The law and practice of decision – making in the world trade organization

Course ID
Ethiopian Economics Association (EEA)
Getahun Seifu

The international legal order during the post-World War II created a favorable condition for international trade notably by introducing the principle of non-discrimination. It significantly liberalized trade by reducing the amount of tariff and non-tariff barriers on international trade and enabled countries (big or small, important or insignificant, rich or poor) to trade with reduced barriers and without discriminating each other. This happened because countries realized that they would be better-off by expanding trade. This was the underlying reason for developing countries and least-developed countries (LDCs) to join the system, which ended up in establishing the World Trade Organization (WTO) in 1995. Undeniably, they benefited from the non-discrimination principle. The WTO is a sizeable organization with 149 memberships, over three-quarters of which are developing countries and LDCs. It has expanded the scope of GATT, which originally dealt only with goods, to include several sub-sectors such as agriculture, trade-related investment measures, sanitary and phyto-sanitary measures and technical barriers to trade. It also introduced new rules on trade in services and trade-related aspects of intellectual property rights (TRIPS). It is attempting to expand further to encompass more to cover other fields related to trade such as labor, investment, competition and transparency in public procurement.
Currently, 32 (21.5%) of the WTO members are LDCs. Their membership is expanding. Eight additional LDCs, including Ethiopia, are in the process of accession. The objectives of economic and social development through trade are enticing especially for the poverty-stricken in the third world. However, the difference in the level of economic development of members in the GATT/ WTO resulted in inequality in absorbing the advantages offered by the system. This gave rise to the need for the introduction of the Generalized Systems of Preference (GSPs) for preferential treatment of developing countries as well as LDCs.

The WTO Agreement articulates under Article IX (1) that WTO follows the GATT practice of decision-making by consensus and, failing such, decisions could be taken by votes (simple-, two-thirds-, three-fourths majority, or unanimous votes, as the case may be). As reaching consensus proved to be very difficult, developed countries especially the United States, the European Union, Canada and Japan (otherwise known as “Quads”) developed informal/secret meetings with the prime purpose of agreeing on an issue in a small “inner circle” and attempting to have it adopted by the rest of the membership. The LDCs do not take part in such meeting.
Trade is essential for LDCs as it deals with crosscutting issues for their development. However, despite the MFN as well as preferential treatments and contrary to their increase in number, their share in international trade continues to decrease. This raises a big question: why? As Stiglitz and Charlton remark that trade may be necessary for development, but it is not sufficient. In the right circumstances, trade liberalization creates opportunities for development but other factors determine the extent to which those opportunities are realized . These “other factors” could be taking full part in the operation of the system. This shows how the entire system is undemocratic, skewed and tilts too much towards developed countries. As a consequence, members are losing hope in the system. For these reasons, it is high time to consider reviewing the decision- making process in the light of the “aid-for-trade” agenda underway

Corporate Author: Getnet Alemu and Edilegnaw Wale (Editor) & Ethiopian Economic Association/Ethiopian Economic Policy Research Institute
Publisher: Ethiopian Economic Association (EEA)
ISBN/ISSN: 978-99944-54-05-1
Primary Descriptors: WTO

Secondary Descriptor: world trade organization – Legislation

Geographic Descriptors: Ethiopia
Cataloge Date: 02/27/2013
Broad Subject heading: Trade
Call Number: 330.963 PRO 2009
Serial Key Title: Proceedings of the Fifth International Conference on the Ethiopian Economy
Publication catagory: International Conference
Content type: EEA Publication
Volume: I
Publication date: 2013-12-27 23:09:00
Forum or Discussion date: 2013-02-27 15:02:11
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Author: Getahun Seifu