Globalising developing nations: political economy



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GLOBALISING DEVELOPING NATIONS: POLITICAL ECONOMY

AND TECHNOLOGICAL CHALLENGES*

DR SUMIT ROY

Visiting Senior Research Fellow, School of International Relations & Strategic Studies, Jadavpur University, Kolkata,India

Globalisation-a historical process-encapsulates in its contemporary phase compression of the world and blurring of national borders galvanized by information and communication technology-ICT-enabling instant transnational relationships over space and time. A ‘new space’ emerges beyond the nation state with a market driven shift to non state forces-international and regional, non governmental and multinational–to pursue economic and socio-political goals. This unfolds a major challenge- confronting the diminishing power of the state and the mounting influence of global forces in shaping and executing policies. Critical questions emerge on the response of developing countries-to withdraw or intensify links with the world economy.

In this context the focus of this paper is on harnessing political economy and technological challenges to globalize developing countries unfolding a shift from state to non state institutions and integration into a technology driven world-exemplified by Asia (South and East) and Africa. Insights emerge into the nature of globalisation and what lies beyond.

* Themes of this paper were presented over 2005-8 at the Nordic Africa Institute, Uppsala, Sweden, Jadavpur University, the University of Calcutta, and the Indian Institute of Management, Calcutta, India, the UN Economic Commission for Africa, Addis Ababa, Ethiopia, and the World Information Society Summit in Tunisia. It draws on aspects of the author's book Globalisation, ICT and Developing Nations: Challenges in the Information Age, Sage, 2005.

INTRODUCTION

The core theme focuses on political economy and technological challenges in globalizing developing countries underscored by the diminishing power of the state and the mounting influence of global forces in shaping and executing policies. This uncovers a market based shift from state to non state institutions and the nature of integration into an information and communication technology (ICT) driven world. This is set in a comparative Asian-(South (India) and East) and African frame.

GLOBALISATION

Globalisation, a historical process, captures in its recent phase, a compression of the world economy, galvanized by diffusion of Information and Communication Technology [ICT], and, above all, opening up of space which transcends national boundaries. It coexists with the nation state and interactions between nation states-espousing conventional international relations. Ties between nation states and other actors and between national and global markets are intensified -flows [trade and finance], movements [migration of labour albeit limited ], and measures to establish security. It interacts with structural change and transition from an agricultural to an industrial and eventually an information based society. Fundamental questions arise over the sovereignty of the state while ushering in non-state actors [eg. international bodies, interest groups, and transnationals] and the emergence of a global political economy. This has to be seen against a backdrop of rebalancing global power relationships stemming from the mounting influence of developing countries-exemplified by two key Asian nations-China and India-the ‘emerging giants.’



