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NIGERIA AND THE WORLD TRADE ORGANIZATION: 1995 – 2010


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ABSTRACT

This work: Nigeria and the World Trade Organization: 1991-2010 examined how the structure of the global economic system that is being managed by the World Trade Organization can promote economic development and welfare everywhere particularly in Nigeria. The throwing down of borders as exemplified by the quick pace of liberalization, deregulation and privatization with the consequent social and economic dislocation, undermined the capacity of Nigeria to be in charge of her process of development. Finally solutions were proffered; Nigeria should slow down the process of liberalization and deregulation to deal with the distortions arising from capital flight; privatization to be renegotiated. Finally Nigeria should enhance the exploit and capacities which it has (both at home and in the diaspora).

 

 

 

 

 

TABLE OF CONTENTS

Title page                                                                                                    i

Certification                                                                                                         ii

Dedication                                                                                                  iii

Acknowledgement                                                                                                iv

Abstract                                                                                                      v

Table of contents                                                                                        vi

 

CHAPTER ONE

1.1     Introduction                                                                                      1

1.2     Problem of the Study                                                                        2

1.3     Purpose of Study                                                                              3

1.4     Significance of Study                                                                        3

1.5     Scope of Study                                                                                 4

1.6     Limitation of Work                                                                           4

1.7     Research Methodology                                                                     5

1.8     Literature Review                                                                              5

1.9     The Structure of the Work                                                                11

          Notes and References                                                                       12

 

CHAPTER TWO

GLOBALISATION AND THE PHILOSOPHY OF WTO

2.1     Introduction                                                                                                14

2.2     Globalization                                                                                    14

2.3     The Philosophy of WTO                                                                            16

2.4     Nigeria                                                                                              26

          Notes and References                                                                        28

 

CHAPTER THREE

NIGERIA AND WTO

3.1     Introduction                                                                                                29

3.2     Agriculture                                                                                        29

3.3     Non-Agriculture Products                                                                 36

          Notes and References                                                                        43

 

CHAPTER FOUR

TRADE RELATED ASPECTS OF INDUSTRIAL AND

ENVIRONMENTAL PROTECTION

4.1     Trade Related Investment Measures (TRIMS)                                  45

4.2     Trade Related Industrial Property Rights (TRIPS)                                     47

4.3     Principles and Objectives of TRIPS                                                  52

          Notes and References                                                                        66

 

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1     Summary of Findings                                                                       68

5.2     Conclusions                                                                                                68

5.3     Recommendations                                                                                      70

Bibliography                                                                                     74

                            

 

CHAPTER ONE

1.1     INTRODUCTION

The World Trade Organization (WTO) is as a result of the Uruguay round on multilateral trade negotiations contained in the final act which includes the Marrakesh Agreement (1994). ²

The Agreement establishing the WTO referred to in the final act as the “WTO Agreement” Ministerial Declarations and decisions and the understanding on commitments in financial services, as annexed thereto which make up the ground rules of the WTO, otherwise known as the final act of the Uruguay Round protocol GATT 1994, the general agreements on trade in services, the understanding and procedures governing the settlement of disputes, the decisions on achieving greater coherence in global economic policy making, agreement on agriculture, textiles and clothing, technical barriers to trade, aspects of investment measures, dumping, aspects of intellectual property rights, rules of origin, import licensing procedures, subsidies and countervailing measures, safeguard measures for protection of domestic industry; the confirmation of trade policy mechanism.3

The final act thus represents a bundle of highly technical and complex instruments which apply not just to trade in merchandise goods, as was the case with GATT, but also to disparate subject matters such as services, investments and trade related aspects of intellectual property. Thus, the WTO is more than just a continuation of the GATT, which it replaced but differs from it in many respects. The WTO deepens and extends the scope of globalization on a rule based, predictable and institutionally enforceable basis while GATT rules are essentially selective, provisional and limited to merchandise good, with a secretariat added since 1980 to boast as an institution. Besides the WTO and GATT opened in different environments, the former came on stream after the IMF/World Bank, two institutions with which it has been enjoined to work with, had, through the Structural Adjustment  Programme(SAP) and its subsequent  variants, together with the conditionality of democratic reforms, that exclude social democracy, as conditions for assisting and doing business with the third world, imposed uniform macro-economic policies on them. It was through these processes that some of the pillars of the WTO-liberalization, deregulation, devaluation, generalized export promotion, mostly of primary products from the third world, were fashioned.4

Because of their scope and complexity, these instruments impose a lot of burden on developing countries to provide adequate manpower both for the negotiation process (which is on-going), their appreciation and implementation stages. It can be said that Nigeria joined the WTO unprepared and without appreciating the full implications of the obligations undertaken as well as the possibilities and challenges for national development.

