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Mon. December 05, 2022
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A Moderated Handshake: Bilateralism, Agricultural Trade Liberalization, and the WTO
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Minecraft is one of my favorite games to play. The most significant endeavor to me is discovering a village and trading with a local villager. In fact, the trading of commodities is essential to obtain precious items you wouldn’t easily come by and advance in the game. Trade functions in Minecraft just as it does in the global political economy: it is crucial to the development of less well-off parties.

A major development in world trade was the creation of international institutional arrangements after the Second World War. The World Trade Organization (WTO) is one of these international institutions, created in 1994 to lower protectionism and increase trade liberalization. The treatment of developing countries within the WTO remains a crucial trade issue because the agricultural policies of the developed world have an overall negative impact on developing countries, sadly contrary to the Minecraft example above. Many developing countries are dependent on the economic benefits that come from exporting agricultural products, yet the developed world often engages in protectionist policies to lower product prices. These lower prices, in turn, lower the incomes of producers in the developing world. The Doha Development Agenda (DDA) was launched at the Uruguay Round in 2001, to serve the economic interests of developing countries, including these pressing agricultural concerns. Yet, the DDA has been met with a wearisome negotiation process that, nineteen years later, remains unfinished.

This essay aims to address one main question: what current trade reform compromise could the WTO reach to alleviate the effects of agricultural trade policies on developing countries? I contend that the facilitation of bilateral agricultural capacity building through the WTO will improve the effects of trade liberalization on least developed countries (LDCs). The discussion of this solution will be prefaced by an explanation of the DDA’s creation and goals. I will also explore why reformation has not been implemented, to better structure the solution. The present-day dependence of developing countries on agriculture and developed countries’ distribution of power will also be considered to identify and focus on the key nations on both sides of the agriculture liberalization policies. Then, I propose the solution of WTO involvement in bilateral negotiations and capacity building. Finally, the WTO’s facilitation of bilateral capacity building will be considered under economic nationalist and critical theories, often said to oppose one another.

It is important to note that “the origins of the postwar international trade regime was found in Anglo-American cooperation during the Second World War” (O’Brien 112). It follows that the trade regime initially created primarily reflected Anglo-American interests. It follows that developing countries would play a minor historical role in the multilateral trading system (Guha-Khasnobis 10). The shift to include developing countries “changed with the entry into force of the WTO in 1995” (Guha-Khasnobis 10), succeeding the GATT. In a single undertaking by the WTO, where all items of the negotiation had to be agreed to in order to join the organization, “developing countries became subject to most of the disciplines of the many agreements contained in the WTO” (Guha-Khasnobis 10). A caveat must be made here: “there are no WTO definitions of “developed” or “developing” countries”. What the WTO does recognize are least-developed countries (LDCs), as defined by the United Nations (UN). This UN definition pertains to 36 of its members.

It is important to note that there were high incentives for countries to join the WTO, notably its robust dispute settlement mechanism and included sectors of agriculture and services. However, these agreements were eventually revealed to have benefits that were “highly skewed towards rich countries” (Guha-Khasnobis 10) and conversely, benefits slanted away from poorer ones. This is what led to the initiation of the DDA, with the goal of introducing “lower trade barriers and revised trade rules” (World Trade Organization). Developed countries were utilizing protectionism through non-tariff barriers (NTBs), which had “ultimate negative effects of distorting international trade from an economic viewpoint and becoming even more harmful than tariffs” (Liu et al. 468). The article “Quantifying the Effects of Non-tariff Measures on African Agri-food Exporters” verifies “the substantial negative impact of these measures on African agri-food exporters” (Liu et al. 468). Nevertheless, developed countries employed these NTBs for various reasons, opposing the change brought forth in the DDA, and stalling it to this day.

