The concept of inclusiveness is closely related to that of legitimacy. A global trading regime will enjoy legitimacy only if it is perceived to effectively address the concerns of all its members, both developed and developing. Similarly, in order for it to achieve inclusiveness, it is essential that countries perceive that they stand to win something from participation in the regime. Using World Trade Organization (WTO) membership as a yardstick, it can be argued that the global trading regime has been successful in this respect. Nevertheless, what has worked until now will not necessarily work in the future, as world trade flows increase, new powerful players emerge in the developing world, and new topics emerge on the trade policy agenda.

The difficulties that have plagued the WTO's Doha Round (also known as the DDA) since its launch almost seven years ago -- and precipitated its collapse this summer -- illustrate well the challenges facing the multilateral trading system. To a large extent, the negotiations have been so slow and yielded so little progress because of a continuous struggle between developed and developing countries. This struggle was first about defining the negotiating agenda, with most developed countries pushing for the inclusion of the so-called "Singapore issues" (trade and investment, competition policy, transparency in government procurement, trade facilitation), and most developing countries resisting this push.

Once the issue of the negotiating agenda was settled in 2004 (with three of the Singapore issues dropped from the agenda), the negotiations were basically reduced to a standoff on the issues of Agriculture and Non Agricultural Market Access (NAMA). At the risk of oversimplification, the situation can be summarized as follows: On the one hand, developed countries want to improve market access for their industrial exports to a dozen or so "emerging" or "advanced" developing countries, while at the same time they try to minimize cuts in their own agricultural subsidies (in the case of the United States) and agricultural tariffs (in the case of the European Union). On the other hand, developing countries want developed countries to drastically reduce their agricultural subsidies and tariffs, but many of them are reluctant to significantly open up their own industrial (and agricultural) markets.

Most of the disagreements between developed and developing countries that have characterized the Doha Round revolve around notions of fairness and legitimacy. In the case of NAMA, those developing countries reluctant to lower their tariffs have justified their position in terms of preserving policy space and their right to industrialize, just as developed countries did in the past. For their part, developed countries argue that it is only fair that the most advanced developing countries make a contribution commensurate with their new standing as emerging economic powers.

In the case of agriculture, a highly emotional topic for both developed and developing countries, arguments about fairness have been even more prominent. Those developing countries with a defensive position have justified it in terms of defending the livelihood of their poor and vulnerable rural populations against subsidized exports from developed countries. This is the underlying rationale behind those countries' demands for excluding certain "special" products from tariff cuts and for the creation of a new agricultural safeguard for the exclusive use of developing countries. Failure to reach an agreement between the United States and India on this safeguard was one factor triggering the collapse of the DDA talks in July in Geneva.

The emergence in the last two decades of powerful new players in the developing world, especially the so-called BRICs (Brazil, Russia, India, and China) has changed the configuration of power in the WTO. This was reflected in the shift from the "old" Quad (the United States, the European Union, Japan, and Canada) in the Uruguay Round to a new one (the United States, the European Union, Brazil, and India) in the Doha Round. China has recently (and belatedly) been included in this sort of informal "steering committee." It can be argued that the multilateral trading system has become more inclusive as a consequence. At the same time, decision-making has become more complex and slower. The experience of the Doha Round shows that the WTO faces a complex institutional challenge balancing inclusiveness and effectiveness as a negotiating forum.

The debate on the legitimacy and inclusiveness of the multilateral trading system is certainly relevant for Latin America. During the 1990s, there was a significant degree of convergence across the region on the way governments addressed the issue of integration into the global economy, and more generally on economic policy making. This relative consensus was mostly built around the "Washington Consensus" and therefore included trade liberalization as a fundamental component. In contrast, currently different approaches to the same issues are being followed in the region, following the rise to power of governments with more heterodox views.

Today some Latin American countries continue to see integration into the global economy as an opportunity, while at the same time stressing the need for better and fairer rules governing that process. Others maintain that the current path of globalization and "free trade" in particular are detrimental to their development prospects. These countries tend to be less forthcoming in discussing particular measures or institutional arrangements that could tackle globalization's shortcomings. This is partly because they question the very legitimacy of the institutions where such discussions take place (World Bank, IMF, WTO, etc.). Interestingly, and against a certain popular view outside the region, this divergence of approaches does not reflect a left-right split, but rather clashing paradigms within what can be broadly termed the "center-left."