It is not our intention to examine the whole of the WTO regime. Rather, we shall focus on some of the key areas of the agreement that touch more directly on Nigeria’s national interest such as liberalization of trade in agriculture, industry, services, investments, trade-related aspects of the WTO, it will be necessary to situate the above subject areas in the context of the philosophy of WTO as derived from its history, aims and objectives, and examine the Nigeria experience since becoming a member of the WTO. This work will also examine what policy options are open to Nigeria both at national and international levels as well as how economic diplomacy can promote the maximization of benefits of membership and minimize its negative consequence.

1.2     Problem of the Study

Nigeria was an active member of the general agreement on tariffs and trade, GATT, as it is of the WTO, which succeeded it. The WTO agreement came into force in 1995 and established a new global economic architecture. It was not just a successor to GATT from which it differed in many respects. The WTO depended and extended the scope of globalization on a rule-based, predictable and institutionally enforced basis while GATT rules were essentially selective and limited to merchandise goods. Nearly sixteen years after the WTO became operational, not much has resulted from the expectations which included developing countries to commit themselves to the agreements, decision and declarations that make up the WTO regime.

It is in the light of these critical issues that their consequences for national development that necessitated this work. How can the WTO need to be renegotiated if it would satisfy the condition of fairness, equity and balance and the benefits there from by the developing countries to materialize? How can Nigeria improve her performance in the WTO? Can Nigeria survive in WTO? The challenge to our diplomacy must be to muster the capacity to pursue this very important task of incorporatingour nation and other parts of the developing world into the globalization process. In such an equity-creating task, we will have the overwhelming- the universal- backing of all people of good will.

1.3     Purpose of Study

The purpose of this work – Nigeria and the world trade organization, 1995 to 2010 is to:

                               i.            Identify and examine the critical elements that defines the nature and character of the WTO;

                             ii.            Indicate hoe Nigeria can relate to the global economy  that is now  managed by the WTO in alliance with the Bretton woods institutions of the international monetary fund (IMF) and the World Bank;

                          iii.            Finally, identify the future impact of WTO on Nigeria in the WTO.

1.4     Significance of Study

The capricious world economic trends ensure that trade remain one of the most fascinating aspects of international relations. Over the generations international trade epitomized the engagement with the world beyond the known borders. It represented both necessity and luxury and was pursued in the name of survival and progress. Trade also stimulated our human curiosity about foreign lands and customs. This worked best if countries respected each other as equal partners. Sometimes, however, the economic progress of one national came at the expense of other national, fueling conquests, and ward. Faced with a multiplicity of challenges posed by the realignment of power relations in the global economy we must strive to address inequality and exploitation in international trade.

The study is an effort towards explaining how trade influences economic development of societies. Since ultimately, the legitimacy of the WTO depends on the responsibility of its members to ensure that such progress is sustainable and that some nations are not advancing their economic development by taking advantage of others.

1.5     Scope of Study

This study is essentially limited to the activities of Nigeria in the WTO, from 1995 when Nigeria joined the organization to date. The impact of the global economy managed by the WTO in alliance with the IMF and World Bank on Nigeria.

1.6     Limitation of Work

Research of this type is always faced with problem of time, because it is meant to be complete at a specific period. There is need to work within a reasonable scope.

This study covers a period of about sixteen years, beginning from 1995 when the WTO came into being and also when Nigeria formally joined the WTO up to 2010 when the negative consequences of globalization have unfolded in the developing countries like Nigeria.

