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Integrated framework for LDCs and ‘mainstreaming’ trade

by Chakravarthi Raghavan

Geneva, 26 Jan 2001 -- Six ‘core’ agencies involved in the ‘Integrated Framework (IF) for Least Developed Countries' are hosting a two-day (29 and 30 January) joint seminar at the World Trade Organization with the title “The Policy Relevance of Mainstreaming Trade into Country Development Strategies: Perspectives of Least-Developed Countries”.

The six core IF agencies are: the International Monetary Fund, the International Trade Centre, the UN Conference on Trade and Development, the UN Development Programme, the World Bank and the World Trade Organization.

The seminar, a document of the WTO’s Sub-Committee on Least Developed Countries further elaborates, is to be the first in a series on ‘mainstreaming trade’.

“Mainstreaming trade”, the paper adds in explaining the off-putting title, “involves the process and methods of identifying and integrating trade priority areas of action into the overall framework of country development plans and poverty reduction strategies."

According to the New Shorter Oxford English Dictionary (1993 edition), ‘mainstream’ used as a noun means “the principal stream or river; the prevailing trend of opinion, fashion etc”. Used as a verb (transitive and intransitive), the dictionary takes us back to the noun, and gives us the meaning as “to incorporate into the mainstream”; and, when used specially in education (says the NS-OED), the verb means “to place (a pupil) in a class for those without special needs.”

At the 1992 World Bank Annual Conference on Development Economics, Mr.  Paul Krugman gave an interpretation of the intellectual history of development economics under the title ‘Towards a Counter-Counterrevolution in Development Theory’. Krugman defined development economics as a branch of economics concerned with explaining why some countries are so much poorer than others and prescribing ways for poor countries to become rich - a revolutionary and important part of economics that commanded great intellectual prestige and substantial real-world influence, and attracted a great deal of intellectual excitement; but that high development theory, Krugman said, left the mainstream of economics and had been swept away by counter-revolution against interventionist development models. Krugman spoke of ‘counter-revolution’ having gone too far, and of the need to bring development economics back into the mainstream.

Speaking as a discussant at that time, Joseph Stiglitz (who was then Professor at Stanford) said that “whether an idea is or is not in the mainstream depends on what river you are sitting beside. The mainstream looks quite different depending on whether one is viewing it from the banks of the Charles (that is, from the Massachusetts Institute of Technology), the Cam (Cambrdige), or the Cherwell (Oxford), leave aside from the shores of Lake Lagunita (Stanford University)...”

Well, the mainstream (of trade now), will undoubtedly look different seen from the shores of the Ganga-Brahmaputra delta (in Bangladesh) than from the banks of the Pangani or Wami (in Tanzania); or from the shores of Lake Victoria than from Lac Leman in Geneva. But judged by the prescriptions and documents from the WTO, the only mainstream is their ‘streams of thought’ - the market god’s words of wisdom to his only prophets.

The entire concept of LDCs (evolved at UNCTAD, and defined by the yardsticks of per capita income, level of education and industrialization) was of countries so completely disadvantaged that they needed special international assistance and help to develop. The original concept was evolved in order to mobilise and provide more official development assistance, in the form of grants, to enable these countries to develop faster. Along the way, the concept kept changing, and was used by the industrialized world mainly to split the developing countries, and by promising more facilities in trade for the LDCs (at the expense of other developing countries), while forcing the other developing countries to undertake all the obligations of the industrial world and more.

In the meantime, during the Uruguay Round when the US and EC would say that they could envisage special treatment for LDCs, but not all developing countries—citing South Korea and Singapore as examples of the developing countries who did not need special treatment—the LDCs, and their spokesman, Bangladesh, used to table proposals, within the Special and Differential (S&D) treatment concept for more favourable S&D for the LDCs. This and other language was put into the Uruguay Round agreements, but like the S&D for the developing countries, that for the least developed too has remained as “best endeavour” promises at best.

At the end of the Uruguay Round, when it came to market access concessions, the industrialized countries made no offers or commitments in areas where the LDCs had an export capacity or comparative advantage.

At Marrakesh, when the Uruguay Round ministers met to sign and conclude, and the frustrations of developing countries and the LDCs was very much in the front, a ministerial decision was adopted to undertake special measures to promote the trade of LDCs and get them market access.

Two years later (at Singapore), there was again talk of special market access facilities for them and an integrated programme, which remained a programme on paper. Then came Geneva, and then Seattle, and now the WTO is having an eye on the next Conference at Qatar (with WTO Director-General promoting a new round to be launched there).

It is in this context and reflective of the increasing frustrations of the least developed countries who find themselves more and more marginalised and slipping back that the attempts to win them over through more promises of help in capacity building has been coming up - with focus on the WTO itself, and the special market access (duty-free, quota-free market access concessions from the developed, to be bound in the WTO schedules) and the special programme of action at the UN LDC Conference to be held in Brussels.

The UN itself sponsored two conferences on LDCs in 1981 and 1991, setting mainly aid targets and other measures by the international countries to help these countries, and the LDCs committing themselves to take a range of policies and actions. The targets remain mainly unfulfilled.

A third UN conference on LDCs is soon to be held, to adopt another plan of action. The UN has published a draft for the consideration of a preparatory committee with unfortunately, very little real content; but that conference is being sought to be made use of by the IMF and the World Bank with their structural adjustment, poverty reduction and other proposals and plans (to expand their own remit) and the WTO wanting its remit to dominate the scene; the UN itself is left with becoming a talk shop, and talking of a global compact with TNCs and the International Chamber of Commerce to promote foreign investment in these countries (as if trade liberalization and FDI under all conditions and circumstances is always beneficial to the host country).

However, the IMF and the World Bank and their programmes and policies, including their poverty reduction strategies, which often are just another name for the old failed conditionality policies, have come under increasing criticism from civil society public interest NGOs who can assemble considerable expertise of their own.

The WTO and its policies promoting the interests of the corporations have also come under severe civil society scrutiny, and erupted not merely in street demonstrations at Seattle, but in considerable work on the ground in developing countries, organizing their domestic businesses and other sectors, and parliamentarians and legislators, against the blind WTO neo-mercantalist recipe of ‘liberalisation of trade and investment’ as an end in itself.

And civil society and the governments and businesses of the developing countries, and even more of the least developed countries, have been pressing for bringing ‘development’ back into the centre of international economic policy - whether in trade, money and finance or any other - and insisting on judging all policies and measures against the yardstick of whether it would promote development, particularly meeting the needs of people, reducing and eradicating marginalisation and inequalities among and within countries.

The IF core agencies and their talk of ‘mainstreaming trade into development’, whether at the WTO or the forthcoming UN Conference on LDCs, have to be judged in this context.

Judged thus, the WTO document, far from throwing any light on the role of trade to promote development merely plays on words, and confuses the issues.

Mainstreaming trade, says the WTO paper, involves the process and methods of identifying and integrating trade priority areas of action into the overall framework of country development plans and poverty reduction strategies. Trade is an engine of growth and makes a significant contribution to development, it asserts, at a time when any number of new critical studies have come out questioning the theory of trade liberalisation in all situations and all circumstances. – SUNS4823

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

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