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The Uruguay Round and the WTO. The Role of Justice in International Trade Negotiations

Hausarbeit 2005 14 Seiten

Politik - Internationale Politik - Thema: Int. Organisationen u. Verbände

Leseprobe

Contents:

1. Introduction

2. Main Body
2.1 Concepts of Justice in International Negotiations
2.2 Selected Aspects of the Uruguay Round Agreement
2.3 Critical Analysis of the Uruguay Round Agreement

3. Conclusion

References:

1. Introduction

In the field of International Relations (IR) a variety of “schools”, such as realism, institutionalism, or constructivism can be found, each promoting its own theory, and each one thinking differently about the world of IR. Though some of them, especially political realism, deny that morality and ethics do matter in the “politics among nations” as H. J. Morgenthau called it, there is strong empirical evidence that indeed norms and values do play a role in this field of life.

Keeping in mind that background, this essay’s general interest is whether international trade institutions comply with a sense of justice. Concretely speaking it is to be analysed whether the outcome of a specific international trade negotiation, namely the Uruguay Round which lasted from 1983 to 1994, is to be judged as “just” or “unjust”.

Fulfilling this task, this essay at first displays a concept to define the very abstract term of justice. The regarded definition will be mainly according to Cecilia Albin.

The second part of this essay provides a summary of main features of the Uruguay Round’s final act, the Agreement on Agriculture (AoA) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Although other sections of the agreement are highly interesting, too, these two fields prove to be extraordinarily useful for this paper’s purpose. Nevertheless it is the my intention to point on other issues of interest for instance labour standards or the further development since 1994 in this essay where it seems helpful and possible. The chapter summarizing the Uruguay Round’s outcome is mainly based on World Trade Organisation (WTO) sources, to insure that no subliminal judgement is included or at least none already supporting the view of the later discussed criticism.

The third section analyses the Uruguay Round’s outcome concerning agriculture and intellectual property. The criticism is derived from economic authors like Dasgupta and Sander/Inotai and development orientated NGOs like OXFAM as well. In most cases the analysis is critical of the agreement, at the same time avoiding the word “justice”. This gap shall be filled by the author’s assessment of the criticism, judging it, and linking it explicitly to the question of justice.

At the end of the essay I want to draw a conclusion about justice in the Uruguay Round agreement, also taking into consideration recent developments within the agreement of the WTO, and referring to the question raised at the beginning of this introduction about ethics and morality in IR.

2. Main Body

2.1 Concepts of Justice in International Negotiations

To assess the Uruguay Round, its final agreement and the criticism on it properly, a consistent definition of the term justice is needed. This essay primarily works with the idea of justice according to Cecilia Albin, Professor for Peace and Conflict Research at Uppsala University, Sweden. She explicitly considers the question of fairness in international negotiations.

For the sake of getting clarity about the relationship between the terms “justice” and “fairness”, one can think of justice as a macro-level concept and fairness as a micro-level one. The different levels serve as distinctive criteria. Albin considers fairness to consist of “individual notions of what is reasonable under the circumstances”, frequently referring to how a pertinent principle of justice shall to be applied (Albin 2003: 367). This reference is what links both concepts together.

According to Albin justice “refers to general standards for allocating collective benefits, opportunities and burdens among the members of a community. They exist prior to and independently of any situation to be judged”. (Albin 2003:367). Firstly in addition to this definition one has to note that the application of justice, as defined above, to negotiations on world trade assumes the existence on an international community. This assumption derives from Thomas Pogge stating that the citizens of richer states are “morally connected” to the poor, at least because of the single natural resource base all human beings share (Pogge 2001:14), and this moral connection itself can be seen the fundament of an international community. The general standards or principles are distinguished by Albin under substantive and procedural criteria, the latter include external, internal, and impartial ones.

