Indonesia needs to formulate country policy for WTO: Khor

The World Trade Organization (WTO) general council agreed, early this month in Geneva, on the "July Package" that set a framework for the Doha Round, which had been in trouble since the collapse of the ministerial meeting in Cancun, Mexico about a year ago. Third World Network (TWN) director Martin Khor, who was on a three-day visit to Indonesia last week, spoke with The Jakarta Post's Zakki P. Hakim on the significance of the agreement and what developing countries such as Indonesia have to do in the future WTO negotiations.

TWN is a non-governmental organization that is concerned with global policy. The Malaysian-born economist was a board member of the South Center in Geneva and a former vice chairman of the UN Commission on Human Rights Expert Group on the Right to Development.

The following is an excerpt of the interview:

Question: What are the challenges the developing world is facing following the July package agreement? Answer: My main concern was the adoption in the July package of a framework on NAMA (non-agricultural market access), an agreement on market access of industrial goods, which could worsen the threat of cheap industrial imports overwhelming local goods and industries in many developing countries.

The NAMA framework required developing countries to give up their flexibility to choose how many of their industrial products' tariffs they would like to bind and at what rate.

Many developing countries in Africa, Latin America and the Carribean had already suffered from a "deindustrialization" process as cheap imports overwhelmed local firms as a result of rapid liberalization under structural adjustment.

Nonetheless, there are two significant gains from the Geneva meeting for developing countries in general: a commitment to eliminate export subsidies for agricultural products, and the placing of three "Singapore issues" outside the negotiating agenda of the Doha work program.

The Geneva meeting dropped three of the "Singapore issues" investment, competition policies and transparency in government procurement but included trade facilitation in the frameworks.

What should Indonesia do in anticipating further negotiations? One basic thing Indonesia should do is its own assessment on how different proposals would affect the country. It would require a different assessment for each talk proposal on each topic including tariff reduction on agricultural and industrial goods.

Secondly, based on the research and assessment, you should formulate your (economic) policies and your negotiation strategy. However, you need to have stronger coordination between departments and institutions and obtain information from representatives in Geneva. Eventually, Indonesia should come forward with a national concept.

Third, Indonesia should strengthen alliances with other nations, which have a similar concept. The Group of 33 developing nations (G-33), which is fighting for special agricultural products is already a good alliance, as the group is concerned about how the small farmers will be affected by the liberalization.

Furthermore, Indonesia with the G-33 should look forward for a schedule of the export subsidies elimination, as the July package had not fixed an end date or a road-map for the elimination.

The developing countries have succeeded in pushing "Special Products and Special Safeguard Mechanism" (SP-SSM) into the package, however details on categories and number of products allowed need to be further negotiated.

Therefore, Indonesia and the developing countries should hire experts in formulating SP-SSM in regard to each country's national interests.

Developing countries should also conduct research on domestic support given in rich countries as some of the trade distorting subsidies were disguised as non-distorting.

How urgent are these assessments? We have to move fast. Because the negotiation starts in mid September.

Currently, all our agriculture and the fate of our farmers are at stake. If we open our markets too fast, our industries and our farmers may not be able to stand the competition.

What we have at stake is very very big. We need to make a conscious effort to respond. The government and the public need to fully understand of what is happening. It is most important for the private sector, of which almost all of the players do not realize of what is happening with their future.

The private sector must conduct research on how agreements in the WTO would affect them and share the results with the government.

Are you suggesting the developing world slows down the liberalization process? We are not advocating applying a brake to globalization. We all should correct, or redirect the process onto the right track.

For some countries, they might be ready to open their market, as they already have full employment and strong capacity. But some others are not.

The developing world should not reduce their tariffs if the rich countries do not abolish their trade distorting subsidies. The developing world needs to block the artificially cheap imported goods from the rich countries.

How could Indonesia play an important role in the WTO negotiations? Indonesia is a very important country. With its large population, it is the biggest nation in Southeast Asia.

If there is a political commitment, Indonesia could be one of the key leaders in democratizing the world's institutions.

The third world needs to campaign in reviving the UN role, at the same time democratizing the IMF, WB and the WTO, reducing the rich countries' influence on world institutions for the developing world's interests.