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Moon, Gillian --- "The WTO-Minus Strategy: Development and human rights under WTO law" [2008] UNSWLRS 10

Last Updated: 4 September 2008

The WTO-Minus Strategy: Development and human rights under WTO law

Gillian Moon

I am grateful to John Basten, Andrew Byrnes, Jurgen Kurtz, Bryan Mercurio and Rosemary Rayfuse and the anonymous referees for their helpful comments.


This paper will appear in Human Rights & International Legal Discourse (HR&ILD) Vol 2 No 1, Mortsel, Intersentia. 2008.

Key words

Developing countries
Development theory
Human rights law
International human rights
International trade
WTO law


International trade law, human rights law and development studies share the common objective of promoting higher standards of living in the poorer countries of the world. Human rights and development scholars have been critical of the law of the World Trade Organisation (WTO), as implementing a development strategy which dominates and constrains the development strategy options of developing countries but which perceives development only in a narrow, economic sense. In this paper, the different theoretical underpinnings of international trade law and international human rights law are described and compared and their differing conceptions of development are examined from the perspective of the broader development discourse. The package of rights and obligations of developing countries under WTO law (the ‘WTO-Minus strategy’) is also described and examples of significant constraints placed by this package on the development strategy options open to developing countries regarding trade in goods are examined from the perspectives of the broader development discourse and international human rights norms. The capacity of the WTO to incorporate new and multidisciplinary knowledge about development is considered.


AoA Agreement on Agriculture
GATT 1947 General Agreement on Tariffs and Trade 1947 (as amended)
ICCPR International Covenant on Civil and Political Rights
ICESCR International Covenant on Economic, Social and Cultural Rights
UDHR Universal Declaration of Human Rights
LDC Least-developed country
SCM Agreement on Subsidies and Countervailing Measures
TRIMS Agreement on Trade-Related Aspects of Investment
TRIPS Agreement on Trade-Related Aspects of Intellectual Property
UN Charter Charter of the United Nations
UNCTAD United Nations Conference on Trade and Development
WTO World Trade Organisation

1. Introduction

The World Trade Organisation (WTO) was established at the end of the Uruguay Round of international trade negotiations in 1995. The preamble to the Agreement Establishing the World Trade Organisation (the WTO Agreement) committed the Member countries to an “open trading system” which would “contribute to” the objectives of “raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand.”[1] Although these objectives were not framed with a view to the WTO assuming a primary role as an international development agency, they are nonetheless typical development objectives, albeit selectively chosen and largely economic in nature. ‘Development’ is a somewhat contested term and a much studied phenomenon. The process of development must now occur in a globalising world, “in economies that are technically more complex and more dependent on global integration than before.”[2]

WTO law sets out to contribute to the achievement of the development objectives of raising standards of living and incomes and ensuring full employment by implementing what is essentially an economic development strategy derived from economic theory. It is argued in this paper that constraints in WTO law regulating trade in goods hinder developing countries from pursuing a development strategy which is focused, first and foremost, on the realization of human rights and fundamental freedoms. Trade policy is a significant part of any development strategy. Supporting the creation of trade policy which does not exacerbate inequality or cause retrogression in developing countries but, on the contrary, stimulates their development while respecting, protecting and promoting human rights and freedoms, will require a change in approach within the WTO. In a nutshell, the WTO will need to accept as both valid and essential a stronger distinction in the treatment of developing and industrialized countries under WTO law and the reintroduction of the principle of ‘non-reciprocity.’ Under that principle, developing countries would be permitted to reap the benefits of trade liberalization by the industrialised countries without being expected to reciprocate in their own countries.

At present, WTO law does not differentiate sufficiently strongly in favour of developing countries, leaving them with too narrow a repertoire of development strategy options and constraining their capacity to pursue a development strategy which is focused on the realization of human rights and freedoms. For low-income, largely agrarian countries, the repertoire should include a comprehensive capacity to shield socially- and economically-vulnerable local producers and communities from the negative consequences of the trade liberalization process. The ability to control the speed, emphasis and nature of the process through the use of trade barriers is essential to being able to control the impacts on individuals, sectors and communities and to ensuring distributional equity. As presently formulated, WTO law restricts this capacity. The repertoire should also include the industrial support strategies (many of which are prohibited or restricted under WTO law) which, historically, have been shown to be powerful stimulators of development. Finally, the development process and repertoire of strategies should be bolstered by a much more useful system of preferential market access for the exports of developing countries than is currently offered. The system should operate within a structure which is fully focused on the exports of greatest value to developing countries, yet is sufficiently flexible to accommodate changes in those exports over time.

Part 2 of this paper traces the historical and doctrinal development of both the economic theory underlying international trade law and the theory underlying human rights law. It considers the nature and elements of the theoretical basis for international trade law from the perspective of the broader development discourse and of international human rights norms. Part 3 identifies three areas of significant constraint imposed by WTO law regulating trade in goods, in conformity with its underlying theory, on the development strategy options open to developing countries and considers their developmental and human rights ramifications. Part 4 reflects on the scope for change in the approach of WTO law towards ensuring that trade strategy enhances development of a kind which facilitates the realisation of human rights and freedoms.

2. Theories of trade and development from a human rights perspective

International trade law and international human rights law were created in their modern forms following the Second World War. Although they shared the common goal of promoting development, they had differing perceptions of the concept of development and of their respective roles in helping to bring it about. The study of development also became a discipline in its own right after the War and, today, there are many perspectives on how to stimulate and advance development,[3] an area of enquiry which Bjorn Hettne and Robert Potter have named ‘development thinking.’ [4] Hettne and Potter distinguish two related fields of activity within “development thinking:” development theories, which are sets of logical propositions which aim to explain how development should or might occur,[5] and development strategies, which are the “real world efforts”[6] or practical paths to development pursued by development agencies of all kinds with a view to stimulating change. Theorising, as found primarily in the academic literature, operates at a level of intellectual abstraction; strategies, on the other hand, involve the practical application of theory. It needs to be noted at the outset, however, that development theories have not developed in a strictly sequential-temporal manner but with a great deal of overlap and mutual influence, making it difficult to draw clear temporal or doctrinal lines between them.[7]

The disciplines of trade law and human rights law grew up alongside development thinking in the post-War years and, although they influenced one another to an extent, it is striking that the two law disciplines induced the pursuit of very different development strategies. Insight into the reasons for this can be found in the different, underlying theoretical approaches of the two fields of international law towards development and in the ways those approaches have evolved over the period since the close of the War.

2.1 Origins of trade and human rights perspectives on development

As the Second World War came to an end, the Allies searched the pattern of events leading up to the War for insights into its causes and how to avoid future wars. The United Nations (the UN) was established in 1945 as a major part of the Allies’ peace strategy. It was to be a harmonizing force, maintaining international peace and security, developing friendly relations amongst nations and achieving high levels of international cooperation. It was also given a development mandate: to “promote ... higher standards of living, full employment and conditions of economic and social progress and development.”[8] The international community’s aim was to “creat[e] the conditions of stability and well-being which are necessary for peaceful and friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples.” [9] Moreover, it was to do this on a basis of respect for “human rights and fundamental freedoms for all without distinction as to race, sex, language or religion.”[10] The UN Charter, then, made clear that economic and social progress and development were to take place within a framework of respect for and observance of non-discrimination as to the enjoyment of human rights and fundamental freedoms for all. The subsequent resolution of the UN General Assembly, the 1948 Universal Declaration of Human Rights (UDHR), [11] identified the specific human rights and fundamental freedoms referred to in the UN Charter. The civil and political rights are set out in UDHR Articles 3 to 21 and include (amongst many) the rights to liberty, life, a fair trial, freedom of speech and religion and universal suffrage. The economic, social and cultural rights are set out in UDHR Articles 22 to 27 and include (amongst others) the rights to work, an adequate standard of living, health, education, social security, housing and participation in cultural life. The rights set out in the UDHR are those which were identified as fundamental to “the dignity and worth of the human person.”[12] Article 28 of the UDHR reiterates the principle in the Charter, that “everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.” Thus, the enjoyment by all of these human rights and fundamental freedoms without discrimination became the norm or principle guiding the formulation of strategies for economic and social progress and development.

The Allies’ analysis also led them to a second conclusion: that economically defensive trade strategies put in place by individual countries in the economic recession between the two world wars, particularly raising tariffs (government-imposed taxes or duties levied on imports) and devaluing currencies to protect local industries, led to the Great Depression of the 1930s which, in turn, contributed greatly to the outbreak of war in 1939. With hindsight, it was evident that these essentially isolationist economic strategies reduced production, trade, employment and living standards everywhere and ultimately led to the collapse of the world’s major economies. Determined not to risk future wars triggered this way, the Allies moved to open up domestic economies to the world economy, believing that greater economic interdependence and interaction between countries would enhance economic growth, development and stability and would foster world peace.

Although this path of action appealed to the major powers for reasons of self-interest,[13] they were also motivated by a benevolent vision. The immediate post-War period was a time of optimism and high confidence about what could be achieved by the development of the poorer parts of the world[14] and it was at this point that development thinking as a serious field of study really began. When US President Truman argued in his 1949 Inaugural Address that the wealthy countries could – indeed should – construct ”a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas,” he was confident that “humanity possesse[d] the knowledge and skill to relieve the suffering” of the impoverished majority of the world’s people.[15]

The idea that humanity possessed knowledge and skills which gave it the ability to create development emanated particularly from the economic theory of this period,[16] which had its roots in the Enlightenment and the Classical tradition of Europe. The Classical tradition began in the 1700s, with the Enlightenment’s burst of enthusiasm and optimism about the potential gains to humanity from an objective, empirical and reasoned approach to the world and its problems. One wing of the Classical school, known as the Scottish Enlightenment, applied the approach of reason and science to the field of economics. Unlike their French counterparts, the Scottish Enlightenment philosophers focussed particularly on ‘scientific’ theories of economic growth, trade and development. They concluded that specialisation in production would yield great benefits. In The Wealth of Nations (1776), Adam Smith argued that specialisation allows for the more efficient allocation of resources and for improved productivity which, in turn, generates economic growth and wealth. [17] A further, important aspect of Smith’s work was the identification of objective forces operating in markets, of an “invisible hand” which determines the value and distribution of resources in their optimal way.[18] Forty years later, David Ricardo explored the benefits of specialisation, in conjunction with a global division of labour.[19] By his theory of comparative advantage, he demonstrated mathematically that there are gains to be made for all countries from specialisation and international trade (the ‘mutual gains from trade’), even for countries which have an absolute advantage in producing many things and do not ‘need’ to trade. This is because there is always an opportunity cost to utilising resources in other than their most efficient way. The theory of comparative advantage shows that “open markets ... accurately price goods and services, ... [enabling] producers in each country to discover what they are comparatively good at producing.” [20] By increasing the size of the potential market beyond national borders, international trading enables the gains from the greater efficiency of specialisation to be seized and, hence, global welfare to be maximized.

2.2 The GATT years

Informed by this theory, the Allies took the view that liberalized international trade, a core component of economic interdependence, would increase development and prosperity across the world and give the best security for peace. The 1947 General Agreement on Tariffs and Trade[21] (GATT 1947) was the expression of this objective in treaty form. Its purpose was to enhance economic interdependence through substantial reductions in barriers to, and through limiting favouritism in, international trade.[22] Thus, Ricardo’s theory of comparative advantage was the underlying, theoretical premise on which the post-War trade regime was built and the drafters expected GATT 1947 to generate at least some of the mutual gains from trade and greater prosperity which the theory predicted. Jeffrey Dunoff names this theoretical basis for the international trade regime, the pursuit of the benefits described in economic theory as comparative advantage, the “efficiency model.” [23] Under the efficiency model, “the ‘problem' [presented by underdevelopment] is how to maximize aggregate economic welfare, and the `solution' is to reduce or eliminate [inefficient] government regulations that interfere with [efficient] voluntary, welfare-enhancing market exchanges.”[24] The efficiency model does not recognise human rights norms as essential guides for the process of economic and social progress and development. In one sense, of course, this is to be expected, as the efficiency model predates the UN Charter and the UDHR. However, it is of significance that the model relies on market-based, economic decision-making to determine the optimal allocation of resources and it measures welfare gains in terms of averaged outcomes. The human rights approach, by contrast, has a distributional focus which emphasises equity, particularly as regards the disadvantaged; as discussed later in this paper, this will generally require some state intervention in markets.[25]

However, the efficiency model was not applied in a particularly “pure”[26] sense in GATT 1947. Although confident of Ricardo’s theory and the benefits of specialisation and open trade, GATT 1947 was drafted in a Keynesian theoretical environment which favoured a ”mixed economy.“ The British economist, John Maynard Keynes, argued that governments had a role in stabilising economies which was both necessary and beneficial. In the Keynesian mixed economy, while the invisible hand of market forces should be allowed to determine choices, a considerable level of state intervention would also be necessary in order to ensure the optimum operation of those very forces and to ensure the existence of social safety nets for those negatively affected by trade liberalisation.[27] Keynesianism saw development as primarily a national process which would require state intervention, state planning and state financing.[28] Reflecting this view, although the drafters of GATT 1947 were “committed to international markets, ... this commitment was ‘embedded’ within a larger commitment to interventionist domestic policies.”[29] Donald McRae describes the “underlying bargain of the GATT” as being “that states would be able to leaven free trade with the protection of certain basic welfare values within society.” GATT 1947 was “both a protectionist and liberal trade charter.”[30] Thus, GATT 1947 left ample room for state development strategies, within developing and industrialised countries alike, and for redistributive measures in favour of those adversely affected by greater openness.

