Mr. Talal Abu-Ghazaleh, Chairman of the Arab Society for the Protection of Industrial Property (ASPIP) and the Arab Society of Certified Accountants (ASCA), has emphasized that there is still a large number of obstacles that hinder liberalization of global trade.
In an interview with “Alhayat”, he considered the creation of the World Trade Organization (WTO) in Marrakech and the establishment of major economic blocs like the European Union and NAFTA in North America, to be a hindrance in reaching true liberalization of international trade. Other obstacles include the vast difference between rich and poor nations and the length of the transition period resulting from the “GATT” agreement.
Abu-Ghazaleh warned of excessive optimism on the possible feasible results that Arab states may garner from the agreement. He said that a major drawback of the agreement is its double standards. This is because at the time the agreement made trade liberalization a binding matter, it left the policy of technology transfer to be an optional procedure. Yet he asserted that joining the agreement was more feasible than boycotting it, pointing out that the decisions emanating from it are of a mandatory nature, regardless of the countries’ membership. He added that joining grants the opportunity for nations to participate and constantly be informed of the latest updates in the fields related to the agreement. It also gives any country a chance to express its opinion on any commercial or trade dispute.
Mr. Abu-Ghazaleh considered that the differences in Arab opinion on joining it go back to the variety of estimates related to its political and economic effects on each country, and the ability of each state to transform its economy to conform to trade liberalization on a more equal basis.
He stressed that Arab nations in the first phase have the task of settling their issues and developing their production sectors in parallel. He called for the formation of specialized administrative bodies in Arab countries to study all aspects of the agreement and its effects, in order to minimize its potential resulting damages and capitalizing on the opportunities it may provide. What follows here is the text of the interview:
The GATT (General Agreement on Tariffs and Trade) and the appearance of the WTO at this time in particular: What are the positive and negative aspects of this?
The emergence of the WTO onto the scene last April as an heir to the GATT is no coincidence. It is the result of a series of negotiations, the last of which was known as the Uruguay Round that lasted several years. It seems to me that from the beginning these negotiations were moving in a specified and clear path with the objective of liberalizing international trade. If we want to briefly explain what liberalization of international trade is, we can say that it is firstly a balance between the countries of the world in what border barriers they put in place before the goods and services of other nations. It also means a balance in what each country offers as far as support and protection of its local production sectors are concerned, in comparison with the support other countries provide to their sectors.
This means that the final outcome for implementing this system in an ideal format, is that the whole world becomes one big common market as if there are no borders between countries.
This is looking at things theoretically and ideally. But there are many difficulties and obstacles during implementation such as: Firstly, the existence of major economic blocs like the European Union and NAFTA for the three North American countries which are Canada, the USA and Mexico. A common market by definition is a geographical area that reduces or eliminates the barriers within it, in comparison with the barriers that surround it with the outside world. So it can be said that the idea of blocs and common markets can be an obstacle in the face of liberalizing international trade unless the whole world becomes a group of commercial blocs that can agree in the end on removing all barriers between each other. This is far-fetched due to the political and economic conditions of the developing world and the disparity in the conditions of its countries. These countries have a common element of needing to grow, yet are different in almost every other aspect.
The second major obstacle is embodied in the speed of advancement in the world’s developed nations and its slowness in the developing countries. This increases the gap between the two every day. Therefore, the ideal dream of creating an integrated world of free trade is hard to imagine in light of the underdevelopment in the larger part of the globe.
The third primary obstacle: It is true that liberalizing trade may in the end lead to the benefits of individuals worldwide as its leaders claim, but the transition phase which is long and hard will mean that weaker countries will face an increasingly difficult time. This is because they will have to open their markets to superior products without having competitive products in return that they can export. This may lead to weakening their ability to improve their production capabilities, especially because they may be prevented from providing support to their national product, and in most cases they simply cannot.
Due to all these hindrances, I see that there is a basic shortcoming in the agreement. While it makes liberalizing trade a mandatory issue, it left the policy on technology transfer an optional procedure without spelling out any balanced policies for this that are consistent with commercial liberalization.
You expect that the transition phase will be long and hard for developing countries, so how long do you think it will last?
The transition phase for many developing countries to reach a state of equilibrium with developed countries in mutual trade will be far off. This is because for this equilibrium to happen, we must envision all nations of the world with an acceptable national income and a balanced economy that can practice all types of commercial exchange. This requires a lot of optimism and imagination.
Why was Marrakech chosen in particular to declare the birth of the organization? Is it because the large nations with a vested interest in the creation of this organization want it to appear as if it is a demand of the third world countries?