This section explores the relevance of concepts and their policy relevance underlying the shift from state to non-state institutions in shaping growth and conflict reduction impinging on institutions: international and regional institutions, supported by non-governmental organizations and multinationals. This underscores the changing links between international relations, international political economy and globalisation: encompassing the flows and movements of trade, finance and investment. The analysis is informed by the changing post coldwar inter and intra state power struggles stemming from nuclear and non-nuclear strife: civil wars, ethnic, religious and tribal animosities often rooted in poverty and cultural insecurity. This has been accompanied by the spread of economic globalisation based on forging stronger links between nations and between domestic-international markets through flows and movements impinging on sustainable growth. Hence, interaction between states and non-state actors is being increasingly moulded by both economics and international and national politics. Post coldwar intra developed nation frictions have been intensified posing a major threat to global peace. The promise of material advance through globalisation arouses hope of a more stable world. However, the extent to which it will be a force for integration or disintegration of human society poses critical questions.
The concepts underlying international and regional institutions have drawn heavily from ‘regime’ theories to analyse the separate, complementary, and often conflicting, norms governing the role of institutions built on basic values, and ideology, the internal organization structures, including hierarchy, sources of finance/funding, and scope of devising, interpreting, and reforming institutional arrangements. Such institutions can serve as an arena, an instrument, or an actor to resolve economic, political, security, and social problems stemming from conflicts between and within nations. This, however, cannot be divorced from the international, the regional, and the national, including the local, social and political power structures, and the extent to which institutions embody/reflect the latter. Indeed, the goals, functioning modes, and bureaucracy governing institutions are intrinsically linked to the historical and post coldwar centres of power and influence although some may be relatively autonomous in terms of shaping their programmes. This has moulded the nature of bargaining, and forming coalitions, and the scope of using coercion, within institutions, to discipline members, and the ensuing outcomes. This may be uneven with far reaching consequences for the relevance, sustenance, and effectiveness of institutions and their capacity to confront, adapt, and cope with changing complexities of international relations and globalisation. The remit of institutions may vary sharply ranging from conventional concerns exemplified by preventive diplomacy, peace making, and peace keeping, and stimulating growth and reducing poverty, to more recent focus on ecology and the environment, migration and crime. This emerges against a backdrop of a breakdown of previous ideological divisions based on the pursuit of capitalism versus socialism and the emergence of mounting inter-regional conflicts rooted in deep seated insecurities- economic, political and socio-cultural-which may be reified by globalisation.
The changes unleashed by the breakdown of coldwar ideologies and the unfolding of various forms of globalisation have profound implications for the relevance of conventional tools of international relations, based on realism, liberalism, and structuralism. These centre on conceptualising the patterns of integration, disintegration and re-integration of the international, the regional, and the national level including the local, the sectoral, the household and the family. The diminishing of old conflicts emanating from coldwar ideological rivalries and animosities may pave the way for new and equally powerful inter and intra state tensions. Destabilization of specific regions could have repercussions beyond their borders. Re-examination of the three main concepts under IR theory throws light on the historical forces stimulating the changes.
First, realism impinges on conflicts between states with the drive for security being the major force motivating the domestic and external strategies of states: the desirability and the acceptability of policies over defence, war, peace and self preservation stemming from deep seated beliefs on the relationship between man and international society. Under the realist school the group is the primary actor in world politics. It centres on the state-a territorial concept which is surrounded by a hard shell. IR is viewed in terms of conflict among states which interact in an integrated state system. The state is seen as a unitary actor. The internal dynamics are ignored.
Second, the liberal school, while acknowledging the importance of security, envisages a broader vision of inter-state relationships, including different branches of the state, and the increasing importance of non-state [public and private] forces, encompassing interdependence, co-operation, bargaining and negotiation to resolve conflicts, and foster economic change. The school recognizes the importance of the state not as a force which united but as an interdependent system composed of a triad of smaller parts-departments, offices, teams, interest groups, directors, secretaries. This paradigm recognizes states as being important actors in world politics but emphasises that the dominance of states has diminished with the emergence of other influential non state actors.
Third, the structural or radical school views the state as the basic unit of analysis focussing on the context within which state action takes place. Its unit of analysis is the entire class divided modern world system and a historical approach moulds the theory. An understanding of the long term, large scale forces which have shaped the world system enables an understanding of its essential dynamics and the interaction of its parts. Capitalist values dominate the world system. This is composed of two major classes or region-centre and periphery; the former are wealthy and the latter are poor. The relationship between the two is governed by a global division of labour which serves to enrich the centre states and to impoverish those in the periphery. In the interest of world freedom and justice the entire system must be torn down and replaced. The approach is informed by radical ideology based on a dialectical grasp of the relationship between humanity and nature. The structural school unfolds a radical historical thrust. This impinges on the changing relationship between the domestic and the international economy integrating the role of social forces, the state and international capital.
In this setting the emergence of a new conception of IR needs to embrace inter and intra state relationships: new forms of post coldwar conflicts, wars, and globalisation and changing domestic-international interactions, based on the need to create integrated visions of security at different levels. This impinges on sustainable growth, peace, human rights, and the emergence of democracy and governance. The ways in which this may unfold is diverse, uncertain and unpredictable and hence likely to arouse anxiety over the analysis and the policy of laudable goals against a background of curbing the state and shifting to the market. This may shatter illusions of post coldwar peace which was professed to stem from the collapse of the ideological divide between capitalism and socialism. However, the ways in which post coldwar international economic, political, and cultural relations may emerge has to be seen in the setting of an unequal distribution of international, regional, national, and local power with globalisation exposing, intensifying, and creating new divisions based on a range of ethnic, religious and cultural beliefs. This, however, may be traced to historical forms of socio-economic and territorial tensions. These may manifest themselves in various forms of fundamentalism and demands for greater autonomy against a backdrop of conflicts between and increasingly within national borders. This may weaken the sovereignty of the nation state or subject it to radical change with diverse non state actors competing for power and influence.