At the time GATT 1947 came into force, only ten developing countries were signatories.[31] Most were not convinced of the benefits to them of open trade, even under the Keynesian paradigm, seeing little to gain from “a trade liberalisation scheme which clearly favoured developed countries ... [and which was] inimical to their economic interest and development.”[32] Developing countries, particularly the now-independent former colonies in Latin America, argued that they would be better off pursuing the alternative economic approach of ”import-substitution industrialisation”.[33] Based on the ideas of two economic development theorists, Hans Singer and Raul Prebisch, this theory argued that developing countries would benefit most from fostering their industries behind protective economic walls, such as high tariffs, import quotas and, importantly, import substitution policies. Under these latter policies, industries in developing countries would be required to source their component parts and other inputs from local suppliers, rather than importing them. Because the protective walls would only be removed when their industries were strong enough to face international competition, this approach has also sometimes been called an ‘infant industry approach.’ Developing countries pointed out that this was precisely the development strategy which the now-wealthy countries had adopted for their own industrialisation.[34] Closely related to this approach was Dependency theory, a Latin American-based development theory which supported import-substitution industrialisation as a development strategy. The theory viewed the entire global economy as structured so as to keep developing countries in a relationship of perpetual dependence on, and exploitation by, the wealthy, industrialised countries; the only way in which these countries could develop was to abandon the external focus of dependency and carve an independent development path.[35]

However, the view that GATT 1947 had little to offer developing countries gradually moderated as the decolonisation and independence movement began sweeping through Asia and Africa in the 1950s and 1960s. Some attraction flowed from the fact that GATT 1947 contained a clause which permitted import-substitution industrialisation. Headed Governmental Assistance to Economic Development, Article XVIII allowed countries “in the early stages of [their] development” to adopt tariff, quota and other protectionist policies, although not unreservedly. Added to this, in 1964, the UN Conference on Trade and Development (UNCTAD) was created, a permanent body of the UN which had “the cardinal aim of ... encourag[ing] international trade in a manner that affords developing countries an increased access to the world market.”[36] The former colonial states had been pushing for the creation of such a body and for other improvements to the terms of their participation in the international economy, which was set out in a New International Economic Order.[37] Largely at the instigation of UNCTAD, a new Part IV, Trade and Development, was added to GATT 1947 in 1965. Although limited in its utility because not binding, it entrenched the negotiating principle of ‘non-reciprocity’ for developing countries. Under this principle, although developing countries would benefit from reductions in tariffs and in other protections by the industrialised states, they were not expected to reciprocate by lowering their own protections. The addition of Part IV was followed in 1968 by the implementation of another UNCTAD proposal, the Generalised System of Preferences, within which industrialised countries were permitted (if they chose) to grant specially favourable tariff and other treatment to (primarily industrial) goods exported by developing countries.[38] The permission to adopt protectionist strategies and the introduction of non-reciprocity and special privileges for developing countries under the Generalised System of Preferences were specific departures from the strict underlying theory and illustrate the flexibility in the GATT compromise.

In response to these UNCTAD initiatives, the number of developing country signatories to GATT 1947, especially African countries, increased sharply. However, developing countries tended not to adhere exclusively at this time to any one theoretical or strategic approach to their development. Most adopted internally-focused economic measures, including import-substitution, while at the same time arguing for international terms of trade that would allow them to expand their export industries and engage to a greater degree in the global economy. The relatively flexible approach of GATT 1947 towards developing countries enabled them to pursue a different international trade strategy to that of the industrialised countries and left them relatively free to craft more individual development strategies. However, the existence of this flexibility should not obscure the fact that, at this period, development thinking did not really challenge the dominance of economic theory or the view of development as “generally synonymous with economic growth.”[39] Moreover, both import-substitution industrialisation and the efficiency model of international trade were ‘Modernization’ theories, united in viewing development as “the bridging of the gap [between rich and poor nations] by means of an imitative process, in which the less developed countries gradually assumed the qualities of the developed.”[40]

However, one strand of Modernization theory which was more controversial during this period was Dualism. Dualism argues that successful development requires a dynamic or modern sector to start the process off. As time goes by, this sector will infiltrate the underdeveloped sectors of the economy through a kind of ‘trickle down’ process of development.[41] The Dualistic approach is characteristically tolerant of distributional inequity and the particularly controversial question it poses is whether inequality is actually “a prerequisite for eventual overall development.”[42] The Dualist theorist, Hirschman, argued that it was and that “governments should not intervene to reduce inequalities for, at some juncture in the future, the search for profits will promote the spontaneous spin-off of growth-inducing industries to backward regions.”[43] However, other Dualist theorists have cautioned that “backwash effects tend[ing] to intensify existing inequalities” need to be controlled.[44]

Depending on how it is applied, the efficiency model underlying international trade law may cause or, at least, may ignore or tolerate inequality arising in the process of development. Certainly, the model promotes a process which requires ordinary developing countries to specialise in that which they can produce most efficiently and to pursue that specialisation as a modern export industry. Because of the greater reliance on imports acquire foreign currency to meet other needs, the export industry becomes extremely important and other production becomes secondary. It is most likely that this would occur in a Dualistic fashion, due to the very fact of under-development. Governments in developing countries would be unlikely to have the resources to assist a largely rural work force to transfer quickly to new industries. Many people would remain, at least for a time, in backward sectors, with little cash to buy the now essential imports. While Dualism as a development strategy may be justifiable within development theory and within economic theory, approaches to development or trade which cause, ignore or tolerate inequality do not meet the norms, mentioned earlier, which international human rights law sets out as guiding the process of social progress and development.

Interestingly, one influential school of development theory which arose during the late 1960s and early 1970s did focus on the importance of equality in development and on the fact that the efficiency model had so far failed to reduce inequality or poverty in developing countries.[45] Under the development theory known as the Basic Needs Approach,

“development was redefined as a broad-based, people-oriented process, ... focussed on households and covering aspects of health, education, farming and reproduction practices designed to create a minimum level of welfare for the weakest groups in society.”[46]

The position of human rights and fundamental freedoms as guiding norms for development thinking was strengthened by the creation of two new treaties. In 1966, the UN opened for signature the two principal human rights treaties, the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR). Neither of these conventions focused directly on the process of development or presented any specific strategic approach to development. However, they gave a heightened status to many ‘basic needs’ recognised in development theory and set out the nature of states parties’ obligations in relation to those needs. Generally speaking, all states carry a primary obligation to respect, protect and promote human rights and fundamental freedoms.[47] Under the ICCPR, signatory states bear immediate obligations with regard to civil and political rights. Under the ICESCR, signatory states bear an immediate obligation “to move as expeditiously and effectively as possible,” to the maximum of their available resources,[48] towards the full realisation of the rights in that treaty. [49] This process of ‘progressive realisation’ of rights under ICESCR is similar, in a practical sense, to the process of development as understood in broad, rather than narrow and economic, terms. The Committee on Economic, Social and Cultural Rights explains that states carry:

“a minimum core obligation to ensure the satisfaction of, at the very least, minimum essential levels of each of the rights .... Thus, for example, a State party in which any significant number of individuals is deprived of essential foodstuffs, of essential primary health care, of basic shelter and housing, or of the most basic forms of education is, prima facie, failing to discharge its obligations under the Covenant.”[50]

The obligation also extends to require that any “deliberately retrogressive measures” by states would have to be thoroughly justified.[51] The human rights law principle of non-retrogression of rights states,

’that nobody should be allowed to suffer an absolute decline in the enjoyment of any right at any time.... [F]ull enjoyment of all the rights may only be possible over a period of time, and ... as time passes some rights may be advanced faster than others. But [the principle] does not permit the level of enjoyment of any right to decline in comparison with the past.”[52]

Although it would be a further ten years before the two treaties came into force, economic and social development were now powerfully “conceptualized” in international law “in terms of human rights and freedoms”[53] and the very close relationship between development and human rights was now well acknowledged. The “moral reasoning”[54] underpinning human rights law was understood to be firmly “rooted in the liberal commitment to the equal moral worth of each individual, regardless of their utility.”[55] Human moral worth and dignity, “which are at the core of human rights,” are absolute and cannot be subjected “to compromise on the basis of [utilitarian] justifications.”[56] The moral reasoning underpinning the efficiency model, on the other hand,

“... [was] utilitarian in nature. Utilitarianism determines the morality of an act according to its consequences for the aggregate of individual utility.... [T]he Efficiency Model of trade law asserts, explicitly or implicitly, the utilitarian argument that free trade is good because of its consequences, namely the maximisation of aggregate individual welfare from efficiency gains and from the operation of comparative advantage. Trade maximises welfare for many reasons, including lower prices [and] increased consumer choice....”

[Human rights approaches] are disturbing to contemporary economists, precisely because [they] view rights as absolutely not to be violated, essentially foreclosing the sort of analysis which economists engage in when evaluating a policy or course of conduct.”[57]

However, a series of economic crises began to unfold in developing countries, stimulating dramatic changes to development thinking and leading, despite the new human rights covenants, to the dominance of a more utilitarian, efficiency model approach to development. It was under the influence of these new theories and strategies that the international trade law of the WTO was created and that a new package for developing countries under international trade law was compiled.

2.3 A change of direction

An oversupply of capital in the early 1970s had resulted in huge loans being given to developing countries. When OPEC raised the price of oil sharply a few years later, forcing up interest rates, and when world commodity prices collapsed in the early 1980s, many developing countries defaulted on what were by then massive repayment obligations. Particularly vulnerable were the import-substituting developing countries, including Mexico, Brazil, India and Argentina, which had borrowed heavily to support (amongst other things) inefficient domestic industries.[58] With Mexico on the brink of bankruptcy and many other developing countries set to follow it, disillusion with state intervention in economies – as Keynesianism or as import-substitution - came rapidly to the fore.[59] An opportunity opened up for the adoption of a “more orthodox, neo-classical tradition” of economic theory, one which was already well developed and had existed for some time “alongside and often in heated opposition to”[60] the Keynesian view. While there were many schools within this neo-classical tradition, they all “stress[ed] the importance of trade and comparative advantages in the development process”[61] and endorsed the efficiency model. Perhaps the best known of these is neo-liberalism. Hettne describes neo-liberalism as “a purified neo-classical discourse, according to which development [is] an inherently universal and increasingly global economic process.”[62]

Neo-liberalism became a dominant theoretical force in the 1980s, largely because it was applied to two powerful economies at this time, those of the United States under President Reagan and the United Kingdom under Prime Minister Thatcher. As an economic approach, it is associated with the rapid deregulation, liberalisation, privatisation and small government which characterised the Thatcher and Reagan policies in the 1980s. It is premised on a high level of confidence in market forces to price the factors of production (capital and labour) appropriately and to minimise waste.[63] Critical of the dilution of the efficiency model under the Keynesian approach, neo-liberalism sees government interventions in markets, such as minimum wage laws, as both unnecessary (markets will find an equilibrium) and distorting.[64] Neo-liberalism is also a Modernisation theory: if a developing country is to seize its comparative advantage and participate effectively in the global economy, efficiency must be a guiding principle, which requires that the country industrialise (even in agriculture) and urbanise, create substantial infrastructure and acquire a level of technological capacity and knowledge. A country cannot do this if it cannot, for example, switch labour from one industry to another, transport goods quickly and comply with international product safety standards.

