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A Reason for Hope

The economic situation in the world is in a peculiar ambivalent state, pressurised by centrifugal forces acting to destroy the monetary system, with overtones of general chaos manifest in its wake. The prolonged financial and monetary instability has had a debilitating effect, particular cause for concern being the increasing of indebtedness of almost all the Less Developed Countries (LDCs). Realizing that concrete steps have to be taken to arrest the explosive situation from deteriorating further, Trade Ministers meeting at a Special Session of Contracting Parties at Punta de Este (Uruguay) decided in September 1986 to launch Multilateral Trade Negotiations (MTN) calling it the Uruguay Round. These negotiations were to be open for participation to all the Contracting Parties of GATT including those that have acceded provisionally. As a measure of bringing more countries into the process, those countries applying for and even intending to apply for admission have been invited to the discussions. This has created a truly world-wide forum intended to draw the maximum number of nations into the mainstream of an acceptable solution to all concerned, cognizant of the fact that the efficacy of any system devised will depend upon maximum participation.

Essentially the Negotiations are to be conducted in three phases (1) trade in goods (2) trade in services, with a final phase being (3) the implementation of results of the earlier two phases. To quote verbatim, the Contracting Parties at Ministerial level determined to (1) abolish protectionism, thereby removing distortion in trade (2) while preserving the principles of GATT to further the objective thereof (3) develop a freer, durable multilateral trading system. Convinced that such action would promote growth and development and remaining mindful of (1) the prolonged financial and monetary instability in the world economy (2) indebtedness of many LDCs, while (3) considering the linkage between trade, money, finance and development. The Contracting Parties then decided to enter into MTN on trade in goods under the aegis and framework of GATT.

In a comprehensive statement designed to lay down all parameters, objectives decided were (1) liberalization and expansion of world trade (2) strengthen role of GATT (3) increase responsiveness of GATT to the evolving international economic environment and foster concurrent cooperative action at the national and international levels. The general principles governing negotiations would be that (1) they would be conducted in a transparent manner (2) considered as one entity in launching, conduct and implementation (3) with balanced concessions (4) earlier accepted principles of GATT to apply in Standstill and Rollback (5) developed countries not to accept quid pro quo in commitment (6) LDCs position in trade would improve resulting in the greater participation within GATT and (7) special attention would be given to the problems of the LDCs in expanding the trading opportunities. Further the GATT members decided on standstill i.e. not to take any further trade restrictive measure either (1) in general or to (2) remedy specific situations or to (3) improve their own negotiation positions and rollback inasfar as they agreed to (1) phase out ‘trade restrictive measures (2) with progressive implementation of this commitment while (3) asking for no concessions for the steps envisaged. They also agreed for multilateral surveillance of rollback and surveillance.

The subjects for negotiations were defined comprehensively being (1) tariff, with attempt to reduce or eliminate tariffs with emphasis on mutual tariff concessions (2) non-tariff measures, with attempts to reduce or eliminate thereof without prejudice to fulfillment of rollback commitments (3) tropical products and natural resource-based products, with liberalisation of trade in them covering processed and semi-processed forms, recognizing the importance to LDCs in trade in them (4) textiles and clothing, with formalizing modalities permitting integration into GATT and its rules and disciplines, thereby contributing to liberalisation of trade (5) agriculture, where discipline and predictability needs to be improved to correct structural imbalances by improving market access, competitive environment and minimizing sanitary and photo sanitary trade regulations acting as barriers.

While receiving the existing GATT articles some safeguards were envisaged for comprehensive agreement inculcating GATT’s basic principle, i.e. transparency, objective centres, structural adjustments, etc while clarifying and reinforcing the disciplines of GATT. It was agreed to clarify and expand the Tokyo Round of MTN, the existing negotiations of subsidies and countervailing measures, contrive settlement of disputes, emphasize trade-related aspects of intellectual property rights, including trade in counterfeit goods and elaborate provisions to avoid adverse effect on trade by trade related investment measures.

The Ministers participating in the Uruguay Round also decided to launch negotiations for Trade in Services, a most important fact of these countries with large populations, having both skill and lack of skill at the lower end of the spectrum. A comprehensive solution bringing GATT procedures and practice to apply to this new aspect was sought.

Having gone through the paraphernalia aforegoing with all its pious hopes, we must analyse what it can really do for Pakistan. Speaking in general, the very fact that the developed countries are looking for ways and means to alleviate the sufferings of the LDCs is welcome indeed. The affluent countries, most of them having had imperial rule over the LDCs till as late as the middle of this century and having lived off and virtually denuded their resources, have a moral responsibility to ensure that their previous colonies, shorn of their natural wealth, are not left to their respective dooms. With ever increasing population, shrinking resources, shortage of arable land and heightened expectations among the populace, the ingredients for anarchy are present, the residual effect of which will cause widespread destruction and damage from which the First World cannot remain untouched.

The informal meeting in Islamabad which can be called the “Islamabad Round” has been at the initiative of Dr Mahbubul Haq. A conclave of 30 Foreign Trade Ministers, is more than just an afternoon tea party, it is a happening and for Pakistan, following the last informal meeting called by the West Germans at Lake Constance, both an honour and an opportunity. On our own turf we get an opportunity to explain to decision-makers in foreign countries the importance raw cotton, textiles, etc have for our economy. As a public relations measure it has far-reaching ramifications and Dr Mahbubul Haq must be commended for it. For Pakistan, whose very life-blood is raw cotton and its downstream derivatives, mainly textiles and made-up garments, easy access to international markets, particularly of the developed countries means the difference between continued poverty and hope for prosperity. Our requisite is basic, fully 45 million of our people are directly or indirectly connected with cotton in some form for their livelihood, it is the mainstream of our economy. It is unreal to expect us to sell sugar mills, cement factories, etc to the developed countries while a meagre increase in the imports of developed countries at the cost of countries who don’t even produce cotton viz. South Korea, Hong Kong, Taiwan, etc would mean a great boon to us.

Trade in Service is also of crucial importance to us. Till recently we had a yearly increase in remittances by our expatriate workers in the Middle East. This figure has now been reversed because of loss of job opportunities. As the process multiplies, we shall be faced with a liquidity crunch based on loss of hard earned foreign exchange earned by these services which made up a great deal of our trade deficit. For Pakistan, this is an important aspect for the developed countries to consider as we have a surfeit of human resources, the potential of which has never been really addressed as a prime hard cash earner. We have to give this aspect great importance.

Pakistan’s initial need for credit should have been concentrated on modernizing its rural economy while concentrating on manpower development through the whole spectrum. We now have to pay for the mistakes of our planners through our noses. If allowed to overcome the growing protectionism of the developed countries for our textiles, Pakistan has the potential of not only paying off its debts but also being prosperous on its accord based on its own potential. To that end these informal discussions in Islamabad assume great importance for us as we can impress upon the participants to give serious consideration to our own particular viewpoints.

As the hosts we cannot impose upon our guests but the least our friends from various countries can do is to listen to our submissions. One disagrees with a lot many things that Dr Mahbubul Haq, economic chameleon extraordinary of the 20th century, normally does, but from time to time he does come up all aces.


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