8 - 14 November 2001
Issue No.559
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Al-Ahram Weekly Online 8 - 14 November 2001 Issue No.559 |
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The order of business
Ibrahim El-Issawi* advises developing countries to claim their rightful place in the WTO
From 9 to 13 November, Doha will host the ministerial conference of an international organisation that, to many, represents the evil face of globalisation: the World Trade Organisation.
Where there's smoke there's fire; and certainly its reputation was the cause of the widespread and sometimes violent protests that accompanied previous WTO ministerial summits, as well as the meetings of other organisations engaged in engineering the global economy, such as the World Bank, the International Monetary Fund, the Global Economic Forum and the G-7.
Although the protesters represent diverse concerns and interests, they are collectively angry with the flagrant discrepancies in the global trade system the WTO supervises. The demonstrations oppose the application of regulations tainted by a good deal of shortsightedness and inequity; all the more reason, then, that they should deter regulations that will aggravate the current injustices, deepen the already enormous chasm between the industrialised rich and the developing poor, and place more obstacles before developing nations' efforts to initiate and pursue sustained growth.
Although most of the WTO's members are developing countries, the major industrial nations, which dominate over a third of global trade, control its decision-making processes. The concerns of the majority of members, therefore, receive virtually no attention on an agenda primarily dedicated to opening markets to the minority's goods and investments -- regardless of the effects on agriculture, developing industries, and the living standards of the vast poor and limited-income segments of underdeveloped nations.
Of course, the developed nations have their own perspective on the relationship between the deregulation of trade and economic growth, and hope to convince underdeveloped nations of its cogency. The negative impact of deregulation is only temporary, they argue, and will be offset in no time once market forces are permitted to rectify the structure of production, thereby setting the economy on the path to rapid growth. The WTO sums up this philosophy as follows: Trade between nations is the engine of growth and development. Economic freedom is the best means to bring about the efficient division of labour and allocation of resources at the international level, and is, therefore, the best means to develop trade between nations. The General Agreement on Tariffs and Trade and other WTO agreements translate this liberal economic philosophy into a system of rules governing global exchanges.
Unfortunately, the theory is little more than an advertisement for deregulation and laissez-faire economics. It fails to address the chasm between rich and poor nations. Nor does it explain the evolution of economic growth, whether in the old industrialised world, the recently industrialised nations or in those socialist nations that achieved astounding levels of growth, sustained for extensive periods, until their cumulated weaknesses led to the collapse of the socialist order.
Contrary to the claims of WTO pundits, history tells us that national economic development cannot be achieved in an open global economic environment; indeed, protectionism and subsidisation are vital to support domestic production and exports. Yet the WTO agreements seek to close off precisely these avenues before developing countries, apart from minor and temporary exceptions. History also tells us that the expansion of trade is the result, not the cause, of rapid economic development. Growth in productivity generates growth in trade, which, in turn, leads nations experiencing rapid growth to seek foreign markets for their goods.
Only very grudgingly did the developing nations sign the WTO agreements, having been pressured to do so by those nations that supply them with aid and that control the international financial institutions in charge of rescheduling their debts. In fact, many developing nations had already agreed to deregulate their trade and their economy, even before the end of the Uruguay round, by adopting the structural readjustment programmes prescribed by the major industrialised countries in exchange for reductions in their debt burden. Then a range of pledges and enticements cajoled them into accepting the results of the Uruguay round, even though studies undertaken by several international organisations had determined that the major industrialised nations would benefit the most from the agreements. Among the inducements on offer were pledges of technology transfer, financial compensation for the rising prices of food and agricultural products, technical and administrative aid to help developing nations fulfil their obligations to the WTO -- and a hint that it might be possible to extend the interim periods before the full implementation of certain agreements. Having lured in the developing nations, however, the industrialised nations did not deliver on these promises.
Now the developing nations feel burdened by endless commitments under agreements whose provisions were never made entirely clear during the negotiations. They also feel they have been duped horribly. Not only has deregulation failed to enhance their competitivity; it has actually promoted the goods produced in the oldest industrialised nations, and even the newly industrialised countries, which developed their economies behind the bulwarks of government protection, subsidies and the centralised channeling of investment. Suddenly, developing economies found their markets flooded with cheap foreign products that have undermined local manufactures, forcing the closure of many domestic industries and increasing the unemployment and poverty rates. In short, for many developing countries, deregulation has pushed the industrialisation process into reverse.
Several developing nations are convinced that they have deregulated trade prematurely, having abandoned many chances to steer their economies toward development before they developed the competitive advantages that would have enabled their products to compete on both domestic and foreign markets. They realise with bitter dismay that they have forfeited their right to development by surrendering to pressure and relinquishing the benefits of government intervention.