 

1.7     Methodology

The materials used for this work were obtained from both primary and secondary sources. The former include oral interviews among others, while the latter include both published and unpublished materials like periodicals, journals, government documents, textbooks and so forth. It is necessary to point out that great difficulty was encountered in the course of data collection and conducting of interviews with some of the officials who may decline to give information or handover some information and documents classified confidential. But in spite of these limitations the research is optimistic of collecting enough data to make the work meet its objectives.

As regards the sampling plan, the research will concentrate on some of the key areas of the agreement that touch more directly on Nigeria’s national interest such as liberalization of trade in agriculture, industry services, investments, trade related aspects of intellectual property and environment. The data will be collected through personal interviews of some officials of the ministry of commerce and NIIA among others. In the case of research instruments.6

A structured questionnaire was designed to collect information from the government officials, staff of NIIA among others. The above data collected were analyzed by editing, coding, data recording and summarization of data.

 

1.8  Literature Review and Theoretical Framework

This work is grounded in the institutionalist interdependence approach to international relations. The idea of complex interdependence among nations goes back to the examination of interstate cooperation and institution building during the post – world war era, and it speaks primarily in opposition to realist theory, is based on the premise

that the anarchical structure of the international system compels states to either maintain or enhance their power for the sake of self-preservation.7

And yet despite the realist assumption that states are guided by their self-interested logic that questions the utility of any collaborative initiative, states have continued to cooperate internationally on a variety of issue.

The liberal institutionalist theory stresses interdependence among nations, was first formulated by Robert Keohaneand Joseph Nye. It makes a claim that stability and order in the international regime.8

This leads to a famous definitions: regimes can be defined as sets of implicit and explicit norms, rules, and decision-making procedures around which actors’ expectations converge in  a given area of international relations.9

Keohane later goes beyond this definition by urging us to pay attention to the nature of the regimes and the state actors that shape according to their needs. States seek to create international regimes because the network of international cooperation benefits them in return. In fact, international cooperationhas persisted with, or without the existence of a dominant hegemonic state capable of providing a strong leadership leading to the establishment of common norms and institutions. According to Keohane, the functional need for international regimes leads to deepening international integration and allows state to function without hegemonic state. The existence of international regimes can be a powerful motivator of international cooperation in the absence of a single large state able

 

 

 

 

and willing to enforce rules and regulations within the system (hence the title of Keohane’s book, After Hegemony).10

According to the above theory, international organizations, such as the WTO, are based on norms that become their standards of behavior as defined in terms of rights and obligations.11

In turn, these general obligations and rights guide the behavior of states in the formulation and implementation of rules. Legal rules vest these rights and obligations in international law. This is why it is particularly important to study the WTO, because it is the first global economic organization that is fully legalized by its adherence to legal rules and its principle of judicial equality. The WTO is also theoretically significant because it illustrates the limitations of the regime theory in addressing the tension between states need for international cooperation and their subsequent vulnerability to become dependent on other states. This dependency is often directly related to institutional and legal restraints imposed, asin the case of the WTO, on its member states. Such constraints can be in conflict with the preferences expressed by some domestic groups, but they do not mean that the state becomes completely powerless.

Still, some observers worry that economic interdependence and the concomitant globalization have at least reduced the autonomy of the state. The claim is made that economic globalization supported by the WTO forces the state to eliminate its protectionist policies, relax environmentalregulations, and reduce social programs in order to be more globally competitive.

The subsequent global “race to the bottom” would ensure that the state becomes less of a relevant actor domestically and perhaps even internationally because of a strong dependence on the performance of the global economy.12

Proponents of this view of international economic relations emphasize the shift in thining about the state’s role in the economy from an interventionist Keynesian perspective to aneoliberal free-market approach based on the work by Fredrich von Hayek. John Maynard Keynes developed a theory of macroeconomics that attached importance to the government as being a source of stability in theeconomic affairs of the country. After all, the hazards of unrestrained free-market, laissez-faire economic liberalism was demonstrated well after the Great Depression in the 1930s. state intervention and the society from the uncertainty of unregulated free markets.13

However, years of deficit  spending and high costs of state subsidies accumulated into burdensome debts, which led some economists to call into question the wisdom of Keynesain macroeconomics theory Milton Friedman, and other academics whose names are associated with the Chicago school of Economics, revived the ideas of Hayek when they contended that government intervention in the market not only stifled individual liberty, but was inefficient and hindered competition.14

