Globalisation And Trade Liberalisation - Concentrating Power

’Global integration is proceeding at breakneck speed and with amazing reach. But the process is even and unbalanced, with uneven participation of countries and people in the expanding opportunities of globalisation - in the global economy, in global technology, in the global spread of cultures and in global governance. The new rules of globalisation and the players writing them focus on integrating global markets. Neglecting the needs of people that markets cannot meet. The process is concentrating power and marginalizing the poor both countries and people’

The phenomenon of globalization has brought about many changes at the national and international level. Many persons argue that in general these changes have been very positive. They point to the increases in world trade and cooperation among states, the spread of greater knowledge and awareness of different cultures, the easy accessibility of information and the development of new technologies as evidence of the success and value of globilization.

At the same time however, it can also be argued that the globlization process has benefited some countries more than others. When one examines the process closely, it is clear to see that only a few countries have actually benefited from increased growth in technology as well as the wealth made from increased trade.

A 1999 United Nations Development Programme (UNDP) Human Development Report pointed out that the highest income countries like the USA and Europe also have the largest portion of world Gross Domestic Product (GDP), they also control over 80% of the world market for export, they have 91% of all internet users and 71% of global trade in goods. On the other hand developing countries have been experiencing increased levels of poverty, economic instability and it is estimated that within the developing world 1.3 billion people live on income of less than one dollar (1$) a day.

This current process has many different yet connected characteristics, which can have varying impacts on different countries. Some of these are:

• The growth of international organizations- more and more decision making at this level is usurping domestic policies and laws.
  
• The increased ability of companies to move money and production quickly from country to country
  
• The increased movement towards trade liberalisation
  
• The development of new technologies

Of these characteristics the most pervasive is the increased movement towards trade liberalization. The rationale behind trade liberalization suggests that the elimination of barriers to trade, the dimantling of protective regimes and the removal of government control over the market will fuel competition. This competition it is argued will in turn generate efficiency and productivity as firms try to ensure their survival in the market place. Therefore companies or sectors that fail in this competitive environment are said to do so because they are basically inefficient and weak. Further the current system is built on the premise that everyone has the ability to benefit from the system in the same way once they are prepared to adhere to a set of generalized rules and prinicples.

The present process is therefore quite impatient with arguments that issues of power, size and capacity can inhibit the ability of some countries to benefit from trade liberalization. Within the ongoing negotiations and trade processes grudging recognition has been given to the need for the provision of special allowances and leeway for developing countries. However, there is strong opposition towards enhancing theses mechanisms despite growing evidence tha developming countries are not benefiting.

Who are the main Players in this process?

The main institutions, which have been leading the process towards trade liberalisation, are the International Monetary Fund (IMF) and the World Bank as well as the World Trade Organization (WTO). Although the IMF and World Bank are seen mainly as lending institutions many of their prescriptive policies are based on principle of market liberalization. For instance, during the 1980s when many Caribbean countries found themselves at the door of the IMF, it recommended a steady process of privatization, market liberalization and import substitution. Governments were forced to reduce spending on the social sector resulting in widespread hardship and discontent in many countries.

The WTO is however the main organization overseeing the process of trade liberalization. The WTO came out of the Generalized Agreement on Trade & Tariffs (GATT) Uruguay Round of negotiations. Countries at the time felt they needed a stronger organization, which would cover more issues and effectively resolve disputes. The structure of the WTO therefore includes several new components, which were not present in GATT.

GATT rules applied to trade in goods only, while WTO rules apply to both trade in goods and trade in services.
Under the GATT system member states reserved the right to adhere to only some of its agreements. Member states of the WTO implement all of the WTO agreements with only a few exceptions.

The WTO has a well-defined dispute settlement mechanism and it can authorize one member to take action against another when that member is in breach of its multilateral obligations.

The main function of the WTO are to:

• Oversee the implementation of the agreements, decisions and ministerial declarations agreed to
  
• Act as a forum for future trade negotiations
  
• Act as a forum for the resolution of trade disputes.

Proponents of the free trade model argue that the WTO is a neutral body governed by independent governments who have joined the organization of their own free will. They contend that the WTO therefor cannot be blamed per se for problems which may arise as countries seek to comply with rules agreed to in the negotiations, rather it is argued that problems arise because countries fail to properly apply the rules. They fail to acknowledge that systemic and other implicit processes within the WTO can unfairly disadvantage some countries. Moreover, while it is true to say that countries within the WTO are all independent issues of power, influence and dependence play an important role in decidin gwhich rules and which voices are heard and adhered to.

Where is the Caribbean in all of this?

The historical legacy of colonization has meant that the Caribbean is still carrying the baggage of economic dependency. The majority of our economic sectors are underdeveloped and we are still overly dependent on one major sector. While the move away from tourism may have been initially lucrative, many countries within the region are currently finding it hard to compete in a sector, which is proving to be just as seasonal as sugar cane. Some countries within the region are also still recovering from the INternational Monetary Fund (IMF) prescribed stabilization programmes administered during the 1980s, as continuous menetary devaluation undermines the economic stability of these countries. Additionally, Caribbean countries are already feeling the impact from a world-wide economic recession, which has seen the continual contraction of our economies over the last three years.

Further, given the present emphasis within the current system on national treatment and reciprocity the Caribbean will have to come to terms with the loss of preferential and non-reciprocal trading arrangements which traditionally have provided guaranteed markets for critical commodities. This challenge is exacerbated by the inability of the region to gain adequate market access to European and North American markets because of the well-developed protective regimes existing in those countries. Such countries have continually failed to live up to their commitment within the WTO to provide better market access for developing countries through reduction in tariffs and elimination of domestic subsidies.

Additionally, the high cost of participation in these processes both financially and technically has been a great challenge. Most recently the Caribbean Regional Negotiating Machinery (CRNM) was plagued with financial worries and had to undergo a massive overhaul. Further, failure to always negotiate as a grouping has left the region at times vulnerable to coercion. In particular, within the WTO there have been repeated cries from policy makers that the process is undemocratic and unfair to developing countries. The last two Ministerials in Seattle and Doha were both plagued with concerns that developed countries were controlling the process and paying attention to the concerns of developing countries.

Moreover there has been continual resistance to recognizing small and vulnerable economies as a special grouping deserving of enhanced special and differential treatment. The United States in particular has been especially against this, despite the fact that very recently this year they have moved to institute protective measures for their steel producers and farmers.

What is more troubling though is the potential impact that many of these agreements will have on the region. The current agreements not only in the WTO but also within the Hemispheric grouping of the Free Trade Area of the Americas which comes on stream in 2005, all seem to prioritize the ability of firms to capitalize on the opening of the markets without an explicit connection to development concerns of the countries involved. Clearly evidence has shown that market economics cannot deal with the issues of equity, poverty and sustainable development. Further, the current uncompetitive nature of most of the sectors in the region means that our ability to actually capitalize from such liberalization will be a hit and miss try at the best. This is not to say that there are not avenues for the Caribbean to benefit but rather that as we become more deeply immersed in this process that we need to be ever cautious that we do not cede the progress that we have made thus far.

’The development dimension must have primacy in the implementation of the Agreement; all else is subordinate to that overall objective. We in the Caribbean must assert this at every turn(...)there are some who would divert us from this goal with glib assertions that if we concentrate on governance and leave the economies to the market, development will follow as the night to day. They must know that we lost our innocence many decades ago and will not be duped again’