It can be argued that the global proliferation of regionalism has stalled the reformation of multilateral trading agreements. As an international organization, the WTO does aim to promote multilateral trade. However, all WTO members as of June 2016 have some sort of regional trade agreement in force (“World Trade Organization”). These regional trade agreements (RTAs) or free trade agreements (FTAs) include bilateral trade pacts that contradict the WTO’s multilateral regime. Most American trade officials argue that “by following both regional and multilateral approaches...world liberalization can proceed more rapidly” (Lawrence 3), so a bilateral solution facilitated by a multilateral organization may be most beneficial. Since the WTO failed to reach a consensus on the DDA on a multilateral basis, WTO member states have seen the benefit in their bilateral negotiations. Thus, the reasons for the WTO engaging in facilitating this bilateral presence begins to clear.

The global political climate of international trade has largely changed since the stalling of the DDA, so there is merit in understanding the present-day dependence of developing countries on agriculture and developed countries’ distribution of power. The United Nations Conference on Trade and Development (UNCTAD) defines a country as dependent on a commodity when “these account for more than 60% of its total merchandise exports” (“Countries Dependent on Commodities Hit 20-Year High”). According to the 2019 State of Commodity Dependence by UNCTAD, 24 countries are dependent on agricultural commodity exports. Of these 24 countries, 16 are member states of the WTO and seven out of 16 are LDCs.

 In terms of the distribution of power in developed countries, “the rise of new powers has increased the diversity of distribution of power-weighted preferences at the WTO” (Steven and Parizek 750). The most notable among these are Brazil, Russia, India, China, and South Africa (BRICS), who have nearly tripled their imports since the early-90s. This economic growth has pushed them into the center of many global economic decision-making procedures (Steven and Parízek 739). The preferences of these new powers, along with the established powers of G7 countries, must be considered. BRICS, except for South Africa, “tend to be less ‘liberal’ than established powers...in terms of overall measures of trade restrictiveness, average applied tariffs, average applied tariffs weighted by trade volumes” (Steven and Parízek 742). Among the BRICS, this is the truest for China and India, two of the most notable protectionist countries. However, from Steven and Parízek’s manual coding of trade liberalization talks, they found that it is “the BICS who favour greater openness” (Steven and Parízek 746) concerning agricultural products. At the same time, G7 countries are more greatly divided. Thus, the capacity building will not only need to consider the power and preferences of G7 countries but also include BRICS. 

My proposed solution is WTO facilitated bilateral capacity building. For LDCs and other agricultural commodity-heavy countries to transition to and participate in international trade, they must be supported with the capacity to participate. Capacity building is the process by which countries obtain, improve and retain the skills, knowledge, equipment and facilities to meet developed standards of trade. The high standards of protectionist trade laws are significant NTBs for LDCs and developing countries. Bilateral capacity building would comprise of two countries partnering together, one developed and one developing country, in a handshake. The developed power would aid the developing country to meet their standards of trade. Specifically, enhanced bilateral capacity building would help the developing country overcome technical barriers to trade (TBTs), such as stringent animal welfare policies, rigorous licensing and labeling requirements, and sanitary and phytosanitary measures (SPS) such as product and processing standards, disease-free production, sampling, and testing requirements. The WTO organization currently engages in “trade-related technical assistance (TRTA) activities” to “help developing countries build their trade capacity” (WTO Technical Assistance and Training), but this is on a multilateral level. Bilateral capacity building would have the end goal of facilitating a channel of bilateral trade.

This capacity building will be facilitated by the WTO asserting itself as the third-party monitor of these bilateral capacity-building partnerships, overseeing the handshake to make sure no country’s fingers are crossed behind their back. This can be done by taking more steps to promote the transparency of these RTAs. Maria Panezi claims that “ensuring FTA monitoring, together with reliable and transparent trade processes in WTO members’ jurisdictions, will mitigate the exclusionary effects of FTAs” (4). The WTO’s role in monitoring FTAs may also allow LDCs to participate in monitoring, learning more about negotiation processes independently. With the WTO monitoring, all the bilateral capacity building will be able to be organized, and more member nations can be made aware to observe and engage in the same.