Neo-liberal economic theory also framed the set of economic development policies which the international financial institutions – particularly the World Bank and International Monetary Fund - imposed as loan conditions upon developing countries in the wake of the economic crises they were experiencing.[65] Referred to by many as the ‘Washington Consensus,’ these policies emphasised (amongst other neo-liberal strategies) extensive trade liberalisation and export-based programmes of industrialisation.[66] The goal of these loan conditions was to require developing countries to open up to international trade and investment, to engage more fully with the global economy and, thereby, to mobilise their domestic resources more effectively to finance their own development. However, developing countries continued to argue that international assistance for their development, as former colonies, was an “obligation owed by the former colonial powers.”[67] Their demand for a New International Economic Order, strong during the 1960s and 1970s, had not been fully abandoned. Their claims found expression at this point in the movement for international recognition of a human right to development, which would include recognition of an obligation on the part of the industrialised world to take extensive responsibility for the development of the poorer countries through international development assistance and cooperation. Their attempts to gain international recognition of a human right to development gained little support from the former colonial powers. Nevertheless, in 1986, the UN General Assembly adopted the Declaration on the Right to Development (the Development Declaration).

The Development Declaration was particularly strategic in that it seized the notion of development and deposited it squarely within the realm of international human rights, as a process which is thoroughly tied to rights and which is very much about the realisation of rights. It presents a broad concept which sees development as a process which extends well beyond the economic sphere to include changes in society, culture and the political realm. The preamble to the Development Declaration defines development in its expansive sense, as

“a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefits resulting therefrom.”[68]

Rather than dictate how to achieve development, this definition describes a broad scope for the development process and identifies human rights norms to guide the process, in particular, that it must be inclusive and equitable. Article 1(1) of the Development Declaration adds to the definition that, through this right, “... every human person and all peoples are entitled to ... [a form of] development in which all human rights and fundamental freedoms can be fully realized.” Thus, the Development Declaration both identifies development as a human right and defines it as a broad, inclusive and equitable process which must facilitate the realisation by all people and all individuals of their human rights and fundamental freedoms. The preamble further adds that “the human person is the central subject of the development process and that development policy should therefore make the human being the main participant and beneficiary of development.”[69] Implicit in this definition, as made clear by the UN Committee on Economic Social and Cultural Rights, is the principle of non-regression.[70] These ways of thinking about development directly challenged narrow, economic conceptions of development, particularly those which might be said to cause, tolerate or ignore inequality or retrogression, which were not participatory and which did not facilitate the realisation of human rights and fundamental freedoms.

The requirements of full participation, fairness and equity in a broad process of development were readily met by a school of development theory which arose at this time, in opposition to those focused more narrowly on economic development and the efficiency model. With the unusual name of “another development,” this approach argued that “top-down,” economics-dominated approaches, which “involv[e] unequal and uneven growth, modernisation, urban-industrialisation, the diffusion of innovations and hierarchic patterns of change and growth poles”[71] could not ever achieve ‘development’ in the true sense. Rather, “bottom-up,” locally-created, participatory and ecologically-sensitive policies and initiatives which focused on meeting basic needs were the means to true development.[72] Adopting a perspective and terms similar to those of human rights, this development approach described itself as “more concerned with the unseen victims than with the victors in the development drama.” It presented “the perspective of the excluded” and broadcast their “cry for visibility, participation and justice.”[73] Kingsbury states that this alternative approach “has been shown, in a number of cases, to produce real, tangible and appropriate [development] benefits for local people.”[74]

Nevertheless, the historic Uruguay Round of trade negotiations, which began in the same year that the Development Declaration was passed and which created the modern international trade law regime, was more influenced by the efficiency model and neo-liberalism than by the human rights approach.[75] The vast body of new trade law which the Round created applied the efficiency model tenets more “purely,”[76] eschewing the deep-seated flexibility of GATT 1947 and drawing developing countries more firmly into pan-sectoral trade liberalisation as a development strategy. This fundamental change was accompanied by a system of concessions for developing countries which, as discussed below, temporarily mitigated some of their trade law obligations or assisted them in adapting to the deeper trade liberalisation process. The new package of trade liberalisation obligations and concessions applying to developing countries is referred to in this paper as the ‘WTO-Minus strategy.’ [77] In the next part, this strategy is explained and, in subsequent parts, it is argued that the WTO-Minus strategy has led to the imposition of significant constraints on the development strategy options and, hence, the realisation of human rights and freedoms, open to developing countries today.

2.4 The arrival of the WTO-Minus strategy

The WTO open trading system, established in 1995 at the end of the Uruguay Round, is the only ‘multilateral’ trading system and is the principal source of international trade law and policy, driving the continuing expansion and regulation of the world’s open trading system. [78]. By extending into areas previously outside, or poorly regulated by, GATT 1947, WTO law brought about major change. WTO law now covers not only trade in virtually all goods, in much greater detail, but also trade in services,[79] and it mandates protection for intellectual property.[80] Added to this, the WTO agreements are a ‘single undertaking,’ in that Members must join all of the agreements; they cannot choose to join only some.[81] These major changes are made even more significant by the fact that WTO law is backed up by a Dispute Settlement System with power to make orders in the nature of enforcement.[82]

The major change for developing countries was that they were brought within the same core disciplines of trade law as the industrialised countries. A more extensive, penetrating and orthodox set of trade law obligations was imposed on developing countries, and the tolerance of protectionism and the principle of non-reciprocity, which had reigned under GATT 1947, were largely discarded.[83] Instead, the strategy of WTO-Minus was introduced. However, before turning to the WTO-Minus strategy, two points need to be noted. First, WTO law does not define ‘developing country,’ even though it is a term used repeatedly in WTO law. To date, developing country Members of the WTO have self-designated as such. Secondly, WTO law expressly imposes very different obligations on ‘least-developed countries’ (LDCs) to those it imposes on other developing countries. There are about 49 countries at any one time which are classified as LDCs by the United Nations Development Program and UNCTAD, on the basis of their low national incomes, weak human assets and high economic vulnerability.[84] By and large, LDCs were exempted from the new liberalisation obligations imposed by WTO law[85] and, for that reason, they are not included in the critique of development strategy constraints set out in this paper.

For the approximately 95 remaining developing country Members, which will be called ‘ordinary developing countries’ in this paper to distinguish them from the LDCs, the WTO-Minus strategy applied. Under this strategy, WTO law was applied to ordinary developing countries, but ‘minus’ the immediate or strict enforcement of some of the obligations. To illustrate, the 1995 Agreement on Agriculture required both industrialised countries and ordinary developing countries to reduce their agricultural subsidies. [86] Thus, WTO law applied the same efficiency model theory to both industrialised and ordinary developing Members alike. However, WTO law then reduced the percentage by which ordinary developing country Members were required to bring down their subsidies (say, by 24 per cent as against 36 per cent for industrialised countries), allowed a longer period for compliance (say, ten years as against six years for industrialised countries) and excluded one or two subsidies commonly used in developing countries from the reduction commitments. The same WTO law principles were applied to the two categories of Member country, minus full and strict enforcement of some of the obligations for ordinary developing countries.

Concessions of this kind are made in recognition of developing countries’ lower levels of development and different development needs and are referred to in WTO law as ‘Special and Differential Treatment.’’ The WTO Committee on Trade and Development has identified more than 150 Special and Differential Treatment provisions in WTO law. A large proportion of these give ordinary developing countries longer timeframes for compliance with WTO law obligations, lower reductions targets or flexibility in their obligations and commitments under the WTO rules and disciplines. [87] Other provisions exhort industrialised country Members to recognise and accommodate the interests of ordinary developing countries, through, for example, providing greater opportunities for ordinary developing countries to export their goods and services, providing financial and technical assistance, refraining from imposing unnecessary trade obstacles and generally taking into account their development needs and difficulties.[88] Provisions which exhort the safeguarding of the interests of ordinary developing countries are the most common type of special and differential treatment in WTO law, while those which concretely increase their trading opportunities are the least common.[89]

Thus, the WTO-Minus strategy does not, in its general thrust of trade liberalisation, distinguish between industrialised and ordinary developing countries. Rather, the one broad trade strategy and, consequently, the one development strategy, are applied to both; the ‘Minus’ aspect – the exceptions made, and flexibility given, through Special and Differential Treatment - does not alter that development strategy in its fundamentals. The underlying theory for trade liberalisation and the efficiency model is clear and proposes that “the best way to promote economic development is to integrate as quickly as possible with the multilateral trading system.”[90] Much less clear is the reasoning behind the special accommodation made for ordinary developing countries, which the theory underlying WTO law does not appear to explain or justify. On the contrary, the efficiency model proposes that “trade enhances growth and ... growth reduces poverty.”[91] Presumably, special and differential treatment is intended to take account of their lower levels of development in ways which will assist them to engage robustly in the trade liberalisation process. However, this is premised on the assumptions that those ways will, indeed, assist, that the WTO-Minus strategy will not hinder their (economic) development and, importantly, that there is no better way for trade law to support their development.

Despite this underlying confusion, ordinary developing countries have little choice but to join the WTO and operate within the confines of the WTO-Minus strategy. Most seek to follow a tripartite economic development strategy which includes fostering their agricultural sectors, building up their industrial sectors and increasing their exports, particularly of agricultural products. The following Part looks at certain constraints imposed by WTO law on the development strategy options of ordinary developing countries in each of these three strategic areas, none of which is addressed adequately through the WTO-Minus approach. While it is not suggested that these are the only constraints, they have been identified as significant in their interaction with human rights and freedoms. The constraints identified all relate to trade in goods and, again, while there may well be constraints relating to trade in services, that is for another paper to explore.

3. Human rights impacts of development strategy constraints imposed under WTO law

3.1 WTO law

The WTO speaks proudly of the fact that the 1995 agreements have added greatly to the extent of trade liberalisation originally brought about under GATT 1947. While GATT 1947 (as amended) continues to apply as a general source of law regulating trade in goods, many of the new agreements now regulate specific aspects of trade in goods, such as trade in agricultural goods, methods for customs valuations and the use of technical standards for traded products.[92] Where there is inconsistency between the terms of GATT 1947 and those of a later WTO agreement, the latter prevails to the extent of the inconsistency.[93] The central principle of WTO law is that trade is to take place in a ‘non-discriminatory’ trading system, a requirement which is made effective through two rules. The ‘like’ products of all Member countries are entitled to equally favourable treatment (the ‘most-favoured nation’ obligation) [94] and Member countries may not favour their own products over ‘like’ imports (the ‘national treatment’ obligation).[95] International trade is greatly facilitated by this guarantee that “[e]ach country[‘s] ... exports will be treated fairly and consistently in other countries’ markets,” and by [e]ach promis[ing] to do the same for imports into its own market.”[96]

Transparency and predictability are also central principles of WTO law. Applying these principles, Member countries have identified tariffs as, by and large, the only permitted border barrier to imports, since tariffs are more transparent than other border barriers, such as discretionary import licensing systems, Tariffs have also been rendered predictable through the system of tariff ‘binding,’ under which Member countries are not permitted to raise tariffs above the published levels at which they have been bound.[97] Applying a further WTO law principle of fairness, a number of anti-competitive or inefficient practices are being phased out, including many subsidies and cumbersome customs procedures. Broadening its application beyond simple trade in goods, trade in services has been brought under WTO law (through a ‘positive list’ approach) and some common investment measures which act to restrict trade are now unlawful. The result of all this change, says the WTO,

“is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them. The result is also a more prosperous, peaceful and accountable economic world.”[98]

The WTO has been seeking to build upon these results in the first round of new WTO negotiations since the Uruguay Round, the Doha Round, which commenced in 2001.[99] However, its path has not been straightforward, partly because of events which took place prior to the commencement of the Doha Round. Considerable community and developing country criticism had been levelled at the WTO in the late 1990s, particularly that WTO law and the WTO-Minus strategy favoured the interests of industrialised countries.[100] Responding to this, the Ministers at Doha launched the new trade negotiations as a ‘development round,’ agreeing to work on a set of issues which they presented as the Doha Development Agenda.[101] Issues put on the Doha development table included trade in agricultural products, trade and technology transfer, intellectual property rights and public health, and preferential treatment for developing country exports, amongst others. WTO law with regard to these has great capacity to affect human rights, such as the right to food, to a livelihood, to education and training, to medicines and, above all, to a process of development which facilitates, on a basis of equality, the realisation of human rights and fundamental freedoms for all.

