Between Trade and Development

by Michael J. Trebilcock

In my recent Robert Hudec public lecture to the Society for International Economic Law at its biannual conference in Bern, Switzerland (“Between Theories of Trade and Development: The Future of the World TradingSystem”), I focus on the role of developing countries and the multilateral trading system.  First, I briefly trace the legal status of developing countries in this system, beginning with the emergence of special and differential treatment on the import side in the 1950s (with respect to the protection of infant industries), and on the export side in the 1960s (with respect to non-reciprocal preferences granted by developed countries), to the single undertaking approach adopted in the Uruguay Round culminating in 1993, where all countries were essentially required to sign on to a broad range of commitments extending well beyond border measures to a variety of internal domestic regulatory policies, to the current Doha Round where a major fault-line has emerged between developed and developing countries with respect to multilateral commitments. 

I then trace a parallel set of shifts in thinking in development economics in the post-war period, beginning with big push, state-led theories of development and import substitution industrialization from the 1950s through to the 1970s, then the converse of these policies reflected in the Washington Consensus that prevailed in development circles throughout the 1980s and much of the 1990s, which emphasized the ubiquitous virtues of private markets and a limited role for government; then the currently prevailing New Development Economics, which emphasizes the shortcomings of both earlier schools of development economics in their commitment to universal or generalizable theories of development, and instead focuses on country- and context-specific impediments to development, recognizing that some of the most economically successful developing countries in the post-war period (including the East Asian and Chinese high-growth economies) have adopted highly eclectic and unorthodox policies that seem to have been effective in their particular contexts.  These shifts in thinking in development economics map closely the evolving role of developing countries in the multilateral trading system.

This evolution in thinking amongst development economists suggests that a one-size-fits-all multilateral trading system must be abandoned, as is already reflected in the dramatic proliferation of preferential trade agreements (PTAs) between developed and developing countries, and between and among developing countries themselves.  To reinvigorate and render sustainable the multilateral trading system, I argue that this system should provide more scope for plurilateral agreements amongst sub-sets of members (“coalitions of the willing”) and making provision for signatories to PTAs to designate, at their option, the WTO dispute settlement system as the dispute settlement regime for their PTAs, hence promoting stronger integration and coherence of international trade law.  In turn, I argue that developing countries, other than the least developed countries, should abandon claims for extreme forms of special and differential treatment, especially on the export side, and be prepared to bargain reciprocally with developed countries for improved market access.