Delegates call for new trade and financial order

Concern over the imbalances of the globalisation process dominated the debates at UNCTAD X, with delegates underscoring the need for a new international rading and financial system to advance the interests of the developing countries and regulate the excesses of the free market.

by Chakravarthi Raghavan

IF the general debate and the interactive debates at UNCTAD X, which saw a total of about 180 speeches and interventions, were to be characterised in any way, it is that many 'whys' and a few 'why-nots' - why not change the systems and rules? - were voiced.

Remarkable, perhaps, were the views emanating from such past ardent advocates and exponents of the liberal order and free trade as Singapore Prime Minister Goh Chok Tong, who on the opening day said a new framework was urgently needed - a new global order to sustain a global consensus on open markets and to moderate its worst excesses. Without such a framework, the international consensus on an open trading system would be eroded by the pressures and dislocations of the relentless market.

The Indonesian President Abdurrahman Wahid said that the Malaysian Prime Minister Mahathir Mohamad had expressed Indonesia's fears and worries. Calling for change in international monetary regulations that took the weakness of some for granted, Wahid said that at present, Indonesia had to accept developed countries' arrangements but when it was strong, it would not be tied to them. UNCTAD, he said, should remember that others shared the concerns expressed by the Malaysian Prime Minister. Indonesia was currently weak and could therefore be manipulated, and not many countries could do what Malaysia had done when it bucked the system (and imposed capital controls).

Former UNCTAD Secretary-General Gamani Corea, speaking as a special guest, called for a suitable arrangement for 'global economic governance', with representation for both developed and developing countries, and some differentiation from developed countries on what developing countries are called upon to make. Corea also called for work on identification of the characteristics of a world trade system that would reflect the goals and interests of developing countries and that could contribute to negotiations among all countries.

Egypt's Yousef Boutros Ghali, Minister of Economy and Trade, underscored UNCTAD's role as the main framework in the UN system dealing with economic matters and the contribution it could make by increasing coordination between trade, financial and monetary policies. While trade was an engine of growth, the parameters of the international trading system must be clearly defined and fair to all. The impending WTO negotiations must be realistic and provide immediate measures for institutional reform and transparency.

Indian Commerce and Industry Minister Murasoli Maran said the 20th century was ending with failure to resolve two major problems - mass unemployment and growing inequality. The question was not whether the market or state should dominate, but one of balance - and that balance might depend on the country, the capacity of the government and the institutional development of markets. But the old GATT and the new WTO looked like a 'one-way street' - one could drive down from the North to the South, but from the South the road was normally blocked. The developed world continued to press for greater access for their goods, services, capital and intellectual property rights in world markets, while the same was denied to developing countries in areas where they had comparative advantage.

The WTO process, Maran said, should be reformed. The fear, anxiety and insecurity of the developing nations should be addressed, and efforts to insulate First World markets from Third World competition should be stopped. The WTO should be given a much narrower, trade-oriented remit, and non-trade issues should be addressed in the appropriate international institutions. While cooperation among international organisations may be good, in the name of coherence, 'a networking behemoth' that pressures developing countries through cross-conditionalities should not be created.

'Darwinian struggles'

Pakistan's Munir Akram (ambassador at Geneva but designated as special envoy of the President) noted that the globalisation process was marked by 'Darwinian struggles' for survival between major international companies, with the ebb and flow of capricious financial flows often determining the fate of peoples. A solution to the negative implications of globalisation should be sought globally, and the international community should draw up an agenda for global equity that would redress the inequities of the world trading system.

Chinese vice-minister Zhour Keren said the financial crisis had dealt a heavy blow to the financial system of emerging markets while developed countries reaped benefits. A sound international financial system and multilateral trading system was needed. The lesson from Seattle was that items linked to the interests of developing countries must be fully considered in any new round of trade negotiations with a balanced agenda. The starting point for a new multilateral round should be development.

