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Small States and the Multilateral Trading System

Overcoming Barriers to Participation

image of Small States and the Multilateral Trading System

Developing countries, including as small states and least developed countries (LDCs), continue to face significant challenges within the global trading system. Action is required to allow them to overcome disadvantages and achieve sustainable levels of income from trade.

This study provides a fresh perspective on how measures can be taken to enhance the participation of small states, many of which are Commonwealth countries, in the multilateral trading system. It contributes to the ongoing general debate about reforming the World Trade Organization and global trade governance.

 

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Commonwealth Small States and Least-developed Countries in World Trade Organization Dispute Settlement

The World Trade Organization (WTO)’s binding dispute settlement system has been heralded as the ‘jewel in the crown’ of the multilateral trading system. The establishment of the WTO in 1995 included a new ‘Understanding on the Rules and Procedures Governing the Settlement of Disputes’ (DSU) that contains innovations that resulted in a paradigm shift from the General Agreement on Tariffs and Trade (GATT) trading relations based on economic power and politics to a WTO system based on the rule of law. The resulting increased legality of the WTO was initially hailed to benefit smaller countries considerably, of which many are developing countries and least-developed countries (LDCs). As Steger and Hainsworth (1998) commented shortly after the creation of the WTO, the shift ‘is particularly beneficial for smaller countries, as without the rules and procedures of the DSU…they would not have the necessary bargaining power vis-à-vis the larger powers’.

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