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Trading System Must Be Friendly To Developing Nations

By Fr. John Felix Raj. S.J.

Asia is steeped in a sense of the sacred. We sense a cosmic worldview in the holistic approach to life with rich cultural diversity expressed in art, architecture, music, and the rich classical and folk traditions. But modern media, IT and globalization-liberalization forces are posing a serious threat to the much-desired Asian unity for economic cooperation. The glaring reality of the vast multitude of poor, the varied deprivation and dehumanization, rampant corruption and injustice and the inevitable exclusion of the displaced, untouchables, women, indigenous and migrant communities confront Asia. The exploitation of our eco-systems further aggravates the plight of the poor.

Asia, by far the biggest, most populous and culturally diverse continent, is currently taking giant steps towards economic integration and closer political cooperation. With 3.5 billion people - well over half the population of humankind -- the nations of Asia is divided by language, ideological orientation, religion and race. In spite of the differences which run far deeper than superficial appearance, as the Asia’s first Nobel Laureate, Rabindranath Tagore rightly foretold, “Asia is one” a united Asia is in the making. [i]

In this context, global cooperation and, in particular, Asian economic unity must come above the forces of commerce and trade. As Supachai Panitchpakadi, the first Asian Director-General of WTO has rightly said, “For the noble hearted, the whole world is one family”. [ii] Asian countries, with their human, natural and financial resources, fast developing communication media and IT, rich cultural diversity and heritage, have the potential to emerge as global leaders in trade, commerce and investment. In a recent of consultation organized by SAWTEE [iii] before the sixth Ministerial, Bharat Bahadur Thapa of Nepal urged that the developing countries have to maintain their unity of purpose to extract a fair deal out of the multilateral trade negotiations. They need to play an effective role in WTO matters. Asia has to lot to offer to the global system.

1948. The Second World War had just ended. The founders of the post-war economic order had the foresight to recognize that economic co-operation must be central to achieve a lasting peace. This is perhaps most clearly encapsulated in the words of President Roosevelt to the Bretton Woods conference in 1944. He reflected that “Commerce is the life blood of a free society.” He also urged that “we must see to it that the arteries which carry that blood stream are not clogged again, as they have been in the past, by artificial barriers created through senseless economic rivalries”. [iv] From this imperative, were built the three pillars of the post-war international economic order: the International Monetary Fund; the International Bank for Reconstruction and Development (the World Bank) and the multilateral trading system embodied in the General Agreement on Tariffs and Trade.

The GATT was created to bring order, security and fair and transparent competition to international trade. Its rules defined what the governments could - or could not - do with their trade policies. GATT was also a forum for countries to settle disputes and to negotiate lower trade barriers. GATT was the outcome of the great depression and the Second World War; a time in our history where countries mistakenly believed that they could solve their problems by living in isolation. The Hawley Smoot Tariff Act that had raised US tariffs to their highest protective levels ever, had set in a motion a trade war. The net result of that war was a sharp decline in international trade, and a loss of welfare of massive proportions. But from the mistakes of our past, came an important lesson for our future that we needed multilateral institutions that could make the world a more orderly place to live in [v].

The World Trade Organization (WTO) was founded in 1995 to replace the GATT. The establishment of the WTO represented “a gigantic leap forward towards broader and more intensive international co-operation”. This multilateral organization aims to lower tariffs and non-tariff barriers so as to increase international trade. The WTO deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. The 146 member states meet in ministerial sessions at least once every two years. Essentially, it is a place where member governments try to sort out the trade problems they face with each other. It is an organization for liberalizing trade. It operates a system of the trade rules.

The bulk of the WTO’s current work comes from the 1986-94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade. The Uruguay Round with 123 member countries took major steps towards correcting some serious weaknesses in the international trade rules, though some of them were taken reluctantly. But steps like incorporations of agriculture within the international rules have not been fully implemented in economies like USA, EU and Japan.

WTO Ministerial conferences
The Ministerial Conference is the highest authority in the World Trade Organization (WTO) structure and takes decisions on all matters under multilateral trade agreements. Since its inception in 1995, the WTO has held six Ministerial Conferences, the sixth one being held from 13 to 18 December 2005 in Hong Kong, a founding member of the WTO.

