Environmental Engineering Reference
In-Depth Information
developing countries, in both its monetary and
fi
scal components. Without this, there will
be few bene
fi
ts accruing to developing countries from reforms in the trading system.
Special and differential treatment
Special and di
erential treatment (S&DT) is based on the idea that fairness should be an
important guiding principle in international economic relations. It is also linked to the
recognition of existing international asymmetries between rich and poor nations. In the
context of WTO it is linked to the idea that developing countries should not reciprocate
in trade concessions because they need more time to adjust to the economic forces
unleashed by trade liberalization.
S&DT is recognized by the original GATT in several of its articles, and these principles
were picked up in various rounds of multilateral negotiations and in several WTO agree-
ments. In practice, however, S&DT has really not provided the conditions needed by
developing countries to adjust. A few extra years in certain transition periods, or a few
tari
ff
points below developed countries' concessions, have not been able to redress exist-
ing asymmetries. In addition, the scope of available economic policy instruments has
shrunk as a result of structural adjustment policies, WTO and several regional agree-
ments. It would seem that developed countries have kicked the ladder that enabled them
to climb to higher living standards.
A new S&DT framework should recognize that developing countries need more room
for policy-making. In particular, the world's trading system must allow developing coun-
tries to access the industrial policy instruments developed countries used in the past.
These are especially important to attain dynamic competitive advantages which are skill
and technology based. Without this, developing countries run the risk of remaining in the
low-productivity trap of natural resource exporters and vulnerable to the long-term trend
of declining prices for primary products (Ocampo and Parra, 2003).
The second component of S&DT is that
ff
fi
nancial assistance is essential to get to the
level playing
nancial assis-
tance. FDI is heavily concentrated in a few developing countries and up to 30 percent of
total FDI is made up of mergers and acquisitions (M&A) of already existing companies.
Financial assistance is a di
fi
eld. Foreign direct investment (FDI)
fl
ows cannot replace
fi
erent instrument with a rationale of its own, oriented towards
long-term investments under preferential conditions and should be part and parcel of
trade agreements.
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Process and production methods (PPMs)
Most developing-country governments are hostile to the notion of using environment-
related PPMs within the WTO system. They argue that this leads to eco-protectionism,
not to adequate environmental defense. But the problem is not with PPMs but with uni-
lateral imposition of regulations and standards (Nadal, 1994).
WTO members should start a program of consultations with organizations such as
UNEP in order to determine if and how PPM-based trade restrictions can be used,
and under what types of circumstances they can be invoked. De
ning criteria and
accompanying disciplines should be the outcome of multilateral negotiations and not
unilateral imposition. This is the only manner in which PPMs can be incorporated into
the trade and environment agenda without fears that it will lead to unjusti
fi
fi
ed neo-
protectionism.
