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Less developed countries and market access for manufactured exports : North-South bargaining and the… Finlayson, Jock A. 1981

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LESS DEVELOPED COUNTRIES AND MARKET ACCESS FOR MANUFACTURED EXPORTS: NORTH-SOUTH BARGAINING AND THE QUEST FOR REFORM 1 B.A., U n i v e r s i t y o f B r i t i s h C o l u m b i a , 1978 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE THE FACULTY OF GRADUATE STUDIES Department o f P o l i t i c a l S c i e n c e We a c c e p t t h i s t h e s i s as c o n f o r m i n g t o t h e r e q u i r e d s t a n d a r d THE UNIVERSITY OF BRITISH COLUMBIA May 1981 J o c k A. F i n l a y s o n , 1981 by 'Jock A. F i n l a y s o n OF MASTER OF ARTS i n In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y a v a i l a b l e for reference and study. I further agree that permission for extensive copying of t h i s thesis for s c h o l a r l y purposes may be granted by the head of my department or by his or her representatives. I t i s understood that copying or pu b l i c a t i o n of t h i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of P o l i t i c a l S c i e n c e The University of B r i t i s h Columbia 2075 Wesbrook Place Vancouver, Canada V6T 1W5 Da t e O c t o b e r 2, 1 9 8 1 ABSTRACT This study examines the evolution of international negotiations between the developed and developing countries in connection with the attempts of the latter to obtain improved access to the markets of the rich industrial countries for exports of manufactured products. The primary focus is on the bargaining which has taken place in two distinct institu-tional settings—the General Agreement on Tariffs and Trade (GATT), and the United Nations Conference on Trade and Development (UNCTAD). Although the period covered by the study is the entire thirty-five years since the end of the Second World War, most of the discussion relates to the period since 1964, the year of UNGTAD's creation. In seeking to explain both the successes and failures of the developing countries in their efforts to obtain improved market access, use is made of several different analytical approaches currently employed by international relations scholars. A major concern of the study is to analyze how valuable or insightful these various approaches appear to be with respect to the particular case under examination here. Some schools of thought ascribe considerable bargaining power to relatively weak actors in international p o l i t i c s , but in case of manufactured exports the developing countries, who lack influence in this issue area, are shown to possess l i t t l e leverage in negotiating for better access to the markets of developed economies. It is the vulnerability and weakness of developing countries that must be stressed in seeking to portray how they are situated in relation to this important area of international p o l i t i c a l and economic relations. - i i i -TABLE OF CONTENTS Page A b s t r a c t i i L i s t o f T a b l e s v L i s t o f F i g u r e s v i i INTRODUCTION 1 Notes 4 CHAPTER ONE: NORTH-SOUTH POLITICAL ECONOMY 5 I A d d r e s s i n g t h e N o r t h - S o u t h Economic R e l a t i o n s L i t e r a t u r e 5 I I Dependency, I n t e r d e p e n d e n c e , and N o r t h - S o u t h Economic R e l a t i o n s 14 1. N o r t h - S o u t h R e l a t i o n s : The Dependency "Metaphor" 16 2. N o r t h - S o u t h R e l a t i o n s : The I n t e r d e p e n d e n c e "Metaphor" 25 I I I C o n c l u s i o n 39 Notes 41 CHAPTER TWO: THE STRUGGLE FOR MARKET ACCESS 49 I I n t r o d u c t i o n 49 I I Phase I : Import S u b s t i t u t i o n and N o r t h - S o u t h Trade R e l a t i o n s 52 - I n t r o d u c t i o n 52 - The C r e a t i o n o f GATT 54 - Trade B a r g a i n i n g and P o l i t i c a l I n f l u e n c e on GATT 58 - I n c r e a s i n g C o m p l a i n t s o f D e v e l o p i n g C o u n t r i e s 64 - A c t i v i t i e s i n t h e UN 72 - "Market D i s t r u p t i o n " : The Case o f C o t t o n T e x t i l e s 74 - C o n c l u s i o n 79 - i v -Page I I I Phase I I : T h i r d W o r ld M a n u f a c t u r e d E x p o r t s and t h e Reform o f I n t e r n a t i o n a l Economic Norms 79 - I n t r o d u c t i o n 79 - LDC M a n u f a c t u r e d E x p o r t s , 1964-73 An O v e r v i e w 82 - Trade B a r g a i n i n g and t h e Reform o f Norms and R u l e s 86 1. LDCs and Tra d e P r e f e r e n c e s 86 2. The T h r u s t Toward N o n r e c i p r o c i t y i n GATT 110 3. D e v e l o p i n g C o u n t r i e s and " D i f f e r e n t i a l T r e a t m e n t " i n t h e Use o f Trade B a r r i e r s 117 - C o n c l u s i o n 135 IV Phase I I I : The ^ ' P r o t e c t i o n i s t D r i f t " and T h i r d World M a n u f a c t u r e d E x p o r t s 136 - I n t r o d u c t i o n 136 - The R i s e o f P r o t e c t i o n i s m i n t h e N o r t h 137 - T e x t i l e s : A Case S t u d y o f P r o t e c t i o n i s m 145 - Trade B a r g a i n i n g i n GATT and UNCTAD 153 - LDC R e a c t i o n t o t h e Tokyo Round and UNCTAD V 166 - C o n c l u s i o n and Over v i e w 168 Notes 171 CHAPTER THREE: ANALYSIS 190 I I n t r o d u c t i o n 190 I I D e v e l o p i n g C o u n t r i e s and t h e B e n e f i t s o f Trade 192 1. The View From Dependency T h e o r y 192 2. The View From t h e I n t e r d e p e n d e n c e P e r s p e c t i v e 201 I I I D e v e l o p i n g C o u n t r i e s and B a r g a i n i n g Power i n t h e M a n u f a c t u r e d E x p o r t s I s s u e A r e a 207 1. S o u t h e r n B a r g a i n i n g Power: The Dependency Answer 208 2. B a r g a i n i n g Power and t h e I n t e r d e p e n d e n c e "Metaphor" 211 IV C o n c l u s i o n 227 Notes 228 SELECTED BIBLIOGRAPHY 235 - V -LIST OF TABLES 1 M a n u f a c t u r e d E x p o r t C a t e g o r i e s 2 Number o f T a r i f f Agreements E n t e r e d I n t o by LDCs at GATT C o n f e r e n c e s , 1947-61 3 E x p o r t s o f M a n u f a c t u r e s (SITC 5-8) 4 P r o d u c t C o m p o s i t i o n o f LDC E x p o r t s o f M a n u f a c t u r e s 5 E x p o r t s o f M a n u f a c t u r e s , 1963-73 6 P r o d u c t C o m p o s i t i o n o f LDC E x p o r t s o f M a n u f a c t u r e s , 1963-73 7 LDC E x p o r t s o f M a n u f a c t u r e s : V a l u e and Volume I n d i c e s 8 Average E f f e c t i v e and Nominal T a r i f f R a t e s on M a n u f a c t u r e s Imported by t h e I n d u s t r i a l C o u n t r i e s , 1964 9 E s t i m a t e d 1970 GSP Imports o f I n d u s t r i a l P r o d u c t s from M a j o r B e n e f i c i a r y LDC S u p p l i e r s 10 I n d i c a t i v e L i s t o f M a n u f a c t u r e s o f A p p a r e n t E x p o r t I n t e r e s t t o LDCs S u b j e c t t o Measures o f Import R e s t r a i n t i n Recent Y e a r s 11 OECD Imports o f T e x t i l e s from LDCs 12 LDC E x p o r t s o f T e x t i l e s and C l o t h i n g t o t h e I n d u s t r i a l C o u n t r i e s 13 OECD Imports o f T e x t i l e s and C l o t h i n g : Source o f Imports 14 LDC P r o p o s a l s t o S a f e g u a r d GSP M a r g i n s 15 D i f f e r e n t i a l Treatment i n Tokyo Round NTB Codes 16 Volume and V a l u e I n d i c e s f o r LDC E x p o r t s o f M a n u f a c t u r e s , 1973-76. - v i -17 P r o d u c t C o m p o s i t i o n o f LDC E x p o r t s o f M a n u f a c t u r e s i n L a t e 1970s 18 Shares o f LDCs i n World M a n u f a c t u r e s E x p o r t s 19 Importance o f LDCs as M a r k e t s f o r D e v e l o p e d C o u n t r i e s E x p o r t s o f M a n u f a c t u r e s 20 I m p l i c a t i o n s o f V a r i o u s Approaches t o Regime A n a l y s i s Employed by S t u d e n t s o f I n t e r d e p e n d e n c e and G l o b a l Reformers f o r LDC B a r g a i n i n g Power and O p p o r t u n i t i e s i n t h e Trade B a r r i e r / M a r k e t A c c e s s I s s u e A r e a - V l l -LIST OF FIGURES E x t e n t o f M u t a l i t y o f G a i n s