The First WTO Ministerial Conference was held in Singapore [vi] between 9 and 13 December 1996. Trade, foreign, finance and agriculture Ministers from more than 120 World Trade Organization Member governments and from those in the process of acceding to the WTO participated in the Conference. The Conference was the first since the WTO entered into force on 1 January 1995. It included plenary meetings and various multilateral, plurilateral and bilateral business sessions. The members examined issues related to the work of the WTO's first two years of activity and the implementation of the Uruguay Round Agreements. They reviewed the ongoing negotiations and Work Programme and examined developments in world trade.

The Second WTO Ministerial Conference was held in Geneva [vii], Switzerland between 18 and 20 May 1998. It took place at a particularly significant time for the multilateral trading system, when the fiftieth anniversary of its establishment was being commemorated. On this occasion members paid tribute to the system's important contribution over the past half-century to growth, employment and stability by promoting the liberalization and expansion of trade and providing a framework for the conduct of international trade relations, in accordance with the objectives embodied in the Preambles to the General Agreement on Tariffs and Trade and the World Trade Organization Agreement.

The third Meeting in Seattle in November 1999 collapsed since developing countries refused to accept a process from which they had been excluded. It was all “take and no give” by developed countries. There were many differences in the perspectives of developing and industrialized nations on the current reality of free trade and how it affected them. There had been a shift in the balance of power. The developing countries concluded that they could not only negotiate, they could block negotiations.

More than 700 organizations and between 50,000 and 1,00,000 people took part in the protests on November 30 against the WTO's Third Ministerial conference. The fact that so many people turned up in the pouring rain, through all the police crackdowns etc indicates the sheer number of people who were concerned at the current issues, as obviously not everyone could be in Seattle. They argued against the current corporate-led free trade and were wanting fairer trade with less exploitation. These groups and citizens sensed a cascading loss of human and labor rights in the world. 587 persons were arrested on that day.

One eyewitness, a promoter of non-violence, Matt Guynn, distributed the following account of police brutality over the Internet: [viii]

In one scene I witnessed this morning (at 8th Ave and Seneca), police who had been standing behind a blockade line began marching in lock-step toward the line, swinging their batons forward, and when they reached the line they began striking the (nonviolent, seated) protestors repeatedly in the back. Then they ripped off the protestors' gas masks, and sprayed pepper spray at point-blank range into their eyes repeatedly. After spraying, they rubbed the protestors' eyes and pushed their fingers around on their lips to aggravate the effect of the spray. And after all THIS, they began striking them again with batons.... The police then were able to break up the line, and the protestors retreated to the steps of a nearby church for medical assistance.

The Fourth WTO Ministerial Conference [ix] was held in Doha, Qatar from 9 to 14 November 2001. At Doha, there was further evidence of the ability of developing countries to influence trade outcomes. A clearer victory in agriculture and other areas was forthcoming. While the broad support for the successful anti-subsidy position in agriculture seemed a developing country achievement, the developing countries were a visible part of the alliance. The meeting accepted that special and differential treatment (allowing different policies by developing countries and requiring different policies towards them) would be “an integral part” of any final settlement, potentially better than the Uruguay Round, which had offered only minor adjustments to policy and non-obligatory concessions.

The Conference adopted a declaration to assist developing countries in implementing WTO agreements, covering issues related to agriculture, services, industrial tariffs, investment, and trade and competition policy. The declaration provides the mandate for negotiations on a range of subjects and other work, including issues concerning the implementation of the present agreements.

The declaration set 1 January 2005 as the date for completing all but two of the negotiations. Negotiations on the Dispute Settlement Understanding are to end in May 2003; those on a multilateral register of geographical indications for wines and spirits, by the next Ministerial Conference in 2003. Progress is to be reviewed at the Fifth Ministerial Conference in Cancun, Mexico. Doha also extended the time for least developed countries to comply with subsidy and intellectual property rules. These issues were accepted at Doha in spite of initial strong opposition by developed countries, indicating that developed countries thought they were a necessary part of any bargain. The Doha Round is widely acknowledged as a “development round” that promised to place development at the heart of trade negotiations and focused on issues on direct interest to developing countries.

