GLOBALIZATION POLICIES NOT WORKING

by Chakravarthi Raghavan

Bangkok, 18 Feb 2000 -- As the tenth session of the UN Conference on Trade and Development was winding down its general discussions and the interactive debates, and negotiating some outstanding issues in the plan of action, one message coming out loud and clear from the speeches and interactive debates was that globalization policies are not working.

There have been repeated incantations about inevitability of globalization and something that can't be stopped. But there have also been voices (as from the ILO Director-General Juan Somavia) differentiating between the advances in technology and information, revolutionary changes that can't be reversed or stopped and globalization as a process that can be influenced and directed and changed by governments.

But the current globalization process, guided by the powerful few and setting normative principles of economic organization for all countries, through unbridled play of market forces driven by transnational corporatist strategies of trade and investment, is not working and benefitting the overwhelming majority of the peoples of the world.

This perception of the globalization process, and the insecurity and uncertainty that it has brought not only to the poor and marginalised who are outside the market but even the middle-classes participating in the market, has unleashed a huge backlash in the North and the South (as UNCTAD predicted a few years ago in its Trade and Development Report).

But more ominous and serious -- it is engendering among the public that governments of countries, individually and collectively, have lost control over the forces they have unleashed and are unable to ensure public good, and equity and justice. This, in turn, is responsible for the sense of illegitimacy that is now enveloping national and international institutions promoting these processes.

Reading carefully between the lines of the documents that will be adopted at the end of this conference, the Bangkok Declaration and the Plan of Action, one can sense an unease even among governments collectively that they are unable to provide a sense of direction or even in their assessments of what went wrong, what went right and the way forward.

The compromise languages and formulations used to clobber together a document to command consensus is such that at implementation stage, the protagonists can persist in their own course, each citing the documents as a source of authority.

However, Conference spokesman Habib Ouane, told an early afternoon press conference Friday, that a sense of direction was emerging, that the participation of heads of agencies, particularly of the IMF, World Bank and the WTO, in the interactive debates on the globalization process, has brought a realisation that the globalization process should be shaped to make it more inclusive, more equitable and more balanced. There was progress, as a result of the deliberations of the conference, in the direction of making the globalization process more socially oriented, more equitable and inclusive.

From the point of view of the UNCTAD Secretary-General, Ouane added, implementation would be a major preoccupation, and UNCTAD secretariat intended to use the intergovernmental process and deploy its analytical capacity towards implementation. As both President Bouteflika of Algeria and the French Development Cooperation Minister had said at the Friday plenary, the time had come to address in earnest the serious concerns of the poor.

"For these reasons, I have the impression that things will not be the same as before," Ouane added.

Delegates reported Friday morning that after a late night meeting, and another this morning, some compromises were being evolved on a few thorny issues relating to UNCTAD's future work programme and engagement, including analytical work in the area of so-called 'governance' issues, on agricultural trade talks and effects of government support to production and exports that affect the developing countries, and the issue of food security in developing countries. In another area of contention, relating to the duty-free, quota-free market access in developed country markets to all the exports from the least developed countries (LDCs), the compromise is so weak as to make it meaningless.

The issue of such preferential treatment is repeatedly brought up by the EC and Japan, and held out as a bait to get a comprehensive round of trade negotiations at the WTO, that even the least developed countries have seen through this game.

The total share of the LDCs in world trade is just 0.05%, and there is no conceivable way that even a quadrupling of this trade and exports would prove a threat to any sectors of production in the advanced countries.

If the developed countries were really serious, they could easily extend such a treatment, and bind it in their schedules in the WTO, so as to encourage investment and production, and thus exports in the LDCs. By such 'liberalization' they will practice what their governments, and think tanks and institutions preach: liberalization benefits the liberalizing country and adds to welfare.

Yet, they have been arguing and resisting formulations relating merely to UNCTAD's analytical work and its contribution to consensus building on market access to the LDC exports.

The compromise formulation emerging is for UNCTAD's analytical and consensus building work to focus on "maximising market access benefits for least developed countries, for example, by developed countries granting duty-free and quota-free treatment for essentially all products originating in LDCs, and the contribution to improved market access for LDCs' exports by other developing countries, combined with a multilateral and bilateral programme to upgrade LDCs' production and export capacities and capabilities."

While Canada, in the committee of the whole, was at the forefront of resistance, it was clear that some others too were hiding behind Canada -- the US and some EU member-states too.

Other areas of UNCTAD activity (analytical and consensus-building) in this area encompass:

* reducing tariff and non-tariff barriers in export sectors of interest to developing countries, particularly in developed country markets,

* maintaining and further improving the level of tariff-free or reduced-tariff access to markets through national Generalized System of Preference Schemes for all beneficiaries, and

* anti-dumping and countervailing duties actions.

In an earlier part of the document, in assessment about international trade, the document notes that in the course of implementation of the WTO agreements, most developing countries consider that certain imbalances and asymmetries exist. Some countries have had difficulties with respect to certain agreements due to human, institutional and financial constraints. These problems need to be addressed urgently so as to ensure that the multilateral trading system results in mutual benefits for all countries.

The document also acknowledges that as a result of the WTO, latecomers now face more stringent policy conditions than those that prevailed previously. And while the multilateral framework of WTO rules contributes to a stable and predictable environment, "it has in certain cases narrowed the range of policy options for Governments. Commitments undertaken under IMF/World Bank structural adjustment programmes have further reduced the remaining policy options.

In the 'sensitive' (to the EU and Japan among others) area of agricultural trade and negotiations, there is a formulation that "food security should be taken into account in any negotiations on agriculture, as well as non-trade concerns referred to in the Agreement on Agriculture (AoA)." This is tucked into a para about financial and technical assistance to address effectively problems of food security in net food-importing developing countries and for concrete measures to ensure the implementation of the Marrakech decision on measures concerning possible negative effects of the reform programme on LDCs and net food importing developing countries.

In the portion of the document on further UNCTAD activities in assisting developing countries in the multilateral negotiations on agriculture, a sentence about the UNCTAD work addressing needs and concerns of predominantly agrarian and small island developing economies was omitted. The US wanted no reference to 'predominantly agrarian' economies (that India wanted). But the compromise language, perhaps has given a wider mandate: "UNCTAD should also undertake analytical work on major agricultural concerns of developing countries."

In the area of money and finance, paradoxically, the US (and other major industrialized countries') resistance to any UNCTAD work on international financial architecture, and amendments and formulations they introduced into the plan of action, may have ended up by giving a much wider mandate to the secretariat in its analytical work.

The document now provides under 'Globalization, interdependence and development', that:

".....With regard to financial and monetary issues, UNCTAD's work should bring in a development perspective. The focus should be on financing for development, consistent with efforts to ensure greater financial stability. Taking into account work done in other relevant organizations, UNCTAD should contribute to the debate on issues related to the strengthening and ongoing reform of the international financial institutions, including the enhancing of early warning and response capabilities for dealing with the emergence and spread of financial crises, by continuing to provide relevant analysis from a development perspective."

On the issue of good governance etc, the compromise now is expected to have a general formulation in an introductory part about evaluation of the impact of the development impact of globalization, and in terms of UNCTAD's future analytical work on implications of globalization on sustained economic growth and sustainable development, this is to be kept in mind. And one of the suggested areas under this includes: "institutional reforms and capacity-building" in the context of the indispensable foundations for the realisation of people-centred sustainable development, and "expanding and strengthening the democratic basis of institutions and ensuring sound policy and administration."

The conference was due Friday night to clear the documents on plan of action and the declaration to be formally adopted at a closing plenary Saturday. (SUNS4610)

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

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