From N o r t h - S o u t h Economic L i n k s Degree o f B a r g a i n i n g Power P o s s e s s e d by So u t h i n G l o b a l Economy INTRODUCTION F u t u r e h i s t o r i a n s may d e c i d e t o c h a r a c t e r i z e t h e decade o f t h e 1970s as a w a t e r s h e d i n t h e e v o l u t i o n o f modern i n t e r n a t i o n a l p o l i t i c s . D u r i n g t h a t p e r i o d , t h e g l o b a l agenda underwent a r e m a r k a b l e change and came t o be i n c r e a s i n g l y dominated by v a r i o u s problems a s s o c i a t e d w i t h g r o w i n g i n t e r n a t i o n a l economic i n t e r d e p e n d e n c e on t h e one hand and e s c a l a t i n g t e n -s i o n s i n r e l a t i o n s between t h e d e v e l o p e d c o u n t r i e s ( t h e N o r t h ) and t h e d e v e l o p i n g w o r l d ( t h e S o u t h ) . Some s c h o l a r s , t a k i n g s t o c k o f t h e t r a n s f o r m a t i o n i n n o t o n l y t h e g l o b a l agenda o f i s s u e s but a l s o t h e t o p i c s and i n t e r e s t s o f academic s t u d e n t s o f i n t e r n a t i o n a l a f f a i r s , wondered whether a l l t h i s d i d n ' t s i g n i f y t h e dawn o f a "new i n t e r n a t i o n a l p o l i t i c s . " ^ D e t e r i o r a t i n g superpower r e l a t i o n s i n t h e l a t e 1970s and a renewed c o n c e r n w i t h m i l i t a r y a s p e c t s o f i n t e r n a t i o n a l r e l a t i o n s s e r v e d t o warn s c h o l a r s and s t a t e s m e n t h a t i t would be p r e m a t u r e t o d i s c a r d t h e a n a l y t i c a l and c o n c e p t u a l approaches t o t h e s t u d y o f w o r l d p o l i t i c s d e v e l o p e d i n t h e 1950s and 1960s. Y e t t h e r e can be l i t t l e doubt t h a t a r e d e f i n i t i o n o f what q u e s t i o n s and t o p i c s a r e worthy o f e x a m i n a t i o n by a n a l y s t s o f i n t e r n a t i o n a l p o l i t i c s i s a l e g a c y o f t h e decade j u s t p a s t . Among t h e most s i g n i f i c a n t r e s u l t s o f t h i s t r e n d has been t h e r a p i d growth o f s e v e r a l i n t e r e s t i n g l i t e r a t u r e s d e a l i n g w i t h v a r i o u s a s p e c t s o f t h e " p o l i t i c a l economy" o f N o r t h - S o u t h r e l a t i o n s . I n t h e p a s t few y e a r s a l a r g e number o f s t u d i e s have appeared w h i c h a d d r e s s such N o r t h - S o u t h i s s u e s as commodity s t a b i l i z a t i o n schemes, d e b t r e l i e f f o r t h e T h i r d W o r l d , - 2 -use and c o n t r o l o f t h e r e s o u r c e s o f t h e oceans, and t h e r o l e o f m u l t i -n a t i o n a l c o r p o r a t i o n s i n h o s t d e v e l o p i n g c o u n t r i e s . I n t h i s s t u d y , a c r i t i c a l l y i m p o r t a n t N o r t h - S o u t h i s s u e t h a t has r e c e i v e d r a t h e r l i t t l e r e c o g n i t i o n i n most o f t h e c u r r e n t l i t e r a t u r e - - a c c e s s t o t h e markets o f N o r t h e r n economies f o r e x p o r t s o f m a n u f a c t u r e d p r o d u c t s from t h e d e v e l o p i n g c o u n t r i e s - - i s examined i n some d e t a i l . S e v e r a l r e a s o n s j u s t i f y s e l e c t i o n o f t h i s p a r t i c u l a r i s s u e from among t h e many i m p o r t a n t ones on t h e N o r t h -S o u t h agenda. F i r s t , improved a c c e s s f o r t h e i r e x p o r t s o f m a n u f a c t u r e s t o t h e N o r t h i s seen as an i n c r e a s i n g l y c r i t i c a l i s s u e by a g r o w i n g number o f d e v e l o p i n g c o u n t r i e s . S i n c e t h e e c l i p s e o f t h e f o r m e r development o r t h o d o x y o f i m p o r t s u b s t i t u t i o n i n d u s t r i a l i z a t i o n , more and more T h i r d W o r l d c o u n t r i e s have come t o r e g a r d t h e e x p o r t i n g o f m a n u f a c t u r e s t o t h e N o r t h as a key element i n t h e i r development s t r a t e g y . A n o t h e r r e a s o n f o r e x a m i n i n g t h i s p a r t i c u l a r i s s u e i s t h a t most academic e x p e r t s and N o r t h e r n governments r e c o g n i z e t h a t m u t u a l i n t e r e s t s can be s e r v e d by l i b e r a l i z i n g a c c e s s f o r m a n u f a c t u r e d p r o d u c t s e x p o r t e d by t h e S o u t h . S p e c i f i c a l l y , w h i l e c e r t a i n i m p o r t - c o m p e t i n g s e c t o r s and i n t e r e s t groups may be harmed by an e x p a n s i o n o f e x p o r t s from d e v e l o p i n g c o u n t r i e s ( o r e l s e w h e r e f o r t h a t m a t t e r ) , N o r t h e r n economies as a whole may g a i n by v i r t u e o f l o w e r p r i c e s f o r i m p o r t e d p r o d u c t s compared w i t h p r o t e c t e d d o m e s t i c p r o d u c t s and 2 t h r o u g h more e f f i c i e n t d o m e s t i c r e s o u r c e a l l o c a t i o n . Thus a p e r c e p t i o n o f m u t u a l i n t e r e s t s has e x i s t e d d u r i n g t h e b a r g a i n i n g o v e r market a c c e s s t h a t i s d i s c u s s e d l a t e r i n t h e s t u d y . F i n a l l y , e x a m i n a t i o n o f T h i r d W o r l d e f f o r t s t o f u r t h e r and p r o t e c t t h e i r i n t e r e s t s i n w o r l d m a n u f a c t u r e s t r a d e p r o v i d e s an o p p o r t u n i t y t o compare and e v a l u a t e c r i t i c a l l y some o f t h e v a r i o u s approaches t o t h e s t u d y - 3 -o f N o r t h - S o u t h p o l i t i c a l economy t h a t have r e c e n t l y d e v e l o p e d . S e l e c t i o n o f t h i s N o r t h - S o u t h i s s u e seems e s p e c i a l l y a p p r o p r i a t e g i v e n t h a t manu-f a c t u r e d e x p o r t s a r e i n c r e a s i n g l y p e r c e i v e d t o be t h e c u t t i n g edge o f T h i r d W o r ld i n d u s t r i a l i z a t i o n and economic development more g e n e r a l l y . What v a r i o u s s c h o o l s o f th o u g h t have t o say about d e v e l o p i n g c o u n t r i e s ' e f f o r t s t o improve t h e i r p o s i t i o n i n t h e i n t e r n a t i o n a l d i v i s i o n o f l a b o r h i g h l i g h t s t h e c o n t r a s t i n g i n t e l l e c t u a l a s s u m p t i o n s and w o r l d - v i e w s t h a t u n d e r l i e v a r i o u s a n a l y t i c a l and i d e o l o g i c a l t r a d i t i o n s . T h i s s t u d y c o n s i s t s o f t h r e e c h a p t e r s , and each has a d i s t i n c t t a s k t o p e r f o r m . The f i r s t c h a p t e r a t t e m p t s t o s u r v e y and c l a s s i f y t h e d i v e r s e l i t e r a t u r e on N o r t h - S o u t h r e l a t i o n s and p o l i t i c a l economy i n o r d e r t o d e t e r m i n e t h e e s s e n t i a l f e a t u r e s o f v a r i o u s approaches t o t h e s u b j e c t . C h a p t e r Two t h e n p r o v i d e s a l o n g and q u i t e d e t a i l e d t r e a t m e n t o f t h e e f f o r t s o f t h e l e s s d e v e l o p e d c o u n t r i e s (LDCs) t o improve t h e i r p o s i t i o n i n t h e i n t e r n a t i o n a l t r a d e system. Here t h e f o c u s i s on t h e b a r g a i n i n g t h a t has gone on w i t h i n i n t e r n a t i o n a l i n s t i t u t i o n s c o n c e r n e d w i t h t r a d e - - a n d e s p e c i a l l y t r a d e b a r r i e r - - m a t t e r s . A s u r v e y o f t h e c h a n g i n g c o m p o s i t i o n and volume o f LDC m a n u f a c t u r e d e x p o r t s d u r i n g t h e p o s t w a r p e r i o d i s a l s o o f f e r e d i n t h i s c h a p t e r . F i n a l l y , t h e t h i r d c h a p t e r r e f l e c t s back on t h e p o l i t i c a l economy l i t e r a t u r e s u r v e y e d i n t h e f i r s t i n l i g h t o f t h e p a t t e r n s o f e v e n t s and outcomes i n t h e m a n u f a c t u r e d e x p o r t s i s s u e a r e a . A c r i t i c a l e v a l u a t i o n o f t h e s e v e r a l s c h o o l s o f t h o u g h t i s r e a l l y o n l y p o s s i b l e t h r o u g h e x a m i n a t i o n o f " r e a l w o r l d " e x p e r i e n c e ; t h i s s t u d y seeks t o f o r c e them t o c o n f r o n t t h e r e c o r d i n a v e r y i m p o r t a n t a r e a o f contemporary N o r t h -S o u t h r e l a t i o n s . - 4 -Notes 1. K. J . H o l s t i , "A New I n t e r n a t i o n a l P o l i t i c s ? D i p l o m a c y i n Complex I n t e r d e p e n d e n c e , " I n t e r n a t i o n a l O r g a n i z a t i o n 32 ( S p r i n g 1978): 513. 