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| Kathmandu, Friday June 13, 2003 Jestha 30, 2060. |
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Driving LDCs’ concerns to
logical conclusion
By RATNAKAR ADHIKARI
Despite resounding rhetoric, 49 poorest
countries of the world, designated as least developed countries (LDCs), are being
marginalised from the global trading system. Their collective share in the global trade
has steadily fallen in the past five decades – from close to 3 percent in 1954 to
0.48 percent now. While unequal global trading system is partly responsible for this, lack
of capacity of the LDCs to negotiate their terms is also considered a major impediment in
reversing the trend of their marginalisation.
The World Trade Organisation (WTO) system as
such has the potential to ensure the integration of these poorest economies of the world
in the global economy. Realising this potential, all the trade ministers of the LDCs met
in Zanzibar in July 2001, for the first time, to prepare their common position for the WTO
Ministerial Conference held in Doha in November 2001. However, they could not achieve a
major breakthrough during the Doha Ministerial partly because of their tendency to
splinter for narrow self-interests. They have realised that they had to pay dearly for
their inability to project a cohesive front at the WTO Ministerial.
This led them to organise the second Ministerial
Conference of the LDC Ministers in Dhaka from 31 May to 2 June 2003. Before the Conference
began, a group of international civil society organisations (CSOs) organised a forum
titled Advancing LDC Interests in the Fifth WTO Ministerial from 29 to 30 May 2003. The
forum, co-organised, among others, by Centre for Policy Dialogue (CPD) and South Asia
Watch on Trade, Economics & Environment (SAWTEE) produced two documents. The first one
was a priority list for the Cancun Ministerial Conference, which LDC Ministers should take
into account and the second was a Declaration detailing the positions LDC Ministers should
take at the Cancun Ministerial. These documents were officially handed over to the Trade
Ministers’ Conference and they incorporated most of the suggestions made by CSOs in
their final Declaration.
Though all the issues incorporated in the final
Declaration are important from the trade and development perspective of the LDCs, it will
not be possible to outline all the issues here due to space constraint. Therefore, this
column will only focus on four major issues that are of critical significance to the LDCs.
The first major issue concerns market access.
Due to the imposition of astronomical tariffs and quantitative restrictions by the
developed countries on products of specific interests to the LDCs such as agriculture,
textile and footware, LDCs have not been able to export these products to the developed
countries’ market. Therefore, LDCs have been continuously demanding the provision of
duty-free and quota free access to developed countries’ market. Responding to this
need, the European Union (EU), Canada, Australia and New Zealand have already provided
such facilities to the LDCs, a few other countries have been reluctant to follow suit. As
per a study conducted by a group of World Bank professionals, LDCs’ export could
increase by 11 percent if they are provided with zero tariff access to all the developed
countries’ market.
It is therefore necessary for the LDCs not only
to negotiate for the provision of duty-free and quota-free access of their products to all
the developed countries’ markets, but also to ensure that such commitment is binding
at the WTO. If such a provision is made without any legal enforceability at the WTO,
developed countries could easily make policy reversal, thus, shattering the expectation of
predictable market access.
The second major issue relates to unreasonably
high standards imposed by the developed countries becoming dynamic hurdle in the process
of enhancing the market access of the LDCs. Despite the existence of WTO Agreements on
Sanitary and Phytosanitary (SPS) Measures and Technical Barriers to Trade (TBT), which are
supposed to regulate the use of high standards without proper risk assessment and
scientific justification, developed countries are imposing unrealistic standards on the
imports of developing countries in general. These standards are impossible for LDCs to
comply given their existing administrative, legal and institutional infrastructure.
Therefore, even if LDCs are provided with tariff
and quota-free access, their market access prospects are still hampered by other
non-tariff barriers such as standards and rules of origin requirements. The provision of
relaxed or flexible rules of origin and standards are mandatory to improve trade prospects
of the LDCs.
The third major issue is that of providing
special and differential treatment (S&DT) to the LDCs. While an open-ended
protectionism is a sure invitation to economic mismanagement as it results in
inefficiency, breeds vested interest groups and creates rent-seeking behaviour, a
temporary and time bound protection, which could credibly be phased out after the expiry
of specified period, could be useful to bring weaker countries up to speed. This is the
underlying principle of providing S&DT.
However, LDCs have remained highly sceptical
about the S&DT provisions contained in various WTO Agreements because they have hardly
been implemented, despite reassurance provided by the Doha Ministerial Declaration.
Therefore, it is being suggested that a Framework Agreement on S&DT should be accepted
during the Cancun Ministerial Conference. The S&DT Framework Agreement should, at the
very least, establish that the implementation of obligations would be modulated according
to the level of development of each country and reviewed periodically, taking into account
not only per capita gross national product (GNP), and exports, but also development
indices and goals.
The final issue that merits special
consideration is the issue of technical assistance. This issue should be looked at from
two angles. While the first relates to helping the LDCs implement the commitments they
have made at the WTO, the second relates to addressing their supply side constraints.
Given the fact that LDCs are resource strapped and they should not be asked to divert
their funds from the social sector such as health and education to implement the WTO
Agreements, fresh resources should come from somewhere.
Similarly, LDCs cannot take advantage of the
market access opportunities if their supply side constraints (such as infrastructure,
governance issues, etc.) are not addressed. They too cost money. It is the responsibility
of the developed countries as well as Bretton Woods institutions to make resources
available for both the purposes.
Taking a common position in a preparatory
meeting is one thing, but sticking to the same, come what may, is an entirely different
issue. The success of negotiation plan hinges more on the second issue rather than the
first one. Let us hope that the past mistakes will guide the LDC Ministers to make an
informed and mature decision during the Cancun Ministerial.
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