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Regulation in the WTO and the North-South Divide: A Post Cancun Evaluation

The demand for trade policy in the developed countries is such that possible WTO agreements include many regulatory issues. On the other hand, regulation is development related in many ways: the best rule may vary with the level of development, the opportunity cost of establishing regulation varies with income level and, finally, liberalisation of regulatory protection between countries at different levels of development is likely to take the form of hegemonic harmonisation. Special and differential treatment for the developing countries could provide solutions but SDT is flawed because of two mutually reinforcing ambiguities: first, it applies to a set of countries with widely different levels of development, on the basis of a self selection; second, its provisions for positive action on the part of developed countries are mostly not legally enforceable. The status quo tends to be defended by the developing countries as for the first ambiguity, by the developed countries as for the second. Therefore, the expansion of the agenda within the framework of the single undertaking rule, coupled with scant liberalisation in agriculture, has produced constant tension up to the Cancun failure. Deep integration through the WTO and single undertaking have proved to be a very difficult combination, which locked the system into a net of issue linkages.