2014 Articles

North-South Imbalances in the International Trade Regime: Why the WTO Does Not Benefit Developing Countries as Much as it Could

Bernhardt, Thomas

Participation in international trade offers an enormous opportunity for low-income countries to contribute to their economic and social development. However, this development potential is undermined by some of the rules and regulations of the international trade regime. The World Trade Organization (WTO) is the most visible and influential pillar of this regime. It was established in 1995 as the institutionalized successor of the General Agreement on Tariffs and Trade (GATT) after the “Uruguay Round” of multilateral trade negotiations, often referred to as the “Great Bargain.” The developing-country perspective on the “Great Bargain” was that they gained access to developed countries‟ markets in exchange for agreeing to include services and miscellaneous “trade-related aspects” in the WTO‟s agenda. This great bargain, however, did little to remove existing North-South imbalances in the world trading system and even introduced some new ones. Many of these imbalances reflect the reality of asymmetrical power relations in the global, political, and economic arena, which, in turn, lead to global economic governance outcomes that, in some cases, are to the detriment of developing countries.
This paper intends to highlight and analyze the asymmetries that characterize the current international trade regime as reflected in WTO agreements. It first argues that one of the key objectives of international trade negotiations (under the auspices of both GATT and WTO), namely to create access to other countries‟ markets, has so far been realized in a rather imbalanced fashion. The second section then explores how different WTO agreements contribute to reducing the “policy space” of developing countries, thereby limiting their ability to pursue national policies that would foster their economic development. The third section, spotlights on assymetries in the governance structure of the WTO to try to explain why international trade negotiations have preserved such imbalanced outcomes. The paper concludes with some final remarks.