SETTING OF THE WORLD TRADE ORGANIZATION IN INTERNATIONAL LAW AND CONFLICTS OF INTEREST BETWEEN DEVELOPED AND DEVELOPING COUNTRIES

SETTING OF THE WORLD TRADE ORGANIZATION IN

INTERNATIONAL LAW AND CONFLICTS OF INTEREST BETWEEN

DEVELOPED AND DEVELOPING COUNTRIES

Introduction

International law in its historical development has demonstrated a civilization of

mankind that is This development is also in line with the changes and dynamics of

international law itself. Which initially grew and developed in a very limited scope, regulating

and organizing a more limited life as well. It is within this framework that international law

reappears to organize human life in order to carry out activities to achieve a more prosperous,

just and equitable life in various aspects of life both in the life of the nation, state and in

international relations. The 21st century will bring us to an escalation in the symptoms of

interconnectedness among countries in the world. Developments in technology and patterns of

economic activity make the world's people increasingly in contact with each other, need each

other, and determine each other's fate, but also compete with each other. This is especially

dramatic in world trade, both in goods and services. This interconnectedness requires

agreement on the rules of the game. The rules of the game that apply to international trade are

the rules of the game that have developed in the GATT/WTO system.

There is interconnectedness and interconnectedness in activities in the field of trade will also

cause friction or friction among countries and communities in the world. Because their

interests are not always identical to each other, although common interests are also increasing.

We will therefore also increasingly live in a realm where we are in a permanent state of

negotiation. Differences of interest, despite the rules of the game, require responsiveness and

sensitivity to the different interests that can arise at any time. This realization has led to the

development of systematic thinking to deal effectively with negotiation issues.

Where differences of interest can be resolved through negotiation, they can be handled

flexibly with direct engagement between the parties who need to resolve differences of

understanding or differences of interest. In cases where negotiations do not resolve the

differences, then to the extent that there is a mechanism to deal with them, they are resolved

through a more formal dispute settlement mechanism. The mechanism then formulates formal

procedures for its operation. To the extent that states parties to a treaty consider the substance

of the rules of the game in that area to be reasonably balanced and fair, the application of the

dispute settlement system to be developed in that area will also be more readily accepted and

supported by members of the treaty.

In the field of international trade, the systematics and mechanisms described above are

possible to realize because in that field there are:



An international treaty that sets out the rules of the game that are developed and

agreed upon by the participating countries,



The international institution established to implement the rules of the game, the

GATT, after the Uruguay Round negotiations has become more formalized, with the

establishment of the World Trade Organization as the successor institution to the

GATT.



The dispute settlement mechanism, after the Uruguay Round, has become a

mechanism with formal procedures and institutions that are acceptable to the

contracting states.

The current international trading system, now managed by a new international

organization, the WTO, has a long history. As an overarching system, the rules of the game in

the WTO cannot be easily understood without looking further at the fundamentals applied

since the establishment of the GATT or General Agreement on Tariffs and Trade in 1947.

The rules of the game developed since the GATT was established include a series of rules of

the game that have essentially been applied in the General Agreement on Tariffs and Trade.

GATT is an international system, forum, and institution in the field of trade. The

system began to be realized in 1947 and became operational in 1948. The realized system was

originally only considered as an interim system, which can develop pragmatically so that it

becomes something complex and has experienced expansion, both in terms of substantive

coverage and in terms of institutions. After the Uruguay Round negotiations (1986-1994)

were completed, GATT member countries also agreed to establish a new institution called the

World Trade Organization (WTO), as the successor institution to the GATT.3

The background to the formation of the GATT began with the bitter experience of the

world economic depression in the 1930s, which was followed by the imposition of trade

protection by major countries. The Great Depression, which was followed by the destruction

of Europe after the Second World War, eventually led to the idea that cooperation between

countries through a multilateral framework was needed to carry out European recovery, the

main actors being the United States and Western European countries. From the framework of

a bilateral trade agreement between the United States and Western Europe, the idea emerged

to expand it to become multilateral within the framework of the United Nations (UN). If this

is the reasoning of those who proposed the idea, the rationale and principles of the GATT

were completed in October 1947. Then, the idea was followed up by organizing an

international conference on trade and employment opportunities in Havana, Cuba, in 1948.

