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It took eight years,
between 1986 and 1994, for GATT member countries to arrive at a world
trade agreement through the negotiations which began at Punta del Este,
Uruguay. Even in April 1994 the negotiations were by no means complete, as
reflected in the pre-decided, post-round negotiations on
telecommunications, information technology and financial services. It was
also reflected in the Uruguay Round decision to go in for a review and
renegotiation of the agreements relating to the contentious areas of
agriculture and services in the year 2000. The Seattle ministerial meet
scheduled for end November was significant because it was meant to arrive
at an agenda for these continuing negotiations.
In the run up to
Seattle, however, different sections of the developed, industrial
bloc have, for quite different reasons and with significantly different
agendas, mooted the idea of a more comprehensive Millenium round. Revising
the 'review and renegotiation' timetable into a full-fledged new round
does have important implications. To start with, it implies that the
fundamental thrust of the next set of negotiations should be further
liberalisation in chosen areas, with no review and roll back of past
agreements. Secondly, it signals to the world that what is at stake are
not marginal adjustments around Uruguay Round benchmarks, but significant
advances in the direction of further liberalisation. Third, it opens the
door to the introduction of new areas of negotiation such as trade and
environment linkages, trade and social clause linkages and finally a
multilateral agreement on investment.
For the
developing countries, the answer to the question as to whether we need a
new round just now depends on an assessment of the first of these
implications. Its been only five years since the Uruguay round treaty and
the new implementation framework centred around the WTO has been in place.
And during those years there is little indication that the wholly unequal
world trading order has changed significantly.
As Chart 1 shows, the annual average rate of growth of developing country
exports has fallen by a percentage point between the four year pre-UR
period (1991-94) and the period 1995-98, whereas it has risen
significantly for the developed countries. If we consider two groups
consisting of the OECD and non-OECD countries, the share of the latter has
actually improved slightly, indicating that it is some of the more dynamic
of the developing countries (which have joined the OECD) that have lost
out in the years after the Uruguay Round.
Chart 1 >>
Chart 2 >>
Finally Chart 3 indicates that while, the prices of manufactured
exports from the OECD countries have fluctuated around a stable level
during 1991-98, the prices of the principal exports of most developing
countries, viz., agricultural raw materials and minerals, ores and metals,
which appeared to be buoyant between 1993 and 1995, have since registered
a sharp fall. The only commodity group for which prices have risen and
stayed high is food and beverages, in whose case a significant part of the
surpluses are with the developed countries. Not surprisingly, current
account deficits have tended to widen in the case of many developing
countries.
Chart 3 >>
It must be noted that this relatively poorer trading performance of
the developing countries is not because they are not "rule-savvy" and have
not exploited the loopholes available within the UR framework to erect new
non-tariff barriers to imports. One such barrier would be the device of
resorting to import restrictions in the name of dumping. In recent times,
both the number of cases and countries resorting to such actions have
increased substantially. In the name of market disruption or distress
caused by imports, whether valid or not, countries have increasingly
invoked anti-dumping relief rather than resorted to safeguard action under
article XIX of GATT. Interestingly, it was the developing country group
which substantially upped its use of anti-dumping initiatives. As Chart 10
shows, while the number of anti-dumping initiations have fallen from 678
to 394 in the case of the developed countries, it in fact rose from 353 to
509 in the case of the developing countries between 1991-94 and 1995-98.
The failure, despite this effort, to realise the promise of a
significantly improved position for developing countries in the world
market after the Uruguay Round can be traced to the structurally
inadequate gains achieved by developing countries in the form of improved
market access.
Chart 4 >>
Chart 5 >>
Chart 6 >>
Chart 7 >>
Chart 10 >>
As Charts 4 and 6 and 5 and 7 respectively show, the concessions received
by developing countries in terms of the share of imports over which tariff
concessions apply and the depth of the tariff cut they benefited from was
lower than that which applied to the developed countries. That is,
starting from a position of subordination, developing countries appeared
to have offered more in the nature of concessions with regard to market
access than the developed countries did. But even this picture is partial,
in as much as it does not capture the commodity composition of the areas
in which the concessions were offered by the two sides. In fact, the
evidence is now overwhelming that both across and within product groups,
the developing countries began to give virtually immediately after the
Uruguay round
negotiations were complete, but they are yet to begin to receive much by
way of benefits in areas which matter to them from an export point of
view.
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