CHART A COURSE
How can we move forward in the liberalization of global industry?Through progressive steps from an already agreed program or through a big step towards the relaxed industry in a new big negotiation?This comes as industry ministers from the World Trade Organization’s 120 member countries prepare to meet in Singapore in December to chart a course for further liberalization of the industry. This will be their first assembly since they met in Marrakesh in April 1994 to conclude the GATT Uruguay Round negotiations.
A long series of preparatory meetings at the WTO’s headquarters in Geneva, which began in the spring and may continue until the eve of the Singapore conference, anticipated what is likely to take place in December. They recommend that the world is not in a position for a jump to loose global industry through a date set at the beginning of the next century.
Unless a vital record disappears from the preparatory work, the ministers will be called to settle 4 primary questions. Three of them, while potentially vital to the long-term progression of the trading system, pose collateral problems that are not directly similar to industry liberalization. There is perhaps a 50% chance that the WTO will make a decision to address, though not through negotiations, the foreign investment regulations factor and the new “competition policy” factor, which covers government and industry practices. industry that limit competition. The third and ultimate moot question will be whether the WTO deserves to take on hard labor rights identified around the world. The United States, France and other European countries have pushed the factor, but it has met with plenty of resistance from the Association of Southeast Asian Nations (ASEAN), Japan, Australia and others. Concerns expressed across its warring parties are that the proposal may also lead to veiled protectionism, although some governments may have other unstated objections. Either way, the chances that Singapore’s ministers decide to address the factor in any meaningful way are slim to non-existent.
The fourth and ultimate vital factor is the pace, intensity and scope of global industry liberalization. The WTO already has an expanded “integrated agenda,” agreed in the Uruguay Round, that calls for vital negotiations on industry liberalization over the next decade. Ministers are very likely to stick to this agenda, but do they? Some economists advocate a more ambitious path that would lead to a complete relaxation of the industry in the first decades of the next century. One of them is C. Fred Bergsten, director of the Institute for International Economics. He argues that an agreement to achieve a flexible global industry until 2010, or perhaps until 2020 for the poorest countries, may simply be achieved through a “big market” that would assure low-income countries that oppose March. return to protectionism through the “old rich” in exchange for full access to their markets and those of Japan. He believes that the singles market would create well-paid exports. euphoric jobs and determine regional industry deals, bringing profits to the United States and the global economy. [1]
Earlier this year, Renato Ruggiero, director-general of the WTO, and Donald Johnston, secretary-general of the Organization for Economic Co-operation and Development, separately expressed conditional support for facets of Bergsten’s concept. Both men also expressed serious considerations about regional trading blocs. But the Financial Times on April 25 reported that Ruggiero and Sir Leon Brittan, the EU’s industry commissioner, “reacted coldly” to Bergsten’s proposal that the WTO focus on flexible global industry until 2010. Last week, WTO officials quietly discussed seeking a more ambitious industry. the liberalization schedule and the convening of an industry summit in Washington at the end of 1997, but neither concept endured. discovered a lot of help. Neither the European Union nor the United States seem to help liberalize the industry beyond the established timetable, although the EU can only help with the preparatory work for a new round of trade negotiations. And if the Uruguay Round has taught the world anything, it is that no major initiative in the WTO stands a chance of good fortune unless the United States and the EU are united.
Proposals to achieve a global flexible industry in the first decades of the twenty-first century obviously have visionary appeal, but the vision will need to be tempered through a keen, experience-based sense of what can be achieved. The Uruguay Round was not about a flexible industry, but about a looser industry, but it almost failed. Ministers in the Singapore assembly would demonstrate common sense and a strong appreciation of political truth by avoiding any giant step towards a global lax industry. Few countries share the laissez-faire religion of the United States and the United States. In the UK, and even in those two countries, hard lobbying would oppose a relaxed industry in general. The WTO has an ambitious built-in timeline that will continue to reduce barriers to industry for much of the twenty-first century. An untimely effort to exclude countries from coverage would almost fail and would most likely seriously undermine the WTO negotiations already underway.
THE WORLD IS FAR FROM READY
Whatever the appeal of the global informal industry, political support for the concept is simply not there. The Uruguay Round, for example, nearly collapsed over differences between the United States and Europe over agriculture. The United States proposed at the beginning of the circular that all agricultural supports and protections be eliminated in a period of 10 years, making it clear that it can only be a longer period. The EU’s reaction has been incredibly negative. When the United States refused to give up its position, the industry rarely turned sour and negotiations, not only on agriculture but on other issues, virtually stalled. The United States gradually softened its position and reached an agreement on agriculture with the EU a year before the circular was finalized. This agreement, which was established with some modifications by other governments, was a remarkable achievement, but it fell far short of a relaxed industry. The EU, in particular France and some southern member states, is probably no more in a position today to settle for a loose industry in agriculture than it was at the end of the Uruguay Round.
