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Why do so many developing countries exceed their WTO obligations in areas of trade, investment, and intellectual property?

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Since the early 1980s, neoliberalism became a part of the foundation for the Reagan and Thatcher administrations. As a result, there was a tremendous shift in the developed world (i.e. the world of the rule-makers) to further the political project
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  Why do so manydeveloping countriesexceed their WTOobligations in areas of trade, investment, andintellectual property? Christopher S. Biggers (chris.biggers@gmail.com)  London School of Economics M.Sc. Global Politics (2008) Abstract: Since the early 1980s, neoliberalism became a part of the foundation for the Reagan andThatcher administrations. As a result, there was a tremendous shift in the developedworld (i.e. the world of the rule-makers) to further the political project that began atBretton Woods. By the end of the Uruguay Round in 1996, the world witnessed theoutcome of this project with the emergence of the WTO, albeit limited as it was not as far reaching as many of the rule-makers had preferred. In light of this fact, the US and other  power players have actively sought to promote their preferences bilaterally so that this political project can be realized. The permissive conditions necessary to negotiate suchagreements arose during the debt crisis in the 1980s which put the IMF back in thedriver’s seat. With positional power further entrenched, the US appears to be using IMFconditionality programs as the nexus for many of its bilateral investment treaties. Byexamining the 40 US BITs currently in force, this research shows a strong correlationwith BITs, the promotion of democracy, and the signaling of a developing countrytoward a new status quo. This paper begins by briefly defining the author’s understandingof the ‘International System’ and further builds upon concepts such as trusteeship, ArnoldToynbee’s mimesis, and positional power.  Key Words: WTO-plus, Bilateral Investment Treaties (BITs), neoliberalism,positional power, International Financial Institutions (IFIs), GlobalPolitics I. A New World Order Since the end of the Second World War, powerful states embarked on a project at BrettonWoods establishing GATT, the World Bank, and the IMF in order to put the world back together again. Since then, states within the international community have witnessed thegrowth of various measures to push states toward a single uniformal direction throughwhat today has commonly been termed  globalization . However, [economic] globalizationshould be understood as a political project which is shaped and constructed  by variousactors – in the international arena (states) and in the national domestic sphere(corporations) – whose objective is to further open markets and maximize profits,respectively. In the attempts to do so, the World Trade Organization (WTO) was foundedat the end of the Uruguay Round in 1996 which set a new stage for the further development of this political project. While the WTO has created various advantages(e.g. MFN access, DSM) for developing countries, it has also constrained their policyspace as, inter-alia , Trade-related intellectual property rights (TRIPS) and Trade-relatedinvestment measures (TRIMS) were brought into this single undertaking. There has beenmuch discussion around developing countries’ ability to carry out industrial policy withinthe bounds of the WTO, but what is often surprising is when developing countries tend toexceed their WTO obligations in the areas of trade, investment, and intellectual propertyfurther restricting policy space. In order to account for these developments, Hedley Bull’stheory on international society will be used as well as various others. In short, this essaywill try and show the relationship between power, ‘norms’, and motivation with the purpose of explaining these decisions. II. Push for ‘WTO-plus’ arrangements It has been increasing argued by skeptics of market liberalization that the power players[who construct the rules of the game] have essentially ‘kicked the ladder’ out from under developing countries with the inclusion of TRIMS, TRIPS, and GATS within the realmof the WTO (Wade 2003, Chang 2003). Accordingly, these skeptics go to great detaildepicting the limitations of developing countries’ industrial policy space which, inter alia,2  conform to the push for increased de-regulation and the extraction of technological rents(Wade 2003:622). As a result there is a drive to maximize comparative advantage usuallywithin one area of export-based growth without allowing for export diversification andwhat could be considered real development (Collier 2007:166). While the argument for decreased policy space could be discussed in some detail, it is the lengths that developingcountries go to beyond the WTO which is in question.The development of the so called ‘WTO-plus’ agreements, inherently understood asincreased standards beyond the WTO, have been procured through many different typesof arrangements. Among them include the use of the regional bilateral trade agreements(RBTAs), bilateral investment treaties (BITs) and arguably other handmaidens of neo-liberalism – the International Monetary Fund (IMF) and World Bank. In order tounderstand the myriad of forces at work in securing WTO-plus agreements, this essaywill single out the implementation of US BITs that were put into force since the late1980s.Before going into great detail, a discussion of a few theoretical perspectives is needed inorder to lay the ground work to clarify the thesis question. The following section will firstaddress Hedley Bull’s theories on International Society. Secondly, an explanation of thegrowing resurgence of historicist arguments and their significance for understandingtoday’s international