Neoliberalism, as this economic movement came to be known, became particularly salient during the late 1970s through the 1990s when governments annulled many barriers to trade and capital movement and reduced some spending.  According to critics of the neoliberal trend in the global economy, governments are getting smaller and the state, by extension, is becoming a less meaningful actor on the international stage as a result – especially when it comes to economic affairs.15

Such arguments, which often predict the complete demiseof the state, are problematic and two counts. First, they overemphasize the ideological strength of neoliberalism in international economic affairs and thereby fail to appreciate the adaptability of the state. Laissez-faire capitalism, after all, reached its apex not in the later part of the twentieth century but ratherin its beginning studies have shown capital flaws far greater before World War.16

Moreover, the scope of the state back then was much narrower, as defense had accounted for the lion’s share of government budgets. Related claims regarding the power of contemporary multinationalcorporations also, appear somehow exaggerated when and reads of the liberties afforded to imperial charter companies in nineteenth-century Asia and Africa and the activities of the United Fruit Company in Central America during the 1950s.17

Second, and perhaps more crucially, empirical studies have revealed that there is a positive correlation between the openness of the economy and the size of government. The famous finding by economist DaniRodrik shows that states whose grass domestic product contains a higher share of trade tend to have larger government expenditure.18

It is a relation that is counterintuitive to the expectations of both advocates of free markets and their critics. The warnings of critics that barriers to trade would require states to disappear have proven to be unfounded, whereas the judgment of the neoliberals that government size can negatively affect trade is also groundless. At the same time, it should not be surprising, given the record of countries that experienced lassies-fair capitalism in the face of the turmoil of the international market that states should seek to shield themselves from its potential risks. Indeed, political scientist John Gerald Ruggie has emphasized how, in the aftermath of World War II, government intervention was determined necessary to maintain domestic stability and smooth operations of a multilateral global economy. He has called this phenomenon “embedded liberalism”19

While one might expect that the argument behind embedded  liberalism has been weakened by the collapse of the Breton Woods monetary system in the 1970s, the subsequent challenge to US economic hegemony, and by the neoliberal shift, Robert Keohane has argued that it contained thereafter, and the empirical evidence  provided by Rodrik’s research shows that governments remain reluctant to loosen their support system to shield their populations from adverse market conditions.20

I rest my argument upon the recognition that the state continues to be an important factor in the international scene. Although joining an international organization such as the WTO may somehow reduce its autonomy, this is done to advance international economic cooperation that is expected to benefit the state. In fact, given the transformation taking place in the global economy, the state has an important role to play. The state is expected to deal with many conflictin pressures that originates outside its borders.

In his book about globalization, Jan AartScholte talks about global tensions characterized by the spread of Tran’s planetary and supra-territorial connectivity. The state should not abdicate its responsibility. It should try to resolve growing tensions brought about by globalization, which after all is about contest between interests and competing values.21

Craig N. Murphy observes that globalization offers a possibility for establishing a substantially more democratic global polity. However, to seriously contemplate its current prospects we must pay attention to the central feature of the global polity that can be identified along three dimensions: the policy realms it affects, its institutions, and its social nature, that is the social forces that it privileges or curtails. 22

In that sense, the WTO is an interesting case study because it provides a forum where economically and socially diverse countries can compete over the shape of its policies, its institutional structure, and its social consequences. Furthermore, the WTO claims to be a global organization with universal membership, which as Peter D. Sutherland observes means that it is ideally placed to contribute to new cooperative arrangements is at the international level aimed at promoting global coherence in economic policy-making, not only in trade relations, but also more generally in other aspects of economics policy. 23

Consequently, the WTO’s ambition must be scrutinized not only from the institutionalist perspective as a functional outcome of interstate negotiations. The WTO must also be investigated from within, as a bureaucracy with its own internal dynamics. Here the recent work by Michael Barnett and Martha Finnemore presents us with great insights by recognizing that each international organization has its own internal autonomy. The authors note that most theories of international relations assumes that an international organization being created by states would exist and act in the way states want them. In contrast, their premise is to treat international organizations as autonomous actors that often produce inefficient, self-defeating outcomes and turn their back on those whom they are supposed to serve.24

This approach can help us examine certain unexpected development in the life of the WTO that appears to have a detrimental effect on the operation of the organization of the Book.