To make it more concrete one can look at broadly recognised principles in international trade, such as the most-favoured-nation (MFN) principle or the standard of national treatment. The MFN generally demands equal treatment of trading partners, in the specific context of the international trade regime WTO it is the extension of concessions given to one country to all other WTO members. The principle of national treatment calls for equal conditions of competition for domestic and foreign products and services and so the prohibition of favouring domestic providers. (substantive principles)

Another principle when it comes to distributive criteria is the notion of need, which stresses an allocation of resources in a form which guarantees that those in most need receive the largest share of benefits. (external procedural principle)

Mutual advantage is another well-known principle that leads to Albin’s definition of justice. It imposes on negotiating parties to base their arrangements on terms they have established in advance and agreed to comply with if the agreement shall be considered as just. Moreover cooperation must be mutually beneficial, which means that net gains must be provided for all negotiating parties. (internal procedural principle)

John Rawls’ “justice as fairness” serves as a last exemplary discussed principle. Rawls suggests that principles of justice were those which parties would select and agree upon if being ignorant of their own identity and position (Rawls 1971:342). Or to say it in other words, an outcome of a negotiated agreement is just only if all parties can agree on it regardless in which position they find themselves and assuming they did not know what their own identity was in the process of negotiating. (impartial procedural principle)

Other broadly recognised and applied principles according to Albin are impartiality, differential treatment of different parties, representative decision making and reciprocity. She summarizes that the concept of justice can be captured as a “balanced settlement of conflicting claims”. (Albin 2003: 374)

Regarding the outcome of negotiations, Albin underlines that justice concerns “the principles guiding the distribution of benefits and burdens in an agreement” as well as “fairness after the agreement.” (Albin 2003: 380) Whereas the first refers to the principles which have been discussed in depth above, the notion of fairness after the agreement refers to the way it is actually implemented and its terms and principles are complied with in practical politics. Albin considers fairness after an agreement to be essential to the definition of the term justice as supported in this essay.

2.2 Selected Aspects of the Uruguay Round Agreement

The results of the Uruguay Round of negotiations can be distinguished into six parts, one establishing the WTO itself, another one for each area covered by the WTO (goods, services and intellectual property rights), moreover the Dispute Settlement Understanding (DSU) and the Policy Review Mechanism (PRM). As the Agreement on Agriculture and the International Patent Regime are to be analysed on their just or unjust impacts, those are the fields which I want to present in advance.

(a) Agreement on Agriculture

The Uruguay Round’s agricultural agreement refers to market access, domestic support and export subsidies. In all three parts there are different rules for industrialised (IC), developing (DC) and least-developed countries (LCD). Concerning market access, a tariffication is demanded, which means the replacement of import restrictions like quotas and non-tariff measures with tariffs. The modified tariffs on agricultural products have to be cut by an average of 36% by IC and 24% by DC. The minimum cut per product is 15% for IC and 10% for DC, and to fulfil this IC are given a 6-years- and a DC 10-years-term. LDC do not have to cut their tariffs on agricultural products at all. Regarding domestic support, a distinction between direct and indirect support is made. Direct support is to be reduced by 20% (IC) and 13% (DC) on basis of the direct domestic support provided to the agricultural sector per year (“Total ASM”) in the base period 1986-1988. LDC do not have to reduce domestic support on agriculture. Domestic financial transfers which are regarded to have a minimal or indirect impact are exempted from the restriction.

Regarding export subsidies, the parties decided a cut in value of 36% by IC, 24% by DC and in quantities of products of 21% (IC) and 14% (DC). The base period is 1986-1990, implementation may last 6 years (IC) or 10 years (DC). LDC do not have to make any cuts on export subsidies.

(b) Trade-Related Intellectual Property Rights

Intellectual property rules were for the first time introduced into the multilateral trading system by the Uruguay Round in form of the Agreement on Trade-Related Aspects of Intellectual Property Rights. It adds new and higher standards to the existing conventions on industrial products or artistic work. Different kinds of intellectual property such as copyright, trade marks, patents and industrial or layout designs are included. The agreement covers the concrete application of trade principles, protection of intellectual property, enforcement in member states, dispute settlement among parties and arrangements for the time of transition.