SHIFT FROM STATE TO NON STATE INSTITUTIONS



INTERNATIONAL
International institutions-exemplified by the United Nations, the Bretton Woods [the World Bank and the IMF] and associated World Trade Organization- can play a major role in shaping the relationship between and within nations and economic, political, and social change and hence the scope of fulfilling inter-linked goals of sustainable growth and development, conflict reduction and peace, and monitoring human rights in the post coldwar era. This is inspired by ‘regime’ theories emanating from diverse conceptions, but, the essential principle can be usefully adapted to analyse the separate and complementary, and often conflicting, norms governing the role of institutions based on basic values, and ideology, the internal organization structures-hierarchy, sources of finance/funding, and scope of devising, interpreting, and reforming institutional arrangements. These can serve as an arena, an instrument, or an actor to resolve economic, political, security, and social problems arising from conflicts between and within nations. The remit of institutions may vary sharply ranging from conventional concerns exemplified by preventive diplomacy, peace making, and peace keeping and stimulating growth and reducing poverty, to more recent focus on ecology and the environment, migration and crime.
The changing conditions of the world economy impinge on the critical need for existing institutions to adapt, modify, or become extinct, and pave the way for more relevant new bodies to confront post coldwar challenges. Early postwar literature on international institutions, while highly focused on formal organizations, was far less naïve and legalistic, more politically sensitive and insightful. This included the recognition that the nature of the international political system provided a basis for the effectiveness of international institutions, that international effectiveness should be subjected to empirical studies, and that elaborate organizational structure is not always the best way of enabling international co-operation. It was also concerned not only with whether international institutions made an impact but how to devise a mechanism to bring this about. This could be based on transparency, reputation, and legitimacy, coupled with domestic political pressures. The need for a more transgovernmental model of the influence of international institutions was recognized. Early studies of institutions were primarily problem driven focusing on the post coldwar concerns which some hoped would be solved by international organizations. Against this backdrop the goals of conflict reduction/peace, creating democracy, and establishing a basis for sustainable growth and development require grasping the conflicts and contradictions in the goals, strategies, and outcomes of key international institutions and the scope of collaboration not only between international institutions but also with non-state actors.
The United Nations is the key institution which captures the aim of fulfilling the intertwined goals of growth and conflict reduction. The emergence of this institution, its attempts to define the goals, the strategies, and the socio-economic and political context of its interventions, and its impact, unfold a diverse, uneven and controversial experience of moulding collective human aspirations. The UN mirrors the limits and the scope of identifying, confronting, and resolving international, regional, and national problems on the basis of universal norms. The UN envisaged fulfilling political, strategic, and economic aims through diverse strategies with a varied structure encompassing a General Assembly, a Security Council, International Court of Justice, Trusteeship, and ECOSOC. Collective security, peaceful diplomacy, peace making, and peace keeping, have been major instruments to minimize conflict in different regions of the world. Such ideals have been embodied in its Agenda for Peace. This has been matched, more recently, by an Agenda for Development, to capture the causes of economic and social poverty and reassess the virtues of the market and the state in a liberalizing world context. The critical link between the two Agendas needs to be established. The functioning of such an institution is driven by finance. Hence, the tension between ensuring global peace and global development is a constant one, with the former being emphasized, against a background of financial shortfalls stemming from non-fulfillment of dues of major members .ie. the USA contributes about 25% of the budget. This has aroused debates on ways in which the UN can be made more efficient and accountable and measures to initiate financial and administrative reforms relevant to the new millennium. This has provoked far reaching major debates on the role of the institution, its relevance, and its measures to cope with complex international realities.
