The World Trade Organization has accused major trading nations of circumventing world trade rules by negotiating separate preferential deals with smaller countries, which it says undermines the general trading system and provides little lasting benefit to the smaller countries.
In its 2004 world trade review published in mid-September, the WTO fretted that trade superpowers such as the European Union and the United States are increasingly offering special deals to African or Caribbean nations that may not be as beneficial as they seem.
“Non-reciprocal preferences are inconsistent with most-favoured nation (deals) and while they may have benefitted particular suppliers at certain times, they generally offer limited additional real market access and may not promote the long-term economic development of beneficiary countries,” the analysis said.
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WTO director general Supachai Panitchpakdi said it is important to balance what may look like favourable deals for small countries against the goal of general trade liberalization.
“Fears about the erosion of preferences among beneficiary countries have emerged on the negotiating agenda more forcefully and explicitly than ever before,” he wrote in the report.
“But just as beneficiary governments are concerned to maintain their margins of preference, others would wish to ensure that most-favoured nation trade liberalization is not arrested.”
Since 2001, even as it takes part in general trade liberalization negotiations, the U.S. has been aggressively pursuing bilateral side deals with other countries, notably offering preferred access rules to Caribbean countries. The agreements allow U.S. processors preferential access to developing countries’ raw product, while being sold as favourable deals for exporters and their economic development.
The WTO warned that the long-term trend is toward more global trade liberalization agreements and the special deals cannot last. Countries that believe they are benefiting from special access deals with the U.S. or the EU should realize it is not a good strategy over the long haul.
The WTO analysis also provided stark evidence of the relative decline in the value of agricultural products in world trade.
Between 1990 and 2002, the value of agricultural trade rose 40 percent to $583 billion US. An increasing portion of that – now almost 50 percent – was trade in value-added product.
But as a share in the value of merchandise trade in the world, agriculture declined from 29 percent in 1963 to 9.3 percent in 2002, despite the increase in higher-value processed products.
