Struggling for free trade in the real world

Struggling for free trade in the real world

There is so much talk about having a `level playing field,' but Malaysian Primer Minister Mahathir Mohamad, in this Inter Press Service commentary, suggests that the size of the players should also be considered.

KUALA LUMPUR: The APEC Conference in the Philippines last month called for a global pact to allow free trade in computers and telecommunications equipment. This sounds good but such calls have little use for developing nations that do not make as much information technology items as do industrialized countries.

While liberalization has been a major factor in the rapid economic growth of Asia-Pacific countries, it must be pursued with flexibility and close attention to the particular conditions and needs of each nation.

APEC (Asia-Pacific Economic Cooperation) comprises a very wide spectrum of economies in terms of both size, advancement, and per capita income, including some of the world's most, and less, developed nations. Accordingly, it would be unrealistic to expect a standard rate of liberalization by all member countries, regardless of the stages of their development.

To force the less advanced member economies to implement liberalization measures at a pace and manner beyond their capacity would be grossly unfair and counterproductive.

The pursuit of liberalization will be good for all APEC members; it should nevertheless be approached carefully to avoid causing dislocation or disruption to industries that are at different stages of development.

An approach premised on progressive liberalization and flexibility will help assure the sustained growth of these economies and thus enable them to positively contribute towards the liberalization process. Furthermore, programmers and projects to enhance development and redress economic disparities between the least and most advanced economies in the region are crucial.

APEC must never result in poor members countries becoming more and more dependent or richer members. Unfortunately, development cooperation, which constitutes a very important pillar of cooperation in APEC, has always taken a back seat to market liberalization and facilitation of direct wholly-owned foreign direct investments. This is unhealthy and must be corrected.

The 'APEC community' that is envisioned will evolve only if members display a willingness and readiness to enhance development cooperation. Given the diversity of the APEC region, care and ingenuity are essential to achieving substantial development cooperation.

Opening up the markets of the rich to the poor is meaningless if the poor have nothing to sell.

Direct foreign investments, which can help enrich a developing country, should therefore precede market opening and the granting of national status to foreign companies. Only when the poorer economies have developed into exporters of services and goods and processed raw material can they be considered ready to liberalize their markets.

Just as liberalization has been pursued according to individual and collective action plans, so we must come up with a detailed blueprint for development cooperation which includes action plans encompassing small and medium enterprises, science and technology, financial flows and infrastructure, telecommunications and human resources development.

If we can put into effect these development action plans in the same manner and with the same zeal as the action plans for market and investment liberalization, we can create in the not too distant future, an 'APEC community' that is not only prosperous but more equitable in the distribution of wealth.

Given the different levels of economies and political development in APEC member economies, it is not inconceivable that the pace of liberalization and deregulation within each APEC member country, particularly in the developing members, will depend on these realities. Political leaders do understand, however, that domestic policies need to be reviewed to facilitate cross-border trade and investment.

The objective is to speed up economic development for the least developed APEC members. While this May be a new approach for APEC, it is not an uncommon practice in other regional groupings.

Any attempt to use economic strength or political influence, or even the power of majority, to ride roughshod over genuine, justified reservations about the speed and scale of liberalization would doom the effort to build a cohesive Asia- Pacific open economic `community'.

Business leaders from the developed APEC economies must understand these reservations and not lobby their governments to push for removal of actual or perceived barriers to the business operations of their firms in other countries, especially in the developing APEC economies.

APEC is not an ideological grouping of nations. Its main concern is the economic well-being of its members. If there are social and political spin-offs from the APEC process and no doubt there will be -- these should be regarded as a bonus.

The greatest challenge facing APEC business leaders, and some governments too, is to have enough patience to nurture the region's immense potential for cooperation and for development. The building of an Asia-Pacific open community cannot be the responsibility of bureaucrats and governments only; the business sector has an equally important role to play.

By working together we can all benefit from this Pacific dynamism. Asia and Latin America must, through the APEC process be brought up the level of Europe and North America, not just in terms of democratization but also in terms of wealth and stature.

Mahathir Mohamad has been Prime Minister of Malaysia since 1981.

-- IPS