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MANY WHYS, AND FEW WHY NOTS IN GLOBALIZATION DEBATES

by Chakravarthi Raghavan


Bangkok, 18 Feb 2000 -- If the general debate and the interactive debates at UNCTAD-X, with a total of about 180 speeches and interventions were to be characterized in any way, it is one of many voices of 'why' and a few 'why-nots' - why not change the systems and rules?

And perhaps remarkable were the views from such past ardent advocates and exponents of the liberal order and free trade, like Singapore President Goh Chok Tong, who on the opening day said a new framework was urgently needed - a new global order to sustain a global consensus on open markets and to moderate its worst excesses. Without such a framework, the international consensus on an open-trading system would be eroded by the pressures and dislocations of the relentless market.

The Indonesian President Abdurrahman Wahid said that Malaysian Prime Minister Mahathir had expressed Indonesia's fears and worries. Calling for change in international monetary regulations that took the weakness of some for granted, Wahid said "At present, Indonesia had to accept developed countries' arrangements, but when it was strong it would not be tied to them." UNCTAD, he said, should remember that others shared the concerns expressed by the Malaysian Prime Minister. Indonesia was currently weak and therefore could be manipulated and not many countries could do what Malaysia had done when it bucked the system (and imposed capital controls).

Former UNCTAD Secretary-General Gamani Corea, speaking as a special guest, called for a suitable arrangement for 'global economic governance', with representation for both developed and developing countries, some differentiation from developed countries on what developing countries are called upon to make. Corea also called for work on identification of the characteristics of a world trade system that would reflect the goals and interests of developing countries and could contribute to negotiations among all countries.

Egypt's Yousef Boutros Ghali, Minister of Economy and Trade, underscored UNCTAD's role as the main framework in the UN system dealing with economic matters and the contribution it could make by increasing coordination between trade, financial and monetary policies. While trade was an engine of growth, the parameters of the international trading system must be clearly defined and fair to all. The impending WTO negotiations must be realistic and provide immediate measures for institutional reform and transparency.

Indian Commerce and Industry Minister, Murasoli Maran said the 20th century was ending with failure to resolve two major problems - mass unemployment and growing inequality. The question was not whether the market or state should dominate, but one of balance - and that balance might depend on the country, the capacity of the government, and the institutional development of markets. But the old GATT and the new WTO looked like a 'one-way street' - one could drive down from the North to the South, but from the South the road was normally blocked. The developed world continued to press for greater access for their goods, services, capital and intellectual property rights in world markets, while the same was denied to developing countries in areas where they had comparative advantage.

The WTO process, Maran said, should be reformed. The fear, anxiety and insecurity of the developing nations should be addressed, and efforts to insulate first world markets from third world competition should be stopped. The WTO should be given a much narrower, trade-oriented remit, and non-trade issues addressed in appropriate international institutions. And while cooperation among international organizations may be good, in the name of coherence "a networking behemoth" that pressures developing countries through cross-conditionalities should not be created.

Pakistan's Munir Akram (ambassador at Geneva, but designated as special envoy of the President) noted that the globalization process was marked by 'Darwinian struggles' for survival between major international companies, with the ebb and flow of capricious financial flows often determining the fate of peoples. A solution to the negative implications of globalization should be sought globally, and the international community should draw up an agenda for global equity that would redress the inequities of the world trading system.

Chinese vice-minister Zhour Keren said the financial crisis had dealt a heavy blow to the financial system of emerging markets while developed countries reaped benefits. A sound international financial system and multilateral trading system was needed. The lesson in Seattle was that items linked to the interests of developing countries must be fully considered in any new round of negotiations with a balanced agenda. The starting point for a new multilateral trade round should be development.

Developing countries, Brazil's Celso Amorim noted, were adjusting themselves and their policies to a system they had not shaped, but rightly felt entitled to influence. It was but fair that developing countries expect that their momentous efforts, in many instances at high political and social costs, be matched by concrete actions on the part of the developed nations. Gone were the dreams of (the developing world) of a new economic order, based on unrealistic demands or expectation that ethical or political considerations rather than operation of market laws become the keystone of international economic relations. But at a minimum, the poor nations might expect that the developed countries deliver on their repeated promises to open their markets to goods the poor nations produced competitively. If protectionism was the evil so often decried in relation to the policies of the South, why was it that most developed nations persisted with their protectionist practices precisely in areas with greatest potential opportunities for developing nations - such as agriculture, textiles and steel.

