From Havana to Bali, third world gets the crumbs
Chakravarthi Raghavan, renowned journalist and long-time observer of
multilateral negotiations, analyses agreements to liberalise world trade
since the Second World War up the recent Bali conference, and concludes
that the Northern powers have always imposed their own interests to the
detriment of Third World countries and their development aspirations.
Geneva - The world of today is considerably different from the one at
the end of the Second World War; there are no more any colonies, though
there are still some 'dependent' territories.
In the 1950s and 1960s, as the decolonisation process unfolded, in
most of the newly independent countries leaders emerged who had simply
fought against foreign rule, without much thought on their
post-independence economic and social objectives and policies.
Some naively thought that with political independence and power,
economic well-being would be automatic.
By the late 1950s, the former colonies, and those early leaders
within them who yearned for better conditions for their peoples,
realised that something more than political independence was needed, and
began looking at the international economic environment, organisations
and institutions.
In the immediate post-war years, the focus of efforts to fashion new
international economic institutions (arising out of US-UK wartime
commercial policy agreements) was on international moves for
reconstruction and development in war-ravaged Europe.
As a result, in the sectors of money and finance, the Bretton Woods
institutions [the International Monetary Fund (IMF) and the
International Bank for Reconstruction and Development (IBRD) or World
Bank], were established - even ahead of agreeing on the United Nations
Charter and its principle of sovereign equality of states (one nation,
one vote in UN bodies) - on the basis of the 'one-dollar one-vote'
principle.
In pursuing their wartime commercial policy agreements, the United
Kingdom and the United States submitted proposals in 1946 to the UN
Economic and Social Council (ECOSOC) for the establishment of an
international trade body, an International Trade Organization (ITO).
ECOSOC convened the UN Conference on Trade and Employment to consider
the proposals; the Preparatory Committee for the Conference drafted a
Charter for the trade body, and it was discussed and approved in 1948 at
a UN conference in Havana.
Pending ratification of the Havana Charter, the commercial policy
chapter of the planned international trade body was fashioned into the
General Agreement on Tariffs and Trade (GATT) and brought into being
through the protocol of provisional application, as a multilateral
executive agreement to govern trade relations, i. e., governments
agreeing to implement their commitments to reduce trade barriers and
resume pre-war trading relations through executive actions subject to
their domestic laws. At Havana, during the negotiations on the Charter,
Brazil and India had expressed their dissatisfaction, but had
reluctantly agreed to the outcome and the provisional GATT.
The US Senate, as a result of corporate lobbying, was however
unwilling to allow the United States to be subject to the disciplines of
the Havana Charter and did not consent to an ITO Charter; the result was
that the provisional GATT remained provisional for 47 years, until the
Marrakesh Treaty which brought the World Trade Organization (WTO) into
being in 1995.
Within the Bretton Woods institutions, there was no direct focus on
promoting "development" of the former colonies; what little happened was
at best a side-effect of the lending policies of these institutions and
the few crumbs that fell off the table here and there, often to further
Cold War interests.
From about the early 1950s, to the extent that it provided any
reconstruction and development loans to the developing world, the IBRD
acted in the interests of the United States, its largest single
shareholder, and favoured the private sector.
For example, early Indian efforts to obtain IBRD loans for the public
sector to set up core industries like steel, which needed large
infusions of equity capital that the Indian private sector was in no
position to provide, were turned down, based purely on the ideological
dogma of private-vs-public-enterprise.It was only much later that a
separate window, the International Development Association (IDA), was
created at the World Bank to provide soft loans (with low interest and
long repayment periods) to low-income countries.
But the IDA did not function as professed and did not provide loans
to set up industries or promote development in poorer countries; in
actual practice it acted to advance the interests of the developed
countries in the Third World.
IDA loans came with conditionalities to promote structural adjustment
programmes, such as unilateral trade liberalisation, resulting in de-industrialisation
of the poorer African countries.
Even worse, IDA loans came with additional conditionalities to cater
to the fads and fashions of the day and the concerns of Northern, in
particular Washington-based, civil society.
The IDA "donor countries" dominated its governance and used their
clout there to sway IDA lending - initially, the IDA obtained funds from
the United States and other developed countries, and there were two or
three substantial replenishments thereafter.
Subsequently, the funds from loan repayments and the profits of the
World Bank (earned by lending at market rates to developing countries)
were used to fund IDA, with small new contributions from the "donors" at
every replenishment.
Though developing countries borrowing from the IBRD at market rates
thus turned out to be the funders of the IDA, they had no voice in IDA
governance, and the developed countries, with very little new money,
have maintained control over the IDA and IBRD policies, to promote their
own policies and the interests of their corporations in developing
countries.
On the trade front, in successive rounds of negotiations at the GATT,
the group of major developed countries (the United States, Canada,
Europe, and later Japan) negotiated among themselves the exchange of
tariff concessions, but paid little attention to the developing
countries and their requests for tariff reduction in areas of export
interest to them.
The only crumbs that fell their way were the result of the
multilateralisation of the bilateral concessions exchanged in the
rounds, through the application of the "Most Favoured Nation" (MFN)
principle.
From the Dillon Round on (through the Kennedy and Tokyo Rounds), each
saw new discriminatory arrangements against the Third World and its
exports.
In the Uruguay Round (1986-94), culminating in the Marrakesh Treaty,
the developing countries undertook onerous advance commitments in goods
trade, and in new areas such as 'services' trade and in intellectual
property protection, on the promise of commitment of developed countries
to undertake a major reform of their subsidised trade in agriculture and
other areas of export interest to developing countries.
- Third World Network Features.
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