Why the poorest countries need a WTO

Ehsan Masood
13 December 2005

Size matters. This phrase, all of two words, sums up the world of the multilateral organisation. At its very simplest it means that richer, more developed countries have more influence on the policies of an organisation inside the United Nations system, compared with poorer and less developed ones.

Take the Kyoto climate protocol, discussed at the major conference in Montreal which concluded on 11 December; there, member-states agreed to immediate talks on new and stronger measures to combat global warming. This result, undoubtedly a breakthrough in climate diplomacy, has taken thirteen years to reach. Since the UN climate convention was signed in 1992, the majority of poorer countries have wanted richer countries to take urgent and legally-binding action. But until now, rich countries (particularly the United States) have been reluctant to do so; hence no real action was taken.

Ehsan Masood is project director of The Gateway Trust

Also by Ehsan Masood in openDemocracy:

“The Hizb-ut-Tahrir equation” (August 2005)

“British Muslims must stop the war” (August 2005)

“The globalisation of Islamic Relief” (November 2005)

If you find this material valuable please consider supporting openDemocracy by sending us a donation so that we can continue our work for democratic dialogue

Poorer countries have good reasons for being concerned about global warming. Among them is that climate change is largely the fault of industrialised countries (and a belief that the polluter should pay); also that it is often the poorest countries who are least able to recover from the extreme weather that comes as a result of the rise in global temperatures.

A majority argument grounded in fact ought to carry some weight in how decisions are made inside the United Nations. But in practice, as we saw from the Montreal climate conference, democracy in the UN won’t get you very far unless your view is supported by either the European Union, the United States (sometimes both), or the five permanent nuclear powers in the Security Council.

But if size matters, the World Trade Organisation ministerial this week in Hong Kong demonstrates that it is not everything. The WTO, at one level, is a forum in which the richer countries among its 149 members – Saudi Arabia became the latest on the eve of the conference – pressurise poorer ones to liberalise their economies, while at the same time handing massive subsidies to their own farmers. But on a different level, when it comes to making (and upholding) international laws and agreements, a determined poor country stands a better chance of getting its way in the WTO than it does through other UN agreements.

One of the reasons for this is that the WTO’s job is not only to make trade laws and promote free trade, but also to uphold laws and resolve trade disputes. In theory, a small WTO-member country that has reason to believe that an international trade law is being broken by a larger country can complain to an independent panel, which will hear both sides of the case and take a decision. None of the many UN environmental agreements have such powers. There are no penalties, for example, if a country misses its targets to reduce greenhouse-gas emissions under the Kyoto Protocol.

In practice of course it isn’t easy for poor countries to challenge richer ones, as a candid paper by Håkan Nordström in the latest issue of the Journal of World TradeThe World Trade Organization in a Changing World”, 39/5, 2005) explains. Nordström is chief economist at Sweden’s national board of trade and a former member of the WTO secretariat in Geneva. His paper reveals much about the secretariat, what it thinks of member-states (rich and poor), and its own prescription for reform.

Decisions on new laws in the WTO are made by consensus, but building a consensus, says Nordström, takes time and involves a number of separate, but converging processes that the poorest developing countries are not equipped to carry out.

“The key to influencing decisions in the WTO is analytical and networking capacity,” he writes. “National positions must be formulated and communicated to the WTO; the positions of other countries must be analysed and responded to; coalitions must be built with like-minded nations and pressure must be exercised on unconvinced countries in the final consensus-building process. On all these accounts, developed countries, and the larger among them in particular, have an advantage.”

The WTO headquarters in Geneva is a busy place. In a typical week, Nordström says there can be between forty and forty-five meetings. A country delegation needs at least three full-time staff to cover essential meetings. A delegation also needs access to experts from law, academia, and capable support staff. Nordström says that seven is the average size of a permanent WTO delegation from a rich country. In contrast, a richer developing country such as Brazil will have three or four staff. The poorest countries will have an average of one. Thirty countries have no permanent representation at the WTO.

Small is friendly

Despite this, I would argue that the WTO, compared with United Nations agencies, is still a better prospect for developing countries wanting to influence the course of legislation. Money is undoubtedly one reason. To bridge what in development-speak is sometimes called the “capacity gap”, WTO member-states have established a $24 million fund to train people from developing countries to become better trade negotiators. According to Håkan Nordström, the fund met more than 1,000 training requests from 118 countries in 2003. No UN environmental agreement has a facility of comparable size.

A second reason why the poorest countries are better off with the WTO is down to the small size of the WTO secretariat. In a list of the top-ten UN agencies ranked by staff numbers and budget size (excluding the World Bank), the WTO with its 600-strong staff comes in at a lowly ninth. And unlike, say, Paul Wolfowitz of the World Bank or José Manuel Barroso of the European Commission, the WTO’s director-general Pascal Lamy is a “general without arms”, as Nordström puts it, unable to propose ideas or suggest compromises. The job of the secretariat is to represent the collective interest of all members. Secretariat staff are not allowed to act on the instructions of any country, nor on their own initiative.

Also in openDemocracy:

“The man who built the WTO: an interview with Peter Sutherland” (January 2004)

Nadeem Ul Haque, “Where do poor countries get their policy ideas?” (February 2005):

“The lack of organised capacity for strategic research and debate means that low-income countries remain dependent on expatriate advice for their reform ideas. This has three deleterious effects:

• a knowledge deficit

• an ownership deficit

• an opportunity deficit”

Also, uncommonly for an international agency the WTO secretariat is not allowed to commission or carry out its own research. This is in part because of concerns from member states of the possibility that research findings could contradict a country’s official position on an issue. Nordström reveals that richer countries are more comfortable outsourcing their research needs to the OECD, while developing countries prefer to use the research capacity of the UN Conference on Trade and Development (Unctad), long seen by them as a champion of the trading interests of the poor.

But why should a small secretariat be better for a poorer country? And why shouldn’t the WTO secretariat expand its powers, its personnel and its ability to carry out in-house research? In effect, why shouldn’t the WTO become more like the headquarters of the World Bank (6,800 staff) in Washington DC, or the UN Development Programme (5,000 staff) in New York?

Nordström, echoing the views of the current WTO secretariat, thinks some kind of expansion is needed for the organisation to help speed up decisions and better serve its expanding membership – one that now also includes universities, business and civil society.

The speed (or lack of it) in resolving disputes is a sore point for many. Between 1995 and 2003, the WTO received some 300 complaints. Half of these are still pending. Nordström thinks some decisions suffer because of the involvement of less-experienced representatives from the poorest developing countries. Some of the jobs they do, he believes, could be taken over by members of a professional secretariat.

But there is a problem in this prescription (which Nordström partly acknowledges) as well as in moves to expand the Geneva secretariat. This is that in becoming a larger international bureaucracy, the WTO risks alienating further those of its poorer members who already perceive the organisation to be biased in favour of the interests of richer countries. Creating another IMF is likely to dent their confidence further.

Even if the practice is flawed, poorer countries in the WTO have the ability to directly influence the course of international law to a degree that is not possible in other parts of the United Nations. The fact that many of the poorest countries lack the capacity to do so should not be seen as a reason to deprive them of what many will regard as a right.

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