A reissue of Robert E. Hudec's seminal study of the situation of developing countries within the international trade system is once again available.
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A reissue of Robert E. Hudec's seminal study of the situation of developing countries within the international trade system is once again available.
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Robert Hudec identified reciprocity as the force behind the momentum toward liberalization and the general though imperfect sense of discipline the system had built up among developed countries. The system did not however ask for reciprocity from developing countries. In order to advance what developing countries wanted the system depended on moral suasion. Hudec's term is 'the welfare obligation' of the better-off members of an organization toward the worse off. (The phrases 'welfare obligation,' 'welfare concept' or 'welfare idea' appear more than 20 times in the book.)
In early negotiations developing countries had asked for resource transfers, but the system settled on exemption from the system's discipline (special and differential treatment) as the coin in which the obligation of the developed to the developing was paid. In the mercantilist logic of the GATT, this coin is twice-blessed; developed countries earn moral credit for giving, developing countries the blessing of receiving.
This coin is also the ultimate principal-agent problem. Nine generations of negotiators have made a living dealing in it, though it costs the givers nothing to create and it benefits the receivers nothing to accept.
Hudec framed the General Agreement on Tariffs and Trade as a commitment by members to apply only approved methods of trade control and to subject these controls to a long-term process of discipline through reciprocal negotiations. This work is grounded in a mode of thought Daviid Palmeter has identified as 'American legal realism,' whose counterpart in economics is institutionalism. With the Uruguay Round expansion of the GATT/WTO system, it has become more a system for administering regulation than for negotiation. Given what the GATT/WTO system has become, Hudec's framing is a more useful framework for analysis than is the more familiar and more romantic view of the as a process of negotiating trade disciplines.
In the legal, political and economics communities that deal with such matters, Hudec's work continues to be ignored. The romance of international negotiations proves to be more attractive to scholars than the reality of international regulation.
