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Opinion - Debunking the maths and myths of WTO and globalisation

2021-03-29  Staff Reporter

Opinion - Debunking the maths and myths of WTO and globalisation
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It is indisputable that the formal launch of the World Trade Organisation in 1995 initialled a paradigm shift in world trade, and by its consequence, a challenge to the sovereignty and traditional powers of small states. Furthermore, it has given scope and energy to new market penetration initiatives. 

Judging from the organisation’s achievements since its birth, one has to admit that what is unfolding is not just momentum, it’s a quiet revolution. Before WTO’s enactment, there were many visions like global reach, multinationalisation and internationalisation. The latter approaches failed to materialize, not for lack of unanimity or commitment on the part of the world’s haves but because the chosen vehicle and path, the multinational enterprise, turned out to be an unacceptable tactic to the target groups who were either resource rich and knew it, or were terribly vocal having been previously hit hard and learnt how to duck and hide behind high innovative schemes, protective tariffs and barriers. Today, the market concept has taken roots - “globalisation” and WTO is its major change agent. Potentially, a reformed WTO could be either the most useful or the most self-destructive innovation since the nuclear bomb. 

At the start, China was out, now China is fully in, and both its intent and influence are visible and impactful. Globalisation has now seeped deeply into the psychology of citizens and also the philosophy of corporations as evidenced in their daily dealings. 

All of us, as world citizens will further embed globalization into our subconscious behaviours until it seeps culturally to the next generation, and the next.

Making of the WTO

A brief look at developments that preceded the 1995 global confluence in Geneva, from which WTO emerged, shows clear convergence of mostly rich states on what they considered “global policies” that would move barriers to the flow of international trade. Leading up to this major event were several bilateral and multilateral talks to which developing countries were invited but

few turned up, or from the significant offices. Such meetings discussed principles and new policy initiatives starting from as far back as 1984. During the 10-year period from 1984, multilateral institutions like the UN, World Bank and International Monetary Fund were active in promoting and mobilising funds toward economic and structural reform and often advocating political and social change that would drive adjustments in trade liberalisation, deregulation, state divestment, privatisation, among others. These latter measures were often accompanied by other ‘recommendations’ under assurances of support of international, multilateral and bilateral creditors and lenders, who often tied their packages of goods, services, equipment, technology, with gifts, grant and aid.

Some of us old enough may even recall that before the WTO there was the old and the revised GATT (General Agreements on Tariffs and Trade). And between the two GATTs and the WTO there were ample opportunities for the world community to discuss and debate the WTO agenda for the new Trade order, now a fait á compli. Yes, WTO is fully endorsed by over 170

countries to inscribe its legality as put finality to the “Uruguay Rounds”. 

My own recollection goes back to various fora and protocols in which I saw many developing nations convey, unmistakingly, their sterling approvals in ignorance, inexperience or their absence. Others did the same thing through inappropriate representatives. The Caribbean region, for example, like most of Africa, was invariably among the absentees and misrepresented. It is no surprise therefore to see that long after the protocols were ‘developed’ and given their tacit approval that immediately after the General Assembly (GA) approval, several concessions had to be made (proposal by Italy) aimed at containing, saving or staving off the “wrath” of visible discontent in the ACP camp. Moreover, as the developing world came soon to realize, concessions in a global decision is binding, unlike a dream - it is not easily forgotten when you wake up. The urgency and impact of the concessions faded rapidly with time; they became highly personal, carried few bargaining chips except for those with political clout, prowess and substantive mineral power.

More than minor flaws

Perhaps it may be worthwhile to note, share and reflect on some of the important sentiments and flaws that emerged during the WTO run-up discussions, which shaped the global consensus and operational principles for global trade expansion and trade development (globalisation). The

authors and main beneficiaries were mostly Asians - both minor and major. Recognising the growing imbalance in both world trade and wealth, the Asians argued for consensus, not so much for concessions (concessions were aftermath mainly for Africa with almost 70% of the world’s least developed countries); and they argued for access to the rich countries’ markets.

They posited proposals for parity and ways and means to acquire necessary competencies from or through their bigger brothers and sisters in the West and North. But a key strategy was missing. How they would foster strategic alliances between themselves in the south and east.