 

1.9       The Structure of the Work

Chapter one introduces the work and set its scope, methodology, limitation and significance of study and review of literature, chapter two analyzed the fundamental, theoretical issue of World Trade Organization. Chapter three and four takes a critical look at areas of major importance to Nigeria. Trade in agriculture, and non-agriculture goods, industry, services, trade related aspects of industrial property and environmental protection, etc. shall be our main area of concern. Chapter five concludes the study with policy prescription and suggestions for a new course of Nigeria membership of the WTO.

 

 

 

 

 

 

 

 

 

 

NOTES AND REFERENCES

1.     For the text of the WTO see “Appendix; see also the legal texts. The result of the Uruguay Round of Multilateral trade negotiations, Cambridge University Press, pp 4-5.

2.     Hans Albrecht Schraepler (1996) Directory Of International Organization, Washington, George Town University Press, p. 43; the World Trade Organization , The Legal Texts, the results of the Uruguay Round of Multilateral Trade Negotiations opcit, p.1

3.     Schraepler, op cit, p.47. see also WTOLegal Texts p.2

4.     Bode Onimade, (2001) “WTO/IMF/World Bank and the new Ideology Of Development” paper presented at the workshop on Africa States and the Challenges of Globalization, organized by the Institute for Peace and Conflict Resolution, Abuja, Nigeria, July 3.

5.     John j. Mearsheimer, (2001) the tragedy of great power politics (New York: w.wNoton, pp 19-21)

6.     Robert O. Loharne and Joseph Nye, (1977) Peace And Interdependence World Politics in Transition (Boston: Little Brown), p. 19

7.     Stephen Krasner (ed) 1984 International Regimes (Ithaca, NT: Cornell University Press, p. 2)

8.     Robert O. Keohane, (1984) After Hegemony: Cooperation and Discord in the World Political Economy (Princeton, NJ: Princeton University Press)

9.     Stephen Krasner op cit p.2

10.                        Anita Chan and Roberts J.S. Ross (2003) “Reacting to the Bottom: International Trade without a social cause” Third World Quarterly 24, No. 6 (2003) 1011 – 1028.

11.                        Elaine Hartwick and RicahrdPeet, (1999) Theories of Development (New York: Guilford Press) pp. 37-40.

12.                        Milton Friedman, (1982) Capitalism and Freedom (Chicago: University of Chicago Press, p.9)

13.                        Donald W. Bray and Majorie Woodford Bray (2002) “Beyond Neo-Liberal Globalization: Another World,” Latin American Perspectives 29, No. 6: 117-126

14.                        Paul Hirst and Grahame Thompson (2002) “The Future of Globalization”, Cooperation And Conflict 37, No. 3, 249.

15.                        Stephen  D. Krasner “Sovereignty” (1999) foreign policy 122: 26

16.                        DaniRodrik (1998) “Why do more open Economics have Bigger Government?” Journal of Political Economy 16, Nos P998

17.                        John Gerald Ruggie, (1982) “International Regimes, Transactions and Change: Embedded Iberalism in the Post War Economic Order” International Organization 36, No. 2:399

18.                        Keohane, op cit, p 187

19.                        Jan AartScholte, Globalization – A critical introduction, 2nd ed. (2005) (Basingstoke, UK: Palgrave, p. 83)

20.                        Craig N. Murphy (2002) “The Historical Process of Establishing Institutions of Global Governance and the nature of Global Polity” in Mortem Ougaard and Richard Higgot(eds) Towards a Global Polity (London and New York: Routledge) p. 169.

21.                        Peter D. Sutherland (1998) “Globalization and the Uruguay Round” in JagdishBhagwati and Mathias Hirsch (eds) The Uruguay Round and Beyond-Essays in Honour of AuthuDunke (Berlin: Springer Publishing), p.152

22.                        Michael Barnett and Martha Funnemore (2004) Rules for the World: International Orgabizations in Global Polities ( Itchaca, NY: Cornell University Press) p. 2.

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