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Free for all trade harmful says un { October 3 2003 } Original Source Link: (May no longer be active)
http://www.guardian.co.uk/business/story/0,3604,1054932,00.htmlhttp://www.guardian.co.uk/business/story/0,3604,1054932,00.html
Free-for-all on trade will harm everyone, says UN
Heather Stewart
Friday October 3, 2003
The Guardian
Western governments risk unleashing a fierce political backlash from the developing world if they persist in forcing poor countries to open their markets to foreign competition, a United Nations report warned yesterday.
Following the collapse of global trade talks in Cancun, Mexico, last month, the UN Commission for Trade and Development used its annual report to issue a hard-hitting critique of the liberalising agenda pursued by the major economic powers in the past 10 years.
Unctad warned the US and the European Union that instead of focusing on dismantling trade barriers, they should be working together to kick-start the global economy and avert a crisis of confidence in countries which have failed to benefit from globalisation.
"If action is not taken to restore stability in financial and currency markets, to start a global recovery and reverse the rapid rise in unemployment, there is a threat that trade imbalances and the coexistence of continued rapid growth in some parts of the world against stagnation, decline and job losses elsewhere could deepen the discontent with globalisation, triggering a political backlash," it said.
Unctad said rock-bottom interest rates might be insufficient to prevent a renewed downturn. With "too many goods chasing too few buyers and too many workers chasing too few jobs", it called for a coordinated round of Keynesian policies to steer the global economy clear of deflation.
Speaking at the launch of the report in London yesterday, Unctad official Yilmaz Akyuz said the rules agreed in the Uruguay round of World Trade Organisation talks 10 years ago had left many developing countries with no chance of nurturing the home-grown firms which are crucial to economic success. He singled out the so-called Trips agreement on patent rights for particular criticism.
Removing trade barriers was "not the main problem" on the economic agenda, he said. What developing countries needed was "the policy space; the ability to nourish, support and develop domestic industries, and the capability to compete in international markets and to supply the home market. This policy space was lost in many countries because of commitments made in the Uruguay round, especially with respect to Trips."
Unctad said the idea that developing countries were already exporting the same kind of products as their richer trading partners was "an illusion based on double counting", because low-cost, unskilled workers in the developing world were simply assembling and re-exporting hi-tech parts bought in from abroad.
It pointed to the record of Latin America as disproving the "Washington consensus" that fighting inflation, cutting back public spending and opening up markets were enough to fix economies. "The record in terms of growth, employment and poverty reduction [in Latin America] has been disappointing," it says.
As the European Central Bank opted to leave interest rates on hold despite plunging growth in the eurozone, Unctad added: "Now is the time for the EU to find ways to exploit its greater scope for expansionary, monetary and fiscal action to bolster growth." It criticised the ECB's "reluctance to fight deflationary tendencies as aggressively as inflation" and the straitjacket placed on government spending by the eurozone's stability and growth pact.
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