Millennium Round a minefield for developing nations

By Johanna Son


Bangkok, March 29 - A proposed "Millennium Round" of new trade negotiations is a minefield for developing countries, especially crisis-hit Asian nations already under tough pressure to open markets further, analysts say.

Industrialised nations, led by the European Union and the United States and Japan, hope to agree on such a round at the November meeting of the world's trade ministers in the United States, five years after the last global trade talks ended.

But this is happening too fast and in the interest of powerful countries, say activists from Asia and elsewhere who are lobbying against the idea of a Millennium Round, as coined by the European Union. "There should be no new round until an assessment of the WTO (World Trade Organisation) is made," says Lori Wallach of the U.S.-based group Public Citizen. The November talks should be a "review and repair round", she added.

Others say any new global discussions should be for governments to assess the performance of the WTO, their compliance with it and the effect on countries of world trade accords. Governments should be held accountable by their citizens on whether the promised benefits of signing the world trade accord in 1994 were becoming reality, they say.

"The Asian financial crisis should have at least taught the world the lesson that there are great risks for developing countries when they are asked to liberalise their economies too fast," or to take part in 'globalisation' in an indiscriminate way," says Martin Khor, director of the Malaysia-based Third World Network.

"Before we can even digest the full lessons of how to manage the interface between the domestic and external economies, pressures are once again mounting to get developing countries to open up even more to the big companies of the industrial countries," he adds.

Activists at a conference on economic sovereignty here last week agreed to campaign against any new round that would put new subjects into the WTO -- in effect giving more powers to the world trade body formed in 1994 as the successor to the General Agreement on Tariffs and Trade.

Analysts are particularly wary of a desire by industrialised countries to introduce in a new round global accords on issues like investment and competition policy -- which the same nations had pushed in a meeting of trade ministers in 1996.

They worry about the revival of old subjects of debate, like proposals to link trade and the environment and labour standards, and say these are not issues for the world trade body to discuss.

Activists also warn about moves to revive the initiative to get an agreement on the free movement of foreign investment -- derailed at the Organisation of Economic Cooperation and Development -- at a Millennium Round.

These negotiations in new areas hold huge risks for developing countries, especially those in Asia, at a time when the recession and the prescriptions of institutions like the International Monetary Fund (IMF) are forcing them to open markets further, critics explain.

The result of these policies has been to allow foreign ownership even in previously-limited areas, in a desperate move to get skittish foreign capital back in. Critics say that these changes aim at opening economies to control by foreign capital.

"The US is taking every advantage it can secure -- from the TRIPS agreement (on intellectual property rights) in the Uruguay Treaty to the financial crisis of the East Asian economies -- to reassert its hegemony over the region," argues Yash Tandon, director of the International South Group Network in Zimbabwe.

For activists, it is time to make haste slowly. "Not only do we not want investment transferred to the WTO at the end of the year, but there should be a two-year period to digest measures so far and study the WTO's future mandate," says Susan George of the Paris-based Transnational Institute.

The WTO's scope remains a matter of controversy for many.

For the first time, the world's nations in the Uruguay Round included new areas into the scope of global trade -- reaching agreements on services, agriculture, intellectual property rights.

Critics say these put too many areas under the WTO and obliged developing countries to change laws and policies designed to manage trade and economic policies -- although proponents say these changes would stimulate global trade and growth.

Tandon says that despite the risks, for instance, the US is pushing for further liberalisation of financial services within three to five years.

Yet even the Bank of International Settlements says a prudential regulatory system may take 10 or more years, especially since most developing countries have high FDI to stock exchange capitalization, he adds.

Argues Tandon: "The argument is not about "prudence" or even sound economic management at the national level. It is about control."

Proponents of new global talks say they would further open up trade, and give poorer nations more market access they want. But they also tell their local audiences a new round would mean more purchases of their goods and prying open foreign markets.

Batting for a new round in January, U.S. President Bill Clinton said new talks would "expand export of services, of manufactured goods and, most of all, farm products".

Activists say they want to replicate the MAI's successful derailment in the campaign against a Millennium Round -- but governments of developing countries so far appear to have differing positions on a new round.

But it is time for unity "lest we are in danger of once again being run over by the mighty trade negotiating machine of the rich nations", Khor adds.

Wallach says critics have a handy weapon -- the fact that the U.S. government failed last year to get fast-track authority to seal trade accords.

This means "they don't have (legal) authority" to negotiate in the new trade round American officials are pushing for, she concludes.

The above article by the Inter Press Service appeared in the South- North Development Monitor (SUNS).