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Trade -A Market Fundamentalism

Trade -A Market Fundamentalism

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Published by Yanuar Nugroho

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Categories:Types, Research
Published by: Yanuar Nugroho on Aug 01, 2008
Copyright:Traditional Copyright: All rights reserved

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06/14/2009

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The Jakarta Post – OPINION & EDITORIAL - Friday, July 25, 2003http://www.thejakartapost.com/Archives/ArchivesDet2.asp?FileID=20030725.E03 Part 2 of 2
Trade -- a market fundamentalism
Yanuar Nugroho
,Director, Business Watch Indonesia, Surakarta,yanuar-n@unisosdem.org There is series of issues called the "Singapore Issues" or "New Issues" to be launched atCancun, that consist of the issues of investment policy, competition policy, transparency ingovernment procurement and trade facilitation.Actually, investment policy will be the only new issue at Cancun. How important is this issue?Investment negotiations at Cancun, if allowed to succeed, will create binding rules within theWTO on investments globally -- a multilateral investment framework (MIF). The concern of allthose that are against negotiations on a MIF are that the outcome of the negotiations withinthe WTO would be unfair and against the interests of developing countries. Will developingcountries go for that?Although there are reasons for developing countries to maintain the position of "No to NewIssues", before these reasons are listed it is important to note that, once negotiations begin, itis difficult to back-roll the process. Thus, negotiations will most likely lead to an agreement.Once this agreement is reached and signed by participating countries it is generallyirreversible, becomes binding to the signatories regardless of the government of the day, andbecomes subject to the dispute settlement and sanctions procedures within the WTO.SEATINI put in its newsletter (July 2003) that most developing countries are not ready for aninvestment agreement and they should block the investment issue at Cancun, since there is aneed for a full understanding of the development implications and clarification of the manyquestions that are being asked. Investment is not a trade issue and should not be broughtunder the remit of a trade body such as the WTO. Developing countries have not fullyanalyzed the implications of a MIF for their economies and for their policy options.Nevertheless, the industrialized and the major developed countries are the advocates of aWTO investment agreement. At a recent meeting on June 10 and June 11 in Geneva of theWTO's Working Group on Trade and Investment (WGTI), the principal message from themajor developed countries was that negotiations on investment should be launched atCancun.The argument for this position was that a WTO agreement on investment could complementthe existing networks of bilateral investment agreements and other bilateral and regionalagreements. It cannot be denied that a relationship exists among investment agreements,investment flows, trade flows and trade rules.What should we (developing countries) do?First, developing countries should play an active role in the remaining meetings of the workinggroup and strongly voice their concerns over the issues listed for clarification. In Geneva,several developing countries maintained that there were many issues that were stillunresolved and that they did not agree that negotiations should commence. Second,developing countries should insist that any investment framework -- whether inside or outsidethe WTO -- should have a fair balance between the rights and obligations of investors andhost countries, and between the rights and obligations of host and home governments.We are constantly told that the way to reduce poverty is through economic growth.Experience tells us this is not true. The UN's Human Poverty Index 1998 (HPI-2) for industrialcountries showed that Sweden, with one of the lowest rates of economic growth per person,

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