WTO's bias towards developed countries

The enforcement of Intellectual Property Rights (IPR) have increased the cost of technology transfers to developing countries, which, in an increasingly knowledge-intensive global economy, reduces their ability to take advantage of opportunities that globalisation offers.

At the same time, the provisions on special and differential treatment in favour of developing countries have not yet been fully implemented and operationalised, and labour markets have not been opened to the same extent as capital markets. Moreover, tariffs remain high on goods with the greatest potential for the poorest countries, as in textiles and agricultural commodities.

The anti-industrialisation thrust of the GATT-WTO accord is made even more manifest in the agreement on Trade-Related aspects of Investment Measures (TRIMs) and the agreement on Trade-Related aspects of Intellectual Property Rights (TRIPs). He also comments that the WTO, like many other multilateral international agreements, is meant to institutionalise and legitimise inequality. Its main purpose is to reduce the tremendous policing costs to the stronger powers that would be involved in disciplining many small countries in a more fluid, less structured international system.

Actually any sort of new policy brings brighter future for the developed nations rather than poor nations. Secular deterioration of trends of terms trade is pushing countries like Bangladesh toward backward. Moreover, to adjust with the rules and regulations of the WTO has a very difficult task for a country like Bangladesh.

Doha WTO Ministerial declaration 2001 states that WTO is the unique forum for global trade rule making and liberalisation, which also recognising that regional trade agreements can play an important role in prompting the liberalisation and expansion of trade and fostering development.

Fifth WTO Ministerial conference was held in Cancún in 2003. The main task was to take stock of progress in negotiations. Negotiations collapsed in Cancun when rich and poor countries failed to agree on the way ahead and opened up a rift over agricultural subsidies. If policymakers and global trade negotiators were paying attention, Cancun could lead to trade talks that actually bring about fair trade, and the benefits to both the developing and the developed world that have long been promised.

Director General of WTO on 19th July 2004 called on WTO member governments to make every effort to strike a deal on a framework accord to Doha development agenda which can eliminate all forms of farm export subsidies enhanced trading opportunities for all countries and more equitable rules for international trading.

Trading nations give mixed reaction as final attempt by the WTO to break a compromise in deadlock between global trade talks by the end of the month July, 2004. Although the Doha round was originally meant to be completed by the end of 2004, global trade talks are still running well into 2005.

The last round of WTO negotiations presents special opportunities and challenges for the South Asian countries. Active participation by South Asian countries can enable them to secure better market access for their exports. It may also preserve or secure changes in the existing regulations that will enable them to fully integrate in the global trading system, while allowing them to meet their developmental goals. However, to achieve a favourable agreement, South Asian countries, especially India, will need to reform their own protectionist trade and domestic policies.

Despite significant trade liberalisation within the last two decades, the regional supply of agricultural commodities remains constrained by trade restrictions and anti-agricultural bias in domestic policies. Reforming regional domestic and trade policies will facilitate negotiations, provide impetus for increased agricultural production, stimulate trade and further economic growth, and enhance the overall food security situation in South Asia.

The relative weaknesses in negotiation resources of developing countries are continuously being felt. If developed countries intend to ensure success of negotiation, they need to consider ways to make the game worthwhile playing. Otherwise, negotiations are likely to give poor results or the weaker players will not want to play at all.

During the year 2003-04 income from total export is USD 7602.99 million in Bangladesh, while for the first nine months of 2003-04, it is USD 6097.12 million. Ironically, Bangladesh's earnings from export sector depend on few products (Source: Bangladesh Arthanaitic Samikhya, 2005). Moreover, we are mainly exporting our products around 88% in four markets i.e. EU-56%, USA-26%, Canada-4% and Japan-2%.

Since multi-fibre agreement (MFA) was ended in 2004, as such the country is now in a dilemma whether it can compete in the free and fair trade. Process of phasing out of the MFA was very important for Bangladesh. But at that time it has failed to take any appropriate measures as both infrastructure as well as entrepreneurial activities are lagging behind. However, in the Annual Report (2003-2004) of Bangladesh Bank comments that Bangladesh faces even more intensive competition with the multi-fibre agreement, the government has already set up a high-powered national coordination council for taking action to meet the challenge in this regard. In reality, activities of national coordination are very limited.

M.Saifur Rahman, Minister for Finance and Planning (2004) in "BANGLADESH: Memorandum of Economic and Financial Policies for Fiscal Year 2005" expressed that the plan of present government to the International Monetary fund (IMF) that they intend to reduce the cost of doing business by streamlining administrative procedures and licensing requirements, open up the RMG sector to foreign direct investment, further liberalise the import regime, and adopt other measures to assist the RMG sector in the post-MFA era. The latter measures include: (i) a skill development program for workers and managers in the RMG sector; (ii) retraining programs for displaced workers; and (iii) a capacity-building program for Small and medium enterprises (SMEs) who are most at risk, especially in technology and marketing.

Present condition:

Starting from the year 2005, the country's export sector is facing free competition in the international market due to the expiry of the multi-fibre agreement. Further, strengthening the role of globalisation process of trade and investment and advent of post MFA era may push Bangladesh into a highly competitive global environment.

But still now the adverse effect cannot be felt, as it is a time consuming process. Garment industry in Bangladesh provides an excellent example of how recent trends in globalisation have opened up huge opportunities for poor developing nations to participate in the global economy for rapid economic development. The Bangladesh apparel export sector began in the late 1970s and presently stands as a multi-billion-dollar monument to the country's participation in the global economy. Organised labour in the United States has been a major force behind the multi-fibre agreement and has been preparing for its expiration in 2005 by seeking other means to defend its home turf. The apparel export industry in Bangladesh was threatened with the loss of U.S. markets, the major outlet for its products.

The writer is Associate Professor, School of Business Administration, The People's University of Bangladesh.

Source: Financial Express Bangladesh