Capacity Constraint: A Fundamental Perspective for the Development Issue at WTO

Abstract

The development issue at WTO, which has generated heated academic and policy debates, is an integral part of the multilateral trade negotiations, with the special and differential treatment (S&DT) for developing countries being at the core. This article seeks to, by introducing certain theoretical analysis framework – such as the theory of ‘incomplete contract’ and ‘poverty as capability deprivation’ – into the multilateral trade negotiations, conclude that the fundamental aspect of the development issue at WTO is the capacity constraint of developing countries: the insufficient capacity limits the extent of their capability to negotiate internationally as well as to transform the negotiated outcomes into domestic economic development. Reviewing the capacity constraint and an array of economic and social indicators, it argues that China is still a developing country. Further, one of the important aspects for the multilateral trade negotiations on development lies in abridging the ‘rules deficit’, focusing on empowering and strengthening endogenous capabilities of developing countries. Meanwhile, the capacity constraint of developing countries stems from the past negotiations of multilateral trade rules and is reflected in the implementation of those rules, i.e., to transform multilateral trade rules into domestic laws and regulations, and further convert such capacity into a driving force and endogenous engine for domestic economic and social development. Thereafter, in the multilateral trade negotiations, developing countries may, on a voluntary basis, duly contribute according to their capacity to do so, which may be the way out for development negotiations at WTO.