The steamroller rolls on
The WTO has become an avenue for developed countries to perpetuate their dominance. To counter this, developing countries need to first identify their interests and undertake detailed analyses of the pertinent issues. In addition, an institutional mechanism should be set up to facilitate coordination of their efforts towards a WTO that is more receptive to the developing countries' needs.
by Bhagirath Lal Das
NEW DELHI: Often it has been said that the WTO is an instrument for the spread of neo-imperialism. This fear is not unfounded. One may, however, add that the main weapon in the march of imperialism is technology; and the WTO is used as the vehicle and instrument to carry the weapon across borders.
In the late 18th and early 19th centuries, when Europe and Asia interacted, the European nations had mercantilist economies. They came to Asia in search of spices and goods (textiles). At that period, the local technology - for example, the technology in what is now South Asia - was superior. Nevertheless, the Europeans prevailed in establishing themselves and becoming dominant in 'international' trade because of their superior technology in shipping.
This led to the strengthening of European colonialism and imperialism, and to the onset of the industrial revolution, first in the UK and then spreading to Europe. In turn, the range of technologies emerging out of that industrial revolution strengthened the imperial dominance of certain European powers. After the initial success of the industrial revolution, Britain-led laissez faire spread to Europe, but in such a way that the countries of Asia, Africa and Latin America were prevented from participating in that industrial revolution. Age of empire
Now, we are amidst another technological revolution, many times more powerful than the last one. It is not only about space, atomic energy and laser technology; it is, in fact, about the entire production process and distribution and marketing systems in all sectors. All these are being revolutionized by the use of new scientific and technological precision and continuous interaction among consumers, designers and producers, through advanced information systems and other similar tools.
The strong linkages among the leaders in technology, production, international trade and government in the developed countries are somewhat unprecedented. Though cloaked under the term "neo-liberalism" - implying a return to 19th-century liberal or laissez faire economics where the state had a hands- off stance on economic activities - the way they are practised in the developed world today is such that the state plays an active role in promoting the interests of its corporations and businesses.
In this new wave, the countries and societies which remain satisfied with their current methods of production or with 'appropriate' or 'intermediate' technology will be left by the wayside, and the caravan of 'development' in the 21st century will move on. Those that have embraced the new culture of production will be the empire-builders, whereas those that have just sat back lamenting their lot will be the victims.
In this massive change, the fear is that the means of production in the entire world will effectively pass into the hands of the big firms of the advanced industrialized countries. The production structures in developing countries will be weakened and they may be reduced to just being the satellites of these big firms. The governments and the societies in the developing countries will also become weak; and decision-making on policy issues may slowly pass on to these big firms and their centres in the developed world.
The empires of the 21st century will not be carved out by marching armies, but by powerful industrial and financial firms.
The developed countries are trying to use the WTO to smoothen the progress of these firms by removing obstacles and also by positive encouragement. Their objective is to expand the economic space of their manufacturers, traders, service providers, innovators and investors. Towards this end, they have managed to develop compatible rules and are also pushing for the formulation of new rules to take full advantage of the immense possibilities in the developing world. Furthering developed countries' aims
The tariffs in developing countries have been slashed drastically, their options for direct import controls have been curtailed and the possibilities for government support for their production and export have been inhibited. At the same time, their markets have been opened to the services which are mainly provided by the firms of developed countries, and enhanced protection of 'intellectual property rights' has been ensured.
Now, efforts are underway to provide the investors of developed countries the facility to have free entry into developing countries, and to allow free play of action to the firms of developed countries in the garb of an effective competition policy.
Besides, like a typical pincer movement, the developed countries, while providing positive support to their own economic operators, are constraining the efforts of developing countries to boost their production and export. There has been a significant evolution of methodology in this regard.
Earlier, the common method for restraining the imports from developing countries was through direct import controls, either in contravention or derogation of GATT. Later, anti-dumping processes started to be used in a big way, and these are still being used. Then came the measures undertaken ostensibly for the protection of the environment and for the preservation of the life and health of human beings, animals and plants.
In reality, most of these measures were simply a device for the protection and preservation of domestic industry, and a large number of them did not stand the scrutiny of independent internal examination or of the dispute settlement panels of GATT/WTO.
Now, a more sophisticated approach is being tried through the attempts at introducing enabling provisions for trade measures to enforce the implementation of labour standards.
A natural question arises as to why the major developed countries prefer to use the WTO as the forum of choice for pushing their economic objectives, even though some of these are not directly related to trade. There are two main reasons. First, the developed countries have found from past experience that they have generally had their way in this forum due to various circumstances. Second, the WTO has a good mechanism of enforcement of obligations, particularly those of the developing countries, through the threat of retaliation on their export of goods.
It appears somewhat incomprehensible that developing countries do not find their way easy in the WTO. The decision- making process is on the basis of one country-one vote, and they are large in number. In fact, out of about 132 members, only 29 are developed country members; developing countries thus number more than thrice this strength. Yet, they find themselves totally helpless and ineffective.
