Is the concept of international commercial equality and trade liberalization misnomer?

Answer 1

THE CONCEPT OF INTERNATIONAL COMMERCIAL EQUALITY AND TRADE LIBERALIZATION IS A MISNOMER?

The reason for establishing the GATT Organization under the forum of the auspices United Nations in 1948, was to reduce the tariff and non- tariff barriers and the traditional discriminatory attitude of the North towards the south because these are the main causes that led to the two pre-historical incidents like the Great Depression in 1930 and the Oil Crisis in 1973 in the world economic history.

Actually the 19th century is recognized as the best period of international economic relations for trade liberalization and commercial equality. During the period of 2nd world war 1914-1918 the structure of economic trade between the states of that time was based cartelization(an association of competitors jointly restricting competition) and unilateralism due to which the stronger nations subjugated the weaker nations under their manipulated trading system.[1]

Before 1930, the four region model was dominated over international economy. The major developed's economic powers were USA,Canada, EEC and Japan. They did utmost endeavoured to impose their unbalanced and un-equilibrium economic policies like tariff and non-tariff barriers over the region in order to protect their domestic products. Their retaliated economic policies not only devastated the economic structure of the developed states but also the developing countries of the other region.

Two developments immediately after the Second World War made to avoid a repeat of the pre-war trade tensions. In Europe, international cooperation developed in coal, and in iron and steel. Globally, the General Agreement on Tariffs and Trade (GATT) was created.(WTO WEBSITE)[2]

If we look at the brief history of the UN regarding trade liberalization so we can divided it under the following sub-periods: 1945-55, 1956-65,166-73, 1973-83 and 1983 to date. In these historical periods the map of the world sudden changed. Politically colonialism ended and the period of independence, permanent sovereignty and economic self-sufficiency appeared on the globe. Every state of the world chanted the slogan of self-determination with their own control over the land, resources and peoples. [3]

The meaningful and the practical participation by the developing countries in the process of world trade liberalization was not possible without elimination of tariff and non tariff barriers and the traditionalistic discriminatory attitude by the developed countries towards the south. The foundation of GATT by UN was the first source of tariff reduction and other economic barriers for the growth of commercialism and liberalization. But sooner or later this paramount of GATT in tariff concession revealed inadequate and the cleavages between the south and north remained intact.

COMMERCIAL EQUALITY ;-

In accordance with the objectives of the GATT, commercial equality has been highlighted comprehensively. It was considered under this UN recognized document that without understanding and achievement of the commercial equality the traditional distances between the north and south and the purpose of trade liberalization cannot be fulfilled. Here the definition of equality can be observed under the following lines.

Definition of commercial equality:-

In the case of Minority school in Albania PCIJ (1935) Series A/B No. 64 it is held by the Court that there is Equality in law and Equality in fact also. Equality in law precludes discrimination of any kind, whereas equality in fact may involve the

necessity of different treatment in order to attain a result which establishes equilibrium between different situations. It is easy to imagine cases in which equality of treatment of the majority and of the minority, whose situation and requirement are different would result in inequality in fact.(REF-CASE LAW)[4]

There are many reasons for the inequitable behaviour by the industrialized country to the developing states, but generally speaking developing countries have many lacks like lower level of skill, less developed infrastructure and institutional capacity and less technological expertise and others, the industrialized states that is why never been agreed to make trade with the developing state due to the above mentioned reasons.[5]

Role of GATTT, Institutionalised process of alleviating economic barriers and other dismantling efforts:

In pursuance of Havana Charter, article xxvii of the GATT provides tarrif negotiations with the contracting parties concerned on selective and product to product basis, the article explained further that the participation of multiple nations under the process of multilateral trading negotiations would be helpful to reduce the higher tariff and non tariff barriers to the growth of trade liberalization.[6]

ROUNDS UNDER UN PERIODS

To reduce the burden of tariffs and other distorting restrictions over members,tariff negations period started on 1947 under the following most favoured Rounds of tariff negations:

a) Geneva Round in 1947

b) Torquay Round in 1951

c) Kennedy Round 1964-67

d) Tokyo Round in 1973-79

e) Uruguay Round in 1987

Role of UNCTAD:-

The main purpose of UNCTAD 1964 was to provide the technical assistance to the developing states to compete with the high standard of industrialized states in trade and commerce and their integration into world economy. It also stress the developing countries to balance the equality between the north and south, they must have to look at inward looking and outward looking strategies in their efforts to get not only ht economic self sufficiency but also to be capable to compete the comparative advantages of industrialized states at international level.[7]

NOTION OF RECIPROCITY:

Unfortunately the concept of reciprocity was tried to evade in the tradition of GATT's tariff negations embedded . part IV added in the GATT that highlighted in the sence that developing states are no more required to offer recipiocraty in tariff negations to the developed countries but on the other hands the developed states were not ready to loose barriers and restrictions on the developing countries.[8]

Concept of Generalised System of Preference

Because of the failure of the MFN and NT to end the disequilibrium and discriminatory rules and principles for promotion of collective economic trading system under the forum of the GATT mechanism, the developing states demanded for the amendment of part IV of the GATT.

