Can Technical Assistance Save Poor Countries?

Technical assistance is a joke. To be more precise, technical assistance is the butt of jokes, most of which feature a naïve do-gooder or a rapacious private company. Did you hear the one about the Americans in Mongolia? Sent out to advise the government on building free markets, they were heartened when officials asked for several hardcopies of the voluminous U.S. securities laws-photocopied on only one side of the page. It turns out the Mongolians were not true converts to the U.S. system; they merely wanted to use the documents for scrap to alleviate the government's chronic paper shortage. If that does not leave you breathless, perhaps you will find the one about the private sector advisor in Kazakhstan more amusing. When a local Kazakhstani bureaucrat fancied his red swim trunks, the advisor was forced to strip down and hand them over because angering the bureaucrat might jeopardize his chance of returning to the bottomless well of the U.S. Agency for International Development (USAID) renewal contracts.

Sadly, these stories are not apocryphal. A few years ago, I managed a U.S. government-run technical assistance program targeted at North and West Africa, and I have at least a few such stories of my own. At times, I felt my fancy law degree and stints at a prestigious law firm and the nation's preeminent *123 trade policy agency had led me to a job as a glorified travel agent. Some of the foreign officials we flew to the United States for seminars I spent weeks organizing appeared more concerned with shopping trips to New York.

Thus, the anecdotal evidence would seem to support the intuitive belief of most Americans (and many beneficiary countries) that technical assistance is a joke. But for every example of waste and graft, there are equal numbers of success stories. “Success” in the technical assistance sense of the word is measured in incremental improvements-it would be naïve in the extreme to believe the typical one- to three-year assistance contract could cure all the problems facing a developing country. For me, success was measured project-by-project, and even individual-by-individual. If I convened a drafting session with some of the best U.S. and African legal minds to produce a model law on arbitration for West Africa, or if I helped draft Cape Verde's foreign trade memorandum-the first substantive step in the World Trade Organization (WTO) accession process-in record time and within budget, I considered that a success. Similarly, if I provided detailed first-rate training to an Algerian lawyer who could then go back to the legal affairs ministry and guide her country's effort to join the WTO, I felt justifiably proud.

In the Anecdote Wars, then, there are at least two sides (admittedly, the successes are not nearly as funny as stories of naked assistance providers). But anecdotes aside, significant problems plague technical assistance programs, both in their structure and in their implementation on the ground. Problems range from the familiar bugaboos of ethnocentrism and biased assistance that merely seek to replicate in developing countries what has worked in the West (or what would be in the West's best interest), to difficulties within the developing countries themselves in identifying their needs and absorbing the assistance provided. As some developing countries have candidly admitted, “they need technical assistance to identify their domestic technical assistance needs.”

The Doha Development Round was launched specifically to address some of these problems just as developing countries' frustration with the rules of *124 the trading system had reached its peak. Six years after the close of the Uruguay Round negotiations, which ushered in the greatest changes to the trading system since its inception in 1947, poor countries still found themselves on the outside looking in as the globalization phenomenon brought untold wealth to already-rich countries. Technical assistance was to be the catalyst propelling developing countries from outsider to full-fledged beneficiary of the globalization revolution, while at the same time compensating them for taking on a plethora of new rules that proved expensive to implement. To date, technical assistance has not achieved those objectives.  Why?

This Article explores some of the reasons for that failure, focusing on the challenges facing both developing countries and the WTO in its effort to provide effective technical assistance. These challenges are significant, and merely throwing money at them-increasing “aid for trade”-without addressing some of the structural impediments to meaningful technical assistance will not be enough.

Trade and Aid: An Uneasy Alliance

The effort to assist countries in achieving sustained economic growth has had a long, and somewhat tattered, history. After World War II, the United States expended massive amounts of money and technical know-how in the reconstruction of Europe and Japan. But the current technical assistance model finds its roots not in the post-war era but in the Law and Development (“L&D”) movement of the 1960s. The underlying premise of the movement was that law was an indispensable prerequisite to economic development. If developing countries had not as yet constructed a system of laws capable of steering them out of poverty and into the modern economy, then such a system would be imported for them from America. During this period, a legion of American-trained lawyers fanned out into the developing world ready to build the legal infrastructure for development.