WTO negotiations at Cancun, Mexico on September 10-14 2003 also collapsed amid deep divisions between the USA, EU and Japan on one side and the Group of 23 led by India, Brazil, South Africa and China, on the other. [x] The two sides, already at odds on agricultural issues, deadlocked over proposals for WTO rules on investment, competition, trade facilitation and transparency in government procurement.

After the Cancun deadlock, WTO members in Geneva began efforts to put the negotiations and the rest of the work programme back on track. Work intensified in the first half of 2004, and after days of closed-door negotiations, a package of framework agreements was reached. It was the so-called “July package” [xi] - the General Council’s post Cancun decision on the Doha Agenda work programme, agreed on 1 August 2004, containing frameworks and other agreements designed to focus the negotiations and raise them to a new level.

The rich countries had delivered a deeply unbalanced text as a “take or leave it” option. This had put developing countries in the unfair position of having to accept a bad deal or reject and get blamed by the USA and EU for failure. But the “development” aspect of the agenda had disappeared from view, leaving WTO business as usual in its wake. Not single one of the more than 80 implementation issues raised by developing countries had been addressed. [xii]

On industrial tariffs, the July Package repeats proposals that were strongly rejected by developing countries in Cancun. These proposals to lower tariffs for industrial products will favour multinational companies that are already established in the international market. They will not help developing or least developed countries diversify and strengthen their industrial base.

The Sixth WTO Ministerial Conference was held in Hong Kong, China, 13–18 December 2005. Prior to the Conference, 70 participants from 16 Asian countries, representing migrant, trade, development, labour, women's and social action groups and networks, made a declaration, after their "Regional Conference on WTO, Development and Migration, that

“We recall with pride the historic success achieved by the people's movements at Seattle and Cancun in derailing the Ministerial meetings of the WTO in 1999 and 2003 respectively. There is a real danger that negotiators will use the meetings of the WTO General Council in July and October 2005 to force a backdoor deal before the Hong Kong MC6, as they did in July 2004 in Geneva. We reject this framework that treats workers, women and migrants as tradable commodities. We reject the AoA framework that has caused the widespread collapse of rural economies, displacing communities and increasing forced internal and external migration”. [xiii]

The Road to WTO Hong Kong Conference was bumpy, not smooth. The Conference began with a pessimistic note. The negotiations were within two frameworks: Doha ministerial declaration of November 2001 and the July Package which was an unbalanced compromise as it favored the developed countries and ignored most of the concerns of the developing countries. After the intense negotiations - and protests, the WTO claimed that a global trade deal was still possible by the end of this year. The summit declaration provided a rough plan for governments to conclude the current round of talks. There is very little time left for governments to overcome the tensions of Hong Kong and agree a blue print within the dead line of a deal by the end of 2006.

The Hong Kong “contest turned into a four-cornered one. With G-20 and G-33 on one side, the EU, the US and the least developed countries (LDCs) were the other three actors. As usual, developed countries started shedding crocodile tears for LDCs. A plethora of hollow promises in the form of “aid for trade”, duty free and quota free market access and many more aid offers were served to the LDCs. The main objective was to shift the focus away from the core agenda of trade liberalization as evident from the EU Trade Commissioner Mandelson’s statement that he was at the outer limit of his mandate and has nothing much to offer. The G-20 and G-33 on their part tried to be practical. They realized that it would be foolish to expect any ambitious result from Hong Kong given the prevailing divergence of opinions on agriculture.” [xiv]

“The first ever joint G-20 and G-90 Ministerial level meeting took place on 16 December. Both the Indian Commerce Minister Kamal Nath and his Brazilian counterpart Celso Amorin were instrumental in building this grand alliance of 110 countries covering 4/5th of the humanity. This thwarted and called the bluff of the rich countries to lure the LDCs and divide the Southern unity. The G-110 meeting also proved that their unity at Cancun was not a fluke but it will sustain. Only after this, the focus of the negotiations was brought back to the main agenda resulting in the release of a revised text on 17th December and adoption of the final declaration on 18th December.” [xv]

Indeed, one major point at Hong Kong was the role played by leading members of the G20 group, notably Brazil and India, both of whom reportedly helped to broker final agreement of the summit’s declaration. The rise of Brazil and India as necessary deal-makers marks a welcome power shift in a WTO traditionally dominated by the major industrial powers, offering the potential for a more democratic WTO and for developing country interests overall to be more effectively represented. [xvi]