They argued against the differential treatment of sectors but were silent on the role of technical assistance in support of value creation in countries of their fledging brothers and sisters. The absence of Africa, the Caribbean, Pacific and Latin America outside of Argentina, Chile and Brazil was conspicuous.

Like the African economies, the Caribbean region was at ease with the concession theology while Latin America, for the most part, remained essentially indifferent, except for Chile, Argentina and Brazil. The outcome of those debates or lack of it, like it or not, is what we have been living with since 1995. For example, few may recall the consequential “banana” crisis that affected Jamaica and many of the smaller States in the Caribbean Basin, Africa and the Pacifics.

Caribbean region, like Africa, did not see then the need for and advantage in seeking counsel, or the collective views of citizens, nor did they devote enough effort to dialogue between members, neighbours, friendly allies or so-called ‘neutral’ states. Instead, country spokespersons registered their unrehearsed, ill-informed and uncoordinated signatories in the concluding WTO parleys, choosing more to participate in the lavish parties that accompany such international events. Of course, some senior officials were comfortable using or taking time off to complete their shopping excursion. In addition, to show that we have still not learnt much from all that very rich and recent experiences, we continue to ponder whether we, as developing nation groups, need to request a new approach to multinational agreements and multilateral negotiations.

New discourse to bring back better balance

We continue to talk and debate whether or not we should include our private sector businessmen and women in the composition of national teams that go to negotiate agreements in trade and finance. We have still to recognise the massive leverage of CARICOM, COMESA, SADC and ECOWAS among the ACP region’s most strategic instruments in international and multilateral negotiations. This is our last best hope against international and multilateral powerhouse and pressure. We continue to weaken our cases and our defences through internal squabbles, divisions and diversions. Even worst, we are still failing to reconcile political differences within our own borders, between our neighbouring States and among our own development partners.

The need to change our approach is no longer a desire, it is an absolute must, and it will become more crucial when we realise that the global agenda is already cast. Divisions within our own house and ranks will only strain our cause and resolve. Something positive must happen soon, now that Britain is divorcing Europe or vice versa. From my crystal ball, there is a clear picture and probability that there will soon be a new round of multilateral trade talks under WTO. Not only is it absolutely important to review the plausibility of the EPA, the various China and American-led bilateral treaties but necessary to bring back a better balance and harmony in the global system of trade for sustainable growth and inclusive development.

Conclusion

In its pristine sense, the notion of globalization is pure, and if I may add - reasonable and honourable. On the one hand, it is a profound economic construct that seeks to enhance global trade efficiency, optimise markets, and remove or reduce impediments to the flow of legal goods and services. As insightful as this is, economists will argue that this myth represents a perfect vector for the supply side but it is not an equation for parity. The formula is incomplete as it focuses and favours present suppliers, or more precisely the industrialised countries. The other side of the equation is missing - missing the capacity of the rest of the world (ROW) to trade.

This is crucial if we are to avoid consequential rows, riots and rebellion. WTO needs to rethink and act swiftly to foster fair competition, advocate help for effective capacity building and make sure that all its stakeholders participate in the trade game. Playing the blame game is not an option as citizens are now more vocal, visible, and sadly, more virulent than ever. Players in the trade game must know the rules, develop adequate tools to play, and have the sense of responsibility to build competitive facilities, engage locally trained competencies and develop the agility to market their products, material resources and skills.

The 4th industrial revolution is rapidly unfolding as we speak. Its global footprint will leave countries little or no room for complacency, complicity or post-decision complaint options. Accordingly, WTO’s mandate needs to be urgently revisited to place a higher role in the trade and valorisation of human talent. This is the commodity of the future and it is common to both developing and the industrialized countries. It is the missing link in the formula for trade and optimisation of services. We in the developing world, as a whole, should recognize this major flaw in the current globalization equation. The myths and the maths implicit in the WTO formula for trade facilitation and development need to be corrected now. WTO and its stakeholders need to give a higher weight in value and importance of production factors that embody talent, labour and intelligence in relation to the traditional role of financial capital.

 

*Earle Taylor is a professional engineer, a development scientist and structural economist. A professor of entrepreneurship, strategic management and public policy, he was an adviser to the Government of Namibia, former Director at the WTO/IUNCTAD/ITC and worked on four continents as well as all three Namibian universities. 

 

Photo: Taylor

Caption: Prof Earle Taylor


2021-03-29  Staff Reporter

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