The EU was not the only one to oppose the 0 coverage option in agriculture. Japan and Korea fought desperately against the opening of their rice markets. It was only in the last weeks of the negotiations that they settled for the slightest openness. Japan nevertheless made up initial imports of 4% of the market, expanding through annual increases to 8% after six years. Korea, thought of as an emerging country, negotiated an initial opening of 1%, emerging annually at 4% after ten years. Can anyone seriously that either country would settle for unlimited rice imports during the 2010-2020 era?
Recent WTO negotiations don’t give industry advocates much hope either. The United States has refused to conclude agreements on Array saying that many of the offers on the table, especially from emerging countries, are insufficient. lax industry, only greater access for its service industries. Recent reports from Geneva have indicated that there is no enthusiasm in Europe to make a radical new commitment to conclude a loose global industrial pact. Indeed, EU officials privately report that some of its member states think negotiators have gone too far in the Uruguay Round.
From the point of view of U. S. domestic politics. In the U. S. , any deal that removes any coverage of the textile industry, historically one of the country’s protected maxims, is hard to imagine. Influence as it once did, neither the industry nor its members of Congress are likely to settle for a relaxed industry early in the next century. In addition, while the U. S. The U. S. Is Slashing Agriculture and Coverage, passing the recent Farm Bill that not all U. S. farm equipment is going to cut agriculture and coverage. The U. S. is in a position to move to absolutely flexible markets.
All industrialized countries are struggling lately, in one way or another, with serious economic and social problems. It can be debated to what extent higher foreign festivals contribute to job losses in industries. There is no doubt, however, that this is a vital factor. , and political objections are being raised to the loss of tasks in Europe and the United States. The rise of foreign industry brings benefits, but generates both losers and winners. it – those who have few skills and education, or who lack occupational mobility due to their age, aptitude or economic situation. In short, the burden falls on those who cannot access well-paid export-related tasks.
Europe is tightening its belt to achieve the Maastricht goals, while in the United States, whether Bill Clinton or Bob Dole wins the November election, many social systems are likely to remain under pressure. in diversity from 2. 0 to 2. 5% in the next two years; satisfactory, perhaps, but vigorous enough to make a truly comprehensive contribution to the solution of unemployment and other serious social problems.
But the disorders of the industrialized countries are not the only concern. China has been negotiating for years, first to join the GATT and now the WTO. It has yet to convince WTO members, adding the United States, that it will settle for regulations and grant sufficient access to its markets. China will not register with the WTO this year, however, the hope in Geneva is that it will be able to join the WTO in 1997. Urging China, as it joins the WTO, to devote itself to fully opening its markets to foreign festivals would be as reckless as it is useless.
Russia, the other main country still outside the WTO, has also started its accession process. They well informed other people in Geneva that, if all goes well, Russia could participate in the WTO within the next two or three years. As with China, Russia’s command economy culture will make negotiations difficult. Can we expect Russia to engage in informal industry by the end of the century? James H. Billington, the Librarian of Congress, warned that “no mistake has been greater in the West than to assume that the only option for Russia’s largely authoritarian history and identity will have to be wholesale conversion to Western democracy and the economy. ” of market”. 2] Jack F. Matlock, Jr. , former US ambassador to the Soviet Union, writing about the election of Boris Yeltsin as president of Russia, notes that “even economic liberals are calling for protectionist measures to revive commercial production. ” [3] Ukraine, Georgia, Belarus, Kazakhstan, and other former Soviet states are preparing to participate in the WTO, but would almost in fact not be in a position to conclude an agreement that would lead to a relaxed global industry. low-income emerging countries, which represent more than two-thirds of the WTO members.
Although there has been a major movement in the world over the past decade towards more flexible markets and less regulation of economic activity, emerging countries, suffering from social and economic disorders that dwarf those of the West, are unwilling to settle for total freedom. industrial. No country in the world adheres as much to trust in flexible markets and flexible industry as the United States, Britain and other English-speaking democracies. Many would see the global flexible industry as contrary to their traditions, doctrines and interests.
