Al-Ahram Weekly   Al-Ahram Weekly
25 Nov. - 1 Dec. 1999
Issue No. 457
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A word to the negotiators

By Adel Bishai*

Adel Bishai
I do not plan to go into detailed discussions of the infinite number of issues pertaining to the World Trade Organisation (WTO) here. I shall only highlight a few points, which I wish a negotiator from a developing country would keep at the back of his mind during the actual negotiations.

First, it is now a fact that the economic and social well-being of nations depends increasingly on what happens on the global scale. For example, today's three giant population blocs -- China, the former Soviet Union and India -- with nearly half of the world's labour force, are being drawn into the global market. By next year, it is estimated that less than 10 per cent of the world's labour force will remain isolated from the global economy.

Second, the world of the 21st century will be different, in the sense that the supra-national body called the WTO is very different from the General Agreement on Tariffs and Trade (GATT) of the 1980s, when the tuna-dolphin issue raised by the US regarding imports of tuna from Mexico was before the GATT tribunal. The GATT ruled in Mexico's favour, but that ruling was not legally binding. We are now in the world of the shrimp-turtle issue, where the WTO ruling against the US is binding. Will some countries in the future refuse to import goods if their production endangers the ozone layer? What will happen in the trade war between the US and Europe over genetically modified crops?

Third, the WTO is a strong organisation, and is becoming even stronger. The negotiators should bear this in mind. It would not be surprising if the WTO wants to expand its activities in many directions: human rights, good governance, etc. In that respect, let us recall what happened during the Geneva negotiations, when demands were made for environmental issues to be integrated in the trade debate.

Fourth, on the issue of trade and environment, to take one example, a negotiator from a developing country would do well to insist that the matter be left to the Committee on Trade and Environment, established in 1994. I believe the CTE should continue to act as a deliberating body, and not rush to make decisions. There seems to be a tendency in the WTO to take separate issues and deal with them piece-meal in a legalistic manner. The Geneva scenario will repeat itself. The apprehensions of developing countries were not unfounded, since the developed nations did not fulfill their obligations with respect to market access, technology transfer, and provision of additional resources. The WTO's focus on specific measures -- for example, attaching environmental conditions to trade and investment -- is at variance with the holistic goal of sustainable development.

Fifth, theoretical underpinnings are necessary for successful negotiations. There will be voices saying that trade and environment are reconcilable. They are indeed; but in the long run, not necessarily in the short run. The hypothetical negotiator's task is difficult precisely because he will be negotiating now when the adjustment process should begin. And this is a process, not an act.

Sixth, the negotiator should sift through the hundreds of pages of the WTO agreement to find the clauses that tend to serve the interests of developing countries. There are several of these, of which, regrettably, not many people are aware. The preamble refers to "the need for positive efforts designed to ensure that developing countries secure a share in the growth of international trade". The environment, also according to the preamble, must be preserved "in a manner consistent with the countries' needs and concerns at different levels of economic development". Thus it is clear that the environment was not meant to be of absolute importance.

Seventh, it is a good idea to look at our export basket, which is not very different from that of many developing countries. In this regard, we should note the following. The sectors of interest to developing countries are those most susceptible to the imposition of environmental standards, often set unilaterally by importing countries. Such sectors include clothing, leather goods, footwear, and other labour-intensive products. Such standards negatively affect the market access of the developing countries. The usual reference to compensation for the loss of competitiveness is only really applicable in the large, diversified economies of advanced countries. In developing countries, the room for manoeuvre is necessarily limited.

Developing countries are price takers in exports of products such as textiles and food products. Their competition is price competition, not non-price competition. Therefore, any environmental requirements that result in increasing costs is tantamount to a loss in competitiveness. The prevalence of small and medium scale-enterprises in developing countries cannot be ignored. Such enterprises cannot afford the variable cost component of complying with environmental standards.

In sum, we should seek to avoid a repeat performance of events that took place a quarter of a century ago, when the "New International Economic Order" was all the rage, and North and South were busy blaming each other. To a large extent, the seriousness of the South in the current negotiations will determine their future course.

Trade liberalisation under the WTO does not mean free trade. The setting itself is asymmetrical. Are we dealing with individual countries, or with blocs (like the North American Free Trade Agreement or the European Union, itself a mini-GATT) on one hand and individual countries -- some of which have a per capita GDP of $100 or $200 -- on the other? How does this work methodologically? Under globalisation, and agreements with transnational corporations, are the developing countries successful in producing for export rather than the home market?

As the WTO meeting takes place in Seattle, demonstrations, workshops and cultural events may well be held. Protesters may ask for a review of the real-life effects of the Uruguay Round, with an eye to repairing the parts that are not working. Representatives from developing countries may start by reviewing what has happened to the share of developing countries in world trade in the past five years, and go on from there. Just as domestically, privatisation requires that we examine imperfections in markets, trade liberalisation requires that we examine the prerequisites on the supply side in developing countries. In this race, some have a head start.


* The writer is professor of international economics and a member of the Shura Council.

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