Despite the fashions of the time, the General Agreement on Tariffs and Trade (GATT), and subsequently the WTO, resisted the call to join the ranks of assistance providers. Even as a record number of developing countries acceded to the GATT in the 1970s, and despite the adoption of GATT Part IV-which acknowledged “the basic objectives of this Agreement include the raising of standards of living and the progressive development of the economies of all [Members]” - the organization defined its core mandate as trade liberalization and maintained that assistance activities were not within its competence. But that was all to change with the ending of the Uruguay Round trade negotiations in 1994.

The Uruguay Round ushered in a paradigm shift. Under the GATT's ala-carte approach, Members could pick and choose the rules that would apply to them. [FN14] Essentially, GATT created a “two-speed” system where rich countries liberalized more of their trade and took on more regulatory commitments than did developing countries. In the Uruguay Round, developing countries changed course and signed on to a “single-undertaking,” obligating them to implement all *126 WTO rules. [FN15] Having committed to a multitude of complex new rules, poorer countries found themselves unable to cope with the demands of implementation.

The “Implementation Problem,” as it came to be known, galvanized the WTO to action as developing countries demanded more and better technical assistance to meet their commitments. In the early days of providing such assistance, the WTO's efforts were less than spectacular, even by its own admission. The organization faced the same problems that other assistance providers had confronted: lack of donor funding, or ear-marked funding, that lacked flexibility; lack of coherence among the aid agencies resulting in duplication of effort; and lack of an overall design-plan for the provision of assistance that incorporated input from recipient or beneficiary countries. In short, the WTO found itself with too few resources responding to one-off requests for technical assistance from developing countries without sufficient coordination with other technical assistance networks. The organization was truly outside its area of competence.

In response to its failure, the WTO adopted The New Strategy for WTO Technical Cooperation for Capacity Building, Growth and Integration (“New Strategy”). The New Strategy called for a revamp of the WTO's assistance model to provide “a more focused response ... within a coherent trade policy framework.” [FN17] One-off training opportunities were disfavored; the organization committed itself to providing technical assistance that was part of a broader *127 integrated national plan linking WTO implementation obligations with development plans and poverty reduction strategies. [FN18]

The WTO's new approach to technical assistance represents a sea change that the organization is “still digesting.” [FN19] Despite the changes, the New Strategy fails to address some significant structural impediments to the provision of effective technical assistance.  Perhaps the greatest impediment is the organization's continued uneasiness with the idea that development and technical assistance are part of its “core function.” The first sentence of the New Strategy reiterates that “the core mandate of the WTO is trade liberalization.” [FN20] Implicitly then, development and technical assistance are ancillary activities; to the extent it continues to be viewed as peripheral to the organization's “core mandate,” technical assistance activities will continue to be seen as not much more than a boon-an almsgiving venture-developed countries bestow on their poorer colleagues.

Making Technical Assistance Relevant

There have been a number of excellent proposals for improving the WTO's technical assistance programs, including suggestions for working more closely with agencies like the World Bank and the International Monetary Fund, as well as regional development banks; creating a semi-autonomous agency that could provide bias-free advice; and opening a “branch-office” of sorts in Africa given the significant focus on technical assistance work on the continent. [FN25] Before any of these reforms can have a significant impact, however, the WTO must deal with the core of fear and distrust many beneficiary countries feel towards the organization and its assistance work. One African representative characterized WTO assistance as “ideological,” contending “[t]hey come to tell us what to think, what our positions should be.” [FN26] The WTO has responded, in part, by hiring more staff from developing countries, and by partnering with universities and respected institutions in the developing world, like the African Development Bank and the U.N. Economic Commission for Africa. [FN27]

More needs to be done to address the underlying distrust of WTO assistance activities. One suggestion I would make is to increase the opportunities for South-South technical assistance projects-perhaps funded by the WTO. Countries like India, Brazil, and now China, have a wealth of knowledge that can be shared, and they do not come with the same amount of “baggage” that WTO secretariat officials bring with them to the developing world.

Another suggestion-more in the form of an exhortation-is for the WTO to fully align its assistance activities with the development agendas of the beneficiary countries.

