The wto-minus Strategy: Development and human rights under wto law

2. Theories of trade and development from a human rights perspective

International trade law and international human rights law were created in their modern forms following the Second World War. Although they shared the common goal of promoting development, they had differing perceptions of the concept of development and of their respective roles in helping to bring it about. The study of development also became a discipline in its own right after the War and, today, there are many perspectives on how to stimulate and advance development,³ an area of enquiry which Bjorn Hettne and Robert Potter have named ‘development thinking.’ Hettne and Potter distinguish two related fields of activity within “development thinking:” development theories, which are sets of logical propositions which aim to explain how development should or might occur,⁴ and development strategies, which are the “real world efforts”⁵ or practical paths to development pursued by development agencies of all kinds with a view to stimulating change. Theorising, as found primarily in the academic literature, operates at a level of intellectual abstraction; strategies, on the other hand, involve the practical application of theory. It needs to be noted at the outset, however, that development theories have not developed in a strictly sequential-temporal manner but with a great deal of overlap and mutual influence, making it difficult to draw clear temporal or doctrinal lines between them.⁶

The disciplines of trade law and human rights law grew up alongside development thinking in the post-War years and, although they influenced one another to an extent, it is striking that the two law disciplines induced the pursuit of very different development strategies. Insight into the reasons for this can be found in the different, underlying theoretical approaches of the two fields of international law towards development and in the ways those approaches have evolved over the period since the close of the War.

2.1 Origins of trade and human rights perspectives on development

As the Second World War came to an end, the Allies searched the pattern of events leading up to the War for insights into its causes and how to avoid future wars. The United Nations (the UN) was established in 1945 as a major part of the Allies’ peace strategy. It was to be a harmonizing force, maintaining international peace and security, developing friendly relations amongst nations and achieving high levels of international cooperation. It was also given a development mandate: to “promote … higher standards of living, full employment and conditions of economic and social progress and development.”⁷ The international community’s aim was to “creat[e] the conditions of stability and well-being which are necessary for peaceful and friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples.” Moreover, it was to do this on a basis of respect for “human rights and fundamental freedoms for all without distinction as to race, sex, language or religion.”⁸ The UN Charter, then, made clear that economic and social progress and development were to take place within a framework of respect for and observance of non-discrimination as to the enjoyment of human rights and fundamental freedoms for all. The subsequent resolution of the UN General Assembly, the 1948 Universal Declaration of Human Rights (UDHR), identified the specific human rights and fundamental freedoms referred to in the UN Charter. The civil and political rights are set out in UDHR Articles 3 to 21 and include (amongst many) the rights to liberty, life, a fair trial, freedom of speech and religion and universal suffrage. The economic, social and cultural rights are set out in UDHR Articles 22 to 27 and include (amongst others) the rights to work, an adequate standard of living, health, education, social security, housing and participation in cultural life. The rights set out in the UDHR are those which were identified as fundamental to “the dignity and worth of the human person.”⁹ Article 28 of the UDHR reiterates the principle in the Charter, that “everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.” Thus, the enjoyment by all of these human rights and fundamental freedoms without discrimination became the norm or principle guiding the formulation of strategies for economic and social progress and development.

