Reading 7 -> Abdalla Medina de Souza - An offer developing countries could not refuse: How powerful states created the World Trade Organisation

Traditional view of normative + inst setting for countries

Have been viewed as Pareto-improving devices employed by utilitarian states to fulfill their interests

His view of normative + inst setting for countries (2)

no such positive sum -> esp in case of WTO and developing states

→ E.g. of the WTO = Developing countries especially least developed are worse off within WTO trade

Traditional view of WTO + developing countries

Joining the WTO (losers into winners through ex post facto rationalizations of the decision to join the WTO) gave dev states gains in long run OR learning during negotiations

Traditional view of institutional power (5)

1. Neoliberal institutionalism (Keohane) -> inst are able to solve collective action problems derived from int anarchy

   1. desirability when the thesis of hegemonic stability could hardly do the job in the absence of a clear hegemonic state

   2. Positive sum view of institutions in IR 

2. Realism 

   1. considered states to be utilitarian actors that would never agree to be members of inst arrangements that make them worse-off, realists refrained from considering the possibility of absolute losses.

   2. Positive sum view as well 

Challenge neorealism + liberal view on institutions

1. Ins power allows powerful countries to attain their goals indirectly, avoiding the legitimating problems that beset overt power exercises

2. Power differentials go beyond relative gains to impose absolute losses

His view of institutional power

1. When actors exercise indirect control over others, such as when states design international institutions that work to their long-term advantage and to the disadvantage of others

Types

• Go-it-alone power - Gruber

• Market power - Hirschman

• Forum shifting power - Braithwaite + Drahos

Go-it-alone power - Gruber (5)

1. Go it alone = ability of powerful states to acquire gains regardless of others → enables them to remove status quo from choice set of weaker states 

2. Illustration of asymmetrical agreement which may spread detrimental consequences

   1. The action of A + B to remove the status quo from the choice set of C has consequences to a 4th actor D from the moment C decides to be a member.

   2. More costly for D to resist, D may also agree, which would in turn mean payoff losses to a fifth actor E and so on.

3. Illustrates WTO: once EU + US makes agreement (A+B) + an area was disputed by dev countries (C,D,E…) standards agreed to bilaterally by A + B prevailed making dev countries worse off

Market power - Hirschman (3)

1. Powerful state may direct its commerce towards weaker nations to create ties of dependence (e.g. of Nazi Ger + Bulgaria) 

   1. Overlaps with compulsory power = for the mobilization or threat of mobilization of material resources is triggered in the exercise of market power

   2. Illustrates WTO: market power of US + EU enabled them to dominate trade regime (e.g. by veto choice on new members) 

Forum shifting power - Braithwaite + Drahos (4)

1. Forum-shifting encompasses three interrelated strategies: 

   1. Moving an agenda from one organization to another

   2. Exiting an organization (e.g. US + EU exiting GATT)

   3. Pursuing the same agenda in more than one organization

2. Illustration of WTO: US employed forum-shifting strategies to insert into the WTO -> TRIPS + GATS

Institutional power illustration in WTO

Showcases US and EU imposing developing countries choice between access to WTO or no access to their markets at all

Critique of traditional view on inst power (6)

1. Barnett + Duvall

   1. Realists failed to fully explain power 

   2. SO created 3 categories power

      1. Institutional -> indirect ways in which one actor controls others by deploying ‘the formal and informal institutions that mediate A & B (states)

         1. Fits with Uruguay round in WTO as EU + US benefit but dev countries dont 

      2. Structural -> mutual relations of constitution produced by the global capitalist economy (akin to Marx)

      3. Productive -> generalized and diffuse social processes that produce and give meaning to social identities and capacities

Role of power in creation of WTO (4)

• Rules on goods, services and intellectual property

  → Goods

• TRIPS

• DSU -> Understanding on the Rules and Procedures Governing the Settlement of Disputes

• Uruguay Round

Goods (3)

1. Promise to dev countries on Uruguay round to liberalise agri + textiles did not come 

2. Dev countries created a blocking opp in Cancun to not liberalise agri -> SO US employed forum-shifting strategies to press LATAM members to leave block 

3. Uruguay Round → restriction on dev countries’ ability to apply industrial policies, most of which historically played a critical role in dev of today’s developed countries 

TRIPS (2)

1. Forces wealth transfers + creates monopolies in developing countries, which increase domestic prices + curtail access to essential products e.g. pharmaceuticals

2. Dev nations now have to make greater payments for the use of intellectual property rights

DSU -> Understanding on the Rules and Procedures Governing the Settlement of Disputes (2)

1. Dev countries limited due to their limited legal capacity 

2. Construction of public–private partnerships to litigate in the WTO explains why the US and the EC have prevailed in the DSU

Uruguay Round (5)

1. 1980s due to oil crisis 

2. Main actor behind it = US

3. Focus on counterfeit goods paved the way for the deployment of a forum-shifting strategy by US

4. Agri split US + EU -> inclusion US vs exclusion EU

5. Hardliners -> group of 24 dev countries attempting to include new issues 

   1. US + EU tried isolating them and reduced their number to 10