Gattastrophe for the 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
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 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 interna-
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
Marxist organization, the POS.
OU have coined the
Y
"a phrase
GATTastrophe". What does this
BC: We mean that, if services and investments are liberalized to the degree that the US is demanding, many developing countries will find
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, the local service sector firms will be 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 • Why are liberalization of services, investments and intellectual property the new themes of GATT? HH: The rich countries have seen big tional 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
HH: The question of the debt does not appear directly in the GATT negotiations. 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 services goldmine
The service issue is connected to the
BRINGING the service sector into GATT is an important issue for the internaissue of investments. There is also a dossitional capitalist economy. Since the beginning of the economic crisis of the er on intellectual property, which is aimed
1970s, investments in services have grown colossally, in a situation where the at copying. A number of countries have rate of profit in industry has not been found adequate by the capitalists. As a copied IBM computers changing result of this there has been an explosive growth of the share of services in detail. The US wants to impose on all the trade. While trade in material products doubled between 1976 and 1987, that of countries involved in GATT legislation so-called invisibles has increased fivefold.
guaranteeing copyright payments.
An important part of these invisibles play a role in increasing productivity,
HH: The intellectual property dossier such as production financing (banks and insurance), transport and sale of also has big implications in the field of goods (publicity and marketing) and strategic services (telecommunications pharmaceutical products and biotechnology, and thus for people's lives. Tech-
Thus services have become a key element in competition between the multiniques to increase crop yields, or new nationals Since trade in services is not covered by any international agreestrains, could then not be introduced withment, it tends to take the place of trade in material products, which is out 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.
• Seed banks, notably of oils from
26 the Amazon forests, have left set
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GATT third world
What is the GATTY
GATT stands for General Agreement on Tariffs and Trade, It is not an
International organization like the United Nations, but an agreement made befween a number of governments, known as the "contracting partles".
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 mar-
GATT
The GATT was concluded for the first time in 1948. At the time it was kets, or lines of credit will not be availasigned by only 23 countries - 12 developed countries and 11 from the ble. At the GATT table, the strategy is
Third World. In 1988 there were 96 "contracting parties" In GATT, Includrounded out. The rich countries there put ing 67 "less developed" countries and three countries from the ex-Soviet in place the safeguards of their own posibloc (Hungary, Poland and Czechoslovakia).
tion faced with liberalization.
The stated aim of GATT is to regulate and develop world trade. In the
HH: The IMF and WB furthermore supbeginning, and until the present Uruguay Round, Its competence was limport GATT. There have been proposals to ited to the physical exchange of raw materials and industrial goods. Agriturn GATT into an permanent organizacultural products and services were excluded.
tion, into an International Trade Organiza-
GATT's means of action are reductions in customs barriers and other tion.
obstacles to free trade, such as national standards for products — known as "non-tariif measures", GATT follows the doctrine of free exchange,
• Why is the US in the frontline of expressed in four principles:
this liberalization offensive?
1. Non-discrimination in trade. Each country applies to alf the GATT sig
BC: Because of their problems of comnatorles the customs regime applied to its most favoured trade partner petitiveness. Europe has become the lead-
(thus "most favoured nation status").
ing exporter of agricultural products. In
2. Reciprocity. Any modification of tariffs by one country is compensated for by changes in the tariffs of the countries which benefit from it.
electronics, Japan and the newly industrialized countries are making gains.
3. The forbidding of quantitative limits on imports (quotas).
4. The settlement of trade disputes.
• Can you give some examples of
The GATT has permitted a very important reduction in custors duties the opportunities opened up by ser-
- from an average of 35% to 3% between 1945 and 1987. This has lacilvice sector liberalization in the Third 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
World?
down to the miraculous effects of free trade. In practise, GATT's princi-
HH: Take the case of Argentine telecoms. The Menem government, when it ples 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 came to power, began to dismantle the important public sector. As soon as he that exclude Imports from competing countries, administrative obstacles, or bilateral agreements between countries - Japan for example restricts mentioned the privatization of the teleexports of cars and electronic microchips to the USA. Thus it is the balcoms sector, a dogfight began between the ance of forces that decides rather than the "rules" of free trade.
Spanish and Americans. The
The result of this situation is that, although 90% of worid trade is undersame was seen in Chile. There is a fantastaken by countries who have signed GATT, only about a third or a quarter tic need for capital outlets in the service of this trade Is conducted according to GATT's principles.
sector. The companies are especially par-
The Agreement is periodically reviewed or adjusted in the course of sotial to "captive markets".
called "rounds" of discussion. There have been seven of these rounds
In telecoms there are different systems.
since 1948. The eighth round, called the Uruguay Round after Punta del
If Alcatel buys the telecom in Argentina,
Este in Uruguay, where it started, is currently underway.
this is not only in order to get the profits
The Uruguay Round is different from previous rounds in that it has been from the use of the network, but also to discussing the extension of GATT to new product areas. This extension impose its whole product range on this has been demanded by the US which wants to add in;
market. If Argentina wants a unified tele-
• Services: banks, Insurance, tourism, telecommunications and so on.
communications system,
Alcatel products. The captive nature oi
• Intellectual property.
these markets also means the multination-
• Agriculture. - Alain Tondeur als can impose big price rises. And these days telecoms are on sale throughout the
• The main target of the liberalizais thus the semition offensive industrialized 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 threatens the complete market system destruction of already weak possibilities for rural development. The agroable to flood the businesses will be 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. *
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27 January 21, 1991 • #198 International Viewpoint