Malaysia: PM for South cooperation for equity in global governance

by Lean Ka-Min

Penang, 20 Nov 2000 -- In the face of their individual limitations and an international economic environment that is less than conducive to realization of their development prospects, developing countries must strengthen cooperation to ensure an effective and equitable system of global governance, the Malaysian Prime Minister has asserted.

Under such a system, different countries will all have their say regardless of their size or economic strength, envisioned Dr Mahathir Mohamad. The network of cooperation needed to bring this about may itself serve as a surveillance system against the ills that may infiltrate the economies of the developing world.

Dr Mahathir issued his call for cooperation when opening the Langkawi International Dialogue 2000 (LID 2000) yesterday in the northern Malaysian island of Langkawi. The Dialogue is to centre on the theme of “Smart Partnership.”

Expounding on the theme, the Malaysian premier said the spirit of Smart Partnership, far from being an abstraction, is a workable entity that promises real, tangible results. Indeed, it is through such cooperation that the developing countries “can achieve together what we are unable to accomplish on our own.”

The need for developing countries to work together is all the more urgent given the current vigorous push in the international arena for every nation to embrace a process of market-led globalization.

Globalization is made out to be driven by irrefutable economic laws and irrepressible market forces such that the process is impossible to resist or even modify and must be accepted by all countries, big and small alike. The Director-General of the World Trade Organization (WTO) has, pointed out Dr Mahathir, even likened the stopping of globalization to “trying to stop the rotation of the earth.”

According to Dr Mahathir, this wholehearted attempt to pass off the irresistibility of the globalization juggernaut as “the truth” is meant to preclude any critical analysis on the part of those who may still harbour doubts.

However, the ‘real’ truth paints a very different picture of the nature of globalization. Noting that it in fact contains very little of the free-market element, Dr Mahathir said the prevailing brand of globalization “has been deliberately shaped to fulfil the requirements of the principal players, a process greatly aided by political powers bent on creating international conditions conducive to their needs.”

“It is indeed baffling that in the face of the onslaught of such diverse economic and political strategies for economic domination, any effort on the part of developing nations to slow the advancement of trade liberalization is automatically labelled as ‘barriers to business’ or ‘market distortions’,” added the Malaysian premier.

Dr Mahathir then listed in his speech a string of cases in the multilateral trading regime which manifest the double standards at work in the international economic system.

Even as they have exhorted and continue to exhort developing countries to open up their markets to imports, Dr. Mahathir pointed out, a number of developed nations (i.e., the US, Europe and Japan) have taken recourse to a range of tariff and non-tariff barriers, including quotas and voluntary export restrictions, in the textiles and agricultural sectors under special terms they secured in the Uruguay Round of trade negotiations.

As global trade increasingly endangers their supremacy in such areas as textiles, Dr Mahathir noted, these countries have also introduced their own rules of origin (to identify where a textile or clothing product comes from), thus altering the conditions of competition and adding to restrictions against the low-cost textile exports of other countries.

Dr Mahathir also drew attention to South Africa’s “free trade” agreement with the EU, which excluded 46% of the former’s agricultural products as they directly compete with European production.

Pointing to the loopholes in the WTO’s Agriculture Agreement, Mahathir pointed out, this allowed the likes of the US to continue providing, through its “Green Box” exemptions, direct income subsidies to the country’s agro-exporters despite the fact that the WTO wants Member countries to reduce their agricultural subsidies and that the US reduced direct subsidy payments through the 1996 Farm Bill.

“I fail to see the logic of this equation, purportedly made in the name of fair trade,” said Dr Mahathir, “but perhaps more disturbing is the prospect of a policy statement that perhaps mathematically tallies, but sends small farms and farmers all over the world to an early grave.”

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), Dr.Mahathir pointed out, protects the rights of corporations but allows for patenting of shared knowledge of indigenous communities. The implication for developing countries, then, is the loss of billions in rent transfers to rich countries, as transnational corporations will continue to control virtually all the patents of developing countries.

Making a more general observation, Dr Mahathir pointed to the fact that two-thirds of international movements in goods and services actually take place as intra- and inter-firm transactions through “mechanisms not even remotely resembling that of ... open global competition.”

The Malaysia premier asked: “Is this not unfair practice?”

