NATIONAL 6 -(Spotlight Weekly)]

Demanding A Fair Deal

Least Developed Countries call for greater action to become part of the multilateral trading system

By A CORRESPONDENT

Representatives of civil society organizations from SAARC and COMESA regions demanded a better deal from the multilateral trading system, especially for the most marginalized and vulnerable countries of the world. This was the view of the participants attending the South-South Seminar "From Brussels to Doha: Integrating Least Developed Countries into the Multilateral Trading System" in Kathmandu last month.

The two-day seminar (July 14-15) was organized by Kathmandu-based South Asia Watch on Trade, Economics and Environment (SAWTEE), a Kathmandu-based advocacy group, in cooperation with Consumer Unity and Trust Society (CUTS), Jaipur, India. The meeting was organized in preparation for the third Ministerial Meeting of the World Trade Organization (WTO) to be held in Doha in November.

Carpet products : Will thery compete?

Although most of the Least Developed Countries (LDCs) initiated the process of economic reforms by the end of 1980s, they were not fully prepared at that time to reap the benefits of global race for liberalization and globalization. Therefore, they remained marginalized. This marginalization has now taken a deeper root. The establishment of the WTO in 1995 and its agreements further exacerbated the problems of the LDCs.

The process of integrating LDCs into the multilateral trading system has so far been limited to rhetoric. On the one hand, the WTO seemingly shows concern over the integration of LDCs into the multilateral trading system, while on the other its agreements stand in the way. No wonder then that LDCs feel not only left out but also disenchanted with the whole process. There is a growing feeling among the LDCs that the developed countries were not honest about implementing whatever little commitment they had made to start with. This is substantiated by the fact that so far none of the commitments made during the inception of the WTO has been set in motion. The Marrakesh Declaration, which provisioned for special and preferential treatment for the LDCs and Integrated Framework for Trade Related Technical Assistance are examples of empty promises that have so far been confined to words.

In 1981, the first UNLDC Conference had targeted an annual GDP growth of 7.2 percent for the LDCs. After 20 years, the actual average rate of annual GDP growth is just 2.2 percent. The total number of LDCs at that time was 32 and which has now increased to 49. Despite holding two more UN sponsored conferences on LDCs, their problems have remained the same, if not worsened.

South-south seminar : A long way to go

Efforts by the developed countries to improve the conditions of the LDCs over the past two decades have not yielded much. Reduction of their share of global exports from 0.7 percent in 1981 to under 0.4 percent in 2001 and the surge in debt from US$ 65 billion in 1985 to $120 billion in 1997 speak for themselves about the conditions of the LDCs today.

Lack of financial resources and expertise has hindered LDCs’ attempts to prepare them to face today's integrated global trading environment. This has also hindered their attempts at the negotiating table to yield the best outcome for themselves.

Against this backdrop, a two-day South-South seminar discussed issues related to LDCs’ attempts at integrating into multilateral trading system. Its objective was to come up with suggestions for the participants of the Zanzibar meeting to be held later in the year on the possible stands that LDCs should take in the upcoming Doha ministerial meeting.

Participated in by over 30 representatives from Bangladesh, India, Sri Lanka, Nepal, Pakistan, United Kingdom, Uganda and Zambia, the seminar came up with recommendations in the areas of market access, implementation issues, participation in the WTO processes, supply-side constraints, efforts at the regional and domestic levels and deliverables for LDCs at the Doha Ministerial Meeting. The recommendations of the seminar will also be fed into the meeting of the LDC trade ministers to be held in Zanzibar, Tanzania.

Dr. Shankar Sharma, member of the National Planning Commission, said LDCs have not been given fair treatment by the developed countries in the WTO system. If this trend continues, he said, they would be further marginalized. Therefore, implementation issues should be discussed as a priority during the Doha Ministerial Meeting, he said.

Secretary-General of SAARC, Nihal Rodrigo, said complexity of issues related to WTO inhibit the equitable participation of the LDCs in multilateral trade negotiations and their full integration eventually in the global trading system.