The Allies’ analysis also led them to a second conclusion: that economically defensive trade strategies put in place by individual countries in the economic recession between the two world wars, particularly raising tariffs (government-imposed taxes or duties levied on imports) and devaluing currencies to protect local industries, led to the Great Depression of the 1930s which, in turn, contributed greatly to the outbreak of war in 1939. With hindsight, it was evident that these essentially isolationist economic strategies reduced production, trade, employment and living standards everywhere and ultimately led to the collapse of the world’s major economies. Determined not to risk future wars triggered this way, the Allies moved to open up domestic economies to the world economy, believing that greater economic interdependence and interaction between countries would enhance economic growth, development and stability and would foster world peace.
Although this path of action appealed to the major powers for reasons of self-interest,¹⁰ they were also motivated by a benevolent vision. The immediate post-War period was a time of optimism and high confidence about what could be achieved by the development of the poorer parts of the world¹¹ and it was at this point that development thinking as a serious field of study really began. When US President Truman argued in his 1949 Inaugural Address that the wealthy countries could – indeed should – construct ”a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas,” he was confident that “humanity possesse[d] the knowledge and skill to relieve the suffering” of the impoverished majority of the world’s people.¹²
The idea that humanity possessed knowledge and skills which gave it the ability to create development emanated particularly from the economic theory of this period,¹³ which had its roots in the Enlightenment and the Classical tradition of Europe. The Classical tradition began in the 1700s, with the Enlightenment’s burst of enthusiasm and optimism about the potential gains to humanity from an objective, empirical and reasoned approach to the world and its problems. One wing of the Classical school, known as the Scottish Enlightenment, applied the approach of reason and science to the field of economics. Unlike their French counterparts, the Scottish Enlightenment philosophers focussed particularly on ‘scientific’ theories of economic growth, trade and development. They concluded that specialisation in production would yield great benefits. In The Wealth of Nations (1776), Adam Smith argued that specialisation allows for the more efficient allocation of resources and for improved productivity which, in turn, generates economic growth and wealth. A further, important aspect of Smith’s work was the identification of objective forces operating in markets, of an “invisible hand” which determines the value and distribution of resources in their optimal way.¹⁴ Forty years later, David Ricardo explored the benefits of specialisation, in conjunction with a global division of labour.¹⁵ By his theory of comparative advantage, he demonstrated mathematically that there are gains to be made for all countries from specialisation and international trade (the ‘mutual gains from trade’), even for countries which have an absolute advantage in producing many things and do not ‘need’ to trade. This is because there is always an opportunity cost to utilising resources in other than their most efficient way. The theory of comparative advantage shows that “open markets … accurately price goods and services, … [enabling] producers in each country to discover what they are comparatively good at producing.” By increasing the size of the potential market beyond national borders, international trading enables the gains from the greater efficiency of specialisation to be seized and, hence, global welfare to be maximized.

2.2 The GATT years

Informed by this theory, the Allies took the view that liberalized international trade, a core component of economic interdependence, would increase development and prosperity across the world and give the best security for peace. The 1947 General Agreement on Tariffs and Trade¹⁶ (GATT 1947) was the expression of this objective in treaty form. Its purpose was to enhance economic interdependence through substantial reductions in barriers to, and through limiting favouritism in, international trade.¹⁷ Thus, Ricardo’s theory of comparative advantage was the underlying, theoretical premise on which the post-War trade regime was built and the drafters expected GATT 1947 to generate at least some of the mutual gains from trade and greater prosperity which the theory predicted. Jeffrey Dunoff names this theoretical basis for the international trade regime, the pursuit of the benefits described in economic theory as comparative advantage, the “efficiency model.” Under the efficiency model, “the ‘problem' [presented by underdevelopment] is how to maximize aggregate economic welfare, and the `solution' is to reduce or eliminate [inefficient] government regulations that interfere with [efficient] voluntary, welfare-enhancing market exchanges.”¹⁸ The efficiency model does not recognise human rights norms as essential guides for the process of economic and social progress and development. In one sense, of course, this is to be expected, as the efficiency model predates the UN Charter and the UDHR. However, it is of significance that the model relies on market-based, economic decision-making to determine the optimal allocation of resources and it measures welfare gains in terms of averaged outcomes. The human rights approach, by contrast, has a distributional focus which emphasises equity, particularly as regards the disadvantaged; as discussed later in this paper, this will generally require some state intervention in markets.¹⁹

