Should developing countries be exempted from WTO rules?

There are many sound supportive arguments for the view that developing nations have to 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)

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