Poorest countries reluctant to lodge trade disputes with WTO

Official statistics hide the extent to which poorer countries do not participate in the World Trade Organization’s (WTO) procedures for solving trade disputes, according to a study by a former deputy director-general of the organisation.

The WTO’s own figures put the share of trade complaints brought to the WTO by developing countries since 1995 at 39%.

But Roderick Abbott argues that just 30% of complaints made to the WTO since it was set up in 1995 were brought by developing countries. Adjusting the WTO’s list of ‘developing countries’ to remove countries that are members of the Organisation for Economic Co-operation and Development (OECD) or have a high gross domestic product (GDP) per person, such as Korea, Mexico and Turkey, the percentage of complaints brought by poorer states is 30%, as opposed to the WTO’s figure of 39%. Of those, 60% were brought by five countries: Brazil, India, Thailand, Chile and Argentina.

Bangladesh was the only country from the group of states known as Least Developed Countries which brought a complaint. Between 80 and 90 members of the WTO have not participated in the dispute settlement process.

The EU and US initiate about 40% of all complaints.

Abbott, a former European Commission representative at the WTO and later deputy director-general of trade at the Commission, concludes that the lack of developing country participation is "a disturbing finding".

"It begins to look as if we can be reasonably satisfied that a small number of more advanced developing members have no substantial difficulty with the system, while a further group has established a record, albeit at a fairly low level of activity. For others, the data is silent," the paper says.

Abbott argues that the work done by the Advisory Centre of WTO Law (ACWL) has largely removed problems developing countries have in meeting costs and technical expertise.

He suggests that the reason for the lack of participation in WTO disputes may be that "for poorer members, with a more limited range of exports, the bilateral route to discussing and solving problems in specific markets has been found to be as effective as the judicial rules-based approach at the WTO".

But non-governmental organisations do not agree. Aftab Alam Khan, head of Action Aid’s trade justice campaign, says the WTO dispute mechanism does present problems for developing countries in meeting expertise standards. "Some countries don’t even have a mission in Geneva…how are you going to fight a case without having an office in Geneva?" he said.

Another problem is knowing when an action by another state goes against WTO rules. "Many countries in Africa are not able to understand the WTO system. To take benefit of any facilities [the ACWL] it is important to understand the rules," says Khan.

One Geneva-based trade expert said there was a perception among some poorer states that there could be political repercussions if they brought a case against a more powerful trading partner. "There is a perception of fear that has come up which states can’t prove but makes them think aid may be pulled by donors if they proceed with a case," she said.

The way developing countries settle disputes bilaterally, as pointed out in the Abbott paper, was not a better route, she added. "There is a risk because the WTO puts a spotlight on a case…without that a bigger country might not be willing to solve it."

Abbott’s paper will be discussed at a seminar next Tuesday (23 January) in Brussels at the offices of the European Centre for International Political Economy.

Official statistics hide the extent to which poorer countries do not participate in the World Trade Organization’s (WTO) procedures for solving trade disputes, according to a study by a former deputy director-general of the organisation.