A Structural Development Trap?: A Critical Analysis of the Idea of a ‘Universal, Rules-Based, Open, Non-Discriminatory, and Equitable Multilateral Trading System’.

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Department of Theology Spring Term 2021

Master's Thesis in Human Rights 30 ECTS

A Structural Development Trap?

A Critical Analysis of the Idea of a ‘Universal, Rules-Based, Open, Non-Discriminatory, and Equitable Multilateral Trading System’.

Author: Evelina Eriksson Supervisor: Per Sundman

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Abstract

Human rights advocates have expressed their concern about the marginalisation of human rights principles and the actual or potential human rights implications of WTO agreements. The international economic law and human rights law have been developed as two parallel regimes, yet trade and economics have been at the centre of most developing agendas in modern time.

There has been a persistent desire to achieve a universal multilateral trading system by both Global North and Global South. The Agenda 2030 is not an exception to emphasise the importance of such a trading system as one of its targets calls for a ‘universal, rules-based, open, non-discriminatory, and equitable multilateral trading system’. Furthermore, the desired multilateral trading system is presumed to facilitate other development goals of the Agenda.

Although peoples’ living standards are increasing worldwide, substantial inequalities remain between and within countries. If we only focus on legal rights and freedoms, people may live on the verge of an adequate standard of living and are thus not able to improve one’s well-being beyond that and lead the life one has reason to value. Hence, this study aims to go beyond the legislative protection of human rights by applying Amartya Sen’s capability approach which focuses on the ethical notion of human rights. Additionally, the approach focuses on the expansion of peoples’ capabilities and freedoms to achieve what one value doing and being. If a universal multilateral trading system is assumed to be beneficial for trade, economy, and to achieve development goals, will the outcomes of such system be beneficial for all peoples’

capabilities to lead the lives they have reason to value? The main findings of this study suggest that the political economy of world trade facilitates a subordination of countries in which some are benefitted, while others are stuck with the production of goods associated with low wages and unhealthy work conditions. This may affect the distribution of intergenerational equity and sustainability, affecting capabilities of many generations to come. One significant conclusion of this study is that legislative protection of human rights is not enough to target detrimental structures and to ensure everyone the kind of life and living standards one has reason to value.

Key words: Human Rights, Development, Trade, Liberalisations, SDG, Capability Approach, Functionings, Capabilities, Freedoms, Agency.

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List of abbreviations

DDA Doha Development Agenda

EU European Union

FDI Foreign Direct Investment FTA Free Trade Agreement

GATT General Agreement on Tariffs and Trade IMF International Monetary Fund

LDC Least Developed Countries MDG Millennium Development Goals NIEO New International Economic Order NTM Non-Tariff Measures

OECD Organisation for Economic Cooperation and Development OEEC Organisation for European Economic Cooperation

SAP Structural Adjustment Programmes SDG Sustainable Development Goals SPS Sanitary and Phytosanitary TBT Technical Barriers to Trade

UDHR Universal Declaration of Human Rights

UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme

URAA Uruguay Round Agreement on Agriculture WTO World Trade Organization

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1. Introduction

On the fourth of December 1986, the United Nations General Assembly adopted the Declaration on the Right to Development. The Declaration defines development as:

[…] a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefits resulting therefrom,¹

According to the first article of the Declaration, the right to development is an inalienable human right that entitles every human being and all peoples their entitlement to participate in, contribute to, and enjoy economic, social, cultural, and political development in which all human rights and fundamental freedoms can be fully realised.²

Economic cooperation and trade have been a major part of development agendas since the ending of the Second World War. There has been a persistent desire to achieve a universal, rules-based, and open multilateral trading system for a long time. The Agenda 2030 for Sustainable Development was adopted by all United Nations Member States in 2015 and is the main development agenda as of today. The Agenda 2030 is not an exception to emphasise the importance of a universal multilateral trading system. The Sustainable Development Goal (SDG) 17, target 10, reads: ‘Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda’³. Furthermore, such a multilateral trading system is presumed to help achieve other development goals of Agenda 2030.

People’s living standards are increasing worldwide and the proportion of people living in extreme poverty⁴ has nearly halved over the last 20 years. Moreover, people are generally living much longer, and the concepts of human rights are becoming more mainstream and

1 United Nations. Declaration on the Right to Development, 1986, Resolution A/RES/41/128, Available at https://undocs.org/A/RES/41/128 [2021-03-10]. Preamble.

2 United Nations. Declaration on the Right to Development, Article 1.

3 United Nations. Transforming our world: the 2030 Agenda for Sustainable Development, 2015, Resolution A/RES/70/1, Available at https://undocs.org/A/RES/70/1 [2021-03-31]. pp. 27.

4 However, recent research on the impacts of covid-19 on global monetary poverty are estimating global poverty to increase for the first time in 30 years, posing a real challenge to the SDG of ending poverty by 2030. See working paper by Andy Sumner, Chris Hoy, & Eduardo Ortiz-Juarez, Estimates of the impact of COVID-19 on global poverty, WIDER Working Paper 2020/43. https://doi.org/10.35188/UNU-WIDER/2020/800-9 [2021-03-26].

