Developing nations 'need fair trade, not free trade'

JAKARTA (JP): Former minister Emil Salim called on industrialized nations on Wednesday to allow wider access for the inflow of goods from developing countries.

He said that the implementation of the existing trade liberalization program remained more advantageous to developed nations than the developing world.

He said many industrialized countries continued to practice covert trade protectionism despite their professed commitment to freer trade.

"What the developing nations actually need is fair trade, not free trade," Emil said in his address during the release of the Trade and Development Report 1999 of the United Nations Conference on Trade and Development (UNCTAD).

Several other senior economists, including former trade minister Arifin M. Siregar and UNCTAD director for globalization and development strategies John Toye, also commented on the release of the report.

The report said the subsidization of agricultural output in industrialized countries shut out imports from developing countries, creating unfair competition.

"The annual cost of support for agriculture in industrial countries in 1996 to 1998 was double the level of agricultural exports from developing countries during those three years," it said.

Although European dairy producers, for example, are among the world's highest-cost producers, they have a 50 percent share of the world market, the report added.

It said that the industrialized countries' possible abuse in applying health and safety standards to control imports from developing countries was another sign of covert protectionism.

The report identified product lines such as footwear, leather and travel goods, textiles and clothing, toys and sports equipment, wood and paper, rubber, plastics and agricultural products as those which sustained high tariffs in the industrialized countries.

It believed the protectionism could inflict potential revenue losses of US$700 billion in a period of less than a year.

"It is estimated that an extra $700 billion of annual earnings could be achieved in a relatively short time in a number of low technology and resources-based industries," it said.

Emil believed the real effects to the economy were much greater than $700 billion.

He said it was not inclusive of the loss of employment opportunities created through exports.

Trade should be the first priority for the economic growth of the developing countries, Emil said, with foreign aid and private foreign investment ranked second.

"Market access to developing countries is key to the (economic) growth of developing countries." He said the need for foreign aid might become obsolete if developing countries were unhindered in their trade efforts.

UNCTAD director John Toye said developing countries needed to finance economic growth with exports, not with short-term capital inflow which could inflict a shock on the countries' economies when the funds were abruptly pulled from the country.

He said that developing countries needed to strive harder in international trade talks to defend their exports which were sometimes obstructed by covert protectionism in industrialized nations' markets. (udi)