2 T h i s i s t h e c o n v e n t i o n a l argument, o r p a r t o f t h e argument, i n f a v o r o f f r e e t r a d e g e n e r a l l y o f f e r e d by l i b e r a l e c o n o m i s t s . T h e i r v i e w s w i l l be s u r v e y e d i n more d e t a i l i n t h e f i r s t c h a p t e r . F o r a s t r o n g s t a t e m e n t o f t h e v i e w t h a t N o r t h and South have mutu a l i n t e r e s t i n s o f a r as t h e m a n u f a c t u r e d e x p o r t s i s s u e a r e a i s c o n c e r n e d , see Roger Hansen, "Trade, t h e D e v e l o p i n g C o u n t r i e s , and N o r t h - S o u t h R e l a t i o n s , " i n Hansen e t a l , T a r i f f s , Q u o t a s , and T r a d e : The P o l i t i c s o f P r o t e c t i o n i s m (San F r a n c i s c o : I n s t i t u t e f o r Contemporary S t u d i e s , 1979). - 5 -CHAPTER ONE NORTH-SOUTH POLITICAL ECONOMY I . A d d r e s s i n g t h e N o r t h - S o u t h Economic R e l a t i o n s L i t e r a t u r e The decade o f t h e 1970s w i t n e s s e d t h e development and r e f i n e m e n t o f s e v e r a l i n t e r e s t i n g l i t e r a t u r e s d e a l i n g w i t h v a r i o u s a s p e c t s o f t h e p o l i t i c a l economy o f r e l a t i o n s between t h e i n d u s t r i a l i z e d c a p i t a l i s t c o u n t r i e s ( the N o r t h ) and t h e l e s s d e v e l o p e d o r T h i r d World c o u n t r i e s ( t he LDCs o r t h e S o u t h ) . I n p a r t , t h e growth o f s c h o l a r l y i n t e r e s t i n N o r t h - South economic r e l a t i o n s stemmed f r o m a b e l i e f t h a t economic m a t t e r s more g e n e r a l l y were becoming much more i m p o r t a n t i n w o r l d p o l i t i c s . " ^ A l s o c o n t r i b u t i n g t o t h e i n c r e a s i n g p o p u l a r i t y o f N o r t h - S o u t h economic i s s u e s as t o p i c s f o r i n v e s t i g a t i o n was t h e w i d e s p r e a d p e r c e p t i o n , s h a r e d by b o t h M a r x i s t and many l i b e r a l a n a l y s t s , t h a t g l o b a l i n e q u a l i t y and p o v e r t y were n o t b e i n g remedied by t h e o p e r a t i o n o f t h e i n t e r n a t i o n a l economy. These two i n t e l l e c t u a l t e n d e n c i e s t o g e t h e r h e l p e d t o g e n e r a t e an enormous o u t -p o u r i n g o f arguments, t h e o r i e s and p r e s c r i p t i o n s on N o r t h - S o u t h p o l i t i c a l and economic p r o b l e m s . How t o c a t e g o r i z e t h i s v a r i e d l i t e r a t u r e p oses s e v e r a l d i f f i c u l t i e s f o r t h e s t u d e n t o f " i n t e r n a t i o n a l p o l i t i c s . S i n c e much o f i t mixes p r e s -c r i p t i o n w i t h a n a l y s i s , i t i s o f t e n d i f f i c u l t t o know whether a p a r t i c u l a r s c h o l a r ' s argument i s based p r i m a r i l y on a d e t a c h e d a n a l y s i s o f N o r t h - S o u t h economic r e l a t i o n s o r , a l t e r n a t i v e l y , on a more n o r m a t i v e c o n c e p t i o n o f how 2 t h e s e r e l a t i o n s ought t o e v o l v e . A more s e r i o u s p r o b l e m stems from t h e - 6 -marked diversity of conceptual approaches, ideologies, and research methodologies employed by the several groups of scholars who have contri-buted to these literatures. This intellectual heterogeneity makes i t impossible to discern any significant degree of consensus in the writings on North-South p o l i t i c a l economy, and thus the articulation of a "synthetic" perspective is precluded. At best, certain distinctive and competing schools of thought can be identified. Fortunately, a number of p o l i t i c a l scientists have endeavored to come to grips with and classify the vast literature on contemporary North-South issues. R.D. Walleri identifies four "major approaches to the study of international p o l i t i c a l economy in general," and North-South p o l i t i c a l 3 economy in particular. These four approaches, or schools, differ both analytically and prescriptively in the way they address what Walleri calls the central "dilemma" of North-South relations—the simultaneous develop-ment of "increasing global interdependence" and "increasing inequality 4 between and within nations." A belief in the efficacy of the market as a mechanism of resource allocation characterizes the liberal approach. According to Walleri, liberal analysts exhibit a basic faith in the market in regard to both the domestic economic development of LDCs and their external economic strategies. The view that domestic inequality is a secondary problem to that of capital accumulation—the "trickle-down" theory of economic development—" has i t s counterpart in the liberal analysis of international equality": Liberal international economic theory remains grounded in the law of comparative advantage and continues to promote the doctrine of free trade. Combined with the unrestricted move-ment of capital, free trade would maximize world production - 7 -t h r o u g h o p t i m a l e f f i c i e n c y i n r e s o u r c e a l l o c a t i o n . Any m a l d i s t r i b u t i o n r e s u l t i n g from g l o b a l economic t r a n s -a c t i o n s , c o n d u c t e d a c c o r d i n g t o l i b e r a l p r i n c i p l e s , i s c o n s i d e r e d t o be o n l y minor.5 Most Western i n t e r n a t i o n a l and development e c o n o m i s t s can be a s s o c i a t e d w i t h t h e l i b e r a l s c h o o l . W a l l e r i a l s o p l a c e s Nye and Keohane, Morse, and o t h e r p o l i t i c a l s c i e n t i s t s i n t h i s t r a d i t i o n . ^ Most o f t h e s e s c h o l a r s a d v o c a t e " f u r t h e r i n c o r p o r a t i o n and i n t e g r a t i o n o f t h e T h i r d World c o u n t r i e s i n t o t h e g l o b a l economy" as t h e most e f f e c t i v e way t o enhance 7 development; many a l s o s u g gest t h a t t h e o p t i m a l p a t h o f " r e f o r m " o f t h e i n t e r n a t i o n a l economy i n v o l v e s i m p r o v i n g t h e o p e r a t i o n o f t h e market so t h a t g i t more c l o s e l y a p p r o x i m a t e s t h e l i b e r a l economic model. A d i f f e r e n t a p p roach t o i n t e r n a t i o n a l p o l i t i c a l economy i s e v i d e n c e d by s c h o l a r s s y m p a t h e t i c t o an economic n a t i o n a l i s t / m e r c a n t i l i s t p e r s p e c t i v e . A c c o r d i n g t o t h i s v i e w , n a t i o n a l economic development f o r T h i r d W o r l d c o u n t r i e s r e q u i r e s s t i f f p r o t e c t i v e t r a d e b a r r i e r s t o f o s t e r i n d i g e n o u s i n d u s t r i a l i z a t i o n and a s t r o n g s t a t e r o l e i n t h e economy. W a l l e r i n o t e s t h a t Germany's economic development i n t h e n i n e t e e n t h c e n t u r y , as w e l l as t h e h i s t o r y o f A m e r i c a n and Japanese i n d u s t r i a l i z a t i o n , a l l p r o v i d e some s u p p o r t f o r t h e economic n a t i o n a l i s t t h e s i s . Many L a t i n A m erican s t a t e s , u nder t h e i n f l u e n c e o f R a u l P r e b i s c h o f t h e UN Economic Commission f o r L a t i n A m e r i c a , e x p e r i m e n t e d w i t h economic n a t i o n a l i s t development s t r a t e g i e s 9 d u r i n g t h e 1950s. A t p r e s e n t , few w r i t e r s a n a l y z e N o r t h - S o u t h i s s u e s from t h i s p e r s p e c t i v e . W a l l e r i terms t h e t h i r d a p p r o a c h t o N o r t h - S o u t h p o l i t i c a l economy " i n t e r n a t i o n a