Wednesday, January 9, 2008

Cape Verde is Set to Join the WTO!

A few years ago, I was hired as legal advisor on a USAID project to assist Cape Verde in joining the World Trade Organization (I write of that experience here). On December 18, 2007, the WTO General Council approved an accession agreement for Cape Verde, thus paving the way for this small island nation to become the 152nd member of the WTO. I want to use my first post to congratulate Cape Verde on a job well done, and to share with you why this accession is important.
You are probably wondering “where the heck is Cape Verde?” Well, I’ll tell you. Cape Verde is an archipelago of nine inhabited islands off the coast of Senegal in West Africa. It is located on the western extension of the Sahara Desert, which, as you can imagine, means that it is dry and somewhat barren. The islands were created through volcanic eruptions, and most of them are rocky and mountainous. Economically, Cape Verde was long recognized as a Least Developed Country (LDC). Best known for the soulful music of The “Barefoot Diva” Cesaria Evora, the Island nation lacks the resource base to become an industrial power. Commercial agriculture is not viable; the size of Rhode Island, nearly fifty-four percent of Cape Verde’s land is non-cultivatable. The Island lacks a continental platform, thus precluding a large scale fisheries industry. So, what’s a small island nation like Cape Verde doing joining the World Trade Organization? And why would WTO Director General Pascal Lamy welcome its accession as a “sign of confidence in the organization and the multilateral trading system”?
For Cape Verde, WTO accession represents a significant milestone. When the Portuguese sailed away from the island in 1975, after 500 years of colonial rule, the place 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. When that failed, Cape Verde adopted a “Big Bang” theory of development—going from a command economy to the free market almost overnight. Despite difficult times, Cape Verde is seeing some progress. 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. And Cape Verde now qualifies 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. By June 2007, Cape Verde’s efforts were sufficiently successful that it became only the second country in history to graduate from the United Nations’ LDC list (the first was Botswana in 1994).
WTO membership is well-deserved recognition of the country’s efforts. It also gives Cape Verde a voice in the organization responsible for managing over 97 % of world trade. It will undoubtedly use that voice to advocate for change in WTO policies on labor. Like most developing countries, if Cape Verde has an export advantage at all it may well be in 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). 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. It is high time that the issue at least be put on the table for discussion.
The WTO itself stands to gain much from Cape Verde’s accession. It will serve as a model for other LDCs seeking to join the organization, and it adds great credibility to the WTO’s claim of being a representative organization. As Pascal Lamy states, Cape Verde’s accession “add[s] another valuable member to the family and brings us another step closer to universal membership.” Cape Verde will need to adopt domestic legislation and finalize membership by June 30, 2008. (photo credit)

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