Will free trade thange our lives?<\/p>\n
By M. Sadli<\/p>\n
JAKARTA (JP): \"WTO Talks a Success\" proclaimed The Straits
\nTimes proudly, on its first page, last Saturday. Were they or
\nweren't they?<\/p>\n
After the Manila APEC summit the host country also warmly
\ncongratulated itself, while the western press and their pundits
\ntended to belittle results of such consensus based meetings. We
\nremember that the Bogor APEC summit was (for us) also a
\nresounding victory because it set targets, or a timetable, to the
\nSeattle APEC Vision. The buzzword in Osaka was guidelines or
\nroadmap. For Manila it was Action Plans. But the western press
\nalready scoffed at the results of the last two APEC summits for
\nlack of concrete agreements. They wanted to see numbers!<\/p>\n
The unlucky host of the next APEC summit, Canada, has a year
\nto fret about bringing success to the task of finding \"overall
\ncomparability\" among the individual action plans (MAPA) executed
\nafter Manila. Can they find and use numerical yardsticks? There
\nis the great risk that consecutive (APEC) summits will get harder
\nand harder to show results of the sexy kind. They may tend to
\nreaffirm old commitments.<\/p>\n
The Singapore inaugural WTO ministerial confab \"must succeed\",
\notherwise the confidence in, the credibility and the
\nsustainability of, this new and very important world body will be
\nshaken, risking the future of the global international trade. But
\nhow to manage a high level gathering of 127 countries and 28
\nwaiting in the wings -- while UN bodies make decisions on a one-
\ncountry-one-vote basis? Should the majority rule prevail while on
\nthe other hand 10 top countries control the vast bulk of world
\ntrade?<\/p>\n
The success of the Singapore WTO meeting was judged by the
\nhost whether or not a ministerial declaration can be produced,
\nafter divisive confrontational debates between groups of
\ncountries with large perceived differences of interest. Every
\ncountry felt unhappy at some time during the process, but yet
\nthere was a sentiment of international cooperation which
\nprevailed in the end. In the end Singapore produced a
\ndeclaration, which all country delegations could feel comfortable
\nwith. For instance, Minister Tunky Ariwibowo is reported
\nsatisfied with the declaration. The WTO Director General,
\nRuggiero, beamed gratification in an TV interview with ABN. But
\nwhat official, who takes part in such conferences, could tell
\ntheir folks at home that they are completely unhappy? On the
\nother hand, (western) international trade economists, sitting on
\nthe sidelines and trying to find hard agreements with numbers,
\ncan find very little.<\/p>\n
Critical Indonesian reporters asked in Singapore whether
\ndeveloping countries did not loose the battle because they could
\nnot get assurances of speedy implementation of the Multi Fiber
\nAgreement (MFA) phase-out into MFN (no quotas, no discrimination)
\nor into the normal WTO system. The Uruguay Round agreement gave
\nimporting countries 10 years time but they can \"backload\", that
\nis put it off until the end.<\/p>\n
Least developed countries got mentioning in the Declaration
\nbut had to content with \"concerns\" of their plight. The
\npossibility of trade concessions, i.e., duty free access to
\ndeveloped countries for their exports, was mentioned, but no WTO
\ncommitment. It was left to individual countries\" on an autonomous
\nbasis\". But at least it may open the door for, for example, a
\n(future) G-7 resolution, and a step by step progress.<\/p>\n
We have to learn to appreciate that most outcomes of periodic,
\nhigh level intergovernmental, meetings are exercises of
\ncompromises at best, often producing only marginal results. We
\ncannot expect a break through at every summit and top WTO
\nconferences. Annual summitry is part of what social scientists
\ncall \"repeated games\" with small incremental gains. Peer
\npressures are expected to work in the longer run, as long as the
\nleaders stay with their Vision and target commitments.
\nUnfortunately, WTO has no Leaders, neither a Vision, like APEC.<\/p>\n
We had three important conferences in a row recently. First we
\nhad the APEC summit in Manila. Then we had the ASEAN informal
\nsummit in Jakarta, unclear about its economic significance
\nbecause the most important outcome was that Myanmar will join the
\nranks of ASEAN in spite of objections from the U.S. and Europe.
\nBut it is said that the ASEAN leaders also coordinate their act
\nfor the upcoming WTO conference. Another very important outcome
\nwas strengthening of the summitry game. Formally ASEAN summits
\nare not annual affairs and the Jakarta impromptu meeting was
\nbilled an informal encounter, but what is in a name? Moreover,
\nthe leaders expressed the wish to see each other again next year.
\nHence ASEAN summits tend to assume annual regularity.<\/p>\n
Last week we had a ministerial meeting of the WTO attended by
\nsome 127 country delegations, while 28 countries are waiting for
\naccession to this global club. There was even a suggestion of
\nholding WTO summits but what would be the consequences of having
\n150 head of states and governments descending upon one city?
