SUNS #5275 Monday 3 Februay 2003
New York, 30 Jan (IPS/Mithre J Sandrasagra) -- The
only way to reverse widespread enmity toward
globalization in developing countries is to make trade
work as an engine of growth and human development,
says a UN Development Programme (UNDP) report released
To achieve that, says the 341-page document, 'Making
Global Trade Work for People', four basic principles
should be incorporated into the World Trade
* Trade must be seen as a means to an end, not an end
* Trade rules and standards should allow for diversity
across regions and nations;
* Countries' rights to protect their institutions and
development priorities must be recognised; and
* No country should be allowed to impose its
institutional preferences on others.
Multilateral trade institutions, which can play a
major role in maximising the potential benefits of
trade, need to shift their focus away from promoting
trade liberalisation and market access to fostering
development, adds the report, because there is no
compelling evidence that liberalisation leads to
higher growth and poverty alleviation.
"The UNDP report does not call on developing countries
to quit the WTO," Ali S. Mchumo, deputy
secretary-general of the East African Community, told
IPS at the report's launch. Rather, the institution
provides an important democratic framework for the
rule of law.
"If we fail to change WTO rules, at least we have the
opportunity to name and shame our oppressors," added
Mchumo, the former Tanzania ambassador to WTO and
chair of its General Council in 1999.
The UNDP began the inquiry that led to the report
after the debacle of the WTO Seattle Ministerial in
1999, which was interrupted by anti-globalization
The UNDP process included experts from government,
academia and civil society, working in association
with the Rockefeller Brothers Fund, the Rockefeller
Foundation, the Ford Foundation, the Heinrich Boll
Foundation and the Wallace Global Fund.
Munir Akram, Ambassador of Pakistan to the UN,
described the reaction to a paper he presented in 1996
on the developmental concerns of Third World
countries: "I was almost laughed out of the room."
But today, big business, civil society and rich and
poor governments are increasingly convinced that
something is going wrong with globalization, said
Kamal Malhotra, lead author of the report.
The combination of unfettered capitalism and rigged
trade rules are playing a major role in developing
countries falling further and further behind, says the
report. "Today's rich countries in the past enjoyed
many of the protections they now seek to deny
developing countries," it adds.
"We are not anti-free trade," said Mark Malloch Brown,
UNDP administrator. "There is no more important engine
of development than trade," he added, but developing
countries must benefit more from the process.
The report examines the cases of Vietnam and Haiti.
Since the 1980s, Vietnam has taken a gradual approach
to economic reform. It engages in state trading,
maintains import monopolies, retains quantitative
restrictions and high tariffs on agricultural and
industrial imports and is not a member of the World
Trade Organisation (WTO). It has also been incredibly
successful economically, achieving a growth rate of
But Haiti, at the behest of the World Bank, undertook
comprehensive trade liberalisation between 1994 and
1995, slashing its import tariffs and removing all
quantitative restrictions. Its economy has gone
nowhere, according to the report, and its social
indicators are deteriorating.
Integration with the global economy is a result of
successful growth and development - not a prerequisite
for it, said Malhotra. For example, India and China,
countries often cited as examples of what openness can
achieve, implemented their main trade reforms almost
10 years after the onset of higher growth. Even now,
the report underscores, trade restrictions imposed by
the two nations remain among the highest in the world.
"Low-income countries have little to bargain with,"
said Malhotra, because any threat of retaliation by
developing countries does not have serious financial
repercussions for rich countries. He suggests that a
"collective action clause" be put on the WTO's agenda
so that developing countries can act in a more unified
The paper also focuses on agricultural tariffs, which
have been cut far less than industrial ones.
Agriculture remains the economic mainstay for the
world's poorest people, providing employment for more
than 70% of the developing world.
According to the report, tariffs on industrial imports
fell from 40% in 1945 to 4% in 1995, but agricultural
tariffs still hover around 62%. For exports that would
greatly benefit economies of developing countries,
such as sugar, rice and dairy products, rich countries
maintain tariffs of 350-900%, virtually eliminating
any profit margin.
Meanwhile, developing countries, forced to cut their
tariff and non-tariff barriers as prerequisites for
World Bank and International Monetary Fund (IMF)
loans, have markets that are wide open to rich
countries' exports. Mexico, for instance, has suffered
as a result of huge imports of US grain, while the
African market has been flooded by European Union
beef, said Murray Gibbs, project coordinator of UNDP's
Asia Trade Initiative.
To ensure that the trade system lives up to its
potential to contribute to human development, Akram
said, "we must consider moving subsidies out and
moving development in ... we must get tariff
discrimination out ... and we must do something about
the WTO's anti-dumping agreement that is being abused
The solutions will not come easy. Malloch Brown
pointed out that though Norway has eliminated all
barriers to exports from least developed countries (LDCs),
imports of products from those nations remain low
because differences in market conditions in Africa and
Scandinavia, language problems and deteriorating
African infrastructure have chilled trade.
It takes 20 days to move products from Kampala, Uganda
to the port of Mombasa, Kenya, a journey that could
take less than two days, Malloch Brown said, pointing
out that "a trade round without a commitment to
building up infrastructure capacity will sell the
The report also warns that developing countries'
growing dependence on food imports is having an
enormous impact on gender dynamics.
In South and Southeast Asia, women perform 60% of food
cultivation and production. Rural African women
produce, process and store up to 80% of food. But the
erosion of domestic food production in the South
affects food security, social cohesion in rural
communities, and women's income, employment and
The WTO declined an invitation to participate in
Thursday's event. "I've lost sleep over what we said
about the WTO in this report," Malloch Brown
confessed, adding that, "running one international
organization, one must be careful not to undermine
another international organisation".