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incorporated in all sorts of areas, programmes, policies, and activities. As of 2018, 9 per cent of the world population lived in extreme poverty⁵. Thus, the proportion of people living in middle-income countries was 75 per cent, a proportion of people whose living standards are at a ‘reasonable’ level. Hence, the dichotomy of rich and poor countries is no longer accurate,

‘poor developing countries’ does no longer exist as a distinct group.⁶ Despite this, the world is still witnessing deprivation, destitution, and oppression to varying extent. Moreover, substantial inequalities remain between and within countries. As Alexandre Apsan Frediani argues in his article Sen’s Capability Approach as a framework to the practice of development⁷, we need to distinguish being poor from being weak. Being poor is associated with an absolute level, whereas being weak is related to the process aspects of development: capabilities, opportunities, choices, and freedoms.⁸ As the number of people that are living in absolute poverty is declining, one might argue that peoples’ capabilities and opportunities should be at the centre of today’s development approaches to ensure everyone the kind of life and living standards they have reason to value. Poverty is not limited to a state of low or no income, it can also be seen as the deprivation of basic capabilities. Furthermore, capabilities and functionings are not limited, thus the capability approach applies to all people despite socioeconomic conditions due to its focus on agency and what people value and have reason to value.⁹ Also, if we only focus on peoples’ legal basic rights and freedoms, people may live on the verge of an adequate standard of living and thus not able to improve one’s well-being beyond that. Consequently, Amartya Sen’s capability approach is a main contributor to this study and constitute the theoretical framework of this thesis.

The definition of the right to development is consistent with Sen’s capability approach – a constant improvement of one’s well-being based on peoples’ active, free, and meaningful participation. Can this be achieved through a ‘universal, rules-based, open, non-discriminatory, and equitable multilateral trading system’ as presumed by the Agenda 2030? If such a multilateral trading system is perceived to be beneficial for trade, economy, and various development goals, it should also be beneficial for all people’s well-being and valuable capabilities to lead the lives they have reason to value. Although investigating only one goal of

5 The definition of extreme poverty is set by the World Bank as living on less than $1.90 per person per day. (World Bank, Ending Extreme Poverty. 2016. https://www.worldbank.org/en/news/feature/2016/06/08/ending-extreme- poverty [2021-03-26]. According to the SDG 1.1, extreme poverty is however set to $1.25 per person. (United Nations, Transforming our world: the 2030 Agenda for Sustainable Development, 2015. pp. 15).

6 Hans Rosling, Ola Rosling, & Anna Rosling Rönnlund. Factfullness, Great Britain: Sceptre, 2018, pp.29, 49.

7 Alexandre Apsan Frediani, Sen's Capability Approach as a framework to the practice of development.

Development in Practice Vol. 20:2, 2010

8 Alexandre Apsan Frediani, Sen's Capability Approach as a framework to the practice of development. pp.185.

9 Amartya Sen, Development as freedom, Oxford: Oxford University Press. 1999, pp. 19, 87.

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today’s development agenda, human rights (and not least the right to development) are closely related – human development cannot proceed if human rights are not respected. Moreover, human rights beyond legal protection, meaning the ethical notion of human rights, need to be further integrated into public action strategies to ensure everyone their basic human rights.

Therefore, people’s capabilities and opportunities are at the centre of this thesis’ analysis of goal 17.10 in Agenda 2030 to go beyond the legislative notion of human rights.

Purpose and Research Question

Sen’s human-centred capability approach and a universal multilateral trading system are viewed as two separate normative agendas, each arguably desirable in their own ways. Moreover, such a multilateral trading system is presumed to help achieve other development goals in the Agenda 2030. Hence, it is crucial to examine the possibility for the two conceptual ideas to coexist. The purpose of this study is therefore twofold. On the one hand, the aim is to investigate whether and to what extent the normative content of the two agendas is compatible with each other. On the other hand, this thesis also aims to investigate whether and to what extent the capability approach is compatible with the realisation of the goal of a universal multilateral trading system and thus the effects and outcomes of such system. Put differently, the research question of this thesis includes both the normative aspect and the outcomes of the realisation of such trading system. The research question is: To what extent is a ‘universal, rules-based, open, non-discriminatory, and equitable multilateral trading system’ compatible with Sen’s capability approach?

Previous Research

The field of research this thesis aims to contribute to is the critical and ethical studies of free trade. Trade liberalisation measures have been examined thoroughly to improve liberal trade policies. However, they are not always examined in direct relation to human rights but rather the positive and negative effects on economic growth, society’s well-being, and local labour markets.¹⁰ However, trade liberalisations have been subject to critique by non-governmental organisations and civil society for undermining human rights in specific, and how economic

10 See for example Hansa Jain. Trade Liberalisation, Economic Growth and Environmental Externalities: An Analysis of Indian Manufacturing Industries. Singapore: Palgrave Macmillan. 2017. And Rafael Dix-Carneiro &

Brian K. Kovak. Trade Liberalization and Regional Dynamics., The American Economic Review, Vol.107:10, 2017.

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considerations have been prioritised by governments, investors, and companies.¹¹ The implications of public service liberalisations on human rights and gender equality are explored by Barnali Choudhury, using primarily a legal approach.¹² The interaction between international trade law and human rights is further discussed in the book ‘Human rights and international trade’, building on two separate views of the relationship between the two legal systems; Professor Ernst-Ulrich Petersmann’s view of trade obligations as human rights on the one hand, and Professor Philip Alston’s warning on a possible fusion and acquisition of human rights by trade law on the other.¹³

Since the 1990s, the European Unions’ (EU) agreements with third parties have contained an explicit clause on human rights. This human rights clause, also called the ‘democracy clause’

as it refers to democracy as well, is built into EU agreements and allows parties to suspend an agreement unilaterally, partially or fully, if it is breached. However, as of 2019, the legal mechanism has not yet been activated to suspend trade preferences under any of its trade agreements. The European Parliament and civil society have, on the other hand, encouraged the Commission to use the clause in a more robust way to respond to serious breaches of human rights and democratic principles.¹⁴ Nevertheless, the European Parliament adopted a binding EU law in March 2021 which requires companies to conduct human rights due diligence along their full value chain.¹⁵ This law enables accountability when human rights are breached by companies during, for example, foreign direct investments which is a common part of trade liberalisation for development and economic growth. Even though previous research is not brought up in this paragraph regarding the human rights clause and due diligence, it is crucial to mention that they exist. Moreover, despite being legal mechanisms of the EU, they aim to cover breaches committed by European companies in third party countries.