This conference produced the Havana Charter with the vision of establishing an international

trade organization, which also included issues of economic development and employment

opportunities, in addition to tariff issues in international trade. However, the US Congress did

not ratify the agreement. Without US ratification, other countries felt there was no point in

operating the agreement. The tariff and international trade provisions of the Havana Charter

were actually the forerunner of GATT, which became operational in 1948.

However, the provisions contained in the GATT/WTO received mixed reactions from

the world community. Developed countries consider that the liberalization of world trade

within the framework of the WTO is a way to create better conditions for the world economy,

while developing countries consider that the provisions of world trade liberalization are an

accommodation of the economic interests of developed countries. Because actually those who

enjoy the ease and benefits of international trade liberalization are developed countries and

developing countries are only victims of world trade liberalization.

This paper tries to describe how the conflict of interest between developed and

developing countries in formulating the provisions of international trade law in the WTO.

From the background description above, the problem is formulated:



Are the legal provisions of the WTO a balance of interests between developed and

developing countries?



How should the legal provisions in the WTO be formulated so as to create justice in

international trade between countries?

Discussion

Principles of International Trade under GATT/WTO

Various basic principles are the foundation of the GATT as a system based on an

integral set of thoughts or conceptions. The components of the basic principles of the GATT

are of course also embedded in the text of the General Agreement as the main juridical source

of the GATT. Presumably, in order for the discussion of the juridical system to be based on a

systematic conception with a strong foundation, it is deemed necessary to briefly discuss the

basic principles. The principles underlying the GATT as a system are the principles contained

in the GATT agreement. Schematically, these principles can be expressed as "architecture"

within the framework of the GATT which as a whole is a system5 . To describe the GATT

principles abstractly but also with the flexibility of implementation necessary for the GATT to

function in real terms. The principles are as follows:

Most Favored Nation or Nondiscrimination Principle.

The main principle on which GATT is based is the principle of non-discrimination,

known in GATT as the Most-favored-nation principle or MFN. In summary, MFN is the

principle that international trade between GATT members should be conducted on a

nondiscriminatory basis. Thus, the main principle is that concessions granted to one trading

partner country must also apply to all other countries. One country should not be treated better

or worse than another, thus all countries are placed on an equal footing, and all countries

should share in the opportunities achieved in the liberalization of international trade and

assume the same obligations.

Exceptions to this principle may be made in certain cases. At the time the GATT

agreement was under negotiation, there were various types of preference systems already in

place that could be continued. In addition, among other exceptions to the requirement to apply

MFN are regional trade arrangements in the form of customs unions or free trade areas

(Article XXIV) and cases of exemptions for developing countries.

Principle of National Treatment

The other side of the concept of nondiscrimination is the principle of national treatment

which prohibits differences in treatment between foreign goods and domestic goods which

means that once an imported good has entered the domestic market of a member, and after

passing through the customs area and paying import duties, the imported good must be treated

no worse than domestic products.

The Tariff Principle as the Single Instrument for Protection

The third principle is that GATT allows protection of domestic products. However,

protection treated against domestic products can only be treated through tariffs or import

duties imposed on imported goods, and not by means of other restrictions. Among other

things, the purpose of this principle is so that the protection given to domestic products and

the restrictions applied to imported goods can be applied in a clearer or more transparent

manner, and the distortionary effects of such protection can be seen more clearly.

Binding Tariff Principle

In order to ensure more predictable international trade, tariff binding provisions or

commitments that bind member countries not to increase import duties on imported goods

after being included in the list of binding commitments are applied.