The UN, therefore, confronts a number of major challenges to resolve perennial and new problems. The Security Council reflects the realities of power at the close of World War 11, rather than those of the 1990’s, while peacemaking operations are ill equipped to tackle massive new demands. The General Assembly is tedious and repetitive in its resolutions and has lost much of its impact as a moral and political force; the intergovernmental structures in the economic field decisions with limited impact on economic reality. The management of the secretariat needs to be improved to cope with its new tasks and provide independent intellectual leadership. A number of priority functions can be identified so that the present structures can be measured against what is expected of them.
First, there is growing recognition of the importance of non-military threats to security but the main aim of the UN remains the maintenance of peace by deterring aggression.
Second, many conflicts today cannot be resolved through collective security theories. These emanate from the spread of local conflicts such as those of an ethnic nature, with deep rooted causes with no one party having a monopoly of right on its side, and inability of the UN to prevent or solve such conflicts.
Third, in pursuing economic development it is essential to remove poverty and the underlying economic problems which may lead to conflict. A lack of political will is the main cause of the failure to deal with such issues but new negotiating structures may usher in a new approach.
Fourth, in the post coldwar era the UN is facing a new international agenda of critical socio-economic problems in countries which are so interdependent that no country can resolve them on its own. eg. global environment, AIDS, drugs, and the mass movement of populations. The present UN structures may be inadequate to cope with these new tasks.
Fifth, the UN is taking on increasingly a bold role in the protection of human rights in member states-both in the increasing use of existing structures and in the incorporation of this element into the mandate of peacemaking operations. eg.in El Salvador and Cambodia. This gives rise to the controversial boundary between emphasis on human rights and claims of domestic sovereignty with the former steadily encroaching on the latter. Hence, reform of the UN is essential. Developed and developing nations may hold different views on reforming the U.N. Major overhauling of finance coupled with drastic changes to sections of the bureaucracy, including streamlining the specialized branches of the U.N, exemplified by merging of ECOSOC and UNCTAD, are among the major proposals. Indeed, continued financial support of the U.N. by the major contributor, the USA, has been used by the latter, backed by many of the major developed nations, as an instrument for continuing support of the U.N. This has been fiercely resisted by many developing nations as it has been perceived as a ploy for shifting the UN towards a more market based institution driven by the priorities of the developed nations. In this context institutions such as UNCTAD have been undergoing major internal changes to make themselves more relevant: including reducing the number of departments, and committees, and sharpening its focus on major concerns including globalisation, trade, investment and services.
Hence, the U.N. should urgently implement genuine reforms to streamline its bureaucracy, eliminate duplication, impose stringent financial accountability, and improve coordination between peace keeping and development activities. This could make the UN a powerful force in shaping global policies.
In contrast to the UN the Bretton Woods (BW) institutions, the World Bank and the IMF, and related World Trade Organization, have more specific, and more narrowly defined economic and developmental goals-stimulating growth, trade and finance, and reducing poverty. These have been seen as the conservators of the rules, conventions, and understandings that have moulded international economic relations, and their ideology and policies have been subjected to critical onslaught. The emergence of the BW institutions should be seen in the frame of the depression of the 1930’s and the huge costs of failure to develop regulations and organizational structures to guide economic policies. The absence of an institutional structure enabled countries to pursue opportunistic policies that compounded their neighbour’s problems resulting in deep and persistent slumps, the implosion of trade, the collapse of the international monetary system, and termination of international lending. This created the need for articulating rules and understandings to guide economic policies following the war in order to ease the pursuit of common objectives and discourage ‘beggar thy neighbour’ policies. The IMF had to approve the initial exchange rates and most changes made thereafter and its approval of such changes was to be conditional on evidence that a country faced a ‘fundamental disequilibrium.’ The World Bank’s IBRD creators underestimated the needs of European reconstruction and neglected those of the third world. The Bank’s capitalization and operating procedures devised in 1944 proved to be inadequate for postwar reconstruction. Meanwhile nothing came of Keynes’s proposal for a fourth international institution to stabilize the prices of primary commodities although the ITO was meant to have some responsibilities in this realm.

