12:37 PM Sep 16, 1996

DEVELOPING COUNTRIES ADVISED TO RETHINK

Geneva 13 Sep (TWN) -- Governments of developing countries were advised to undertake, individually and collectively, a proper assessment of the outcome of the Round, and do this in a system wide effort within each country (rather than only the trade bureaucracies), identify the sources of asymmetry and inequity and work to change them.

This advice came at a two-day seminar on the WTO and Developing Countries organized here by the Third World Network.

Over 100 participants from some 60 Third World delegations were represented at the seminar attended by experts, some observers from international organizations and NGOs of the South.

Issues of implementation of the Marrakesh accord, a review of the various agreements and their effects, the issues relating to a proposal to bring in investment issues into the WTO through a study process, and the implications of the trade and environment nexus were among the subjects discussed at the seminar.

In explaining the seminar, the Director of the Third World Network, Mr. Martin Khor explained that it had been organized at the request of several Third World delegations who felt themselves overwhelmed by a one-sided propaganda from other organizations, but had little information from experts about the other side of the argument.

The subjects before the seminar, and the various papers and presentations, the Chief Editor of the SUNS and Geneva representative of the TWN, Mr. Chakravarthi Raghavan explained, had been settled after consultations with several developing country delegations, and the papers written were in effect 'demand driven', rather than 'donor driven' as in many other seminars. This was particularly so in respect of the papers and presentations on investment and other related issues, where only a one-sided view was being pushed at UNCTAD, WTO and elsewhere, and developing country delegations had sought expert views on the other side of the story.

In his opening remarks, Khor said that while the implications and effects of the Uruguay Round and what the WTO has in store for the future was not at all clear to the public, a strong public feeling was emerging that the WTO would have a powerful impact not only on global trade and economy, but on national economic, social and cultural policies and practices of every country.

The WTO was also being seen as "the greatest facilitator" of the globalisation process about whose nature and effects was being fiercely debated among the public. The 'fundamentalist' free-marketeers and free-traders viewed liberalisation itself as a goal and as a criterion of success. But there were increasing rumblings from ordinary people, social scientists, economists and politicians that this process is leading to increasing wealth for a few and marginalisation of a large number of weaker countries and sections of society.

The Singapore Ministerial meeting was taking place in the shadow of this growing public disquiet over globalisation. It could not simply be assumed that greater external liberalisation would benefit everyone. Freer trade between parties of equal standing would be mutually beneficial, but when a country had still not built up its capacity, it would be a threat to their domestic economy and even national sovereignty.

Those who set and deal with the rules at the WTO could not afford to ignore this growing disquiet and rumblings of the public and the TWN had organized the seminar to enable experts, practitioners and public groups to examine together and take stock of the implications.

Khor said that the seminar should address and focus on issues that should figure prominently on the SMC -- how to correct the inequities of the system and its rules, how to offset losses and weaknesses of the LDCs and other countries as a result of the Uruguay Round, what could be done to change the rules through the review process, whether the new issues being proposed would increase the inequities and what could be done to counter the continuation and intensification of unilateral trade threats and measures.

The Deputy to the UNCTAD Secretary-General, Mr. Carlos Fortin in his speech noted that while the developing countries would have some potential benefits from the Round and its agreements, their multilateral obligations had increased dramatically because of the 'single undertaking' approach as a result of which all the disciplines applied to everyone. Other obligations arose from the tariff bindings, commitments in services and on TRIPs as well as abolition of quantitative restrictions and licensing systems as a result of disinvoking the Art. XVIII:B (balance of payments rights).

Fortin said that developing countries, like major industrial ones, should undertake nationally a complete assessment and have 'action programmes' to ensure full exercise of their trading rights and maximising their benefits. Developing countries would need to create new institutions, with clearly defined responsibilities, and a 'trade policy community' (as in the developed countries) -- comprising not only government officials, but also lawyers, trade consultants, academics, journalists, lobbyists, private sector representatives, consumer groups etc concentrating on trade issues.

Referring to the various items proposed as new issues or under unfinished business, Fortin said each developing countries should prepare a "dossier", with effective coordination of different agencies, to be able to handle these and defend their own interests.

