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This page intentionally left blank WTO AT T H E M A RG I N S At a pivotal point in the history of the World Trade Organisation, when development issues are at the heart of negotiations, how the larger and more powerful WTO Members address the legitimate concerns of its poorest and most vulnerable members will shape the perception of the institution throughout much of the century. This book aims not only to document almost ten years of experience of small, vulnerable states with the WTO, but also to explain why these experiences have occurred. The book takes an evidential theory approach to explaining the inherent features characteristic to the trade and economic development of small island states. It then proceeds to highlight the particular issues of concern to these states in relation to multilateral trade negotiations at the WTO. A section is devoted to discussing the experience of the African Caribbean and Pacific (ACP) countries with the WTO dispute settlement mechanism, in the context of the impact and implications of EU reform in the sugar, banana and tuna industries. The book ends with a discussion of key negotiating issues for the island states and institutional arrangements which will facilitate reform. ro m a n g ry n b e rg is Advisor and Head of International Trade and Regional Co-operation for the Economic Affairs Division of the Commonwealth Secretariat. WTO AT T H E M A RG I N S Small States and the Multilateral Trading System Edited by RO M A N G RY N B E RG CAMBRIDGE UNIVERSITY PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi, Dubai, Tokyo Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9780521861434 © Cambridge University Press 2006 This publication is in copyright. Subject to statutory exception and to the provision of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published in print format 2006 ISBN-13 978-0-511-67515-7 eBook (NetLibrary) ISBN-13 978-0-521-86143-4 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate. CONTENTS List of figures and appendices List of tables List of contributors page viii xiii xix Introduction Roman Grynberg 1 Part I – Theory and evidence 9 1 A theory of trade and development of small vulnerable states Roman Grynberg 2 Small countries: a survey of the literature Michael Weatherhead 3 When comparative advantage doesn’t matter: business costs in small economies L. Alan Winters and Pedro M. G. Martins 11 29 74 4 Can small states compete in manufacturing? Ganeshan Wignaraja and David Joiner 108 5 The economics of isolation and distance Stephen Redding and Anthony J. Venables 145 6 The trade performance of small states Roman Grynberg and Mohammad A. Razzaque 164 7 Small economies and special and differential treatment: strengthening the evidence, countering the fallacies Virginia Horscroft v 227 vi contents Part II – WTO and small economies 8 Small vulnerable economy issues and the WTO Roman Grynberg and Jan Yves Remy 9 Special and differential treatment for small developing economies Richard L. Bernal 279 281 309 10 A study of alternative special and differential ar