11 CIDSE, Ensuring the Primacy of Human Rights in Trade and Investment Policies: Model Clauses for a UN Treaty on Transnational Corporations, Other Businesses and Human Rights, Belgium: Brussels, 2017. Available at:

https://www.cidse.org/wp-

content/uploads/2017/03/CIDSE_Study_Primacy_HR_Trade__Investment_Policies_March_2017.pdf [2021-05- 07].

12 Barnali Choudhury. Public Services and International Trade Liberalization: Human Rights and Gender Implications. Cambridge (UK): Cambridge University Press. 2012.

13 Thomas Cottier, Joost Pauwelyn, & Elisabeth Bürgi Bonanomi., Human Rights and International Trade. New York; Oxford: Oxford University Press. 2005.

14 European Union, Human Rights in EU Trade Agreements – The Human Rights Clause and its Application, 2019.

Available at:

https://www.europarl.europa.eu/RegData/etudes/BRIE/2019/637975/EPRS_BRI(2019)637975_EN.pdf [2021- 05-07].

15 European Parliament, MEPs: Companies Must No Longer Cause Harm to People and Planet with Impunity, 2021.

Available at: https://www.europarl.europa.eu/news/en/press-room/20210304IPR99216/meps-companies-must- no-longer-cause-harm-to-people-and-planet-with-impunity [2021-05-07].

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The research on trade in relation to human rights is to a large extent of a legal perception.

Moreover, the relationship between the two legal systems of trade and human rights has gained attention within trade agreements in the EU and the upcoming law on corporations’ legal responsibility along their full value chains in the last decades. In order to position this thesis in relation to previous research and its contribution to the area of human rights, trade, and the critical studies of free trade, this study will go beyond the legislative focus and thus examine the ethical notion of human rights. By applying Amartya Sen’s capability approach when analysing trade liberalisations and the goal to achieve a universal trading system, this thesis seeks to illuminate people’s well-being, capabilities, basic rights, and instrumental freedoms which is not reached when applying legal frameworks.

Research Design

The qualitative methodology chosen to conduct this study and answer the research question is a critical analysis of ideas. This methodology may open up an interesting discussion and reveal underlying factors and explanations as to why an open, non-discriminatory, and equitable multilateral trading system has not yet been achieved and if such a system is compatible with a human-centred development approach. The unit of analysis is the idea of a ‘universal, rules- based, open, non-discriminatory and equitable multilateral system’ and the theoretical framework for the analysis is thus Amartya Sen’s capability approach. The ambition of combining a critical analysis of ideas and a theoretical framework of capabilities is to take a critical stance towards the ethical studies of free trade. In contrast to a human rights-based approach, the capability approach as a theoretical framework will give an interesting perspective on the discussion due to its ethical notion of human rights, rather than the legal protection of them.

Choice of Method: Critical Analysis of Ideas

As a tradition of social science, critical theory includes most things that has some theoretical indication and which in some senses is critical, for example postmodern deconstructivism, postcolonialism, and multicultural feminism. A critical analysis of ideas does not necessarily have to be a negative perspective of something, but rather a study of a social phenomenon from an emancipatory view and aspect. When applying a critical analysis of ideas, it is important to not discuss the unit(s) of analysis as an isolated phenomenon but to relate it to the combination of totality and subjectivity. Alvesson and Sköldberg emphasise the importance within critical

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research to not seize upon ‘the usual suspects’¹⁶ when applying a critical analysis, the usual suspects being for example capitalism, patriarchy, or racism. It is therefore important not to approach a problem too narrowly or biased. A critical analysis of ideas should rather consider social and historical contexts and interpret the empirical material as socially constructed phenomena, only partly produced by dominant ideologies. Research should not without careful reflections and critical analyses reproduce ideologies or social constructions, though the authors agree that such an approach is not always easy to adopt.¹⁷ Nevertheless, the researcher is also part of a society and its preconceptions, structures, and values. Although strengthening something already existing is not bad in itself, the authors emphasise that such reproduction of ideas or values should not be done unconsciously or uncritically. It is in this situation the critical analysis of ideas takes place – to problematise, question, and challenge ideas and structures.¹⁸

A critical analysis of ideas gives the researcher a more unrestrained approach due to its internal encouragement to view a phenomenon in other contexts (and not as an isolated phenomenon). The researchers’ creativity, as well as analytical and interpretive ability, is profoundly valued. Existing empirical material and data can therefore be utilised within critical research to be interpreted and reinterpreted based on the research approach to a problem or question. These interpretations are further complemented by the researchers’ observations and interpretations of the subjects’ context and surroundings. Critical research is thus to not adhere to empirics alone, but to critically analyse existing theories and empirics to illuminate potential detrimental and dominating conceptions, structures, and values. However, according to Alvesson and Sköldberg, the researcher should not exaggerate the critical factor within the method since it could underestimate the possibilities and utilisation of empiric material.¹⁹

