The new multilateral trade negotiations: a challenge for Latin America and the Caribbean

Abstract

When they gather at the third Ministerial Conference of the World Trade Organization (WTO), the Ministers of 132 countries will be deliberating upon the future programme of work for the Organization. The guidelines for their discussions have been set by the agenda incorporated into the Uruguay Round agreements, which covers three main sets of issues: (i) the implementation of those agreements; (ii) the agenda that forms part of them, i.e., substantive negotiations aimed at carrying forward the reform of the agricultural sector, intensifying the liberalization of trade in services and clarifying some of the disciplines established by other agreements; and (iii) the possible introduction of new issues for analysis as a basis for further proposals and negotiations. It should be borne in mind that, with the creation of WTO, a new forum has been established in which trade negotiations have been converted into an ongoing process. 

The Governments of the developing countries, in general, and those of Latin America and the Caribbean, in particular, are striving to ensure that these negotiations will constitute a 'development round' in which their interests are taken fully into account and, to that end, have drawn up a positive agenda for pursuing matters of common interest. Five years after the entry into force of the multilateral trade agreements, the developing countries, in general, and the Latin American and Caribbean countries. in particular, have realized that there is a serious imbalance between the cost of carrying out their obligations and the benefits they will receive from the industrialized countries' fulfilment of their commitments. This view is supported by a number of academic appraisals of the impact of the Uruguay Round, which show that the industrialized countries have benefited the most from the liberalization of trade in goods and services. Their greater negotiating capacity has enabled these countries to establish a multilateral framework of disciplines for trade in services and for the protection of intellectual property rights, to bring up issues such as investment and competition policies in regard to TRIMs and the telecommunications agreement, and to move forward with the liberalization of financial services, telecommunications, electronic commerce and information technology. In addition, the provisions pertaining to liberalization of the agricultural, textile and apparel markets has had the effect of giving the more advanced economies more time to carry out their internal restructuring than the developing countries have had to make the necessary changes in their legislation, rules and institutions to fulfil the commitments they made as part of the Uruguay Round agreements.Although they feel that they now enjoy more predictable and more secure market access thanks to the greater transparency of national trade rules and policies associated with the Uruguay Round agreements, the countries of the region are nonetheless aware that formidable barriers to their exports still exist in major import markets.

The Uruguay Round agreements failed to resolve a number of questions relating to market access for developing countries ?issues whose settlement would entail political costs that the Governments of the more advanced economies are unwilling to pay? which had been left pending from earlier rounds. In the industrialized countries, the tension generated by market integration and the growing interdependence of nation-States has been mounting, and the impacts of these circumstances on the labour market are being felt at a time when technological change is also making its influence felt on the demand for labour. There is a widespread belief that economic integration and liberalization have destabilizing effects that will need to be counteracted if Governments want to ensure that society will continue to support the idea of global interdependence.

From the standpoint of Latin America and the Caribbean, these negotiations are being undertaken within a framework that differs in both positive and negative ways from the context in which the Uruguay Round was held. Some of the factors on the positive side of the equation are: (i) WTO is a universal organization whose membership includes all the countries of the region that have been actively participating in the negotiation process; (ii) as part of the commitments made by these countries in the Uruguay Round, they have adopted an export-oriented development model, have implemented a rigorous macroeconomic reform programme and have bound their tariffs at low levels; (iii) all the countries are participating in simultaneous bilateral, plurilateral and multilateral negotiations at which they analyse the same issues and establish similar ?but not identical? rules, and these countries' negotiators are learning from these experiences; and (iv) although they have had very severe impacts, recent financial crises have not been as devastating or as politically debilitating as the external debt crisis of the 1980s.

The performance of the region's economies has demonstrated, however, that the necessary macroeconomic reforms have not yet been completed in many countries, since their stability is still largely determined by the behaviour of external capital flows. The external sectors of Latin America and the Caribbean are still vulnerable, both because of the countries' difficulties in obtaining reliable access to long-term capital markets (which affects their exchange policies and their economies' investment and growth rates) and because of their specialization in exports of labour- and natural-resource-intensive goods and services. As a result, their export performance hinges on their ability to gain reliable market access and on the existence of economically worthwhile international prices.