Conclusion

There is hope of integrating developing countries into the global trading system. But the coming end of the Doha Development Round [FN32] must bring with it more than hope if “developing countries, and especially the least-developed amongst them, [are to] secure a share in the growth in international trade commensurate with the needs of their economic development.” [FN33] Despite some of the problems identified in this Article, technical assistance is an important tool to propel developing countries into the global economy. It must be acknowledged, however, that such programs can play only a supporting role-albeit a significant one-in that process. Ultimately, it is for developing countries themselves to draft and implement coherent development agendas that are in line with their interests; technical assistance should be used to advance those needs rather than to promote the interests of the West.

David & Goliath Lay Down Their Arms: Cape Verde Joins the WTO

What’s a small island nation like Cape Verde doing joining the World Trade Organization?

With a population just short of 430,000, per capita income of $1,400, and exports totaling about $3 million annually, Cape is hardly in a position to compete with perennial export giants like the United States, China, and the European Union. And yet, this small archipelago of 10 islands and eight islets located in the extension of a vast semi-arid and arid zone of the Sahel in West Africa seeks to join “The Club” of nations in the World Trade Organization.

The World Trade Organization is the international community’s most powerful economic institution, with a membership of 153 countries and control over 97 % of world trade. Can a powerful organization dedicated to the principles of free trade help a small and poor country like Cape Verde?


Barefoot Divas and The Big Bang: A Brief History of Cape Verde

In the economic arena, Cape Verde has little in the way of comparative advantage. Nearly 300 miles of Atlantic Ocean and a vastly different geography separate Cape Verde from Senegal and the African continent.

Best known for the soulful music of Cesaria Evora – The “Barefoot Diva” – the Island nation lacks the resource base to become an industrial power. Agriculture, the backbone of many African economies, is not viable because of the Islands’ rocky and mountainous topography, lack of rain, and extensive soil erosion.

The size of Rhode Island, nearly fifty-four percent of Cape Verde’s land is non-cultivatable, and the only agriculture to speak of is the subsistence farming rural families engage in with the help of drip irrigation. The fisheries sector is not commercially significant because the Island lacks a continental platform.
Despite seemingly insurmountable odds, Cape Verde’s history leaves room for cautious optimism. When the Portuguese walked away in 1975, after 500 years of colonial rule, the Island was in shambles: In the whole country, not a single secondary school could be found, and the only roads in existence were ones that served a strategic commercial purpose. Faced with massive illiteracy, little infrastructure, and few natural resources for development, the new government turned to a Soviet-style command economy.

For years, Cape Verde’s development model sought to build the internal market through import substitution and state intervention in the economy. The government regulated prices and created numerous state enterprises ensuring wide spread employment and access to affordable basic goods, but at great societal cost. The country stumbled along facing a massive debt load, weak productivity and profitability in the public sector, an underdeveloped private sector coupled with a growing informal sector, and a constantly shrinking pool of development assistance.

By 1991, Cape Verde had reached a critical stage in its development; politically and economically, change was necessary. The country opted for the “big bang” approach to development: Almost overnight, the state moved from a one-party to multi-party political system, and economically it transitioned to a market economy. In both transformations, Cape Verde has some success stories to share.


The Politics and Economics of Cape Verde

In a set of events mirroring the Bush v. Gore campaign, Cape Verde’s 2001 presidential elections found two candidates separated from the Presidency by roughly 17 votes. After presumed winner Pedro Pires took office, the Supreme Court invalidated a few fraudulent ballots. At least some Cape Verdeans argued the presumed loser, Carlos Veiga, was the “real” president. In the face of mounting tension, Veiga graciously stepped aside for the greater good of the country.

Along with its political maturation, Cape Verde has seen real improvement in its economic outlook. The government adopted a liberal foreign investment law, and by 2002, Foreign Direct Investment had risen from $2 million to over $27 million. The country also created an export market, focusing on textiles, footwear, and some fish and fish products. Recently, Cape Verde qualified for benefits under the African Growth and Opportunity Act, a U.S. initiative providing enhanced market access, particularly in textiles, to eligible sub-Saharan African countries. In addition to these efforts, Cape Verde also made the decision to join the World Trade Organization.