Speaking in Hong Kong on the opening day of the World Trade Conference, Nobel Prize winner and former Senior Vice-President of the World Bank, Joseph Stiglitz acknowledged that the WTO "sets up policies and makes decisions affecting almost every one in the economic world," but that "people who are affected by the decisions everyday have no right to vote." [xvii] This "democratic deficiency" is a major cause for the volatile protests that accompany the WTO wherever it travels. As is so often the case, wherever the WTO touches down it manages to successfully divide communities. Hong Kong is no exception. The community is still digesting the events that occurred outside on the streets during the conference, not those that took place behind closed doors. [xviii]

Deep Divisions
The split between developed and developing countries is not new. It was one of the factors that led to the failure of the Seattle talks. However, a potent new force challenging the USA and EU has emerged inside the WTO. The G-23 represents 85 per cent of the world’s farmers and more than half the global population.

The developing countries have formed powerful developing country alliances. In fact, the “Cotton 4,” the “G20,” the “G33” and the “G90” have succeeded in placing their interests at center stage. Agriculture negotiations are now seen as a key ingredient of the Doha Round, and that is primarily because of the importance of this sector to developing nations. After all, 73% of the poor in developing countries live in rural areas. In a recent of consultation organized by SAWTEE before the sixth Ministerial, Bharat Bahadur Thapa of Nepal urged that the developing countries have to maintain their unity of purpose to extract a fair deal out of the multilateral trade negotiations. [xix]

It is a fact that rich countries protect their own trading interests - to reduce agricultural subsidies and open up vast new markets. They bully the poor countries and their concerns are often marginalized. Agreements are often discarded and the developing countries sidelined. The third world countries are concerned about the effects of liberalization and globalization on trade, on the environment, on jobs, on cultural and social issues, which are important.

As observed by Oxfam, small wins were achieved by developing countries in the form of stronger language on agricultural export subsidies and export credits and the dropping of three out of the four so-called “Singapore Issues” [xx] but overall the final text of the framework remained disappointing and did little to advance the round of talks, said Oxfam. Apparent concessions by the USA on cotton were not legally binding and would not guarantee an end of the harmful regime.

According to Professor Walden Belo, [xxi] a long time critic, the developing countries have waited nearly 10 years for the trade superpowers that dominate the WTO to show sensitivity to their efforts to change global trade from being an instrument of their domination to serving as a mechanism to advance their economic development. For this patience, they have been rewarded with a succession of anti-development negotiating frameworks and texts culminating in the July Framework.

Poor countries and NGOs fear that further liberalization of trade will only benefit rich countries. WTO negotiations favor the interests of investors and neglect agricultural protectionism by rich countries. Critics often charge that the WTO functions undemocratically and that it has opaque negotiation procedures that harm the interest of the poor. [xxii]

Global scandal
Poverty is the serious problem in many developing countries and so trade rules must support poverty eradication. Agriculture is the main source of livelihood and employment for people. But global trade in agriculture is in a mess. There is very little progress made in the agricultural side. Rich countries spend billions subsidizing their agricultural sector, leading to chronic overproduction and dumping surpluses on global markets. Poor countries demand reform of this trade practice that impoverishes small-scale farmers.
The UN Food and Agriculture Organization reported in December 2004 that the number of hungry people in the world had grown by 18 million since 2000, so there are now 852 million people living with hunger. Governments are far from achieving the Millennium Development Goals of halving the number of people living below the poverty line (less than $1 a day) between 1990 and 2015.
Indian farmers have been losing $1.1 billion annually to their counterparts in developed countries, says a study. The total lost agriculture-related income for developing countries because of trade-distorting subsidies that enrich farmers and traders of developed countries amount to $24 billion, says the study by Washington-based policy watchdog International Food Policy Research Institute (IFPRI). [xxiii] The study found the US responsible for a third of all distortions to agricultural economies of developing countries. All European Union countries put together were responsible for about half of the distortions while Japan and other high-income Asian countries caused another 10 per cent of income loss.