In his speech, the Deputy Director-General of the WTO, Mr. Anwarul Hoda focused on the implementation of the agreement and, as he put it, looking at the picture in terms of the "half-full glass". He viewed the Dispute Settlement Mechanism as the biggest achievement, and noted that all the players were seeking recourse to it. Even the USA which in the past had been taking recourse to unilateralism and bilateralism, he said, showed a clear willingness to submit high profile disputes to the WTO jurisdiction.

In terms of implementation, the first 20 months of the WTO and not shown any slippages and wherever difficulties had been sighted these had been quickly resolved. As for the Textiles and Clothing accord, while no one had complained that the schedule of integration was not being implemented, a number of exporting countries had complained that the ATC was not being implemented in spirit and that the Textile Monitoring Body was having difficulties in reaching decisions by consensus.

In an overview of the situation of the South countries under the WTO, Mr. Chakravarthi Raghavan that the overall effect was one of asymmetric obligations on the developing countries and creating a built-in inequity. Though the WTO was less than two years old, the same processes of globalization and trade liberalization (by the developing world) had been under way for nearly a decade or more and there was now enough evidence of the inequity and growing disparities as a result of this process.

Raghavan said the WTO Director-General should be congratulated for his frank statement at Midrand (UNCTAD-IX) that the WTO's responsibility only to reward the most efficient producers globally and enable efficient resource mobilisation but that it was not the WTO responsibility to bring equity and equitable distribution of benefits and this had to be done by governments and other international organizations.

But if this be so, then it was for the WTO member governments to change the rules to introduce equity, not through aid or safety net approaches, but by changing the rules themselves. Every one of the WTO agreements should be scrutinised from this perspective and changed. Otherwise, he said, the rising concern over this process and the globalization issue would result in loss of public support for this order -- in the North and the South.

A major lesson, and one that is often forgotten, of the collapse of the command system of economies, Raghavan said, was the need for a self-correcting mechanism -- including transparency of information and decision-making and accountability to the public.

While this was often referred to in national contexts, there was no attention to this aspect on the international context -- in relation to the economic organizations like the IMF and the World Bank and now the WTO.

From his 18 years of experience of following the trade organization activities, it seemed to him that the WTO had become the most non-transparent of international organizations. The Uruguay Round process, despite the wide participation of developing countries, had been a non-transparent one where a few powerful countries decided things and others were presented with these. The situation under the WTO had become worse, he said. No one knew now who met whom where and how, and how decisions were reached in small groups outside the WTO. And through this process trade bureaucracies in countries, and the WTO bureaucracy were trying to expand their own empires at the cost of others within governments and international organizations.

There was also a virtual conspiracy within the international systems and organizations not to raise issues of "winners and losers" in the Round and everyone within secretariats were being asked to focus on 'trading opportunities'.

But refusal to face the facts would not make them go away and they would return with a vengeance to haunt negotiators and the system, he warned.

Raghavan ridiculed the view that Africa's marginalisation problems would be resolved by further liberalisation and a Multilateral Investment Agreement, and suggested that the real lessons of the East Asian experience found in UNCTAD studies, including the forthcoming Trade and Development Report should be studied by Third World governments and policy-makers.

"There has never been a case in history," he said, "of foreign investors coming in and developing a country and there never will be. TNCs, who are the foreign investors, are not charitable organizations, but those trying to maximise profits and capital accumulation for the shareholders in the home country. Host governments could benefit only if they intervene and direct the investments and regulate corporate policies to ensure forward and backward linkages within the economy. The proposed Multilateral Investment Agreement would take away the scope for this."

He suggested that developing countries who already in a hole as a result of the WTO accords they accepted without a proper assessment should not dig deeper. They should not accept new obligations or constraints either through a new process on Trade-related Investment Measures nor of a study or negotiating process for an MIA or any other such new or additional constraints.

The laissez faire of the 19th century failed because of lack of public support in its home - Britain. Similar loss of public support was emerging in the industrial world and developing world to the new efforts at creating laissez-faire through globalization etc. It was time for re-thinking, and pragmatic change of course after review. It did not mean going back either to Keynesianism or the command economies. Both had failed, just as the neo-liberalism has failed to deliver.

And developing countries who had the most to lose should each ask themselves whether they had made any gains by trying to negotiate individually in the GATT/WTO framework, and jump on to the 'globalization train'. They had not and it was time they should join hands to resist further pressures to put them in a straight-jacket. It was not a case of 'globalization and development', but of 'globalization or development'. And if they do not make a wise choice, developing country governments and elites would face increasing social disorder from their peoples.