Transcript #8
Mr. Sumi: Thank you, Mr. Chakramon. Let's take some questions from the back row. Yes, the gentleman standing.
Mr. Ricardo Meléndez-Ortiz: Thank you, Mr. Chairman. My name is Ricardo Meléndez-Ortiz, I am from the International Centre for Trade and Sustainable Development in Geneva. I also want to congratulate you for an excellent panel.
I will be very brief on my question given the time. I would like to address this particularly to Professor Sachs and Mr. Narongchai. Basically, what I would like hear from them is what they think about the current architecture and rules of the international trade regime led by WTO. It is very refreshing to hear the emphasis put on domestic strategies and policies and on the autonomy of designing those domestic strategies and policies. Furthermore, it is also refreshing to hear about an emphasis on industrial policy and on development policy. However, I think that it is now recognized that trade rules and the trade architecture suffer from a great disconnect from development policy and they do limit and hamper those efforts of being active in promoting growth, particularly of development if you look at development as not equitable to just income growth but a more comprehensive understanding of development. So in that framework, would you characterize the current rules as enabling or disabling, and what would you advise in not only the current round of negotiations but parallel efforts to modify the basis that informs that trading system? Then to Mr. Narongchai, I would address the same type of question, but obviously focusing on the knowledge-based economy and architecture now for the intellectual property rights in the world, again led by the WTO regime. Thank you.
Mr. Sumi: I am sorry to correct you but Mr. Narongchai is not on the panel. Mr. Chakramon is. Mr. Sachs?
Mr. Sachs: A very brief response to a complicated issue. I think that the most important single issue in the international trading system for the poor countries remains the issue of market access and the fact that, basically, the rich countries open up their markets for most things except those things that poor countries can sell, so that the most protected sectors are apparel and textiles, with MFA still, although maybe that is going to change on schedule. And of course, the processing of primary commodities. It is outrageous that Africa can sell coffee beans to Europe but it cannot sell processed chocolate because of the escalation of tariffs. These are simply abusive policies of rich countries that have to end if there is going to be any sense in this Doha round as being a development round. I think the market access issues are the most important single issues.
The second set of issues is complicated, and none of us knows yet: to what extent will the flexibility to have industrial policy be fatally compromised by the rules of the game that are being set up? For example, it is still possible to have subsidies for pioneer sectors but it is not possible to have export subsidies. That may be a very damaging problem for getting new sectors started, or it may be that you can put the industrial policy not on an export promotion basis but on an industry sector basis, and therefore WTO-consistent. We do not know how this will play and I am very much in favor of the developing countries, especially the poor countries, negotiating for maximum flexibility on these issues.
I am also very happy to turn it over to my colleague from Thailand-I am delighted that Mr. Supachai is about to become director of WTO. I think he will…pardon me? Oh, it is today? Okay, let me say greetings to him then in that way. I think he understands very much the issues of developing countries and I am very much looking forward to his voice in these negotiations.
Mr. Sumi: Would you like to say anything about this potential disconnect between market growth and some flexibility or policy space for intervention? Okay, let's take other questions. Okay, Ma'am?
Ms. Biloa: Thank you very much for your very instructive and inspiring remarks. I want just to react to a single point when Mr. Chakramon spoke about a master plan for Africa. I thought of the existing NEPAD. I would like to know what is your assessment of NEPAD? Is it something which is likely to help Africa develop? And this question is for all of you. Thank you. Oh, sorry, my name is Biloa. I am a media manager from Cameroon. Thank you.
Mr. Chakramon: Sorry, I do not feel quite comfortable making a comment about that yet because I really do not know about that, but maybe later on. Sorry.
Mr. Sumi: Yes, sir?
Mr. Landium Mashana: Thank you. My question is slightly related to the second to the last speaker. I just want to maybe ask the panelists: what do they make of the current policy discussions, particularly with regards to bilateral trade arrangements like the free trade area for SADEC? To what extent, for instance, has that been a factor in the East Asian development model. My name is Landium Mashana, I am an economist with the development banks.
Mr. Sumi: Is there anyone who wants to make comments? Mr. Sachs?
Mr. Sachs: I think regional integration is useful but it is most useful to integration with the richest markets. So SADEC cannot replace Africa's access to Europe and the United States or its focus on exporting to Europe and the United States as well. So, I like the SADEC process. It will emphasize gains from trade within the region, it will help the negotiating power of southern Africa vis-a-vis the rest of the world, but unfortunately as we have seen in cases such as MERCOSUR that when two closed economies, Brazil and Argentina, integrate with each other they remain just a closed economy, only a little bit bigger. The important point is to integrate with the world markets, not just with small regional markets. So I would emphasize using SADEC to solve regional problems but to be aiming in the export promotion for the whole world market.
