Developing Nations in the WTO

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Until 1956 developing nations in the GATT mostly participated through commodity exportation. They were disadvantaged by the Nuclear Multilateral Bilateral Approach. In this method, proposed by Canada, a “nucleus” of large and powerful countries negotiated deals, which were then generalized for the rest of GATT’s members. In 1956 GATT first responded to demands from developing countries for reforms. New articles aimed at supporting nascent economies’ export industries through measures such as mandating that developed nations would not expect reciprocity from their developing neighbors for lowering tariff barriers. These new provisions, however, were abstract and not as binding as the rest of the GATT.

GATT membership surged in the 1970s as developing nations joined the agreement. These countries became more wary of dependence on developed economies, and claimed that the terms of trade were biased against them. They could not compete with developed-nation manufacturing prices, but also could not afford to pay for heavy industry goods. Out of these fears was born the New Economic Order, a system that developing countries pushed to balance out the playing field with respect to trade. It included provisions to stabilize commodity prices, give preferential tariffs to developing nations, and prevent developed-world technology licensors from taking advantage of developing countries. Similarly, the G-77 was formed as a lobbying bloc of developing nations, led by India and Brazil. Shortly thereafter the OPEC cartel formed to raise the price of petroleum, altering the global trade regime. The GATT responded with measures such as the General System of Preferences (1971), which provided a waiver to the Most-Favored-Nations clause that would allow preferential tariffs for developing nations.

Throughout the 1980s and 1990s dependence theory and preferential treatment for emerging economies were replaced by the Washington Consensus, which advocates for global free trade. Developing nations were obligated to accept the new system, championed by the IMF and World Bank, partly because of their debt overhand from the previous decades. With the creation of the WTO out of the GATT in 1994, the Washington Consensus has become controversial in many circles.

(Barton et al, 2006)