FEAR OF REGIONALISM
Global lax industry is a remote target, full of pitfalls, yet regional industrial agreements have been a little less difficult to achieve. Many well-informed observers fear that they are going too far and that the world will be divided into hostile trade blocs. Concern about regionalism dates back to the early 1980s, when the U. S. industrial agreements with Israel and Canada, and the extension of EU membership. Since then, the creation of NAFTA, U. S. -led efforts have been under the guise of NAFTA. on very lively regional agreements. However, a review of WTO industry statistics and a sober assessment of what is likely to happen in the Pacific, the Western Hemisphere and elsewhere r I recommend that this concern, if unfounded, be exaggerated.
In 1995, the WTO published a report entitled “Regionalism and the Global Trading System” that deserves to be better known. The Secretariat of the organization points out that the comparison of the industry within the regions before and after the conclusion of regional industrial agreements does not allow us to conclude that the global industry is increasingly regionalized (see table 1). Statistics in the report show that intra-regional industry declined somewhat between the late 1920s and the years immediately following World War II, and then increased dramatically through the early 1970s, but increased only slightly. quantity between that date and 1993 in Western Europe while slightly cutting back in North America. Only in Asia did the intra-regional industry develop particularly in those years. This past progression can be explained not through a nonexistent regional industrial agreement, but through a significant movement of direct investment, much of it Japanese, to production facilities in Asia. [4] In fact, Japan’s overall industry (exports plus imports) with the rest of Asia grew by more than 23%, or $66. 4 billion, between 1992 and 1994 alone, more than Japan’s construction with any other region, in absolute terms and relative. . Array[5] If this is really regionalism, it is one of the healthiest, motivated by advertising considerations.
WTO statistics clearly cannot wait for the future. A 1994 summit assembly of the Asia-Pacific Economic Cooperation (APEC) Forum in Bogor, Indonesia, set a purpose of “free and open industry and investment” until 2010 for developed countries in the region and 2020 for emerging countries, not describing freedom and open industry or evolved and emerging nations. Similarly, a 1994 Summit of the Americas in Miami, Florida, followed a U. S. proposal. The U. S. Department of trade in the U. S. to build a Free Trade Area of the Americas (FTAA) by 2005, with really extensive progress before the end of the century.
Are any of these proposed regional arrangements more likely to achieve their objectives through the announced target dates?Both seem far from being up to the task. None of the 1994 declarations is a legally binding commitment; or they are, at best, political declarations of intent. And definitional disorders are hardly technical questions. Whether, for example, it is explained that loose global industry comes with everything that moves in foreign industry or that excludes sectors such as agriculture or services, the resulting debates, both domestic and foreign, will likely be fierce.
In the case of the FTAA, two ministerial-level assemblies have taken a position since the Miami assembly and several implementation teams have been established, but continuous and detailed negotiations are not in sight. The United States reportedly attempted to schedule a Summit of the Americas in late 1997 or early 1998, but Brazil, possibly more directly involved with the customs union established in a Mercosur position (Brazil, Argentina, Uruguay and Paraguay, with Chile as a partner member), and other nations seem reluctant to move forward temporarily in the FTAA. (Customs unions, like the EU, don’t have unusual external industrial barriers; flexible industrial areas, like NAFTA, don’t. ) Brazil has liberalized its economy in recent years, but after running an industrial deficit in 1995, it imposed higher customs tariffs. on cars and raised barriers to other imports. While those moves represent only a small percentage of imports and can be safely reversed, they raise the question of whether Brazil would be in a position to settle for a loose continental industry until 2005. Would the United States and other hemisphere nations be? If it took an all-out effort to get NAFTA through Congress, what kind of political effort would it take to get Congressional approval of a hemispheric industrial pact?
After an ambitious start in Bogor, the November 1995 APEC summit in Osaka ended, noted a Nov. 25, 1995, New York Times editorial, with an “agreement on indistinct terms” that did not set a deadline for “the elimination of agricultural coverage. “and other sensitive industries. ” It’s hard to think that China and Japan need a generalized relaxed industry with the United States and other Pacific countries. that would force the United States and other rich countries to widely open their borders to imports of textiles, clothing, electronics and other manufactured goods, as well as agricultural products, while their own exporters wait another ten years before arriving in the countries, possibly adding China, do the same.
