Reconquering Third World with protocols.
Colonialism is making a comeback. For centuries, the governments and corporations of the industrial Western nations, backed the military power, exploited the resources and markets of the poor countries. The determination of these countries to recapture control of their resources and impose policies that favoured domestic over foreign interests spurred the anti-colonial struggles that culminated in independence of much of Asia, Africa and Latin America. Very few people are aware of the fact that now the former colonial powers are in the process of regaining the right of transnational companies to dominate the economies of their former colonies, this time through trade agreements.
Some little-noticed revisions of global trade rules, as well as a series of proposed new rules, are today's weapons for restoring some of the economic underpinnings of colonialism. The new proposals came from the European nations, backed by the US, and were offered at the first ministerial meeting of the World Trade Organisation that was held in Singapore in December 1995. The industrial nations hoped to persuade the trade and commerce ministers of more than 100 W.T.O. countries to set up a Multilateral Investment Agreement, which would guarantee global corporations "national treatment," meaning that national governments could not impose any measure that favour local companies or discriminate against foreign ones. As a result, a wide array of restrictions in nations all over the world that prohibit foreign corporations from opening branches or buying property, and that limit the share of local businesses foreigners may own, would be swept away.
For developing nations, the new rules have profound implications. Many countries have adopted policies that favour the growth of local companies. Some give them tax breaks and preference in government contracts; indigenous banks are offered protections not available to foreign ones. Governments, like Pakistan, describe and justify such policies in the name of globalisation of trade and economies, and national interest. Many argue that because foreign firms were given preferences during the colonial era, local companies need special treatment for a period of time so that they can better compete with foreign ones.
Malaysia's New Economic Policy, for example, was formulated to increase Malaysians' equity ownership in several sectors of the economy by placing limits on foreign holdings. As a result, the foreign share of Malaysia's total equity has fallen from 70% in 1970 to about 70% today. Malaysian policies that restrict foreign ownership of land and property and limit the scope of foreign banks have likewise helped build a domestic economy that is the engine of the country's development.
The proposals the industrial powers are pushing have been built on a history of postcolonial economic arrangements that rig the global economy against the interests of poorer countries. Despite the well-publicised cases of Western economic and humanitarian aid to Third World countries, there is a far greater net outflow of economic resources from the Third Word to the developed countries. Take raw materials. Only 20% of the world's industrial wood comes from tropical forests, yet more than half of that is exported to the richer nations. The wood that is exported from the Third World - mainly for wasteful uses in the rich countries - is lost to poor nations, who now have difficulty obtaining wood for essential uses such as houses, furniture and boats.
Even worse, the processes of extracting Third World resources cause economic loss through environmental degradation such as deforestation, soil erosion and desertification, and the pollution of water supplies; soils required for food production become infertile; forests that are the habitats of indigenous peoples are overlogged or flooded out; wood used for fuel disappears as whole forests are felled; and water from rivers and wells is clogged from the silt that washed down from denuded hills.
There is also a net loss of financial resources . Prices of Third World's commodities have been plummeting, while the prices of manufactured goods imported from the Europe and America continue to rise. According to the United Nations, the prices of commodities other than oil fell by an average of 52% between 1980 and 1992. The impact has been particularly severe in the sub-Saharan African countries, whose dependence on commodity export is greatest. In the period from 1986 to 1989, sub-Saharan Africa suffered a total loss of $ 56 billion due to the decline in the purchase power of its exports.
The external debt crises, which originated in the 1970s, has been another major source of financial drain on the Third World. To this day, many of the "development projects" designed to encourage the export of natural resources are financed by foreign loans. It is rare for these projects to generate sufficient returns to repay the debts, so the money must be raised either through an increase in exports or through new taxes, which in Third World countries invariably hit poor people hardest.
Another source of the drain from the Third World is the dominance by multinational corporations of international transport, trade and distribution of commodities exported by the Third World. These companies siphon off an overwhelming share of the final price of the commodities. Third World countries have to pay large amounts for freight, insurance, packing and marketing of their exported and imported goods. Many studies have shown that Third World countries receive only 10 to 15 % of the final price of their commodities when sold to northern consumers.
The new rules of trade can give Third World countries very little opportunity to learn from the developed world and build their own technological capacity in order to compete on an equal footing. Nor can these impoverished countries expect much help from international organisations in curbing restrictive business practices and monopolies by global corporations. The code of conduct on transnational corporations that had been negotiated for more than a decade at the UN Centre on Transnational Corporations was abandoned, and the centre was transformed into an agency that promotes foreign investment.
The growing gap between rich and poor countries was exacerbated by the Uruguay Round of the GATT, which expanded GATT's powers to include elimination barriers to the rapidly growing trade I such services as banking, insurance, information, the media and professional services such as law, medicine, tourism, accounting and advertising.
In banking, a number of Southern countries have long restricted the participation of foreign banks to a limited range of activities. To preserve local banks some countries prohibited foreign banks from setting up branches in small towns. Now, under the new GATT rules, the marginalisation of local banks, financial and other professional services will accelerate.
The Uruguay Round of GATT also threatens to affect health conditions in the Third World drastically. The private health care industry and insurance companies of the rich countries have launched a drive to commercialise health care services in the South. They are beginning to buy up hospitals and bring about the privatisation of health care, which will make it inaccessible to the vast bulk of the people.
Even some of the newer environmental initiatives in the South are endangered. Indonesia, for example, recently proposed to ban the export of rattan, an important forest product that is becoming scarce. Immediately the US and European Community protested that the export ban violated the principle of free trade, and threatened retaliation against Indonesian exports.
The Uruguay Round of GATT and the proposed WTO investment rules have led many Third World countries and groups to concluded that colonialism is being reimposed, that the economies of the developing Third World are being subordinated in new ways to the corporate interests of the rich Western nations. Rich countries, finding that the UN General Assembly is often hostile because the majority of its members fight for Southern interests, have sought to shift more and more of the social and economic aspects of the UN to the World Bank, the IMF and the WTO.
The WTO cloaks its work in the principle that all nations should be treated equally. But under free trade the weaker nations will continue to suffer. This is why so many in the Third World countries oppose free trade: It may be good among equal partners, but in today's global economy some countries are more equal than others.
Opposition to Europe's new investment proposals in the WTO is growing. Within weeks of their announcement, several dozen people's organisations from around the world signed a statement stating that "member countries of the WTO should oppose suggestions that the issue of foreign investment be introduced on the work agenda of the WTO."
India's ambassador to the WTO pointed out the implicit double standard in the new Northern investment proposals. The investment treaty was being advocated in order to increase the mobility of one actor of production, investment. Yet the rich countries are not willing to discuss similar increase in another factor; the mobility of labour.
There is an urgent need for political leaders in the Third World to speak out and organise opposition to such kind of new proposals. Only concerted action will prevent Third World countries from being pushed down the slippery slope of another round of so-called "trade" negotiations in which their interests will be further eroded.
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