Cape Verde Seeks Development: Can Joining the WTO Help?

So, back to the original question: Why would a country like Cape Verde want to join the World Trade Organization?

For starters, Cape Verde seeks to bridge the “credibility gap”. The government’s new development policy looks to services – primarily tourism and banking – as the engine for economic growth. The services sector is particularly sensitive to the perceptions and myths held by would-be foreign investors, and as a small, least developed, African transition economy, Cape Verde has enormous perception challenges to overcome. For Cape Verde, WTO accession represents concrete evidence, both domestically and to the world community, that its autonomous liberalization efforts are working.

Equally as important, Cape Verde wants its liberal trade policy to mobilize increased resources for economic development. While a debate rages in the international community over whether the benefits of multilateral trade liberalization ever trickles down to developing and least developed countries, Cape Verde is betting in the affirmative. Whether it is to attract a higher, more export-oriented level of foreign direct investment, or to loosen the purse strings of international donors who insist that recipient states make real progress toward free markets and the implementation of international “best practices” in economic policy, Cape Verde is hoping that World Trade Organization accession translates into more money in the bank.

Perhaps the third most important rationale for the Island’s WTO accession plan lies in Cape Verde’s view that it can only hope to influence international trade policy by joining forces with other developing countries. Fully three quarters of WTO members are developing countries; like most such members, if Cape Verde has an export advantage at all it may well be its populace. The Island’s literacy rate has risen to an astonishing 77 %, and the country has a long tradition of exporting labor to increasingly better paying jobs in the developed world (Cape Verdeans have been immigrating to the United States since the 1800s when New England whaling ships would sail in to port and take on new recruits). In fact, there are more Cape Verdeans living in New England than in Cape Verde. The country is highly dependent on expatriate remittances to cover its massive trade deficit, and the government would like to facilitate easier access to developed country labor markets. But free movement of labor is not covered in the WTO Agreements. Developing countries have long lobbied for its inclusion, believing that the WTO’s rules-based system is their best hope for obtaining fair access to rich country labor markets.

The notion of the World Trade Organization as a referee ensuring a level playing field among its membership is not quite as farfetched as some believe. Recently, Antigua & Barbuda, a small island nation in the Caribbean with a population less than a quarter the size of Cape Verde, brought the world’s super power before the WTO’s dispute settlement body. Antigua & Barbuda maintain that a U.S. prohibition on cross-border gambling and betting services has led to a $4 million loss to the Caribbean nation’s economy. The WTO has not yet issued a ruling, but whatever the relative merits of the Caribbean Island’s claim, it is a sure bet that they would have had no success in getting the United States to address the issue but for the World Trade Organization’s mandatory dispute settlement mechanism. Membership really does have its privileges.


The Costs of WTO Membership

But membership comes with real costs. Unlike most African countries that joined GATT (the precursor to the WTO) in the 1960s and 70s on the sponsorship of their former colonial rulers, Cape Verde will join under the full WTO accession process. The WTO treaty is largely silent on the requirements for accession, providing only in Article XII of the Marrakesh Agreement that a country may accede “on terms to be agreed between it and the WTO.”

In practice, World Trade Organization accession is a two-step process: the acceding country must negotiate increased access to their markets on those products of interest to World Trade Organization members. In addition, the acceding country must also negotiate on the rules applicable to its membership. For example, developing countries traditionally have been entitled to “special and differential treatment”, which allows them, among other things, extended periods of time to implement their World Trade Organization commitments. An acceding country is not automatically entitled to an extended implementation period. It has the burden of demonstrating the need for such a period.

Practically speaking, World Trade Organization accession amounts to significant costs for Cape Verde and these transition periods can be crucially important. For example, the Island’s customs regime, one of the key sources of revenue for the government, will need to be overhauled as it does not conform to the WTO’s Custom’s Valuation Agreement (CVA). New legislation and implementing regulations will have to be drafted; Customs officials, judges, lawyers and the business sector will all need to be trained in the new procedures. But more fundamentally, the dominant view in Cape Verde is that the government will lose revenue once it implements the CVA. There is little support for implementing the Agreement at all, let alone on an accelerated timetable.

