Mar 1, 1993




Kuala Lumpur Feb 26 (TWN) --With the Uruguay Round negotiations now on hold there will be a gap of six to nine months before any conclusion is reached, and developing countries must take advantage of this period to take a hard look at what the implications of a conclusion to the Uruguay Round would be and to coordinate strategy so that the South can speak with one voice, a leading Third World trade policy analyst suggested here.

Chakravarthi Raghavan, Chief Editor of the SUNS was delivering a lecture on the "Implications of a successful conclusion of the Uruguay Round for developing countries" at the Institute for Strategic and International Studies, Malaysia. The meeting was attended among others by diplomats, senior officials of Malaysian government and some business representatives.

Unless the leading developing countries make an overall assessment nationally, and then find some common ground to support each other and present a fairly coherent stand vis-à-vis the North, they will be at the mercy of the three major trading entities, he said.

"We either join together and prevent it or we will be hanged separately," Raghavan said, adding "it is possible that we may all be hanged collectively too. But at least they will then have scores of bodies to dispose of."

The successful conclusion of the Round and when this would happen was very much an open question at this point of time, Raghavan said, noting that the new Clinton administration in the US was still to making up its mind on its policy towards the negotiations. While President Clinton has spoken of the need for conclusion of the Round, in the context of his overall economic policy, and has been speaking of 'fair trade' -- whatever that term might mean -- the full contours of the US policy were yet to be clearly spelt out.

But it seemed clear that trade policy and the Uruguay Round was not exactly on the top of the Clinton agenda, and his major thrust is likely to be to get his economic policy and budget etc through Congress quickly.

The Uruguay Round negotiations could in any case only be seriously resumed in Geneva after the US administration gets a new "fast track" authority to negotiate and conclude trade agreements from Congress.

If the administration does try to put new issues on the agenda at the Geneva talks, even merely in terms of flagging environment, labour rights etc and starting 'trade-related' negotiations on them in the next Round to be launched immediately after the conclusion of the present negotiations, "it will be a new ball game and the Round could go on for 2-3 years with some major uncertainties," he said.

And, even if no new issues are put on the table and the negotiations are sought to be concluded on the basis of the current Dunkel text of the Draft Final Act, it would still take six to nine months from the time the new 'fast track authority' is granted to negotiate on the various changes in the text sought

be the US, India, EC, Mexico, Brazil and others, he said. The changes sought are somewhat contradictory, and in some cases --as in the US view over anti-dumping rules or intellectual property and services agreements or the institutional arrangements-- would result in such fundamental changes as to result in an even greater imbalance in the outcome than now.

Only in the light of the changes accepted or finalised, could market accession negotiations in goods and negotiations on initial commitments in services take place and be completed. The estimate of negotiators involved in these tasks, he said, ranged from six to nine months of difficult negotiation.

Raghavan said that his own discussions with various countries and their negotiators, and the kind of queries he has got from officials and others suggested that in many countries there has been no overall assessment or cost-benefit analysis of the likely outcome of the Round.

Trade ministries everywhere seemed to have a narrow focus on concluding the Round, thinking only of the "gains" and "benefits" for their countries. But it was clear that in most if not all the leading Third World countries no overall and clear assessments have been made.

Such an assessment, Raghavan said, should be made in each of the countries under the direction and guidance of the highest political and parliamentary authorities so that their leaders could have a clear balance sheet drawn up for them.

Developing countries, he noted, sometimes had conflicting interests and this has been making it difficult to adopt a common stand. But when one carefully looked into the likely outcome of the Round, while there may be a few areas where the interests of the countries of the South clash, there are several others where countries had a common interest or no interest at all.

On the basis of their individual national assessments, the major Third World economies and countries -- whether in the framework of the Group of 15 or a larger ad hoc grouping of interested countries-- must consort at political levels and coordinate their positions, he said.

Where a country has no interest of its own, and the position of another Third World country is not antagonistic, each Third World country concerned must provide support to the other and speak up in the negotiations -- whether in the green room or Dunkel consultations or the TNC.

Where there is a conflict, there must be an effort at political level to look at the conflict and see whether a compromise common position can be reached.

This is the minimum level of mutual solidarity and support that developing countries must provide to each other at a time when the world economy is on a dangerous course and developing countries appear to be facing danger of "collective colonialism" by the three major entities -- US, EC and Japan.

