Experts urge developing states to promote local firms

ISLAMABAD: Participants of a conference on WTO issues on the second day were of the opinion that negotiating agreements might reduce ability of the developing countries to regulate and formulate investment policies and local firms may lose protection and assistance provided by the state.

The three-day conference as organized by Sustainable Development Policy Institute in collaboration with Oxfam, CUTS and SAWTEE. The participants observed that a prohibition on governments to regulate the flow of funds could lead to financial instability, balance of payments problems and increased external debt.

According to them, the governments should assist and promote local firms so that they may be viable and develop despite their present relative weakness, enabling them to successfully compete with foreign firms and their products. They feared that the developed countries’ market access approach might eventually win out due to their higher negotiating capacity and influence.

On trade facilitation, the participants expressed serious concerns that it might lead to imposition of now obligations on developing countries that would be costly and difficult to implement. On market access for non-agricultural products, the participants were against the formula approaches suggested by the developed countries. Since developing countries have much higher tariffs than the rich countries, these formulae and proposals are couched in terms of percentage points, even if the proposals are couched in terms of less percentage reductions for developing countries.

Pradeep Mehta from CUTS International said that developing countries balked at incorporating issues of foreign investors, standards for anti-monopoly and cartel laws and greater transparency in government purchasing in the trade talks, specifically the investment rules, because many wanted to retain control over their own key industrial sectors. Manoj Kumar from Jawaharlal Nehru University said that harmonization of competition laws across the board may not be in the interest of trade as each country’s policy was determined by its domestic needs and culture. As a result, the one-size-fits-all approach would not work.

Former WTO-ambassador Narayanan while sharing his experiences at the DOHA Summit Said that India had all along questioned the legitimacy of inclusion of the Singapore issues in the WTO programme, and had maintained that the issues did not belong to the multilateral body since they impinge upon the sovereignty of individual governments.

Dr. Saman Kelegama of Institute of Policy Studies, Sri Lanka, said that two stages of the Multi-Fibre Arrangement (MFA) passed but little meaningful integration took place. He said that exports would improve with relocation of industry from the developed to developing countries but the maximum relocation would be in South Asia.

Dr. Aradhana Agarwal of Indian Council for Research on International Economic Relations said that even if phase-out of the MFA takes place, the question of which country would gain out of it mainly depend on the competitiveness of the country. Investment in technology and machinery is very low. He said that apart from this, transaction costing the sector is very high. Over time, India is already loosing out to China and although it is predicted that India would gain by the phase out of MFA, possibly this might not actually happen, Dr. Agarwal said.

Dr. Atiur Rahman from Bangladesh Institute of Development Studies said that trade and commerce sector is extremely important for his country, as its fall would lead to collapse of economy in Bangladesh. Samar Verma of Oxfam, India, said that elimination of quotas would certainly take place since there is a strong link between T&C and TRIPS agreement.