Gattastrophe for the third world BETWEEN December 3 and 6 last year, the GATT (General Agreement on Trade and Tariffs) conference met in Brussels. The meeting was meant to set the seal on the eighth revision — or round - of the treaty since 1948. The negotiations for the current round started in Punta del Este in Uruguay, hence the name "Uruguay Round"
For once the doings of this apparently remote technocratic institution attracted considerable attention in the media, chiefly around the issue of European agricultural subsidies and the US led campaign to get them removed. However another aspect to GATT was largely overlooked - its role in policing the relations between North and South in the interests of the former. Alain Tondeur interviewed two Belgian economists, Helene Herting and Bruno Carton, on this subject. The Interview first appeared in the November 28 issue of La Gauche, fortnightly paper of the Belgian revolutionary advances in the service sector, which has been radically restructured. Now these countries need to find wider markets. The Third World offers significant possibilities in this respect.
At the same time it seems as if there is a desire to centralize the big international questions under the heading of free trade. For example, there is already an international body dealing with intellectual property law based in Geneva. But the Americans want GATT to take this on.
BC: There is a consequence of this. The institutions which deal with development, such as UNCTAD [UN Conference on Trade and Development], also based in Geneva, where the Third World countries have the voting' majority, are being pushed to the sidelines.
• What is the relationship between the Uruguay Round and the strategy of structural adjustments promoted by the International Monetary Fund (IMF) and the World Bank in relation to the debt crisis?
HH: The question of the debt does not appear directly in the GATT negotiations. But it is there in the background. One of
Marxist organization, the POS.
Y OU have coined the phrase "a GATTastrophe". What does this mean? BC: We mean that, if services and investments are liberalized to the degree that the US is demanding, many developing countries will find themselves recolonized.
To liberalize services means that any American, European or Japanese service firm will have the right to set up in the Third World without the country in question being able to impose any restriction. Evidently, faced with such competition, up in the US. This is, in a rather full sense, investment in the future.
HH: Quite so. Then people say that the poorer countries could also select seeds. But of course, the Research and Development budget of a multinational, for just one single product, is often greater than the whole R&D budget of a Third World country.
• Why are liberalization of services, Investments and intellectual property the new themes of GATT?
HH: The rich countries have seen big
But it is there in the background. One of the aims of the Uruguay Round is to allow the buying up of service sectors in the Third World.
One way of doing this is via the debt, through "swaps". That is through the buying up of Third World debt on the secondary market, where the credits are sold below their value. Let us imagine that you buy some of a country's debts at 50% of their value. Then you go to the government of the country concerned and propose to exchange the debt titles for some service up for privatization. In this exchange you give the debt back its full value. Given, furthermore, that national enterprises are usually privatized at less than their full value, you win twice. Not a the local service sector firms will be wiped out.
The service issue is connected to the issue of investments. There is also a dossier on intellectual property, which is aimed at copying. A number of countries have copied IBM computers changing some detail. The US wants to impose on all the countries involved in GATT legislation guaranteeing copyright payments.
HH: The intellectual property dossier also has big implications in the field of pharmaceutical products and biotechnology, and thus for people's lives. Techniques to increase crop yields, or new strains, could then not be introduced without paying the multinationals. As for medicines, intellectual property rights means that it will simply become impossible for most people in the Third World to obtain them. 26 the Amazon forests, have been set • Seed banks, notably of olls from
The services goldmine BRINGING the service sector into GATT is an important issue for the international capitalist economy. Since the beginning of the economic crisis of the 1970s, investments in services have grown colossally, in a situation where the rate of profit in industry has not been found adequate by the capitalists. As a result of this there has been an explosive growth of the share of services in trade. While trade in material products doubled between 1976 and 1987, that of so-called invisibles has increased fivefold.
An important part of these invisibles play a role in increasing productivity, such as production financing (banks and insurance), transport and sale of goods (publicity and marketing) and strategic services (telecommunications and so on). Thus services have become a key element in competition between the multinationals Since trade in services is not covered by any international agreement, it tends to take the place of trade in material products, which is handicapped by protectionism. However, this increases the instability of the system. The stampede into services increases stock market speculation and increases the dangers of a crash. This is one reason for bringing services into
GATT.
The other reason, as Helene Harting and Bruno Carton underline, is the opening of new markets for the multinationals +
International Viewpoint #198 • January 21, 1991
bad bit of business.
