Policy space: are WTO rules preventing development?

This briefing paper examines how existing and proposed trade rules under the World Trade Organization (WTO) effect national policies in developing countries. The paper addresses the concern that developing countries are losing "policy space" – that is, that new international trade rules prevent developing countries from developing national policies best suite to their development needs.

The report argues that:

• developing countries need policy space to promote development, however this is often limited by international trade rules
• the principal areas where trade agreements restrict a country’s policy space include tariffs, Trade Related Intellectual Property (TRIPs) and investment
• while some policy space has been closed by international trade agreements, much space remains. This can be both create problems as well as opportunities for domestic policy.

The report concludes that the loss of policy space is difficult to measure and results from a variety of agreements. The net effect on each country will depend on other obligations (for example regional trade agreements) and on the characteristics of its economy (such as its dependence on aid).