Thu, 13 Oct 1994

WTO likely to develop despite obstacles

JAKARTA (JP): The World Trade Organization (WTO) will likely materialize as an international agency despite various obstacles, most notedly the special interest groups responsible for maintaining protectionist policies, says visiting Italian Minister of Foreign Trade Giorgio Bernini.

"It is true that in Europe recently many politicians have been calling for more protectionism due to the perceived economic threats from the fast-growth developing economies," Bernini said in a seminar at the Center for Strategic and International Studies (CSIS) here yesterday.

"But I do not see their ideas being adopted by the governments," he said. "Nobody wants to be left out from the world economy."

Bernini, who arrived here Tuesday for a two-day visit, is also an authority on international trade laws and comparative law. The WTO is the international agency proposed to supervise the implementation of the recently completed Uruguay Round of negotiations on the General Agreement on Tariffs and Trade (GATT).

Bernini said that although they are still currently in legal limbo, the social and environmental clauses of the WTO will not necessarily harm the interests of developing economies.

"What is needed is concrete participation in the WTO negotiations by developing nations to ensure that these clauses will not be utilized as a form of trade harassment," the minister added.

Bernini acknowledged that the social clauses, which include provisions on labor standards, might prove "sensitive" for several developing nations, including Indonesia, which has a vibrant but labor intensive economy.

The official, however, said that environmental and labor issues will not be able to be dismissed.

He also warned that when the social and environmental clauses are passed, it is the small and medium firms which will find them "most challenging."

"This is why tight policy coordination is required by the governments of developing nations as well as participation in WTO negotiations," he said.

Many developing as well as industrialized nations will have to review and re-adjust their laws once the WTO is implemented, he added.


In the meantime, economist Mari Pangestu questioned whether WTO will be the appropriate forum to facilitate labor and environmental issues.

"There are reasons to suspect that the social and environmental clauses, supposed expressions of altruism, could evolve into protectionism," she said.

"Maybe such issues could be better addressed in other forums like the International Labor Organization (ILO) or other multilateral forums," she said.

At the same occasion, economist Djisman Simandjuntak told The Jakarta Post that the most serious challenge that Indonesia will soon face, in connection with the WTO, is in the business service sector.

According to the Marrakesh treaty, the final resolution of the GATT Uruguay Round talks, Indonesia will welcome foreign law firms, insurers and accountants to operate in the country in five years time.

"Are our lawyers, accountants and insurance companies ready to compete with their foreign counterparts who will soon be allowed to operate here?," he said.

This must be addressed not only by the government but also by the professionals' associations, he added. (hdj)