A critical analysis of ideas aims to identify and question assumptions and traditions which contribute to a society’s ways of act and see things. Such ‘reality’ is imposed upon people for the benefit of certain interests and the detriment of others. According to Alvesson and Sköldberg, the ambition of applying a critical analysis of ideas is to irradiate indoctrinated assumptions of reality and to open up for other ways of seeing things. By questioning structures, acknowledging historical, cultural, and social influences on society, thinking in dialectical terms, and examining unique and different alternatives to the ‘normal’ and well-known

16 Mats Alvesson & Kaj Sköldberg, Tolkning och reflektion: vetenskapsfilosofi och kvalitativ metod, 3 ed., Studentlitteratur, Lund. 2017. pp. 236.

17 Mats Alvesson & Kaj Sköldberg, Tolkning och reflektion: vetenskapsfilosofi och kvalitativ metod, pp. 207, 235–

238.

18 ibid., pp. 236f.

19 ibid., pp. 240–247.

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established order, the researcher can find interesting results. In addition, self-criticism and self- reflection are important for the researcher to not get caught up in dominating structures and assumptions.²⁰

Material

This thesis aims to examine whether to what extent the normative content of two agendas is compatible with each other, and whether the outcomes of the SDG 17.10 is compatible with Sen’s capability approach. The capability approach constitutes the theoretical framework of this thesis, and the unit of analysis is the conceptualisation of the idea of a ‘universal, rules-based, open, non-discriminatory and equitable multilateral system’. The description is primarily based on the SDG 17.10 from which the phrase is borrowed. However, to present a proper conceptualisation of such a multilateral trading system, other SDGs have been examined, as well as reports written on the subject of free trade. Furthermore, scientific articles, international declarations, reports, and other literature on the subjects have been subjected to analysis and examination in order to conduct this study.

The theoretical framework of this thesis is presented and described primarily based on Amartya Sen’s book ‘Development as Freedom’. In addition, secondary descriptions have helped to give a proper definition of the approach to form the methodical framework for the analysis to evolve from. The reason why this thesis’s theoretical framework is based on the capability approach rather than a human rights approach, for example, is due to the capability approach’s emphasis on the ethical notion of human rights rather than the legal protection of them. In addition, the capability approach is eligible for this thesis’ subjects since it is elaborated by an economist (Amartya Sen, the winner of the Nobel Prize in Economics in 1998) to assemble the notions of economy, development, and ethics.

Limitations

In line with the purpose of this research, goal 17.10 of the SDGs is in focus along with Amartya Sen’s capability approach. International trade and development is a great field of research and in combination with human rights a growing public concern. Thus, a proper delimitation needed to be done to write this master’s thesis. Trade liberalisations to achieve a universal and open multilateral trading system is limited to those mentioned in other parts of the SDGs. No further trade agreements, preferential treatments or systems has been investigated, although there are

20 ibid., pp. 246f, 263f.

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several systems and agreements that could be of interest. However, questions about tariffs and duties are still covered, although no specific preferential treatments, systems, or agreements are mentioned.

Outline

This thesis is divided into six chapters. The first chapter introduces the subject, defines the research purpose as well as the research method and material. The second chapter aims to give the reader a perception of what role economic cooperation and trade have had in notions of development initiatives since the post Second World War period. A brief descriptive summary has been elaborated, which concludes with today’s development agenda and thus this thesis main subject of analysis – the SDG 17.10. Chapter three presents the theoretical framework of this thesis which consist of the capability approach. Central concepts of the capability approach are elaborated as well as the relationship between the approach and human rights. The fourth chapter provides a critical analysis of the idea of the SDG 17.10 in relation to the theoretical framework. Several means of trade liberalisations are further examined in relation to central concepts of the capability approach. To conclude the thesis, the author discusses the results in chapter five and outlines the concluding remarks of the thesis. Chapter six contains references.

2. Background

This section aims to give the reader a brief overview of what role economic cooperation and trade have had in notions of development initiatives since the Second World War’s end. The overview will transcend to the development agenda of today and subsequently the contemporary notion of economic cooperation and trading system which constitutes the unit of analysis of this study, namely the SDG goal 17.10. When talking about development, the terminology of ‘developed’ and ‘developing’ countries are often used to distinguish them from each other. Even though it is a detrimental dichotomy, as argued later in the analysis, this thesis will apply this vocabulary for the reader to easily understand the division of countries when it comes to advantages and outcomes of trade policies. Furthermore, when talking about international trade, the term ‘least developed countries’ (LDCs²¹) is used to determine which countries that can benefit from preferential treatments and so forth.

21 As of 11 February 2021, the following 46 countries had the status of ‘least developed countries’: Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad,

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Development in the post-World War II era

Ian Goldin and Kenneth Reinert argue that the modern development assistance may be traced back to the Marshall Plan, launched in 1947, along with the Bretton Woods Conference in 1944²² and the creation of multilateral institutions for international cooperation.²³ At this time, the dichotomy of ‘developed’ and ‘underdeveloped’ was established through ‘Point Four’ on the US’s foreign policy agenda. Point Four aimed to mobilise resources, extend technical assistance, and increase capital investments in the Global South. Although the intentions of Point Four were well-meant, i.e., creating conditions to achieve a decent standard of living, the dichotomy of developed and underdeveloped proposed a new relationship to the earlier North- South division of colonies and colonists. The new relationship was of a different character though. With the Universal Declaration of Human Rights (UDHR) in place, every state was equal de jure.²⁴ However, de facto, the hierarchical subordination of states continued²⁵. Furthermore, the dichotomy maintained the division of different parts of the world with interventions justified as necessary, and the ‘underdeveloped’ countries could only be assisted by the ‘developed’.

