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

Resources, Rules and International Political Economy:
The Politics of Development in the WTO

Kenneth C. Shadlen^*

Introduction

The Uruguay Round of multilateral trade negotiations, which began in 1986 and
concluded with the signing of the “Final Act” in 1994, marked a watershed in the making
of the international political economy. In addition to giving birth to a new international
organization, the World Trade Organization (WTO), the Uruguay Round introduced
binding agreements in new areas that had previously been left out of the international
trading regime. That is, while the WTO’s predecessor organization, the General
Agreement on Tariffs and Trade (GATT), addressed national policies in tariffs and non-
tariff trade measures, the Uruguay Round addresses policies in a variety of “trade-
related” activities, such as intellectual property (IP) and investment.

The broadening of the international trade regime to include binding constraints in
these new issue areas was fiercely resisted by many developing countries. Yet, despite
their resistance to negotiating IP and investment, and the unfavourable nature of the
subsequent agreements, developing countries accepted the final outcome. Developed
countries’ insistence that the Uruguay Round be an all or nothing affair—a “single
undertaking”—meant that developing countries could not approve the Final Act, with its
promises of increased access to North American and European markets, the final
elimination of the onerous Multi-Fiber Arrangement, and the establishment of a more
useful system for dispute resolution, without also accepting agreements that imposed new
multilateral disciplines on IP and investment (along with other areas, such as services and
subsidies and so on).

In the period after the Uruguay Round, the “North-South” conflicts over IP and
investment remain politically charged. Developed countries have sought to secure
commitments beyond that stipulated by the WTO. In both policy areas, developed
countries were unsatisfied with the settlements reached in the Uruguay Round and sought
to impose additional limitations on developing countries’ policy options. And in both
policy areas developing countries adamantly resisted and successfully turned back these
efforts.

How have weak countries managed to prevail in an important international setting
like WTO? To address this question I draw on the insights from two approaches to the

* I wish to thank the participants at the June 2007 conference at Monash University’s Prato Centre for their
helpful comments on my presentation, and to Jeff Waincymer for insightful and constructive feedback on
an earlier draft of this chapter.

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