Globalization and Particularism

As the globalization of capital, international standards and prices determine the pace of trade and investment around the world, nation-states and societies, with various degrees, resist adjusting to the new demands of market forces. Coupled with information and scientific and technological revolution eroding national and cultural barriers, and facilitated by opening of markets and crumbling of barriers, the globalization increasingly provokes particularism across the people in every continent. The dynamic of globalization and particularism can easily be discerned during the course of debates in various rounds of talks among competing interests groups and the angry demonstrators outside the most guarded conference halls waving diverse flags and posters seeking protection against one another. While every issue, even if not related to trade, is being pushed on the agenda, mobility of labour across the continents remains untouched leaving globalization lopsided and selective.

Ever since the talks on General Agreement on Tariffs and Trade (GATT) paved the way for the creation of World Trade Organization (WTO) in 1994, we have seen an upsurge in the preferential trade agreements across the globe with 300 free trade areas (FTAs) already in place. Although proponents of multilateralism abhor FTAs, creating a “spaghetti bowl”, this is what is being done to serve particular interests by all and sundry. Creation of G-20, African group and Carins Group of 17 agriculture-exporting countries, least developed countries (LDCs), the United States and the European Union show a diverse battle for protectionism from globalization and even playing field. Most protectionists, such as the EU, Japan and the US, are those who stand to benefit more from the advent of globalization as the developing countries stand to lose while preferring their particular concern over the overall good of seeking a legitimate share and place for the developing world. As the whole debate and negotiations are centred around subsidies and tariffs on agricultural and manufactured goods, a big tug of war continues on the four so-called Singapore issues (investment, competition policy, transparency and trade facilitation) being pressed by Japan and EU, trade-unrelated “fair trade pushed by the US, Non-Agricultural Market Access (NAMA) and intellectual property.

Doha Round of talks brought the issues of subsidies on agriculture at the centre of debate and the developing countries felt for the first time that their voice was being heard. And this was in Cancun that a great breakthrough took place with the creation of G-20, led by Brazil, India, China and South Africa. The group demanded of the EU and the US to come back with concessions on subsidies on agriculture. In the past, the US, EU, Canada and Japan used to set the agenda, but the creation of G-20 changed the equation marginally in favour of the developing countries who, in turn, are divided and tend to enter into individual deals.

The World Trade Organization's ministerial in Hong Kong has barely survived due to elimination of export subsidies, amounting to $ 5 billion, on farm goods by the end of 2013 -- leaving little time for agreements on thornier issues. This is, however, of no consequence since most of the export subsidies have been phased out. Unlike previous rounds of talks at Seattle (1999) and Cancun (2003), the Hong Kong ministerial did not end in a fiasco. The 50 LDCs stand to gain from duty-free and quota-free access to 97 per cent of imports by the European Union, Japan and the US from the LDCs by 2008, if the remaining three per cent do not distort trade in bananas, sugar and apparel. Although no commitment has been made on the remaining subsidies, tariffs and quotas on agriculture, some tangible movement has taken place on who is to cut how much subsidies on agriculture in both developed and developing countries and, in turn, lowering of tariffs on manufactured goods by the G-20 countries, including India and Brazil. However, an overall agreement remains to be reached with a deadline as close as April.

The future of Doha Round of talks still remains quite bleak. Already the blue box, dealing with production-limiting subsidies, and the green box, which pertains to subsidizing farmers for environmental and live stock protection, are out of the purview of the WTO. There is no development on services. The differences between the most powerful members, the US and the EU, on the one hand, and large growing economies, such as China, India and Brazil, on the other, remain unbridgeable. If the EU refuses to budge from its protectionist position on farm subsidies, which the developing agrarian countries resent, India and Brazil are adamant to consider reduction in tariffs over their manufactured goods until the EU brings down its excessive subsidies on farm products. The conflict between the EU and the US, however, compelled the Union to provide access to the goods of poor countries and America to withdraw subsidy on cotton. Pledges of aid for trade to compensate for the loss of developing countries is a good development. It is yet to be seen how far these promises are real.

The effort to “buy off” the poor countries may not breed fruit since the measures so far announced to alleviate their concerns seem quite cosmetic. The developing countries also remain divided as interests of bigger developing economies are at variance with the LDCs. The developing countries of South Asia also acted divergently. The good point about the WTO is that the poor countries carry a veto and they must not squander it for little gains and avoid bilateral deals with the powerful. If trade has to be freed, that it must, it should be done on an equal basis. Globalization is inevitable and it cannot be reversed, nor should it be selective by leaving the mobility of the most important factor of production, labour, out of its ambit. It must create an even playing filed without any discrimination while alleviating the sufferings of those who continue to suffer most.