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Monday, November 24, 2008

Negotiating Trade in Developing Countries!

When it comes to trade in the developing world and the negotiation of trade issues in particular, the process is often left up to a small and relatively non-commercial group of career politicians and public servants, who then attempt to negotiate on behalf of their respective countries for said best interests. Especially with countries who are new, or, looking to be a part of more bi-lateral agreements and, more importantly, regional trade agreements (RTA's), the personnel in the best position to negotiate soundly are few and far apart.

When we speak of negotiating on trade, one must automatically think of; trade in what? The two main components are goods and services. Goods is a rather straight forward issue to consider; fruits, vegetables, raw material etc. Services on the other hand, while it's a little more complex, basically boils down to; legal services, medical services, financial services etc... or, anything that does not involve making a sale of a particular product, but rather, the service rendered. While the goods aspect is relatively more cut and dry than that of services, the issue almost always centre's around the idea of the "sale" or "selling" either particular aspect. So, shouldn't it be that the persons, leading the charge in the negotiating process, be of a business background, who know more about sales and product promotion? This is not the case in many instances. Hence, the problem and the reason for this commentary.

Thus far, the negotiating machinery has been littered with persons, who have not been able to link the commercial industry to sound political and economic policy making. The main negotiators, as weird as it may sound, are persons with little or no international business or commercial background, and rather, career long civil service bureaucrats or politicians, who are mostly lawyers, who have little or no business experience or involvement at all. Developing countries are not the only countries suffering from an influx of public service bureaucrats and legal minded politicians to their trade negotiating machinery. However, they are the ones that suffer greatly due to the fact that their "intellectual elite", are comprised mainly of lawyers who make it due to family connections through some form of formal training and career bureaucrats, who follow the dictum of politicians and who have better access to education and training--at least on paper-- than does the average man on the streets. Most times, these negotiators, are the ones that are least interested on how the dynamics trade negotiations affect the private business sector--if they ever fully understand it at all. Truthfully, they have very little to lose, except for pride and have very little experience in international trade/cross border commercial activity matters, to the extent that their livelihood depended on it. So, they can afford to engender the loftiest of foreign policy goals, at the expense of a commercial sector they have no true intimate dealings with.

Recently, there has been an attempt to provide extensive training into and for persons, within the region, to learn more about trade and globalization and the international-political economy, but, in my view, not enough mass education of the persons om these issues who matter the most. Training a few persons, more often than not, works towards aggravating the persons who this issue affects the most, because, the persons with the training, will almost always be seen as outsiders, city-slickers or persons just not aware of the 'real' issues. This happens more often than not. A prophet, is hardly ever respected in his country. Just read the story of Jesus Christ. There are many of instances, where the gifted in certain areas, suffer because they cannot be understood for the value they bring to the issues. Its not jealousy or hatred of said persons, but people normally hate and fear what they cannot understand--especially if the person is "local" to their community. The issue further plays out as; "how dare 'you', tell 'us', little person, how to conduct our business?" This is what makes the top down policy approach, where larger international bodies and organizations, hand out policy directives to developing countries- with all good intentions- to follow this or else, appear to be a better solution for all!!! While the intentions may be from a good place, if it does not translate or affect the persons at the root and core level and policy fails to resonate or make sense at any level, this is not only a wasted effort, but, also, a dangerous economic gamble on the future of small economies, who need stability for their own specific design, rather than a blanket, one size fits all cookie cutter approach to economic policy which simply does not compute.

What does a developing country do, in order to bring more actors more closely affected by trade pacts? Well, it simply has to bring the business community on board. While the likelihood that the business community would most likely axe a deal which may be harmful to their advantage in their domestic markets, the likelihood of them moving on a deal that expands their commercial base, is equally enticing and hence, this is the reason for "negotiating".

My thing is- and not to sound overly simplistic in this article- the fact of the matter is is that we have to build the ties that are of equal and relevant importance, to our best efforts primarily and not to ever forget that. While I don't want to take for granted any efforts made by countries thus far to address this issue. The fact of the matter is is that too often, it is overlooked in detail and discussed vehemently, all at the same time.

So, where are we going with trade negotiations and the framework in which it operates in in the developing world? Well, we are going no where if we ignore it totally and bury our heads in the sand, and, we will be going backwards, if we do not get first best information from the business community-- especially industries that are globalized currently, or involved heavily in the import/export business.

What should happen, is that countries, should look into basic foundations for trade cooperation on a bi-lateral and issue for issue basis. Forget the wholesale, high reaching goals of the Caribbean Single Market and Economy (CSME) and the Economic Partnership Agreement (EPA) with the European Union and African and Pacific countries--even though the ship has apparently sailed in both and more importantly the latter, in serious regards. Just simply neglect the framework and work on individual bi-lateral country obligations. Not that it would in any way affect the outcome of the arbitrary panels of either organization, especially the EPA which is "WTO plus", but because you would be doing sound work for your domestic industries, which depend on governments- if they are going to be involved in the economic decision making process- to make the best possible decisions based on first best information from the folks the policy will affect the most. Its critical.

What we can do now, on our own, is instead of reaching too high with these agreements, trying to do everything in one swoop, in an effort to emulate the developed world-- which systems took decades to come to in regards to some form of common understanding on their trade practices-- we should in turn, rather, take these agreements and use it as a safe ground for bi-lateral negotiations within member countries as much as possible, using the organizations first hand information to guide our individual bi-lateral negotiations on specifically sensitive and most valued sectors of interest-- at least, in theory that sounds fair. But, the other issue is that many of these agreements- and in particular regards to the EPA- is that they are built on most-favoured nation (MFN) principles that negate any special preference to any other member over the other. In light of that and what I am suggesting in any event, is pointedly that the total formality of the agreement should be left out of the format of the practice of the framework, as much as possible. And, instead, it should be a vehicle for bringing more actors together to facilitate common understandings on bi-lateral issues which are workable.

For example, if there is a need for teachers in languages, in Barbados and, the Bahamas has an abundance in teachers in languages, but is in need of medical professionals and, Barbados has an over abundance of medical professionals, the governments of said countries, should work towards that regards and use the information, they should have--in regards to regulation and statistical and diplomatic information and resources on the level of the type of economic activities within their jurisdictions-- and then, lend support or awareness of the possibilities for a shared partnership on that level and from that premise, instead of trying to reach too high and too far, with agreements, which have no guidelines for shared economic understanding on any level. Basically, wasting time on negotiations and policy frameworks, which have no use to anyone at anytime, with little or no delineation for particular economies.

To be totally frank and to get my position on the matters of RTA's and the multi-lateral system out full and clear, is that it was a wasted effort if the business community does not have a credible, sound impact on the agreements. The cry was, in commercial sectors all over the developing countries involved with the EPA, is that they understood less about it, than they did/do know about the CSME. That's dangerous. And, it is a scary thought to imagine that the developing countries particularly involved with the World Trade Organization (WTO), who are currently involved with the EPA, are basically admitting to flying blindly in a globalized trade based world, despite their long standing involvement. That in itself is startling! While the agreement on the EPA was fair, and, unfair, in very different and particular aspects, to have it still yet again at the crux of my argument--lack of understanding on behalf of the folks who are affected the most--is an issue we can no longer ignore if we must play this game.

While there is no perfect agreement and certainly not a cookie cutter for any generalized framework of understanding, the basis for the agreement and the negotiations which prelude the agreement itself, can be sewed up more tightly, if serious considerations are taken into account for the commercial sector, already established globalized sectors and strengthening basic guidelines for partnerships on individual preferences.

Youri
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