GATT, WTO, and Their Impact on Developing Countries

When the General Agreement on Tariffs and Trade (GATT) was signed in 1947, the global economy was supposed to enter an era of fairness and shared prosperity. Decades later, that promise feels incomplete for much of the world. Developing nations argue that the rules of global trade, first under GATT and then under the World Trade Organization (WTO), were written largely by and for the rich. They point to high agricultural subsidies in wealthy countries, strict intellectual property rules, and expensive compliance burdens as evidence that the system tilts against them. Understanding how this happened, and why the disagreements remain unresolved, is essential to making sense of contemporary global politics.

From GATT to WTO: a quick foundation 🔗

GATT was created in 1947 as a provisional agreement to reduce tariffs and encourage trade after the devastation of the Second World War. Its preamble spoke of raising living standards and ensuring full employment. Over the following decades, members met in a series of negotiating “rounds” to cut tariffs and, later, to address non-tariff barriers as well.

For most of its life, GATT focused on industrial goods. Agriculture was largely left out, partly because powerful members like the United States wanted to protect their farm sectors. This early choice mattered enormously, because agriculture is exactly the sector where many developing countries hold a natural advantage.

The Uruguay Round (1986-1994) changed everything. It was the most ambitious round to date, expanding trade rules into services, intellectual property, textiles, and agriculture. It was also the first round in which developing countries played an active role. The round concluded with the creation of the WTO in 1995, which replaced GATT with a permanent, rule-based institution complete with a binding dispute settlement system.

Why the WTO felt different 🔗

The WTO was not just a bigger GATT. It introduced a principle called the single undertaking, meaning members had to accept almost the entire package of agreements as a whole, rather than picking and choosing. As one analysis of special and differential treatment notes, this meant that all members became subject to broadly the same set of rules. For developing countries, this was a turning point. They could no longer opt out of demanding commitments the way they once could under GATT.

The promise of special and differential treatment 🔗

The trading system was never completely blind to development concerns. GATT’s Part IV, added in the 1960s, formally recognised the interests of developing countries and promoted the idea of non-reciprocity, meaning poorer nations would not be expected to match the trade concessions of richer ones. The Tokyo Round produced the Enabling Clause of 1979, which established the principle of differential and more favourable treatment, allowing developed countries to grant preferential market access to developing countries on a non-reciprocal basis.

These provisions gave rise to schemes like the Generalized System of Preferences (GSP), under which rich countries lower tariffs on imports from poorer ones. On paper, this looked generous. In practice, the benefits often fell short.

When paper promises don’t deliver 🔗

Studies of the system identify a recurring problem: the commitments of developed countries regarding preferential market access turned out to be much less valuable in reality than they appeared. Preferences under the GSP were gradually eroded as overall tariffs fell, and the special treatment was never a strong enough force to genuinely integrate developing countries into the trading system. Many of Part IV’s provisions, meanwhile, were never enforceable, because no retaliatory action could be taken if a developed country failed to honour them.

Agriculture: the deepest grievance 🔗

If there is one issue that captures the frustration of developing nations, it is agriculture. Wealthy countries provide enormous subsidies to their farmers, allowing them to produce and export crops at artificially low prices. Farmers in developing countries, who often lack any safety net, then struggle to compete against this subsidised produce both in export markets and at home.

The economics are stark. As the Center for Global Development explains, when commodity prices are low, subsidies push them even lower and discourage investment in agriculture in poorer nations. Cutting these subsidies was a central demand of developing-country negotiators when the WTO launched the Doha Round in 2001.

The structural imbalance has deep roots. Because agriculture was essentially exempted from earlier GATT agreements, rich countries built up a system of import quotas and export subsidies that the rules barely touched. By the time of the Uruguay Round, many countries felt this exception had become too glaring to ignore. Yet the resulting Agreement on Agriculture, while historic, still left wealthy nations with substantial room to support their farmers.

Intellectual property and the TRIPS battle 🔗

The second great grievance concerns intellectual property. The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) required all members to provide strong patent protection, including 20-year patents on pharmaceutical products. This was a dramatic shift for countries that had previously allowed local firms to produce cheap generic versions of patented medicines.

The consequences for public health were immediate and serious. According to Médecins Sans Frontières, by limiting competition and local manufacturing, TRIPS risks keeping drug prices high and worsening the access-to-medicines crisis, effectively treating life-saving medicines like ordinary consumer goods.

India’s pharmaceutical example 🔗

India offers the clearest case study. Before TRIPS, India recognised only process patents, which let domestic companies reverse-engineer and manufacture affordable generic drugs, earning the country a reputation as the “pharmacy of the developing world.” After the transition period ended in 2005, India switched to a product patent system that granted exclusive rights over specific drugs regardless of how they were made.

