Global Policy Forum

By Tan Sri Ghazali Shafie

This analysis is not directed at any nation but as a member of the South Commission, I feel that the agenda decided by the World Trade Organisation (WTO) in the context of globalisation is made on the premise that world trade is conducted on a level playing field.

In reality, the rules drawn up by WTO in the face of globalisation will cause the developing countries to lose out even more. The WTO will have to change its stance to become an organisation for all countries, and not cater only for the interest of the developed nations.

The assumption that the world is a level playing field is incorrect, because the real situation is so different with its contrasting levels of wealth, developments, capacities and capabilities between a handful of industrialised nations and the rest of the developing world. Furthermore, as opposed to the claim by the developed nations that the WTO is the "world", the truth is that it does not cover all the countries in the world. China, a huge nation that is still developing, is still not a member because its membership is opposed by groups with commercial interest in the United States of America.

If the WTO is truly for the world, then the membership of any nation should not be a question at all.

DIFFERENT LEVELS OF DEVELOPMENT OF WTO MEMBERS

There should be an indepth and fair assesment on the level of development and progress of the WTO members because their conditions are different. This matter was raised when the question of trade was considered during a conference in Havana (Cuba) in 1947.

At that time, there were not many independent developing nations and they were weak. Although the developing nations and their weaknesses were considered and the conclusions included in the Havana Charter of the International Trade organisation (ITO), the function of the ITO itself was ineffective and the organisation eventually collapsed.

Then came the General Agreement on Tariffs and Trade (GATT) to focus on the question of tariffs and trade. In the beginning GATT was seen as a gathering of the rich countries. The fate and state of the developing countries did not receive the attention due to them.

At the same time, the number of independent states also increased and GATT was berated by them through the United Nations. There, the developing nations were vocal in their demands but because GATT was not a policy-making body and the people who could decide on the rules and regulations were the wealthy states, their complaints again fell on deaf ears.

LINK BETWEEN TRADE AND DEVELOPMENT OVERLOOKED

The industrialised countries did not not take into account the close link between trade and development. And as the number of developing nations increased, they began to assert their concern at the United Nations, resulting in the formation of the United Nations Conference on Trade and Development (UNCTAD) in 1964.

At the first UNCTAD conference, the developing nations formed the Group of 77 (G-77) to face the advanced countries. The result, though not satisfactory, was that GATT finally acknowledged and accepted the link between development and trade. With the platform to voice their concern and interests, the developing world hoped to have market access to the industrialised nations.

It was only after some 20 years after UNCTAD and GATT that a new move was seen to bring about changes on the question of trade and development as well as the level (or stage) of development of the Third World countries in the nternational trading system. This change was supported by the big multinational companies which are active in the developing countries. There were others who said that the change was the work of "neo-liberalisation" forces in the industralised nations.

Unfortunately, the United Nations became less and less effective. This eventually led to the emergence of a new international trade system, that is, the WTO.

GSP ABOLISHED, URUGUAY ROUND PHILOSOPHY GROUNDED

These changes cost the South countries dearly, because the General System of Preferences that had benefitted them in term of exports, was cast aside and the tariffs for certain goods did not follow set procedures. Worse still, the whole noble philosophy of the Uruguay Round Of Multilateral Trade Negotiations that began in Cancun was thrown out of the window.

Free market as a philosophy of WTO forces the developing nations to compete for trade with the wealthy nations on the same term, even though their economies are weak. What is strange is that the developed countries had used the fear of protectionism by the South nations to justify their move but the new system in effect protects their own interest.

The features of protectionism are obvious, but it was very difficult for the poor countries to rebut the arguments of the developed nations, which were obviously the sole beneficiaries. Unlike previously when the developing countries were mainly interested in penetrating the markets of the industrialised states, now they are responsible for opening up their own markets to the developed nations without any barriers or controls. Can the developing countries therefore compete with the developed nations? What is obvious is that the WTO is an instrument of the developed nations which does not address the interest of the poor countries, despite the time frame given to them to liberalise their markets.

LEVEL PLAYING FIELD A JOKE

There was a proposal that was not well accepted, that is, technical assistance be given to the developing nations so that they can compete with the developed countries in the end. It appears that the developed countries are not bothered by the gaps between developed and under-developed nations, and the theory of a "level playing field" must be a joke when the developing countries are asked to compete with the industrialised nations. The divide is simply too wide.

According to the theory of international trade, when the market is open and free, then trade will increase and the business people will reap profits. But the theory did not say whether the profits will acrue fairly or equitably. In this imperfect world, there are differences in terms of development between nations and societies. In my opinion, the theory that the world is level is incorrect. And what is important is the understanding that trade is to assist development and should be open but limited by the needs of development and progress.

Freeing trade is not a difficult thing for the developing countries but the arena for free trade must really be level, and not lop-sided.

DEVELOPED NATIONS IMPOSE WILL

The rich countries will always impose their will. For example, they had jammed the pact on Trade Related Investment Measures (TRIM) down the throat of the developing nations to protect the interest of their investors who wanted to be shielded from responsibility or having to share the benefits from their investments in Third World countries.

The same goes for services but the question of movement of labour from one country to another (which is important to Third World countries) was completely ignored. The question of intellectual property rights was opposed by the developing countries since the Uruguay Round but in the end, the developed nations had their way. The question of transfer of technology from the developed to the developing states should rightfully be a matter of concern. When we look into these issues, what is obvious to us is that the developed nations are only concerned about their own interest, and we, from the developing states, must explain and work very hard to get anything out of the WTO.

It appears that colonialism is returning in another mask. As such, I propose that an advisory body be set up by the South nations themselves and accept whatever assistance or cooperation from the developed nations. The body must be made up of experts in law and negotiation, not experts in quarelling. There are a lot of issues to be studied, like health and "phytosanitary measures" and food security. What will be good will be for the developing countries to accept the advice of the experts before entering into any agreement. The most important thing is attitude. Does the world community accept the fact that the "earth" is not level with its many rifts and valleys? Societies and governments are in different stages of development and they cannot be regarded as equal, to compete for business and trade in a lop-sided field.

The theory that the world is a level playing field is wrong, and there is no way that globalisation can be accepted in its totality.

Tan Sri Ghazali Shafie is former Malaysian Foreign Minister and a member of South Commission

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