l i s m . " L i k e t h e economic n a t i o n a l i s t s c h o o l , a n a l y s t s a s s o -c i a t e d w i t h t h i s p e r s p e c t i v e a r e c r i t i c a l o f t h e l i b e r a l model and i t s a t t e n d a n t p r e s c r i p t i o n s . They seek t o r e d u c e i n t e r n a t i o n a l i n e q u a l i t y by - 8 -p r o m o t i n g g l o b a l market i n t e r v e n t i o n i n o r d e r t o p r o v i d e a b e t t e r b a r g a i n i n g p o s i t i o n f o r LDCs, s i n c e i t i s argued t h a t t h e u n r e g u l a t e d market i s f a r more d e t r i m e n t a l i n i t s e f f e c t s on t h e South t h a n i s b e l i e v e d by t h e l i b e r a l s c h o o l . C r e a t i o n o f i n t e r n a t i o n a l o r g a n i z a t i o n s and regimes h i g h l y s e n s i -t i v e t o t h e needs and problems f a c i n g t h e South i s a c e n t r a l p r e s c r i p t i o n o f t h i s s c h o o l , w h i c h i n c l u d e s b o t h p o l i t i c a l s c i e n t i s t s ( e . g . G o s o v i c ) and e c o n o m i s t s (e. g . M y r d a l ) . These a n a l y s t s a r e i n e f f e c t a d v o c a t i n g r e f o r m o f t h e i n t e r n a t i o n a l economic system t h r o u g h e x t e n s i v e market i n t e r v e n t i o n u nder t h e a e g i s o f s t r e n g t h e n e d i n t e r n a t i o n a l and r e g i o n a l i n s t i t u t i o n s . The t y p e and e x t e n t o f r e f o r m s t h e y seek a r e q u a l i t a t i v e l y d i f f e r e n t t h a n t h o s e s t r e s s e d by l i b e r a l a n a l y s t s , but l i k e t h e l a t t e r t h e y b e l i e v e t h a t t h e South can (and r e a l l y has no c h o i c e but t o ) mature e c o n o m i c a l l y t h r o u g h c o n t i n u e d p a r t i c i p a t i o n i n t h e N o r t h e r n - d o m i n a t e d g l o b a l economy. The r e c e n t r e p o r t o f t h e s o - c a l l e d " B r a n d t Commission" s h o u l d be l o c a t e d w i t h i n t h i s t r a d i t i o n , s i n c e i t embraces s e v e r a l d i s t i n c t l y " i n t e r v e n t i o n i s t " s t r a t e g i e s i n t h e s e a r c h f o r s o l u t i o n s t o T h i r d World economic p r o b l e m s . ^ W a l l e r i s u g g e s t s t h a t t h e l a s t a p p r o a c h t o t h e s t u d y o f N o r t h - S o u t h p o l i t i c a l economy i n c o r p o r a t e s b o t h e a r l i e r M a r x i s t and c u r r e n t dependency t h e o r i e s . Dependency t h e o r y emerged i n t h e wake o f t h e f a i l u r e o f o r i g i n a l M a r x i s t a n a l y s i s t o a c c o u n t f o r what i s p e r c e i v e d t o be a p e r s i s t i n g a l l i a n c e between t h e S o u t h e r n b o u r g e o i s i e and i n t e r n a t i o n a l c a p i t a l i s m , w h i c h a l l i a n c e e x p l a i n s t h e i m p o s s i b i l i t y o f g enuine " n a t i o n a l i s m " and " a n t i -i m p e r i a l i s m " among LDC m i d d l e c l a s s e s . ^ A l t h o u g h t h e r e a r e s i g n i f i c a n t d i f f e r e n c e s among s c h o l a r s grouped under t h e dependency l a b e l , t h e y a l l t e n d t o : 1) p o r t r a y T h i r d World s t a t e s as b a s i c a l l y i n t e g r a t e d i n t o an i n t e r -n a t i o n a l c a p i t a l i s t s y s t e m w h i c h c o n s i g n s them t o t h e l e a s t r e w a r d i n g and - 9 -l e a s t p r o f i t a b l e economic t a s k s ( e x p o r t i n g raw m a t e r i a l s , p r o d u c i n g m a n u f a c t u r e s w i t h low amounts o f v a l u e added, e t c . ) ; and 2) argue t h a t economic s u r p l u s i s c h a n n e l e d , " v i a t r a d e , i n v e s t m e n t and o t h e r economic l i n k a g e s , from t h e South ( t h e " p e r i p h e r y " ) t o t h e N o r t h ( t h e " c o r e " ) , o f t e n w i t h t h e h e l p o f m u l t i n a t i o n a l c o r p o r a t i o n s . Many d e p e n d e n c i a a n a l y s t s a d v o c a t e s o c i a l i s t r e v o l u t i o n among t h e LDCs and t h e i r disengagement from t h e c a p i t a l i s t i n t e r n a t i o n a l d i v i s i o n o f l a b o r . A somewhat d i f f e r e n t c l a s s i f i c a t o r y scheme i s put f o r w a r d by Rob e r t 12 Cox. I n e x a m i n i n g r e c e n t l i t e r a t u r e d e a l i n g w i t h LDCs' e f f o r t s t o c r e a t e a comprehensive new i n t e r n a t i o n a l economic o r d e r , Cox d e t e c t s f i v e d i s t i n c t " o p i n i o n c l u s t e r s " - - a n e s s e n t i a l l y l i b e r a l " e s t a b l i s h m e n t p e r s p e c -t i v e " ; a r e f o r m i s t " s o c i a l democrat v a r i a n t o f t h e e s t a b l i s h m e n t v i e w , " w h i c h s h a r e s w i t h t h e l a t t e r "a b a s i c commitment t o . . . a w o r l d economy w i t h r e l a t i v e l y f r e e movement o f c a p i t a l , goods, and t e c h n o l o g y " ; an i n d i g e n o u s T h i r d W o r l d p e r s p e c t i v e t h a t encompasses d i v e r s e v i e w p o i n t s b u t i s b a s i c a l l y r e f o r m i s t w i t h r e g a r d t o c u r r e n t N o r t h - S o u t h economic r e l a t i o n s ; a " n e o - m e r c a n t i l i s t " p e r s p e c t i v e w h i c h c o n t a i n s b o t h r i g h t - and l e f t - w i n g v a r i a n t s ; and an " h i s t o r i c a l m a t e r i a l i s t c u r r e n t o f t h o u g h t " t h a t i n c l u d e s 13 t h e v a r i o u s n e o - M a r x i s t dependency a p p r o a c h e s . Cox's c a t e g o r i z a t i o n o f t h e p o l i t i c a l economy l i t e r a t u r e i s somewhat u n i q u e i n t h a t he d i s t i n g u i s h e s between an " A m e r i c a - F i r s t " s c h o o l o f neo-14 m e r c a n t i l i s m , r e p r e s e n t e d by Rob e r t T u c k e r , and a more r a d i c a l s c h o o l w h i c h s t r e s s e s (and a p p l a u d s ) t h e d e c l i n e o f American hegemony and t h e growth o f West European and T h i r d W o r l d economic independence from t h e U n i t e d S t a t e s . However, one i s e n t i t l e d t o doubt whether " r i g h t - w i n g neo-m e r c a n t i l i s m " can be s a i d t o c o n s t i t u t e a d i s t i n c t a p p roach t o N o r t h - S o u t h p o l i t i c a l economy, s i n c e o n l y a s i n g l e a u t h o r (Tucker) i s i d e n t i f i e d as - 10 -f a l l i n g under t h i s r u b r i c . M o r e o ver, Cox h i m s e l f seems t o s u g g e s t t h a t T u c k e r ought t o be p l a c e d i n t h e l i b e r a l e s t a b l i s h m e n t camp when he l a b e l s T u c k e r a p roponent o f " o l d l i b e r a l i s m , " " ^ w h i c h a f t e r a l l b e a r s a c l o s e r e s e m b lance t o t h e p e r s p e c t i v e o f most e s t a b l i s h m e n t e c o n o m i s t s ( e . g . , Cooper, B e r g s t e n , B h a g w a t i ) . A l s o c u r i o u s i s Cox's t h i r d " o p i n i o n c l u s t e r , " t h e i n d i g e n o u s T h i r d W o r ld p e r s p e c t i v e . He i n c l u d e s i n t h i s c a t e g o r y b o t h r e f o r m i s t and n e o - M a r x i s t T h i r d World s c h o l a r s whose a n a l y t i c a l and p r e s -c r i p t i v e p o i n t s o f d e p a r t u r e d i f f e r m a r k e d l y . I t seems more s e n s i b l e t o p l a c e a s c h o l a r l i k e Mahbub u l Haq, who Cox d i s c u s s e s e x t e n s i v e l y , w i t h i n t h e " s o c i a l - d e m o c r a t i c r e f o r m i s t " t r a d i t i o n , s i n c e i t i s c l e a r t h a t Haq f a v o r s r e f o r m o f t h e g l o b a l economy, a l b e i t f a i r l y e x t e n s i v e i n n a t u r e , r a t h e r t h a n t h e r e v o l u t i o n a r y - d i s e n g a g e m e n t s t r a t e g y a d v o c a t e d f o r i n t h e S outh by t h e dependency s c h o o l . "^ R a d i c a l T h i r d World s c h o l a r s more p r o p e r l y b e l o n g i n t h e h i s t o r i c a l m a t e r i a l i s t " o p i n i o n c l u s t e r . " I n e x a m i n i n g t h e s e v a r i o u s a t t e m p t s t o come t o g r i