Dec 5, 1989


GENEVA, DECEMBER 3 (BY CHAKRAVARTHI RAGHAVAN)— The GATT contracting parties began their 45th annual session here Monday morning with a speech from their chairman, putting across a third world view of the new GATT and the world economy after the Uruguay Round.

In the cosy, non-transparent atmosphere of the GATT and its secretariat, dominated by a few major industrial trading blocs, such fundamental questions have been seldom posed. Even third world delegates, as chair of the contracting parties, adopt a tone in line with the tradition.

From the viewpoint of third world countries, Jamal said, an open and liberal multilateral trading system, should enable them to breathe freely, develop their potential to the maximum as rapidly as possible and cope with their enormous commodity and technological dependence and demands on them for life-giving environment protection.

Unless over the remainder of the Uruguay Round more open and liberal understanding was shown to these vital needs of the third world the new GATT that would emerge would be oppressive and not if beneficial to the third world, Jamal in effect said.

The opening speech by Amb. Amir Jamal of Tanzania was frankly sceptic about the claims of benefits to third world economies and their development through the open, liberal multilateral trading system that would emerge after the Uruguay Round or of the new order and promises because of the new east-west relationships.

Jamal noted that by next year end (when the Uruguay Round would conclude), the metamorphosis of the four-decade old GATT would have advanced to a "point of no return". But would it have equipped itself to meet challenges of an increasingly complex multilateral trading system and provided room for the "late-comers" on the stage of technological transformation to "breathe freely", even as "gladiators develop new muscles and flex them with increasing impatience and unpredictability"? Referring to the projections of world trade growth, and its unevenness, Jamal asked whether the "new GATT" would help redressing this imbalance or would it accentuate trade intensity within a selected group of nations already equipped with capital and technology?

The export earnings of the 32 low-income economies of sub-Saharan Africa, Jamal noted, had been reduced to less than half between 1980 and 1987 - from $40 billion dollars to $17 billion.

The commodity producing African countries had maintained their export volumes but their earnings were reduced.

GATT CPs, he noted, were developing "sensitivity" to dumping practices.

But when the market "dumps commodities" on importing countries, very much against wish of exporters, "this is seen as a welcome anti-inflationary blessing". No one was foolish enough to suggest imposing sanctions on the market with anti-dumping measures, since it would mean dumping the exporters produce on the oceans or making a bon-fire out of them.

"These life and death questions", Jamal said, "are entwined irretrievably with a search for capacity to acquire, adopt, adapt and innovate technology, in an international environment of a fair and even-handed financial and monetary system".

He added: "I regret to say that such evidence as has surfaced so far gives little ground to believe that there is a concern to make a new GATT give timely recognition to the historical role that science and technology, as well as the early disciplined phase of the Bretton Woods system, played in advancing the health of the already developed economies".

Nor did one see much evidence of issues of environment and drug abuse, not to mention economic space for third world countries pursuing light industrial activities like textiles, leather goods and durables like furniture, motivating the powerful economies undertake structural adjustments to shift burdens among social groups within those countries.

But third world countries were being forced to undertake structural adjustment in an "awesomely constrained socio-economic framework", and their finance ministers were being asked to perform miracles by shifting around 67 or 75 cents or even 1-1/2 dollars of per capita income as part of the sanctified "structural adjustment", without even additional emerging exigencies of environmental preservation and drug control.

"Will the new GATT succeed in preventing the structural adjustment costs of environment and drug abuse in the north from being passed on through the market mechanism to the ill-equipped south?". In a reference to western media reportage of the Uruguay Round discussions, Jamal said that for the "enlightened media" of the industrialised north what the Uruguay Round might mean to the less and least developed countries was "obviously of no great concern".

For all practical purposes of the Uruguay round, these economies did not matter.

But "will the new GATT succeed in preventing this from becoming self-fulfilling?".

The early harvest in the Uruguay Round had brought benefits to the GATT itself - tightening the dispute settlement measures that could only do good to the whole system, and establishing on a preliminary the trade policy review mechanism (TPRM).

From a third world perspective, if the TPRM enabled a better understanding of the "extremely tight options" available to the third world countries, as they strove to maintain a growth-oriented equilibrium in the management of their economies, a timely and useful purpose would have been served.

"Unfortunately, early harvest in areas of direct and immediate concern to developing countries as envisaged at the time of the Punta del Este declaration has remained beyond our reach", Jamal noted.

"Without ensuring a balance in the final outcome favouring growth-oriented development of many potential trading partners, the negotiators may be running a risk of political reprimand rather than even cautious support", he added.

An "open" and "liberal" multilateral trading system was most likely to ensure efficient use of the world's resources, for the industrial and third world countries alike.

But the "key, central, question is what is open and what is liberal?".

"For barely clad, ill-equipped societies, what does an open and liberal system signify?".

"As long as there is an open and liberal understanding shown, in the remainder of the Uruguay Round, of the absolutely vital need for a large number of developing countries to breathe freely, and to develop their potential to the maximum as rapidly as possible, even as they contend with the struggle to escape from commodity and technology dependence, and with the enormous demands placed on them of life-giving environment protection there is hope that, imperfect as human institutions are, the new GATT will be a multilateral arrangement meaningful to the diversity reflected in the contracting parties".

The Bush-Gorbachov summit meeting over the weekend in the Mediterranean, (involving some U.S. commitments about trade benefits for the USSR), Jamal suggested, heralded "a major sea change in the global multilateral trading system".

"The scene is being firmly set for a 21st century which will have finally rounded up the circle of a global multilateral trade and exchange system. By then GATT’s half-a-century of contribution to that system will have provided an indispensable foundation on which to build the future".

But there was also a "message" in all this for third world countries, namely, that it was "within the power of a few major economies to determine the pace of change and even the character of such a change".

"There is not an indefinite period of time available to the developing countries - to some more than to others - to get connected with the world's trading system that will enable them to optimise domestic capital formation on a sustained basis, based on hard work and sound socio-economic management".

"Even the most liberal trading nations imbued with a deep sense of international solidarity will want to see evidence of good faith through visibly sustained performance".

But the responsible leadership of industrial nations should not also ignore the message about poverty and environmental degradation that came out of the Washington-based world watch institute (see suns 2266).

"That message", Jamal said, "is equally clear. Looking at the global prospects by the middle of the 21st century, local and national programmes to alleviate poverty afflicting, by then, perhaps half the world's humanity, would avail little without international reforms including debt reduction through an international agreement, an impartial mechanism for adjusting disputes and lessening protection against imports from the south".