Unfortunately, it is clear from events since 2001 that the WTO is experiencing considerable difficulty in achieving the trade and development outcomes it set for itself at Doha. While there are no doubt many reasons for this, the human rights perspective highlights two which are particularly penetrating. First, the broader and more equitable concept of development set out in the Doha Development Agenda is not easy to reconcile with the narrower, largely undifferentiating notion of development encapsulated in WTO law and the WTO-Minus strategy, based on the efficiency model. Secondly, even if WTO law and human rights law were to agree on the efficiency model approach to development, they would take different approaches to the ‘management’ of the changes which trade liberalisation brings about. Opening up to the global economy under WTO law, through reducing trade restrictions, is a transformative process which will produce winners and losers. Siddiq Osmani explains that, while the economic theory underlying WTO law is that trade will bring overall gains which will outweigh losses,

“... the gains and losses may not be distributed evenly across the population. ... Evidence as well as common sense suggest that losses will be felt disproportionately more by the weaker segments of society. They would suffer more simply because they lack the flexibility to cope with the changing winds of market forces, owing to the various impediments they face in accessing new skills and resources....This is where the human rights approach to development can play a vitally important role.”[102]

3.2 Constraints on fostering agricultural sectors

Tariffs and non-tariff barriers

Until 1995, the majority of protective barriers to foreign goods were imposed at countries’ borders and were most commonly tariffs, but also import quotas or various types of import licensing scheme. GATT 1947 favoured the use of tariffs over all other barriers, principally because they were considered the most transparent, they were fairly predictable and, while tariffs certainly rendered imports more expensive, they were not an absolute barrier to entry of goods. GATT 1947 implemented its preference for tariffs by prohibiting the use of non-tariff barriers, but it made an exception for agricultural goods.[103] Seeking to correct this, the AoA introduced tighter regulation of non-tariff barriers to the entry of agricultural goods, requiring that they all be expressed as tariffs.[104] There are few circumstances now in which WTO law permits the use of non-tariff barriers for any goods.[105] The prohibition on non-tariff barriers has not particularly affected the development strategy options of ordinary developing countries, the governments of which have traditionally preferred (government revenue-generating) tariffs. In any event, an exception is given in the AoA under which ordinary developing countries which had previously used non-tariff barriers may continue to use them to protect local producers of “a primary agricultural product that is the predominant staple [such as rice or maize] in the traditional diet of a developing country Member.”[106]

Although tariffs are still used extensively by ordinary developing countries, both to support the economic viability of rural communities and to raise government revenue, they have been brought down to lower levels over time.[107] It is not usually WTO law as such which obliges countries to reduce their tariffs on particular products or to reduce them by specified margins; reductions are more often negotiated separately during trade Rounds. Nevertheless, there is continual pressure on all Member countries to reduce and bind tariff rates wherever possible. The tariffs set by ordinary developing countries are now bound on almost three quarters of the goods they import, including agricultural products.[108] However, the bound tariffs of ordinary developing countries tend to be set higher than their actual rates,[109] giving them some scope to raise tariffs at times when they want to protect sensitive products or industries and to keep prices stable. Tariffs are only permitted to be raised above the bound rates in very limited circumstances: when action is taken against ‘dumping’ (generally, imports coming in at a price below the cost of production) (see below), when countervailing tariffs are imposed to offset certain foreign subsidies or when temporary emergency measures are introduced to limit imports in the face of a potentially damaging imports surge. In any other case, compensation will be payable.[110] As a result of this restriction, many ordinary developing countries have safeguarded their tariff flexibility by retaining high bound rates for staple or important agricultural products.[111]

Despite this, the system of negotiating reductions in agricultural tariffs and of binding the reduced rates may act as a constraint on the development strategy options of ordinary developing countries and may work against the realisation of human rights and fundamental freedoms. Whether or not reductions will have this effect may depend on the extent of liberalisation previously undertaken by them and on the proportion of their populations dependent on agriculture for livelihood. Many ordinary developing countries have a predominance of poor or small farmers, and those which have previously reduced agricultural tariffs substantially or for particularly sensitive products, such as food staples, may be vulnerable to developmental damage if they have to bring their bound tariffs down yet further.[112]. This will occur when the produce of such farmers becomes more expensive than imported equivalents, when the viability of the small farmers is dependent on tariff protection. If poor and small farmers are unable to sell their produce through local markets, not only will they and their families suffer greater poverty but the economic foundation of many rural communities will be depleted.

A study by the FAO in 2000 of the Sri Lankan experience illustrates how this may happen. Sri Lanka is an ordinary developing country in which

“[a]lmost 75 percent of the population is still classified as rural, which for all intents and purposes means mainly engaged in agriculture, given the economic linkages generated by agriculture in the rural economy.”[113]

In the early 1990s, Sri Lanka bound all its agricultural tariffs at 50 percent but its actual rate on most agriculture commodities remained at 35 percent. The FAO study concluded that, given the impact already of competitive imports on the domestic agricultural sector,

“any further reduction of the bound tariffs is likely to create difficulties.... Alternative employment opportunities in agriculture or elsewhere are limited. While tariff reductions may be welfare-increasing [for consumers] in the short run, ..., the longer-run effects can be perverse in welfare terms, through the virtual elimination of domestic output.”[114]

The exceptions mentioned above, permitting countries to raise tariffs above the bound levels when acting against dumping, foreign subsidies or an import surge, might be of temporary assistance in mitigating damage caused by artificially cheap produce. However, the exceptions do not address the greater concern, that lower bound agricultural tariffs may cause permanent displacement of local production and increased poverty in existing rural economies.

Yet the Doha Round negotiations have reached a consensus that bound agricultural tariffs will be reduced by an average of at least 33 percent for ordinary developing countries.[115] The countries have responded, in part, by presenting a group of proposals which would enable them to give higher, flexible tariff protection to particularly sensitive or special products, such as food staples, based on the three criteria of food security, livelihood security and rural development needs.[116] The debates which this group of proposals has sparked make evident a number of underlying tensions in WTO law and the WTO-Minus strategy. The Chair of the WTO Committee on Agriculture, Ambassador Falconer, while allowing in principle for the possibility of certain products being designated as “special,” expressed consternation that the proposal could “render the whole discussion on [Special and Differential Treatment] ... completely redundant,” because it would enable a typical developing country to bring well over ninety percent of the value of its import trade within the listing.[117] Ambassador Falconer is clearly concerned that the Special Products proposal will reverse the liberalisation thrust of WTO law and the WTO-Minus strategy.

Ordinary developing countries, on the other hand, have taken a development perspective and are concerned to retain some capacity to raise and lower tariffs for products which they consider central to their (particularly rural) development. The special or sensitive products proposals suggest that the agricultural tariff reduction and binding expectation within the WTO-Minus strategy will only be borne with for so long as it does not actually constrain this capacity. Now that the negotiations are seriously threatening their ability to raise agricultural tariffs for development purposes, ordinary developing countries are voicing their disagreement. The fact that developing countries have so far been able to keep some bound rates relatively high may well have been masking a deep disagreement with the thrust of the WTO-Minus strategy as the most appropriate development strategy. As the special or sensitive products proposal makes clear, ordinary developing countries want to retain the flexibility to raise agricultural tariffs for protectionist purposes as a legitimate development strategy option.

In arguing for the right to raise agricultural tariffs, ordinary developing countries seem to be arguing for a return to the spirit of the GATT 1947 arrangement of non-reciprocity, which applied not only to tariffs but to all border barriers. A non-reciprocal arrangement would enable developing countries to benefit, in developmental terms, from the greater trade openness of industrialised countries while still having the right to protect and nurture their own industries, for developmental purposes. However, some trade economists have expressed strong opposition to any suggestion that the more industrialised developing countries, in particular, should be allowed to avoid reciprocity, pointing out that a number of ‘developing’ countries now perform better in terms of GDP per capita than do some OECD members.[118] At the very least, the industrialised countries insist upon a system under which developing countries must “graduate” away from Special and Differential Treatment as their economies strengthen.[119]

More generally, most industrialised country Members are opposed in principle and for reasons of self-interest to non-reciprocity other than for LDCs and particularly vulnerable ordinary developing countries. They have criticised the special or sensitive products proposal as enabling ordinary developing countries to ‘free ride,’ that is, to enjoy unfairly the benefits of tariff reductions by the industrialised countries on numerous important products without having to reciprocate. The agricultural economist, Timothy Josling, is critical in general of Special and Differential Treatment as “encouraging countries to delay opening [to the global economy, which] may be perpetuating asymmetries [between rich and poor countries], rather than reducing them.”[120] He also accuses it of placing the WTO “under significant stress,”[121] by progressively weakening the most-favoured nation principle of non-discrimination. The disagreement raises squarely the fundamental question of whether WTO law should ‘differentiate’ by giving ordinary developing countries a wider repertoire of development strategy options than industrialised countries, including options which run counter to liberalisation and the efficiency model. The UN High Commissioner for Human Rights has expressed concern about the failure of the Agreement on Agriculture to do just that. She regards this as a human rights issue because it has important development implications:

“At the heart of adopting a human rights approach to the liberalisation of agricultural trade is the issue of whether a ‘one-system-fits-all-approach’ is appropriate. The agricultural sector plays starkly different roles in the development of every country. In the case of low-income countries, the agricultural sector plays an essential role in ensuring food security and alleviating poverty.... For developed countries, the agricultural sector is often less significant.... The application of the same rules to widely different populations and conditions without effective affirmative action for the poor risks exacerbating existing inequalities.”[122]

It would be a mistake, however, to assume that the simple solution would be to go ahead with the proposed agricultural tariff reductions by all Member countries but to encourage them to provide “social safety nets” to compensate “losers ... from [the] trade-liberalisation side effects.”[123] As mentioned above, the issue is not only the protection of those whose human rights are negatively affected by trade liberalisation but also the ability to continue to produce in ways, such as small farming, which might be too inefficient to survive in a global market but which, nevertheless, facilitate the realisation of human rights and freedoms. While human rights law would obviously consider safety nets to be essential in the face of such change, their existence cannot make suitable a trade-driven development strategy which is offhand about the realisation of human rights and fundamental freedoms. Agricultural production is at the heart of food security, and the challenge for the majority of ordinary developing countries is ensuring regular access to adequate food. For many, their development strategy is geared not towards reducing their (inefficient) local food production and turning to imports but, on the contrary, “to rais[ing] agricultural productivity and food production in line with their needs and potential.”[124] Further agricultural tariff reductions are more likely to hinder than to support this development strategy; they are more suited to the development strategies of industrialised countries, which have largely urban populations employed in manufacturing or other non-agricultural industries and which are grappling with a problem of continual overproduction in agriculture.

It would also be a mistake not to acknowledge the key role higher tariffs may play in development. Even apart from their role in protecting small farmers and supporting rural communities, tariffs are a valuable source of government revenue in the majority of developing countries. This is an entirely legitimate fiscal approach, particularly given the difficulty of collecting income tax where large informal sectors exist. Revenue from tariffs will contribute to the capacity of governments to fund other facets of development, such as health and education, and will to their capacity to redistribute wealth throughout communities. At present, there are virtually no mechanisms within WTO law for redistribution for purposes of equity, the only possible exception being GATT article XIX which allows barriers to be raised temporarily in the face of certain kinds of imports surge.

Steering a trade liberalisation process which does not exacerbate inequality or cause retrogression but, on the contrary, respects, protects and promotes human rights and freedoms, will require a comprehensive capacity on the part of low-income, largely agrarian countries to shield socially- and economically-vulnerable local producers and communities from the negative consequences of the process. From the human rights perspective, if ordinary developing countries are to seize development gains from opening up to global trade, they will require a wider repertoire of development strategy options than they are currently permitted under WTO law and the WTO-Minus strategy. This is because the ability to control the speed, emphasis and nature of the liberalisation process, through the use of trade barriers, is essential to being able to control the impacts on individuals, sectors and communities and to ensuring equity.