While relatively few fetters are placed on such movements, labour, on the other hand, does not enjoy the same level of mobility internationally, Dr Mahathir noted and criticized the “glaring” inconsistency between the treatment of labour, for the most part originating from less developed countries, and that of financial and technical productive factors, which are largely the domain of industrialized nations.

In short, then, “all around us double standards abound”, said the Malaysian prime Minister.

The cold, hard truth, despite all the high-flowing rhetoric about “a better quality of life for all humanity” and “an equal footing”, is that “it is really all about money and market domination.”

It is amid such a backdrop that extreme poverty continues to afflict over a fifth of the world’s population.

While almost 10% of the global population live in Africa, the continent now has less than 1% of global trade, 0.3% of global manufacturing and 2.4% of global GDP, of which 40% was accounted for by South Africa and Nigeria alone. Added the Malaysian premier, the 50 poorest countries, while accounting for 20% of the world’s populace, live only on 2% of the world’s income.

In the 1960s, the richest 20% of the world’s population had incomes 30 times greater than those of the poorest 20%. By 1996, however, they were 61 times better off.

“While the developed nations continuously harp on ‘human rights violations’, the G-77 [group of developing countries] accurately identifies poverty as the single most pervasive violation of human rights. And this is not perpetrated by us,” said the Malaysian premier.

Dr Mahathir underlined the need for developing countries to ensure all available resources are tapped in order that the vicious cycle of incapacity for wealth generation and sustainable development may be broken. In this regard, he emphasized, Smart Partnership practices are instrumental in ensuring the social accessibility of knowledge, hence the G77’s call at the Havana South Summit in April for greater South-South cooperation in the area of information technology.

Dr Mahathir warned of the danger that developing countries may be bypassed by the advances in and benefits of information and communications technology.

To the vast majority of the world’s population, the growth of electronic commerce, which is projected to achieve volumes of several trillion US dollars by 2004, is but a distant shadow.

And despite a growth rate of 15,000 new Internet users a day, and 220 million devices accessing the World Wide Web, with 200,000 added each day, it remains that only 5% of the world’s population, concentrated mostly in the developed world, stand to gain from this boom. For starters, the top 20% of the world’s population account for 74% of phone lines, against the bottom 20% with access to only 1.5%.  Said Dr Mahathir: “While effective international cooperation is vital in bridging the widening digital divide, more importantly it allows for representation of the views of the developing world in formulating international policies on the use and expansion of information technology. The Internet Assigned Numbers Authority (IANA), for example, has no representation from the developing world.”

The larger issue of representation of developing countries in international fora, contended Dr Mahathir, is one that must be immediately addressed. Here again, however, the implication of a weak economy manifests itself in a number of ways.

Although they constitute three-quarters of the WTO membership, the developing countries’ economic dependence on the larger economies in terms of imports, exports, aid and security negates their advantage in numbers. This in turn translates into their inability to make their vote count in a manner that serves to influence the WTO agenda and negotiations in their favour, lamented Dr Mahathir.

Moreover, the relative economic weakness of the developing countries limits the level of human and technical resources at their disposal in international economic fora.

The result is “an inability to cope with the 40-50 meetings held in Geneva each week. It means less preparation when entering into negotiations with counterparts from developed nations. It means settling for what is less-than-optimum outcomes in dispute settlements because of a level of legal expertise that is not up to par,” said Dr Mahathir.

The solution, suggested Dr Mahathir, lies in developing countries’ equipping themselves and building their strength. For, failure to do so would be “tantamount to laying down our weapons and surrendering our collective destinies.” In this respect, the countries of the developing world must strive for greater technological know-how, stronger representation in world fora, and appropriate institutional, legal, supervisory international frameworks.

The Malaysian Prime Minister conceded that the difficulties involved in putting together a new multilateral structure cannot be underestimated.  However, “such efforts do work even though the process is long and hard.”

Recent developments have given some cause for optimism that the struggle for greater equity in international economic relations will bear fruit. Countries are no longer content with reaching just any kind of agreement at the last hour in multilateral economic fora merely for the sake of reaching agreement, said Dr Mahathir.

“The Seattle debacle is proof that developing countries are no longer willing to take the back seat. Hard lessons have been learnt from the Uruguay Round. The merits and intentions of these so-called ‘mediating mechanisms’ of international multilateral agencies are seriously suspect.”