The key to the future
p. 19 · Read in the full issue
WHILE the rest of the world spent seven years trying to free up international trade in the GATT Uruguay Round nego tiations, the island states of the Pacific were sitting on the sidelines.
Only Fiji had any involvement, joining
the GATT (General Agreement on Tariffs and Trade) as the round came to a tortuous end. There was no other input from the region.
It was not necessarily that Fiji’s neigh bours were disinterested. They have few resources for international negotiations and participation in the Uruguay Round was a very demanding and expensive business. Some probably thought the outcome of years of wheeler-dealing be tween the world’s trading giants was of little relevance to them anyway.
But with the increasing globalisation of trade and new rules governing its interna
tional conduct in place, the question now is whether the Pacific states can afford to remain outside the mainstream.
A new World Trade Orgainisation, to provide a single institutional umbrella over current GATT structures and all agreements reached in the Uruguay Round, will be set up next year.
China and Taiwan are negotiating membership. So is Russia. All but a couple of the Commonwealth of Independent States of the former Soviet Union want in.
Vietnam is interested, along with Kampuchea, Saudi Arabia and Jordan are thinking it’s time they joined Burma and Benin, Chad and Cuba, Saint Lucia and Suriname and more than 100 other nations in the GATT.
Can the tiny island states of the Pacific, whose future, it is increasingly clear, depends on trading internationally, afford to stay out?
The Brisbane communique of the South Pacific Forum, which stressed “the need to adopt a global perspective in regard to the development of economic policies” and
acknowledged this required increasing international
competitiveness, indicated the region’s leaders are thinking about the issues.
What they don’t know at the moment is what the Uruguay Round means to them. Is it good as it is, with a long over due reduction in barriers to agricultural exports for New Zealand and Australia?
Or is it bad, indicating as it does, higher prices for food imports for those nations which have to buy much of their
requirements when subsidy-driven surpluses are reduced?
Will it open up new opportunities for Pacific island countries’ exports, or will it provide increased competition from other suppliers with a resulting reduction in returns?
I understand that New Zealand officials anxious to see that their nearest neighbours’ interests are not overlooked in the new international trading environment are actively
looking at these issues.
They suspect there may be opportunities, as yet uncovered, for the island nations in the Uruguay Round outcome, but acknowledge that re search is needed to find them. This may be a role for the Forum, but I understand New Zealand is ready to offer a helping hand.
The main point is that it seems clear the island states will need some sort of relationship with the new WTO to make sure their interests are not
trampled u|}on.
The most optimistic view is that they will inevitably benefit from the Uru guay Round outcome because it will
stimulate economic activity through
out the world, thereby creating a greater demand for the products of the Pacific island states as well as those of
every other exporting country.
This argument says every country would have been worse off without a Uruguay Round agreement.
This may be true, but those benefits are very hard to define.
An alternative downside of the round is that the Pacific island countries will suffer from the loss of tariff margins of preference they have enjoyed for access to developed countries under the Lome Convention and the Generalised System of Preferences. (They have already felt the pressure of reduced margins to their biggest markets as New Zealand and Australia have cut their tariffs against imports from all
countries.)
There is a major issue here for the Fiji clothing industry, which currently has quotas for exports into the United States and Canada. All quotas will be eliminated over time under the Uruguay Round agreement this could help Fiji expand its sales or, on the other hand, provide greater competition from other suppliers. Other issues which will have to be addressed inlcude the impact of the Uruguay Round deal on sanitary measures affecting PIC exports, and the extent to which they may need to fight tendencies of importing countries to resort to new forms of protection. (Many see the introduction of unjustified quarantine rules and unnecessary environmental regulations inevitable as some countries seek to minimise the impact on their own
producers.)
The key to the PlC’s economic future as the Brisbane Forum communique indicates their leaders recognise is
international competitiveness.
This all points to the Forum countries taking positive action on areas to which they have done little more than pay lip service to so far that is, expanding their private sectors, diversifying their economies, adopting sustainable fishing and
forestry policies, increasing value-added production and
developing regional approaches to international trade.