p s w i t h t h e b u r g e o n i n g l i t e r a t u r e on i n t e r n a t i o n a l p o l i t i c a l economy, i t i s i m p o r t a n t t o r e c o g n i z e t h a t t h e "models," " s c h o o l s , " and " a p p r o a c h e s " s u g g e s t e d by W a l l e r i , Cox and o t h e r s are meant t o i m p l y o n l y a g e n e r a l o r i e n t a t i o n on t h e p a r t o f s c h o l a r s grouped under t h e s e l a b e l s . I n d i v i d u a l s o f t e n e x h i b i t v i e w s d i f f i c u l t t o c a t e g o r i z e i n t h i s way. S t i l l , i t i s b o t h u s e f u l and l e g i t i m a t e t o engage i n an e f f o r t t o c l a s s i f y t h e many p o i n t s o f v i e w found i n t h e l i t e r a t u r e under a s m a l l number o f h e a d i n g s . As R o b e r t G i l p i n has commented i n r e g a r d t o t h e i n t e r n a t i o n a l p o l i t i c a l economy l i t e r a t u r e : • Each model c o n s t i t u t e s an i d e a l t y p e . Perhaps no one i n d i v i d u a l would s u b s c r i b e t o each argument made by any one p o s i t i o n . Y e t t h e t e n d e n c i e s and a s s u m p t i o n s a s s o c i a t e d w i t h each p e r c e p t i o n . . . a r e r e a l enough; t h e y have a p r o f o u n d - 11 -i n f l u e n c e on p o p u l a r , academic, and o f f i c i a l t h i n k i n g on t r a d e , monetary, and investment problems.17 In o r d e r t o a c q u i r e a g e n e r a l sense o f how t h e s e d i v e r s e approaches t o North-South p o l i t i c a l economy d i f f e r from one an o t h e r , the assumptions made by v a r i o u s c o n t r i b u t i n g s c h o l a r s r e g a r d i n g m a t t e r s o f c r i t i c a l i m p o r t -ance f o r North-South r e l a t i o n s warrant c l o s e s c r u t i n y . In p a r t i c u l a r , the answers p r o v i d e d by ( o r assumed by) t h e s e s c h o o l s t o two c e n t r a l q u e s t i o n s s h o u l d be s t r e s s e d : 1) Are economic t r a n s a c t i o n s and l i n k a g e s between the c a p i t a l i s t N o r t h and t h e LDCs m u t u a l l y b e n e f i c i a l ? I f so, t o what degree? 2) Given t h e i r c u r r e n t l y e x t e n s i v e i n t e g r a t i o n i n t o the N o r t h e r n -dominated i n t e r n a t i o n a l c a p i t a l i s t economy, how much b a r g a i n i n g power does the South e n j o y v i s - a - v i s t h a t economic system and N o r t h e r n governments? One way o f p o r t r a y i n g the r e l a t i o n s h i p s among t h e s e competing s c h o o l s i s t o c o n c e i v e o f them as a r r a y e d a l o n g a continuum a c c o r d i n g t o the answers t h e y p r o v i d e t o each o f the above q u e s t i o n s . Thus, w i t h r e s p e c t t o the f i r s t q u e s t i o n , l i b e r a l a n a l y s t s s t r e s s the m u t u a l i t y o f b e n e f i t s d e r i v i n g from North-South economic r e l a t i o n s , w h i l e most adherents t o a dependency p e r s p e c t i v e emphasize the e x p l o i t a t i v e , even zero-sum, n a t u r e o f such l i n k a g e s . The f o l l o w i n g diagram, i n t e n d e d s o l e l y f o r i l l u s t r a t i v e p u r p o s e s , may a s s i s t i n u n d e r s t a n d i n g how the d i f f e r e n t s c h o o l s are a r r a y e d . F i g u r e 1: E x t e n t o f M u t u a l i t y o f Gains From North-South Economic L i n k s " r e f o r m e r s " l i b e r a l s dependency w r i t e r s a b s o l u t e l y r e c i p r o c a l g a i n s " l i b e r a l reformer's" " g l o b a l r e f o r m e r s " a b s o l u t e e x p l o i t a t i o n o f South - 12 -C l e a r l y , w h i l e few a n a l y s t s a r e l i k e l y t o s u b s c r i b e t o e i t h e r extreme p o l a r v i e w , s t u d e n t s o f N o r t h - S o u t h p o l i t i c a l economy w i l l c l u s t e r i n t o d i f f e r e n t groups t h a t occupy q u i t e d i f f e r e n t p l a c e s a l o n g t h e d i m e n s i o n o f m u t u a l i t y o f b e n e f i t . Those s y m p a t h e t i c t o a l i b e r a l ( i n c l u d i n g l i b e r a l -r e f o r m i s t ) p e r s p e c t i v e t e n d t o p e r c e i v e a h i g h degree o f r e c i p r o c a l g a i n i n N o r t h - S o u t h economic r e l a t i o n s , o r a t t h e v e r y l e a s t a r g u e , as many r e f o r m i s t s do, t h a t t h e South s t a n d s p o t e n t i a l l y t o g a i n a g r e a t d e a l from p a r t i c i p a t i n g 18 i n t h e g l o b a l c a p i t a l i s t economy g i v e n c e r t a i n changes i n r u l e s . W h i l e l i b e r a l w r i t e r s o b v i o u s l y h o l d v a r y i n g v i e w s on t h e e x t e n t t o w h i c h LDCs b e n e f i t from c u r r e n t N o r t h - S o u t h economic l i n k a g e s , t h e y do t e n d t o s h a r e , as w i l l be d i s c u s s e d below, a b a s i c b e l i e f i n t h e wisdom o f S o u t h e r n p a r t i c i -p a t i o n i n t h e i n t e r n a t i o n a l economic system. Many s c h o l a r s l a b e l l e d " i n t e r n a t i o n a l i s t s " by W a l l e r i and " T h i r d W o r ld i n t e l l e c t u a l s " by Cox a l s o e v i n c e t h i s v i e w . At t h e o t h e r end o f t h e s p e c t r u m a r e l o c a t e d s c h o l a r s who a r e s k e p t i c a l o f o r r e j e c t a l t o g e t h e r t h e v i e w t h a t s i g n i f i c a n t economic b e n e f i t s a c c r u e t o t h e South by v i r t u e o f i t s i n v o l v e m e n t i n t h e g l o b a l c a p i t a l i s t economy. C e r t a i n r a d i c a l s o r n e o - M a r x i s t s l a b e l l e d " i n t e r n a t i o n a l i s t s " by Cox can be subsumed under t h e g e n e r a l dependency r u b r i c and l o c a t e d n e a r t h i s p o l e , as p e r h a p s can some " m e r c a n t i l i s t s , " a l t h o u g h t h e l a t t e r a r e d i f f i c u l t t o c l a s s i f y i n s o f a r as N o r t h - S o u t h p o l i t i c a l economy i s c o n c e r n e d because o f t h e p a u c i t y o f c u r r e n t m e r c a n t i l i s t c o n t r i b u t i o n s t o t h e l i t e r a t u r e on most 19 N o r t h - S o u t h i s s u e s . A second d i m e n s i o n a l o n g w h i c h s t u d e n t s o f N o r t h - S o u t h r e l a t i o n s can be a r r a y e d r e l a t e s t o t h e e x t e n t o f b a r g a i n i n g power a t t r i b u t e d t o t h e LDCs i n t h e c a p i t a l i s t economic system. O b v i o u s l y t h i s v a r i e s w i t h t h e s p e c i f i c i s s u e a r e a under c o n s i d e r a t i o n . The degree o f b a r g a i n i n g l e v e r a g e e n j o y e d by LDCs i n t h e m a n u f a c t u r e d e x p o r t s i s s u e - a r e a , w h i c h w i l l be a c e n t r a l c o n c e r n o f t h i s s t u d y , need n o t be e q u i v a l e n t t o t h e i r b a r g a i n i n g power i n o t h e r i s s u e - a r e a s i n i n t e r n a t i o n a l economic r e l a t i o n s . But i n s o f a r as t h e i n t e r n a t i o n a l economy as a whole i s c o n c e r n e d , t h e s e v e r a l s c h o o l s on N o r t h - S o u t h p o l i t i c a l economy c l e a r l y make d i f f e r e n t a s s u m p t i o n s about S o u t h e r n power w i t h i n t h e i n t e r n a t i o n a l c a p i t a l i s t s ystem. T h i s v a r i a t i o n among th e d i f f e r e n t s c h o l a r l y " o p i n i o n c l u s t e r s " can a l s o be p o r t r a y e d d i a g r a m m a t i c a l l y . F i g u r e 2: Degree o f B a r g a i n i n g Power P o s s e s s e d by South i n G l o b a l Economy " r e f o r m e r s " l i b e r a l s dependency w r i t e r s " s ymmetric " l i b e r a l " g l o b a l no S o u t h e r n i n t e r d e p e n d e n c e " r e f o r m e r s " r e f o r m e r s " b a r g a i n i n g power i n c a p i t a l i s t w o r l d economy In t h i s f i g u r e l i b e r a l a n a l y s t s , as w e l l as " r e f o r m e r s " who f a l l under t h e " i n t e r n a t i o n a l i s t " o r " T h i r d W o r l d Forum" h e a d i n