Death of a nation under global trade<\/p>\n
Alexander C. Chandra, Jakarta<\/p>\n
Indonesia will soon have to renegotiate its position in the
\nWorld Trade Organization (WTO) nonagricultural market access
\nagreement (NAMA). This agreement was a product of the Doha
\nMandate, which, primarily, regards development as the central
\nissue, particularly for developing countries. In reality,
\nhowever, negotiations on the NAMA have so far neglected the needs
\nof developing countries in achieving their developmental
\nobjective.<\/p>\n
The modalities that will be used to lower tariffs remain the
\nsubject of contention between the developing and developed
\ncountries. Meanwhile, Indonesia's position in the existing
\nnegotiations on NAMA is still rather unclear.<\/p>\n
Prior to the ministerial meeting in Cancun, the Indonesian
\ngovernment stipulated that Indonesia would prefer to get involved
\nin the implementation of NAMA on a voluntary basis. However,
\nlooking at the proposed modalities produced by the Negotiating
\nGroup on Market Access (NGMA), which was issued in May 2003, it
\nis likely that further commitment to the NAMA agreement would put
\nIndonesia's nonagricultural sectors in jeopardy. Indonesia will,
\nonce again, become another nation suffering enforced global trade
\nliberalization.<\/p>\n
Although the core agenda of the Fourth WTO Ministerial
\nConference in Doha, Qatar, on November 2001, was to reduce tariff
\nand nontariff barriers on industrial goods, developed and
\ndeveloping countries are still in contention over the way in
\nwhich this objective should be implemented.<\/p>\n
The proposed methods included in Girard's text (named after
\nNGMA chairman Pierre-Louis Girard), which was issued during the
\nWTO Ministerial Meeting in Cancun, Mexico, last December, were
\nbased on the Swiss formula that requires all participating
\ncountries to make drastic cuts in tariffs.<\/p>\n
Developed countries argued that the proposed methods for
\ntariff elimination were not sufficient enough to ensure global
\ntrade liberalization in the foreseeable future. The U.S., in
\nparticular, gave the most ambitious proposal to date, in which
\ntariff levels should be no more than 8 percent by 2010 and,
\nsubsequently, zero by 2015. The European Union also warned that
\nthe formula used should not reward those countries that
\nmaintained a high level of duties.<\/p>\n
Most developing countries generally resisted the proposed
\nmethods because of the lack of attention given to their needs and
\ninterests.<\/p>\n
First, developing countries generally consider that the
\nmandated deadline for NAMA negotiations to conclude by January
\n2005 is too fast.<\/p>\n
Second, tariffs are of critical importance for many developing
\ncountries because they generate revenue for the government and
\nthe promotion of industrialization and employment.<\/p>\n
Third, tariffs are also crucial to protect small and infant
\nindustries. The seven industry sectors identified in the NAMA
\nnegotiations (electronic and electrical goods; fish and fish
\nproducts; footwear; leather goods; motor vehicle parts and
\ncomponents; stones, gems and precious metals; textiles and
\nclothing) are often considered critical for developing countries.<\/p>\n
Fourth, the lowering of tariffs on industrial goods may also
\ndamage domestic agricultural production. There is a possibility
\nthat trade liberalization on nonagricultural sectors could lead
\nto a massive exodus of labor and capital from agriculture to
\nindustrial sectors.<\/p>\n
Fifth, liberalization on industrial goods would have a
\ndevastating effect on the environment because it could lead to
\nthe intensification and consumption of environmentally sensitive
\nproducts. On the whole, developing countries still need to impose
\ntariffs on many of their nonagricultural sectors to avoid
\ndeindustrialization and to build domestic competitiveness.<\/p>\n
Unlike developed countries that push for nonlinear approaches
\nin tariff elimination, developing countries prefer to adopt a
\nlinear approach. The emphasis on the nonlinear approach would
\nsimply mean that developing countries had to make drastic tariff
\ncuts, with few gains in return.<\/p>\n
It will come as no surprise that in the next WTO General
\nCouncil Meeting, at the end of July, developed countries will
\npress harder for the NAMA to come into realization.<\/p>\n
Early this year, for example, U.S. Trade Representative Robert
\nZvellick stated that he did not want 2004 to be a lost year for
\nnegotiations during his visits to various counterparts in Asia,
\nAfrica and Europe.<\/p>\n
As far as Indonesia is concerned, the government has not been
\nin a strong bargaining position to influence the formulation of
\nthe Girard text.<\/p>\n
Prior to the WTO meeting in Cancun late last year, Minister of
\nIndustry and Trade Rini M.S. Soewandi also hinted that the
\nvoluntary approach would be the most appropriate method for
\ntariff reduction. However, pressing ahead with this approach
\nwould only slow down total liberalization in Indonesia<\/p>\n
It is, therefore, imperative that the Indonesian government
\ntake a very cautious approach in the next NAMA negotiations. The
\ngovernment's decisions in the negotiations should reflect the
\nneeds and interests of its domestic constituents. Indonesia's
\nweak bargaining power in the negotiations will not help
\nIndonesian farmers, laborers and entrepreneurs.<\/p>\n
The last thing we want to see is the death of our nation under
\nglobal trade liberalization.<\/p>\n
The writer (chandra_alex@yahoo.co.uk) is studying for a PhD at
\nHull University and is a researcher at the Institute For Global
\nJustice.<\/p>",
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