The WTO and the Poorest Countries: The Stark Reality

IMF Working Papers, May 1, 2004

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Small and poor countries have acquired a significant say in WTO decision-making.
These countries have limited ability to engage in the reciprocity game that is at the heart of the WTO.
These countries have limited interests in the broader liberalization agenda because of their preferential access to industrial country markets.
Accommodating the interests of the small and poor countries is desirable in itself and would facilitate expeditious progress in the Doha Round.
Desirable ways of addressing their concerns—providing them additional financial assistance and nonpreferential market access—are proving infeasible.
As a result, the system is gravitating toward the less desirable option of relieving these countries of obligations, including those that might be welfare-enhancing for them.

The central tension: small and poor countries’ increased voice in decision-making vs. their limited capacity to partake in reciprocal liberalization.
Preferential market access from industrial countries reduces small and poor countries’ incentive to engage in nonpreferential liberalization.
Financial assistance and nonpreferential market access are identified as desirable remedies but are characterized as infeasible in practice.
The system’s current trajectory risks substituting obligation relief (including for measures that could enhance welfare) for the infeasible remedies.

Prioritize accommodation of small and poor countries’ interests to both advance equity and facilitate progress in negotiations such as the Doha Round.
Recognize limits of existing remedies: additional financial assistance and nonpreferential market access may not be implementable as solutions.
Anticipate and assess consequences of moving toward obligation relief for small and poor countries, including potential welfare trade-offs.