g s s u g g e s t e d by W a l l e r i and Cox r e s p e c t i v e l y , a r e p l a c e d t o w a r d t h e p o l e o f "symmetric i n t e r d e p e n d e n c e , " w h i l e M a r x i s t s and dependency s c h o l a r s a r e d e f i n i t e l y a r r a y e d c l o s e r t o t h e p o l e o f a b s o l u t e dependency. I t s h o u l d be n o t e d t h a t even t h e most s a n g u i n e l i b e r a l o b s e r v e r o f N o r t h - S o u t h r e l a t i o n s would h a r d l y s u g g e s t t h a t an a b s o l u t e symmetry i n b a r g a i n i n g power p r e v a i l s i n t h e g l o b a l economy. However, as w i l l be d i s c u s s e d below, s c h o l a r s a s s o c i a t e d - 14 -w i t h t h e l i b e r a l a p p r oach t o N o r t h - S o u t h p o l i t i c a l economy do t e n d t o a s c r i b e c o n s i d e r a b l e i n f l u e n c e t o t h e LDCs, e s p e c i a l l y i n r e l a t i o n t o c e r t a i n key i s s u e s on t h e g l o b a l agenda. A u t h o r s grouped under t h e dependency h e a d i n g , on t h e o t h e r hand, t e n d t o p e r c e i v e t h e South as e s s e n t i a l l y i m p o t e n t i n terms o f s h a p i n g i t s own development and e x e r c i s i n g 20 p o l i c y c h o i c e s w i t h i n t h e c o n t e x t o f i n t e r n a t i o n a l c a p i t a l i s m . I I . Dependency, I n t e r d e p e n d e n c e , and N o r t h - S o u t h Economic R e l a t i o n s That t h e South i s g e n e r a l l y h i g h l y dependent on e x t e r n a l economic f o r c e s and has l i m i t e d "autonomy" w i t h r e s p e c t t o i t s d e v e l o p m e n t a l e v o l u t i o n i s p r o b a b l y a c c e p t e d by most s t u d e n t s o f c o n t e m p o r a r y w o r l d p o l i t i c s . I t i s when t h e s e s t u d e n t s a s s e s s t h e degree o f t h i s dependence and i n t h e i r i n t e r p r e t a t i o n o f t h i s s t a t e o f a f f a i r s t h a t s h a r p d i f f e r e n c e s emerge. James Caporaso has examined t h e N o r t h - S o u t h p o l i t i c a l economy l i t e r a t u r e i n some d e t a i l , and he s u g g e s t s t h a t t h e r e are i n f a c t two v e r y d i f f e r e n t "modal" approaches t o t h e a n a l y s i s o f N o r t h - S o u t h r e l a t i o n s . ' Caporaso's p o i n t o f d e p a r t u r e i s t h e c o n c e p t o f dependence ( o r " r e l a t i o n a l i n e q u a l i t y " ) and t h e d i f f e r e n t meanings a t t r i b u t e d t o t h i s c o n c e p t by v a r i o u s groups o f s c h o l a r s . He argues t h a t i n t h e d i v e r s e " l i t e r a t u r e on dependence, one can a b s t r a c t two predominant images: dependency as t h e absence o f a c t o r autonomy and dependence as a h i g h l y a s ymmetric form o f i n t e r d e p e n d e n c e . " A c c o r d i n g t o t h e second image, w h i c h a c c o r d s w i t h a l i b e r a l a p p r oach t o p o l i t i c a l a n a l y s i s , " t h e o p p o s i t e o f dependence i s i n t e r d e p e n d e n c e — n o t autonomy. W h i l e autonomy r e s t s on t h e i d e a o f s e l f -22 c o n t r o l , i n t e r d e p e n d e n c e r e s t s on t h e n o t i o n o f m u t u a l c o n t r o l . " These two d i f f e r e n t images o f " r e l a t i o n a l i n e q u a l i t y " r e f l e c t - 15 -sharply contrasting assumptions about the correct anal y t i c a l focus i n the study of North-South rela t i o n s . Caporaso argues that these varying assumptions i n turn generate two d i s t i n c t approaches i n the l i t e r a t u r e — the "bargaining" and the " s t r u c t u r a l " approaches. In i t s essential features the bargaining perspective i s actor oriented and leads to a careful analysis of s p e c i f i c contests among actors based on clashes of consciously held interests. The outcomes of bargaining contests may be due to differences i n c a p a b i l i t i e s but they are not an automatic function of these. Outcomes may also be affected by putting a greater amount of resources into the e f f o r t , by being w i l l i n g to suffer higher costs, or through the s k i l l of . . . n e g o t i a t o r s . ^ A very different approach involves focusing on "structural power," which i s concerned not so much with bargaining outcomes as with "the a b i l i t y to manipulate the choices, c a p a b i l i t i e s , alliance opportunities, and payoffs that actors may u t i l i z e . " The structural analysis situates an LDC within the t o t a l i t y of the global c a p i t a l i s t system, and explains p o l i t i c a l and economic outcomes i n terms of this larger context. According to th i s view, dependence i s not a position of i n f e r i o r i t y from which to bargain with the North, but rather "the process of incorporation of the less developed countries . . . into the global c a p i t a l i s t system 24 and the . . . distortions r e s u l t i n g therefrom." This conception of re l a t i o n a l inequality bears l i t t l e resemblance to that found i n the works of most non-Marxist students of North-South relations. In what follows, the bargaining and structural perspectives are studied by examining several contemporary l i t e r a t u r e s on international rela t i o n s ; these are divided into two groups, one of which centers on the dependency l i t e r a t u r e , and the other being an amalgam of the writings - 16 -o f l i b e r a l e c o n o m i s t s , s t u d e n t s o f i n t e r d e p e n d e n c e , and t h o s e who f a v o r e x t e n s i v e g l o b a l r e f o r m and a New I n t e r n a t i o n a l Economic O r d e r . The l a t t e r group i s o b v i o u s l y l e s s c o h e r e n t because o f t h e d i f f e r e n t t o p i c s and i s s u e s s t u d i e d by i t s d i v e r s e c o n t r i b u t o r s , b u t i t i s argued t h a t t h e t h r e e s c h o o l s t h a t make up t h i s second group a c c e p t t h e "metaphor" o f i n t e r d e p e n d e n c e i n t h e i r a n a l y s e s o f N o r t h - S o u t h r e l a t i o n s . L a t e r i n t h i s s t u d y t h e i n s i g h t s t h a t can be g l e a n e d f r o m t h e s e v a r i o u s approaches t o N o r t h - S o u t h p o l i t i c a l economy i n s o f a r as t h e m a n u f a c t u r e d e x p o r t s i s s u e a r e a i s c o n c e r n e d w i l l be d i s c u s s e d , and t h e competing e x p l a n a t i o n s o f d i f f e r e n t s c h o o l s examined. I n t h e r e m a i n d e r o f t h i s c h a p t e r , t h e main g o a l i s s i m p l y t o i n d i c a t e how t h e s e v a r i o u s " o p i n i o n c l u s t e r s " c o n c e i v e t o t h e N o r t h - S o u t h r e l a t i o n s h i p more g e n e r a l l y . 1. N o r t h - S o u t h R e l a t i o n s : The Dependency Metaphor The m a j o r i t y o f w r i t i n g s w i t h i n t h e d e p e n d e n c i a t r a d i t i o n have f o c u s e d on L a t i n A m e r i c a ' s p o l i t i c a l and economic development w i t h i n t h e 25 w o r l d economy. Most a d h e r e n t s t o t h e dependency s c h o o l have been c o n c e r n e d t o e x p l i c a t e t h e ways i n w h i c h t h e e x t e r n a l c a p i t a l i s t o r d e r has a f f e c t e d s p e c i f i c LDCs, but a g e n e r a l model o f how t h i s o r d e r d e t e r -mines T h i r d W o r l d development has a l s o been a r t i c u l a t e d by a u t h o r s w r i t i n g 2 6 w i t h i n t h e dependency t r a d i t i o n . Dependency t h e o r i s t s a r e by no means i n unanimous agreement i n t h e i r a n a l y t i c a l approaches and p r e s c r i p t i o n s , b u t t h e r e a r e c e r t a i n themes and arguments w h i c h a r e u b i q u i t o u s i n t h e l i t e r a t u r e . V i r t u a l l y a l l dependency w r i t e r s agree t h a t t h e way i n w h i c h i n t e r n a t i o n a l c a p i t a l i s m "has molded t h e d o m e s t i c c l a s s s t r u c t u r e s and e x t e r n a l r e l a t i o n s o f t h e p e r i p h e r