Large transnational companies, Cuba's Foreign Trade Minister Ricardo Carizas Ruiz declared, were the main beneficiaries of the open markets that had favoured the major economies. The issues of tariff and non-tariff barriers to the developing world had been compounded by increasing unilateral measures as a means of political pressure on small countries. This was happening in the face of the supine international agencies, particularly the WTO, illustrating the fragile nature of its rules, Carizas Ruiz declared, drawing pointed attention to the US use of Sec. 301 of its trade laws. Structural transformations in favour of the weakest economies, rather than merely improved traditional trading terms, should be the priority for any new multilateral round of trade negotiations.

Thailand's foreign minister, Surin Pitsuwan, suggested that globalization process was not a matter of choice but an accomplished fact, along with its imbalances. A global approach to shape and manage the process was needed to maximize opportunities, minimize the risks and avert problems of marginalisation. The growing anxiety and scepticism about trade liberalization must be addressed, and the existing multilateral trading systems rules must be improved to better balance mounting obligations and unrequited rights of states. The pace of liberalization and integration must be commensurate with levels of development, and the existing international financial system must be improved to prevent a recurrence of the crisis and provide better crisis management. The deputy prime minister and minister of foreign affairs of Mauritius, Rakaswur Prryag, challenged the view that e-commerce would solve the problems of isolation of small island developing nations. It may mitigate some of their problems, but it was no panacea for their development problems, he said. The special and differential treatment for developing countries may not be adequate to deal with exigencies of globalization. Sustainable development of small island developing nations must be built into the WTO rules.

Ana Maria Solarez Gaiti, vice-minister of Bolivia said the aim of the conference should place globalization at the service of development. Globalization can and should be changed and guided by human agency, she asserted.

Jamaica deputy prime minister Seymour Mullings underscored the need for a more comprehensive and focused programme to provide relief to the developing countries from unsustainable debt, and there was an urgent need for broader and more creative approaches inclusive of an expanded initiative for debt relief.

Several non-government representatives focused on what they saw as the failure of governments at UNCTAD-X to address the real issues and problems of the developing countries.

For the Third World Network, Martin Khor said that the view that financial liberalization and deregulation posed little danger to the developing world was promoted by rich countries and organizations who wanted access to developing country markets. But this was a mis-diagnosis, and as a result, a financial problem was converted into a structural recession. The developing world needed new policies so that it was not further locked into financial liberalization. Reforms of the IMF were needed, and of the WTO which had become the deformed version of the multilateral trading system. The development of the developing world should be the main goal of the WTO.

Jayanthi Durai of the Consumers International noted that the current multilateral trading system had allowed the top ten TNCs to increase their share of sales four-fold, while African consumers had lost purchasing power.

Shalmal Guttal of the Focus on Global South wanted UNCTAD to play a central role in developing and setting agreements for global trade, finance, investment and development. UNCTAD's focus must move away from an overwhelming focus on international trade as the key factor in development and pay greater attention to measures for strengthening domestic economies and internal markets, asset and income distribution, and also pay serious consideration to the principal subsidiary relations (within TNCs) in production and trade.

Michel Bailey of Oxfam said the hypocrisy of the world trade rules was nowhere more evident than in agriculture - where industrialized countries paid their farmers $350 billion a year in subsidies - seven times their ODA. How can farmers earning $200 a year compete with european farmers with an annual subsidy of $20,000. And over-production generated by subsidies were dumped on world markets, destroying rural livelihoods.

Yash Tandon of the International South Group complained that UNCTAD was looking for ideas from academics and scholars in the North. This was illustrated in the roundtable of economists, where there was only one academic and scholar from the South. The G-77 and the UNCTAD secretariat, he complained, had sacrificed truth (about the failures of globalization) to the dictates of power and privilege. (SUNS4610)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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