Rolland’s ‘bargaining power of blocs’

Rolland209 is of the view that the distinctions ‘developed/developing/least-developed countries’ somehow associate with the bargaining power of coalitions in WTO forums. She traces a history of coalitions that threw up names such as:

The UNCTAD Group of Seventy-Seven (G-77); Informal Group of Developing Countries that included Argentina, Brazil, Egypt, India, Yugoslavia, Chile, Pakistan and Uruguay;the Association of Southeast Asian Nations (ASEAN); the Cairns Group of LDCs concerned with agricultural issues; other LDC coalitions such as the Friends of Fish that promote the elimination of fisheries subsidies and the Friends of Geographical Indications who sought the extension of protected geographical indications beyond wines and spirits, and the Sectoral Initiative in Favour of Cotton, a very small coalition of the cotton exporters Benin, Burkina

207 _{Ibid. p.143.}

208 _{outlined at length on pp. 144-150 as considerations of national income, social factors, population size}

and sector competitiveness.

209 _{Rolland, Sonia E, ‘Developing Country Coalitions at the WTO: In Search of Legal Support’, vol. 48, no.}

Faso, Chad, and Niger; the Mercado Comun del Sur (MERCOSUR), a regional trade agreement signed in 1991 between Argentina, Brazil, Paraguay, and Uruguay; the Caribbean Community (CARICOM) a regional negotiating machinery formed in 1997; the South Pacific Forum that co-ordinated action on development issues and trade in fisheries and marine resources; the African Group; the South Asian Association for Regional Cooperation (SAARC) of South Asian countries; the Organization of African Unity (OAU); the Group of Small and Vulnerable Economies.210

Having conducted a very interesting review of the successes of these groups at a number of WTO ministerial conferences, and having noted that these successes were possible on the group level but would not have been attainable at individual-country level, Rolland proceeds to the critical point of her analysis, that is, the examination of ‘the rationales for legal recognition of groups and coalitions’211 that are operative in public international law, and specifically in WTO law. The basic position, she notes, is that:

… the entities that make up the WTO are – like in other international

organizations – states and, to some extent, other international organizations. The EC is a distinct case, as both its members and itself are parties to the WTO, but the number of votes of the EC cannot exceed the number of its members. It is the only supra-national grouping of states that benefits from full legal recognition in the WTO.212

But she immediately adds that:

The WTO also provides for some recognition for regional trade organizations through the Article XXIV notification process and rights. Yet the WTO’s legal framework has an impact on these entities and coalitions, which in turn influences the development of WTO law and practice. While supra-national groupings without formal legal existence, such as coalitions, are not recognized in WTO law any more than they are in general public international law, other international organizations have developed mechanisms to ensure some degree of regional or other group representation in addition to individual state participation.213

210 _{Ibid. pp. 487-499.}

211 _{Ibid. p. 506 et seq.} 212 _Ibid.

On the basis of this observation, Rolland proceeds to ‘to assess the interaction between each category of coalition and the WTO legal framework’. One category of coalition, the LDCs, are ‘given particular consideration as such’, specifically by the ‘2007 Technical Assistance Plan’, which is ‘designed to reflect existing patterns of collaboration between members and to further strengthen these groupings in a two-way flow of information and institution building’.214 Also, this plan offers ‘regional coordinator internships’ to:

… the ACP, the African Group, the CARICOM, the Group of Latin American and Caribbean Countries (“GRULAC”), the SAARC, the WTO LDCs Consultative Group, the IGDC, the Arab Group, and the Pacific Islands Forum … Other internships are aimed at LDCs and Small and Vulnerable Economies.215

Whereas it is clearly arguable that the groupings Rolland thus identifies have the WTO recognition she claims they have, her ensuing comment that ‘WTO agreements already recognise LDCs as a distinct group with special needs that must be addressed as a subset of special and differential treatment’216 is rather too generous. As already noted at 2.5.1 of this thesis, that recognition is far from substantive, for no mandatory privileges attach to it. Nevertheless, she rightly notes that ‘currently, the only category of developing countries recognized by the WTO as such is the LDCs’, and that ‘the WTO eventually gave an institutional home to LDCs with the creation of a Subcommittee on LDCs in the Committee on Trade and Development.217 She is right to note also that ‘of the fifty listed LDCs, thirty are WTO members, and several more have observer status’,218 and that ‘LDCs account for 20 percent of WTO membership, almost as much as developed members’. But her claim, in the same sequence, that LDCs ‘represent a certain political

