LDCs and WTO commitments
The performance of World Trade Organisation (WTO) as regards market access, implementation obligation and payoff are disappointing because of inadequate safeguards for economic development, resource constraints, unachievable obligations and benefits.
The obligations from WTO membership can be summarised into two categories. First, reduction in trade barriers which is related to policy, and second, establishment of basic investment environment and procedures and legislation related to implementation. This article deals with implementation of second category requiring commitments on customs valuation, Intellectual Property Rights (IPR) and Sanitary and Phytosanitary Standards (SPS). Weak legislation, cumbersome procedures and ineffective institutions call for huge investments for WTO compatibility. Such investment in equ-ipment, manpower, systems and expatriates raises the question whether it would be a productive investment for LDCs to join WTO considering the capacity, the large size of investments and the benefits derived from alternative development priorities like poverty reduction and MDGs.
The absence of ownership, weak assessment of implementation costs and marginalisation of the majority of developing countries have given rise to the lack of confidence and drained political will. The LDCs take obligations as a ‘commitment trap’. Advanced countries should realise that the obligations imposed are not feasible for LDCs. If the obligations are not met, they need to be rescued through empowerment, enhanced participation and financial and technical support. Such support package to increase confidence of the LDCs should cover implementation cost, diagnose development issues and prescribe remedy along with binding commitment to assistance. Customs valuation agreement deals with valuation portion, thereby undermining comprehensive reforms in information, process and logistics required for enhancing market access. The agreement overlooks trade scenario, practices, logistics, regulations and problems of developing countries. High tariff, lack of control over merchandise movement and cumbersome administrative and judicial proced-ures require reforms in customs and administration.
WTO obligation compliance necessitates greater ownership and participation, assessment of cost and benefits of compliance and difficult choices between compliance and development priorities. Borrowed money has to be assessed on cost/benefit basis. The argument that scarce resources could be used for prioritised development like achieving MDGs and reducing poverty rather than diverting them to meet WTO obligations has some logic. The integrated framework established for ensuring technical assistance has fallen short of LDCs’ needs. Advanced countries’ pro-mise to assist LDCs in implementation has also not materialised. Weak institution, resource constraints and limited expertise have restrained developing countries from complying with WTO discipline. A lesson form Uruguay Round is that compliance with commitments need not be repeated. If huge requirements for investment, enhanced participation and ownership of LDCs are not dealt with, the issue of compliance will remain unresolved and hurt global integration.