it highly unlikely to arrive at a single deal that will address all their interests.

As experts have previously observed, the shifts in the negotiations to include more developing countries’ representatives may in the end lead to a weakened developing country solidarity on agriculture and trade issues because of the uneven impact within the global South of potential agricultural deal.

It is further impacted by the fact that their economies are not the same and at times vary greatly. This questions the capability of the developing countries’ economies to respond to price and tariff changes, considering lack of human and physical capital, weak institutions and political instability.

These are the issues the WTO should help solve to have an equal playing ground for all member states.

What's the way forward?

There is a need for the developing countries to reform their systems to gain from opportunities that WTO provides. For instance, there is an urgent need to re-evaluate constitutionalism and governance.

The nexus of using legal and popular constitutions and proper institutional administration translates into proper economic systems and development. This is obtained by an adequate framework that guides public institutions and the private sector towards economic development trough transparency and measurable performance.

This results in a stable state with predictable behaviour. It thus encourages economic and financial institutions to enter into agreements. There is also the issue of diversification of economic activities and empowerment activities, domestically, which will translate into empowerment of domestic markets and production of products that may sell in international markets.

In addition, diversification pattern empowers a country’s socioeconomic progress through remodelling of traditional activities into commercially viable engagements that will translate into international business activities.

Citizen organizations can also develop alternatives to the corporate-dominated system of international economic governance. They can build a political space that nurtures a democratic global economy, one that promotes jobs, ensures every person is guaranteed their human right to food, water, education, and healthcare, promotes freedom and security, and preserves our shared environment for future generations.

That way, the developing countries can get more from the WTO.

Kibii is an international affairs writer and commentator