Both the Bretton Woods and the UN are increasingly facing complex problems arising from the nature of globalisation. This is illustrated by harrowing concern over the pattern of speculative flows of finance and its impact on the world economy. This originated in the East Asian economic crisis from 1998 onwards –the collapse of these economies aroused critical questions on the ease with which the flow of finance into these economies stemmed from the prospects of investments which were dubious, risky, and with proper collateral. The subsequent destabilization in these economies which impacted in various ways on other regions of the world, was partly, and almost fully [by some], attributed to such financial flows. Control over such portfolio funds has called for measures, supported by international institutions, such as the Bretton Woods, to create disincentives, such as through taxing speculative currency transfers. The recent East Asian experience has called for a fresh appraisal of the role of international institutions, and specially the Bretton Woods bodies, to create the conditions of balanced growth, reduction of poverty, and curbs on complete market freedom, coexisting with the role of specific institutions to maintain global peace. Alas, the role of such institutions is being undermined by the largest nations through increasingly unilateral action, bilateral consultations, or groupings such as the Group of Seven [G 7] that act outside the institutions. Neo regionalism, too, may pose a threat to the multilateral system both economically, resulting trade diversion, discrimination and protection, and politically, undermining the multilateral bodies. The end of the coldwar may serve to radically alter the security foundations of the existing international economic order including the global institutions. The Bretton Woods institutions may have drifted from their original vision. The IMF may be a pale shadow of Keynes’s original vision while the original role of the World Bank envisaged by Keynes was as an institution for the expansion of global growth and employment rather than for deflationary policies. Indeed, the BW institutions could be seen not as vehicles for global management but as ones for policing the world.


The World Trade Organization has been a major force behind the creation of an open world economy with trade as the instrument to bring about the free movement of goods, services, and investment. This, however, is intertwined with the unequal distribution of resources in the world economy and its impact on bargaining and negotiations between developed and developing nations over rules governing international economics and trade. The core of the problem rests on the capacity of international institutions, led by GATT, and subsequently the WTO, to cope with the diverse and the changing nature of the global economy. This unfolded against a backdrop of inter and intra nation economic and political tensions.
GATT, General Agreement on Tariffs and Trade and subsequently the WTO, World Trade Organization, set out to create an equitable basis of global exchange inspired by notions of free trade and serve as an arena, instrument and actor for identifying and redressing the sharp disparities in trading and production structures of developing and developed nations. The rules, procedures, interventions, and modifications to trading arrangements, however, have fallen short of initial hopes of building a multilateral system by lifting trade barriers symbolized by tarrifs, non tarrifs, and domestic production and export subsidies, for efficient and equitable trade between nations. This mirrored both the inherent organizational limits of institutions such as GATT and the extent to which they were able to encompass the sharply differing interests of diverse, and unequal, economies mirroring global economic and political realities. Attempts to re-shape this through other inter governmental bodies, symbolized by UNCTAD, capture the harsh reality of world trade and underscore the limits of correcting imbalances in the latter.
Pressures to reform and re-invent GATT, paved the way for measures to accommodate the changing world economy and the special and differential needs of developing nations, while emphasising the virtues of free trade. This was encapsulated in the creation of the WTO, under the Uruguay Round, ushering in a new impetus to construct a more democratic institution incorporating sectors in which developing nations had a comparative advantage using cheap labour and low technological needs-exemplified by agriculture and textiles-while allowing sufficient time to dismantle tarriff and non tarriff barriers in the process of transition to a more open economy. This embraced the anxieties over unfettered entry of foreign investment into developing nations, and the urgency of implementing mechanisms to resolve inter nation trade conflicts. This assumed that domestic and external policies, such as aid, and debt relief, would complement the new visions of the WTO.
However, the controversies and debates before, during and after the world trade meetings capture the uncertainty and the anxiety over the capacity of institutions such as the WTO to establish an equitable global trading order–exemplified by Seattle [1999], the key Doha or ‘Development Round’ (2001)) and the Hong Kong Round (2005), and measures to enhance global trade relationships such as the WTO July 2008 Geneva meeting. The extent to which the principles of the Uruguay Round can be executed remains the major issue.
Developing nations are being coaxed to fulfil their obligations to liberalize their economies. However, developed nations are either maintaining their market barriers or not adequately relaxing them. Indeed, pronouncements of major leaders of the rich G 7 nations, voiced by the USA, have aroused debates over inclusion of areas sensitive to developing nations: labour standards and the environment. This would certainly put them at a major competitive disadvantage and, indeed, may undermine the visions of the WTO. Divisions have surfaced between developed nations [USA and EU] and reinforced those between developed and developing nations. In spite of differences among the latter in terms of their trade structure and strategy there is powerful consensus on the major issue of 'unfair' terms of trade. This could bolster their bargaining power vis a vis developed nations.
Debates unfold the long term virtues of special and differential treatment of developing nations under the WTO, and whether this will inhibit their future capacity to compete, and in turn the need to provide resources, technology and know how, to bolster their supply capacities. The history of GATT and the WTO, pose searching questions on the relevance, scope, feasability, accountability, and transparency of such specialized international institutions, in revamping deep rooted international and national economic and socio-economic disparities. This has been intensified by globalization which has unfolded the significance of a range of international, regional and non governmental institutions at several levels in reshaping international economic relations: UNCTAD, UNDP, G 15, ECA, ASEAN, SAARC. This calls for a fresh re-assessment of the post coldwar political economy of trade set in the interplay of domestic and external political economy. Recent moves to unearth and confront imbalances in the global economy, including trade, finance, and investment, and the worsening inequality between and within developed and developing countries, reveal bold steps to reassess traditional controversies over development thinking and strategies between the Bretton Woods and the WTO and the U.N. organizations.

