19 August, 04, Business Recorder
Recorder Report, ISLAMABAD

ISLAMABAD (August 19 2004): Regional co-operation and consensus building on policies and participatory approach in South Asian countries are essential to ensure a uniform approach to counter the hegemony of the developed countries, in terms of designing and implementing WTO policies.

These were the general observations of the economic experts who spoke in the second round of a conference here on Wednesday.

The agenda of the second round was to discuss “Trade and service,” “Textile and clothing,” “Future of Singapore issues,” and “Implementation issues and special differential treatments”.

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, etc.

Pradeep Mehta, the keynote speaker from CUTS International, said that developing countries had balked for including these issues in the trade talks, specifically the investment rules, because several countries 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 as compared to the rich countries, he said.

The participants agreed that there was “no future of the Singapore issues”. The experts demanded an accelerated pace of clarification for these issues, as enhanced awareness in the South, will help the regional governments in leading greater participation in terms of revising the WTO round called “July Package”.

If such measures were not adopted the 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.

Manoj Kumar from Jawaharlal Nehru University said that developing countries were not in a position to undertake such obligations and harmonise the competition laws across-the-board. “Policy of every country was determined by its domestic needs and culture. As a result, the one-size-fits-all approach would not work,” he argued.

Former WTO ambassador Narayanan, while sharing his experiences at Doha Summit said that India had questioned the legitimacy of inclusion of the Singapore issues in the WTO programme. He said India had maintained that the issues had no relevance to the multilateral body since they impinge on sovereignty of individual governments.

On the issue of 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, they said.

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, they said.

On trade and competition, an extremely complex subject to different interpretations, there was a need for governments to assist and promote local firms to enable them to successfully compete with foreign firms and their products.

However, apprehensions were there 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 may lead to imposition of new obligations on southern countries that would be costly and difficult to implement.

On the 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,” they said.

During the session on textile and clothing issues, Dr Saman Kelegama from the Institute of Policy Studies, Sri Lanka said that two stages of the multi-fibre arrangement (MFA) have been passed, but little meaningful integration had taken place.

Exports will improve with the 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 and Pakistan benefiting from low wages and domestic textile industry.

China will dominate global T&C increasing its share to 50 percent after 2005. Sri Lanka, Thailand and the Philippines would, however, lose out due to dependence on imported fabrics and buyers.

Dr Aradhana Agarwal of Indian Council for Research on International Economic Relations said that even if phase out of the MFA had taken 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 was very low. Apart from this, transaction cost in the sector was very high. Overtime India was already losing 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, Agarwal said.

Dr Atiur Rahman from Bangladesh Institute of Development Studies, while presenting the facts, said that textile and clothing sector is extremely important for 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.