Why Developing Countries Won’t Negotiate? The Case of the WTO Environmental Goods Agreement

Abstract

In January 2014, the WTO broke the longstanding impasse in trade negotiations over environmental goods. It abandoned a decade-long effort to reach an agreement as part of a comprehensive Doha Round package. Instead, the WTO declared that it would commence new negotiations for a standalone plurilateral agreement. While a quarter of the WTO membership has expressed their intention to participate in these negotiations, very few developing countries have done so. This Article examines the question of why this is the case. The conventional belief is that developing countries have export interests at stake in environmental goods, but are avoiding the talks because of competing desires to preserve high tariff rates to protect domestic industries and/or to express their dissatisfaction with the current mode of negotiations.

This Article proposes an alternative interest-based explanation: Most developing countries stand to gain very little from the talks, as they are currently structured. More important than the countervailing forces emphasized by the conventional explanation is the simple fact that developing countries, other than China, simply do not have sufficient interests at stake to join the negotiations. Drawing on original analyses of recent trade flows in environmental goods from various developing countries, the Article highlights the following: First, very few developing countries have much at stake in terms of exports. Second, among those that do export, many already have reaped significant tariff benefits through negotiations in other fora. Third, developing countries can achieve remaining objectives through free riding. Finally, the predominance of intra-developing country trade minimizes gains from a treaty dominated by advanced economies. Together, these explanations account for why most developing countries have little to gain – contrary to the conventional belief that many have interests at stake.

For those who may find the lack of developing country participation to be troubling, this Article explores several potential options to entice more developing countries to join the negotiations. Overall, the Article suggests that the key to increasing the participation of developing countries will be to expand the scope of the negotiations beyond what is currently on offer, to include other environmental goods, services, and/or non-tariff barriers.