WTO law and the WTO-Minus strategy have yet to come to terms with the fact of these differences of perspective. Although WTO law repeatedly differentiates between industrialised, developing and least-developed countries, the reasoning behind the differentiation is far from clear. This is particularly evident in the virtual exclusion of LDCs from WTO law commitments. Article XI of the WTO Agreement explains that LDCs “will only be required to undertake commitments and concessions to the extent consistent with their individual development, financial and trade needs or their administrative and institutional capabilities.” One is left wondering how, in this context, the relationship between the WTO law obligations of an LDC and its development needs is to be evaluated, what body of knowledge or research supports the introduction of a consistency test for this purpose and what factors are to be considered relevant in administering such a test. No doubt textual statements of this kind are partly a result of the political and diplomatic nature of trade law negotiations, reflecting compromises and trade-offs rather than theoretical coherence. No doubt, too, the statement is intended as an acknowledgement that trade liberalisation may sometimes have to be delayed until particular development ‘ingredients’ are in place.[125] Unfortunately, both the writings of trade lawyers and WTO statements about the reasoning behind the concessions in special and differential treatment tend to focus more on arguments about the benefits of trade liberalisation to economic development, rather than to provide a solid explanation for the concessions.[126]

Yet as WTO negotiations proceed towards deeper trade liberalisation and the depth of acceptance of the WTO-Minus strategy by the Members is increasingly tested, the lack of clear theoretical underpinning for differentiated treatment will almost certainly become a very tangible problem. Demands by ordinary developing countries to be allowed to vary their agricultural tariffs as they consider best for their food security, livelihood security and rural development needs are likely to draw antagonistic and theoretically incoherent responses from industrialised country Members, particularly as India, China and Brazil consolidate their economic development.

Agricultural domestic subsidies and structural supports

The AoA is the principal WTO treaty regulating agricultural subsidies.[127] The AoA permits the continued use of agricultural subsidies but, in the years immediately after its introduction in 1995, it required that those which stimulated production be reduced in value and quantity. Some domestic subsidies commonly used by ordinary developing countries were included in the reductions, while others have now become open to challenge if they nullify or impair benefits which would otherwise accrue to another Member country.[128] Domestic subsidies are government payments to producers to support the prices or incomes they receive. Ordinary developing countries have not been great users of agricultural domestic subsidies, so that the restrictions on their use have had only a peripheral impact.[129] However, agricultural domestic subsidies have a legitimate position in the repertoire of development strategy options which ought to be available to ordinary developing countries, where they could assist with building up productive sectors in poor rural communities and with increasing overall food production. Marketing boards and similar supports may also assist by providing greater income stability for small farmers enabling equitable food distribution. However, such supports are at risk of violating the national treatment rule of GATT art. III by discriminating against imports.

Dumped agricultural produce

A particular development problem for farmers in ordinary developing countries is the fact that some agricultural products from (mainly) industrialised countries, primarily the US and EU,[130] are sold on world markets at artificially low prices (‘dumped’), due to the fact that ‘export subsidies’ have been paid to the agricultural producers. Export subsidies are government payments to domestic producers which are conditional upon goods being exported. They are obviously intended to give the producers an artificial advantage in foreign markets. Although the AoA required agricultural export subsidies to be reduced after 1995, they are still permitted, still in use and still very substantial. From a development perspective, they enable artificially cheap agricultural produce to enter and damage local markets in ordinary developing countries, undercutting farmers and impoverishing rural communities. Bryan Mercurio observes that,

“the countries of the Ivory Coast and Burkina Faso perfectly illustrate this situation, as both nations had healthy cattle industries until the EC dumped beef into their markets and not only undermined but also destroyed domestic production.”[131]

From an efficiency model perspective, export subsidies prop up inefficient industries and grossly distort markets.[132] The 2005 Hong Kong Ministerial Declaration expressed the hope that agricultural export subsidies would be phased out by 2013.[133] At the time of writing, the Doha Round negotiations had not yet concluded any firm agreement on the problem of agricultural export subsidies in industrialised countries. The EU has made clear that its agreement to any phasing out is conditional on other countries, particularly the US, phasing out "all export measures with equivalent effect" over the same period of time.[134] Given this, it seems unlikely that agricultural export subsidies will be phased out in the near future.

More than one writer has made the point that agricultural export subsidies operate as a kind of special and differential treatment for industrialised countries[135] and both trade economists and human rights advocates support banning their use by industrialised countries. However, from a human rights perspective, their potential use in agriculture should be seen as a legitimate development strategy option for ordinary developing countries. These arguments are developed in 3.3, below, and apply equally to agriculture and manufacturing.

3.3 Constraints on building up non-agricultural industries

Industrial supports and subsidies

Most ordinary developing countries have well-established agricultural industries, albeit dominated by small and resource-poor farmers. Most are also industrialising, to a greater or lesser extent, and this could be assisted by the provision of industrial subsidies. Although these countries have more often had to tax than subsidise their manufacturers, until recently some supported local manufacturing export industries by providing export subsidies. Additionally, they often protected local industries from foreign competition by providing ‘local content subsidies.’ Local content subsidies are payments which are tied to the use of domestically-produced, rather than imported, component parts or other inputs in a manufacturing process. These protective measures have, of course, been central instruments in the development strategies of those countries which pursued import-substitution industrialisation.[136] However, under the Agreement on Subsidies and Countervailing Measures (the SCM), the use of these industrial subsidies is now prohibited.[137] As part of Special and Differential Treatment, developing countries were given up to eight years from the introduction of the SCM to withdraw these subsidies.[138] A second WTO agreement, the Agreement on Trade-Related Investment Measures (TRIMs), prohibits local content requirements in investment legislation in most situations where the requirements affect trade.[139] Ordinary developing countries had previously used such measures to ensure that the benefits of foreign investment flowed back into their domestic economies through inputs being sourced locally.

Other types of industrial subsidy, although not prohibited under WTO law, are open to challenge (are ‘actionable’) under the SCM if they injure or seriously prejudice an industry of another Member country.[140] A wide range of subsidies of potential utility in the development of ordinary developing countries, such as subsidies for research and development, for aid to disadvantaged regions and for environmental assistance, became actionable from 1999.[141] A developing country which insisted on maintaining these subsidies could face counter-measures imposed by other Member countries to offset damage caused to their industries. However, no action has yet been taken and it seems that the prevailing mood is against an industrialised country doing so for the present.

The dominant view among trade economists is undoubtedly that export subsidies and local content requirements lead countries in entirely the wrong direction, distorting trade and development and drawing resources into inefficient sectors.[142] Even if they can be justified as merely temporary supports, it is argued that inefficient, subsidised industries may never be able to obtain the economies of scale necessary to become viable, yet it may be difficult for governments to withdraw the subsidies as interests become entrenched.[143] This reasoning underlies the WTO law prohibition on the use of industrial subsidies. Moreover, no Special and Differential Treatment permission has been made available for ordinary developing countries regarding the use of industrial subsidies, beyond the granting of a phased withdrawal.

However, the view has been challenged by both development economists and developing countries, who argue that industrial subsidies can be demonstrated, historically, to be very powerful development stimulants. If it can be shown that these subsidies are likely to help stimulate strong industrial development which reduces poverty and related deprivation, the traditional economic analysis should not be the primary determinant of their utility. The human rights approach to development would assess their utility against the type of development defined in the Development Declaration, that is, against their contribution to a development process which is broad, inclusive and equitable, which facilitates the realisation by all of human rights and fundamental freedoms and which does not create any retrogression of rights and freedoms. Manufacturing which must source its labour and component parts locally, employing both men and women from diverse local communities and stimulating a build-up of satellite businesses and new skills, may meet these requirements more readily than manufacturing which imports many of its inputs.

Developing countries have argued that their industrial development is constrained by their restricted ability to utilise subsidies of this kind, particularly to favour local sources. In a 2002 submission to the WTO, India argued that, “subsidies contingent upon use of domestic over imported goods [are] crucial to the process of industrialization and development of developing countries.”[144] Moreover, the historical evidence against the traditional economic analysis creates considerable room for scepticism about the prohibition in WTO law. Medhi Shafaeddin cites the significant fact that, “[w]ith the exception of Hong Kong, no country has developed its industrial base without resorting to infant industry protection.”[145] Similarly, Birdsall, Rodrik and Subramanian report that,

“[a]lmost all successful cases of development in the last 50 years have been based on creative—and often heterodox—policy innovations. South Korea and Taiwan, for example, combined their outward trade orientations with unorthodox policies: export subsidies, directed credit, patent and copyright infringements, domestic-content requirements on local production, high levels of tariff and non-tariff barriers, public ownership of large segments of banking and industry, and restrictions on capital flows, including direct foreign investment.”[146]

Ajit Singh explores the measures used by Japan and Korea during their period of strong economic growth and lists an extensive set of protectionist export promotion, import restriction and industrial policy measures.[147] Professor Moran refers to economic studies which show that subsidies can be beneficial to development where they result in “dynamic gains from learning” or where they create “industrial complexes” with substantial “forward and backward linkages” in the local economy.[148] Moreover, Robert Wade points out that the economic growth performance of Latin American countries which adopted import-substitution industrialisation policies during the post-Second World War period was, during that time, “better by several measures than it has been during the subsequent era of liberalization and privatization.”[149] Ken Shadlen is critical of the TRIMs agreement’s reducing the ability of ordinary developing countries to use subsidies, which he sees as “important policy instruments to increase local value-added, employment and industrial upgrading.”[150]

3.4 Transferring technology and the ‘single undertaking’

All developing countries need access to new technology as an essential ingredient in building up their industrial sectors and increasing the productivity and efficiency of their agricultural sectors. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIMs) requires all Member countries, except the LDCs, to take costly steps to introduce minimum levels of intellectual property protection into their domestic law. Of particular significance in this context are patents, which are exclusive, enforceable rights to exploit an invention commercially. Most past and current inventions occur in industrialised countries. Until the introduction of TRIPs, the intellectual property laws of developing countries tended to help build local industries by fostering “opportunities for local firms to access foreign innovations” and encouraging “learning and technological progress via imitation.”[151] Under TRIPs, imitation as an option for technological development in industry and agriculture has been greatly restricted. The circumstances in which patent rights may be denied are limited and the rights must be protected under domestic law for a minimum of 20 years.[152]

This change is of particular significance for developing countries because, as Shadlen observes, “a country’s patent regime ... has important effects on the acquisition, development and diffusion of technologies throughout the economy.” Although there is still some flexibility within TRIPs by which developing countries can gain less restricted access to new technologies[153] (‘technology transfer’), by and large, they must now access the new technologies on commercial terms. Most developing countries are “net consumer[s] of knowledge,” which knowledge they must now purchase from sources which are increasingly private, commercial institutions.[154] Yet the only special and differential treatment provision in TRIPs for ordinary developing countries on the crucial issue of technology transfer is article 67, which merely exhorts industrialised countries to assist developing countries to implement the TRIPs agreement and to enforce intellectual property rights.

Singh argues that the fact that developing countries agreed to TRIPs at all in the Uruguay Round “reflects the economic and political weaknesses” these countries suffered from in “the ‘lost decade’ of the 1980s.”[155] Their dependence on international financial assistance following the debt crisis “reduced [them] ... to the status of being supplicants before the International Financial Institutions”[156] during the period of the Uruguay Round negotiations. In his view, the TRIPs agreement is “anti-development” for countries which are not already industrialised[157] and developing countries should be given the choice of opting-out of it. Their development was better supported, he argues, by the “a-la-carte” approach to GATT 1947 taken during the 1960s and 1970s, than by the single undertaking approach of the WTO-Minus strategy, under which WTO Members must sign all of the trade agreements, including TRIPs.[158]

This presents the ‘single undertaking’ feature of the Uruguay Round agreements itself as a constraint on the development strategy options available to ordinary developing countries. The human rights approach to development would question whether the single undertaking requirement contributes positively to a development process which is broad, inclusive and equitable, facilitates the realisation by all of human rights and fundamental freedoms and avoids any retrogression of rights and freedoms. Because technology transfer, like industrial subsidies, can be a very powerful development stimulant, there are compelling human rights and development arguments against the single undertaking.