As a lack of things rather than the results of historical circumstances, the definition of

‘underdevelopment’ set the agenda for development policy to be made of growth and aid.

Intending to agree on an international development agenda, governments of 29 Asian and African states (and soon-to-be states) called a conference in Bandung, Indonesia, in 1955. The Conference marked the beginning of the ‘Non-Aligned’ movement and these countries’

collective demands within international organisations regarding decolonisation, development, and other political and economic issues. The Bandung Conference defined ‘development’ in

Comoros, Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Lao People’s Democratic Republic, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, São Tomé and Príncipe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, United Republic of Tanzania, Yemen, and Zambia. (United Nations, List of Least Developed Countries (as of 11 February 2021), No Date. Available at:

https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/ldc_list.pdf [2021-03-30]).

22 Bretton Woods Institutions consist of the World Bank and the International Monetary Fund (IMF).

23 Ian Goldin, Kenneth Reinert, & World Bank, Globalization for Development, 2006, pp. 115f.

24 Gilbert Rist, The History of Development, from Western Origins to Global Faith, 4^th ed, London: Zed Books, 2014.

pp. 69–75.

25 Although the 1948 UDHR Article 21 ensures all people the equal right of taking part in the government of his/her country, directly or through freely chosen representatives, it was not until 1960 the Declaration on the granting of independence to colonial countries and peoples came into place. Moreover, even though the Second World War became a turning point in colonial history, it took decades before all colonies proclaimed independence.

Furthermore, the colonial heritage has resulted in economic, cultural, and social structural injustices according to many critics, see for example Thomas Pogge (2005).

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terms of economic cooperation and recognised the importance of promoting economic development and stabilising commodity trade in the Asian-African region. As a result of Point Four and the demands made during the Bandung Conference, several new international development agencies were established.²⁶ For instance, in 1965, the United Nations Development Program (UNDP) was formed through the merging of two General Assembly resolutions²⁷ on technical assistance and financing of projects in the most indigent countries.

Another major agency within the development field, the Organisation for Economic Cooperation and Development (OECD), was set up in 1961, originating from the Marshall Plan initiative the Organisation for European Economic Cooperation (OEEC).²⁸

A New International Economic Order

In 1970, the General Assembly proposed a strategy with the intention to conceive development through a global and integrated process. Furthermore, what was considered ‘Third World’- countries gained power within the international order, making the industrial countries compromise politically and economically. In 1974, the Declaration on the Establishment of a New International Economic Order (NIEO)²⁹ was issued as a result of a set of proposals put forward by the Non-Aligned countries.³⁰ The current international economic order was recognised as outdated, established in a time when most of the developing states were still under colonial rule and the development of these states was thus limited and inequality perpetuated.

The main purpose of the NIEO was therefore to promote economic development and growth in developing countries, correct inequalities, and redress existing injustices through international cooperation based on sovereign equality.³¹ International trade was seen as the engine of growth within the NIEO, and by integrating the developing states, continued growth would be ensured.

On the contrary, the dependency school prescribed the international arena as a sphere where

26 Gilbert Rist. The History of Development, from Western Origins to Global Faith, pp. 79–88.

27 Expanded Programme of Technical Assistance for Economic Development of Under-Developed Countries (A/RES/304 (IV), 16 November 1949) and the Establishment of the Special Fund (A/RES/1240 (XIII), 14 October 1958) resulted in the Consolidation of the Special Fund and the Expanded Programme of Technical Assistance in a United Nations Development Programme (A/RES/2029 (XX), 22 November 1965).

29 United Nations, General Assembly, Declaration on the Establishment of a New International Economic Order, 1974, Resolution A/RES/3201 (S-VI),Available at: https://undocs.org/en/A/RES/3201(S-VI) [accessed 2021-03- 12]. United Nations: General Assembly, Programme of Action on the Establishment of a New International Economic Order, 1974, Resolution A/RES/3202 (S-VI). Available at: https://undocs.org/en/A/RES/3202(S-VI) [accessed 2021-03-12].

30 Gilbert Rist. The History of Development, from Western Origins to Global Faith, pp.140–144.

31 United Nations, General Assembly, Declaration on the Establishment of a New International Economic Order, 1974, Resolution A/RES/3201 (S-VI).

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domination effects are utilised, and as Rist puts it, ‘far from closing the gap between centre and periphery (as it proposed to do), the NIEO actually widened it’³².

The World Bank and the International Monetary Fund (IMF) have been part of the development agenda since their creation during the Bretton Woods conference in 1944.

However, their approach to development has shifted over time. During the 1970s, the Basic Needs approach entered the international discussions of development as a strategy to meet the most essential needs of people in the Global South. The trickle-down effects of economic growth had not been enough to ensure the most basic needs, greater priority had to be given to nutrition, health, literacy, housing, and employment. However, the basic needs approach was still considered to be consistent with mainstream economics, although economic growth alone was not enough. As a way of promoting policy reforms to reduce poverty, the Structural Adjustment Programmes (SAP) entered the dominant economic theory within the development discourse during the 1980s.³³ Promoted by the World Bank and the IMF in means of loans, aiming to restore a number of equilibria that was thought necessary to stabilise the international system, several neoliberal policy reforms were emphasised even more than before.³⁴ Liberalisation and privatisation of the market, an outward-oriented trade strategy along with macroeconomic policies was thought to result in economic growth in developing countries with favourable trickle-down effects. However, by reducing state intervention, public empowerment in ending poverty was diminished. Furthermore, not focusing on institutional quality and governance, the SAP left developing states in persistent poverty and debt.³⁵

New Millennia, New Strategies?