Mr. Sumi: Thank you, Mr. Sachs. Yes, this gentleman?
Speaker: I am a student in the International Relations Department, Vets University. My question is addressed to Professor Ohno. Among the basic recommendations you outlined in your presentation, you asserted that the Asian economies should continue to promote globalization while mitigating its negative impact. It is a little bit complicated for me but I want you to move down to Africa; after all, what Professor Sachs has been talking about is the situation of Africa. What is your take? Should they also be doing the same? Looking at the outline of needs that Professor Sachs has made for Africa-I am just suggesting that in future presentations you are making you might want to rethink your development strategy for Africa with a moral prerogative at the forefront. Moral, in this sense, I am talking about fairness. They have to deal with other societies like heavily industrialized societies. Fairness has to be in a situation where they would say: 'We are starting at this point. This person is already in the lead, and this person is lagging.' Professor Sachs sited examples of the cocoa pods being sold to Europe. Other European economies are actually using vegetable oil to make chocolate products to sell to Africa. Just try to imagine what would have happened to the Middle East economies if they had to encourage other countries to develop solar energy. What would have happened to their economies? So, my recommendation is: go back to your research and try to look at African developmental strategies from a moral prerogative. Thank you.
Mr. Ohno: I did not get your point quite well but I think what you said is exactly what I feel too, that globalization must be promoted but you have to manage, not the World Bank or the financiers in New York or London, but you must manage. And, as Professor Sachs said, globalization cannot be avoided, but the speed and scope and sequencing must be geared to the particular needs of the economy. At the same time, you have to give incentives for domestic producers and domestic FDI producers to do better and to become more competitive. At the same time, you do not want to have a crisis situation where all the factories are closed down. This is a very delicate task and I am trying to talk this thing into the Vietnamese government's policies, and it is very tough even in East Asia. But I am not saying that you should just globalize and then compete with the big economies or multilateral companies. That is not what I am saying. But you have to liberalize on your terms, and this speed must be geared to the improvement in your policy content, improvement in the domestic capability of the private sector and also the government sector, and then you open up gradually. The big mistake of the East-Asian currency crisis is that they just opened up without thinking about these things. So I think what you say-I take your point very positively, that we should not just liberalize or globalize, we have to also have the strategies, and to the extent that you have strategies you can open up with a positive attitude.
Mr. Sumi: Thank you very much, Mr. Ohno. Mr. Sachs, would you like to say the last word because timing…
Mr. Sachs: Well, a very brief one, which is that a lot of what is at issue in Africa is what seems to be a very limited power of Africa to negotiate with Europe or the United States. Here, I think that it is extremely important for the African leadership institutionally-SADEC, for example, or the New African Union, or through NEPAD-to put forward strong negotiating positions. The rich countries are very cynical-you know that. The rich countries know that they are not really doing anything for Africa-you should know that. They do not feel too guilty about it, but they do not feel too happy about it either. If Africa can put forward very strong positions, you will get a lot farther from the divide-and-conquer tactics of the Breton Woods Institutions, where they want you one-by-one to do whatever they say.
On the trade negations, Doha can never go the way that the Uruguay Round went, which was an abuse of poor countries. It will not happen again. But it takes a lot of preparation to be able to negotiate in a strong way. NEPAD was not bad in that regard, but it was not good enough. Africa has to prepare harder for better negotiations and to understand deep down that Europe and the United States know that they are cynical, they know that they are not really doing what they say they are doing, and you can press them to close the gap between their words, which are very nice, and their reality, which is often pretty ugly. And when that gap closes it will go up. They need Africa's support for all sorts of things. For our own security, for global stability-they need Africa's support. They want to get it very inexpensively, but if you raise the stakes you will be able to negotiate harder.
My advice is to negotiate very hard on three points: On market access. Do not give up, because it is an abuse the way the international system works: very cynical in the United States and Europe. So market access. Second, the debt. It is a crime for Africa to be paying debt when so many millions of people are dying for lack of drugs and medicines right now. The debt really needs to stop being paid. It just needs to stop so that this money can be used for the public health emergencies. Third and related, the rich countries really need to help more in development assistance.