Developing countries, Brazil's Celso Amorim noted, were adjusting themselves and their policies to a system they had not shaped but which they rightly felt entitled to influence. It was but fair that developing countries expect that their momentous efforts, made in many instances at high political and social cost, be matched by concrete actions on the part of the developed nations. Gone were the dreams (of the developing world) of a new economic order, based on unrealistic demands or expectations that ethical or political considerations rather than the operation of market laws become the keystone of international economic relations. But at a minimum, the poor nations might expect that the developed countries deliver on their repeated promises to open their markets to goods the poor nations produced competitively. If protectionism was the evil so often decried in relation to the policies of the South, why was it that most developed nations persisted with their protectionist practices precisely in areas with the greatest potential opportunities for developing nations - such as agriculture, textiles and steel?

Large transnational companies, Cuba's Foreign Trade Minister Ricardo Carizas Ruiz declared, were the main beneficiaries of the open markets that had favoured the major economies. The issues of tariff and non-tariff barriers to the developing world had been compounded by increasing unilateral measures as a means of political pressure on small countries. This was happening in the face of the supine international agencies, particularly the WTO, illustrating the fragile nature of its rules, Carizas Ruiz said, drawing pointed attention to the US use of Sec. 301 of its trade laws. Structural transformations in favour of the weakest economies, rather than merely improved traditional trading terms, should be the priority for any new multilateral round of trade negotiations.

Thailand's Foreign Minister Surin Pitsuwan suggested that the globalisation process was not a matter of choice but an accomplished fact, along with its imbalances. A global approach to shape and manage the process was needed to maximise opportunities, minimise risks and avert problems of marginalisation. The growing anxiety and scepticism about trade liberalisation must be addressed, and the existing multilateral trading system's rules must be improved to better balance mounting obligations and unrequited rights of states. The pace of liberalisation and integration must be commensurate with the level of development, and the existing international financial system must be improved to prevent a recurrence of crisis and provide better crisis management.

The deputy prime minister and minister of foreign affairs of Mauritius, Rakaswur Prryag, challenged the view that electronic commerce would solve the problems of isolation of small island developing nations. It may mitigate some of their problems but was no panacea for their development problems, he said. The special and differential treatment for developing countries may not be adequate to deal with the exigencies of globalisation. Sustainable development of small island developing nations must be built into the WTO rules.

Ana Maria Solares Gaiti, vice-minister for economic relations of Bolivia, said the aim of the conference should be to place globalisation at the service of development. Globalisation can and should be changed and guided by human agency, she asserted.

Jamaica's deputy prime minister Seymour Mullings underscored the need for a more comprehensive and focused programme to provide relief to the developing countries from unsustainable debt, and said there was an urgent need for broader and more creative approaches inclusive of an expanded initiative for debt relief.

Failure to address real issues

Several non-government representatives focused on what they saw as the failure of governments at UNCTAD X to address the real issues and problems of the developing countries.

For the Third World Network, Martin Khor said the view that financial liberalisation and deregulation posed little danger to the developing world was promoted by rich countries and organisations which wanted access to developing-country markets. But this was a misdiagnosis, and as a result, a financial problem was converted into a structural recession. The developing world needed new policies so that it was not further locked into financial liberalisation. Reforms of the IMF and of the WTO, which had become a deformed version of the multilateral trading system, were needed. The development of the developing world should be the main goal of the WTO.

Jayanti Durai of Consumers International noted that the current multilateral trading system had allowed the top 10 transnational corporations (TNCs) to increase their share of sales four-fold, while African consumers had lost purchasing power.

Shalmali Guttal of Focus on the Global South wanted UNCTAD to play a central role in developing and setting agreements for global trade, finance, investment and development. UNCTAD must move away from an overwhelming focus on international trade as the key factor in development and pay greater attention to measures to strengthen domestic economies and internal markets, and asset and income distribution. It should also devote serious consideration to the principal-subsidiary relations (within TNCs) in production and trade.

The above is an edited version of an article which first appeared in the South-North Development Monitor (SUNS #4610).