Acknowledging the importance of institutions and governance, different routes to the common goals of development were now on the agenda. However, a brand-new path did not reveal.

During the last few decades, the international community had agreed upon the importance of the divergence of development in terms of economic, social, environmental, political, and so forth.³⁶ The next bigger global partnership on development was adopted in September 2000³⁷, named the Millennium Development Goals (MDGs). Targeted in MDGs on the goal to achieve

32 Gilbert Rist. The History of Development, from Western Origins to Global Faith, pp.150.

34 Ian Goldin, Kenneth Reinert, & World Bank, Globalization for Development, 2006, pp. 216f.

35 Richard Peet & Elaine Hartwick, Theories of development: Contentions, Arguments, Alternatives, 3^rd ed., New York: Guilford Press, 2015, pp. 104f.

36 Richard Peet & Elaine Hartwick, Theories of development: Contentions, Arguments, Alternatives pp.107f.

37 United Nations, United Nations Millennium Declaration, 2000, Resolution A/RES/55/2. Available at:

https://undocs.org/A/RES/55/2 [2021-03-10].

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a global partnership for development, further improvement on open trading and financial systems were emphasised. Such systems should, according to this goal, be rules-based, predictable, and non-discriminatory, as well as include commitments to good governance and poverty reductions. Furthermore, the goal stressed tariff- and quota-free access for developing countries’ export as well as enhanced debt relief for heavily indebted countries.³⁸

In 2001, a Ministerial Conference of the World Trade Organisation (WTO) took place in Doha, Qatar, where the member states agreed upon establishing a new negotiating round on trade and development, named the Doha Development Agenda (DDA). In retrospect, the DDA refers to Ministerial Conferences and negotiating rounds on trade and development within the WTO between 2001 and 2015 which aimed to further liberalise trade and improve trading prospects of developing countries and their integration into the WTO multilateral system.³⁹ However, the rounds’ negotiations were not as beneficial as desired and the DDA was subsequently declared settled in 2015.⁴⁰ Due to the 14 years of extensive negotiations, only the main topics, agreements, and disagreements will be presented.

The Doha Negotiations

The Doha Round did on the one hand deal with the problems developing countries were facing in the implementation of the present WTO agreements. On the other hand, development was the main objective of the negotiations, which is why it is often referred to as the Doha Development Agenda, which aimed to promote economic growth and development of all Member States.⁴¹ The Doha Ministerial Declaration provided the mandate for the negotiations to come. An open and non-discriminatory multilateral trading system is referred to as an important means of trade and development in the Declaration. Furthermore, developing countries (which constituted the majority of the WTO Member States) were recognised as vulnerable and subject to structural difficulties and marginalisation in the global economy and trading system.⁴² A broad array of subjects have been discussed during the rounds’ negotiations, mainly including the minimising of tariffs on agriculture and industrial goods, and the removal

38 United Nations, United Nations Millennium Declaration, 2000, Resolution A/RES/55/2. pp. 62–68.

39WTO, The Doha Ministerial Declaration, 2001, Declaration WT/MIN(01)/DEC/1. Available at:

https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-

DP.aspx?language=E&CatalogueIdList=37246&CurrentCatalogueIdIndex=0&FullTextSearch= [2021-03-15].

pp.1.

40 Antoine Martin & Bryan Mercurio. Doha Dead and Buried in Nairobi: Lessons for the WTO, Journal of International Trade Law and Policy, vol. 16:1. 2017. pp. 49ff.

41WTO, The Doha Round Texts – Introduction. No date. Available at:

https://www.wto.org/english/tratop_e/dda_e/texts_intro_e.htm [2021-04-05].

42 WTO, The Doha Ministerial Declaration, 2001, Declaration WT/MIN(01)/DEC/1. pp.1 (§3, 4, 6).

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of agricultural subsidies. Besides enhanced market access, balanced rules, and other trade facilitations, the member states also pledged to reject the use of protectionism.⁴³ Development was thus placed at the centre of the negotiations, and the Ministerial Declaration aimed to place the developing countries’ ‘needs and interests at the heart of the Work Programme adopted in the Declaration’⁴⁴.

The Ministerial Declaration enunciates that the negotiations should be concluded no later than January 2005, however, this deadline was not met. Instead, several other conferences and negotiation rounds were held, and the Doha Round seemingly ended in defeat in 2008. Attempts to revive the Round were met with varying outcomes. Subsequently, the 10th Ministerial Conference in Nairobi, Kenya, in 2015 is seen as the last attempt to revive the negotiations with its agreement on issues of exports and agricultural subsidies, named the Nairobi Package.⁴⁵ The original DDA negotiations were afflicted with deadlocks due to the developed and developing countries' failure to reach a collective position on provisions regarding trade liberalisations to be included in a future multi-trading system, specifically regarding subsidies for food and agricultural sectors.⁴⁶ In 2003, at the 5th Ministerial Conference in Cancún, Mexico, a coalition of developing countries, the G20-Trade⁴⁷, emerged as a response and opposition to the release of a joint US-EU agricultural proposal. The G20-Trade called upon the DDA objective of a fair trading system, concerned that the US-EU proposal would be enforced upon them. With the premise of equal votes and consensus, the negotiations were consequently deadlocked.⁴⁸ These food security concerns in terms of agricultural-related policies have been difficult to agree upon and have become one of the most important and controversial negotiating topics of the WTO.