The major entities, he said, were guilty of gross hypocrisy in asking the developing world to follow what the North preaches and not what it practices. The US, for example, finds no contradiction between its opposition to developing countries forming regional arrangements (such as MERCOSUR in Latin America, the AFTA in the ASEAN region or the East Asian Economic forum idea of Prime Minister Mahathir) while pursuing its own regional arrangements like Nafta etc. Nor did the EC seem concerned about its European Economic Area and other arrangements -- whether of the hub-and-spoke variety of the US or concentric circles of economic cooperation of the EC.

There is a new wind of economic theory and change in the air, Raghavan said, and developing countries must take note of it rather than following the theoretical views of the IMF/World Bank and their proponents in the North or their intellectual followers in the South.

Political leaders of the South had now to look at these issues in an overall frame, within their countries and collectively across the South. The issues involved were too vital for the future of the countries of the South and future generations to be left to the tender mercies of economic theorists, textbook scholars, technicians and technocrats who so often miss the wood for the trees, Raghavan said. 

He appealed to Prime Minister Mahathir to take the lead, firstly by undertaking an overall cost-benefit analysis of the impact a successful conclusion to the Round would have for Malaysia; then by persuading other leading Third World economies to do the same; and finally, over the next 2-3 months by trying to harmonise Third world positions and enable the South to face the North with a single voice.

Raghavan suggested that the gain to the world economy by a successful conclusion of the Uruguay Round had been over- stated. The 250 billion dollar boost suggested in a OECD development centre study pamphlet had now been dismissed by the OECD secretary-general as a "pretty theoretical exercise", he noted, and yet leaders and international officials continued to repeat the figure. He recalled in this connection the claims made at Montreal in 1988 at the mid-term review that the concessions on tropical products had a 25 billion trade coverage, when in actual fact the trade in tropical products in terms of the tariff lines on offer was only 15 billion dollars in 1986. And while there had been predictions then of a 25 billion Christmas gift for the developing world, actual UNCTAD tariff line calculations showed that the trade benefits would amount to only 332 million dollars, of which some 243 million went to the industrial world. The gains in the Uruguay Round could well prove to be similarly elusive, he added.

While some of the individual agreements, particularly on rules could bring some certainty, they would certainly be lost if the Americans had their way on GATT II, or anti-dumping rules, Trips, Services etc., Raghavan said.

He also questioned the apocalyptic scenario currently being put forward should the talks fail, and said any world economic recession or depression or trade wars would not be prevented by a successful conclusion. Nor would such events be triggered merely because of a prolonged stalemate or failure to wrap up the agreements quickly.

Any conflict or problems for the world economy would arise out of fundamental economic factors of production etc in the US, EC and Japan, and not because of a set of trade rules. Solutions have to be sought through much more basic issues of the economy rather than the trade rules. The IMF and the Bank and other Northern controlled institutions are trying to hide the failures of their ideologically motivated policy advices and prescriptions by pointing to the GATT and the Uruguay Round for solutions. They should not be allowed to get away with it, he said. 

At another lecture at the Institute of Diplomacy and Foreign Relations (IDFR), Malaysia, Raghavan said the world scene against whose background the Uruguay Round was conceived and pushed by the US in the early 1980s and launched at Punta del Este was completely different from the world of the 1990s.

The laissez faire theories of the market and trade, theories which were never practised in the major industrialized countries but pushed on the South by the IMF and the World Bank, have now come under severe challenge from mainstream economists.

In the United States they were now openly looking to the White House, i.e. the government, to intervene in the economy to keep it moving, and some hard-nosed 'management' of trade in the name

of 'fair trade' was under way. In this situation the developing countries had all the more need to concert with each other and see how they could chalk out a joint plan of action to safeguard their own interests.

Keynes has in effect staged a comeback -- thanks to the Procrustean policies pushed by the Fund and the Bank in the South and the weird economic theories of the Reagans, Bushes and Thatchers in the North. The Fund and the Bank were now turning their attention to the former socialist countries, and with some luck on their side, "who knows, they may even succeed in making Marx fashionable again in the East and the West," Raghavan said.

For the coming decade or more, growth and demand in the North, would be sluggish and the developing world in any event would need to look at each other's markets and for satisfaction of

human needs. This opportunity should be grasped. Otherwise the South would once again come under a colonial style condominium rule of the three major entities. Leaders like Mahathir Mohammad of Malaysia who took a prominent position on the environment issue and the Rio summit should take the initiative now, Raghavan said. 

Amb. Sallehuddin Abdullah, Director at the IDFR, said the developing countries must get their act together and safeguard their individual and collective interests.