Sir,

The argument of Claus-Dieter Ehlermann and Natalie McNelis (Letters, April 15), that the decision of the World Trade Organisation appellate body in the General System of Preferences case represents the "salvation of GSP programmes" that will allow developing countries to "continue to benefit from special preferences" masks powerful ironies in the decision, as well as the very real hypocrisy of the Europeans and the U.S. in pushing for this outcome. Many trade economists hold that the GSP system, whose history goes back several decades, is misguided and ultimately hurts developing countries by allowing them to postpone growth-enhancing liberalisation. The resulting sense of entitlement regarding special privileges has now become a big impediment to a successful conclusion of the Doha round.

But the larger issue that India (which brought this case against the European Union) and other developing countries must ponder is whether the invitation, inherent in this decision, to freight GSP with numerous non-trade demands--in areas such as labour standards, environmental rules, drug enforcement and whatever else the big developed countries decide is in the "interest" of developing countries--tips the balance against accepting the alleged trade benefits accompanying this blatant coercion. Finally, the WTO appellate body is hardly without blame here. In its search for a rationale to allow developed countries to dictate domestic priorities of GSP beneficiaries, the appellate body stood the language of the WTO text on its head--it argued in effect that the discriminatory, coercive rules were valid because they "respond[ed] positively to the development, financial and trade needs of developing countries". With nary a hint of irony regarding the much-vaunted WTO principle of national equality before the law, the appellate body endorsed the demands of those such as the EU and U.S. both to play lords bountiful and to decide what policies are truly in the "interest" of GSP beneficiaries.

Claude E. Barfield is a resident scholar at AEI.