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You work for the NAFTA secretariat, You need to respond why you feel WTO systems, as well as FTAs do not constrain policy space in any way. States are free to chose the domestic policies that they require.

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WTO, developing economies and policy space

WTO, developing economies and policy space

The potential impacts of WTO policies on the national policy space

According to Hoekman (2004), some reasons more than just examples can be provided to confirm that the allegations have been over-extrapolated. However, it is important to acknowledge that some of the allegations presented by the concerned states have some basis. It would be unfair to assume that these states do not understand the WTO policy, which may raise a question of international respect as well as trust. The possible first area of concern is the aspect of policy space and its trade-related
aspects
(Milner, 2009). On this ground, it has been established that the main constraints on policy space of developing economies are probably international non-trade policy issue not related to WTO policy framework. For instance, the US might decline to import from China due to political reasons rather than economic reasons. The two economies have been at the forefront of attaining global supremacy, and the interests might be far more than economic supremacy. The second allegation by the concerned states might have emerged from situations where emerging economies have failed to consider unilateral actions to modify their national policies. The WTO cannot narrow down to specific national policies and therefore allows room for member states to develop national goals. However, these national goals must be in line with the WTO policy framework.

The policy space is considered as the room available for economies to maneuver (Overseas Development Institute, 2007). If it were to be realistic that the policy space for developing economies was absent, it would imply that the WTO policies restrict policymakers from developing national specific policies through established rules of the WTO. Nations may not have a wider room full of options to select from due to pressure from the WTO policies. However, nowhere in the policies of the WTO have such strict rules been established.

WTO fundamental principle

Taking a close look at the WTO’s basic principles, one would fail to link the allegations by concerned parties with the basic principles governing WTO (Milner, 2009). Five fundamental principles govern the establishment of all policies adopted by the WTO. A principle of non-discrimination ensures that no member state is treated more favorably than other member states
(World Trade Organization, 2012). The reciprocity principle provides member states with a balanced platform for carrying out negotiations. The principles closely relate to the provisions of the MFN rules. A third principle requires binding and enforceable commitments by member states especially in situations of agreements. Transparency among member states and the WTO governing body is also another principle that is relevant when developing the policies governing the WTO member states. The need for transparency implies that foul play would be illegal and as such, member states that confirm such allegation have a right to sue the WTO.

The final principle is very fundamental for the questions raised by the concerned states. The principle that recommends for safety valves encourages economies to exercise a certain degree of control to protect the economic interests of their states (Sampson and Chambers, 2008). A government can impose trade measures that would enable their nations to achieve their non-economic objectives. The principle also recommends an aspect of fair competition among member states. Finally, the principle allows reasonable interference in trade for certain economic reasons. With all these provisions, it can be established that developing economies have no reason to claim that the WTOP reduces their national policy space.

Regulatory deficiency

One of the regulatory gaps that fail to protect the interests of the developing states is the export restrictions (Milner, 2009). It has been argued that the export restriction has been one of the most under-regulated areas among the WTO laws. The deficiency in the law was evident when the global economic crisis recently occurred. It was evident that every economy had a free ride to develop its export law to protect internal economic interests. Export regulation deficiencies have paved way for economic-political interests to manifest which creates an unfair playing ground among the WTO member states. For instance, when a country fails to export food to another country after an initial agreement, there is likely to emerge loss of trust. The country intending to import would feel fouled in such a scenario. Unfair competition is also likely to emerge because of the under-regulated export. Developing economies are unable to realize added value options that would increase their export revenues. Some states have engaged in free trade agreements where the developing states find themselves on the receiving end. The situation is worse when the free trade agreement involves a developed economy, which produces more than a developing state involved in the trade. As a result, of some developing economies often have an unfair balance of trade, which contributes to inflation.

WTO new framework

It can be argued that despite the goodwill and intentions by the WTO, there may be loopholes, which have caused some states to complain. However, changes in some areas can be beneficial in such a way that most developing countries may feel at home with the WTO (Hoekman, 2004). For instance, established a level playing ground for both developed and the developing economies may not be fair for the developing states. It would possibly mean that the developing economies would continuously rely on the developed states for many aspects needed for economic development. However, it is recommended that the developing states embrace the aspect of innovation in developing their internal specific policies to be in line with the guidelines set out by the WTO.

Bibliography

Hoekman, B., 2004, Operationalizing the Concept of Policy Space in the WTO: Beyond Special and Differential Treatment. Retrieved from World Bank, Groupe d’Economie Mondiale, Sciences Po and CEPR : http://gem.sciences-po.fr/content/publications/pdf/Hoekman_operationalizing_SDT.pdf

Milner, C., 2009, Constrainiing and Enhancing Policy Space: The WTO and Adjusting to Globalization. Retrieved from The Journal of International Trade and Diplomacy 3 (1), Spring 2009: 127-154 : http://www19.iadb.org/intal/intalcdi/PE/2009/04139.pdf

Overseas Development Institutte., 2007, Policy Space: Are WTO Rules Preventing Development? Retrieved from Briefing Paper: https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/106.pdf

Sampson, G. P., & Chambers, B., 2008, Developing Countries and the WTO: Policy Approaches. New York: Unieted Nations UNiversity Press.

World Trade Organization., 2012, Trade and Public Policies: A Closer Look at Non-Tariff Measures in the 21st Century. Retrieved from World Trade Report 2012: https://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report12_e.pdf