This proposed solution goes beyond the DDA’s goals because it minimizes the participants in these negotiations. Additionally, it ensures that at least one of the partners is economically stable enough to provide both the human and technical resources to ensure that the developing country can be built up. The small bilateral scale of this capacity building allows for complex protectionist structures and policies to be reduced to only two countries. After developing countries can raise their production standards, it will be much easier to navigate the preferences of one other country, as opposed to navigating all the other countries in a multilateral negotiation.

 A stellar example of bilateral capacity building is the agreement between Canada and Thailand. After the 1997 Mutual Recognition Agreement between the two countries, the Canadian Food Inspection Agency (CFIA) became deeply involved in helping Thailand meet the food and safety regulations for the nation to export their shrimp to Canada. CFIA agents went to Thailand’s seafood facilities and aquafarms to help them meet their regulations. Now “Canada alone imports about $700 million in shrimp every year” (CBC) with a large portion of it arriving from Thailand. In 2007, Heike Baumüller said that seafood exports, like shrimp, can be expected to increase as “non-tariff measures are reduced through multilateral, regional and bilateral trade negotiations” (Baumüller 2). This case study exemplifies how bilateral capacity building achieves what the DDA could not—agriculture liberalization for developing countries. If the WTO facilitated this bilateral capacity building, larger-scale liberalization would enable developing countries to gain from agriculture exportation.

Economic nationalist theory stresses the importance of the nation’s interest in international works. Under this theory, the state must protect its interests. It may be thought that this theory would be the hardest to adhere to, as bilateral capacity building aims to increase agricultural trade liberalization. However, this solution works with economic nationalist theory in three ways: through economic nationalist actors, within its dynamics and production. First, the actors of economic nationalism are states, similar to bilateral capacity building. Production and exchange would be governed by political powers, as was the case with Canada’s CFIA. Bilateral capacity building would hopefully lead to bilateral trade, and these negotiations would be facilitated by states and with state interests in mind. Secondly, this solution follows the dynamics of economic nationalism. Economic nationalism proposes that a dominant power is necessary to provide leadership and absorb short-term costs of capacity building. Economic nationalistic skepticism about globalization is answered by this solution as well. By drawing back from the multilateral, international trade regime and operating on a smaller, country-to-country basis, power is given back to states, while the international organization simply monitors for transparency. Finally, this solution follows economic nationalist production styles because the agricultural goods are domestic, made within the borders of that state.

Yet, how can bilateral capacity building, with its goal of trade increase and thus production increase, still maintain environmental sustainability? Marta Tuninetti says that “the increase of trade will drive increasingly displaced environmental impacts” (Tuninetti 10). An immediate solution may be sustainable development adjacent to developing countries’ economic growth with international trade. Afghanistan, for example, is already using renewable energy technology to provide rural populations with energy. An example of this is a French NGO called GERES, which “has developed and transferred to local entrepreneurs the Passive Solar Housing technology” that relies on “collecting, storing and distributing solar energy during the winter without any mechanical or electrical equipment” (François and Gavaldao 179). These Passive Solar Houses (PSH) had an energy consumption that was “23% lower than non-PSH houses, with a net energy consumption decrease of 60 kWh per week in average” (François and Gavaldao 179). This example proves that even in developing countries, bilateral capacity can still be facilitated in sustainable methods. It will require innovation from the developed world to “invest more and early into climate and environmentally friendly technological change in order to reduce the pressure on land and the environment” (Schmidt et al. 200).