Pradeep S. Mehta, secretary-general of CUTS, said the developing countries and LDCs should maintain the cohesiveness they exhibited during the Seattle ministerial conference of the WTO during the Doha ministerial meeting as well. Added Ratnakar Adhikari, general secretary of SAWTEE, "WTO membership is a prerequisite for LDCs to better integrate themselves into the multilateral trading system. However, the way developed countries have forced LDCs to accept WTO-plus commitments proves that they are not genuinely interested to make this happen."

International trade, under the auspices of WTO, is supposed to expand the participation of the LDCs in the international market and thereby expand their economies. However, empirical evidence points to the other end: the last decade or so has seen a shrinking of the economies of the LDCs and their participation in the volume of world trade. Obviously, global trade should be inclusive, not exclusive, of LDCs. To that end, it was opined that multilateral agencies, including WTO, should do more to integrate LDCs into the multilateral trade system by assisting them rather than ignoring them.

The major issues confronting integration of Nepalese economy into the multilateral trading system are as follows:

—Dependence on one country for major international trade activities. Trade with India was fairly open even before the onset of the liberalization process. Even at present 44.4 percent of Nepal’s exports find markets in India and 35.6 percent of Nepalese import come from India.

—After India, Nepal is dependent on two commodities [Carpet (37.4 percent) and garments (39.5 percent)] and two markets (Germany and the United States). Nepal does not have comparative advantage in any of these products.

—Efforts made so far to diversify into other sectors have not produced results. Despite the fact that major policy changes have been made and appropriate legal and institutional mechanisms have been put in place, Nepal has not been able to reap the benefits of trade liberalization so far.

—Efforts towards integration of Nepal into the multilateral trading system are underway. Two such examples include: a) initiation of the process for Nepal’s Accession to the WTO; and b) preparation of the Trade-Related Needs Assessment.

Nepal’s main positions during the Doha Ministerial Conference are likely to be centered on three key issues:

—Speedy and trouble free accession to be provided to the WTO.

—Quota-free and tariff-free access of all the LDCs’ products to all the developed countries’ market.

—Continuation of some form of preferential arrangements on textile and clothing to the LDCs even after the phasing out of the quota system.

Participants were of the opinion that creating a trade-enabling environment at the regional and domestic levels can have major impact on LDCs’ ability to integrate into the multilateral trading system.

The experiences of LDCs in their attempt to integrate their economies at regional level are not encouraging. LDCs remain least integrated economies both at regional the multilateral level. This is not to say attempts at doing so have not been made by the LDCs. Indeed, many regional cooperation agreements are evidence of their attempt at integrating themselves to such arrangements. It was pointed out that major factors responsible for this are market structures in the LDCs and political will of their leaders.

Doha Ministerial Conference of the WTO

According to UNCTAD, Least Developed Countries (LDCs), a group of 49 countries, have a combined share of less than 0.5 percent in global trade, and estimates show that this share is declining. Efforts to integrate LDCs into the multilateral trading system have largely failed so far.

The Marrakesh Decision on Measures in Favour of Least-Developed Countries and Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries have been of no use because of developed countries’ indifferent attitude towards them. Integrated Framework for Trade Related Technical Cooperation (IF) have failed to produce any noticeable impact because confusion regarding the objectives of the initiative. The recent initiative of European Union, namely, Everything But Arms (EBA) is not likely to produce much impact unless other members of Quad follow suit. LDCs are also being subjected to WTO-plus commitment during the time of their accession. However, they are to be blamed in part for not being assertive enough. To sum up, LDCs are not able to claim their due share from the multilateral trading system, and at the same time, the developed countries have been conspicuously ignoring them.

WTO has at last acknowledged the marginalization of LDCs from the global trading system. This view was also reflected during the recently concluded Third UN Conference on LDCs (UNLDC III, May 14-20, 2001, Brussels). However, unless and until a follow up is made to ensure that the message from Brussels are carried forward to the Fourth Ministerial Conference of the WTO to be held in Doha, whatever precious little has been achieved during the UNLDC III will lose its momentum.