Structured debates on trade, under formal and informal conditions, have increasingly tended to embrace it within a wider frame including north-south relationships, debt relief, foreign direct investment, flows of aid, and supporting domestic fiscal, monetary, sectoral, poverty and governance, under mounting inter and intra state conflicts. In this respect, the major focus since the Seattle [1999] and the Post Doha [November 2001] phase culminating in Hong Kong Round (2005) has been on :





  • Continuity of discussions on unresolved trade and development issues emanating before, during and after Seattle




  • Post Seattle plans and monitoring-collective or under specific institutions to fulfil desirable goals




Discussions have continued on the need to match the theory or rhetoric and the practice of international trade arrangements under the WTO encompassing:




  • Opening up of developed country market to developing country exports of agricultural goods coupled with reducing developed country tariffs on such goods and on subsidies on production and export of agricultural goods and reducing the pressure on developing countries to open up their markets to developed country exports




  • Ensuring special and differential treatment of developing countries in terms of allowing them to have higher levels of tariffs and for a longer period to enable gradual adjustment to the norms of the WTO




  • Incorporating the special needs of the least developing countries, most of which are in Africa, with heavy burden of debts and extensive poverty




  • Implementing the promises under the phasing out of the Multi Fibre Agreement and enabling developing country exports to compete in developed countries




  • Ensuring that TRIP’s takes into account the special needs of developing countries of access to cheap medicines especially for HIV/AIDS




  • Not using the WTO to impose labour or environmental standards on developing country exports as this could make their exports more expensive and hence uncompetitive



  • Measures to overcome the inability of many poor developing countries to send representatives to the WTO, emanating from resource constraints, and hence problems of participating in negotiations

The post Seattle plans to pursue the goals of a balanced world trading system and the desirable goals identified above have emerged at diverse meetings of international and regional groupings and the gatherings of world leaders: exemplified by meetings of G7 leaders, WTO specialized sessions and UNCTAD meetings.