In Ghana's Katanga Valley, the staple food is rice. This comes as no surprise, given that the fields for miles around are paddies. Look a little further and the sacks piled high on village walls sport an American flag. This most simple of foods is brought in courtesy of the US department of agriculture. Presumably, it comes out of the aid budget. Look a little further again and the fields lie fallow. The powers that be, presumably the lending institutions, have decreed that local rice is not quite good enough, or cost-effective enough, for international markets. [xxiv]

Benin, Chad, Mali and Burkina Faso, [xxv] whose economies are heavily dependent on cotton, have called for all trade distorting policies in the cotton sector to be addressed in the Doha Round. These countries have seen the international price of cotton fall by some 40% in recent years, in part due to the subsidies that the rich hand out to their farmers. Needless to say, this has had a serious impact on their economic situation.

If the US and Europe removed their farm subsidies, the value of African food exports would double. According to Oxfam estimates, protectionism in rich countries costs the developing world £60bn a year. The organization cites the example of sugar. Under the current regime of quotas and high tariffs, Europe's sugar prices are set at almost three times world market levels. Each year, European consumers and taxpayers foot the bill, of roughly £1bn, while developing countries - encouraged to liberalize their markets under IMF/World Bank strictures - suffer the consequences.

Sophie Murphy of the Minneapolis-based Institute for Agriculture and Trade Policy (IATP) [xxvi] identifies agricultural trade issues as critical since 'agriculture is the main source of employment and livelihood for people in many developing countries and is arguably the most important sector for an agenda to eradicate poverty'. New rules are clearly needed since 'the current mix of national policies and multilateral rules have sent commodity prices plunging and dramatically increased poverty', with more people now living in poverty than in 2000. Despite the criticisms made of rich countries with regard to dumping the 'July package does not get at the problem … rich countries have again ensured that the proposed rules will not force any actual cuts in their spending on agriculture. The scope for spending will be diminished, but spending levels will remain largely unchanged'.

She also argues that the July package rules 'fail to address one of the worst problems: the dumping of agricultural products in world markets at prices that are below the cost of production'. This problem is 'a structural feature of current commodity markets because of the power of a small number of private firms' whose 'market power enables them to set prices at the expense of farmers and consumers alike'. She cites cotton as an example in this regard, and argues that 'the WTO approach fails to respect the broader objectives that many countries have for agriculture - including meeting the human right to food and establishing a strong rural sector as a basis for economic development', which she maintains 'depend on a strong government role and on regulating the private sector', something which the WTO approach sees no need for. She argues in favour of trade rules which 'allow policy space so countries can determine the best course for their specific development needs; end dumping; and permit policies that strengthen farmers' power in the market places'.

This is the global food scandal in microcosm. There are thousands of examples like this where heavily subsidized commodities from the so-called developed world are dumped on the poor, while they are prevented from securing access to the markets of the rich. It is in this economic deviancy that the two big issues of the moment - Europe and the G8 - coalesce. The Katanga story might equally have involved food sent from the European Union or Japan, the two other purveyors of trade immorality.

The WTO approach fails to respond to the needs of many developing countries particularly in the field of agriculture. To address the problem of the developing countries, trade rules need to change: 1. they must allow policy space for countries to determine the best course for their specific development needs; 2. they must stop dumping and 3. They should permit policies that strengthen farmers’ power in the marketplace. [xxvii]

Vital tool
What the developing countries have asked for is greater market access, and rules that are more fair and balanced. “Opening markets to products of export interest to developing countries is in fact the greatest contribution that the WTO can make to a country's development. But we must not forget in that equation that imports are just as healthy for a country's economy as exports. It is through greater competition that countries become more efficient at what they do. Imports make them more competitive and enable them to export. In fact, imports and exports are two sides of the same coin.” [xxviii] Furthermore, rules that significantly reduce trade distortion in sectors of interest to developing countries, and that simplify and improve customs procedures — what we call “trade facilitation” in our jargon - are also high on the agenda of developing countries.

About two-thirds of the WTO’s around 148 members are developing countries. They can play an increasingly important and active role in the WTO because of their numbers, because they are becoming more important in the global economy, and because they increasingly look to trade as a vital tool in their development efforts. Developing countries are a highly diverse group often with very different views and concerns. The WTO’s new rules for global trade present both opportunities and challenges to Asian developing countries.

Trade must contribute to poverty eradication. Pro-poor trade measures have a direct impact on poverty reduction while pro-growth measures have indirect effects. Since trade liberalization policies in developing countries may adversely affect the poor in the short run, a cautious approach in necessary so that existing socio-economic and institutional structures respond in a pro-poor manner to the structural adjustments from trade liberalization.