In light of these costly consequences, developing nations should coordinate their efforts to secure agreement over 10 legitimate demands at the WTO ministerial summit in Doha.
First, the conference should acknowledge the iniquity of subjecting developing nations to the same obligations as their developed counterparts under WTO agreements, given the disparity in levels of development and administrative, organisational and financial capacities. Such an acknowledgement would ensure that the issue of development would be accorded special status and greater attention within the WTO, and that developmental concerns would be taken into consideration when determining the various concessions participants are expected to make in the trade negotiations held under the organisation's auspices.
Prioritising development on the WTO agenda implies that obligations incurred by the participant countries should be commensurate with their economic development and their people's standard of living. One consequence of this would be to bring into effect the principle of special or preferential treatment for developing nations instead of the unrealistic interim periods stipulated by current agreements. Economic development cannot be achieved in five or 10 years, and developing nations should not be deprived of the commercial and industrial policy mechanisms that were available to industrialised and newly-industrialised nations before the GATT accords were signed in 1947. Accordingly, preferential treatment provisions could be linked to specific values by an indicator of comprehensive development, whereby preferential treatment declines in proportion to rises in the indicator.
The third demand is a direct consequence of the previous two and entails the right of developing nations to reconsider many of the obligations they assumed under the WTO agreements they were forced to sign. This right of review should not be limited to the technical, administrative or even financial aspects of implementation, because at the heart of the problem lie the fundamental inequities inherent in the obligations themselves. Therefore, "issues of implementation" should be defined very broadly, allowing for the amendment of the rules contained in the agreements and the reassessment of obligations in light of developmental needs.
Fourth, prioritising development also means paying special attention to a number of other issues related to the growth of trade. Most important is the relationship between trade and foreign debt, technology transfer, and foreign aid respectively; equally crucial issues are the deregulation of labour flows, and the decline of international commercial exchange rates in developing nations.
Just as the WTO closely monitors developing nations' record in meeting their obligations, it should also keep track of whether industrialised nations live up to their pledges. Vague promises must be converted into specific, clearly defined commitments backed up by penalties. The industrialised nations must remember the pledges they made to compensate the rising prices of food and agricultural products, facilitate technology transfer and nurture the technical and administrative capacities of developing nations; they must also take into account the means (such as subsidies, dumping and customs barriers) by which they have protected and promoted their own exports.
Developing nations must also refuse to hold a new round of multilateral trade negotiations. Such negotiations may have been acceptable in the age of the GATT, before a powerful international organisation with a recognised legal persona came into being. The creation of the WTO following the Uruguay round brought into being a permanent forum for negotiations. A new round of multilateral negotiations would only duplicate the work of the WTO; it would also force the developing nations to monitor the progress of an inordinate number of concurrent bartering processes. More importantly, the push for a new multilateral negotiating round looks suspiciously like an attempt to sideline developing nations and introduce new items on the WTO agenda.
Developing nation delegates in Doha must also insist on their right to refuse new discussions of competitivity, investment, government purchases, facilitating trade, labour and the environment. These nations already have shouldered a heavy burden under current agreements, which, as mentioned above, must be revised from the perspective of development needs. Furthermore, many of the new issues that have been aired do not fall under the WTO's jurisdiction in the first place; yet the developed nations are using them to turn the organisation's powers of compulsion and punishment to their own ends. This was the case with the debate over intellectual property rights, which is not a trade issue and is already covered under several international agreements.
The eighth demand entails the refusal to consider further customs deregulation. Developing countries, whose domestic products are already under pressure from import deregulation, cannot afford such measures. Nor can they accept them given the barriers imposed on their exports to the markets of industrialised nations.
Developing nations should also resist attempts to broaden WTO jurisdiction over global trade to include matters that have no bearing on transnational commerce. The WTO's authority over legislation, monitoring and the imposition of penalties are already so extensive that this institution is virtually a global ministry of the economy. The sovereignty of national governments has suffered in consequence. Now is the time to restore some restraint, and indeed to curtail some of the organisation's powers.
Finally, the WTO must become more democratic and more transparent. In particular, the overwhelming majority of its members must have the opportunity to participate more actively and effectively in its decision-making processes. In addition, NGOs concerned with the issues brought before the WTO, especially NGOs representing the interests of developing nations, should have a greater opportunity to monitor discussions, negotiations and conferences on these issues, and enjoy free access to the relevant information.
* The writer is a consultant at the National Planning Institute.
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