09-01 "Resources, Rules and International Political Economy: The Politics of Development in the WTO"



GDAE Working Paper No. 09-01 Resources, Rules and International Political Economy

Of course, the ability of developing countries to block developed countries’
initiatives in the areas of IP and investment only begs the more critical question of why,
if they can do this now, they could not do it before and stop these agreements in the first
place. Or to put it differently, if developing countries can prevent the unfavourable
Uruguay Round agreements from being supplanted by a set of more unfavourable Doha
Round agreements, why could they not prevent the more favourable Tokyo Round
agreements from being supplanted by the unfavourable Uruguay Round agreements?
After all, they did try: as discussed, developing countries opposed TRIPS and TRIMS in
the Uruguay Round, just as they oppose developed countries’ TRIPS-Plus and TRIMS-
Plus initiatives in the contemporary environment. Why did they acquiesce to the former
but block the latter? The answer to this question gets to the heart of the analysis, and in
particular the interface between institutionalist and structuralist approaches. Addressing
this question, then, sheds light on both the importance and limitations of international
institutions.

The existence of a “single undertaking” is frequently invoked as an explanation
for why developing countries accepted TRIMS and TRIPS in the Uruguay Round. In
previous rounds, countries chose whether or not to sign on to supplemental codes, but the
single undertaking meant that the Uruguay Round was an all or nothing affair. But that
explanation is unsatisfactory without considering the exercise of power that made the
introduction of this institutional device feasible and, moreover, effective. After all, the
single undertaking itself was new - an institutional reform introduced to gain developing
countries’ consent to agreements that they had resisted.41

The key to making the single undertaking work was to make the WTO the only
game in town. That is, the way to get developing countries to accept a set of Uruguay
Round agreements that they had fiercely rejected was to make the alternative to
acceptance being excluded from the international trade regime. But how to do that? After
all, many developing countries were already members of the GATT, which offered MFN
access to the developed countries’ markets. Any tariff reductions made in the Uruguay
Round, then, would have to be granted on a MFN basis to GATT members, even if they
rejected TRIPS and TRIMS. Thus the key would be to eliminate the GATT from the
shadows of the WTO.

At the end of the Uruguay Round, all countries who participated in the
negotiations signed the “Final Act” and thus became signatories to all the various WTO
agreements. One of the texts included in the Final Act was the GATT 1994, a new
agreement that incorporated - but superseded - the GATT 1947. The Uruguay Round’s
Final Act stipulates that GATT 1994 is “legally distinct” from GATT 1947. Most
importantly - and this is the frequently overlooked point - immediately upon joining the
WTO (including GATT 1994) the US and EC both withdrew from GATT 1947, thus
terminating their obligations under GATT 1947.42 Any country that did not sign Uruguay
Round’s Final Agreement and join the WTO would, formally, retain their rights under
GATT 1947, but since the largest countries with the most important markets were no
longer bound by GATT 1947, non-joiners would be left with empty rights. The result of

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