As it is central to this essay’s question on justice within the “Uruguay Agreement”, the rules on the adequate protection of patents are discussed in more detail. Patents have to be registered in order to receive protection. Registration includes a description of what is being produced, which itself is public information. The agreement requires in each member state legal circumstances granting patent protection for at least 20 years. Both, product and process (of production), must be patentable. Protection must be possible in almost all fields of technology, including plant varieties.

Exceptions are conditionally, governments can refuse issuing a patent if its economic exploitation would be prohibited for reasons of “public order” or “morality”. The exclusion of therapeutic, diagnostic and surgical products from patent rights is allowed. Also animals and plants (other than microorganisms) and their biological processes of production can be made impatentable.

Patents confer to their owner exclusive rights concerning product and process. When the patent subject matter is a product, third parties shall be prevented from making it, when the subject matter is a process from using it without the patent owner’s consent.

A patent issuing a process extends automatically to the obtained product. Under certain conditions infringers can be ordered by a court to prove that their product has been produced in another way than the patented own.

2.3 Critical Analysis of the Uruguay Round Agreement

(a) Trade-Related Intellectual Property Rights

The part of the agreement on TRIPs can be called an international patent regime. Concerning TRIPs, analysts discover an inner-agreement bias. The critical analysis of the TRIPs part concerns its theoretical inconsistency on the one hand and its orientation on the rent interests of the DC’s multinational enterprises instead of the development of LDC and the assistance to their people on the other hand. Concrete formulations as well as estimated effects of the treaty are criticised. This is presented in the following paragraphs.

Kevin Watkins (in OXFAM Briefing Paper 9) notices that TRIPs increases gains by IC, especially the USA and their transnational enterprises, while it inflicts significant losses for LDC. The agreed patent protection is considered to be extraordinarily stringent. Increasing royalty payments do, according to Watkins, not lead to a more of technology transfer but in the opposite reduce technological mobility. Research and Development activities are concentrated to a degree of 90% in industrialised countries. This fact indicates that the vast majority of innovations is patented in those countries by transnational enterprises. The strict interpretation of TRIPs causes financial transfers from LDC to IC, hinders technological transfers and harms public health in LDC.

Connecting Watkin’s criticism to Albin’s definition of just principles, this clearly conflicts with the requirement of net gains from cooperation for all parties. As studies suggest and observations confirm a net loss from the agreement especially in non-industrialised countries in Africa, the TRIPs agreement evidently contradicts the net gain standard. Those countries relying on medicaments patented by foreign multinational enterprises do not have enterprises which own intellectual property rights that could balance the disadvantages. For that reason TRIPs results in net losses for technology-poor countries and that does no fulfil the required principle of net gain cooperation and therefore is considered unjust.

Moreover, Watkins accuses the USA to promote double standards when supporting transnational enterprises’ claim against the South African government because of it importing cheap generic copies of patented drugs for HIV/AIDS and the US own announcement to use low-cost generics against a bio-terrorist attack with anthrax. This evidently unmasks USA’s double standards in judging patent rights. Patent rights seem to be considered untouchable when it comes to African HIV victims but relatively unimportant when US citizens might be threatened by bio-terrorists.

What is unjust with double-standards comes to the surface when looking at the Rawlsian understanding of “justice as fairness”. This suggests that parties choose an arrangement regardless what identity they have. US American negotiation behaviour differs from the powerful insistence on intellectual property rights (case against South Africa) to the threat of not complying with them in order to achieve cheaper prices (case of anthrax). This way of negotiating proves full awareness and exploitation of the different positions and identities USA stands for in the two exemplary cases. Being aware of and exploiting one’s own identity in a negotiation contradicts the “justice as fairness” principle. It is proven that this behaviour is all but not ignorant of the identity of the negotiating party. In this respect double standards, which are based on using different positions for different claims, are to be regarded as unjust.