214 _{Ibid. p. 507.} 215 _{Ibid. pp. 508-509.} 216 _{Ibid. p. 510.} 217 _{Ibid. p. 511.}

force’ is denied (inadvertently) by her admission that ‘their share of international trade remains minimal’. The reader is left to wonder quite what it is that Rolland understands by ‘political force’, given this admission. Her recommendation that other UN-recognised groupings219 should also enjoy WTO recognition is also lame, for lack of any

demonstration that this recognition is of the least consequence for their development through the development of their trade capacities.

Rolland is nevertheless concerned to make her point that there is an ‘objectivity’ in the LDC categorization, whereas there is not in the ‘developing country’ self-

categorisation.220 If by ‘objectivity’ she has in mind UN or WTO recognition of the clearly apparent, that is, the paucity or the trade capacity of LDCs that their GDP per capita demonstrates, then her point carries. She does, however, not identify GDP per capita as the indicator of rightful LDC status. Does she deny that GDP per capita is the basic indicator here? Though she is never explicit on this point, she does dismiss GDP per capita as an adequate indicator of a WTO member’s claim to ‘developing country’ status:

In fact, it is often the case that a developing country member shows wide disparities in the development of the various sectors of its economy. Therefore, differentiation based on a single arbitrary criterion, such as Gross Domestic

219 _{Rolland, note 209, p. 513, footnote 115: ‘The United Nations maintains a list of Small Island}

Developing States (U.N. and non-U.N. members) and has recognized the need for special measures in favor of these countries since 1994, calling particular attention to these countries’ vulnerabilities in the context of the Uruguay Round. G.A. Res. 49/100, U.N. Doc. A/RES/49/100 (Feb. 24, 1995). The United Nations also has defined a list of Landlocked Developing Countries. See generally Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries, and Small Island Developing States, http://www.un.org/ohrlls/ (last visited Mar. 22, 2007) for a survey of U.N. undertakings for LDCs, Small Island Developing States, and Landlocked Developing States. A number of countries belonging to these three groups have joined the coalition of Small and Vulnerable Economies at the WTO, even though the issues of each group are quite different.’

Product … per capita, would not adequately reflect the broader state of a country’s economy.221

How, one must ask, is GDP really the ‘arbitrary’ criterion she says it is? GDP per capita is the calculation that takes account in a country of personal consumption, investment, government spending and exports, and subtracts the value of its imports from their total. None of the inputs of that calculation is arbitrary. She posits the view that GDP per capita ‘would not adequately reflect the broader state of a country’s economy’. But she declines to ruminate on quite what that ‘broader state of a country’s economy’ might be, leaving the reader with the suspicion that she herself suspects that closer scrutiny of that concept will engage her in an unwieldy subjectivity that would demonstrate GDP per capita to be anything but arbitrary in comparison. Stiglitz said some time ago:

… one of the features which distinguishes more developed from less developed countries is their higher gross domestic product (GDP) per capita ... Contrary to Kuznets’s contention, by and large, increases in GDP per capita are accompanied by reductions in poverty … to some extent, the changes in society which may be called ‘modernization’ are as much a cause of the increases in GDP as a result.222 This is a fulsome endorsement of the perspicacity of GDP as illustration of the state of an economy. It is interesting that not even Sen is prepared to deny this illustrative power of the GDP. He allows that it is the indicator of economic inequalities, but insists that economic inequalities are less important indicators of human freedom, which, he insists, is the primary element of development, than are non-economic factors such as political freedoms, biological makeup, individual circumstances, gender, talents, pollution and

221 _Ibid.

222 _{Stiglitz, Joseph E, ‘Towards a New Paradigm for Development’, 9}th _{Raul Prebisch Lecture, United}

Nations Conference on Trade and Development, October 1998, http://www.unctad.org/en/docs/prebisch9th.en.pdf.

local crime, etc.223 Whether or not one sees merit in Sen’s conception of the nature of development, it remains true that Rolland speaks only in an economic context, so Sen’s position does not rescue her dismissal of the GDP as an accurate indicator of the state of an economy.