Similarly, World Trade Organization accession means that Cape Verde will have to create and enforce an intellectual property rights regime. The country currently has no IPR regime to speak of. It will take not only time, but enormous financial and human resources to create a viable regime. While much of the rest of the world – including developed countries – took years, even centuries, to create their systems, Cape Verde will have to implement a regime within a handful of years. And implement it must because under the World Trade Organization’s “single undertaking” approach, all WTO members must sign on to nearly all WTO Agreements.


Conclusion

Cape Verde’s accession to the World Trade Organization presents something of a crossroads for the international community. There are no models to look to given that the only previous least developed countries to complete the full accession process – Cambodia and Nepal – did so only as of September 2003 (the only success stories to have come out of the failed World Trade Organization Cancun Ministerial Conference). It would be tragic if WTO membership brought additional administrative costs and failed to bring sustained economic growth to Cape Verde and its people.

Having achieved laudable results in the face of a challenging history, Cape Verde has demonstrated its commitment to a free market-based economy. The international community must in turn support its efforts to ensure that World Trade Organization accession brings real benefits to this small island nation.


Originally published in slightly different form in the American Bar Association International Law Section Journal (Spring 2004).Update: On July 23, 2008, Cape Verde became the 153^rd member of the WTO.

Why?

I remember the moment I told my father I wanted to be a lawyer. It was a typi­cally humid June day in New York City, and through the open window of our apartment could be heard all the sounds of summer: the gush of water escaping from an open fire hydrant, the blaring horns of ever-impatient mo­tor­ists, and the occasional snippet of conversation from the old men gathered on the stoop outside. But in our tiny, cramped kitchen there was only silence.

“Why?” my father finally asked.

Family legend has it that I responded, “Because I want to be the international Thurgood Marshall.”
Perhaps. My career has been a (modest) homage to the late, great justice in that I, too, focus on issues of fairness and equity in my work as a trade and development specialist. As I grow older, I find myself less concerned with my answer, however, and more fascinated with my father’s question: Why?
At the time, I did not fully comprehend what he was asking—I was only 9 years old. Like a Zen koan, more is revealed each time I explore the question.

My father came of age during the “Papa Doc” Duvalier regime in Haiti, a time in which lawyers faced persecution, kidnapping and even death. Why would I aspire to a profession that pitted a single individual against the all-powerful state? Why would I contemplate membership in an organization whose ethics call for representation of the accused, the unpopular, the poor and the dissident? Why would I participate in a system that either corrupts or kills?

My father’s experience of law, lawyers and the legal profession is vastly different from my own. As an American attorney whose closest bout with danger was a pulse-pounding (but ultimately uneventful) trip to Algeria, I am not often called upon to risk life or limb in service to my profession.

Like so many others, I recoiled in horror last November as Pakistani lawyers faced down batons, tear gas, barbed wire and other implements of autocratic rule to protest the government’s manipulation of the judiciary. My first uncensored thought was “Why?” Why would these lawyers stage protests at local courthouses knowing they would be clubbed, beaten and jailed? Why would they risk their safety, their families and their careers to object to the firing of a single judge?

As I contemplated the actions of my comrades in law, I finally came to understand the true nature of my father’s question: Why choose a profession that eschews security in favor of a life lived holding authority figures accountable under the law?

It is a task that will often prove risky—and not just in “exotic” locales across the world. The lawyer who forces the prosecutor to prove her case when society has already found a murder suspect guilty faces public scorn. The lawyer who battles the U.S. government all the way to the Supreme Court to ensure those charged with terrorist acts have access to courts and justice risks public opprobrium. But we the lawyers do these things anyway.

I sometimes wish I could go back in time—back to that summer day in June in New York City. If I could face my father’s question all over again, here is what I would say: “Why? Because the legal profession is the greatest profession in the world. In the process of doing our jobs, we secure freedom for everyone else.”

This essay was selected by the ABA Journal Board of Editors as the winner of the 2008 Ross Essay Contest. The prize is $5,000. The contest drew 193 entries on the topic: “Why do you believe the legal profession is the greatest profession in the world?” The contest is supported by a trust established in the 1930s by the late Judge Erskine M. Ross of Los Angeles. The contest is administered by the ABA Journal.

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