However, the efficiency model was not applied in a particularly “pure”²⁰ sense in GATT 1947. Although confident of Ricardo’s theory and the benefits of specialisation and open trade, GATT 1947 was drafted in a Keynesian theoretical environment which favoured a ”mixed economy.“ The British economist, John Maynard Keynes, argued that governments had a role in stabilising economies which was both necessary and beneficial. In the Keynesian mixed economy, while the invisible hand of market forces should be allowed to determine choices, a considerable level of state intervention would also be necessary in order to ensure the optimum operation of those very forces and to ensure the existence of social safety nets for those negatively affected by trade liberalisation.²¹ Keynesianism saw development as primarily a national process which would require state intervention, state planning and state financing.²² Reflecting this view, although the drafters of GATT 1947 were “committed to international markets, … this commitment was ‘embedded’ within a larger commitment to interventionist domestic policies.”²³ Donald McRae describes the “underlying bargain of the GATT” as being “that states would be able to leaven free trade with the protection of certain basic welfare values within society.” GATT 1947 was “both a protectionist and liberal trade charter.”²⁴ Thus, GATT 1947 left ample room for state development strategies, within developing and industrialised countries alike, and for redistributive measures in favour of those adversely affected by greater openness.
At the time GATT 1947 came into force, only ten developing countries were signatories.²⁵ Most were not convinced of the benefits to them of open trade, even under the Keynesian paradigm, seeing little to gain from “a trade liberalisation scheme which clearly favoured developed countries … [and which was] inimical to their economic interest and development.”²⁶ Developing countries, particularly the now-independent former colonies in Latin America, argued that they would be better off pursuing the alternative economic approach of ”import-substitution industrialisation”.²⁷ Based on the ideas of two economic development theorists, Hans Singer and Raul Prebisch, this theory argued that developing countries would benefit most from fostering their industries behind protective economic walls, such as high tariffs, import quotas and, importantly, import substitution policies. Under these latter policies, industries in developing countries would be required to source their component parts and other inputs from local suppliers, rather than importing them. Because the protective walls would only be removed when their industries were strong enough to face international competition, this approach has also sometimes been called an ‘infant industry approach.’ Developing countries pointed out that this was precisely the development strategy which the now-wealthy countries had adopted for their own industrialisation.²⁸ Closely related to this approach was Dependency theory, a Latin American-based development theory which supported import-substitution industrialisation as a development strategy. The theory viewed the entire global economy as structured so as to keep developing countries in a relationship of perpetual dependence on, and exploitation by, the wealthy, industrialised countries; the only way in which these countries could develop was to abandon the external focus of dependency and carve an independent development path.²⁹
However, the view that GATT 1947 had little to offer developing countries gradually moderated as the decolonisation and independence movement began sweeping through Asia and Africa in the 1950s and 1960s. Some attraction flowed from the fact that GATT 1947 contained a clause which permitted import-substitution industrialisation. Headed Governmental Assistance to Economic Development, Article XVIII allowed countries “in the early stages of [their] development” to adopt tariff, quota and other protectionist policies, although not unreservedly. Added to this, in 1964, the UN Conference on Trade and Development (UNCTAD) was created, a permanent body of the UN which had “the cardinal aim of … encourag[ing] international trade in a manner that affords developing countries an increased access to the world market.”³⁰ The former colonial states had been pushing for the creation of such a body and for other improvements to the terms of their participation in the international economy, which was set out in a New International Economic Order.³¹ Largely at the instigation of UNCTAD, a new Part IV, Trade and Development, was added to GATT 1947 in 1965. Although limited in its utility because not binding, it entrenched the negotiating principle of ‘non-reciprocity’ for developing countries. Under this principle, although developing countries would benefit from reductions in tariffs and in other protections by the industrialised states, they were not expected to reciprocate by lowering their own protections. The addition of Part IV was followed in 1968 by the implementation of another UNCTAD proposal, the Generalised System of Preferences, within which industrialised countries were permitted (if they chose) to grant specially favourable tariff and other treatment to (primarily industrial) goods exported by developing countries.³² The permission to adopt protectionist strategies and the introduction of non-reciprocity and special privileges for developing countries under the Generalised System of Preferences were specific departures from the strict underlying theory and illustrate the flexibility in the GATT compromise.
In response to these UNCTAD initiatives, the number of developing country signatories to GATT 1947, especially African countries, increased sharply. However, developing countries tended not to adhere exclusively at this time to any one theoretical or strategic approach to their development. Most adopted internally-focused economic measures, including import-substitution, while at the same time arguing for international terms of trade that would allow them to expand their export industries and engage to a greater degree in the global economy. The relatively flexible approach of GATT 1947 towards developing countries enabled them to pursue a different international trade strategy to that of the industrialised countries and left them relatively free to craft more individual development strategies. However, the existence of this flexibility should not obscure the fact that, at this period, development thinking did not really challenge the dominance of economic theory or the view of development as “generally synonymous with economic growth.”³³ Moreover, both import-substitution industrialisation and the efficiency model of international trade were ‘Modernization’ theories, united in viewing development as “the bridging of the gap [between rich and poor nations] by means of an imitative process, in which the less developed countries gradually assumed the qualities of the developed.”³⁴