(b) Agreement on Agriculture

Agriculture was one of the most controversial issues within the negotiations and for that reason was clarified by a separate agreement. Nevertheless, this agreement has been object of a lively critique.

Biplab Dasgupta emphasizes that US and European subsidy levels are enormous, so that even after a reduction they would remain high compared to those of DC (Dasgupta 1998:184). A more detailed analysis of this fact shows a remarkable inner-treaty bias. In volume, the Agreement on Agriculture demands an average reduction of agricultural subsidies of 36% for IC and 24% for DC. Considering the fact that IC’s subsidies in the underlying period were significantly higher than those of DC (Dasgupta 1998:189), it becomes clear that even after a reduction IC are allowed to pay more subsidies to their farmers.

Applying Albin’s concept of justice, a contradiction with principle of equality is observed. That standard demands comparable treatment, burdens and rewards for each negotiation party. Though DC need to cut their subsidies less than IC, there is still inequality regarding the subsidy levels which are allowed. Assuming the permission to subsidise one’s own country’s agricultural sector would be beneficial, the rewards from the agreement are not distributed equally and hence are not justifiable. Moreover this can be considered from the view of burdens, too. Holding the view that the prohibition of subsidies is a burden to a country (e.g. limiting the country’s available policy options), the agricultural agreement does not distribute that equally. According to the agreement, DC are not allowed to pay their farmers as large subsidies as EU or USA because of IC’s higher payments in the base period. This means an unequal division of burdens, which does not comply with the principle of equality, so it is not justified and even double crucial when taking into consideration the higher food need in DC.

Beyond Dasgupta’s criticism one might ask whether it is not a clear conceptual bias within the treaty itself. Why should, in such an important field like agriculture, a general agreement allow each country different reduced amounts of subsidies? Why are there things like universal labour standards defined in the Uruguay Round when on the other hand there is no such universality when it comes to subsidy levels? Why can subsidies still be different, and why are IC allowed to subsidise more? The reduction in per cent implies the reduction on a national basis, and it is suspicious why especially on such an important issue the agreement uses an individual base when in nearly all other fields, for instance TRIPs, universal standards are fought for. This hints to an application of double standards whose unjustness in the sense of a Rawlsian unfairness has already been developed for the case of TRIPs and is valid in this context as well.

Hewitt/König (in Sander/Inotai) point out the implications of the Agreement on Agriculture concerning special treatment of African-Caribbean-Pacific (ACP) states under the Lomé Convention. The Lomé Convention was valid between 70 ACP states and the EU. It guaranteed ACP states preferential access into EU markets to facilitate promotion and diversification of their exports and to decrease their dependency on primary exports. This convention included an ethical motivation. As the Uruguay Round’s declared aim was the expansion of the MFN principle and the fixation of equal treatment among the trading partners, it was conceptually a counterpart to special preferences in the Lomé Convention. A simple lowering of tariffs as negotiated in the Uruguay Round ends up in a decrease of ACP states’ preferential rights. Or to say it in other words: as the ACP states’ exporters enjoyed special treatment in form of lower tariffs in the EU market, a general reduction of trade barriers means a marginalisation of their preferential rights or even a higher tariff level by the Uruguay Round compared to their former special or no tariffication. (in Sander/Inotai 1996: 94)

To agree with the erosion of their preferential rights means to give up potential future benefits which must be considered clearly as a relevant concession on the side of the ACP states. The principle of reciprocity asks for mutual responsiveness to each other’s concessions. The Agreement on Agriculture does not honour the ACP’s concessions in form of giving up their former preferential rights. In this way the principle of reciprocity is not fulfilled which leads to a more unjust outcome.

Stevens (in Sander/Inotai 1996) criticises the ideological blindness of the agreement. The doctrine guiding the negotiations and predominantly influencing the final outcome was liberalisation and the free flow of trade. He analyses that this doctrine was more orientated at the interest of multinational corporations than at the reality of billions of people in LDC. Among them many net food importers are to be found for whom not market access but the need for food is the deciding parameter. This need for food implies an interest in stable world market prices and a long orientated food security. These interests were not met in the Uruguay Round’s Agreement on Agriculture. This view is also expressed by Shukla (in Nayyar 2002:196) when summarizing that the Agreement on Agriculture was lacking recognition of LCD priority being food security and not trade expansion.

