Inequalities in globalisation and liberalisation Ignoring the appeals of developing countries

BY ELIZABETH MORGAN

Wednesday, November 21, 2018

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The United Nations Conference on Trade and Development (UNCTAD) and other organisations have defined globalisation as the dynamic and multidimensional integration of global economies through increasing international trade in goods and services and flows in investment and finance. These are fuelled by policy reforms and advances in information, communications and technology, as well as transportation.

Globalisation has also facilitated the movement of labour, legal and illegal. It works along with liberalisation, which enables the opening of markets through removal of barriers to trade (tariff and non-tariff measures) and deregulation in the financial sector. Players include countries and transnational corporations, as well as multilateral organisations. Today, a product can have components produced in several countries through the global value chains which mean that the various stages of production and distribution take place in different countries.

Professor Deepak Nayyar, in his 1998 essay 'Globalisation: The past in our present', pointed out that globalisation is not new. It actually accelerated between 1870 and 1913, the period of laissez faire (free trade). Nayyar stated that the lesson from history shows uneven development. He warned that globalisation in the later part of the 20th century demonstrated many similarities to that of the 19th century and was bound to produce uneven development not only between countries but within countries. He pointed out that in the late 20th century the few developing countries benefiting from globalisation were Argentina, Brazil, Mexico, South Korea, Hong Kong, Taiwan, Singapore, China, Indonesia, Malaysia, and Thailand. All other developing countries were seeing minimal, if any benefit. He saw the economic distance between countries increasing and income disparities among peoples widening.

In their national interests, developed countries began to press for a further acceleration in globalisation from the 1980s onward. Liberalisation of trade was accelerated through the General Agreement on Tariffs and Trade (GATT) Uruguay Round (UR) of multilateral trade negotiations, which concluded in 1994. The GATT UR resulted in improved market access through reduction of barriers to trade and brought new areas under regulation such as trade in services, agriculture, textiles and clothing, and trade-related intellectual property rights (TRIPS). It also resulted in the creation of the World Trade Organization (WTO) outside of the UN system. Before the UR agreements could be implemented there was a further proposal to increase market access which led to a call for a new round of multilateral trade negotiations covering more new issues such as investment, competition, environment. and core labour standards. When this proposal encountered opposition the proponents moved to accelerate negotiation of bilateral and plurilateral free trade agreements with greater levels of liberalisation. Deregulation of the international financial system was also expanded.

Liberalisation and deregulation for a number of developing countries, including Jamaica, however, occurred due to their acceptance of the International Monetary Fund (IMF) and World Bank structural adjustment programmes. Liberalisation of Jamaica's economy was thus unilateral and occurred in the 1980s.

A 1999 paper sponsored by the Carnegie Endowment for International Peace, concluded that developing countries faced special risks that globalisation would exacerbate inequality in the coming decades, raising the political costs of inequality and the social tensions associated with it. It went on to say that a protectionist and populist backlash would be a shame as in a perverse twist, it would undermine the benefits that more open and globally integrated economies and policies could deliver to the peoples of the developing world.

Since the 1990s, developing countries, including Jamaica, have been expressing their serious concern about the uncritical embrace of globalisation and liberalisation specifically by the developed countries, the USA, European Union (EU), other members of the Organization for Economic Cooperation and Development (OECD), and the International Financial Institutions. In Jamaica's 1998 policy statement at the UN General Assembly (UNGA), Seymour Mullings, then deputy prime minister and minister of foreign affairs and foreign trade, stated, “The reality is that the globalisation process is heightening patterns of uneven development among developed and developing countries and it is already very clear that there is no globalisation of benefits.” In 2008, then Prime Minister Bruce Golding, speaking on globalisation and the plight of developing countries, told the UNGA that solving the problems of developing countries required more than mere liberalisation of trade, privatisation and free capital flows. The focus, he indicated, had to be on global development, addressing limitations bedevilling developing countries, and not just on increasing global market access.

Over 15 years or more Jamaica continued to join other developing countries at the UNGA, the WTO, UNCTAD, and in other international fora to express concern about the inequalities inherent in globalisation and liberalisation, especially if developing countries could not speedily put in place necessary reforms and access financing.

The developed countries and some beneficiaries among developing countries continued to push for deepening globalisation and liberalisation ignoring the appeals of developing countries. They supported China's WTO membership, as it was seen as a large, lucrative market and a source of cheap goods and labour. They forced through the launch of the WTO Doha Round of trade negotiations in 2001 under the pretext that it would be a development round. When it did not bring the desired results to secure increased access into the markets of developing countries and regulate new areas, they turned to negotiating even more complex free trade agreements outside of the WTO. They ensured that the world became more integrated further entrenching globalisation.

Then came 2009 and the great financial collapse (the Great Recession) originating in the USA. It was the worst global recession since the 1930s Great Depression. It has taken several years for countries, including Jamaica, to dig themselves out of this economic crisis. Then came 2016 and the British voted by a narrow margin in a referendum to leave the European Union. This Brexit was fuelled by concerns about loss of sovereignty, jobs and migration. Britain is currently in a quagmire. In the USA, Donald Trump, with support in states hurting from the decline in manufacturing and other industries, won the presidential election. He promised to bring back jobs and to “make America great again”.

Suddenly, these developed countries recognised that globalisation had resulted in inequalities and social discontent within their own countries. For Trump, the free trade agreements initiated and supported by his own Republican Party became the worse agreements ever; with America, the champion and beneficiary of globalisation and liberalisation, the victim. Now, he seem set to disrupt the post-war world order and has declared himself a nationalist. Ultra-conservative nationalist groups have gained prominence in the EU (Italy, Hungary, Poland, Austria, Germany, France) due to anxiety about sovereignty, migration, and economic instability. Brazil, seen as a globalisation beneficiary with great development potential, has faced recession and corruption scandals. Brazil has just elected an ultra-conservative president.

So, here we are wondering whether the tide of globalisation can be stemmed after years of ignoring lessons of history and the concerns of developing countries and organisations such as UNCTAD, UN Economic Commission for Latin America and the Caribbean (ECLAC), the South Centre, Third World Network, and other bodies and individuals from developing countries. Self-interests often make countries and their transnational corporations, and even institutions, blind and deaf to the concerns of others until they are directly impacted themselves. Then the villains become other countries and peoples. What a world!

Elizabeth Morgan is a specialist in international trade and politics. Send comments to the Observer or elizabethmorganstliz@gmail.com.

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