GLOBALIZATION AND TRADE LIBERALIZATION
It has turned into a reality rather than an option
From SHAMIM AHMED RIZVI, Islamabad
July 21 - 27, 2003
There were some voices of opposition, but majority of the participant at the round table conference on "Social dimension of globalization" in Islamabad last week emphasized the need to prepare the country to face the coming challenges of globalization as it is going to be a reality which has to be faced. Governor State Bank of Pakistan, (SBP) Dr. Ishrat Hussain was blunt in his observation that Pakistan should face challenges of globalization to reap benefits of the new system instead of finding faults with it.
The day-long conference was organized by the Sustainable Development Policy Institute (SDPI) in cooperation with Friedrich Ebert Stifiung (FES). Elaborating his point the Governor SBP said that Pakistan should follow the example of India and China which met the challenges upfront and improved various sectors of economy to come to grips with them. Other important message he gave was that democracy and partnership were the first steps towards people's empowerment and these should be given priority in decision making. He said that protection of labour and human rights was key to economic growth. Globalization was beneficial for Pakistan but as part of policy of finding of faults in everything it was being properly projected. This policy of pessimisms must be shunned to reap benefits of the changing world order, he added.
Dr. Ishrat stressed the need of inculcating consensus among all sections of society to prepare a national agenda for the progress of the country. He referred to China as a typical example of collective national approach, which changed it into a world economic power during the last two decades. He said China captured major share of the international market during the last few years. The SBP chief said he was convinced that Pakistanis are as good as Indians or Chinese in their performance, and all that is needed to make them first for globalization is proper exploitation of the potential.
Former federal secretary Dr. Zafar Altaf noted that Pakistan's agriculture sector failed to deliver due to faulty policy of the government. He added that agricultural sector is not ready to meet the challenges of globalization due to many reasons. He listed a few of them such as lack of information to the farming community, low production and quality. Zafar questioned Pakistan agriculture sector's ability to meet the world standard without increasing its per acre yield. He claimed that growers are hardly familiar with the concept of WTO or globalization. He stressed to the need of imparting information about the chaining requirements of the world market to the farming community.
MNA Kashmala Tariq said the government if following the policy of involving people in decision making at all the levels as it is the best tool to expedite the process of national progress.
FES representative Abdul Qadir said that social dimension of globalization is one of the importance aspects of the process of globalization that focuses on poverty, inequalities and miseries of the people.
Dr. Shahrukh Rafi said the government has recently sent a letter of intent to the IMF saying that it would take other measures that the Fund would suggest. He said that "we should not give such an open space" to the donors as, with such offers, they come hard on the countries like Pakistan and impose conditionalities that become troublesome for the people. He said structural adjustment is the key mechanism for facilitating economic integration and using the example of Pakistan, he indicated that this can have negative economics consequence.
ILO director Johanas Lokolo said ability to respond to the opportunities created by globalization depends on a more integral view of interdependent economic and social objectives. This calls for an integrated approach to the economic, social and political dimensions of public policy. He said that under ILO's 'Decent Work Agenda', the concept of working poor was an important tool in the analysis of the labour market. Poverty is associated with unemployment and 'Decent work' is a critical component of an integrated approach to poverty reduction and more equitable development.
Sartaj Aziz called for a fundamental rethink about globalization and trade liberalization. He was of the opinion that the developing countries should present their united position on trade issues at the WTO's Cancun ministerial to be held in September. He said the developing countries cannot liberalize their trade regime for goods and services, unless the actual and not promised market access for their export has reached the desired level. They should not be asked to reduce their measure subsidies for agriculture unless and until the developed countries have cut their domestic support by at least half. They cannot agree to broaden the scope of WTI further unless the Doha commitment to incorporate the development dimension in all areas of the multilateral trading system has been effectively implemented.
Dr. Abid Suleri of SDPI gave a presentation on 'policy realignment in globalization regime; re-mapping the globe'. He said that WTO is a rule-based organization and the member countries could bring their concerns at proper forum. He called for policy coordination among developing countries so that they could bargain for more democratic global governance. He said there is a need to create a balance between activism and research and forging alliances along regional or international lines.
PIDE Director Dr. A. R. Kemal said so far commitments for trade liberalization are under structural adjustment program with IMF and not under way WTI related commitment. He said that Pakistan has already reduced tariff. Pakistan needs to identify exports options that could benefit it under comparative advantage clause. "We have to realign our policies particularly regarding expansion of industrial sector."
So far as globalization is concerned, for all practical purpose it has turned into a reality rather than an option. Hence there is no choice for this country but to meet the challenge of globalization in an appropriate manner after the Word Trade Organization's (WTO) free trade regime becomes fully effective in 2005. That is, when the ongoing disputes regarding quotas and markets access will come to a close, to be replaced by issues that deal with unfair trade practices.
Admittedly, WTO is a rule-based organization, and the rules are arrived at through a system, which, by and large, is equitable. It also provides for a special mechanism to address the issues that worry the less developed and therefore disadvantaged countries. Needless to say, these countries will have to work together to win favourable terms of trade for themselves in the on-going negotiations process, an upcoming occasion being the WTO ministerial meeting at Cancun in Mexico. A major cause of concern to agri-based countries such as ours in the practice of heavy agriculture subsidies in the US and EU, that lead to cheap agricultural surpluses, the European Union, France in particular, which maintains a highly subsidized farm sector, has already been under much pressure to undertake the necessary reforms. It has announced some reductions in subsidy, but it need to do more. Those on the other side of the divide would like the western farm subsidies to come down to at least half of their usual levels so as to creates less lopsided playing fields for their own farmers before the commencement of the free world trade order. For that to happen, they will have to build a sustained, collective pressure. That, of course, will not be all to be done.
Free trade, needless to say, means unrestricted movement of goods as well as services across borders. So far only the advanced western nations monopolies the services sector, selling expertise in sophisticated fields such as banking, insurance, medicine, engineering, etc. in the case of Britain, for example, the bulk of the country's exports comes from the services industries. Which would be fine but for the fact that it has been a one-way street. A truly free trade regime must ensure unfettered mobility of all factors of production and must also include the more basic services from the developing countries, like that of barbers, plumbers or tailors. Open markets being the ascendant philosophy in the current western economic discourse, market forces rather than governments should be allowed to determine whether or not the services offered by, say a barber from this part of the world, are required by people in London or New York. On the contrary, advanced industrialized nations are erecting new walls around their borders. Developing countries must demand the removal of such restrictions on manpower mobility, in addition to withdrawal of the subsidy system, when they negotiate the new terms of trade.
So far as the example of India and China is concerned, it is not truly relevant, as Dr. Ishrat Hussain himself elucidated that China's is an example of collective national approach, which has turned it into a world economic power during the last two decades. There, of course, have always been fundamental systemic differences in the Chinese approach to economic policy and our own. Even in the case of India, the decision to put the country on the road to industrial and social development was taken a long time ago under the able leadership of the country's first Prime Minister, Jawaharlal Nehru. During the more recent years too, the country's leadership made timely policy decision, like going for IT in a big way as far back as in the mid 1980s.
Also, unlike those two countries, Pakistan is still largely dependent on the multi-lateral donor organizations, and is consequently bound by the guidelines and conditionalities they impose on its economic policy. China and even India, suffers no such constraints and therefore they have all the freedom they need to pursue their goals as they deem fit. Hence, before claiming its place alongside countries like China, Pakistan has to end its dependence on multi-laterals. It also needs to resolve the unending power tussle between the political and military elite that has cost us a lot both in terms of political stability and economic progress.