WTO head advises against protectionism

GENEVA: World Trade Organization head Renato Ruggiero on 18 May warned nations to resist protectionist pressures, saying a strong multilateral trading system represented a "force for stability and cooperation" for the agency's 132 members.

Speaking at the start of a three-day meeting called to fete 50 years of the General Agreement on Tariffs and Trade (GATT) - the trade agency which preceded the WTO - Ruggiero said world trade ministers must give a "strong signal" that they intend to keep markets open despite the financial turmoil in Asia.

"Keeping trade open is the main road to renewed growth," the WTO chief insisted. Ruggiero also called for complete free trade in goods exported by the world's poorest nations.

Further trade liberalization

The WTO Director-General, backed by EU Trade Commissioner Sir Leon Brittan and, to a lesser extent, US Trade Representative Charlene Barshefsky, was using the WTO encounter to press for further trade liberalization.

All three argue that in addition to ensuring the "full and faithful implementation" of agreements reached under the Uruguay Round of trade liberalization talks under the GATT in 1994, WTO members must also continue to tear down barriers trammelling free trade. Trade officials say a final statement to be issued by Ruggiero on 20 May will underline the need for "further liberalization which is sufficiently broad-based to respond to the range of interests and concerns of all members".

Not everyone wants to go that far. The Geneva meeting also turned into a forum for those who believe that free trade is doing more harm than good to people in developing nations.

"There's nothing to celebrate," stresses Myriam Van der Stichele of the Amsterdam-based Transnational Institute. "All over the world, people experience that they cannot benefit from a trading system that is dominated by multinational companies."

Speaking at a meeting of the World Health Organization in Geneva earlier in the week, Cuban President Fidel Castro also lambasted the WTO for following the "blind and uncontrolled laws of the market".

Moreover, for over two days, the streets of Geneva were crammed with over 5,000 anti-free trade protestors who share Castro's disdain for trade liberalization - but have been expressing it in a more direct manner.

"Most developing countries feel that their plate is full already," insists Martin Khor, head of the Penang-based Third World Network. "But, despite this, they are being pressed to sign up for a new agreement which will be even more significant than the Uruguay Round."

Khor said that the next global round - which the EU hopes will be launched on 1 January 2000, and called, aptly, the "Millennium Round" - will cover a host of new and old topics which continue to preoccupy WTO members.

The EU and the US will be pressing developing countries to accept a discussion on liberalizing cross-border investment flows, after having failed to get a quick decision on the subject at the Organization for Economic Cooperation and Development in Paris, NGO trade experts predict.

The round will also focus on competition policy, government procurement, labour standards and the environment, Khor says. But such negotiations will not be in developing countries' interest, he warns. "Our analysis is that even implementing existing agreements will create tremendous problems and lead to future social crisis in the developing world," Khor says.

The only reason the system hasn't broken down yet, he says, is because developing nations have been given so-called "grace periods" of up to four years to translate their Uruguay Round commitments into action. "But there will be pain and screams of agony in a few years," Khor warns.

Cautious response

The response from governments in developing countries has also been cautious. India's commerce minister Ramakrishna Hegde told the meeting that the WTO and trade must be seen as an "instrument for development". The pace of change and liberalization, he insisted, must be "carefully calibrated to take account of the differences between nations". Hegde also lashed out at the EU and the US for using protectionist actions to restrict goods and services produced in developing countries.

The Philippines' Secretary of Trade and Industry Cesar Bautista also criticized Western countries for delaying the effective liberalization of world textiles trade.

"By pushing the bulk of restrictions for elimination to the end of the ten-year transition period - the longest in the WTO - the willingness of importing countries to undergo industrial adjustments through increased competition becomes questionable," he said.

Jamaica's Deputy Prime Minister Seymour Mullings insisted that the WTO must not overlook the problems facing smaller nations as they struggle to attract investments and expand exports.

Despite the appeals for caution, trade officials say it will be difficult to stop the drive for further trade negotiations.

Under commitments made in the Uruguay Round, WTO members must start negotiations by 2000 at the latest on further liberalization in the fields of agriculture, services and intellectual property rights.

The EU insists that these negotiations will be more rewarding for everyone if countries can barter concessions made in one sector in favour of advantages gained in another.

Trade officials say that US President Bill Clinton's invitation to the WTO to hold next year's Ministerial meeting in the US (thereby effectively launching the new global trade talks) is likely to be welcomed by WTO members who remain wary of Washington's commitment to the multilateral trading system.

But for many in the South, it means months of preparations and hard work. "The WTO is not a win-win situation for developing countries," warns Khor. "Some are going to lose and some are already losing."  (IPS)  
(Third World Economics No. 184/185, 1-31 May 1998)