However, one strand of Modernization theory which was more controversial during this period was Dualism. Dualism argues that successful development requires a dynamic or modern sector to start the process off. As time goes by, this sector will infiltrate the underdeveloped sectors of the economy through a kind of ‘trickle down’ process of development.³⁵ The Dualistic approach is characteristically tolerant of distributional inequity and the particularly controversial question it poses is whether inequality is actually “a prerequisite for eventual overall development.”³⁶ The Dualist theorist, Hirschman, argued that it was and that “governments should not intervene to reduce inequalities for, at some juncture in the future, the search for profits will promote the spontaneous spin-off of growth-inducing industries to backward regions.”³⁷ However, other Dualist theorists have cautioned that “backwash effects tend[ing] to intensify existing inequalities” need to be controlled.³⁸
Depending on how it is applied, the efficiency model underlying international trade law may cause or, at least, may ignore or tolerate inequality arising in the process of development. Certainly, the model promotes a process which requires ordinary developing countries to specialise in that which they can produce most efficiently and to pursue that specialisation as a modern export industry. Because of the greater reliance on imports acquire foreign currency to meet other needs, the export industry becomes extremely important and other production becomes secondary. It is most likely that this would occur in a Dualistic fashion, due to the very fact of under-development. Governments in developing countries would be unlikely to have the resources to assist a largely rural work force to transfer quickly to new industries. Many people would remain, at least for a time, in backward sectors, with little cash to buy the now essential imports. While Dualism as a development strategy may be justifiable within development theory and within economic theory, approaches to development or trade which cause, ignore or tolerate inequality do not meet the norms, mentioned earlier, which international human rights law sets out as guiding the process of social progress and development.
Interestingly, one influential school of development theory which arose during the late 1960s and early 1970s did focus on the importance of equality in development and on the fact that the efficiency model had so far failed to reduce inequality or poverty in developing countries.³⁹ Under the development theory known as the Basic Needs Approach,
“development was redefined as a broad-based, people-oriented process, … focussed on households and covering aspects of health, education, farming and reproduction practices designed to create a minimum level of welfare for the weakest groups in society.”⁴⁰
The position of human rights and fundamental freedoms as guiding norms for development thinking was strengthened by the creation of two new treaties. In 1966, the UN opened for signature the two principal human rights treaties, the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR). Neither of these conventions focused directly on the process of development or presented any specific strategic approach to development. However, they gave a heightened status to many ‘basic needs’ recognised in development theory and set out the nature of states parties’ obligations in relation to those needs. Generally speaking, all states carry a primary obligation to respect, protect and promote human rights and fundamental freedoms.⁴¹ Under the ICCPR, signatory states bear immediate obligations with regard to civil and political rights. Under the ICESCR, signatory states bear an immediate obligation “to move as expeditiously and effectively as possible,” to the maximum of their available resources,⁴² towards the full realisation of the rights in that treaty. This process of ‘progressive realisation’ of rights under ICESCR is similar, in a practical sense, to the process of development as understood in broad, rather than narrow and economic, terms. The Committee on Economic, Social and Cultural Rights explains that states carry:
“a minimum core obligation to ensure the satisfaction of, at the very least, minimum essential levels of each of the rights …. Thus, for example, a State party in which any significant number of individuals is deprived of essential foodstuffs, of essential primary health care, of basic shelter and housing, or of the most basic forms of education is, prima facie, failing to discharge its obligations under the Covenant.”⁴³
The obligation also extends to require that any “deliberately retrogressive measures” by states would have to be thoroughly justified.⁴⁴ The human rights law principle of non-retrogression of rights states,
’that nobody should be allowed to suffer an absolute decline in the enjoyment of any right at any time…. [F]ull enjoyment of all the rights may only be possible over a period of time, and … as time passes some rights may be advanced faster than others. But [the principle] does not permit the level of enjoyment of any right to decline in comparison with the past.”⁴⁵
Although it would be a further ten years before the two treaties came into force, economic and social development were now powerfully “conceptualized” in international law “in terms of human rights and freedoms”⁴⁶ and the very close relationship between development and human rights was now well acknowledged. The “moral reasoning”⁴⁷ underpinning human rights law was understood to be firmly “rooted in the liberal commitment to the equal moral worth of each individual, regardless of their utility.”⁴⁸ Human moral worth and dignity, “which are at the core of human rights,” are absolute and cannot be subjected “to compromise on the basis of [utilitarian] justifications.”⁴⁹ The moral reasoning underpinning the efficiency model, on the other hand,
“… [was] utilitarian in nature. Utilitarianism determines the morality of an act according to its consequences for the aggregate of individual utility…. [T]he Efficiency Model of trade law asserts, explicitly or implicitly, the utilitarian argument that free trade is good because of its consequences, namely the maximisation of aggregate individual welfare from efficiency gains and from the operation of comparative advantage. Trade maximises welfare for many reasons, including lower prices [and] increased consumer choice….”

