How the international Trading System is Changing and why this may not Good for Developing Countries (W-101)

How the international Trading System is Changing and why this may not Good for Developing Countries (W-101)

Publication details

  • Saturday | 16 Apr, 2005
  • Dirk Swart, Adil Najam
  • Working Papers
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Abstract The essay looks at the proliferation of bilateral and minilateral preferential trading agreements from the perspective of the developing countries. The proliferation is so dramatic that when considered collectively might even signify a fundamental change in the nature of the world trading system – an emergence of a “shadow” international system. The changes – especially the increase of bilateral and regional trading arrangements – may not necessarily be good for the developing countries. Three aspects are considered. First, the benefits of preferential trade agreements (PTAs) for the developing countries are often not trade related. They tend to be limited only to a few products. The proliferation of such arrangements can distract the attention and resources of the developing countries away from global multilateral arrangements. Second, historically the developing countries have been wary of the WTO, but it has become more South friendly. More Southern members have joined, more Southern countries have become important trading players, and more Southern countries have become comfortable in using the WTO dispute resolution mechanisms. More importantly, WTO remains the forum where long-lasting trade rules are set. Finally, even though preferential trading arrangements might seem to give developing countries more voice, they do not necessarily promise more say to the South. Developing countries should tread into the growth fields of PTAs with some care, and they should certainly not do so at the expense of their full participation in the WTO system.