Difference between Fairness in Regulations and Commitments

Another significant element when considering the obstacles to moving the Organization toward a just institution from the perspective of the first principle of justice is the commitment established by each WTO Member in their individual schedule of commitments. Studying the legal provisions set in the Agreement indicates a relative fairness and alignment with justice principles. However, looking solely at the Agreement and the rules in the WTO framework would not result in obtaining a true perspective of the Organization. A comprehensive overview of the Agreement with the individual schedules of commitment of each WTO Member shows that the acceptable framework of the Agreement has been disregarded and forgotten almost in its entirety and the first principle of justice which calls for equal treatment has been violated. The problem is illustrated in several cases in the WTO Agreement especially the WTO Agreement on Agriculture in which the rules established present a good overview of a relatively fair arrangement and a good move from a non-desirable situation to a better condition. However reading these provisions in conjunction with the scheme of

275 Stiglitz, "Social Justice and Global Trade.", p.18

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commitments of individual members highlights a different outcome and results in an entire unjust and unfair mechanism.²⁷⁶

1.2.3.2.1. Rules of Origin

The rules of origin are a set of rules and provisions which determine the country of origin of particular goods and put forward the formulae which determine whether or not these goods would be considered as manufactured in a certain territory. These rules which are critical in international trade provisions especially in trade policy instruments such as safeguard measures, like anti-dumping and countervailing duties, play a major role in international trade and the free flow of goods between the low-income and high-income countries.²⁷⁷ The fact that there is no binding regime of rules of origin in WTO has provided the possibility for the powerful members to design carefully and on each good specifically the complicated rules of origin in order to tailor the impact of free trade on the domestic industry of the powerful members.²⁷⁸ The problem of rules of origin shows itself more in the Special and Differential Treatment and different GSP programs which will be studied later.

1.2.3.2.2. Agricultural and Cotton Subsidies

Originating from the difference between the Agreements' Regulations and scheme of commitments of individual members, the level of subsidies paid to the agricultural and cotton sector of the developed countries and powerful members of the WTO is a major problem in the move toward free international trade.

Agricultural policies and subsidies were always one of the controversial issues during the trade negotiation rounds during the GATT as agriculture and cotton

276 Cedro, "John Rawls Justice as Fairness and the Wto." p.132

277 Antoni Estevadeordal and Kati Suominen, "Rules of Origin: A World Map and Trade Effects Integration, Trade and Hemispheric Issues Division, Integration and Regional Programs Department Inter-American Development Bank," Paper prepared for the The Seventh Annual Conference on Global Economic Analysis: Trade, Poverty, and the Environment, available at https://www.gtap.agecon.purdue.edu/resources/download/1866.pdf (May 2004). p.2

278 William E. James, "Rules of Origin in Emerging Asia-Pacific Preferential Trade Agreements: Will Ptas Promote Trade and Development?," Asia-Pacific Research and Training Network on Trade Working Paper Series 19(August 2006). p.33

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was one of the primary sectors in which the developing and least-developed countries had found their comparative advantage. In fact, one of the most influential elements in the failure of negotiations to establish the International Trade Organization (ITO) was the fact that the developed countries especially the United States refused to align their agricultural policies with the general rules of competition in international trade law.²⁷⁹

The Agreement on Agriculture was negotiated and designed as an outcome of the Uruguay Round aimed at promoting the reduction of exports subsidies, improving the market access opportunities and reducing and eliminating the subsidies for domestic production. However, the subsidies which the farmers in US receive now have been calculated as three times more than the entire US AID budget for Africa's 500 million people. The subsidies paid by the developed countries in agricultural goods and cotton made all the concessions made by these countries to the developing countries useless and in vain. The Agreement on Agriculture and the cotton agreement were on the single undertaking package of the Uruguay Round and formed a part of the trade-off between the developed and developing countries. The general regime of international trade was introduced for agricultural goods and cotton and in return other concessions such as the introduction of Trade-Related Aspects of Intellectual Property (TRIPS) were made in favor of the developed countries. However, the level of subsidies permitted under the scheme of commitments made the concessions on the agricultural sector worth zero and consequently the cotton subsidies which twenty five thousand American farmers receive still puts at a disadvantage to a very large and significant extent ten million poor cotton farmers in Sub-Saharan Africa.²⁸⁰

The history of the negotiation rounds and the implementation of the Agreements present a clear example of the hypocrisy of the powerful members of the WTO in approaching free trade. The international principles of justice require that the inequality be examined on a global scale and not be limited to the national

279 R.E. Hudec, "The Gatt Legal System and World Trade Diplomacy," New York: Praeger (1975).

p.64

280 Stiglitz, "Social Justice and Global Trade." p.21

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boundaries. Statistics reflect that the US subsidies paid to its farmers is more than the entire GDP of an African country such as Burkina Faso, whose economy is affected by more than two million people of its population being dependent on cotton production with over half of them living below the poverty line.²⁸¹ The principle of justice requires that the situation of US farmers, among whom the level of poverty is literally zero and the farmers in Africa who mainly live below the poverty line be assessed and compared to each other. This has resulted in the understanding that the WTO concession-exchange mechanism has been designed and functions on unjustified privilege for certain sectors in certain countries and the WTO has provided the possibility for the advanced economies to implement the solutions that were tailored to their specific needs and have them vested in legal and binding principles and rules.²⁸²