Negotiating Trade: Developing Countries in the WTO and NAFTA.

McClough, David

Negotiating Trade: Developing Countries in the WTO and NAFTA. Edited by John Odell, Cambridge: Cambridge University Press, 2006.

Negotiating Trade: Developing Countries in the WTO and NAFTA offers an intriguing glimpse into the dynamic process of trade negotiations. Odell and the contributing authors explore the effectiveness and outright success of developing countries negotiating trade related matters within in the institutional context of the WTO and NAFTA. Case studies provide a depth of analysis unfamiliar to many economists yet when compiled in a single volume provide compelling evidence supporting Odell's organizing theme that trade agreements vary with the negotiation process which is influenced by institutional context. In short, the US and EU continue to dominate trade negotiations, however developing countries are gaining experience and expertise that is enabling these countries to negotiate favorable arrangements despite perceived disadvantages. The book is intended for an academic audience interested in trade negotiations and for practitioners of trade negotiations interested in courses of action and factors contributing to successful negotiation results.

Odell's introductory chapter underscores the increased participation of developing countries in trade negotiations, identifies key assumptions and defines analytical terms, summarizes the volume's findings, and proposes future research. This comprehensive chapter is essential in preparing the reader for what follows. Odell competently justifies and illustrates the assumption that actors make decisions using bounded rationality due to incomplete information and the inability to perform optimizing calculations. Furthermore, he notes that negotiation research assumes that the institutional context of a negotiation matters. These assumptions are consistent with the level of analysis and emphasis placed on the negotiation process and the actors involved.

An appendix to the introductory chapter provides an operational definition to Odell's framework for classifying and describing negotiating behavior. The appendix is especially useful as nearly all the contributing authors refer to either the Distributive strategy, a strategy in which the negotiating party seeks to claim value, or the Integrative strategy, a strategy in which the negotiating party seeks to create value. The Mixed strategy combines the Distributive and Integrative strategies. Armed with an appreciation of key assumptions and an understanding of the analytical terminology, the reader is prepared for Part I of the volume, which examines multilateral negotiations.

In the first of four chapters comprising Part I of the volume, J.P. Singh examines the differing outcomes from two agreements of the Uruguay Round: the General Agreement on Trade in Services (GATS) and the Trade-Related Aspects of Intellectual Property Services (TRIPS). Specifically, Singh seeks an explanation for why developing countries made greater concessions in the TRIPS agreement than in the GATS agreement. Singh examines the role of agenda-setting, coalition-building, and unilateral threats in an effort to explain the differing outcomes. This chapter's examination of the formation of national interests may be interesting to economists seeking to understand the processes underlying the formation of stated community preferences.

In the following chapter Odell and Susan K. Sell examine the presumably unintended yet unfortunate consequences of the TRIPS agreement. The authors examine how reframing the intellectual property issue in terms of public health concerns, specifically the need for affordable drugs to fight the devastating effect of AIDS in Africa, enabled developing countries to create a formidable coalition to win concessions relating to issuance of compulsory licenses necessary for public health purposes. The role of self-interest in trade policy is illustrated all too clearly when the authors review the sequence of events in 2001 during which US negotiators representing the interests of the pharmaceutical industry seek to enforce limits to compulsory licenses in developing countries while leaders discuss issuing compulsory licenses for ciprofloxacine (Cipro) in response to the anthrax scare following the terrorist attacks in September.

In chapter four, Amrita Narlikar and Odell examine the failure of the Like Minded Group (LMG) to achieve its desired outcomes leading to the Doha Ministerial Conference. This case study concentrates on the failure of the LMG's strictly distributive strategy. Specifically, the authors focus on the ability of the US and the EU to buy-off LMG coalition members and thus fragment the coalition. As such, the stated goals of the LMG were not met prior to initiation of the Doha Round.

In the final chapter of Part I, Cedric Dupont, Cosimo Beverelli and Stephani Pezard explore the process of learning during a negotiation. They utilize data generated from WTO training simulations made available to negotiators from developing countries. The authors are to be commended for their creative approach to studying this important topic, however this paper offers little additional insight. Moreover, the value of the data can be challenged. To be sure, simulations can be and frequently are useful training devices, but the study of negotiations fundamentally depends on the nuance of the process and the participants. The paper appears out of place with the remainder of the volume.

Part II moves away from multilateral negotiations to focus on the role of developing countries in bilateral negotiations with the US or EU. Antonio Ortiz Mena L. N. examines how Mexico was able to avoid any significant concessions relating to energy during the NAFTA negotiations. Despite the relentless effort by US negotiators, Mexico was able to avoid foreign participation in the oil industry and energy supply commitments with the US by employing a sequentially mixed strategy and clever framing tactics. Despite power asymmetries, the US was unable to win desired concessions. In the end, it would appear that domestic politics worked against US negotiators as President Bush sought to finalize the agreement in advance of his re-election campaign.

Part III consists of two chapters examining WTO dispute settlement negotiations. In the initial chapter, Christina L. Davis contrasts two negotiations in which a developing country engages in a dispute settlement negotiation with the EU or the US. In her first case, Peru uses the WTO dispute settlement mechanism and legal resources made available through the WTO to wrestle concessions from the EU pertaining to the labeling of scallops. In her second case Vietnam faces similar challenges as the US imposes barriers to the catfish market. In this instance, however, Vietnam is unable to utilize the WTO dispute settlement mechanism or legal resources because it is not a member of the WTO. Davis concludes that the WTO levels the playing field for developing countries seeking enforcement of negotiated trade agreements.

In the final chapter, James McCall Smith reviews how Ecuador quickly joined and then successfully navigated the WTO dispute settlement process to gain concessions from the EU relating to access to the banana market. Of particular interest in this case study is the cross-retaliation strategy employed by Ecuador against key EU products and intellectual property.

Negotiating Trade: Developing Countries in the WTO and NAFTA provides numerous examples and interesting stories that lie behind the typical topics presented in an economics course examining trade. Although the volume is most useful to students of international political economy, traditional economists would benefit from the detailed case studies that examine the negotiation processes that define the international trade environment. Odell and the contributing authors clearly show that there is much more to trade than absolute advantage, comparative advantage, differences in factor proportion, and economies of scale.

DAVID MCCLOUGH, Bowling Green State University