Principle of Fair Competition

GATT rules also contain the principle of fair competition. As export subsidies and

dumping become more prevalent, the GATT is increasingly facing problems. The rules that

apply to GATT participating countries to deal with export subsidies and dumping are

contained in the text of the GATT agreement as well as in the Anti-Dumping Code and

Subsidies Code resulting from the Tokyo Round. To counter dumping and export subsidies,

importing countries are given the right to impose anti dumping duties and countervailing

duties as a reward or countermeasure against dumping or export subsidies. In the framework

of the Uruguay Round, both codes were further refined and became an integral part of the

WTO agreement.

Principle of Prohibition against Quantitative Restriction.

Another principle in the GATT is the general prohibition on quantitative restrictions, i.e.

quotas and similar types of restrictions. This provision was considered very important by the

founders of the GATT because at the time the GATT was established quantitative restrictions

were the most serious and frequently encountered obstacles as a legacy of the depression era

in the 1930s. However, in recent years there has been an increase in the application of

quantitative restrictions. This is the case, for example, in the fields of agriculture, textiles,

steel and industrial goods of particular importance to developing countries.

The exceptions allowed in the GATT are quantitative restrictions applied by member

countries in the event that a country faces problems in its balance of payments. The

exceptions are listed in article XII. The article stipulates that quantitative restrictive measures

taken by a member state should not exceed the time limit necessary to address the balance of

payments problem. Moreover, restrictions The quantitative measures applied should be

gradually reduced and phased out once the country's balance of payments is addressed.

The exception is extended in the event that a developing country faces a balance of

payments problem. The exception is found in Article XVIII which stipulates that quantitative

restrictions may be imposed by a developing country to prevent the depletion of its foreign

exchange reserves due to increased imports, caused by its development program or by

increased domestic production.

Consultations within the GATT are held periodically and on a regular schedule with

countries that impose or increase import restrictions on balance of payments grounds. These

consultations may lead to recommendations from the Council of Representatives of the GATT

(see Chapter 8 for more on the role of the Council of Representatives in the GATT

organization).

In these consultations, there is usually a discussion and exchange of ideas on the overall

economic problems, both internal and external, faced by the country that is facing balance of

payments problems and is taking action to impose quantitative restrictions. Furthermore, other

matters that are also discussed are the impact of such restrictive measures on other countries,

as well as the possibility of other alternative policies that might be taken in addition to

quantitative import restrictions.

At the request of a developing country that is implementing quantitative import

restrictions within the framework of Article XVIII, the GATT, in consultation, may focus its

attention on issues concerning the "external environment" and measures that other countries

may take to improve the balance of payments problems of that country.

In order to carry out consultations, GATT obtained assistance from the IMF

(International Monetary Fund) for analysis and information on exchange rate, monetary

reserve and balance of payments issues of countries under consultation in the context of

article XVIII.

Principles of Waiver and Emergency Restrictions on Imports

The GATT also allows for exceptions in the form of waivers and other emergency

measures. Among the exceptions in the form of waivers that have been allowed are exceptions

taken by the United States in implementing its agricultural policies, which actually violate the

GATT, but because they were implemented before the GATT, the measures and policies

obtained a waiver.

In certain cases, a country may face an emergency that requires it to take protective

measures because its domestic industry is in trouble. Article XIX allows a country to take

such protective measures. But Article XIX states that such protective measures are emergency

measures that are temporary in nature. The above exceptions are known as Safeguards

measures. Under specifically defined conditions, a GATT member country may impose a

restriction on its imports or revoke tariff concessions it has granted to other countries for

products that have experienced such a large increase in imports that they have caused severe

hardship to the domestic industry of the country concerned. In the terms of the article XIX of

the GATT, such restrictions may be imposed when the increase in imports of a particular

product has reached a level that causes injury or can be expected to cause injury.

Recently, Article XIX has been applied unreasonably and even, in an effort to

circumvent the obligation to follow the provisions of Article XIX, certain countries have

applied safeguards unilaterally or unilaterally and discriminatorily, so that a voluntary export

restraint where a powerful importing country has succeeded in forcing its less powerful

trading partners to voluntarily restrict its exports to a destination country that wants to restrict

its imports. As this issue is a controversial one, in the Uruguay Round, the issue of safeguards

was an important topic of negotiation.