Although the Member State’s different views on the Doha commitments are acknowledged as great concerns in the Nairobi package, they did reach a consensus on eliminating agricultural export subsidies along with the chance to find alternatives to subsidies.⁴⁹

43 WTO, The Doha Ministerial Declaration, 2001, Declaration WT/MIN(01)/DEC/1. pp.1 (§1).

44 ibid., pp.1 (§2).

45 Antoine Martin & Bryan Mercurio. Doha Dead and Buried in Nairobi: Lessons for the WTO, pp.49.

46WTO, Day 5: Conference ends without consensus. 2003. Available at:

https://www.wto.org/english/thewto_e/minist_e/min03_e/min03_14sept_e.htm [2021-04-05].

47 The G20-Trade coalition of developing countries is a different coalition from the more recent G20 Leaders’

Summit.

48 Charalampos Efstathopoulos. Leadership in the WTO: Brazil, India and the Doha development agenda, Cambridge Review of International Affairs, Vol. 25:2, 2012. pp.273–274.

49 Antoine Martin & Bryan Mercurio. Doha Dead and Buried in Nairobi: Lessons for the WTO, pp.49–53.

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Today’s Development Agenda

The same year that the WTO members had agreed on the stalemate’s definitive end of the Doha negotiations, another global development agenda was adopted by the United Nations all member states – the Sustainable Development Goals. The Agenda 2030 for Sustainable Development was adopted by all United Nations Member States in 2015 and is the main development agenda as of today. The SDGs contain 17 goals and 169 associated targets which together constitute recognition on ending poverty and other deprivations by the year 2030, as well as improving health, reduce inequalities, and spur economic growth.⁵⁰ All 17 goals of the SDGs create a holistic approach to development, focusing on poverty, health, well-being, education, gender equality, clean water, sanitation, employment, peace, and climate among other things. The SDG number 17, ‘Partnerships for the goals’, consists of 19 targets of which 17.10, 17.11, and 17.12 are devoted to trade. This thesis will henceforth focus mainly on one of these, namely the goal 17.10. However, as the upcoming review will show, other goals and targets are important to give prominence to answer the research question. The SDG 17.10 reads:

Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system under the World Trade Organization, including through the conclusion of negotiations under its Doha Development Agenda⁵¹

Such a ‘universal, rules-based, open, non-discriminatory, and equitable multilateral trading system’ under the WTO is thus argued to help achieve the other development goals of the SDGs.

To achieve such a trading system, other goals and targets’ implications are relevant to pay attention to. For example, goal 8 target 8.a (decent work and economic growth) emphasise the need to increase the Aid for Trade⁵² support for LDCs, whereas goal 10 target 10.a and 10.b (reduced inequalities) emphasise the implementation of the principle of special and differential treatment for LDCs and foreign direct investment in LDCs. The DDA is mentioned in both goal 2 target 2.b (end hunger), and goal 3 target 3.b (good health and well-being) in means of preventing trade restrictions and export subsidies in agricultural markets as well as to ensure access to affordable essential medicines and vaccines to protect public health. Furthermore, to significantly increase the exports of LDCs, implement duty-free and quota-free market access,

50 United Nations, Transforming our World: the 2030 Agenda for Sustainable Development, 2015.

51 ibid., pp. 27.

52 Aid for Trade is a WTO initiative to encourage developing country governments and donors to recognise trade’s role in development. (WTO, Aid for Trade, no date, available at: https://wto.org/aidfortrade [2021-04-26]).

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and facilitating market access for LDCs are entailed in goal 17, target 17.11 and 17.12 (partnerships for the goals).⁵³ Note that the purpose of this thesis is not to examine how the progress of the Agenda 2030 is going, but how such a trading system is compatible with Amartya Sen’s capability approach when it comes to people’s well-being and freedom to lead the lives they value and have reason to value.

This background makes it clear is that there has been a persistent desire to achieve a universal, rules-based, and open multilateral trading system for a long time. Although the world is getting wealthier and healthier overall, inequalities remain. Furceri, Loungani, and D. Ostry argue that the aggregate and distributional effects of policies aiming to liberalise international capital flows (i.e., the financial side of international trade) have contributed to significant increases in inequalities.⁵⁴ Moreover, according to D. Ostry, there is evidence that growth tends to be more fragile and less resilient when it is not inclusive. When adverse shocks occur, like a global financial crisis or a pandemic like covid-19, there is less support in unequal societies for policies that can resist these economic shocks. In addition, societies with unequal access to education, health care, and nutritious food are in general less resilient to economic shocks, making it difficult and time-consuming to recover economically.⁵⁵ This will be brought up further in the analysis along with trade liberalisation measures and its outcomes and effects on peoples’ capabilities and well-being.

3. Theoretical Framework

The following chapter provides the thesis’ theoretical framework of Amartya Sen’s notion of the capability approach. Central concepts are elaborated and described, as well as the capability approach’s relation to human rights. The theoretical concepts of capabilities, freedoms, functionings, and agency will be used to further analyse and discuss the idea of a ‘universal, rules-based, open, non-discriminatory, and equitable multilateral trading system’ and thus to answer the research question.