y s t a t e s p r e c l u d e s t h e p o s s i b i l i t y o f genuine n a t i o n a l development i n t h e T h i r d W o r l d w i t h i n t h e c o n t e x t p r o v i -27 ded by t h e p r e s e n t i n t e r n a t i o n a l o r d e r . " They agree as w e l l t h a t economic l i n k a g e s between N o r t h and South a r e i n h e r e n t l y " u n e q u a l " and i n f a c t s e r v e as t r a n s m i s s i o n b e l t s by w h i c h economic s u r p l u s i s a p p r o -p r i a t e d by advanced c a p i t a l i s t " m e t r o p o l e s . " Most p r o p o n e n t s o f dependency t h e o r y argue t h a t t h e South ought t o d i s e n g a g e from t h e i n t e r n a t i o n a l c a p i t a l i s t system i n o r d e r t o promote what i s f o r t h e dependency s c h o o l t h e most i m p o r t a n t " v a l u e " — a u t o n o m o u s , e g a l i t a r i a n n a t i o n a l development. I n t e r e s t i n g l y , a l t h o u g h dependency t h e o r i s t s t e n d t o d e v o t e t h e b u l k o f t h e i r s c h o l a r l y a t t e n t i o n t o t h e a n a l y s i s o f t h e p o l i t i c a l and economic c h a r a c t e r i s t i c s o f S o u t h e r n s o c i e t i e s , t h e i r e x p l a n a t i o n s a r e l a r g e l y s y s t e m i c and t r a n s n a t i o n a l i n n a t u r e . Andre Gunder F r a n k , a m ajor c o n t r i b u t o r t o t h e l i t e r a t u r e , p r o v i d e s an e x c e l l e n t example o f t h e dependency t h e o r i s t ' s s y s t e m i c b i a s : We c o n s c i o u s l y f o l l o w t h e g e n e r a l r u l e o f s o c i a l t h e o r y t h a t s t a t e s t h a t when s e e k i n g t o e x p l a i n ( o r change) a p a r t o f s o m e t h i n g , i n t h i s case underdevelopment, one must l o o k f o r and r e f e r s y s t e m a t i c a l l y t o t h e whole i n terms o f w h i c h t h a t p a r t can be u n d e r s t o o d . ^ T h i s s t r u c t u r a l , s y s t e m i c e x p l a n a t o r y p e r s p e c t i v e i s s t r o n g l y i n f o r m e d by M a r x i s t t r a d i t i o n s o f s o c i a l a n a l y s i s . Dependency t h e o r i s t s a r e n o t n a r r ow economic d e t e r m i n i s t s , but t h e y d i f f e r from o t h e r s c h o o l s i n t h e i r d e v o t i o n t o e x p l a i n i n g outcomes by r e f e r r i n g t o t h e " i m p e r a t i v e s " o f t h e s y s t e m — i n t h i s c a s e t h e i n t e r n a t i o n a l c a p i t a l i s t system t h a t i n c l u d e s t h e LDCs as s u b o r d i n a t e members. Dependency w r i t e r s would no doubt agree w i t h t h e eminent M a r x i s t t h e o r e t i c i a n George Lukacs t h a t " i t i s n o t t h e p r i m a c y o f economic m o t i v e s t h a t c o n s t i t u t e s t h e d e c i s i v e d i f f e r e n c e between - 18 -29 M a r x i s t and b o u r g e o i s t h o u g h t , b u t t h e p o i n t o f v i e w o f t o t a l i t y . " I n a d d i t i o n t o e x h i b i t i n g a c l e a r p r e f e r e n c e f o r s y s t e m i c e x p l a n a t i o n s , t h e d e p e n d e n c i a a n a l y s i s o f S o u t h e r n development and underdevelopment a l s o t a k e s a t r a n s n a t i o n a l a p p roach. The c e n t r a l u n i t o f a n a l y s i s i s n o t t h e s t a t e , b u t c l a s s . C l a s s e s i n t h e i n t e r n a t i o n a l c a p i t a l i s t system a r e l i n k e d a c r o s s n a t i o n a l b o u n d a r i e s and c o n s t i t u t e t h e cement w h i c h b i n d s t h e s u b o r d i n a t e p e r i p h e r a l S o u t h e r n n a t i o n s t o t h e e x p l o i t a t i v e i n t e r n a t i o n a l d i v i s i o n o f l a b o r as a whole. In t h e t y p i c a l dependency a n a l y s i s , w i t h i n an LDC a l o c a l "comprador" b o u r g e o i s i e i n t i m a t e l y t i e d t o f o r e i g n c a p i t a l and s t r o n g l y o r i e n t e d t o w a r d e x p o r t t o t h e i n t e r n a t i o n a l market o c c u p i e s a c e n t r a l p o s i t i o n . T h i s c l a s s may be i n d u s t r i a l , c o m m e r c i a l , o r even a g r a r i a n , d e p e n d i n g on t h e p e r i o d under e x a m i n a t i o n ; t h e main p o i n t i s t h a t i t i s " o u t w a r d - l o o k i n g , " and i t shapes t h e e v o l u t i o n o f t h e economy a c c o r d i n g t o t h i s i m p e r a t i v e . I t w i l l u s u a l l y be s u p p o r t e d by a s m a l l , p r i v i l e g e d l a b o r " a r i s t o c r a c y " w h i c h has a s i m i l a r i n t e r e s t i n m a i n t a i n i n g t h e s e t i e s t o t h e w o r l d c a p i t a l i s t system. The o u t w a r d - l o o k i n g c l a s s e s w i l l c o n t r o l t h e p o l i t i c a l a p p a r a t u s , and t h e i r p o l i c i e s , w h i l e p r o m o t i n g t h e i r own m a t e r i a l i n t e r e s t s , w i l l r e t a r d o r even r e v e r s e t h e development o f t h e n a t i o n ' s economy as a whole and w i l l e x a c e r b a t e i n e q u a l i t y and p o v e r t y i n t h e s o c i e t y . D e c i s i o n s and- s t r a t e g i e s w i t h r e s p e c t t o t h e n a t i o n ' s economic development a r e made w i t h t h e i n t e r n a t i o n a l c a p i t a l i s t market i n mind, n o t a c c o r d i n g t o t h e r e a l needs o f t h e s o c i e t y and masses. I n t e r n a t i o n a l c a p i t a l i s m , r u l i n g t h r o u g h t h e d o m e s t i c "comprador" c l a s s e l e m e n t s , s t y m i e s t h e e v o l u t i o n o f a mature, e g a l i t a r i a n economy and p o l i t y . Thus t h e dependency e x p l a n a t i o n o f S o u t h e r n underdevelopment and - 19 -dependence p o i n t s t o " b o t h t h e t r a n s n a t i o n a l f u s i o n o f c l a s s i n t e r e s t s and t h e s y s t e m i c s t r u c t u r e o f t h e i n t e r n a t i o n a l c a p i t a l i s t s y s t e m . " I n t h i s w o r l d - v i e w , "dependency i s e quated w i t h a p a r t i c u l a r s p e c i e s o f non-autonomy, s p r i n g i n g from t h e l a c k o f i n t e r d e p e n d e n c e o f d o m e s t i c economic s e c t o r s on t h e one hand and t h e i r c o r r e s p o n d i n g dependence on e x t e r n a l economic a c t i v i t y on t h e o t h e r . " "Dependency, t h e n , i s J a n u s -f a c e d . I t has an i n t e r n a l anatomy m a n i f e s t i n g i t s e l f i n f r a g m e n t a t i o n and an e x t e r n a l anatomy r e a l i z e d t h r o u g h i t s r e s p o n s i v e n e s s t o f o r e i g n «-• •* ,.31 economic a c t i v i t y . " As n o t e d above, dependency t h e o r i s t s argue t h a t few economic b e n e f i t s a c c r u e t o t h e LDCs as a r e s u l t o f N o r t h - S o u t h t r a d e and i n v e s t m e n t l i n k a g e s . Many exponents o f t h e dependency model a r e i n b r o a d sympathy w i t h t h e t h e s i s o f Emmanuel, who argues t h a t t r a d e between t h e advanced c a p i t a l i s t c o u n t r i e s and t h e LDCs i s i n h e r e n t l y u n e q u a l . I n h i s i n f l u e n t i a l book, Unequal Exchange:  The I m p e r i a l i s m o f T r a d e , Emmanuel s e t s f o r t h an i n t e r e s t i n g e x p l a n a t i o n o f why t r a d e between N o r t h and South b e n e f i t s t h e f o r m e r and i m p o v e r i s h e s t h e l a t t e r . R e a s o n i n g on t h e b a s i s o f a modern v e r s i o n o f t h e M a r x i s t l a b o r t h e o r y o f v a l u e , Emmanuel p o s i t s t h a t t h e " t r u e v a l u e " o f l a b o r ' s c o n t r i -b u t i o n t o p r o d u c t i o n i n t h e South i s n o t r e f l e c t e d i n t h e p r i c e s o f S o u t h e r n e x p o r t s because o f t h e i n s t i t u t i o n a l and p o l i t i c a l weakness o f l a b o r . S o u t h e r n i m p o r t s from t h e c a p i t a l i s t c o r e c o u n t r i e s a r e i n f a c t p r i c e d above t h e i r t r u e w o r t h because o f t h e a b i l i t y o f N o r t h e r n l a b o r t o o b t a i n h i g h wages and o f N o r t h e r n c a p i t a l t o e x t r a c t p r o f i t s , b o t h o f w h i c h a r e 32 " p a i d f o r " w i t h t h e s u r p l u s e x t r a c t e d , v i a t r a d e , from t h e S o u t h e r n w o r k e r s . Moreover, t h i s e x i s t i n g d i s p a r i t y p o r t e n d s an even g r e a t e r i n e q u a l i t y i n w e a l t h and development between N o r t h and S o u t h : - 20 -Once a c o u n t r y has got ahead . . . t h i s c o u n t r y s t a r t s t o make o t h e r c o u n t r i e s pay f o r i t s h i g h wage l e v e l s t h r o u g h u n e q u a l exchange. From t h a t p o i n t onward, t h e i m p o v e r i s h -ment o f one c o u n t r y becomes an i n c r e a s i n g f u n c t i o n o f t h e e n r i c h m e n t o f t h e o t h e r , and v i c e v e r s a . 