But unfortunately they never got any positive response from the developed states. The lacuna in the part IV of the GATT was that it never provides the legal framework for the dispute in the trading negations and under the GSP the developed states did many negotiations beyond the limits of the GATT mechanism.[9]

2 Main Problems In GSP System

1) Preferential arrangements made on the the de facto manners outside the GATT mechanism

2) Violation of obligations by each partner under the implementation of GSP system in agreements.

Under GSPT

The GSPT, was introduced under the new mechanism of the GATT system on the request of the developing states for collective self- reliance as well as for the promotion of structural changes.

After reviewing the pre-history of the North and he South economic trading negotiations the Group of the 77 states demanded the safeguard measures under the auspice of the UNCTD for the assistance of the developing nations.[10]

Objectives of Uruguay Round of Negations

Uruguay Round of Multilateral Trade Negations launched in 1986, which also highlighted the same serious problems that has been faced in other Rounds like disequilibrium in trade policies by developed states and non-reciprocal attitudes.

This round also suffered lack of consensus on trade policies and trade issues.

Objectives:

1) Mutual cooperation between the states to trade liberalization, reducing barriers and special assistance to LDC for economic growth.

2) Strengthening the role of GATT for multilateral trade negotiations

3) Enhancement of GATT mechanism for improving the inter-relationships with other related organisations.

4) Fostering the collective consensus in to the North and the South alleviating the barriers.[11]

Role of New International Economic Order:-

In the establishment of NIEO it was highlighted that the north and the south have international relationship in their socio-economic affair, no one can be isolated from the rest for the purpose of gaining their prosperity, growth and development in the pursuit of their trade liberalization.The prosperity of international community as a whole depends upon the prosperity of its continent parts. ( chatter

g. Notes) The purpose of NIEO was solely to balance the attitudes between the industrialized and the developing countries to promote trade liberalization following the Articles 1 and 2, 14 and 18 of the CERDS.

Developed states never favoured these resolutions whole heartedly and they always unfortunate to the growth of trade liberalization under the purpose and objectives of UN. Majority of the developed stated confronted with the principles and provisions of the resolutions and presented the following reasons to object over them.[12]

Reasons by developed states for confrontation to NIEO

1. Developed states felt insecurity among some provisions in transferring technological assistance and investment in developing states e.g, Under Article 2 (c) of the Charter of Economic Rights and Duties of the States does not cover the foreign investment in the process of expropriation of foreign property in developing states.

2. The developed states were not ready psychologically for radical changes of these ideas adopted in NIEO.

Krishna mufti's prediction was empirical in the context that the operative and confrontational elements between south and north being influenced by world political and economic development.[13]

Role of Charter of Economic Rights and Duties of States 1974;-

Again it has been discussed under this charter the reaffirming fundamental purpose of the United Nations that to maintain the international peace and security, the development of friendly relations among nations and the achievement of international cooperation for the liberalization of trade can only be attained under following the respected principles of sovereign equality, interdependence, common interest and co-operation among all states irrespective of their economic and social justice.

Under Article 14[14] of the charter of Economic Rights and Duties of States has cleared expressed that developed states and the developing states have nearly a

common practice within their own economic structures e.g., EEC and EFTA already demonstrated the same problem faced by the developed nations. Developing countries have the same dismantling obstacles that is why the two resolutions NIEO and CERDS has been made under the frame work of UN to deal the same common problem between the developed and the developing countries.[15]

Unfortunately, developed states never co-operated properly to mange and follow the principles and provisions of the two resolutions in order to save his own interest. Under Article 18 of CERDS expressed that to save the end of trade liberalization on economic global world they must have to improve and enlarge the system of generalized no reciprocal and non discriminatory tariff preferences to the developing countries consistence with the relevant agreed principle and the frame work of the resolution.[16]

Role of GATT/WTO:-

The emergence of WTO in 1997 was set up out of the Uruguay round 1986-94 of GATT, which became the successor to and replacement of GATT. Its main function is to administrate negotiations and enforce international trade regulations and rules which are binding all the members of the organization.[17]