A Blueprint for Progress

Following is an attempt to sketch a few criteria that could ease some of the concerns and costs that participation in multilateral trade negotiations entails for developing countries. After this, a brief overview of regional integration in South America is presented highlighting the weaknesses and obstacles in this process.

Identifying Criteria for a More Inclusive Trading Regime

Among the most common demands for a fairer, pro-development trading system are the following: the opening by developed countries of their markets to developing countries' exports of goods (particularly those with greater value added) and services (mostly through the movement of both low- and high-skilled service providers), the end of agricultural export subsidies, and a substantial reduction in domestic agricultural subsidies. Of course, fulfillment of these demands would go a long way towards improving developing countries' ability to develop through trade. However, our focus here will be on other, complementary elements.

A starting point is that the WTO is better than bilateral arrangements. Leaving aside all the trade theory concerning the benefits of multilateral rules, the WTO levels the playing field allowing for more balanced results. This is so because emerging economies can create alliances that increase their leverage. Probably the clearest example is the G-20, a group of developing countries led by Brazil and India that was created in 2003 to push for agricultural reform in developed countries. It is widely acknowledged that this group has become a major force in the agricultural negotiations.

Differences in "social endowment" among countries should be considered when discussing "liberalization efforts."

Developed nations can rely on the existence of social safety nets to tackle the social consequences of tariff reductions or other trade commitments on affected sectors. This is not the case for a large number of developing countries. It is fair to say that Japan and Norway are more prepared than any Latin American or African country to cope with the challenges arising from globalization in general and trade liberalization in particular. An obvious inference to draw from this fact is that developed countries should not push developing countries to adopt commitments going beyond what they can "sell" domestically.

Increase South-South trade.

Developing countries in general should be more willing in multilateral negotiations to show the same ability to produce results as they have in bilateral negotiations. A large number of developing countries today have negotiated, or are willing to negotiate, free trade agreements with the United States and/or the European Union. However, some of the same countries adopted a much more defensive attitude in the Doha Round, even when the degree of market opening they would have to commit to in the DDA is much less than in a free trade agreement. This approach disregards the fact that, for a significant number of developing countries, improved market access to other developing countries is as important as improved market access to developed ones. Those more reluctant to embark on market opening between developing countries should bear in mind that job creation in a developing country as a consequence of increased exports to other developing countries is as important as job creation through increased exports to developed countries. This reality is almost certain to continue and deepen in the coming decades, as most of the world's economic and demographic growth today can be traced to emerging economies, especially in Asia.

There must be effective and full recognition of different levels of development among negotiating partners.

The concept of Special and Differential treatment for developing countries (S&D) has a long history in the multilateral trading system. In the context of the DDA, it has expressed itself in a variety of ways, such as the so-called "special products" and the Special Agricultural Safeguard for developing countries; different tariff cuts for developed and developing countries; longer time frames to implement commitments; etc. However, constantly rethinking S&D is essential, since developing and least developed countries have come to represent a large majority of WTO members and as differences among developing countries in terms of economic size, social conditions, and institutional capacities become more apparent. Moreover, some developing countries have become so internationally competitive that their emergence generates anxiety not only in developed countries but also among developing ones. In this context, some ideas for a new S&D are briefly discussed below.

First, perhaps it is time to explore in more depth a complex and sensitive issue: the need for more differentiation among developing countries. At present, the WTO only recognizes two categories of developing countries: the Least Developed Countries (LDCs) and all others. But this crude distinction hides substantial differences in development levels among non-LDC developing countries. Should a $2,000 (€1,572) per capita income country have to make the same commitments as a $6,000 per capita income country? We have seen this debate emerge in the context of the DDA, as reflected in the distinction developed countries make between twenty or so "emerging" or "advanced" developing economies and all the rest. A benchmark that could help in refining the current classification is whether a country qualifies for overseas development assistance.

Second, a variation on traditional S&D could be to have two categories of disciplines: a core of obligations to which all WTO members would commit, and a second category of voluntary disciplines that would apply to a subset of members. This approach could be particularly helpful to deal with so-called "new" issues like intellectual property (beyond the existing agreements), competition policy, trade and investment, or even labor and environment. What is the point of requesting that an LDC or a similarly poor developing country adopt complex commitments on issues like competition policy when its population barely has drinking water? Actually this two-tier system already exists de facto: While the WTO sets the "basic" set of obligations for its 153 members, the most developed among them have committed themselves to more stringent standards, or to disciplines in other areas such as investment, at the Organization for Economic Cooperation and Development (OECD).