The egalitarian assumption of common basic interests neglects existing differences. Justice as suggested by Albin also calls for differential treatment of different parties. The theoretical harmonisation of practically unequal negotiating parties makes differential treatment impossible. By denying many LCD’s priority being food security and not market expansion, parties are “equalised” which makes a special treatment of different parties because of differing interests impossible. That is the point where the insistence on a certain theoretical concept, namely market liberalisation, causes unjustness.

3. Conclusion

The essay comes to the conclusion that the considered aspects of the Uruguay Round’s outcome can be judged as unjust and should explicitly be called that way. There is no denying that the discussed sub-agreements of the round’s final act were unjust according to the principles of justice stated above. In the Agreement on Agriculture as well as in the agreement on TRIPs just principles like net gains, need and the perception of “justice as fairness” are not met and therefore these aspects can and must be assessed as being unjust.

Admittedly, there are parts of the agreement which can potentially challenge this assessment. The Dispute Settlement Mechanism (DSM), which was implemented in the WTO structure to deal with trade-related conflicts among member states, seems to work for the interests of LCD/DC. Also, since the final act in 1994, especially after the escalation at the WTO summit in Seattle in 1999, a lot has been done. This was already visible in the process of agenda-setting where for nearly the first time DC/LCD were able to put issues of relevance to them on the negotiation table during the preparatory work of the Doha Round in 2001(Albin 2003:376).

That is why I want to promote a differentiated analysis of the Uruguay Round and its institutional outcome, the WTO. In particular, the above observations do not necessarily lead to the conclusion that justice does not play a role in international trade negotiations, like political realism might suggest. A crucial question which is worth further exploration reads as follows: “If main parts of the Uruguay Round agreement did not meet the interest of LCD/DC, why did they sign it?” or more future orientated “If we consider ethics and morality to be important factors in International Relations, how can we ensure that international trade negotiations comply with our notion of justice?”. The analysis of these questions seem to be worth closer observation and a potential enhancement of this essay.

References:

Albin, Cecilia 2003: Negotiating International Cooperation. Global Public Goods and Fairness. in: Review of International studies, Vol. 29 (3), British International Studies Association, pp.365-385

Dasgupta, Biplab 1998: Structural Adjustment, Global Trade and the New Political Economy of Development. London: Zed Books

Pogge, Thomas 2001: Priorities of Global Justice. In: Metaphilosophy, Vol. 32 (1/2), pp.6-24

Rawls, John 1971: A Theory of Justice. Cambridge, MA: Harvard University Press

Sander, Harald and Inotai András 1996: World Trade after the Uruguay Round: Prospects and Policy Options for the Twenty-First Century. London, New York: Routledge

Shukla, S.P. 2002: From GATT to WTO and Beyond in Nayyar, Deepak: Governing Globalization: Issues and Institutions, Oxford University Press, Oxford

Watkins, Kevin 2001: Eight broken promises: why the WTO is not working for the world’s poor. In: OXFAM Briefing Paper, Vol. 9

WTO 2003: Understanding the WTO. Genève: Information and Media Relations Division

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Details

Seiten
14
Jahr
2005
ISBN (eBook)
9783668387966
ISBN (Buch)
9783668387973
Dateigröße
632 KB
Sprache
Englisch
Katalognummer
v352638
Institution / Hochschule
Eberhard-Karls-Universität Tübingen – Institut fuer Politikwissenschaft
Note
1.7
Schlagworte
international relations normative theories justice fairness trade WTO Uruguay Round TRIPS tariffs multinational enterprises development

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Titel: The Uruguay Round and the WTO. The Role of Justice in International Trade Negotiations