Meanwhile, Thailand, the Philippines, Malaysia, Indonesia and other countries in the Asia-Pacific region may start to move away from industry liberalization as export expansion slows and industry balances weaken. goods are minimized or generate losses. On October 3, the Financial Times reported that Japan and the United States would soon file court cases with the WTO over Indonesia’s “national car” program, which they say will discriminate against their vehicle exports. President Suharto is reported to have warned that increased imports of foreign goods could have “a massive effect on expansion and equitable distribution. ” Malaysian Prime Minister Mahathir bin Mohamad has reportedly said that if import purchases are not restricted, it is worth raising price lists and imposing quotas on “certain non-essential products”. [46] Attitudes can be repositioned and barriers that have been removed can be lowered. However, if the expansion rates of some Asian economies decline and giant industry surpluses disappear, which is not unlikely, the task of putting an APEC industry deal in position will not be enough. be easier.
APEC’s proposal for a regional flexible industry has a unique facet called “open” industry or “open regionalism” that will make the agreement more difficult to achieve and more benign in its effect on the world trading system. ‘is reached. As internal or intra-regional barriers are lowered, so will external barriers or those affecting non-APEC nations. The new agreement would not be a flexible industrial agreement in the same old sense, in which internal barriers are removed while external barriers are maintained, but an 18-member wide open industrial zone. As admirable as this goal is, there is little chance that APEC will even come close to fully achieving it. In the realpolitik of industrial negotiations, where reciprocity is a basic and universally accepted perception, negotiators driven by internal pressures compare exports and imports on the basis of the mercantilist perception that exports are smart and imports are bad. Whatever the theoretical arguments in favor of openness, what the concept implies makes Bogor’s purposes even more unlikely.
Both supporters of industry regional agreements and those concerned could triumph over complicated messes by leaving some products and sectors out of the pacts and marking long eras of transition for others. While the WTO rule leaves some room for manoeuvre allowing preferential agreements, the rule does not allow for general exceptions or excessively long transition periods. It calls for barriers to industry “essentials” to be removed between members of an agreement, and for a period not exceeding ten years. , unless they are “harmless cases”. If agriculture, for example, were excluded from a flexible industrial agreement, the WTO would likely label the agreement as illegal.
While neither an FTAA nor a regional agreement among the APEC countries is likely to see the light of day near the target dates being recently discussed, this does not warrant recommending that regional integration does not advance in the next 10-15 years. . The Mercosur customs union already included Chile, and Bolivia will probably go up soon. Some Central and Eastern European countries, such as the Czech Republic, Hungary, Poland and Slovenia, are very likely to join the EU. Negotiations to bring Chile into NAFTA have been frustrated through the US Congress, but this setback can probably be overcome. It is also not unlikely that other Latin American countries will simply sign up to NAFTA. In Asia, ASEAN countries are moving towards the creation of an ASEAN Free Trade Area until 2003, but complicated disorders persist, mainly in agriculture. However, none of these advances would pose a serious risk to the global trading system, where barriers will also be lowered. These countries constitute only a small fraction of the global industry. For example, the overall commodity industry of ASEAN countries, whose economies have grown rapidly, is only about 5% of the world total.
Statistics aside, brands and service providers around the world, helped by falling industry barriers, the immediate expansion of shipping networks, and the explosion of technology, have made connections between regions of the world too hard to count and almost too difficult to conceive. These ties virtually ensure that the global will not be divided into trade blocs or fall back into large-scale protectionism.
WTO INTEGRATED PROGRAMME
Not only are the risks of regionalism exaggerated, but the WTO’s built-in timetable presents an ambitious timetable that calls for primary negotiations. The program is much more ambitious than any other program with the exception of the Uruguay Round, which has only one component on manufactured goods, which can still be added in Singapore at the Australia headquarters. In any case, tariff reductions on manufactured goods were agreed in Marrakesh, and price lists in industrialized countries are already low, while emerging countries have reduced price lists from the dizzying grades of just a decade ago.
In the last two years, negotiations have taken positions in currency facilities, telecommunications and shipping, which are perhaps the most important sectors of the service industry. These negotiations, which were too complicated to bring the Uruguay Round to a successful conclusion, did not go well. Last year, the United States, considering the aid from other countries to lower barriers insufficient, withdrew the new aid it had made in terms of monetary facilities and refused to participate in a partial agreement drawn up by the EU. Negotiations on essential telecommunications and maritime transport were not completed in accordance with the 1996 Uruguay Round deadlines. New 1997 deadlines have been set for key monetary and telecommunications facilities, and there is some optimism in Geneva that they will be met. However, negotiations on shipping will not resume until the year 2000, when there will be a new wave of successive rounds of talks on express commitments aimed at further liberalizing the industry in facilities. In the same way, at the end of the century, new nepastiations intended to cut coverage and aid to agriculture deserve to be started. Agriculture brought the Uruguay Round to the brink of failure and the new talks promise to be complicated.