3.5 Constraints on agricultural exports

Under the efficiency model, all countries should develop export industries in areas where they have a comparative advantage. In the real world, however, this is not necessarily possible. Protectionist measures restrict access for the exports of ordinary developing countries to their obvious markets, in two ways. First, relatively high protective tariffs on the part of the industrialised countries greatly restrict openings for the typical exports of ordinary developing countries. On the positive side of the ledger, tariffs imposed by industrialised countries have been brought down over many decades to an average of less than 4 percent for industrial goods, with a large proportion entirely duty free.[159] Most of these tariffs are now bound at low levels[160] and only a small proportion of exports from ordinary developing countries now face tariffs of more than 15% in the markets of industrialised countries.[161] On the negative side, however, tariffs still remain high for the most common, agricultural exports of ordinary developing countries, particularly for raw commodities and other unprocessed agricultural goods, such as food staples, vegetables and fruit, sugar and dairy products.[162] Added to this, tariffs on processed agricultural goods tend to be much higher than on raw goods, “virtually excluding” ordinary developing countries’ from diversifying their exports into the considerably more profitable processed foods industry.[163]

Secondly, such benefits as have flowed from reductions in the agricultural tariffs of industrialised countries have been largely ‘offset’ by the domestic subsidies these countries provide to their agricultural producers for produce destined for their own consumers (as opposed to produce destined for export). Domestic subsidies are still permitted, although those which stimulate production have been subject to reductions since 1995.[164] Both the US and EU extensively subsidise the production of some agricultural goods for domestic consumption, thus diminishing the opportunity for developing countries to export their products at prices which cannot compete, because they reflect their true cost of their production. Unfortunately, as with tariffs, the subsidy reductions imposed on industrialised countries in the early years of the AoA were met through cuts for product lines of little interest to developing countries, with reductions lowest for those agricultural products with most advantageous export potential.

By leaving ordinary developing countries in a position of being unable to exploit their comparative advantage, WTO law constrains the development strategy options open to them. The principal response of WTO law and the WTO-Minus strategy to these particular problems has been to maintain the system of waivers permitting industrialised countries to discriminate in favour of the exports of developing countries. The Generalised System of Preferences was formalised in 1979 and is the principal, but not the only, such preferential arrangement which has been authorised.[165] The purpose of the Generalised System of Preferences was to sanction a mechanism through which industrialised countries might give preferential market access to most industrial, and a limited range of agricultural, exports of developing countries without violating the non-discrimination obligation under GATT 1947.[166] The scheme was intended to help developing countries industrialise, especially to build up their infant industries, by offering tariff-free or reduced tariff entry for industrial goods. However, it has many weaknesses, not least the fact that the preference-giving country unilaterally decides which products will be favoured under its scheme. Typically, schemes have not given preferential terms to agricultural exports, which remain of greatest importance to ordinary developing countries, nor to the more profitable, processed agricultural goods, and the market advantage given by low or zero industrial tariffs under the schemes has diminished as tariffs overall have come down.

Of greater benefit would be for industrialised countries to lower their tariffs and withdraw their domestic subsidies for those products of particular export interest to ordinary developing countries. Industrialised countries have resisted pressure to do this, partly because they want to continue to protect those industries in their own countries but also because of their on-principle reluctance, discussed earlier, to confer trade concessions on a non-reciprocal basis. Once again, the absence of a clear and settled understanding in the WTO-Minus approach as to why and when trade law should differentiate in favour of developing countries hampers rational discussion of this important development constraint.

However, in the light of earlier analysis, the question must be asked whether the pursuit of comparative advantage through increased agricultural exports will bring ordinary developing countries closer to the style of development process set out in the Development Declaration. The majority of developing countries export unprocessed commodities and agricultural goods, so that improving access for these exports to wealthy country markets may have the negative effect of locking them into low profit, highly volatile export sectors. Moreover, as Thomas Palley warns,

“it is doubtful that all developing countries can grow via export-led manufacturing. The global market is limited and an excessive focus on exports stands to generate degraded competition between Southern economies. Countries will find themselves crowding each other out and pushing down the prices of the goods they sell.”[167]

As explained earlier, developing countries which have experienced development through (amongst other things) diversifying their exports away from the typical commodities have tended to do so using a wide range of domestic industry supports. Dani Rodrik explained that successful supports have,

“tend[ed] to be country-specific, requiring local knowledge and experimentation for successful implementation. They [have been] targeted on domestic investors and tailored to domestic institutional realities.”[168]

He argues that,

“a development-friendly international trading regime is one that does much more than enhance poor countries' access to markets in the advanced industrial countries. It is one that enables poor countries to experiment with institutional arrangements and leaves room for them to devise their own, possibly divergent solutions to the developmental bottlenecks that they face. It is one that evaluates the demands of institutional reform not from the perspective of integration ("what do countries need to do to integrate?") but from the perspective of development ("what do countries need to do to achieve broad-based, equitable economic growth?").[169]

4. Confined thinking and the scope for change within the WTO

In 1990, led by Amartya Sen and Mahbub ul Haq, the UNDP introduced the notion of development as ‘human development,’ measured by human indicators, in contrast to the dominant, but more limited, notion of development as economic development, measured by economic growth. Sen saw human development as “a process of expanding the real freedoms that people enjoy;” thus, development will occur as the “major sources of unfreedom” are removed and peoples’ “capabilities” are consequently expanded.[170] These ideas grew into a concept of human development which fully accepts an indivisible relationship between itself and human rights. Sen presented human development in terms of ‘instrumental freedoms,’ that is, “those which allow us to live lives free from starvation, undernourishment, escapable morbidity, premature mortality, illiteracy and innumeracy.”[171]

Building on this work, the United Nations has taken steps to incorporate new understanding and knowledge about how the process of development can be steered to facilitate the realisation of human rights and freedoms for all. In 1997, the then Secretary-General requested all UN agencies and bodies to mainstream human rights into their activities and programmes.[172] Many UN agencies moved to adopt a human rights-based approach to their development cooperation work and, by 2004, the UN Statement of Common Understanding on Human Rights-Based Approach to Development Cooperation and Programming had drawn them together in a relatively consistent approach. Under the Common Understanding, it was agreed that all UN programmes of development co-operation and assistance should aim to “contribute directly to the realization of one or several human rights.”[173] It was also agreed that international human rights standards should guide all development cooperation and programming in all sectors and at all phases, including all development cooperation directed towards the achievement of the Millennium Development Goals. The guiding human rights standards identified in the Common Understanding included “universality and inalienability; indivisibility; inter-dependence and inter-relatedness; non-discrimination and equality; participation and inclusion; accountability and the rule of law.”[174] The United Nations Development Group observes that the human rights-based approach,

“leads to better and more sustainable outcomes by analyzing and addressing the inequalities, discriminatory practices and unjust power relations which are often at the heart of development problems. It puts the international human rights entitlements and claims of the people and the corresponding obligations of the State in the centre of the national development debate.”[175]

To a large extent, the rights-based approach to development had grown out of frustration at the “failures of contemporary processes of globalisation to resolve fundamental problems” of poverty, marginalisation, social injustice and social exclusion. [176] The challenge of past failure was picked up by the World Bank under James Wolfensohn’s presidency at the end of the Uruguay Round. After undertaking extensive reviews and analyses of its past development assistance policies, particularly its emphasis on traditional or neo-liberal economic solutions, the Bank moved to a more holistic approach, with a strong focus on poverty-reduction. It began to support developing countries “to direct their own development strategies” and it “mainstream[ed]” the involvement of civil society, gender awareness and development perspectives.[177] In greater harmony with international human rights norms and conceptions of development, the changes were “underpinned by a commitment to inclusion, ... partnerships, sustainability and institutional excellence.”[178]

Although the depth of change within the World Bank and to its programmes may be questioned, the WTO has not displayed a similar interest in utilising contemporary knowledge to improve its understanding as to how international trade law might better support human rights-based development in developing countries. The Uruguay Round of trade negotiations can be seen as a missed opportunity to modernize and advance trade theory and its strategic implementation to take advantage of new knowledge gained since the end of the War about, and deepening understanding of, development needs, processes and effective strategies. While it must be acknowledged that attempting to make fundamental changes to WTO law and the WTO-Minus strategy would be fraught with political difficulties, it is also evident that the WTO itself is not sufficiently open to new knowledge and understanding. Although “[m]ainstream policy economics has been gradually lowering its claims about the positive impact of trade [liberalisation] on development and poverty reduction,”[179] WTO law and the WTO-Minus strategy remain firmly premised on the efficiency model and the economic dimension of development.

This has contributed to the stalling of Doha Round negotiations, which are mired in disagreement about development – its definition, its relationship to poverty and human capabilities as well as to economic growth, its links with trade (particularly when levels of development within a developing country vary greatly) and the most appropriate role for industrialised countries in supporting it globally. To become an effective, contemporary institution, the WTO must take a great leap forward, so that it “serve[s] no longer as an instrument for the harmonization of economic policies and practices across countries, but as an organization that manages the interface between different national practices and institutions.” The “manner in which the international trading regime and the WTO function” should be “reinvigorated” by a new focus on “development and poverty alleviation, along with a nuanced, empirically-based understanding of the development process.”[180] Development thinking has been coalescing for many years around ‘bottom up’ approaches, “delinking” international trade strategy from the theory of neo-liberalism and setting a high priority on compliance with human rights norms.[181] These are the paths indicated for the international community in creating trade law which enhances, rather than constrains, the development strategy options of developing countries and which facilitates the realisation of human rights and fundamental freedoms.