Rolland’s argument stumbles on her curt dismissal of the reliability of the GDP calculation as an indicator of the state of a country’s economy, and finally falls on her erroneous resort to the Enabling Clause, where she claims wrongly (see Cui, above) that in the European Tariff Preferences case there was, from the Appellate Body, an

insistence on the non-discriminatory character’224 of its provisions. As Cui points out, there was no insistence on the non-discriminatory character of the category ‘developing countries’. The contrary is true, for this Panel determined that the benefits of the Enabling Clause accrue only to ‘similarly situated’ developing countries. So her ambition to

illuminate what might be the ‘recognition of more specific groups of developing countries based on transparent and uniform criteria’ remains not only unrealized but obscure from the outset. Rolland does not reveal what would constitute the requisite criteria. Certainly, the Enabling Clause will not do that, nor does it lend itself to the ‘recognition of more specific groups of developing countries’ in any other way. Indeed, as Bhagwati says, the Enabling Clause allows the self-declared developing states ‘to escape even the limited discipline’225 of Art XXIV226 if they enjoy the favouritism of a major developed or wealthy country or enter into a Regional Trade Agreement (RTA).

223 _{Sen, Amartya, 1999, Development as Freedom, (2}nd _{ed., 2001), Oxford University Press, pp. 51-53.} 224 _{Ibid. p.515.}

225 _{Bhagwati, Jagdish 2008, Termites in the Trading System: How Preferential Agreements Undermine} Free Trade, Oxford University Press, p. 95.

(The basic purpose of the Enabling Clause is to relax the conditions under which RTAs between developing countries may qualify for exception from the MFN principle. This is discussed further at section 3.8.1 of this thesis.)

Rolland might be right to hold that a developing/least-developed country becomes a ‘more specific’ sort of developing/least-developed country if it becomes a member of an RTA. But then, this is a trivial differentiation, for it distinguishes the RTA-member developing/least-developed country from other developing countries only in that it is such a member. That sheds no light at all on which are ‘really’ developing countries, and gives no guidance on how that category might be defined. Rolland has not succeeded to sketch a route to that definition by way of her observations of the bargaining power of coalitions in the WTO system.

3.1.3 Karmakar’s obligations of successful developing-country negotiators Accounting for the now-seven-years-old and still far-from-concluded Doha Round, Suparna Karmakar recalls an interesting remark of Erikson227_:

… developing countries have been justifiably suspicious of the hidden regulatory ambitions of the US and the EU. The US has been trying to slip in

environmental and labour standards [emphasis added] into WTO agreements while EU has been pushing for increased regulatory powers under sustainable development clauses and multilateral investment agreements. Both have

undertaken unilateral regulatory actions that have proved trade-impeding. In the present poor economic and financial climate of the West when developing country exports to these economies are naturally weakening, incessant push for unbridled regulatory powers at every opportunity clearly indicates that the erstwhile leading WTO negotiators are not interested in genuine and non-

preferential reform and liberalisation. Their new professed ‘mainstream’ view on globalisation is clearly biased in favour of new trade regulations rather than

227_{Erikon, F. ‘From Twin Towers to Fawlty Towers: The Story of the Doha Round’, ECIPE Working}

opening markets and re-energising this important engine of growth and development.228

This remark is interesting less from the point of view of the desirability of clarifying the ‘developing country’ concept than from the alternative point of view that classification matters little, for rapidly-growing economies, among which Brazil, Russia, India, China and South Africa (the BRICS countries), of which only Russia is not yet a WTO member, are now confident in their ability to reject developed countries’ proposals that do not serve the cause of their further development. Right though Karmakar is in her observation of certain developing countries’ vigorous and effective negotiating powers, it remains true that the adroit classification of countries along the developed/developing/least- developed spectrum in accordance with the GDP per capita ranking, and in concert with obligations distributed on the international distribute justice model (outlined below), developed countries will not be tempted to ‘slip in environmental and labour standards’ into WTO Agreements, for the countries (such a China and India) on which they seek to impose those standards will have been relieved ex ante of obligation to comply with them.