What we expect from the WTO<\/p>\n
Muhammad Sauri Hasibuan, Researcher, Fortech Consulting, Jakarta<\/p>\n
The World Trade Organization (WTO) replaced the General
\nAgreement on Tariffs and Trade (GATT) in 1995. Compared to the
\nGATT, the WTO is much more powerful as it has a legal and
\ninstitutional foundation, backed by a dispute settlement system.
\nCountries which do not abide by the trade rules are taken to
\ncourt and can eventually face retaliation.<\/p>\n
Today the WTO has 132 members with another 31 in the process
\nof accession, 98 out of 132 members being developing countries,
\nand 27 of the developing countries are classified as least
\ndeveloped countries (LDCs).<\/p>\n
Yet the results for developing countries, particularly
\nIndonesia, have been at best mixed and in many cases damaging.
\nWhile it sets out to be a democratic institution, the WTO is
\ndominated by the leading industrialized countries and by the
\npowerful corporations within those countries.<\/p>\n
The logic of commercial trade drives the WTO. The development
\ngoals articulated when the GATT was first formed have been put
\naside, or wrongly assumed to be the natural consequence of
\nincreased trade. The WTO, is at present mainly about fast track
\ntrade liberalization in the sectors and products benefiting those
\nwith power in the institution.<\/p>\n
Indonesia and other developing countries have little power
\nwithin the WTO framework for the following reasons. First, while
\nIndonesia and other developing countries make up two-thirds of
\nWTO membership and by their vote can influence the agenda and
\noutcome of the trade negotiations, developing countries such as
\nIndonesia have never used this to their advantage.<\/p>\n
The Indonesian economy in one way or another is dependent on
\nthe United States, the European Union and Japan in terms of
\nimports, exports, aid, security etc.<\/p>\n
Hence, while many countries may be opposed to an agreement, as
\nwas the case with the Trade Related Intellectual Property Rights
\nAgreement (TRIPS) concluded in the Uruguay Round, developing
\ncountries did not eventually object to its conclusions.<\/p>\n
Second, trade negotiations can be best described like people
\nplaying cards, where the principle of reciprocity or "trade-offs"
\napply. For example, one country gives a concession in an area,
\nsuch as the lowering of tariffs for a certain product, in return
\nfor another country agreeing to sign on to a certain agreement.
\nThis type of bartering benefits the large and diversified
\neconomies since they can get more by giving more.<\/p>\n
Thus disparity between those who can give and those who
\ncannot, or only a little, is increased. The stronger members
\naccrue benefits, while the weaker ones have their interests
\nsidelined. It is well known in WTO circles that developing
\ncountries almost never barter for benefits, but usually relent to
\nthe requests of the developed countries. For the most part,
\nnegotiations and trade-offs take place between the developed
\ncountries.<\/p>\n
Third, Indonesia has fewer human and technical resources and
\ntherefore enter negotiations less prepared than its developed
\ncountry counterparts.<\/p>\n
Indonesia has positioned itself to be cautious on all clauses
\nproposed by developed countries. In the Working Group On
\nInteraction Between Trade and Competition Policy, the country has
\ncommented on the issues of support for progressive reinforcement
\nof competition institutions in developing countries, that it will
\nfirst strengthen its competition agency and its human resources.<\/p>\n
Take the procurement sector, comprising of development
\nprojects including infrastructure development, foreign aid
\nschemes and projects related to privatization process.<\/p>\n
Without adequate supervision from Indonesia's competition
\nauthority, KPPU (Commission for the Supervision of Business
\nCompetition), it is not fair to insist that Indonesia liberalize
\nthis sector.<\/p>\n
Procurement is a roughly Rp 200 trillion business from both
\nthe public and private sector; the influx of well-prepared
\noverseas competitors that frequently follows after opening up a
\nthis sector will leave havoc in its wake.<\/p>\n
Instead, the U.S. and other ruling members of the organization
\nhave pushed members to "fast track" the inclusion of new issues
\naccording to the emerging interests of their corporations. To
\ngain market access in developing countries, they have succeeded,
\nin record time, to finalize agreements in telecommunications,
\ninformation technology and financial services.<\/p>\n
The pressure to liberalize the financial sector has also been
\na regular mantra for the WTO. Indonesia's diplomat should have
\nlearned in the past that in the most recent Uruguay Round of
\ntrade negotiations, the subject of trade in services was
\nintroduced.<\/p>\n
But in the end, markets were opened mainly for the services
\nexported by the advanced countries -- financial services and
\ninformation technology -- but not for maritime and construction
\nsectors, where developing countries like Indonesia might have
\nbeen able to gain a toehold.<\/p>\n
One could also add to the list of this hypocrisy and
\ninequities, recent measures developed by the U.S. such as the
\nRules of Origin (rules used to identify where a textile or
\nclothing product comes from), changing the conditions of
\ncompetition and adding to the restrictions against the products
\nof low-cost textile exporting countries.<\/p>\n
Finally, the concept of economic sovereignty would be best
\nadapted if the country's policy makers had the vision of what
\nkind of economy the country is heading to in the next five or 10
\nyears from now.<\/p>\n
Forcing a developing country to open itself up to products
\nthat must compete with those produced by developed countries can
\nhave disastrous consequences. Rapid liberalization without first
\nputting safety nets in place will lead the country into dire
\npoverty.<\/p>\n
It is like setting the country off on a voyage on rough seas,
\nbefore the holes in their hull have been repaired, before the
\ncaptain has received training, before life vests have been put on
\nboard. Even in the best of circumstances, there would be a high
\npossibility that they will sink when hit broadside by a big wave.<\/p>",
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