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A True Development Round Should Promote Fair Trade for Developing Countries

24 June 2004

Joseph Stiglitz talking at Marlborough House, London, 21 June 2004
'Developing countries should not be forced to accept obligations which overly restrict their scope for active development policies. '
A new Commonwealth report recommends that the Doha Development Round should promote fair trade for developing countries, including proposals to prioritise free trade in commodities and services that facilitate the movement of unskilled labour to enable workers in poor countries to provide services to markets in rich countries.

The report, titled 'An Agenda for the Development Round of Trade Negotiations in the Aftermath of Cancún, was released by the Commonwealth Secretariat in London, UK, on 21 June 2004. The report by the Initiative for Policy Dialogue (a Columbia University-based network of international development economists) was written by Nobel Laureate Joseph Stiglitz of Columbia University and Andrew Charlton of Oxford University. It details which reforms would deliver the largest gains to developing countries and, consequently, should be given the highest priority in the Development Round.

The report highlights the need to address non-tariff barriers, which have taken on increasing importance as tariffs have come down. The economic experts advocate reform of the legal framework to respond to dumping and other alleged unfair trade practices to ensure that developing countries are not disadvantaged. Professor Stiglitz, who was awarded the 2001 Nobel Prize in economics, points out the importance of revising intellectual property provisions (TRIPS) to narrow the 'knowledge gap' between rich and poor countries. He says developing countries should not be forced to accept obligations which overly restrict their scope for active development policies.

"It is an Advanced Industrial Country Round of what they think can pass as a Development Round. But we should not let them get away with it," said Professor Stiglitz at the launch of the Commonwealth report. In his report, the academic says that developing countries should receive special and differential treatment because they have been disadvantaged by unfair trade negotiations in the past, and because of the differences in their current circumstances. Developed countries have been widely criticised for their agricultural subsidies and other trade restrictions which discriminate against key agricultural and manufactured exports from developing countries.

Professor Stiglitz argues that the problems are much broader and that fundamental reform of the agenda and negotiating process will be required if the Doha Round is to deliver on its promise to developing countries. He said the Doha Round agenda was set by the special interests of advanced industrial countries to serve their own needs. Professor Stiglitz said: "The average tariffs by the developed countries against the less developed countries are higher than the average tariffs of the developed countries against other developed countries. They discriminate against the developing countries.

"The fact that the agricultural subsidies of Europe, the US and Japan exceed the entire income of Sub-Saharan Africa, you ask them, how can they effectively compete? Unless we have fair procedures, we're not going to get fair outcomes. And the current procedures are really not fair, they're really not transparent, they're not democratic."

At the launch, the Commonwealth Secretary-General said it is important to provide developing countries with real opportunities to trade their way out of poverty. He stated: "It will certainly remain impossible until we do have a truly fair, transparent multilateral trading system. But the reality is too often that the existing rules are skewed against poor countries. 

"We see three main problems for developing countries under the present rules. Trade opportunities must be supported by greater aid flows. Secondly, market access remains an important problem. This is what developing countries really want, especially in those products in which they have a distinct advantage. Thirdly, developing countries do lack the influence over the decision-making process that creates the rules and regulations. So none of us here and certainly around the Commonwealth want the Doha Round to fail. It would damage a lot of confidence, especially at a time when there are other issues in the world which do sometimes reflect the disparities of wealth in the world."

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