The WTO is careful to take on the characteristic of internationalism and appear neutral and balanced when addressing the interests of the international community. Therefore, we see that the main tasks in it and all its departments and different sections focus on the role and significance of the developing nations. In addition to this, Morocco has a special location for the north and south of the world. We note that the world still is divided upon itself between North and South, after being divided between East and West.
What are the declared and non-declared goals of the WTO?
I see the declared and non-declared goals as being the same. There is nothing more clearly stated than the agreement’s declaration of its policy that aims to eliminate trade barriers between countries. What can be debated though is whether or not these objectives serve the interests of the advanced world only or the world as a whole. The difficult situation that may disrupt the balance even further, is that rich nations –in addition to being better able to compete- are also better at interacting with the agreement due to the efficiency of their technical apparatuses.
What is meant by its inevitability and is joining it mandatory for all of the world’s states?
Maybe this agreement is unique in the world as far as it being binding for both those who signed it and those who didn’t. This is because the agreement’s specifics can be summarized as follows:
1- The organization has legislative authority in all economic aspects and countries must revise their economic legislations to conform to the organization’s legislations.
2- The organization has the authority of monitoring and oversight on the extent to which countries adhere to those legislations.
3- The organization has the right to impose sanctions on countries that violate its system.
4- The organization has judicial apparatuses to settle disputes and issue binding judgments in relation to commercial practices.
All this applies to nations of the globe whether or not they signed the agreement, because if the organization issues a decision, state members must abide by it. If the decision has to do with a non-signatory state, it will find itself isolated facing all signatory states in regards to the decisions taken, which may result in all types of economic sanctions like boycott and others. Therefore, I see that the system is mandatory regardless of the membership of the state. So I think it is better for all countries to join the organization, especially now that it’s been signed by over 100 nations including the richest and most influential in the world. Through participation, countries will have the opportunity to constantly be informed and interact, and have a better chance at getting their point of view heard, without the excessive optimism that they will be able to change those decisions.
What is important to us is the Arab region, as it was noticed that there was an inconsistency in attitudes. At the time that the League of Arab States warned of the dangers of the agreement on the Arab region, we find that some Arab countries and particularly those in the Arab Gulf welcomed the agreement, and sought to join it. So how can we explain this?
The creation of the organization may be the best event in contemporary human history, if we look at it from the point of its idealistic goals and we assumed the independence of those involved in it. It will indeed be disastrous if it moved towards serving the interests of those powerful enough to control and move it. So as a reader of this situation, I cannot honestly judge it except by seeing its product.
As for the disparity in attitudes towards it, I don’t think this disparity is reflected in whether one joins it or not, as everyone is obliged by it and driven to it whether by joining it or not, or whether welcoming it or not.
If there is a difference of opinion, then this affects the region’s economy, and therefore its social and political conditions. This is because in our contemporary world economy has become the main umbrella that defines all political and strategic stances and considerations. Therefore, the effect of this agreement and the role of this organization will extend to all aspects of our daily lives, starting from tariffs to freedom of movement to systems of commercial and industrial activities and others.
In your opinion, what are the negative effects of this agreement on the region, and does the level of these effects vary from one Arab country to the next?
The effects will definitely vary according to the conditions of each country, not only in relation to the wealth and economic resources but also in relation to the social, scientific and political conditions. This is because a country that can transform itself at a greater speed than another country to an economy that is consistent with trade liberalization on an equal basis, will be in a better position than a country that has difficulty in conducting this transformation whether it be due to its administrative systems or social structure or economic capabilities.
Generally speaking, our region will no doubt find it necessary to sort out its affairs in the first phase, and open its markets to transfer goods and services while at the same time face the problem of developing its productive sectors. These are two opposing factors especially in light of preventing protection and the competition of superior imported products. This is especially true since “Economy of Scale” means increasing production in a particular plant means reducing the cost of a produced unit. So countries that can produce large quantities will be better able to compete than small plants in small nations.
It is hard to imagine the WTO coming into being in isolation of what’s going on in the Arab region especially in regards to the Arab-Israeli peace being executed. So to what extent can free trade be tied with peace in the region and what are the mutual effects on the two elements?
It is not realistic or fair to accuse the world order or the trade agreement or the WTO to have objectives when it comes to the aims of the Arab-Israeli peace. Yet surely the agreement will affect the nature of the economic relations in the region. So if we understand that the WTO works based on the concept of free trade regardless of the shape of the political system and political relations between countries and reaching an open world, and if we consider that Israel and the Arab nations are a part of this world, then it is natural to assume that implementing the agreement in the region will require lifting barriers between all countries of the region including Israel. It is here that the agreement is tied into peace.