Conflicts of Interest Between Developed and Developing Countries in the Free Trade

(WTO).

Developing countries often argue that international law is the product of Western

countries that are now developed countries. This argument is based on the fact that

international law was originally the law that applied between countries in continental

Europe.12 It is therefore not surprising that international law is very centered on what happens

in Europe. They determine the shape and course of international law.

The emergence of developing countries after World War II has brought changes. The

desire of developing countries to be free politically and economically from their former

colonies has had an influence on international law in general, in addressing the existence of

international law, they consider that existing international law does not reflect their values.13

Developing countries argue that the formation of international law before World War II did

not involve them at all. Even the various international institutions established after the end of

World War II were more for the benefit of developed countries than for their interests.

The economic interests of developed countries are more dominant and color the face of

international law. International agreements related to economic issues accommodate more

principles adopted by developed countries. Even developed country business actors receive a

lot of protection from international agreements negotiated between developed and developing

countries.

To protect their economic interests, developed countries want international law not to be

tampered with. They tend to maintain what already exists in international law (status quo).

Meanwhile, developing countries have a reformist attitude, wanting fundamental changes in

international law so that it truly reflects the values adopted by the majority of the world's

population.

In the last three decades, the conflict of economic interests between developed and

developing countries has centered on the issue of trade between countries. This conflict is

triggered by different views. On the one hand, developing countries tend to adopt policies that

hinder the entry of goods and services from foreign businesses, especially from developed

countries. As sovereign states, developing countries Of course, it is legitimate to impose these

barriers. The reasons often cited are to protect employment, as a means to protect the industry

in order to strengthen national business actors, to earn foreign exchange. On the other hand,

developed countries want no barriers imposed by countries, including those imposed by

developing countries. The absence of barriers is identified with free trade, which means there

is no discrimination where goods or services come from.14 Markets are important because

products produced by businesses from developed countries must be purchased. Potential

markets for goods and services from businesses in developed countries are in developing

countries. There are several reasons why this is so. First, consumers in developing countries

are usually not yet established. Consumers in developing countries are very happy with goods

from developed countries. Secondly, in terms of population, developing countries are very

potential. It's just that the purchasing power of developing countries is very low.

From the two perspectives above, there is a tug-of-war between developed and

developing countries. For developing countries, they easily determine barriers by enacting

national legislation. Developed countries, on the other hand, think about how they can remove

the various barriers adopted by developing countries. It is certain that developed countries

cannot order developing countries to remove these obstacles like the relationship between

colonizers and colonized countries. The most likely alternative is to make agreements which

are then outlined in international treaties. This is intended so that developing countries are

bound by an agreement which in turn will remove all barriers to goods and services from

abroad.

Efforts by developed countries to reinforce the principles of international trade that they

believe in have received reactions from developing countries. Developing countries have been

fighting for a long time to change the traditional principles of international trade. For

developing countries, which are generally grappling with the problem of economic growth,

they do not agree if the market economy is simply applied in international trade.15 For this

reason, at the first United Nations Conference on Trade and Development (UNCTAD) session

in 1964, the need for the principles of preferential treatment and non-reciprocity to be applied

was raised.

The Ideal Format of Legal Provisions in the WTO That Can Create Fairness in

International Trade Between Countries

The legal rules contained in the WTO framework have indeed become an international

legal order that binds most countries in the world, but these rules are not a sacred rule that

cannot be changed. Because in fact the international law formed in the framework of the

WTO is a collection of agreements contained in an international agreement, therefore these

agreements are very likely to be changed as long as there is a willingness of the countries

bound in it to change the international legal order.

Although all the rules contained in the WTO framework are a rule-based system rather

than a diplomacy-power system16 , the provisions of the WTO are not the same. The WTO is

a reflection of the hegemony of industrialized countries over developing countries. Most of

the rules contained in the WTO are an accommodation of the interests of developed countries

and the emasculation of the interests of developing countries.