environment will be briefly examined. Furthermore, theories ontrusteeship will be mentioned as to clarify the perception of the rule-makers (at least inthe US) and how these perceptions come into play during negotiations with the rule-takers. III. A Social Ideology – A Theoretical Perspective Globalization has often been used as the rubric under which academics try to explain ananarchic process, seeking to bridge together the various parts of the world, creating oneuniformal mould. However, this term has been employed to describe many differentthings and can not be utilized in order to provide an adequate explanation. Instead,[economic] globalization will be thought of as a political project with specific aims3  driven by key actors within international society whose actions reinforce what may bedescribed as a social ideology (i.e. in this instance, the belief in market liberalization anddemocratization as core tenets of a ‘proper’ society). At the international level, powerfulactors have used this social ideology to help form the base of a specific internationalsystem which is undoubtedly drifting toward the directives of the US and the EuropeanUnion, two power players who wield considerable tools of persuasion.This development of positional power for both actors may partially be explained bylooking at Hedley Bull’s theory on international relations regarding the construction of aninternational society. Extrapolating from Bull, international society is essentially basedaround concepts such as agency and  structure where both, normatively speaking, aremutually reinforcing. As a result, states (i.e. the agents) help form the rules of the game(i.e. the structure) which in turn reify their positions within international society (e.g.states as, ‘rule-makers, ruler-takers, and rule-breakers’). States coexist with the rules of the game both codified in international law and in the establishment of norms. Whileinternational law is usually considered more concrete, norms should not beunderestimated in providing the guidelines for the action of states. Norms, themselves,are often associated with the co-existence of states in an international society, asreiterated by Bull [1977:13], “in the sense that they conceive themselves to be bound by acommon set of rules in their relations with one another”. Regularly norms, like other  principles and rules of the game, are usually termed under the rubric regime and comeinto play during the decision making process (Krasner 1983). However, note in thisinstance the use of the term norm should not be confused with customary internationallaw (i.e. as legally binding), but rather be seen in the light of a specific grouping of states’ behavior (i.e. the rule-makers) and their ability to promote their version of the rules (evenif it means being a rule-breaker  1 ) by pushing their mold of a new status quo/self regulation (Ogus 2001). 1 Rule-breaking in the traditional notion where there are a common set of rules and those with power may attimes circumvent those rules. However, some scholars may argue that power is a part of the rules of thegame as noted in the often quoted realist lessons from the ‘Melian Dialogue’. ‘The powerful do what theycan, while the weak do what they must’. See Thycudides Book V 4  When thinking about the rule-makers, one might also want to consider the literatureregarding the failed states thesis as economic problems and domestic hardships often leadto failed states and to international intervention [setting new standards within the‘troubled state’]. Within this literature, Robert Jackson [1998:4] outlines the notion of  trusteeship which prevailed throughout the western world during an age of empires andhas recently resurfaced due to gross violations of human rights. Currently, trusteeshipmay be seen as a type of post-modern or benign imperialism which has been considered a panacea for some ‘ailing states’ (Mallaby 2002; Crocker 2003; Eizenstat et al. 2005;Krasner and Pascual 2005; Ellis 2005). As a result, some scholars and policy makers haverecently questioned whether  imperialism is entirely negative. Prominent historians, like Niall Ferguson [2004:198] have suggested that “such a thing as liberal imperialism…on balance was a good thing…in many cases of economic ‘backwardness’, a liberal empirecan do better than a nation-state”. If this is indeed the perception of modern scholars andwestern policy makers [in the US] then perhaps, these concepts may help explain the proposed thesis question. It could be argued that the rule-makers are essentially returningto a mission civilisatrice pressuring a neoliberal medicine for developing countries’economic backwardness especially during times of illness [i.e. economic crisis]. As aresult, the rule-makers have begun to implement a social doctrine that has a ‘one size fitsall’ approach whenever the conditions are permissible. Though, that is not to say that thisdoctrine is without its critics (Council on Foreign Relations, 1999; Goldstein, 2000;International Financial Institution Advisory Commission, 2000; Stiglitz, 2002).However, in further discussion of trusteeship or neo-trusteeship, developing countries(i.e. the rule-takers) may have what Jackson [1993] classifies as negative sovereignty while those such as developed countries (i.e. rule-makers) have  positive sovereignty . Thelatter “presupposes capabilities which enable governments to be their own masters” whilethe former implies that countries have only a legal entitlement to sovereignty extended tothem through the de-colonization or ‘international enfranchisement’ process (Jackson1993:26-9). However, negative sovereignty is merely a formative recognition, implied bytitle only and not substantive like positive sovereignty. Therefore, one might questionwhether developing countries are trying to attain this standard of recognition which often5
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