All the initiatives are taken by the developed countries; and decisions are generally taken in their interest. Even though developing countries resist sometimes, they almost always yield in the end. The only exceptions are the circumstances when all or a large number of them put up combined resistance.
Developing countries' ineffectiveness
Four reasons can be easily identified for the failure of developing countries in the WTO forum. First, generally they are not able to have a firm identification of their interests. Within a large number of developing countries, the process of clearly defining the position on issues is not easy. Various wings of government and interest groups often have differing views and approaches, which is not uncommon even among the developed countries. What is problematic in developing countries is that a rational filtering of firm and final positions through all the differing opinions is often not easy. The result is that there is an absence of a single-minded focus on any particular initiative or on a specific line of defence. In short, the line of a developing country in most cases is not firm, focussed and precise.
Second, the developing countries are not well prepared. This handicap primarily flows from the first since the preparation will normally not be thorough if the lines of initiative or defence are not clear. Further, most of the developing countries have poor infrastructure for detailed analytical study and analysis of issues and problems. Often in negotiations, a country has to analyze the implications of various alternatives at short notice, and, several times, even almost on a continuous basis. Generally, the developing countries do not have the capacity for such analysis.
Third, they do not coordinate well among themselves. This handicap, in turn, flows from the first two. If the positions of a country are not clearly and precisely defined and if there is absence of thorough and comprehensive analysis, it will naturally be difficult to have an effective cementing of positions.
Fourth, the developing countries are often overawed, and sometimes even afraid, in the WTO. This attitude arises initially because of lack of knowledge of the various subjects. Though the negotiators and trade policy officials of some developing countries are very knowledgeable and competent, for most of the countries, it is not the case. Lack of knowledge, coupled with inadequate preparation, makes them extremely diffident in intervening in the formal debates and informal discussions. This is compounded by plurilateral and bilateral pressures in the capitals. The governments of developing countries generally hesitate to displease the major developed countries.
Empowering developing countries
These problems suggest their own way out. It is necessary for developing countries to improve their internal system of finalization of their positions on the WTO issues. Traditionally, subjects relating to GATT have been handled in the government by the Ministry of international trade or international economic relations. Now, the subjects addressed in the WTO are quite complex; besides, there is a close inter- relationship among various issues and a large number of interest groups involved in any subject. It is necessary to have an institutional mechanism for intra-ministry joint consideration of an issue and also for detailed consultation with all the interest groups affected by an issue.
Simultaneously, it is also necessary to have public debates, for example through the press, on some vital issues in the WTO which may be of national importance. If a position emerges after having weighed the multi-sided implications in this manner, the national position will be very much consolidated, and the government will then be motivated to push ahead with its position with greater confidence and conviction.
There has to be intense research and analysis in this process of formulating the positions and also in the follow-up during the negotiations for these positions. Governments in developing countries are not themselves quite equipped for this purpose. They have to enlist the help of research institutions and universities in their countries. Besides, there can be major gains in this regard if some key research institutions in the developing countries develop a system of mutual cooperation in their work in these areas.
Then, there should be an institutional arrangement for coordination among the developing countries. Such coordination should be there not only among the delegations in Geneva, but also at the level of capitals. Already, there are institutions like the G77 in Geneva and in New York, the informal group of developing countries in the WTO, the Non-Aligned Movement, the G15, the G24 (in connection with the work in the IMF and the World Bank), the South Centre, regional groupings of developing countries and so on.
The time has come for a fresh think on what should be the effective institutional mechanism for coordination among the developing countries in matters relating to the formulation of positions and negotiations in the WTO. It could be one or more of these existing institutions or it could be a proper blend of some of them. Yet another alternative could be to evolve a new institutional mechanism specifically suited to WTO matters. Whichever institutional mechanism is chosen or created, it should have the twin objective of being a political forum and also an effective technical support apparatus. If it is not practical to have a mechanism involving all the developing countries, one should aim at one involving a large number of countries, say about thirty of them.
Such preparation and cohesion will certainly enable the developing countries to shape the agenda of the WTO in their best interests, which is almost impossible at present. It will not be a confrontational approach, but a positive and constructive one, which will enable them to focus on relevant issues, prevent their exploitation and minimize the threats and pressures on them. The WTO can, in this manner, be turned into a useful organization by them, one which will be alive to the needs and imperatives of the economies of the vast multitude that inhabit the developing world. And in this manner, the developed world will also benefit. It is important for the developed world to learn once again that its growth and development depend a lot on the accelerated development of the peoples of the developing world, because its own areas are not adequate for the full realization of its potential. (Third World Economics No. 182, 1-15 April 1998)
(The author was formerly India's Ambassador and Permanent Representative to GATT. He was also the Director of International Trade Programmes in UNCTAD.The above article first appeared in the SUNS)