Since WTO’s decisions and actions have far reaching effects on the lives of billions of people and the environment upon which they depend, it should make the multilateral trading system more open and friendly to developing countries. Its operations and decision-making procedures have to be more transparent, participatory and democratic.

US policy has been that of divide and rule. Munakata Naoka writes in Japanese journal Jiji Top Confidential: "After the Malaysian Prime Minister, Dr. Mahathir Mohamad's proposal 12 years ago to create the East Asia Economic Caucus (EAEC) met strong objections from the US, East Asia — wide regional initiatives remained a taboo for years. But the 1997 Asian currency crisis changed the tide. From the late 1980s through the early 1990s, when concerns mounted in the US over Japan's economic power, Washington fiercely opposed the EAEC vision. And it attempted to reinforce and utilize the APEC framework as a tool to promote trade liberalization in Asia... Following the conclusion of negotiations with China on its WTO accession, the US has become active to drive a wedge into Asian moves toward bilateral FTAs among them. The US made its first move in the fall of 2001 when it suddenly agreed with Singapore to launch FTA negotiations." [xxix]

The main problem in the global economy is that 20 per cent of the people located in the US, the European countries and Japan consume 80 per cent of world's resources. The 20/80 asymmetry requires that we build an alliance of the 80 per cent people of the world who are now consuming only 20 per cent of the world's resources despite most of these resources being in their countries. The US is striking an alliance with the European Union, Japan and Singapore to drive a wedge among the developing countries — especially India and China. [xxx]

Single Asian Currency
If the sense of Asian unity has to be promoted, then a single Asian currency can either facilitate that Asian unity or become a common means towards that end. "The case for a single Asian currency is overwhelming," declared Hong Kong's chief executive, Donald Tsang, at a conference in China in April 2005. But unfortunately, reality is not that simple. Asia is not like Europe that needed a single currency as part of a political union, and Europe has worked towards political and economic integration for over 50 years before the birth of a single European currency in 2001. [xxxi]

Asian finance ministers took another step toward creating an Asian monetary fund at the annual meeting of the Asian Development Bank in Istanbul in the first week of May 2005. It is a kind of European-style financial union that proponents of closer cooperation in Asia are striving for. However, the gulf that Asia needs to bridge before establishing anything like a European-style financial union is dauntingly wide.

Common wisdom has it that Asia is dreaming if it thinks economies as diverse and as far-flung as China, Japan, South Korea, the countries of the Association of South East Asian Nations and India can emulate Europe. For one thing, Europe has settled the question of hegemony; Asia has not. "There is no hegemony in Europe," argues Norbert Walter, chief economist for Deutsche Bank. "There are three in Asia: China, Japan and India." [xxxii]

Yet the move toward common financial arrangements is a confidence-building mechanism among Asia's rising powers. Haruhiko Kuroda's election in February 2005 to head the ADB has lent momentum to economic integration in Asia. Laying down a key marker for his tenure, Kuroda, formerly an influential official in Tokyo, has set up a new department of regional integration, which will be headed by a University of Tokyo economist, Masahiro Kawai.

Kawai points out that trade and investment among the Asean states, China and Japan is leading the way and in trade terms the region is actually coming together at a more rapid rate than Europe ever experienced. At the Istanbul meeting, finance ministers from 13 Asian nations agreed to enhance a modest mechanism that allows countries to swap their foreign reserves to ease liquidity problems on a bilateral basis first set up in the Thai city of Chiang Mai in 2000.

The idea is to transform this bilateral arrangement into a single multilateral process by increasing the size of the swaps and developing a surveillance mechanism similar to that currently applied by the International Monetary Fund. Kawai has argued that this regional approach fills a gap left open by the IMF, which is country-focused. According to Kawai, the Asian Financial Crisis in 1997 told us that this country-focused approach doesn't work because of contagion. The regional approach is important, and the IMF has not been strong on that.

The first attempt by Japan in 1997 to set up a multilateral fund in Asia met fierce resistance from the United States and was hurriedly shelved. But in Istanbul, Japan's finance minister, Sadakazu Tanigaki, gave a ringing endorsement of moves toward an Asian Monetary Fund, saying that Japan was "committed to promoting cooperation for the further prosperity of the region."

