External trade liberalisation, forced on the developing countries by tight-fisted official development assistance and the loaded Uruguay round trade agreements, has not put the world's poor nations on the promised path of sustained growth. True, an open trading system accelerates growth across nations but the rich countries decide what is open and what is not. This has provoked Unctad's Trade Development Report (TDR), 1999, to use pretty strong language: "Developed countries cannot on the one hand, justify protecting mature producers in their agricultural and high technology sectors and on the other, deny such possibilities to developing countries". If existing multilateral rules, adds TDR, are impeding the learning and upgrading process in the industrial sectors of the developing countries, then a re-examination (of the impugned rules) is called for. Instead of pushing domestic producers into world markets, says TDR, the concept of infant industries needs to be extended beyond the earliest stages ofindustrialisation and "include more advanced competitive industries through appropriate protection support".
The trouble is that the OECD countries skew multilateral trade rules (their subsidies to agriculture at $350 billion is double the value of developing country exports); also the developing countries cannot get their act together on a positive trade agenda. In vain TDA's call for an "assault" on tariff peaks and on their frequency and escalation in products of interest to the developing countries: footwear, leather and travel goods, textiles and clothing, toys and sport equipment, wood and paper products, rubber, plastics and agricultural products. The rich countries have foisted external trade liberalisation as an absolute good and given the short shrift to the poor nations. Unctad wants a major reform; its TDR calls for special and differential treatment for developing countries. Seattle could be a turning point, but only if the developing countries muster political will.
They were lured intoexternal liberalisation by global capital flows. But private capital inflows into developing countries have resulted in exchange rate appreciation to the detriment of their performance in international trade. Currency values remain misaligned and, TDR points out, much of the capital inflow does not go into productive investment but into reserves to ward off speculative outflows. (India is a case in point). Reserves cost more than they earn. TDR's estimate that reserve accumulation (or credit to the rich world) cost the developing countries a cool $50 billion in the nineties should inspire introspection on the unequal economic order into which India and other poor nations are being absorbed.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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