While trade negotiations are by no means the sole task of the trade ministry, they are typically its most visible function. Performing tha...
While trade negotiations are by no means the sole task of the trade ministry, they are typically its most visible function. Performing that function is more challenging now that the number of negotiating platforms has increased, the demands made on developing countries have deepened and the number of issues on the table has proliferated. A trade ministry may need to handle multiple negotiations at once. It must also follow up on the existing trade agreements, ensuring not only that they are properly implemented at home and abroad, but also pushing the country to take full advantage of the opportunities that these agreements create. Negotiating trade agreements is only a first step towards taking full advantage of the potential opportunities in the external sector. It is equally important that a trade ministry follow through by working with national producers and prospective investors to identify and exploit market opportunities. The nature of the global debate over trade and development has undergone major shifts in recent decades. Simple formulas such as the demand for special and differential treatment for developing countries, or the insistence of “trade, not aid” as the royal road to development, have given way to a more variegated range of approaches that countries take towards the liberalization of their own markets and the quest for preferential access to foreign markets. While some developing countries base their strategies on a major role for the State and hope to secure open access to developed country markets on a one-way basis, others give greater weight to the market and are willing to secure that access through the negotiation of two-way agreements. One of the key questions to be addressed in any TPF is which of these approaches — or some compromise between them — is the most appropriate means of mainstreaming trade into the country’s development strategy. A TPF should examine in depth a country’s participation in existing trade agreements, both multilateral and regional, as well as the options for new negotiations. The descriptions and prescriptions should present an overall vision of the country’s main objectives in its trade agreements and consider how the actual and potential agreements contribute to those aims. A. MARKET ACCESS: PREFERENTIAL OR RECIPROCAL? The first and most fundamental question that a developing country faces in devising its trade strategy concerns the terms on which it is prepared to secure improved access to other countries’ markets. Does it seek to obtain preferential access in one direction, in which developed countries (and some developing countries, as well) grant open access to their markets without demanding concessions in return, or is it prepared to negotiate agreements in which it also opens its own market? This question is especially apt for middle-income countries, insofar as least developed countries are generally not expected to negotiate reciprocal agreements with their developed partners. Even for LDCs, however, the negotiation of reciprocal arrangements with their neighbours, either in the form of free trade agreements or customs unions, remains an option. Whether or not they enter into RTAs, developing countries may place differing degrees of emphasis on discrimination as an element in their trade strategies. There are two issues here. First, how important is it to obtain preferential access to major markets, and at what price? That discrimination includes not only the terms of the preferential access that they hope to obtain to the markets of developed countries, but also the preferences that they might give in return.
The principal options are the non-reciprocal (one-way) preferences that developing countries enjoy via programmes such as the Generalized System of Preferences, or the reciprocal (two-way) preferences that they secure through the negotiation of RTAs. The second issue concerns the value that a country will place on retaining any preferential access that it might enjoy. Will that country view initiatives to negotiate multilateral trade liberalization as another opportunity to improve its access to foreign markets, or will it instead see a threat to the margins of preference that it already enjoys under preferential programmes and agreements? The answer to that question has important systemic implications, as one of the most intractable problems in the Doha Round stems from the widespread concern on the part of poorer developing countries that any reductions in MFN tariffs achieved in the negotiations could, on balance,
do them more harm than good. 38 TRADE POLICY FRAMEWORKS FOR DEVELOPING COUNTRIES: A MANUAL OF BEST PRACTICES Table 17. Principal themes in developing–developed country trade relationships Non-Preferential Preferential Non-reciprocal 1950s–1960s: Apart from post-colonial preferences (especially with the United Kingdom and France), developing countries enjoyed only MFN access to rich markets. Access was non-reciprocal insofar as developing countries were mostly outside GATT, unbound, and often restrictive. 1970s: Starting with the GSP and followed by regional preferences, developing countries acquire preferential access to industrialized markets. Trade policies generally remain restrictive and unbound, with countries either staying outside GATT or opting not to adopt its agreements. Reciprocal 1980s: While still enjoying preferential access under the GSP and other programmes, more developing countries reciprocate by adhering to the Washington Consensus, adopting more open trade policies, acceding to GATT, and participating actively in the Uruguay Round. 1990s: Many developing countries opt to negotiate RTAs with industrialized countries, thus replacing the one-way concessions of the GSP and other preferential programmes with reciprocal, bound preferences. Promote a universal, rules-based, open, nondiscriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda. Significantly increase the exports of developing countries, in particular with a view to doubling the least developed countries’ share of global exports by 2020. Realize timely implementation of duty-free and quota-free market access on a lasting basis for all least developed countries, consistent with World Trade Organization decisions, including by ensuring that preferential rules of origin applicable to imports from least developed countries are transparent and simple, and contribute to facilitating market access. Three of the 19 targets under Sustainable Development Goal 17: Revitalize the Global Partnership for Sustainable Development PARTNERSHIPS FOR THE GOALS The matrix in table 17 offers a simplified summary of the principal directions that have been taken in the trade relationships between developed and developing countries in the years since the founding of the multilateral trading system. In the first few decades of that system, which coincided with the period in which many African, Asian, and Caribbean countries won their independence from European countries, most developing countries remained either outside the GATT system or participated only nominally in multilateral negotiations, and any preferences that they received came solely from their former mother countries. In subsequent decades, the relationship evolved along with the introduction of one-way preferential programmes in the 1970s, the adoption of more pro-trade policies in the 1980s and the new wave of North–South RTAs starting in the 1990s. Each of those developments were general trends only, and in every period there have been some countries that deviated from the path that the majority took. What distinguishes the present period from the past is that it is no longer possible to identify a single pattern that accounts for the majority of all developing countries. While some countries have enthusiastically pursued the initiatives that began in the 1990s, negotiating numerous RTAs with one another and with a diverse array of extraregional partners, others prefer the earlier pattern of non-reciprocal preferences. In neither case, however, can preferential access to the markets of the developed countries be expected to offer as much of a boost today at it did in past decades. Margins of preference have been eroded as a result of multilateral negotiations that reduced MFN tariffs and have also been diluted by the developed countries’ proliferation of RTAs with many and varied partners. The potential value of preferences has been further undercut by Uruguay Round deals that phased out the quotas on apparel and outlawed the imposition of quotas under other forms such as voluntary restraint agreements.
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