This restricted the easy availability of generic versions of newly patented medicines. Many other poorer countries that depended on cheap Indian generics suddenly faced the prospect of unaffordable drug prices. Developing nations did fight back: a large coalition including India, Brazil, Thailand, and the African Group pushed for the Doha Declaration on TRIPS and Public Health in 2001, which reaffirmed their right to use tools like compulsory licensing to protect public health. But using these flexibilities often invited pressure from powerful trading partners.

The compliance trap 🔗

Even where the rules are formally even-handed, they can hurt poorer members through sheer cost. Implementing WTO agreements requires building customs systems, intellectual property offices, regulatory bodies, and legal expertise. For a low-income country, these compliance costs are substantial, and they were frequently imposed without serious planning for how poorer members would actually meet them.

The dispute settlement system illustrates the same problem. It is far more legalistic and binding than GATT’s informal procedures, which sounds like progress. But bringing a case is expensive and demands legal capacity that many developing countries simply lack. Worse, even when a poorer country wins, enforcement is weak. The system relies on the threat of retaliatory trade sanctions, but a smaller economy that sanctions a giant like the United States or the European Union often hurts itself more than its target.

The Doha Round: a development promise that stalled 🔗

Launched in 2001, the Doha Round was explicitly branded the “Doha Development Agenda.” It promised to reduce farm subsidies, lower trade barriers, and write new rules to help the world’s poor. It was meant to correct the imbalances of the Uruguay Round.

Instead, it became a symbol of deadlock. The core dispute was familiar: how deeply rich countries would cut the farm subsidies that distort trade in commodities like cotton, sugar, and corn, and how far developing countries would open their own markets in return. A 2007 meeting of the so-called G-4 (the United States, the EU, India, and Brazil) collapsed precisely over this question, with the US calling Brazil and India “inflexible” while those countries refused to open up unless the rich world slashed its subsidies first.

A Harvard Business School analysis describes the result as a stalemate between developed and developing countries that has driven nations toward bilateral and regional deals instead. There have been partial wins, including a 2015 decision at the Nairobi Ministerial Conference to eliminate agricultural export subsidies. But the comprehensive bargain Doha promised never materialised, and the round lingers in what observers have called a “zombie-like state.”

Why the deadlock matters 🔗

The collapse is not just a diplomatic embarrassment. As negotiations stalled, countries turned to bilateral and regional trade agreements that bypass the WTO entirely. This risks fragmenting the global system into a patchwork of competing rules, which often disadvantages the smallest and poorest countries who have the least bargaining power in one-on-one talks.

A shifting balance of power 🔗

The picture is not entirely one-sided. Today, over three-quarters of WTO members are developing economies or least-developed countries, and emerging powers like India, Brazil, and China have become far more influential than they were in the GATT era. They have built South-South coalitions that reframed global trade politics as a North-South struggle, and they have used the system’s own tools, such as the cotton dispute, to challenge the farm policies of the richest nations.

China’s accession in 2001 highlighted a new tension. When it joined, members refused to let China simply declare itself a developing country entitled to all the usual flexibilities, with the United States arguing that its size as a global trader disqualified it. This points to a deeper question now facing the system: who genuinely counts as “developing,” and should a fast-growing giant receive the same concessions as a struggling least-developed economy?

Looking ahead 🔗

The story of GATT, the WTO, and the developing world is ultimately about a gap between principle and practice. The institutions were built on the language of fairness, raising living standards, and shared growth. Yet the specific rules, on agriculture, intellectual property, and compliance, were shaped by the priorities of the powerful. Developing countries have grown more organised and assertive, winning important concessions and reshaping debates, but the fundamental imbalances remain stubbornly in place.

Whether the multilateral system can reform itself, or whether it slowly gives way to a fragmented world of regional blocs, will be one of the defining questions of global politics in the coming decades.

What do you think? Is special and differential treatment a genuine path to fairness, or does it risk keeping poorer countries permanently dependent rather than competitive? And as emerging economies grow stronger, should the line between “developed” and “developing” be redrawn entirely?

References

1. https://en.wikipedia.org/wiki/Special_and_differential_treatment
2. https://www.iatp.org/sites/default/files/Special_and_Differential_Treatment_for_Deve_2.htm
3. https://www.iatp.org/sites/default/files/Trade_and_Development_in_the_GATT_and_WTO_The_.htm
4. https://www.cgdev.org/publication/food-security-developing-countries-there-role-wto
5. https://msfaccess.org/spotlight-trips-trips-plus-and-doha
6. https://www.parkerip.com/blog/trips-agreement-and-its-effect-on-intellectual-property-laws-in-india/
7. https://journalofethics.ama-assn.org/article/intellectual-property-and-access-medicine-poor/2006-12
8. https://archive-yaleglobal.yale.edu/node/39966
9. https://www.hbs.edu/faculty/Pages/item.aspx?num=39810
10. https://www.tandfonline.com/doi/full/10.1080/09692290.2025.2455504