WORLD'S POOR MAY LOSE IN URUGUAY ROUND DEAL

5:39 AM Dec 8, 1993

WORLD'S POOR MAY LOSE IN URUGUAY ROUND DEAL
Geneva Dec 8 (TWN) - Success in the GATT Uruguay Round trade talks will be bad news for the world's poorest countries, according to a report by ChristianAid, a British nongovernment aid agency.

'Winners and Losers', by Peter Madden and John Madeley, looks at the likely impact of the Uruguay Round agreements, argues that the poorest countries of the world would not only fail to get better market access, but will actually suffer reduced market access and lower trade volumes.

For these unequivocal losers, compensation must be available, within the GATT package, on the basis of a series of side agreements, the British charity said.

Also, if the promised gains from textiles and agricultural liberalisation be not as large as expected, a second group of countries might also suffer losses.

"A Uruguay Round that leaves millions of poor people worse off will win few plaudits from history," Madden and Madeley say in the study and stress that "most of the estimated 270 billion dollar gains from the GATT Round will accrue to the rich North but more should be shared with the developing countries".

"In the interest of a balanced Uruguay Round, winners (which the report identifies as mainly the EC) should share their gains", said Madden during a press conference in Geneva Wednesday.

The report proposes the use of compensatory payments, such as those given during the integration of the EC into a single European market, whereby countries which were adversely affected received financial payments out of EC funds. Madden pointed out that this concept should be applied globally.

And even if a developing country gains, overall the poorest people within that country may lose and there might well be an increase in poverty in some countries if the benefits of trade liberalization are concentrated on a few, the authors say in their report.

The report also deplores the lack of free trade in one service area, however, where the Third World has an advantage -- the movement of labour.

While it might be difficult to analyze gains and losses, and the actual losers and appropriate level of compensation, some broad trends were becoming clear, the report said.

African countries would lose nearly three billion dollars a year from 2002, while the net food importing countries -- three quarters of the developing world -- would face higher food import bills.

Overall, it said, the terms of trade of the primary producers would worsen.

All the net benefits for the developing world would come out of the phasing out of the MFA, but with gains mainly in Asia, Latin America and Bangladesh among the least developed. But these gains would be jeopardised if the industrial world were to use 'safeguard' measures or if President Clinton negotiated a further delay in phasing out MFA.

The report also challenges the common view that the developing countries wold gain by agricultural trade liberalisation through an end to agricultural dumping by the farm super-powers.

Even after the accord, Christian aid says, the European Union would be able to export large amount of cereals, pushing down world market prices, and the EU's "most efficient" would be able to compete at a post-GATT price, provided the compensatory subsidies were maintained.

The Trips accord, while countering counterfeit goods and counterfeit labelling, will also harm millions of poorer consumers and farmers in the developing world and would give monopoly power to companies, leading to an increase in prices.

The genetic wealth of the developing countries -- "the fields of gold", as the World Bank described it -- would privatize that wealth in the hands of TNCs through TRIPs, and remove the freedom of developing countries to make up their minds in this regard.

The report conjures up the possibility of trade wars and deep recessions as a result of not concluding the Round, and argues for compensation to the losers, and this should be made a part of the final declaration and tied to the implementation of the accords. "Vague promises of aid are of doubtful value when public spending is under pressure from the North," the report adds and calls for a series of side agreements as for NAFTA, lest the attempts to include compensation in the package may unravel the agreement.