53 United Nations, Transforming our World: the 2030 Agenda for Sustainable Development, 2015. pp. 14–17, 19, 21, 26 (Goals 8, 10, 2, 3, 17).

54 Davide Furceri, Prakash Loungani, & Jonathan D. Ostry. The Aggregate and Distributional Effects of Financial Globalization: Evidence from Macro and Sectoral Data. Journal of Money, Credit and Banking, Supplement to Vol.15:1. 2019. pp.166.

55 Jonathan D. Ostry. Growth or Inclusion? Finance and Development. Vol.55:2. 2018. pp.43.

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The Capability Approach

Amartya Sen, the winner of the Nobel Prize in Economics in 1998, first outlined his conception of capabilities in 1979 which has been developed in greater detail since by himself and other authors (conceivably Martha Nussbaum as one of the most prominent).⁵⁶ According to Sen, ‘a person’s capability to achieve functionings that he or she has reason to value provides a general approach to the evaluation of social arrangement’⁵⁷, which allows a particular way of viewing the assessment of equality and inequality. The capability approach’s main idea is thus to expand peoples’ capabilities and freedoms which will help them achieve what they value doing and being. By emphasising agency, the capability approach stresses the self-determination, autonomy, and empowerment to pursue goals that he or she values and has reason to value.⁵⁸

Peoples’ living standards are increasing worldwide, the proportion of people living in extreme poverty are declining⁵⁹. People are living much longer and the concepts of human rights are becoming more mainstream and incorporated in various areas, programmes, policies, and activities. However, the world is still witnessing deprivation, destitution, and oppression to varying extent. Violations of political freedoms and basic liberties as well as increasing threats to our environment and the sustainability of our economic and social lives are at stake. To overcome these problems and address these deprivations, individual agency is central, Sen argues. Nonetheless, the freedom of agency is constrained by the social, political, and economic opportunities that are available to us, individual agency and social arrangements are thus deeply related. It is therefore important, according to Sen, to address the force of social influences on individual freedoms and to see these freedoms as social commitments. By expanding freedoms, peoples’ choices and opportunities of exercising their reasoned agency increases, which are principal means of development, according to Sen.⁶⁰

56 Sabina Alkire & Séverine Deneulin, The Human Development and Capability Approach. In An Introduction to the Human Development and Capability Approach. Séverine Deneulin & Lila Shahani (ed.), London: Earthscan, 2009, pp. 31, 43

57 Amartya Sen, Inequality Reexamined, New York: Russell Sage Foundation, 1992, pp.5.

58 Sabina Alkire & Séverine Deneulin, The Human Development and Capability Approach, pp. 31, 37.

59 However, recent research on the impacts of covid-19 on global monetary poverty are estimating global poverty to increase for the first time in 30 years, posing a real challenge to the SDG of ending poverty by 2030. See working paper by Andy Sumner, Chris Hoy, & Eduardo Ortiz-Juarez, Estimates of the impact of COVID-19 on global poverty, WIDER Working Paper 2020/43. https://doi.org/10.35188/UNU-WIDER/2020/800-9 [2021-03-26].

60 Amartya Sen, Development as Freedom, pp. xi–xii.

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Functionings

Functionings are things people value. Sen defines functionings as ‘the various things a person may value doing or being’⁶¹. Put differently, functionings are activities and states which constitute valuable means to a person’s well-being. Since functionings are things a person value, they may vary from individual to individual and from time to time. It can be elementary functionings, such as being adequately nourished, being well educated, or having a good job, or it can be activities or personal states like having self-respect, being happy, or having a good reputation.⁶² Functionings thus relate to different dimensions of life, including things like survival, education, and health as well as empowerment and self-expression.⁶³

Capabilities

Capabilities reflect a person’s freedom to achieve valuable functionings and to enjoy the kind of life one values. As Sen puts it, capabilities refer to a person’s ‘alternative combinations of functionings that are feasible for her to achieve’⁶⁴. In other words, capabilities are the actual possibilities open to a given person to achieve his or her valuable functionings. A person with many capabilities, a wide capability set, can choose among numerous functionings and thus pursue a variety of different life paths. Sen illustrates this with an example of two persons, one who is affluent and fasting, and one who is destitute and starving. Both persons may share the same functionings of eating and be well-nourished, however, they (presumably) do not have the same capability set. The affluent person has the capability to eat well-nourished food in a way the other person has not, it is the capability set that tells them apart, not the functionings (although they could have different functionings depending on what they value).⁶⁵ Although capabilities are at the centre of this approach, the goal is not to expand the number of capabilities, but to expand the quality of human life.⁶⁶

Freedom

Amartya Sen’s book Development as Freedom outlines the need for an integrated analysis of the roles and interconnections between five crucial instrumental freedoms: economic opportunities, political freedoms, social facilities, transparency guarantees, and protective

61 Amartya Sen, Development as Freedom, pp. 75.

62 ibid., pp. 75.

63 Sabina Alkire & Séverine Deneulin, The Human Development and Capability Approach, pp. 32.

64 Amartya Sen, Development as Freedom, pp. 75.

65 ibid., pp. 75, 87.

66 Sabina Alkire & Séverine Deneulin, The Human Development and Capability Approach, pp. 34.

A Structural Development Trap?: A Critical Analysis of the Idea of a ‘Universal, Rules-Based, Open, Non-Discriminatory, and Equitable Multilateral Trading System’.