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Dr Mohammad Al Asoomi, Special to Gulf News
Published: March 18, 2009, 23:21 The global financial crisis has underminded the ambitions of the World
Trade Organisation (WTO). After the liberalisation of commodities,
particularly readymade garments, and its impact on some Arab economies
who failed to compete with Asian manufacturers, opening up the service
sector has become uncertain.
A decade ago, the WTO was the third side of the "New World Order"
triangle, after the International Monetary Fund and the World Bank.
However, the global financial crisis has placed the whole World Order in
a corner. This has prompted most countries, including the European
Union, to call for reassessing the current financial order. The WTO is now in an unenviable position for many reasons: First, it is
a new organisation that has not established its fundamentals or
ambitious projects yet. Second, it was the first of the three
organisations to fall victim to the financial crisis. As the financial meltdown spread, several countries resorted to protect
their markets apart from their commitments towards WTO, whose future is
at stake. Developed countries that were enthusiastic about the
liberalisation of trade and free markets during the last 10 years were
the first to resort to old protectionist methods under the pretext of
the financial crisis and the increase in unemployment rates. On the other hand, some of the developing countries have not been
affected by the crisis because they were not members of the WTO in the
first place and were not part of the trade liberalisation. Yet other
developing countries remained committed to liberalisation because it is
in line with their policies. The question is how to tackle the issue of establishing a new global
financial and economic order. Another question is: what is the condition
of the three organisations, which seem to be suffering from structural
and organisational problems? And will countries around the world abide
by the new decisions? It is obvious that the rules of the current international institutions
have been overcome. Although developed countries called for abiding by
WTO's decisions on liberalisation, they took strong protectionist
measures after the financial crisis hit. They also imposed new restrictions on foreign imports to help support
their domestic products and curb the bankruptcy of their companies.
Within the same context, Britain's Prime Minister, Gordon Brown, warned
that the world is about to face great economic challenges, according to
a report published in the Times newspaper last January. He also called for replacing the concept of absolute free economy,
adopted by the UK over the last three decades, with a better philosophy.
He also said that the gravity of the crisis demands swift action. My suggestion here is to allow developing countries to take part in
laying down the foundations of a new world order in line with the last
G-20 summit, which called for giving developed countries a bigger say in
this matter. As the next G-20 summit is to be held in London next month, it would be
an important occasion to re-draw the map of the world's economic power
centres, especially with a number of developing countries such as Saudi
Arabia, Indonesia, Argentina, Brazil and India participating in this
conference. These countries adopt the agenda of developing countries,
which aim at increasing their contribution to laying the ground for new
international economic relations. Therefore, absolute free trade is not an option at present, especially
in the area of service trade. Financial establishments in developing
countries are currently unable to compete with those in developed
countries, neither financially, technologically, nor in the marketing
sector. In short, this simply means that the principals on which the WTO was set
up in 1995 may not suit many developing countries. Fair competition is
demanded, but appropriate circumstances have to be available to achieve
this goal. The writer is a UAE economic expert.
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