United Nations, 1 Oct 99 (TWN) -- Free unrestricted flow of goods and services across borders will eventually destroy markets and result in contraction of world trade, the Malaysian Prime Minister, Mahathir Bin Mohamad said here Wednesday in his address to the UN General Assembly.

"That was what happened when the currency traders impoverished the countries they attacked," he said. "These countries could not buy the products of the rich i.e. the rich lost their markets and world trade contracted."

In a scathing attack on the 'liberal democratic free market capitalist' system, Mahathir said "the markets of the poor countries may not be big but impoverishing them would result in lost sales for the rich."

Small independent countries were being told, he said, that the world should be borderless, that capital, goods and services should flow freely between countries. There should be no discriminatory taxes to protect local industries or products.

"Local banks, industries and products must compete on the same footing as imported products and their banks and industries must compete with foreign banks and industries set up in their countries. No conditions must be attached to foreign banks and businesses which want to set up operations in their countries. They must have national status like those given to local businesses. This way it is said, a level playing field will be created and competition will be fair.

Mahathir questioned whether competitions between giants and dwarfs could be fair even if the playing field was level. The giant banks, corporations and industries from the rich countries with huge local markets can afford to lose money in a small foreign country when they make huge profits at home and elsewhere. The small businesses in the small countries will go bankrupt if they lose money repeatedly. In the end they will have to sell to the giant foreign companies or close down altogether.

In an ominous prediction of what the fate of most developing countries would be if the TNCs are allowed unfettered access, Mahathir said "there will be no more big local companies. There will only be branches of large foreign companies who will indulge in transfer pricing, and will repatriate most of their profits."

Criticizing the Western double standards, Mahathir reminded the West that it took centuries to make their system work. Their transition from feudal oppressive rule was bathed copiously in blood. Both rich and poor were massacred as reforms were forced by a succession of uncaring tyrants, many elected by the people. Even today their system has not brought about freedom and equity to large segments of their people.

"Yet they insist that all the countries of the world, new or old, must immediately adopt the only system of Government, their system, their liberal democratic system."

Mahathir also had a dig at the West over its overriding preoccupation these days on human rights. He chose to dwell on two specific human rights issues - an individual's right to dissent versus the collective rights of masses and child labour.

"The definition of human rights seem limited to an individual's right of dissent against the Government," he said. "Millions of people in a country will be made to suffer through sanctions and even bombings in order that a few dissenters may enjoy their rights of dissent. Apparently the rest of the population, hundreds of millions of them sometimes, have no rights. Their rights are not considered human."

He added that the deprivation of the right to work for millions resulting from currency trading is not considered as violation of human rights. 'In the Western perception only individuals have rights, the masses do not.'

On child labour, the Malaysian Prime Minister called for a direction of concern to where it really mattered and not making it worse for the poor people. "Unfortunately the concern is only shown when the products of child labour and sweat shops compete successfully with the products of highly paid high living four-day week workers in the developed countries."

"Child labour and sweat shops are not something which anyone would defend but consider the extreme poverty of the people in some countries," Mahathir said. "They have no capital, no technology or expertise, no markets at home, no Harvard-trained managers. All they have is low cost labour. For the workers the tiny wages that they earn is far better than starvation and death.

"If we really care, then invest and pay high wages and the sweat shops will disappear and adults will earn enough to feed their children. Forcing them to stop child labour and sweat shops will only cause more sufferings for their people. Telling them to stop producing children is not a solution either. We know that the poor have a higher birth rate than the rich. To stop the population explosion which the West is worried about, enrich these people. Stopping their sweat shops and children from working will only impoverish them further and cause them to have more children."

The globalized world, Mahathir said, will be totally uniform. "Everything should be standardized according to Western best practices. Variety is equal to being intransigent and must therefore be eliminated."

He added that no serious attempt was being made to change the International Financial System. So far there was only talk about intention. But the threat of financial, economic and political destabilisation remained. (SUNS4521)

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

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