On the way to Seattle we have heard much talk about making these new trade negotiations into a Development Round. Our central objective must be to change that rhetoric into substance - in the agreements themselves. This is the way to give practical effect to the efforts by developing countries to become full-fledged - not shadow - members of the system.
UNCTAD is doing precisely this: encouraging developing countries to take a pro-active
attitude in redressing the imbalances and shaping a better system through the "Positive Agenda
Programme", whose impact can already be measured by the fact that half of the 250 proposals in
the preparatory process came from those countries.
The developing countries in the past have been likened to the "free-riders" in the system.
This was never true, and by their actions, the developing countries have shown just how wrong this view is. They have liberalized faster and further than any other countries. And in the preparatory process for Seattle, they have submitted more than 110 detailed and concrete proposals for dealing with the specific problems which they have identified as impeding their ability to participate fully and effectively in the multilateral trading system.
This is not only the best, but the only, way to deal with the problem of legitimacy, which
stands now at the very heart of the trade debate -- as anyone can see just by glancing through
newspaper editorials or watching the street demonstrations.
At the root of the problem lies globalization and its disruptive effects: job security,
increasing inequality among nations and inside them, the pervasive fear that people are losing
control over their own lives. The backlash against globalization finds expression in shifting
targets. First, it was the NAFTA, then the investment negotiations in OECD. Now WTO´s turn
has come. In this sense, it is suggestive and perhaps ironic that the home town of Microsoft, the
symbol of the globalized economy, should become the setting for demonstrations against global
trade, even if most participants in the protests come from elsewhere. It would be a serious
mistake to brush aside the significance of these demonstrations. They have to be taken seriously.
For any international organization, legitimacy depends on three main components: universal
membership, participatory and effective decision-making, and fair sharing in the benefits of the
WTO´s universality has just received a big boost from the breakthrough on China´s
accession, which will hopefully soon put an end to the long wait of one fifth of humanity.
We are still a long way, however, from ensuring that the accession process will become
fairer and quicker. This requires agreeing to a "fast track" for those 19 least developed countries
who remain in the waiting room. It also means not making demands on acceding countries,
beyond those requirements already imposed on the current members. Now that the US and China
have agreed upon terms for China´s accession, there is no more reason for a geostrategic game
which has had serious knock-on effects for many acceding countries.
But as the organization grows more universal, it also gains in size, complexity and
heterogeneity. The club-like decision-making process of the old GATT served well for an entity
of a few like-minded countries, but it no longer fits one with 140 member nations, China among
them, with different interests and development levels. As a former participant in the green-room
system of the Uruguay Round, I have to admit that it was less than fair or transparent to the many
excluded Contracting Parties. Since the end of that round, and because of the way it ended,
complaints have been accumulating about the lack of participation and transparency in decisions.
There has been a clear pattern of complaints leading to disappointment, and this in its turn is
generating a sense of a "legitimacy deficit" for the whole system in the public eye. The net result
has been a growing perception that the system could become more and more difficult to manage,
as suggested by a series of painful episodes culminating in the inconclusive pre-Seattle preparatory
process in Geneva.
A sure way of making things even worse would be to produce an artificial consensus on the
basis of texts negotiated by a few key players. In due course, this will only turn disappointment
into disaffection. In effect, it is not size that makes the process cumbersome, but the one-sided
promotion of the interests of just one group of countries, and the persistent refusal to
acknowledge the legitimate interests and well-founded concerns of developing nations. This is
precisely what we have been seeing in relation to the genuine difficulties these countries have been
facing with the implementation of some provisions in TRIPS and TRIMs, among others.
The implementation problem is but the last one in the long list of imbalances that have been
distorting a system which was for many years aimed at the reduction of industrial tariffs among
advanced economies. It was perhaps understandable, in that light, that agriculture would be kept
largely outside the disciplines of a system that had to accommodate the construction of the
European Common Market and its CAP, or Common Agricultural Policy. This was achieved, by
the way, not through the official free trade philosophy of the multilateral system but very in spite
of it. Massive subsidies and State intervention turned the market upside down, disproved all the
predictions of the reputable economists of 80 years ago and made Europe into one of the largest
agricultural exporters in the world. The first waiver in agriculture was granted to the US in the
early 50s, while the first "short-term" arrangement for cotton textiles that would later develop into
the Multifiber Arrangement occurred in the latter part of that decade: In one case, nearly half a
century ago, and in the other, more than 40 years ago. And the nations which after all those years
say they are not yet ready fully to liberalize agriculture or textiles trade are often the very same
ones that feel it would be much too lenient to grant developing countries more than five years in
which to adapt to the complex changes in intellectual protection.
In order to deserve to be called a "development round", future negotiations would have to
redress those imbalances, as a bare minimum. More specifically, they would first have to
eliminate the most glaring example of imbalance, the freedom of developed countries to subsidize
massively their exports of agricultural products, and to place their industrial subsidies in the non-actionable category. Secondly, they should accelerate the dismantling of the Multifiber
Arrangement, where only 6 per cent of the value of restricted items has been liberalized so far.
Thirdly, it is time to get rid of tariff peaks and tariff escalation in a large array of products where
developing countries are competitive, and to grant bounded free market access to LDCs exports.
There is no alternative to the multilateral trading system, but this does not mean we have
to resign ourselves to its current imbalance. After the two decades of the Tokyo and Uruguay
Rounds, the vast majority of developing countries have ended up with more trade deficits - 3 per
cent more than in the 70s - and less economic growth - 2 per cent less than before. This is in part
the result of inadequate domestic policies, although as I mentioned earlier, most of those nations
carried out serious adjustment programmes and can no longer be called "fee riders" after the rapid
opening of these markets. There are other reasons: the sluggish growth of the economies and
import demand of advanced countries, the fall in commodity prices and consequent deterioration
in terms of trade. But a significant cause of this worrying state is certainly the asymmetries in the
balance of mutual rights and obligations, including market access, that must finally be set right.
There are only two options before us. The first is to persist with the mercantilist approach
of pressuring developing countries to further open markets that will soon become non-existent,
as those nations will not be able to get through exports the resources they need to pay for their
imports. The second is a "lift all boats strategy" that will allow developing economies to export
their way out of poverty and underdevelopment, earning them the money to finance their imports
of capital goods and technology from industrial countries, without increasing their debt. I hope
that Seattle will choose the second road, the only one that can close the "legitimacy gap" and
update the old UNCTAD slogan, "trade, not aid", with two new formulas: "market access, not
speculative capital and debt; trade, not hot money".