The Least Developped Countries and the WTO

Economie | 10 pages | 03-02-2006 | Format : | Note : Non noté |

PRIX : 3.60€ |

Résumé

Would the failure of the WTO MC6 in Hong Kong be good or bad news for the Least Developped Countries? Do the LDC's benefit from WTO rules and trade liberalization? If so, to what extent? A short as well as a long run analysis.

Extract:

The WTO allows its members to negotiate multilateral trade agreements following two main guiding principles, that is to say, liberalism and symmetry. On the one hand, liberalism implies that the use of tariffs and quotas are restricted, since they are an obstacle to free trade which is itself profitable for every country according to the theory of comparative advantages . On the other hand, symmetry implies each nation must observe the MFN (Most Favoured Nation) clause. Tariffs and quotas, when allowed, should apply to all.

We are today in the Doha Round which began in 2001. It is also called the “Development Round” for it gives a priority to make trade fairer for developing countries and help them to have access to the world trade system. The main issue today is about removing all tariffs barriers as agriculture is concerned which is the most developed economic sector in most of today's developing countries. Actually Cancun MC5 failed in making rich and poor countries agreed on a consensus (the rich countries asked the poor countries to open their market to Western goods but on the other side, they refused to cut off their farm subsidies). Today still, tensions within the EU, and between US and EU about a common proposal is likely to compromise the negotiations in the MC6 in Hong Kong.

Meanwhile, would a failure of the MC6 be bad news for every one? By failure, we mean that no consensus will be reach, and that, at best, the status quo will remain. Actually any generalization in this sense would not be pertinent as regard the several differences between the countries today all over the world. To answer this question, we should take into account the different levels of development of each country and the impact a complete liberalization could have on their economic, social and political structures. The category we will focus on in this paper gathers the least developed countries (LDC's) together. LDC's have in common “low incomes”, “human resource weaknesses” and an “economic vulnerability” . Do they benefit from free trade globalization like any other country? In the context of the MC6, is it in their interest to open their market to western goods and, in exchange, be able to sell their agricultural production without facing the obstacle of EU and US farm subsidies? In other term, would the failure of the MC6 (topmost WTO meeting) in Hong Kong be good or bad news for the LDC's?

On the one hand, the failure of the MC6 is in the short run likely not to be regrettable for the LDC's since, contrary to the other developing countries, they aren't enough prepared yet as regards their domestic instability, to integrate the world trade system. Meanwhile, on the other hand, it could be considered in the long run as a bad news for it compromises the future of the WTO and of its principles which are, for the LDC's, the most efficient way, once they will have stabilized their economy, to thrive under globalization.

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