[Human rights approaches] are disturbing to contemporary economists, precisely because [they] view rights as absolutely not to be violated, essentially foreclosing the sort of analysis which economists engage in when evaluating a policy or course of conduct.”⁵⁰

However, a series of economic crises began to unfold in developing countries, stimulating dramatic changes to development thinking and leading, despite the new human rights covenants, to the dominance of a more utilitarian, efficiency model approach to development. It was under the influence of these new theories and strategies that the international trade law of the WTO was created and that a new package for developing countries under international trade law was compiled.

2.3 A change of direction

An oversupply of capital in the early 1970s had resulted in huge loans being given to developing countries. When OPEC raised the price of oil sharply a few years later, forcing up interest rates, and when world commodity prices collapsed in the early 1980s, many developing countries defaulted on what were by then massive repayment obligations. Particularly vulnerable were the import-substituting developing countries, including Mexico, Brazil, India and Argentina, which had borrowed heavily to support (amongst other things) inefficient domestic industries.⁵¹ With Mexico on the brink of bankruptcy and many other developing countries set to follow it, disillusion with state intervention in economies – as Keynesianism or as import-substitution - came rapidly to the fore.⁵² An opportunity opened up for the adoption of a “more orthodox, neo-classical tradition” of economic theory, one which was already well developed and had existed for some time “alongside and often in heated opposition to”⁵³ the Keynesian view. While there were many schools within this neo-classical tradition, they all “stress[ed] the importance of trade and comparative advantages in the development process”⁵⁴ and endorsed the efficiency model. Perhaps the best known of these is neo-liberalism. Hettne describes neo-liberalism as “a purified neo-classical discourse, according to which development [is] an inherently universal and increasingly global economic process.”⁵⁵

Neo-liberalism became a dominant theoretical force in the 1980s, largely because it was applied to two powerful economies at this time, those of the United States under President Reagan and the United Kingdom under Prime Minister Thatcher. As an economic approach, it is associated with the rapid deregulation, liberalisation, privatisation and small government which characterised the Thatcher and Reagan policies in the 1980s. It is premised on a high level of confidence in market forces to price the factors of production (capital and labour) appropriately and to minimise waste.⁵⁶ Critical of the dilution of the efficiency model under the Keynesian approach, neo-liberalism sees government interventions in markets, such as minimum wage laws, as both unnecessary (markets will find an equilibrium) and distorting.⁵⁷ Neo-liberalism is also a Modernisation theory: if a developing country is to seize its comparative advantage and participate effectively in the global economy, efficiency must be a guiding principle, which requires that the country industrialise (even in agriculture) and urbanise, create substantial infrastructure and acquire a level of technological capacity and knowledge. A country cannot do this if it cannot, for example, switch labour from one industry to another, transport goods quickly and comply with international product safety standards.
Neo-liberal economic theory also framed the set of economic development policies which the international financial institutions – particularly the World Bank and International Monetary Fund - imposed as loan conditions upon developing countries in the wake of the economic crises they were experiencing.⁵⁸ Referred to by many as the ‘Washington Consensus,’ these policies emphasised (amongst other neo-liberal strategies) extensive trade liberalisation and export-based programmes of industrialisation.⁵⁹ The goal of these loan conditions was to require developing countries to open up to international trade and investment, to engage more fully with the global economy and, thereby, to mobilise their domestic resources more effectively to finance their own development. However, developing countries continued to argue that international assistance for their development, as former colonies, was an “obligation owed by the former colonial powers.”⁶⁰ Their demand for a New International Economic Order, strong during the 1960s and 1970s, had not been fully abandoned. Their claims found expression at this point in the movement for international recognition of a human right to development, which would include recognition of an obligation on the part of the industrialised world to take extensive responsibility for the development of the poorer countries through international development assistance and cooperation. Their attempts to gain international recognition of a human right to development gained little support from the former colonial powers. Nevertheless, in 1986, the UN General Assembly adopted the Declaration on the Right to Development (the Development Declaration).
The Development Declaration was particularly strategic in that it seized the notion of development and deposited it squarely within the realm of international human rights, as a process which is thoroughly tied to rights and which is very much about the realisation of rights. It presents a broad concept which sees development as a process which extends well beyond the economic sphere to include changes in society, culture and the political realm. The preamble to the Development Declaration defines development in its expansive sense, as

