An inter-Arab advisory centre to help countries improve their negotiating powers in trade and tariff talks has been proposed by the Arab League, the Gulf News can reveal today.
The Arab Management Society has been given the job of drawing up the proposal in order to counteract the threat of negative impacts from the Gatt agreement.
Talal Abu-Ghazaleh, president of the Arab Management Society, said that the setting up of the economic body was recommended at a conference on free trade in goods and services in Beirut last April, under the patronage of Lebanon’s Premier Rafeeq Al Hariri.
The process was hurried along after Abu-Ghazaleh’s recent meeting with Arab League secretary general Esmat Abdul Meguid, who was very conscious of Gatt implications.
“He is also aware that no single Arab country will be capable of providing all the expertise required for negotiating the highly sophisticated agreement.” said Abu-Ghazaleh. “We will have greater leeway to maneuver if we are technically and legally equipped to do so.”
Abu-Ghazaleh also called for Arab resources to be combined to develop an Arab Free Trade Area in order to further boost the negotiating stand at individual nations and meet the challenges posed by other international economic blocs.
“The Arab world is also urged to abandon its justified or unjustified differences and take serious steps towards setting up the free trade area for the sake of its collective economic destiny,” he said.
Abu-Ghazaleh added that the Arab World is still assessing the various implications of the Gatt agreement. However, they are not in a position to discuss whether to join or not because its resolutions will have the same effect on non-members as members.
“Arab countries need to carry out a strategic reassessment of their economic structures and set up new goals under this new economic order,” he said.
But it was inevitable that the process of change will make developing countries and the Arab world pass through a difficult transition period, said Abu-Ghazaleh.
“Apart from the change in itself, we will also face open competition with the developed world, which is equal to us on the level of the agreement’s terms but is superior to us when it comes to economic competitive capabilities,” he said.
Abu-Ghazaleh said the two basic principles on which Gatt is built, Most Favoured Nation and National Treatment, could be unfair to Arab nations and developing countries.
The Most Favoured Nation principle says all members should be given the same treatment which any member gives to another except for free trade areas where barriers are lower than those under Gatt.
These areas include the European Union (EU) and the North American Free Trade Area (NAFTA), explained Abu-Ghazaleh.
“However, it remains to be seen whether the World Trade Organisation would agree to consider this region as a free trade area and enjoy EU and Nafta’s privileges in order to grant each other reciprocal privileges,” he said.
“If not, GCC countries, which currently enjoy privileges such as free movement without holding passports and economic unity, will have to be granted to worldwide countries and this could be extremely dangerous,” Abu-Ghazaleh said.
Abu-Ghazaleh said the principle of National Treatment under which every country should ensure free access of foreign products, services and rights to its market without unreasonable restrictive measures, is expected to cause serious implications as it prohibits nations giving subsidies to local industries to put their products in a better competitive position.
Abu-Ghazaleh added that the Trips treaty (Agreement on Trade Related Aspects of Intellectual Property Rights) also provides severe protection for the rights of owners but does not provide a mechanism for transfer of technology, except in broad general encouragement terms.
He also said the WTO is now studying several new agreements to which every member will be bound. These include labour rights and regulations which are supported by the U.S.
Abu-Ghazaleh said that the Gatt agreement, which he described as “a fact of life” means strict adherence to its terms and as such all countries will have to review their laws and regulations immigration, labour, education, entertainment, ownership of assets and shares, licensing of companies among others.
Abu-Ghazaleh said other serious implications lie in the fact that the WTO is given comprehensive authority over every aspect of economy and, unlike the UN, it also has power of legislation, execution, and judicial authority, making it look like a world economic state.
“As such, Gatt grants the WTO the right to enact new legislation to which all countries in the world must comply with and amend their legislations accordingly” he said.
It further resolves disputes through its disputes settlement system and it has the power to impose sanctions on violating countries.
Abu-Ghazaleh believes that it would have been better for the world to have established the WTO and Gatt simultaneously with the World Bank and the International Monetary Fund, as provided for under the Bretton Woods treaty signed by the allies after World War 2.
But the establishment of the WTO and Gatt took 50 years as the American Congress was initially against it.
However, the U.S. constitution which gave significance to international affairs, was the real power that outlined international trade policies with the congress at a later stage.
“The founding fathers of the US constitution believed that foreign trade was part of American interests, hence the ongoing U.S. emphasis on foreign trade takes precedence over any international issue, including security.” said Abu-Ghazaleh.