Efforts to change the legal order of international trade with legal rules that are fair, fair

and take into account the interests of developing countries and accommodate the interests of

developed countries are realistic efforts that can be made by the world community in order to

achieve a responsive international trade legal order. This effort is not a futile effort made by

developing countries, but a realistic effort as long as it is done constructively and directed to

achieve the goals of developing countries. With the ability of reliable diplomacy and common

perception among developing countries, the international trade order that has now been

formed can be changed in accordance with the wishes of developing countries.

The rules that are the main focus in the current WTO framework are the provisions

governing trade in services, which are contained in a trade in services regime, namely GATS

(General Agreement Trade on Services), Intellectual Property Rights (TRIPs) and trade-

related investment measures. Trade in services is in the spotlight because this trade

liberalization implies the opening of sensitive service trade sectors that were only open to

domestic service providers, now open to all foreign service providers as long as given

commitments by countries in their scheduled of commitments. Now the services of lawyers,

doctors and lecturers are all open to foreign service providers. Not to mention services that

serve the lives of many people that should be served by the government are now open to

foreign service providers, for example health services that should be served by domestic

hospitals are now open to foreign service providers. This then has implications for The high

cost of health care that must be borne by the people of developing countries.

The intellectual property rights protection sector is also a major problem highlighted

by developing countries, the enactment of TRIPs has implications for the demand for

maximum protection of intellectual property rights by developed countries and so hard

pressure on developing countries. Developing countries that do not comply to protect their

intellectual property rights are blacklisted, while on the other hand the regulation on transfer

of technology is ignored by developed countries. Developed countries even utilize natural

resources owned by developing countries in the form of biodiversity as patent rights owned

by them.

The juridical facts above are the facts of how the provisions of international trade

within the framework of the WTO have changed the international trade order which leads to

the condition of the difference in the level of economic progress between developed and

developing countries which is very striking. Therefore, the effort to establish a fair and just

international trade system is a necessity for the world community. The desired international

trading system is a trading system that can provide opportunities for developing countries to

market their products to other countries and protect domestic industries. Special and

differential treatment for developing countries is a necessity considering that so far those who

enjoy free international trade are developed countries, while developing countries are

generally spectators because during the process of forming international trade norms

developing countries are not involved because developing countries are colonies of developed

countries.

The desired international law in the context of international trade is a law that can

accommodate all the interests involved. Developing countries must appear to struggle to

change the face of international law into laws that can accommodate their interests.

Conclusion:



Developed countries consider the liberalization of world trade within the framework of

the WTO as a way to create better world economic conditions, whereas developing

countries consider that the provisions of world trade liberalization accommodate the

economic interests of developed countries rather than developing countries, Because

actually those who enjoy the ease and benefits of international trade liberalization are

developed countries and developing countries are only victims of world trade

liberalization. So that this rule often gets a strong reaction from developing countries,

unfair treatment has been felt by developing countries and also only used as objects of

free trade for developed countries and not as subjects. The economic level of developed

countries is much higher than developing countries as well as in the field of technology

and other fields, while developing countries are busy fixing their economy, the inability

of the economy and technology makes developing countries unable to compete in the

world of free trade, not to mention the human resources. This reality makes developing

countries often resist the WTO. Therefore, the WTO rules should also be able to pay

attention to the socio-economic life of developing countries. So that the existence of the

WTO really provides meaningful progress for the survival of developing countries. So

as to create better economic conditions for the world community within the framework

of free trade (WTO).



The substance of international trade provisions in the current WTO framework is a

reflection of the interests of industrialized countries to control international trade.

Ideally, international trade rules should reflect the interests of developed and developing

countries. Developed countries are given the right to market their products to

developing countries, while developing countries are given the right to market their

products to developing countries are given the right to protect their domestic markets.

Moreover, in order for international trade to be fair and just, differential and special

treatment of developing countries must be a top priority for international trade

arrangements.