Regional cooperation a must in South Asia

F.P. Report ISLAMABAD: Regional cooperation among Southern countries, specifically in the South Asia context, along with consensus building on policies and participatory approaches are essential to ensure a uniform approach to counter-balance the hegemony of the developed countries, in terms of designing and implementing WTO policies. These were the general observations voiced by the experts and participants during the second talks on WTO issues at a conference on Wednesday. During the plenary discussion on the future of Singapore Issues, the speakers highlighted the deadlocks Centreed around the four Singapore issues, of foreign investors, standards for anti-monopoly and cartel laws, greater transparency in government purchasing – enabling foreign companies to win public sector business and trade facilitation, by making things like customs procedures simpler. The keynote speaker, Pradeep Mehta, from CUTS International, stated that developing countries had balked at including these issues in the trade talks, specifically the investment rules, because many wanted to retain control over their own key industrial sectors. The complexity of negotiating in completely new areas would have left them at a disadvantage, compared to the rich countries. As a result, the panelist ironically agreed there was “no future of the Singapore Issues.” Representatives demanded an accelerated pace of clarification for these issues, as enhanced awareness in the South of these issues, may lead greater participation in terms of revising the July Package, even if it meant that dropping a few of the issues from the Package. If such measures were not adopted Southern states may damage their present and future development chances. It was agreed that although there has been some technical assistance provided since Doha, it was mainly in the form of donor-driven workshops. It was felt that the capacity of Southern countries to negotiate and implement new obligations on the Singapore Issues had not increased considerably. On the competition policy, Manoj Kumar, from Jawaharlal Nehru University, stated that developing countries were not in a position to undertake such obligations and a 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 including the Singapore issues, in the WTO program, and had maintained that the issues did not belong in the multilateral body since they impinge on sovereignty of individual governments. On investment, the participants said that negotiating agreements might erode governments’ ability to regulate and formulate investment policies. An investment framework advocated by the proponents would prevent or limit the host government’s ability to regulate the entry and operations of foreign firms and funds, and its ability to assist or give preference to local firms. Local firms may lose protection and assistance provided by the state. The prohibition on government to regulate the flow of funds could lead to financial instability, balance of payments problems and increased external debt. On trade and competition, an extremely complex subject to different interpretations, there is a need for governments to assist and promote local firms so that they may be viable and develop despite their present relative weakness, to enable them to successfully compete with foreign firms and their products. However there were apprehensions that the developed countries’ market access approach may eventually win out, due to their higher negotiating capacity and influence. On trade facilitation, the participants expressed serious concerns that it may lead to imposition of new obligations on Southern 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 would mean much larger tariff cuts by developing countries in terms of percentage points, even if the proposals are couched in terms of less percentage reductions for developing countries.” During the session on textile and clothing issues, Dr. Saman Kelegama, Institute of Policy Studies, Sri Lanka. Textiles & Clothing (T&C) stated that two stages of the Multi-fibre arrangement (MFA) have been passed, but little meaningful integration had taken place. Exports will improve with relocation of industry from developed to developing countries, but the maximum relocation will be in the South Asia. South Asia will gain from MFA reform, with India & Pakistan benefiting from low wages and domestic textile industry. China will dominate global T&C increasing its share to 50 percent after the year 2005. Sri Lanka, Thailand and the Philippines would, however, lose out due to dependence on imported fabrics and buyers. However, environmental, labour, health and other safety standards may be used to circumvent WTO provisions. The eminent scholar further pointed out that the important aspect in the context of garment exports is to link the whole garment exports with poverty alleviation. 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 as which country would gain out of it mainly depends on the competitiveness of the country. Investment in technology and machinery is very low. Apart from this, transaction cost in the sector is very high. Overtime India is already loosing out to China and although it is predicted that India will gain by the phase-out of MFA but possibly this might not actually happen, said Dr. Aggarwal. Dr. Atiur Rahamn, Bangladesh Institute of Development Studies, while presenting the facts, said that T&C sector is extremely important for the Bangladesh. If this sector collapses, Bangladesh economy will also collapse. Samar Verma of Oxfam GB in India said that elimination of the quotas would certainly take place since there is a strong link between T&C and TRIPS agreement.