Of course, this isn't all about safeguarding financial stability in Asia. Japan is in a hurry to cement its role as a pivot of these financial mechanisms before China becomes too dominant - and perhaps before the yen is overshadowed by the yuan. China is quietly supportive because Beijing sees itself as inheriting an Asian financial system sealed off from too much outside scrutiny. There are shades too of the kind of Asian hubris evident before the Asian financial crisis.

But many financial experts working on integration are wary of moving too fast. "Asia is not like Europe," argues Jin Liqun, a former vice finance minister of China who is now an ADB vice president. "We don't have the social and political homogeneity." If indeed these moves toward integration are more about hegemony than homogeny then it would be prudent for less powerful Asian nations to ensure that they are not being lured into a greater China or greater Japan.

Looking Ahead
Deeper regional integration is necessary. It requires various kinds of regional cooperation arrangements, areas and methods of cooperation, institutional arrangements to facilitate cooperation like Asian Development Bank, Central Asia Regional Economic Cooperation (CAREC), Asia Pacific Economic Cooperation (APEC), South Asian Association for Regional Cooperation (SAARC), bilateral and regional trade arrangements, relationship of these to WTO etc. Institutions like ADB can play a significant role in training and preparing the Asian developing countries to understand and actively participate in the WTO negotiations.

Economic cooperation in Asia has so far been limited mainly to the bilateral or sub-regional levels and in the areas of trade and investment, money and finance, and infrastructure. More recently, however, the geographic scope of agreements has started to expand across the different sub-regions, providing initial signs of cooperation and integration in Asia as a whole. [xxxiii]

Over the past decade in Asia, a growing awareness of the interdependence among countries in the region and of the importance of regional cooperation in managing the challenges of globalization has led to important steps to enhance regional economic cooperation initiatives. Relatively slow progress with multilateral initiatives and the proliferation of regional blocs in other parts of the world have provided additional impetus to greater cooperation within Asia. There is a realization that open regionalism can contribute substantially to enhanced productivity and economic growth, and to poverty reduction, within the region.

"It becomes imperative for India to forge ahead in its ties with Asean so that the adverse impact or trade diversion resulting by the creation of NAFTA and the EU can be combated by enhancing growth within the Asian region." [xxxiv] The implication is that we must create an India-China-Asean bloc to challenge the high consumption of the US-EU-Japan group by shifting terms of trade in our favour by cartelization just as OPEC has done successfully in West Asia.

‘India is ready to play an ‘active’ role in promoting Asian economic integration and is keen to co-operate with China in achieving the goal. India’s approach towards Asian integration and its relations with the rest of the continent are increasingly an important element of Indian foreign policy. It was India which first propagated the idea and concept of an ‘Asian economic community’ in September 2003. Asian economies, especially India and China, seem posed to provide the thrust necessary for continued economic growth in the 21st century. “India and China are two of the most important contributors to the political and economic dynamics of this continent, as also of the world. They should join hands towards these goals”. [xxxv]

In a Message to some Chinese friends, Tagore had said: "Age after age in Asia, great dreamers have made the world sweet with the showers of their love. Asia is again waiting for such dreamers to come and carry on the work, not of fighting, not of profit-making, but of establishing bonds of spiritual relationship. The time is at hand when we shall once again be proud to belong to a continent that produces the Light that radiates through the storm clouds of troubles and illuminates the path of Life." The first Prime Minister of India, Jawaharlal Nehru, while speaking to Mr. Paul Feng of the Central News Agency, had said on January 20, 1946, "If China and India hold together, the future of Asia is assured." This holding together need not be confined to diplomacy and trade; it can, by all means, be a psychological force that can work wonders in the realms of creativity in Asia and in the world. [xxxvi]



Gamal Nkrumah, “Asia is one”, Al-Ahram Weekly 3-9 August 2000, Issue No. 493, weekly.ahram.org.eg/2000/493/in1.htm.  Manoj Das in an article in the Hindu, January 7, 2001 makes a case for a voluntary compulsion to get to know the literature of other Asian countries thereby strengthening the Asian identity.