[1] Marrakesh Agreement Establishing the World Trade Organization, opened for signature 15 April 1994, 1867 UNTS 3 (entered into force 1 January 1995), preamble (the WTO Agreement).
[2] J. Remenyi, What is Development?, in: D. Kingsbury, J. Remenyi, J. McKay and J. Hunt, (eds.) Key Issues in Development 22 (Hampshire: Palgrave Macmillan, 2004).
[3] B. Hettne, Development Theory and the Three Worlds: Towards an International Political Economy of Development (Essex: Longman Group Ltd, 1995).
[4] R. Potter, Theories, Strategies and Ideologies of Development, in: V. Desai and R. B. Potter (eds), The Companion to Development Studies 61-62 (London: Hodder Arnold, 2002). Bjorn Hettne also identifies a third, related field of activity. Development ideologies influence development agendas to reflect different social, economic, political, cultural, ethical, moral and religious goals and objectives: Hettne, ibid, p. 62.
[5] Potter, ibid, p. 61.
[6] Id.
[7] Potter, ibid, p. 62-3. Potter also suggests a helpful classification of development theories into four major categories. The first is the classical-traditional approach, which emphasises the economic dimension of development. Dominant in this approach are theories of dualism, modernization and neo-liberalism. WTO law is based on economic theories which fall within this category. The second is the historical-empirical approach, with theories purporting to build upon what has happened in the past. These include the Mercantilist model and transport theory. The third is the radical political economy-dependence approach, embracing neo-Marxism, structuralism, modes of production theories and the Latin American dependency theories. The fourth are the so-called ‘bottom-up’ and alternative theories, which emphasise the ideal.
[8] United Nations Charter art. 55. Under art. 56, the international community pledged itself to act with the UN for the achievement of the aims in art. 55.
[9] United Nations Charter art. 1, para. 2.
[10] United Nations Charter art. 1, para. 3.
[11] UNGA, Universal Declaration of Human Rights (A/RES/217 (III)). As a resolution of the UN General Assembly, not a treaty, the UDHR is not binding on states.
[12] Preamble to the UDHR; Preamble to the United Nations Charter.
[13] Self-interested motivations included avoiding an economic recession as the military sector of their economies wound down following the end of the War. In addition, with the start of the Cold War, international trade and development assistance became “major weapon[s] in the battle to gain support for [the] ideologies and systems” of the United Sates and the Soviet Union. These ‘self-interest’ factors made widespread economic development and international economic engagement by the non-Communist countries of central interest to the post-War Western alliance: Remenyi, supra note 2, p. 23
[14] P. Streeten, Development Perspectives 61-2 (London: Macmillan, 1981), cited in: Hettne, supra note 3, p. 10.
[15] T. Binns, Dualistic and Unilinear Concepts of Development, in: Desai and Potter, supra note 4, p. 75.
[16] Id.
[17] A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (The Strand, 1776), cited in: K. Willis, Theories and Practices of Development 32-3 (London/New York: Routledge, 2005).
[18] Willis, supra note 17, p. 33.
[19] D. Ricardo, On the Principles of Political Economy and Taxation Chapter 7 (London, 1817).
[20] J. L. Dunoff, The Death of the Trade Regime, 10(4) European Journal of International Law 737 (1999).
[21] General Agreement on Tariffs and Trade, opened for signature 30 October 1947, 55 UNTS 187 (entered into force 29 July 1948) (GATT 1947).
[22] The Allies also saw the need to make capital available for development. At the 1944 Bretton Woods conference, the World Bank was established to “generat[e the] consistent flow of foreign capital necessary for financing the reconstruction and development of the world’s economies devastated by the Second World War”: M. R. Islam, International Trade Law 79-80 (Sydney: The Law Book Co Ltd, 1999). The role of the International Monetary Fund (the ‘IMF’) was to ensure a stable international payments system to support trade and investment, and consequently, stable development. The planned third body, the International Trade Organisation, failed ultimately to be established because of political opposition from within the United States. As a consequence, until 1995 when the WTO was established, the law of GATT 1947 was applied in the process of international trade liberalisation but there was no international body to oversee the process.
[23] Dunoff, supra note 20, p. 737.
[24] Ibid, p. 745.
[25] V. Gauri, Social Rights and Economics: Claims to Health Care and Education in Developing Countries, World Bank Policy Research Working Paper 3006 15-16 (World Bank, Development Research Group, March 2003.
[26] B. Hettne, Current trends and future options in development studies, in: Desai and Potter, supra note 4, p. 8.
[27] Hettne, supra note 3, p. 33.
[28] Ibid, p. 40.
[29] J. L. Dunoff, Does Globalization Advance Human Rights? 25 Brooklyn Journal of International Law 138 (1999).
[30] D. McRae, Developing Countries and ‘The Future of the WTO’ 8(3) Journal of International Economic Law 609 (2005).
[31] At this time, ordinary developing countries were offered accession to GATT 1947 “on essentially the same terms as developed countries:” B. Hoekman and M. Kostecki, The Political Economy of the World Trading System: The WTO and Beyond 386 (New York: Oxford Universty Press, 2001).
[32] Islam, supra note 22, p.25.
[33] Hettne, supra note 3, p. 41.
[34] S. Edwards, Openness, Trade Liberalization, and Growth in Developing Countries 31(3) Journal of Economic Literature 1358–9 (1993).
[35] Desai & Potter, supra note 4, pp. 94-106.
[36] Islam, supra note 22, p.26.
[37] United Nations General Assembly Declaration on a New International Economic Order, Resolution, A/RES/S-6/3201 May 1974.
[38] GATT Decision of 8 November 1979: Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (LT/TR/D/1). See also Hoekman and Kostecki, supra note 31, p. 386–7.
[39] J. A. Elliott, Development as Improving Human Welfare and Human Rights, in: Desai and Potter, supra note 4, p. 45.
[40] B. Hettne, Current Trends and Future Options in Development Studies, in: Desai and Potter, supra note 4, p. 7.
[41] Binns, supra note 15, p.77.
[42] Ibid, p. 76. Emphasis added.
[43] Ibid, p.77.The ‘growth centre model’ posed by French economists of the 1940s and 1950s was very similar to that of Myrdal and Hirschman. “In essence, the growth centre model depicts the transmission of economic prosperity from a centre, most commonly an urban-industrial area” which spreads out to stimulate other areas: ibid, p. 77.
[44] J. McKay, Reassessing Development Theory: Modernization and Beyond, in: Kingsbury et al, supra note 2, p. 53.
[45] Elliott, supra note 39, p. 46.
[46] Id.
[47] This categorisation of states’ obligations was reaffirmed in Paragraph 1 of the UN Vienna Declaration and Programme of Action, A/CONF.157/23 12 July 1993
[48] International Covenant on Economic, Social and Cultural Rights, art. 2(1).
[49] Committee on Economic, Social and Cultural Rights, General Comment 3, The nature of States parties' obligations (Fifth session, 1990), U.N. Doc. E/1991/23, annex III at 86 (1991), para. 9.
[50] Ibid, para 10.
[51] Ibid, para. 9.
[52] S. Osmani, Globalisation and the Human Rights Approach to Development, in B. Andreassen and S. Marks (eds.) Development as a Human Right 265 (Cambridge, Massachusetts: Harvard University Press, 2006)..
[53] Elliott, supra note 39, p. 45.
[54] F. J. Garcia, The Global Market and Human Rights: Trading Away the Human Rights Principle, 25 Brooklyn Journal of International Law 67 (1999)7.
[55] Ibid, p. 70.
[56] Ibid, p. 72.
[57] Ibid, pp. 72-73.
[58] D. Yergin and J. Stanislaw, The Commanding Heights: The Battle for the World Economy 391 (New York: Touchstone, 2002).
[59] Elliott, supra note 39, p. 47.
[60] Ibid, p. 40.
[61] Id.
[62] Hettne, supra note 4, p. 8.
[63] T. Palley, From Keynesianism to Neoliberalism: Shifting Paradigms in Economics, Foreign Policy in Focus Special Report 3 (May 2004).
[64] Ibid, pp. 3–4. Neoliberalism is closely aligned with the economic approach known broadly as monetarism, which became dominant at this time under Thatcher and Reagan as well as in a “’counter-revolution’ in development economics:” Hettne, supra note 3, p. 114. However, the general view is that the monetarist experiment failed; economic policy-makers have returned to interest rate based-policy: Palley, ibid, p. 5.
[65] The international financial institutions required economic reforms under Structural Adjustment Programs to be implemented in return for further financial assistance to developing countries.
[66] J. Williamson, Did the Washington Consensus Fail? (Institute for International Economics, 2003) <> (last accessed 1 November 2007). For an evaluation of the Washington Consensus and rejoinder to critics, see J. Williamson, The Washington Consensus as Policy Prescription for Development (‘Practitioners of Development’ World Bank Lecture Series, 2004) <> (last accessed 1 November 2007). David Greenaway and Oliver Morrissey state that almost 80 percent of World Bank structural adjustment loans to developing countries during the 1980s had trade policy reforms attached: D Greenaway and O Morrissey, Structural Adjustment and Liberalisation in Developing Countries: What have we learned?, Kyklos Vol 46 Issue 2 1993 241-261, at 243.
[67] A. Orford, Globalization and the Right to Development, in: P. Alston (ed), People’s Rights 131 (Oxford: University Press, 2001).
[68] UNGA, Declaration on the Right to Development (A/RES/41/128) (1986). Because the Development Declaration is a resolution of the UN General Assembly, not an international treaty, it is not a binding instrument under international law. The precise meaning and content of the right to development are as yet unclear, as is the nature of the obligations it would impose upon states or the international community if it were to become a binding international treaty: Orford, id.
[69] Ibid, Preamble.
[70] UN Committee on Economic, Social and Cultural Rights, supra note 49, para. 9.
[71] R. B. Potter, T. Binns, J. A. Elliott and D. Smith, Geographies of Development 89 (Essex: Pearson/Prentice Hall, 2004).
[72] Ibid, p. 114. The influence of this approach remains strong today, buoyed particularly by the sustainable development movement.
[73] Hettne, supra note 3, p. 161.
[74] D. Kingsbury, Community Development, in: Kingsbury et al., supra note 2, p. 222.
[75] Nor was the outcome of the Uruguay Round influenced, apparently, by the adoption of the Vienna Declaration and Programme of Action by 171 states represented at the 1993 World Conference on Human Rights. The Vienna Declaration stated that the promotion and protection of human rights is the “first responsibility of governments,” reaffirmed the right to development and made clear that “all human rights are universal, indivisible and interdependent and interrelated:” Vienna Declaration and Programme of Action (A/CONF.157/24) (1993). Part I Paragraphs 1, 10 and 5.
[76] Hettne, supra note 4, p. 8.
[77] The name ‘WTO-Minus’ is an extension of the line of analysis of international trade law which uses the term ‘Plus’ to indicate a position relative to WTO law. For example, the term “TRIPs-Plus” has been applied to bilateral and regional trade agreements under which countries agree to assume not only the standard obligations under TRIPs but also more extensive obligations than are required under TRIPs: WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, opened for signature 15 April 1994, 1869 UNTS 299 (entered into force 1 January 1995) (TRIPs). For example, developing countries have forgone their rights to a transition period for implementing TRIPs and to make use of particular flexibilities otherwise available to them under TRIPs.
[78] It is supported in this by a great many bilateral and a number of regional trade agreements which largely mirror its rules but which also give the signatory countries deeper access to each others’ markets.
[79] General Agreement on Trade in Services (GATS), opened for signature 15 April 1994, 1869 UNTS 183 (entered into force 1 January 1995).
[80] TRIPs, supra note 77.
[81] An exception is the two plurilateral WTO agreements, the Agreement on Trade in Civil Aircraft, opened for signature 15 April 1994, 1915 UNTS 103 (entered into force 1 January 1996) and the Agreement on Government Procurement, Agreement on Government Procurement, opened for signature 15 April 1994, 1915 UNTS 103 (entered into force 1 January 1996).
[82] The Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), opened for signature 15 April 1994, 1869 UNTS 401 (entered into force 1 January 1995) arts. 19, 21-2, 26.
[83] Although GATT 1947 continues in force and is still the principal agreement governing international trade in goods, in the event of inconsistency between GATT 1947 and any of the new agreements, the provisions of the latter will prevail to the extent of the inconsistency: WTO Agreement, supra note 1, Annex 1A.
[84] Low national income is indicated by per capita Gross National Income under $900, weak human assets by a composite index based on health, nutrition and education indicators and high economic vulnerability by a composite index based on indicators of instability of agricultural production and exports, inadequate diversification and economic smallness. United Nations Conference on Trade and Development, Least Developed Countries at a Glance (TAD/INF/PR/LDC02) (18/06/02) (last accessed on 1 November 2007).
[85] Some WTO agreements do impose obligations on LDCs but give them longer implementation periods, which have usually been further extended. For example, under the TRIPs Agreement, LDCs were to have implemented their obligations by 2005. The period has since been extended to 2016: World Trade Organisation, Understanding the WTO 42 (2007) (last accessed on 1 November 2007). LDCs also enjoy the benefits of extra technical assistance (for example, under the Agreement on Technical Barriers to Trade, opened for signature 15 April 1994, 1868 UNTS 120 (entered into force 1 January 1995) (TBTA)) and of being specially considered in the contexts of technology transfer (for example, GATS, supra note 79) and dispute settlement (DSU, supra note 82). For more information, see: WTO Committee on Trade and Development, Special and Differential Treatment for Least-Developed Countries (WT/COMTD/W/135) (5 October 2004).
[86] Agreement on Agriculture, opened for signature 15 April 1994, 1867 UNTS 410, (entered into force 1 January 1995), arts. 4 and 15.2 (‘AoA’).