\nCourting disaster in many ways. In Singapore many, many delegates
\nof small countries felt they were left by the way side when
\ndelegates from 30 countries hurdled together cooking up
\nsomething. On the other hand, such small grouping informal
\nmeetings, sometimes breakfast meetings, in a big confab are
\nprobably the most important part of the process. Without such
\nlobbying, tough talk posturing in open sessions will never be
\nbridged and no final compromises forthcoming.<\/p>\n
But old prejudices surface easily. The WTO may still be like
\nthe old GATT, an exclusive club of the rich industrial countries,
\nand even so, when the crunch comes down, things are settled
\nbetween a handful of big players, that is the U.S., Europe and
\nJapan. That was visible at the end of the Uruguay Round when the
\ninclusion of agriculture became a major stumbling block for the
\nconclusion of the Round.<\/p>\n
Statutory, decision making in GATT is on a one-country-one-
\nvote basis, but in practice on a consensus basis. In reality,
\nhowever, consensus means that everybody could block a decision,
\nwhich clearly leads to nowhere. Hence, in reality and in the end,
\nthe big guys have a lot to say. The majority developing countries
\ncan exercise a veto influence if they are reasonably organized,
\nlike in the G-7, ASEAN and others. Their influence was clearly
\nfelt in Singapore when they blocked a strong pressure from the
\nU.S. and Europe to include \"social issues\" in the agenda of the
\nWTO, with the prospect to becoming part of the rule based regime.
\nIt was told that there was a contest of will between two resolute
\nladies, Rafidah from Malaysia (who constantly said No, No, No)
\nand Charlene Barshefsky from the U.S. In the end, the No
\nprevailed.<\/p>\n
But those majority developing countries cannot be always
\nnegative. The spirit of non-confrontation in North-South
\nrelations prevailed, also in Singapore. There was give-and-take.
\nThe developing countries went along with the U.S. major thrust to
\nliberalize the Information Technology market, provided they were
\ngiven some \"flexibility\" (APEC buzzword) with respect to time
\ntable and product coverage as yet.<\/p>\n
With respect to the social issues only the linkage between
\ntrade and labor standards was thrown out the WTO window and into
\nthe ILO house, but the Declaration (some developing countries
\nperhaps grudgingly) recognized that core labor standards are a
\nserious international matter, but conditionality and trade
\ndisputes arising out of different standards are declared
\nunacceptable to this formal international community.<\/p>\n
Will the U.S. fret and loose its interest in the WTO because
\nof this outcome? Hopefully, not likely. President Clinton and his
\nadministration can show their folks at home, and the powerful
\nunion movement, that they did their best but could not get their
\nway, this or every time. The information technology liberation
\nwas the feather that was brought home for the Clinton cap. The
\nRepublican Party, dominating the Congress, is traditionally more
\ninterested in unfettered international trade anyway. The WTO
\nbureaucracy seemed also happy with this outcome. They can
\nconcentrate on making international trade more free, contributing
\nto world prosperity.<\/p>\n
With respect to the other \"new issues\", that is, trade-and-
\nenvironment, trade-and-investment and trade-and-competition
\npolicy, and others the consensus was that these issues need
\nfurther studies, before the developing countries and the majority
\nof members countries can feel comfortable with them. The
\nministerial declaration also affirmed that any kind of
\nprotectionism is rejected, and hence the new issues should not be
\nused as covert protectionism. Developing countries were not
\nvehement in their objections.<\/p>\n
On the other hand, developing countries did also not get what
\nthey really wanted, that is, faster removal of tariff and non-
\ntariff barriers in the importing countries in sensitive areas
\nlike textile and agriculture. The developing countries were more
\ninterested in the \"old issues\", the GATT-type issues, while the
\nindustrial countries were interested in \"new issues\" and \"linkage
\nissues\".<\/p>\n
Will ASEAN, APEC and WTO change our lives? Not tomorrow or
\nnext year, but certainly within the next 10 years. International
\ntrade will accelerate because of a free trade regime and the
\ngrowth of members countries will be stimulated, and certainly
\ndeveloping countries. The old GATT and ASEAN have shown this over
\nthe years. APEC will do this towards 2010. Of course there will
\nbe greater gainers among the countries and within countries, but
\nit will be a win-win game rather than a win-loose game.
\nDeveloping countries, their enterprises and trade lobbies should
\nadopt a pro-active stance, seeking opportunities rather than
\nconstantly complaining about lack of competitiveness.<\/p>\n
The author took part in a Singapore symposium on Dec. 13-14,
\n1996, organized by PECC Trade Policy Forum and ISEAS, to evaluate
\nthe APEC and WTO conferences.<\/p>\n
Window: Will ASEAN, APEC and WTO change our lives? Not tomorrow or
\nnext year, but certainly within the next 10 years.<\/p>",
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