It has been nineteen years since the launch of the Doha Round and the DDA. I maintain that a bilateral system of capacity building, facilitated by the WTO, is the first step to giving positive effects to developing countries. The failure of the DDA may have caused countries to pursue regional trade agreements, but by incorporating a national organization back into the global discussion, this paper begins a vital investigation into subsequent research of how integrating various levels of “lateralism” may be what is needed to support developing countries. A limitation of this paper, though, is that it is predicated on the assumption that developed countries want to see development in economically poorer countries. This assumption may be hard to be mitigated, but if mutual benefit can be the focus of these bilateral capacity-building partnerships, then progress is possible. Much like how a single trade between my Minecraft character and a random villager propelled me further into the game, international trade, especially through agricultural liberalization, is necessary for the economic development of poorer countries. If the WTO can step up, realizing the historical unequal playing field it has cast many countries into, it can work to encourage bilateralism, a moderated handshake, and bring developing countries up to the standards of trade for them to continue to thrive.

Adeola Egbeyemi is from Ottawa, Ontario and currently attends McMaster University as a third-year undergraduate Arts—the liberal kind—& Science student, combined in Political Science. She has had one prior publication in the University of Waterloo’s Journal of Integrative Research and Reflection on the topic of colorism, bearing no academic convergence to the WTO and international trade. Her other increasingly divergent academic interests include Theatre & Film, Poetry, Philosophy, and trying to write witty publication biographies.

 

Bibliography

Baumüller, Heike. “Fisheries – Environmental Impacts of Trade Liberalization.” Rapid Trade and Environment Assessment (RTEA) Thailand, June 2007, pp. 1–5.

Bouët, Antoine, and David Laborde. “Why Is the Doha Development Agenda Failing? And What Can Be Done? A Computable General Equilibrium-Game Theoretical Approach.” The World Economy, vol. 33, no. 11, 2010, pp. 1486–1516., doi:10.1111/j.1467-9701.2010.01302.x.

Boue?t Antoine, and David Laborde Debucquet. Agriculture, Development, and the Global Trading System 2000-2015. International Food Policy Research Institute, 2017.

“Countries Dependent on Commodities Hit 20-Year High.” United Nations Conference on Trade and Development, 16 May 2019, unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2086.

State of Commodity Dependence 2019. United Nations, 2019.

François, Yann, and Marina Gavaldao. Integrating Avoided Emissions in Climate Change Evaluation Policies for LDC: The Case of Passive Solar Houses in Afghanistan. Springer Nature, 2018.

Guha-Khasnobis, Basudeb. The WTO, Developing Countries and the Doha Development Agenda: Prospects and Challenges for Trade-Led Growth. 1st ed., Palgrave Macmillan, 2004.

Lawrence, Robert Z. Regionalism, Multilateralism, and Deeper Integration. Brookings Institution, 1996.

Liu, Chang, et al. “Quantifying the Effects of Non-Tariff Measures on African Agri-Food Exporters.” Agrekon, vol. 58, no. 4, Mar. 2019, pp. 451–471., doi:10.1080/03031853.2019.1581624.

O'Brien, Robert. Global Political Economy: Evolution and Dynamics. 5th ed., Red Globe Press, 2020.

Panezi, Maria. “The WTO and the Spaghetti Bowl of Free Trade Agreements.” Center for International Governance Innovation, no. 87, Sept. 2016, pp. 1–6.

Schmitz, Christoph, et al. “Trading More Food: Implications for Land Use, Greenhouse Gas Emissions, and the Food System.” Global Environmental Change, vol. 22, no. 1, 2012, pp. 189–209., doi:10.1016/j.gloenvcha.2011.09.013.

Stephen, Matthew D., and Michal Parízek. “New Powers and the Distribution of Preferences in Global Trade Governance: From Deadlock and Drift to Fragmentation.” New Political Economy, vol. 24, no. 6, 2018, pp. 735–758., doi:10.1080/13563467.2018.1509065.

Tuninetti, Marta, et al. “Charting out the Future Agricultural Trade and Its Impact on Water Resources.” Science of The Total Environment, vol. 714, 2020, p. 136626., doi:10.1016/j.scitotenv.2020.136626.

“Understanding the WTO - Regionalism: Friends or Rivals?” WTO, www.wto.org/english/thewto_e/whatis_e/tif_e/bey1_e.htm.

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