“a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefits resulting therefrom.”⁶¹

Rather than dictate how to achieve development, this definition describes a broad scope for the development process and identifies human rights norms to guide the process, in particular, that it must be inclusive and equitable. Article 1(1) of the Development Declaration adds to the definition that, through this right, “… every human person and all peoples are entitled to … [a form of] development in which all human rights and fundamental freedoms can be fully realized.” Thus, the Development Declaration both identifies development as a human right and defines it as a broad, inclusive and equitable process which must facilitate the realisation by all people and all individuals of their human rights and fundamental freedoms. The preamble further adds that “the human person is the central subject of the development process and that development policy should therefore make the human being the main participant and beneficiary of development.”⁶² Implicit in this definition, as made clear by the UN Committee on Economic Social and Cultural Rights, is the principle of non-regression.⁶³ These ways of thinking about development directly challenged narrow, economic conceptions of development, particularly those which might be said to cause, tolerate or ignore inequality or retrogression, which were not participatory and which did not facilitate the realisation of human rights and fundamental freedoms.
The requirements of full participation, fairness and equity in a broad process of development were readily met by a school of development theory which arose at this time, in opposition to those focused more narrowly on economic development and the efficiency model. With the unusual name of “another development,” this approach argued that “top-down,” economics-dominated approaches, which “involv[e] unequal and uneven growth, modernisation, urban-industrialisation, the diffusion of innovations and hierarchic patterns of change and growth poles”⁶⁴ could not ever achieve ‘development’ in the true sense. Rather, “bottom-up,” locally-created, participatory and ecologically-sensitive policies and initiatives which focused on meeting basic needs were the means to true development.⁶⁵ Adopting a perspective and terms similar to those of human rights, this development approach described itself as “more concerned with the unseen victims than with the victors in the development drama.” It presented “the perspective of the excluded” and broadcast their “cry for visibility, participation and justice.”⁶⁶ Kingsbury states that this alternative approach “has been shown, in a number of cases, to produce real, tangible and appropriate [development] benefits for local people.”⁶⁷
Nevertheless, the historic Uruguay Round of trade negotiations, which began in the same year that the Development Declaration was passed and which created the modern international trade law regime, was more influenced by the efficiency model and neo-liberalism than by the human rights approach.⁶⁸ The vast body of new trade law which the Round created applied the efficiency model tenets more “purely,”⁶⁹ eschewing the deep-seated flexibility of GATT 1947 and drawing developing countries more firmly into pan-sectoral trade liberalisation as a development strategy. This fundamental change was accompanied by a system of concessions for developing countries which, as discussed below, temporarily mitigated some of their trade law obligations or assisted them in adapting to the deeper trade liberalisation process. The new package of trade liberalisation obligations and concessions applying to developing countries is referred to in this paper as the ‘WTO-Minus strategy.’ In the next part, this strategy is explained and, in subsequent parts, it is argued that the WTO-Minus strategy has led to the imposition of significant constraints on the development strategy options and, hence, the realisation of human rights and freedoms, open to developing countries today.

2.4 The arrival of the WTO-Minus strategy

The WTO open trading system, established in 1995 at the end of the Uruguay Round, is the only ‘multilateral’ trading system and is the principal source of international trade law and policy, driving the continuing expansion and regulation of the world’s open trading system. . By extending into areas previously outside, or poorly regulated by, GATT 1947, WTO law brought about major change. WTO law now covers not only trade in virtually all goods, in much greater detail, but also trade in services,⁷⁰ and it mandates protection for intellectual property.⁷¹ Added to this, the WTO agreements are a ‘single undertaking,’ in that Members must join all of the agreements; they cannot choose to join only some.⁷² These major changes are made even more significant by the fact that WTO law is backed up by a Dispute Settlement System with power to make orders in the nature of enforcement.⁷³

