It forces one to wonder whether the attempt at consensus on trade rules has as much value as anticipated, and whether developing countries capacity to stall an agreement on international investment and trade is not an ineffective bargaining tool. Given the rapid pace of globalisation, the power to bargain seems much more effective if it is derived from improvements in local productivity and competitiveness.

UNEVEN TAXES

Ever since the Doha round in 2001, the developing countries have attempted, with justification, to use their influence at the bargaining table to highlight the inequities, and its consequences, that exist in trade arrangements. However, there continues to be a number of unresolved issues with no apparent resolution any time soon.

The issue of agricultural subsidies and tariffs were among the main agenda items discussed in Doha back in 2001. However, there is a perception that not much has been achieved since those discussions. This lack of progress has contributed to mistrust between both sets of countries and is making the concept of negotiating a challenging prospect.

To add to the difficulties, is the fact that trade relationships among countries within the developed world, are more favourable than the trading arrangements these continue to have with developing countries. Take taxes on imports as an example. It is reported that taxes imposed on imports from developing countries are four to five times higher than those imposed on trade between the developed countries. Take the case of exporting clothing from India to the United States. These garments attract a 19 per cent tax while clothing from countries like France and Germany into the US attract duty of between zero and one per cent.

Examples like the above add to the feeling of unfairness within the trading system and this only serves to sharpen the resolve of developing countries to hang tough to their demands to adjust these imbalances.

In the area of trade in agriculture, the inequalities are even more glaring. Currently, the developed countries spend more than US$1 billion a day on subsidies to their farmers, essentially allowing their output to be sold for less than what it costs to produce. For example, Europe produces sugar at approximately 300 per cent higher in costs than the developing country Malawi. However, European producers are able to survive because of Government subsidies.

The case is similarly made in regards to the USA. A case in point, America's 25,000 cotton farms receive more than $$3 billion a year in support. A commitment to talk armed with this knowledge the developing countries argue that all this makes it impossible for them to compete. And even though the U.S. has promised to cut agricultural tariffs by approximately 75 per cent over the next five years, their actions seem to contradict their expressed commitment to the trade negotiation.

For example, the 2002 farm bill in that country was not in keeping with a tariff reduction, but rather an increase in agricultural subsidies over the next decade, to the tune of US$82 billion. So the developing countries justifiable argue that in the area of agriculture, America verbally commits to a tariff reduction process, but seemingly acts in contradiction. With this awareness, these poorer countries are unlikely to yield to pressure from the developed world for any agreement that does not address this disparity. And so, the discussion is likely to continue, and the agreement timetable appears more distant.

NEGOTIATING PREFERENCE

Back in the Caribbean, regional leaders and negotiators seem clear on their position that small states are vulnerable to free trade and market liberalisation, under these conditions. While these countries argue for access to the developed markets, they equally argue for time and more favourable trade terms in order to protect their mostly traditional and vulnerable industries. There is some doubt, however, as to the extent to which smaller states can dictate or influence these negotiations. Sure they can prevent an agreement. However, can they stop global liberalisation? Hardly likely.

This leads to an important issue. Since developing countries were placed at the bargaining table, on equal footing as their larger more established trading partners, they have been given the power to prevent any unilateral agreement on the part of these larger developed markets, and have positioned themselves to use this power as a bargaining chip to negotiate. However, even with these voting rights they are unlikely to prevent the ongoing thrust towards international investment and trade. In fact, they increasingly encourage it through their efforts to do business with there larger more developed markets.

AN ECONOMIC QUANDARY

Developing countries face a major contradiction which they must reconcile in moving forward. There is a recognition that trade and investment liberalisation is necessary for them, particularly in a context where they are competing for international resources for their own economic survival. So they increasingly pursue local policies to open their borders to foreign investment and trade, in keeping with this major thrust towards business liberalisation, hoping that in the process they will achieve greater economic stability. However, in pursuing these policies of openness, these economies become increasingly dependent on their larger, more powerful trading partners, in a sense, making themselves more economically vulnerable because they are less able to negotiate trade and other investment terms. This is a Catch-22 situation but the reasons are clear.

In countries like Jamaica, where debt servicing is high on the agenda, and job creation is critical in moving forward, there is very little room to manoeuvre or negotiate with economically stronger nations about trade barriers. In these cases the most common concern is the stimulation of investment activity from any legitimate source or geographic origin. So even if our sugar is unable to gain access to the U.S. market, we can ill afford to prevent U.S. influence through investment and trade in Jamaica.

The fact is that, we are so closely linked to the US economy, and so dependent on this economy for our own economic progress, we are vulnerable to any planned or unplanned occurrences that restrict economic activities between both countries. So this is not the answer. Nor should we believe that trade will ever be truly free and fair.

ADDRESSING THE CHALLENGES

So in the end, trade liberalisation will take place with or without completion of the WTO rules of engagement and the sooner we recognise this fact, the better we are likely to be.

And given the pace at which globalisation is taking place, the longer it takes to secure rules based trade, the less effective are likely to be the poorer countries in securing a ideal agreement. In the meantime, countries must continue to exist and address the challenges which confront them.

The issue, therefore, is how we prepare for the inevitable, even while we attempt to carve out the best deal within the WTO. That inevitability is influenced by the need to build local competitiveness and productivity. In other words, putting our house in order so as a country, we become attractive for local and foreign investment opportunities and by extension, favourable trade opportunities.

For in this global paradigm, competitive advantages will only be gained by positioning yourself as an attractive investment prospect. For example, having an educated and trained population. In the final analysis, it is not free trade that will bring countries like Jamaica the greatest benefits. We should reflect and understand that in an ideal world, with free trade, access to markets no longer becomes an advantage, rather, our capacity to compete with other destinations that enjoy the same privileges but are more or less productive and prepared.

It is for this reason that I believe that too many developing countries are allowing themselves to be diverted from the more fundamental challenge of achieving international competitiveness, but rather depending on special privileges to penetrate international markets. Too much time is spent on calling for preferential privileges and too little time spent on working to improve governance towards boosting local competitiveness.

There is no doubt that the developed world, particularly Japan, the USA and the European Union, must adjust with greater urgency their practice of subsidising their producers, and restricting access to their markets. However, there is similarly no doubt that developing countries like Jamaica must move with even greater urgency to improve their own capacity to be competitive in the global marketplace.