Developing Countries and the Next Round of Multilateral Trade Negotiations

Broad-based liberalization is in the interests of developing countries.Developing countries became full-fledged participants in multilateral trade negotiations only with the Uruguay Round, during which they succeeded in bringing agriculture into the GATT/WTO, reaching agreement on phasing out the Multi-Fibre Arrangement within 10 years, and beginning work on services, among other things.Their overriding interest in the new round is still to ensure the healthy expansion of an open multilateral trading system.Developing countries should seek across-the-board liberalization rather than zero-for-zero reductions, which tend to favor the interests of industrial countries (which focus on sectors in which they have comparative advantage) and diminish the support for further cuts.Liberalization of agricultural trade provides important opportunities. Developing countries have a considerable stake in reducing agricultural protection and subsidies and prohibiting agricultural taxes and export quotas.Of particular interest are agreements covering services-including, for example, agreements on ways to permit the temporary immigration of construction workers. It is important that labor standards not be used to stifle competition from labor-abundant developing countries-that any agreement about labor standards not raise the costs of unskilled labor in countries whose comparative advantage lies in exported products that use unskilled labor extensively-and that excessively high product standards not be imposed.Developing countries can increase their leverage substantially by forming coalitions based on common interests in a wide range of areas (as the Cairns group did in the Uruguay Round).This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to identify opportunities for developing countries in the WTO 2000 negotiations. The author may be contacted at akrueger@leland.stanford.edu