The major change for developing countries was that they were brought within the same core disciplines of trade law as the industrialised countries. A more extensive, penetrating and orthodox set of trade law obligations was imposed on developing countries, and the tolerance of protectionism and the principle of non-reciprocity, which had reigned under GATT 1947, were largely discarded.⁷⁴ Instead, the strategy of WTO-Minus was introduced. However, before turning to the WTO-Minus strategy, two points need to be noted. First, WTO law does not define ‘developing country,’ even though it is a term used repeatedly in WTO law. To date, developing country Members of the WTO have self-designated as such. Secondly, WTO law expressly imposes very different obligations on ‘least-developed countries’ (LDCs) to those it imposes on other developing countries. There are about 49 countries at any one time which are classified as LDCs by the United Nations Development Program and UNCTAD, on the basis of their low national incomes, weak human assets and high economic vulnerability.⁷⁵ By and large, LDCs were exempted from the new liberalisation obligations imposed by WTO law⁷⁶ and, for that reason, they are not included in the critique of development strategy constraints set out in this paper.
For the approximately 95 remaining developing country Members, which will be called ‘ordinary developing countries’ in this paper to distinguish them from the LDCs, the WTO-Minus strategy applied. Under this strategy, WTO law was applied to ordinary developing countries, but ‘minus’ the immediate or strict enforcement of some of the obligations. To illustrate, the 1995 Agreement on Agriculture required both industrialised countries and ordinary developing countries to reduce their agricultural subsidies. Thus, WTO law applied the same efficiency model theory to both industrialised and ordinary developing Members alike. However, WTO law then reduced the percentage by which ordinary developing country Members were required to bring down their subsidies (say, by 24 per cent as against 36 per cent for industrialised countries), allowed a longer period for compliance (say, ten years as against six years for industrialised countries) and excluded one or two subsidies commonly used in developing countries from the reduction commitments.The same WTO law principles were applied to the two categories of Member country, minus full and strict enforcement of some of the obligations for ordinary developing countries.
Concessions of this kind are made in recognition of developing countries’ lower levels of development and different development needs and are referred to in WTO law as ‘Special and Differential Treatment.’’ The WTO Committee on Trade and Development has identified more than 150 Special and Differential Treatment provisions in WTO law. A large proportion of these give ordinary developing countries longer timeframes for compliance with WTO law obligations, lower reductions targets or flexibility in their obligations and commitments under the WTO rules and disciplines. Other provisions exhort industrialised country Members to recognise and accommodate the interests of ordinary developing countries, through, for example, providing greater opportunities for ordinary developing countries to export their goods and services, providing financial and technical assistance, refraining from imposing unnecessary trade obstacles and generally taking into account their development needs and difficulties.⁷⁷ Provisions which exhort the safeguarding of the interests of ordinary developing countries are the most common type of special and differential treatment in WTO law, while those which concretely increase their trading opportunities are the least common.⁷⁸
Thus, the WTO-Minus strategy does not, in its general thrust of trade liberalisation, distinguish between industrialised and ordinary developing countries. Rather, the one broad trade strategy and, consequently, the one development strategy, are applied to both; the ‘Minus’ aspect – the exceptions made, and flexibility given, through Special and Differential Treatment - does not alter that development strategy in its fundamentals. The underlying theory for trade liberalisation and the efficiency model is clear and proposes that “the best way to promote economic development is to integrate as quickly as possible with the multilateral trading system.”⁷⁹ Much less clear is the reasoning behind the special accommodation made for ordinary developing countries, which the theory underlying WTO law does not appear to explain or justify. On the contrary, the efficiency model proposes that “trade enhances growth and … growth reduces poverty.”⁸⁰ Presumably, special and differential treatment is intended to take account of their lower levels of development in ways which will assist them to engage robustly in the trade liberalisation process. However, this is premised on the assumptions that those ways will, indeed, assist, that the WTO-Minus strategy will not hinder their (economic) development and, importantly, that there is no better way for trade law to support their development.
Despite this underlying confusion, ordinary developing countries have little choice but to join the WTO and operate within the confines of the WTO-Minus strategy. Most seek to follow a tripartite economic development strategy which includes fostering their agricultural sectors, building up their industrial sectors and increasing their exports, particularly of agricultural products. The following Part looks at certain constraints imposed by WTO law on the development strategy options of ordinary developing countries in each of these three strategic areas, none of which is addressed adequately through the WTO-Minus approach. While it is not suggested that these are the only constraints, they have been identified as significant in their interaction with human rights and freedoms. The constraints identified all relate to trade in goods and, again, while there may well be constraints relating to trade in services, that is for another paper to explore.