Supachai Panitchpakdi’s address to Asian Business Leaders in Bangkok on 14 June 2005, “The WTO at Ten: What is at Stake for Asia ?

South Asia Watch on Trade, Economics and Environment (www.sawtee.org). Its objective is to promote partnership for capacity building in the context of liberalization and globalization. It is a regional network operating from Kathmandu.

Supachai Panitchpakdi’s address in Marrakech on 9 June 2004, “Ten Years after Marrakech: the WTO and Developing Countries”. www.wto.org/spanish/news.

WTO NEWS: Speeches — DG PASCAL LAMY, NGO Roundtable Forum: the WTO's Sixth Ministerial Conference in Hong Kong,16 October 2005,University of Hong Kong, Rayson Huang Theatre



Paul Donahue, “This is What Democracy Looks Like - the WTO Protests in Seattle”, The Maine Woods, Vol. 4, No. 1, 2000.

www.cidse.org/en/tg1/AssDoha.htm, The Fourth WTO Ministerial Meeting (9-13 November 2001, Doha,Qatar) A CIDSE Assessment.

www.un-ngls.org/documents/text/go.between/gb101.htm :  UN No-governmental Liaison Service, NO 101 - December 2003-January 2004

WTO July 2004 Package of Framework Agreements - Global Issues,

www.africafocus.org/docs04/tr0407.php ; www.globalissues.org/TradeRelated/FreeTrade/July2004Package  

Declaration of the "Regional Conference on WTO, Development and Migration: Building Migrant and People's Solidarity in Challenging Neo-liberal Development and WTO" 17-19 July 2005 in Hong Kong.

Pradeep S Mehta and Pranav Kumar, “WTO in 2006: Looking Back to Move Ahead”, www.choike.org/nuevo_eng/informes/3890.html


Jon Barnes, “ Next Steps for the WTO” 23, January 2006, www.panos.org.

David Kootnikoff, “Hong Kong releases 11 out of 14 WTO Protestors”, Ohmy News, International World, January 12, 2006, www.english.ohmynews.com/articleview


South Asia Watch on Trade, Economics and Environment organized the consultation in Kathmandu on 19 September 2005.

www.pambazuka.org/index. Pambazuka News : Issue 159.

“WTO July 2004 Package of Framework Agreements - Global Issues”, www.globalissues.org/TradeRelated/FreeTrade/July2004Package 

Global Policy Forum, www.globalpolicy.org/socecon/bwi-wto/indexwto.htm ; www.rgemonitor.com/content/view/84978

Hindustan Times, “Indian Farmers losing $1.1 billion to Rich Countries”, September 21, 2004.

www.globalpolicy.org/socecon/hunger/economy/2005/0620farmsubsidies.htm, “Farm Subsidies that Starve the World” – Global Policy Forum

www.wto.org/spanish/news_s/sppl_s/sppl09_s.htm, Pascal Lamy’s speech in Hong Kong – NGO Roundtable Forum, 16 October 2005.


Murphy Sophia, “Will the Doha Round Play a Role in Ending Global Poverty?”, Institute for Trade and Agriculture, Minneapolis. http://www.tradeobservatory.org/library.cfm?refid=72744

Pascal Lamy’s Speech at NGO Roundtable Forum.

Bharat Jhujhunwalla, Singapore FTA: Against Asian unity?, Business Line, August 18, 2005


Michael Vatikiotis, “Single Asian Currency, Key to Stability”, International Herald Tribune, May 13, 2005

Iran Daily, May 16 2006, p.7, www.iran-daily.com ; www.iht.com/articles/2005/05/12/opinion/edvatik 

A high-level conference, organized at the Asian Development Bank in July 2004 discussed this topic.

Gitanjali Aiyar, www.thehindubusinessline.com/2005/08/18/stories, Hindu Business Line, Aug.18, 2005.

Inaugural speech of the Indian Funance Minister, P. Chidembaram at the third ‘Made in India’ show organized by the Confederation of Indian Industry (CII) in Shanghai, Oct. 17 2005.

Das Manoj, “Forging an Asian Identity”, the Hindu, January 7, 2001, www.hinduonnet.com/2001/01/07/stories; www.ibiblio.org/obl/reg.burma/archives ; (Professor Tan Yun-shan and Cultural Relations between India and China by V. G. Nair, Madras, 1958).



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