[87] For example, certain subsidies used by some ordinary developing countries to support small and resource-poor farmers were excluded from the general commitment to reduce agricultural subsidies: ibid, art. 6.2. Other examples include arts. 12.4 of the TBTA, supra note 85, and art. 4 of the Agreement on Trade-Related Investment Measures, opened for signature 15 April 1994, 1869 UNTS 299 (entered into force 1 January 1995) (TRIMS).
[88] Examples may be found most WTO agreements. Typical illustrations are Article 10 of the Agreement on Sanitary and Phytosanitary Measures, opened for signature 15 April 1994, 1867 UNTS 493 (entered into force 1 January 1995) (SPSA) and Article 11 of the TBTA, supra note 85.
[89] WTO Committee on Trade and Development, Implementation of Special and Differential Treatment
Provisions in WTO Agreements and Decisions, 4 (WT/COMTD/W/77) (25 October 2000). The Aid for Trade initiative launched at the Hong Kong WTO Ministerial meeting in 2005 also falls within this category. It is a voluntary initiative designed to help developing countries, in particular LDCs, to build their trading capacity and infrastructure to benefit more from trade liberalisation. It is part of the Official Development Assistance (ODA) of participating donor countries. “OECD data show trade-related ODA commitments running at about $25-30 billion a year in the past few years, which is around 30% of total ODA:” WTO, Aid for Trade Fact Sheet, 1 (last accessed 1 November 2007). The WTO also includes as Special and Differential Treatment provisions for technical assistance and training, much of which is provided through the WTO Institute for Training and Technical Cooperation and the International Trade Centre. For more information about these programmes, see (last accessed 1 November 2007).
[90] A. Singh, Elements for a New Paradigm on Special and Differential Treatment: Special and Differential Treatment, the Multilateral Trading System and Economic Development in the 21st Century, paper prepared for joint ICTSD-GP International Dialogue, April 2003. (last accessed 1 November 2007).
[91] F. van Hees, Protection v. Protectionism: The Use of Human Rights Arguments in the Debate for and against the Liberalisation of Trade 18 (Abo Akademi, Finland,, 2004) (last accessed 1 November 2007), quoting J. Bhagwati, In Defense of Globalization (New York: Oxford University Press, 2004).
[92] AoA, supra note 86. Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, opened for signature 15 April 1994, 1868 UNTS 279 (entered into force 1 January 1995) (the Customs Valuation agreement). TBTA, supra note 85.
[93] WTO Agreement, supra note 1, General Interpretative Note to Annex 1A, Annex 1A Multilateral Agreements on Trade in Goods.
[94] GATT 1947, supra note 21, art. I; GATS, supra note 79, art. II; TRIPs, supra note 77, art. 4.
[95] GATT 1947, supra note 21, art. III; GATS, supra note 79, art. XVII; TRIPs, supra note 77, art. 3.
[96] WTO, supra note 89, p. 4.
[97] GATT 1947, supra note 21, art. II.
[98] WTO, supra note 89, p. 2.
[99] To a certain extent, the rights and obligations of ordinary developing country Members of the WTO operate in a dynamic context, due to the system of rounds of negotiations towards the progressive liberalisation of international trade.
[100] There is ample commentary on the criticisms of the WTO which led to the establishment of the Doha Round as a development round. For a civil society perspective, see J. Thomas, The Battle in Seattle: The Story Behind and Beyond the WTO Demonstrations (Colorado: Fulcrum Publishing, 2000).
[101] Doha WTO Ministerial Declaration WT/MIN(01)/DEC/1 20 November 2001 (last accessed on 2 November 2007). However, the Doha Round has stalled and seems unlikely to yield any new law or liberalisation commitments.
[102] Osmani,, supra note 52, pp. 261 and 264.
[103] GATT 1947, supra note 21, art. XI.
[104] AoA, supra note 86, art. 4.
[105] However, technical and health standards are increasingly being applied by industrialised countries with similar effect.
[106] AoA, supra note 86, art. 4.2, annex 5.
[107] Members agreed during the Uruguay Round that ordinary developing country agricultural tariffs would be reduced overall by 24% by 2005.
[108] WTO, supra note 85, p. 27.
[109] Id.
[110] Ibid, p. 25.
[111] Even before 1995, the majority of developing countries had been required to reduce their agricultural tariffs, not because of GATT 1947 but in compliance with conditions imposed by the international development banks, as the result of regional or bilateral trade agreements or simply as autonomous liberalisation, usually in response to elite domestic pressure. Commonly, trade liberalisation undertaken for these reasons has extended further than the requirements of WTO law: B. Mercurio, Re-shaping the Role of Developing Countries in the WTO: Analysing the Agreement on Agriculture, Vol. 9 Balayi 31-2 (2006).
[112] See K. Shadlen, Exchanging development for market access? Deep integration and industrial policy under multilateral and regional-bilateral trade agreements, 12.5 Review of International Political Economy (2005). For example, many bilateral and regional trade agreements require developing countries to introduce more extensive liberalisation in investment and higher levels of intellectual property protection. Some also require that developing countries liberalise trade in services in ways not required under GATS. Examples include Mexico under NAFTA, Singapore under ASEAN and Brazil under MERCOSUR: S Stephenson, Can Regional Liberalization of Services go further than Multilateral Liberalization under the GATS? Vol. 1 No. 2 World Trade Review (2002).
[113] FAO, Agriculture, Trade and Food Security: Issues and Options in the WTO Negotiations from the Perspective of Developing Countries, Vol. II, Country Case Studies, FAO Commodities and Trade Division, Rome, 2000. Part IV Issues of Concern in Further Negotiations on Agriculture.
[114] Id.
[115] This figure is based on prior agreement that agricultural tariffs will be reduced by an average of at least 50 percent for industrialised countries: Ambassador Crawford Falconer, Revised Draft Modalities for Agriculture, Part II Market Access, 1 August 2007, and by two-thirds of that for ordinary developing countries: M. Gifford, Domestic Agricultural Policy Reform, 11(2) Bridges Weekly Trade News Digest 4 (2007).
[116] WTO General Council, Decision Adopted by the General Council on 1 August 2004 (WT/L/579), Annex A, para. 41.
[117] WTO Committee on Agriculture, Chairman’s Reference Paper: Special Products, 4 May 2006, paras 9 and 10.
[118] World Trade Organization, The Future of the WTO 24 (Consultative Board, 2004) <> (last accessed 14 Sep 2007).
[119] Singh, supra note 80, pp. 23-24.
[120] T. Josling, Overview of trade agreements: the multilateral system, in W. Kerr and J. Gainsford (eds.), Handbook on International Trade Policy 77 (United Kingdom: Edward Elgar, 2007).
[121] Id.
[122] Economic and Social Council, Globalisation and its impact on the full enjoyment of human rights, E/CN.4/2002/54, p. 15.
[123] J. Wolfensohn, President, World Bank Group, Statement to the WTO General Council, 22 October 2004. (last accessed on 1 November 2007).
[124] Economic and Social Council, supra note 122, p. 16. (author’s emphasis)
[125] The compelling body of evidence gathered by William Easterly, that ethnic conflict and economic development are inversely proportional to each other, would support the wisdom of such an acknowledgement: W. Easterly, Can Institutions Resolve Ethnic Conflict? 2-3 (World Bank, 2000).
[126] See, for example, on the subject of the new special and differential treatment measures for developing countries after the Uruguay Round: “[U]nder the WTO, there is a new concern for developing countries. This concern is ... [a] recognition that, overall, trade liberalisation is beneficial rather than detrimental to economic development:” M. Matsushita, T. Schoenbaum and P Mavroidis, The World Trade Organisation: Law, Practice and Policy 378(Oxford: Oxford University Press, 2004). See also, for example: “The integration of developing countries in the multilateral trading system is important for their economic development and for global trade expansion. In this connection, we recall that the WTO Agreement embodies provisions conferring differential and more favourable treatment for developing countries, including special attention to the particular situation of least-developed countries:” WTO, Singapore Ministerial Declaration, December 1996, WT/MIN(96)/DEC, paragraph 13. (last accessed on 1 November 2007).
[127] Agreement on Subsidies and Countervailing Measures, opened for signature 15 April 1994, 1869 UNTS 14 (entered into force 1 January 1995) art. 13 (SCM).
[128] AoA, supra note 86, art. 6. For a fuller explanation, see M. Desta, The Law of International Trade in Agricultural Products 328-332 and 413 (Kluwer Law International, 2002).
[129] Mercurio, supra note 111, p. 90.
[130] K. Anderson, Bringing Discipline to Agricultural Policy via the WTO, in: B. Hoekman and W. Martin, Developing Countries and the WTO: A Pro-Active Agenda 46 (Washington: Blackwell Publishing, 2001).
[131] Mercurio, supra note 111, p. 30.
[132] This argument is set out extensively in A. Panagariya, Evaluating the Case for Export Subsidies, The World Bank’s Policy Research Working Paper Series 2276 (2000).
[133] WTO Ministerial Conference, Doha Work Programme Ministerial Declaration (WT/MIN(05)/DEC), para. 6.
[134] Gifford, supra note 115, p. 4.
[135] See, for example, J. Walley, Special and Differential Treatment in the Millennium Round, Centre for the Study of Globalisation and Regionalisation (CSGR), Warwick University, Working Paper No. 30/99, p. 8. (last accessed on 1 November 2007).
[136] Shadlen, supra note 112, p. 759.
[137] SCM, supra note 127, Part II.
[138] T. H. Moran, The Impact of TRIMs on Trade and Development 1(1) Transnational Corporations 57 (1992). This aspect of TRIMs is, in a sense, an extension of the national treatment obligation in GATT 1947, which prohibits any measures requiring domestic businesses to source their inputs locally, rather than from like imports: GATT 1947 Art. III:4
[139] TRIMs, supra note 87. However, TRIMs does not prohibit all such requirements, its effect depending on whether the measure in question violates the national treatment principle or imposes quantitative restrictions. For an analysis and critique, see Shadlen, supra note 112.
[140] SCM, supra note 127, Part III. The rules applying to ordinary developing countries do not impose a time limit for phasing out these subsidies and other Member countries are required to take a more ‘generous’ approach to, for example, assuming that they will cause serious prejudice.
[141] Ibid, Part IV and art. 31.
[142] See, for example, Walley, supra note 135.
[143] J. H. Jackson, The World Trading System: Law and Policy of International Economic Relations 24 (London: MIT Press, 1997).
[144] India, Submission to WTO: Proposals on Implementation Related Issues and Concerns (TN/RL/W/4) (25 April 2002).
[145] M. Shafaeddin, What Did Frederick List Actually Say? Some Clarifications on the Infant Industry Argument, UNCTAD Discussion Paper (UNCTAD/OSG/DP/149) (2000), p. 2. See also H-J. Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective (London: Anthem Press, 2002).
[146] N. Birdsall, D. Rodrik and A. Subramanian, How to Help Poor Countries 84(4) Foreign Affairs 145 (2005).
[147] Singh, supra note 90, pp. 12-15.
[148] Moran, supra note 138, p. 61.
[149] R. H. Wade, What strategies are viable for ordinary developing countries today? The World Trade Organization and the shrinking of ‘development space’ 10(4) Review of International Political Economy 631 (2003)..
[150] Shadlen, supra note 112, p. 759. Shadlen concludes, however, that the constraints are not comprehensive and that some such measures are still available for use by developing countries.
[151] Ibid, pp. 760–1.
[152] TRIPS, supra note 77, art. 33.
[153] Shadlen, supra note 112, p. 761.
[154] Wade, supra note 149, p. 624.
[155] Singh, supra note 90, p.7.
[156] Ibid, p. 21.
[157] Id.
[158] Ibid, p. 23. As mentioned earlier, the WTO agreements are referred to as a ‘single undertaking,’ in that Members must join all of the agreements; they cannot choose to join only some.
[159] WTO, supra note 85, p. 11.
[160] Ibid, p. 12.
[161] Ibid, p. 25.
[162] D. Hathaway and M. Ingco, Agricultural Liberalization and the Uruguay Round, cited in: Mercurio, supra note 111, p. 80, note 28.
[163] This practice is called ‘tariff escalation’: Mercurio, supra note 111, p. 88.
[164] AoA, supra note 86, Parts IV and V.
[165] GATT Decision of 8 November 1979, supra note 38. Other schemes include the Cotonou Agreement, a non-reciprocal scheme set to expire at the end of 2007 (to be replaced by Economic Partnership Agreements), under which the EU provides duty free access to most exports from African, Caribbean, and Pacific (ACP) countries.
[166] The 1979 GATT Decision waived the most-favoured nation requirement of equal treatment under GATT 1947 Article 1: supra note 38. There are now 16 GSP schemes notified to the World Trade Organisation.
[167] T. Palley, Thinking Outside the Box about Trade, Development and Poverty Reduction 2-3 Foreign Policy in Focus 7 (January 18 2006)..
[168] D. Rodrik, The global governance of trade as if development really mattered, UNDP, New York, 2001, p. 1.
[169] Ibid, p. 2.
[170] A. Sen, Development as Freedom 17-18 (New York: Anchor Books, 2000).
[171] Potter et al., supra note 71, p. 12.
[172] FAO, Brief introduction on Human Rights Based Approach in Development Programs, p. 1.
[173] UN, The Human Rights Based Approach to Development Cooperation: Towards a Common Understanding Among UN Agencies, 2004, para 1. (last accessed on 1 November 2007).
[174] Ibid, para. 2.
[175] UNDG, text headed Human Rights-Based Approach to Development Programming, (last accessed on 1 November 2007).
[176] B. Andreassen, Brief Introduction on the Human Rights Approach to Development, p. 28. (last accessed on 1 November 2007).
[177] S Harman, All change? Exploring the changes to World Bank policy and practice under the Multi-Country AIDS Programme (MAP), 5 Political Perspectives CIP 2007 Vol. 1(11). Harman is referring specifically to the World Bank’s Comprehensive Development Framework. For further information:,,pagePK:60447~theSitePK:140576,00.html
[178] Id.
[179] Palley, supra note 167, p. 1.
[180] Rodrik, supra note 168, p. 2.
[181] P. O’Connell, On Reconciling Irreconcilables: Neo-liberal Globalisation and Human Rights 7 HRLR 494 (2007). See also Santos and Rodriguez-Garavito (eds.), Law and Globalization from Below: Towards a Cosmopolitan Legality (Cambridge: Cambridge University Press, 2005).

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