In the editorial of Nigerian Newspaper dated 22 October 2001 title "Reviewing the WTO Treaty" express the views by the developing states about WTO, that it is a multilateral body of rich and poor nation which stand on equal partners, establishes the treaties to bind over all member equally and without any discrimination. [18]

The WTO is guided by five major principles which include: non-discrimination, reciprocity, binding enforceable commitments, transparency and safety values and In the trading history of WTO, the Uruguay and Doha Rounds have important performances in growing equality and liberalization for member states and the new born nations, ameliorating the barriers and restrictions on agriculture and semi- industrial products and introducing some new areas like services and subsidies and intellectual property issues.[19]

Criticism on WTO's surveillance:-

One of the criticisms of WTO is that it has been high jacked by industrialized state like USA, EU, Canada and Japan to expand their market due to high tariff and non-tariff barriers and the services of the transitional corporations.

WTO lacks technical skills in dealing with non-trade and labour issues such as environmental regulations, labour standards and human rights as well. Some have objections in their words that WTO not doing enough to prevent imports from countries where by child labour is being abused together with poor working

conditions. One more criticism has been subjected to WTO system that it allows countries to impose anti-dumping policies on foreign imports.[20]

CONCLUSION:

Since the emergence of the United Nations, has been struggling with unceasing efforts to keep the world at peace and to grow the trade liberalization on basis of commercial equality through its institutionalized instruments, resolutions ,declarations and chatters.

under the forum of the UN, GATT, UNCTAD and WTO's different rounds with the amendments of new laws and regulations were made with the passage of time for the purpose of removing the traditional tensions between the North and the South that led them to post world wars and economic crisis in the world trade history by imposing their inequitable policies and economic barriers over each other to protect their own domestic products and politicised supremacy. No doubt the industrialised states also made constructive efforts towards trade liberalization under the plate form of EFTA and EEC but unfortunately directly or indirectly the developing states being affected badly.

sThe characterization of the GSP and the GSPT in the process of reciprocity and mutual consensus for the reduction of tariff and non-tariff barrier and transferring the well equipped knowledge and technical assistance to the developing and the least developing states was to make them progressive for the collective self-reliance and the common goal of commercial equality in multilateral trading system. but again the detribalized states played their rational non-cooperative role to unbalance the commercial equilibrium and hopes of the UN'S purpose and objectives in trade liberalization.

WTO, despite of having some shortcomings in its rules and decision making mechanism, still continue to bridge the gap between the NORTH and the SOUTH for commercial equality and trade liberalization .

[1] s

[2] WWW.WTO.ORG, TITLE, WHAT IS WTO.

[3] INTERNATIONAL AND CAMPARATIVE LAW QUARTERLY, JULY 1991,VOL.40, PAGE.671,CERDS AFTER 15 YEARS BY DOMINIC MCGOLDRICK:

[4]

[5] Journal of International Economic Law,2009,Trade and equality: a relationship to discover by Gillian Moon.

[6] JOURNAL OF WORLD TRADE, FOURTY YEARS OF INTERNATIONAL ACTION FOR TRADE LIBERALIZATION BY S. K. CHATTERJEE:

[7] ReferencesBurley, John. Evaluation of UNCTAD's International Trade Program. 5 June 2008. United Nations Conference on Trade and Development. Accessed 13 October 2009. .

[8] JOURNAL OF WORLD TRADE, FOURTY YEARS OF INTERNATIONAL ACTION FOR TRADE LIBERALIZATION BY S. K. CHATTERJEE

[9] IBID:

[10] IBID:

[11] IBID:

[12] INTERNATIONAL AND CAMPARATIVE LAW QUARTERLY, JULY 1991,VOL.40, PAGE.669,CERDS AFTER 15 YEARS BY DOMINIC MCGOLDRICK

[13] JOURNAL OF WORLD TRADE, FOURTY YEARS OF INTERNATIONAL ACTION FOR TRADE LIBERALIZATION BY S. K. CHATTERJEE

[14] "All states should co-operate, inter-alia, towards the progressive dismantling of obstacles to trade and the improvement of international frame work for the conduct of world trade and to these ends, co-ordinated efforts shall be made to solve in an equitable way the trade problems of all countries, taking in to account the specific trade problems of the developing countries"

[15] JOURNAL OF WORLD TRADE, FOURTY YEARS OF INTERNATIONAL ACTION FOR TRADE LIBERALIZATION BY S. K. CHATTERJEE

[16] IBID

[17] WWW.WTO.ORG:title, what is WTO.

[18] ThisDay, Volume 7, No. 2375 Page 11 of 22 October 2001

[19] IBID

[20] International Business. 5th Edition,2004, McGraw Hill: