Chapter Two - Development and the WTO Approach

Summary

Trade, the WTO and Development – An Introduction

The dictionary definition of trade is: ‘the buying and selling of goods and services; a commercial activity of a particular kind’. Development signifies a progress from a less sophisticated phase to a more advanced stage. It is defined as ‘a new stage in a changing situation; a new product or idea’. Synonyms include: advance; betterment; change; enlargement; growth; progress.

In the past, ‘development’ remained within the realm of discourse on economic and social rights of individuals and societies around the world. As such, development work is largely credited to the activities of international agencies such as the World Bank and the International Monetary Fund (IMF) and alliances between nations under which some financial assistance is offered to the less developed countries of the world, such as the G8. The World Trade Organisation (WTO) with its rules-based system, its compulsory dispute settlement mechanism and its promotion of the free trade ideology, has not hitherto been counted as an international development agency. Therefore, it could be argued that ascribing a development character to this trade organisation may well be beyond its circle of influence. It is important to assess the validity of both sides of the argument.

Trade and development, the two concepts which form the basis of this study, must necessarily be assessed in the context of their relationship within the WTO. The starting point is to appreciate the WTO: what it stands for, how it came into being, and how it functions in the trading environment. The understanding, both of the WTO and of most trade practitioners, is that the Organisation is principally, a trade negotiating body. The trade negotiation role of the WTO in the multilateral trade arena is not in doubt. Part of the appeal of a regulated system for multilateral trade even under the umbrella of the 1947 General Agreement on Tariffs and Trade (GATT) was and still is the accessibility it affords its membership to negotiate on a wide range of trade and economic related issues.

International trade has grown in the past century largely because the world’s nations have expressed a joint interest in eliminating protectionist domestic legislation and in promoting the free trade mechanism for trade in goods (and services).