BC: The demands for liberalization presented in the GATT framework reinforce the liberalization policies imposed by the World Bank. The latter is straightforward. Either the Third World opens up its markets, or lines of credit will not be available. At the GATT table, the strategy is rounded out. The rich countries there put in place the safeguards of their own position faced with liberalization.
HH: The IMF and WB furthermore support GATT. There have been proposals to turn GATT into an permanent organization, into an International Trade Organization.
• Why is the US in the frontline of this liberalization offensive?
BC: Because of their problems of competitiveness. Europe has become the leading exporter of agricultural products. In electronics, Japan and the newly industrialized countries are making gains.
• Can you give some examples of the opportunities opened up by service sector liberalization in the Third World?
HH: Take the case of Argentine telecoms. The Menem government, when it came to power, began to dismantle the important public sector. As soon as he mentioned the privatization of the telecoms sector, a dogtight began between the French, Spanish and Americans. The same was seen in Chile. There is a fantastic need for capital outlets in the service sector. The companies are especially partial to "captive markets"
In telecoms there are different systems. If Alcatel buys the telecom in Argentina, this is not only in order to get the profits from the use of the network, but also to impose its whole product range on this market. If Argentina wants a unified telecommunications system, it has to use Alcatel products. The captive nature of these markets also means the multinationals can impose big price rises. And these days telecoms are on sale throughout the world.
• The main target of the liberalization offensive is thus the semiindustrialized Third World countries.
H: Yes, although the African countries are also in the sights above all in relation to agriculture. In these countries the free market system threatens the complete destruction of already weak possibilities for rural development.The big agrobusinesses will be able to flood the world's markets with cheap goods.
Products from low-productivity coun tries will thus be completely wiped out.
On the one hand, the markets will be open, while at the same time governments will not be able to support the prices of the peasantry's produce. All possibilities of food self-sufficiency will be completely destroyed. *
GATT What is the GATT?
GATT stands for General Agreement on Tariffs and Trade. It is not an International organization like the United Nations, but an agreement made between a number of governments, known as the "contracting parties".
The GATT was concluded for the first time in 1948. At the time It was signed by only 23 countries - 12 developed countries and 11 from the Third World. In 1986 there were 96 "contracting parties" In GATT, IncludIng 67 "less developed" countries and three countries from the ex-Soviet bloc (Hungary, Poland and Czechoslovakia).
The stated aim of GATT is to regulate and develop world trade. in the beginning, and until the present Uruguay Round, Its competence was limited to the physical exchange of raw materials and industrial goods. Agricultural products and services were excluded.
GATT's means of action are reductions in customs barriers and other obstacles to free trade, such as national standards for products — known as "non-tariff measures", GATT follows the doctrine of free exchange, expressed in four principles: 1. Non-discrimination in trade. Each country applies to all the GATT signatorles the customs regime applied to its most favoured trade partner
(thus "most favoured nation status").
2. Reciprocity. Any modification of tariffs by one country is compensated for by changes in the tariffs of the countries which benefit from it.
3. The forbidding of quantitative limits on imports (quotas). 4. The settlement of trade disputes.
The GATT has permitted a very important reduction in custors duties
- from an average of 35% to 3% between 1945 and 1987. This has lacili tated an important growth of world trade - at the rate of 8% each year between 1950 and 1970. It would be a mistake however to put this figure down to the miraculous effects of free trade. In practise, GATT's principles are only applied when it suits the multinationals, In the opposite case they are got round by a number of means such as packaging instructions that exclude Imports from competing countries, administrative obstacies. or bilateral agreements between countries - Japan lor example restricts exports of cars and electronic microchips to the USA. Thus it is the balance of forces that decides rather than the "rules" of free trade.
The result of this situation is that, although 90% of world trade Is undertaken by countries who have signed GATT, only about a third or a quarter of this trade is conducted according to GATT's principles.
The Agreement is periodically reviewed or adjusted in the course of so- called "rounds" of discussion. There have been seven of these rounds since 1948. The eighth round, called the Uruguay Round after Punta del
Este in Uruguay, where it started, is currently underway.
The Uruguay Round is different from previous rounds in that It has been discussing the extension of GATT to new product areas. This extension has been demanded by the US which wants to add in;
• Services: banks, Insurance, fourism, telecommunications and so on.
• Investments. • Intellectual property. • Agriculture. - Alain Tondeur 27 January 21, 1991 • #198 International Viewpoint
GULF CRISIS