Meetings such as the G7 summit [July 2001] accompanied by a meeting of African trade ministers in Zanzibar [July 2001] capture debates in terms of their goals, achievements, shortfalls, relevance of setting the agenda for future summits and gatherings and the scope of impacting on sustainable growth and development- the WTO Ministerial Meeting in Doha [November 2001]. The Post Doha issues centre on the “implementation” issues and the “new’ issues-the former covering the unfulfilled promises of the developed countries in key areas exemplified by agriculture, TRIPS, and services, while the latter impinges on the “Singapore’ concerns-key aspects of foreign investment and trade facilitation, the environment, and the setting up of working groups on the linkage between trade, debt and finance. In the sphere of agriculture the persistence of high tariff and non tariff barriers, coupled with heavy domestic support, in the form of subsidies, and export subsidies, by developed countries have been of critical importance. There was relatively greater comfort on TRIPS relaxing the conditions under which developing countries could gain access to cheap drugs and manufacture drugs, especially for HIV/AIDS. But anxiety continues to reign over the patent rights of developing countries in relation to access to traditional knowledge. There is, moreover, considerable doubt over the terms on which foreign investment will be allowed into developing countries. In the services sector developing countries need to evolve the specific sectors including the financial sub-sector and the relevant infrastructural support required. Environment continues to be a sensitive sphere for developing countries. It could be used as a pretext by developed countries to block developing country exports on the grounds of the latter not fulfilling any specific requirements. There was relief at Doha that no firm agreements emerged on the environment. The attempt to investigate the linkage between trade, debt and finance under the rubric of the WTO promises to unfold and resolve the perennial problem of external debts especially for African countries. This, however, is a start as there are major conceptual and practical problems in overcoming the obstacles to the debt crisis.
The execution of the Post Doha aspirations is captured by the 5th WTO Ministerial Meeting in Cancun in September 2003. Much hope rested on the meeting resolving the major concerns which emerged in Doha underscored by the major critiques on “implementation” and “new issues.” Alas, such hopes were dashed in Cancun. There was failure to reach any agreement between developed and developing countries. Indeed, basic doubts emerged on the future of multilateral agreements on trade through the WTO and the spread of bi-lateral deals. The EU and the US, and in particular the latter, could turn its back on multilateral agreements and adopt bi-lateral deals. This could have adverse implications for poor developing countries with limited bargaining power and the future of globalisation itself.
First, the major contentious issue was agriculture centred on the core concern over reduction of domestic and export subsidies. Unless these are removed or sharply reduced the prospects of developing countries, and especially those in Africa, of boosting their agricultural exports, their main source of growth, and in turn income, employment, and poverty reduction, will be blighted. Two versions of a proposed draft Ministerial text over five days, heavily influenced by the developed countries, failed to eliminate agricultural subsidies. Alas, the major developed regions, including the EU, the US and Japan, did not make any concrete commitments to implement reductions in subsidies. This aroused strong resistance from developing countries and especially the Developing Country Group of 23 –coined ‘The New Multilateral Block’-including India, China, Brazil, and South Africa, which firmly voiced the demands of developing countries. This group, backed by over 10,000 protestors from Mexico and around the world, and thousands of Non Governmental Organizations, working with developing country delegations to scrutinize trade agreements, found the position adopted by developed countries as totally unacceptable. Indeed, the group argued that “no deal was better than a bad deal.” This should be seen against a backdrop of the major countries in the EU and the US curbing domestic policies which appease their farmers through generous subsidies at the expense of taxpayers and, above all, at the expense of the livelihoods of millions of poor farmers in developing countries-especially in Africa. Inability to conclude the Doha Round by 2006 aroused much concern about the scope of liberalising global trade.
Second, the Meeting focussed on the ‘Singapore’ issues –the contentious concerns on trade and investment, trade facilitation, and government procurement. A group of 70 developing countries issued a statement firmly refusing to begin any negotiations on such issues as these would jeopardize their ability to regulate foreign investment by global corporations in their domestic economies. Any agreement on foreign investment would be legally binding and developing countries, especially in Africa, resisted its emergence on such grounds. However, some discussion ensued on government procurement but no clear conclusions emerged.
Overall, NGO’s and convention delegates denounced the non-transparent and undemocratic decision making process within the WTO.
In conclusion, the future of the WTO lies in accommodating the immediate and the future needs of different types of developing nations, and poor socio-economic groups, through intensifying formal and informal co-operation with relevant international, regional and non-governmental organizations, and diverse pressure groups representing the interests of poor socio-economic groups. It is critical that such institutions embrace transparency, accountability and truly democratic participation to fulfil goals of sustainable development. This demands a more open non-polarized debate on the rules, regulations, and procedures to create a more effective arena for international trade negotiations coupled with a critical review of the concepts underlying markets to meet immediate and long term social and human needs. This would make the WTO a more relevant institutional arena and an instrument for restructuring global trade under rapidly changing post coldwar inter and intra state relations.




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