Critical mass as an alternative framework for multilateral Trade negotiations

Global Governance

Volumn 15, Issue 3, 2009, Pages 375-392

  Gallagher, Peter ^a   Stoler, Andrew ^b  

^a Industry Organizations   (Australia)

^b UNIVERSITY OF ADELAIDE   (Australia)

Author keywords

Agriculture; International negotiations; Political economy; Trade; World Trade Organization

Indexed keywords

EID: 70350259598     PISSN: 10752846     EISSN: None     Source Type: Journal    
DOI: 10.1163/19426720-01503006     Document Type: Article

References (34)

1. This article is a contribution to the research project "Viability of Alternative Frameworks for Agricultural Trade Negotiations, " cosponsored by the Australian Rural Industries Research and Development Corporation (RIRDC) and the Australian Centre for International Agricultural Research (ACIAR). Elements of this article were originally produced for the April 2008 Warwick Commission seminar held at the University of Melbourne.
2. Ministerial Declaration of 14 November 2001, para. 47.
3. Agreement Establishing the World Trade Organization (Marrakesh Agreement), Preamble.
4. Doha Ministerial Declaration, para. 2.
5. Ibid., para. 50.
6. "Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries, " GATT Council Decision of 28 November 1979, L/4903.
7. Here is an intuitive demonstration of the intended mechanism. Consider a twoproduct developing country economy where prices are determined by the ratio of importables to exportables (i/x). Now, hold protection in this economy steady so that the price of importables (i) is unchanged while reducing protection in developed country export markets. The price of exportables rises in the developing country, owing to the greater demand for exports (to the developed market) so that the price ratio of importables to exportables (i/x) falls: a terms of trade gain to the developing country.
8. The nonreciprocity of developing countries in the market access negotiations of the Dillon, Kennedy, and Tokyo Rounds is documented in the GATT study "The Tokyo Round of Multilateral Trade Negotiations, Report by the Director-General of GATT" (Geneva: GATT, 1979) ;
9. and in William R. Cline et al., Trade Negotiations in the Tokyo Round-A Quantitative Assessment (Washington, DC: Brookings Institution, 1978). Fourteen developed countries applied the Tokyo Round tariff formula: another twenty, mostly developing countries, participated to some extent in the tariff negotiations. The GATT study estimated that the final reduction on industrialized products was about 38 percent and that the cut on products of interest to developing countries that were included in the final results was approximately 35 percent (simple averages). The reluctance of developing countries (and Australia) to participate in the Tokyo Round market access negotiations reflected not only on their trade policies but also on the imbalanced objectives of the negotiations-carried forward from the Kennedy Round-that concerned, chiefly, a subset of nonagricultural products. Although developed countries offered cuts in "tropical products, " no tariff formula was applied to cuts in temperate farm products.
10. The Lerner equivalence: as the demand for exportables increases, output in that sector rises, wages and other specialized factor prices rise, and the price of the exportable rises too. At a higher price relative to imports, demand in the export market (where the importable goods are produced) falls.
11. J. Williamson, "The Washington Consensus as Policy Prescription for Development, " paper presented at the Practitioners in Development Lecture, World Bank, Washington, DC, January 2004.
12. Robert E. Hudec, Developing Countries in the GATT Legal System (London: Gower, for the Trade Policy Research Center, 1987).
13. From Australian trade minister John McEwen, among others, see GATT Summary Record of Eleventh Session, 25 October 1956, SR.11/7, available at www.wto.org/gatt-docs/English/SULPDF/90270417.pdf (accessed 1 July 2008).
14. Hudec, Developing Countries, p. 36.
15. Ministerial Declaration on the Uruguay Round (20 September 1986), para. I. B. (ii)
16. The Codes, to which few developing countries adhered, were renegotiated as agreements or "understandings" in the Uruguay Round.
17. The Quad was composed of the European Communities, the United States, Canada, and Japan. The Quad members met regularly on an informal basis to exchange information and, where possible, to coordinate their positions in the Uruguay Round negotiations.
18. These four agreements were seen to be of limited interest and application to most WTO members (only a few countries produce large civil aircraft or are major exporters of dairy products), and it was agreed that it was not necessary or desirable to make participation in the agreements a requirement of WTO membership.
19. Hudec, Developing Countries, p. 103.
20. J. M. Finger, The Doha Agenda and Development: A View from the Uruguay Round (Manila: Asian Development Bank, 2002).
21. The commitment embodied in, for example, Article 20 of the Agreement on Agriculture to continue negotiations on the "reform process" as part of the normal work of the WTO without relaunching a comprehensive round of negotiations.
22. Peter Gallagher, The First Ten Years of the WTO (Cambridge: Cambridge University Press, 2005).
23. Revised Draft Modalities for Agriculture, TN/AG/W/4/Rev. 2, 19 May 2008.
24. Kym Anderson, Will Martin, and Dominique van der Mensbrugghe, "Doha Merchandise Trade Reform: What's at Stake for Developing Countries?" World Bank Economic Review 20, no. 2 (2006) : 169-195. (Pubitemid 43997467)
25. Anderson, Martin, and van der Mensbrugghe, "Doha Merchandise Trade Reform, " are at pains to point out that these projections are based on static estimates that experience suggests are likely to significantly undershoot actual outcomes, including the dynamic ("second round") gains from liberalization as firms and households adjust to new opportunities.
26. Austria, Belgium, Canada, Denmark, France, the Federal Republic of Germany, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, the United States, and Zimbabwe.
27. Article XVI:4 was unbalanced, as far as most agricultural exporters were concerned.
28. As Hudec, Developing Countries, notes, no "reciprocal" offer from them would have secured more equitable product coverage at the time (p. 73). The improved discipline on industrial subsidies worked, however, without the participation of the majority of GATT CPs because it had been accepted by a critical mass of countries accounting for most industrial product exports.
29. For the purposes of this initial article in the project, we are basing the analysis on trade in several product groups that are widely recognized as significant in both export and import trade, including grains, dairy products, and meat products. Later in the RIRDC-ACIAR research project, of which this article is a contribution, the categories of products will be expanded importantly.
30. WTO members not participating in the critical mass negotiations might be requested to operate any export subsidy programs they maintain in ways that do not undercut the effectiveness of the implementation of the critical mass agreement.
31. For now, we have based this analysis on the 2006 ITC TRADEMAP data at six-digit HS (harmonized system of tariff nomenclature) level.
32. The EC-27 are counted as one for purposes of this analysis.
33. This is 106 of the WTO's 152 members if the EC-27 are counted separately.
34. Among those that we do not examine here is the impact of critical mass agreements on what is sometimes called the "geometry" of WTO membership.