The WTO deserves to review the regulations on trade-related investment measures and propose appropriate adjustments no later than five years after the entry into force of the WTO on 1 January 1995. Negotiations on investment have begun at the OECD and, as he pointed out, it is quite conceivable that this assembly in Singapore will make a decision that the WTO deserves to start discussions on investment soon. The assembly will make a decision on whether those regulations deserve to be maintained or amended.
The Uruguay Round Agreement on Government Procurement is one of 4 that do not bind all WTO members, only the signatories to the agreements. Although it has only 11 members, basically industrial, adding the United States and the EU, the agreement is one of the maximums It is vital to get out of the Uruguay Round, and its negotiation has been harshly questioned. Talks to extend the agreement are expected to begin in late 1998. As this incomplete list suggests, the WTO already has a busy and complicated negotiating schedule. happily finished — and good fortune is not confident — it will give a new impetus to the expansion of global industry in the first decades of the next century.
NOT A BIG DEAL
If the giant Bergsten market were necessary, the political difficulties related to achieving a relaxed industry could be overcome. Fortunately, the option of a primary return to protectionism through the “old rich” is remote. The country would be incredibly disruptive, irreparably damaging a vast network of industrial relations not only between importers and exporters, but also between manufacturers and distributors. It would be like dropping a stone on a table covered with fine glass.
The United States is the only primary commercial country that can also simply return to large-scale coverage, but the risk is low. Like most people, Americans might cover certain industries from time to time, but most of them wouldn’t. stick to the prescriptions of Pat Buchanan, former candidate for the Republican presidential nomination, because they perceive the consequences of the coverage. The governments of Japan and other countries are well aware of this political reality.
But think that the unthinkable happens and a WTO member takes refuge in serious protectionism. That country would soon be one of the WTO’s myriad commitments, and there is now an effective mechanism for such a situation. Under a new negotiated procedure under the Uruguay Round, each WTO member has the right to complain about violations of WTO regulations to an independent panel of dispute settlement experts. A defendant country may not unduly block or delay the process. the case reviewed through an appellate body), will have to replace the challenged practice, which is the desired outcome, or offer reimbursement by reducing some other industry barrier. If nothing is done, the claimant has the right to erect industry barriers. they oppose safe exports. Ultimately, a government can also simply refuse to settle for anything and withdraw from the WTO with six months’ notice. rs of goods and facilities at great risk.
While there is no need for additional insurance that opposes a return to coverage through the “old rich,” the other aspect of the single-person market: full access for the United States and other high-income countries to the markets of low-income countries and Japan. – it would probably have limited appeal. In the U. S. and elsewhere, the concern would be that, if formal government barriers simply disappear, exporters would still face hidden and sophisticated practices that restrict the industry held by personal corporations. and countries where corporations have interaction in such practices have virtually no incentive to negotiate changes. The United States and other industrialized countries now have little industry coverage to use as a bargaining chip on the issue.
THE RIGHT COURSE
The United States will have to boldly lead any move toward a lax global industry if the initiative is to have any chance of success. Clinton’s management had the wisdom to resist calls to stick to a path that would be divisive at home and strongly opposed abroad. As well as the controversy over what was widely noted as the U. S. over-proposal. The U. S. agriculture campaign nearly derailed the Uruguay Round, an effort to abolish global industrial barriers would likely disrupt, and likely severely damage, the WTO negotiations already underway. If those negotiations can be concluded effectively, they will give an extra boost to the global industry, which is lately experiencing impressive expansion (see Table 2).
In a March 22 press release, the WTO predicted that the product industry would grow to a “solid point of around 7 percent” in 1996. If it continues to grow at the current rate, it will double in ten years to about $10 trillion. this is just goods industry; advertising exports can seamlessly accumulate $3 trillion to $4 trillion within 10 years. To put overall profit in perspective, $13 trillion to $14 trillion is roughly part of current global production.
The glass is not half full; it is more than partially full. The good fortune of the Uruguay Round, the immediate expansion of industry and an agreed list for further liberalization of industry allow the winner of the 1996 United States presidential election to focus on foreign issues very important to peace and stability. knowing that there is already a schedule that will occupy the negotiators and the industry will expand in the early years of the twenty-first century.
[2] James H. Billington, “Let Russia Be Russian”, The New York Times, June 16, 1996, p. 15.
[4] See Martin Wolf, “Japan Looks to Asia”, Financial Times, 11 June 1996, p. 14.
[5] “International Trade, Trends and Statistics”, Geneva: WTO, 1995, p. 166.
[6] The Economist, 10 August 1996, p. 57.