33 W h i l e n o t a l l dependency t h e o r i s t s a r e i n complete agreement w i t h Emmanuel's a n a l y s i s , t h e y do a c c e p t t h e metaphor o f u n e q u a l exchange i n t h e i r d i s c u s s i o n s o f N o r t h - S o u t h t r a d e . I n f a c t , r e j e c t i o n o f t h e neo-c l a s s i c a l l i b e r a l d o c t r i n e o f c o m p a r a t i v e a d v a n t a g e — w h i c h i n s i s t s t h a t a l l n a t i o n s r e g a r d l e s s o f l e v e l o f development can g a i n t h r o u g h t r a d e i f each c o n c e n t r a t e s on p r o d u c t i o n and e x p o r t o f t h o s e commodities i n w h i c h i t s f a c t o r endowments p r o v i d e i t w i t h a c o m p a r a t i v e (not a b s o l u t e ) 34 advantage — i s a h a l l m a r k o f a l l w r i t i n g s i n t h e d e p e n d e n c i a t r a d i t i o n . F o r Samir Amin, " i f t h e i n t e r n a t i o n a l d i v i s i o n o f l a b o r i s u n e q u a l , t h e 35 argument o f c o m p a r a t i v e advantage l o s e s i t s v a l i d i t y . " Immanuel W a l l e r s t e i n s u g g e s t s t h a t t r a d e t i e s c o n s t i t u t e a c r u c i a l p a r t o f t h e new " t e c h n o l o g y " o f modern i m p e r i a l i s m w h i c h a l l o w s t h e N o r t h t o p i l l a g e t h e S o u t h w i t h o u t c o n s t a n t and c o s t l y r e s o r t t o d i r e c t m i l i t a r y a c t i o n : I t i s t h e s o c i a l achievement o f t h e modern w o r l d . . . t o have i n v e n t e d t h e t e c h n o l o g y t h a t makes i t p o s s i b l e t o i n c r e a s e t h e f l o w o f s u r p l u s . . . from p e r i p h e r y t o t h e c e n t e r , from t h e m a j o r i t y t o t h e m i n o r i t y , by e l i m i n a t i n g t h e " w a s t e " o f t o o cumbersome a p o l i t i c a l s u p e r s t r u c t u r e . 3 6 Johan G a l t u n g echoes t h i s v i e w w i t h h i s comment t h a t t h e "mechanisms o f modern i m p e r i a l i s m a r e i n d i c a t i v e o f t h e s u p e r i o r i t y o f " s t r u c t u r a l 37 r a t h e r t h a n d i r e c t v i o l e n c e . " And Andre Gunder Frank o b s e r v e s t h a t N o r t h - S o u t h t r a d e exchanges (and t h e a s s o c i a t e d i d e o l o g y o f f r e e t r a d e ) a r e t h e c e n t r a l means by w h i c h t h e N o r t h " e x p r o p r i a t e s economic s u r p l u s f rom i t s s a t e l l i t e s and a p p r o p r i a t e s i t f o r i t s own economic development." - 21 -I n t h e w r i t i n g s o f dependency t h e o r i s t s , one c o n s t a n t l y e n c o u n t e r s t h e argument t h a t n o t o n l y i s N o r t h - S o u t h t r a d e u n e q u a l , b u t i t i s s t r u c t u r e d so as t o p r e v e n t t h e emergence o f mature i n d u s t r i a l S o u t h e r n economies c a p a b l e o f g e n e r a t i n g s e l f - s u s t a i n i n g g r owth, c r e a t i n g a mass d o m e s t i c market f o r goods, and p r o v i d i n g f o r t h e b u l k o f t h e i r f o o d r e q u i r e -ments. I n s t e a d , t h e " o u t w a r d - l o o k i n g " n a t u r e o f S o u t h e r n economies d i c t a t e s a d i f f e r e n t s e t o f p r i o r i t i e s : e x p o r t o f raw m a t e r i a l s and u n s o p h i s t i c a t e d m a n u f a c t u r e s t o N o r t h e r n economies; p r o m o t i o n o f economic p o l i c i e s h i g h l y d e t r i m e n t a l t o t h e g o a l s o f e q u a l i t y , p a r t i c i p a t i o n , s e l f - s u f f i c i e n c y and n a t i o n a l autonomy; and maintenance o f p r i v i l e g e d e x t e r n a l l y - o r i e n t e d c l a s s e s i n c o n t r o l o f t h e s t a t e a p p a r a t u s . But how do t h e s e w r i t e r s e x p l a i n t h e f a c t t h a t o v e r t h e p a s t t w e n t y y e a r s a number o f LDCs have become ma j o r p r o d u c e r s and e x p o r t e r s o f m a n u f a c t u r e d p r o d u c t s and have d e v e l o p e d economies w h i c h a r e c l e a r l y i n d u s t r i a l i z i n g a t a r a p i d pace? That some S o u t h e r n economies have become newly i n d u s t r i a l i z e d and m a r k e d l y i n c r e a s e d t h e i r e x p o r t s o f m a n u f a c t u r e s does n o t , a c c o r d i n g t o dependency t h e o r i s t s , i n v a l i d a t e t h e d e p e n d e n c i a t h e s i s o f u n e q u a l exchange, because i t i s s t i l l t h e cas e t h a t " t h e i n d u s t r i a l development o f t h e s e c o u n t r i e s i s dependent on t h e s i t u a t i o n o f t h e e x p o r t s e c t o r , t h e c o n t i n u e d 39 e x i s t e n c e o f w h i c h t h e y a r e o b l i g e d t o a c c e p t . " I n o t h e r words, t h i s i n d u s t r i a l development i s i n a sense " i l l e g i t i m a t e , " p r e c i s e l y because i t i s e x t e r n a l l y - i n d u c e d . As dos Santos p u t s i t , t h i s "new phase" i n t h e i n t e r n a t i o n a l c a p i t a l i s t d i v i s i o n o f l a b o r p r e s u p p o s e s an i n c r e a s e i n t h e i n d u s t r i a l i z a t i o n o f raw m a t e r i a l s and o f p r o d u c t s o f a low degree o f t e c h n o l o g i c a l development, and e x p o r t o f t h e s e p r o d u c t s t o t h e dominant c e n t e r s . . . wh i c h . . . s p e c i a l i z e i n t h e p r o d u c t i o n o f goods and s e r v i c e s f o r e x p o r t w h i c h have a h i g h t e c h n o -- 22 -l o g i c a l c o n t e n t , and t h e e x p o r t o f c a p i t a l , t h u s r a i s i n g t h e p a r a s i t i s m t y p i c a l o f t h e i m p e r i a l i s t powers t o i t s h i g h e s t l e v e l . ^ Thus t h e growth o f m a n u f a c t u r e d e x p o r t s from t h e S o u t h , f a r from v i t i a t i n g t h e d e p e n d e n c i a t h e s i s , m e r e l y c o n f i r m s t h a t i m p e r i a l i s m has a t t a i n e d a h i g h e r , and f o r dos S antos more e x p l o i t a t i v e , l e v e l . W i t h i n t h e dependency l i t e r a t u r e , S o u t h e r n i n d u s t r i a l development i s p o r t r a y e d as non-autonomous "dependent development": i t i s e x p o r t - o r i e n t e d ; i t i s c o n d i t i o n e d by t h e t e c h n o l o g i c a l and f i n a n c i a l - c a p i t a l m o n o p o l i e s e n j o y e d by N o r t h e r n c a p i t a l i s m ; i n s h o r t , " i t must i n s e r t i t s e l f i n t o 41 t h e c i r c u i t o f i n t e r n a t i o n a l c a p i t a l i s m . " Even though some LDCs have e v o l v e d t o t h e p o i n t where t h e y no l o n g e r s i m p l y e x p o r t raw m a t e r i a l s and i m p o r t m a n u f a c t u r e s — t h e c l a s s i c image o f dependency w h i c h i n f a c t s t i l l o b t a i n s f o r much o f t h e S o u t h — t h e y r e m a i n r e l i a n t on t h e s t r u c t u r e o f g l o b a l c a p i t a l i s m ; i n dos S a n t o s ' p h r a s e , t h e " p r o d u c t i v e s y s t e m " remains 42 " e s s e n t i a l l y d e t e r m i n e d by t h e s e i n t e r n a t i o n a l r e l a t i o n s . " The more advanced LDCs "have now w i t h i n t h e i r b o r d e r s an i n c r e a s i n g l y d i v e r s i f i e d i n d u s t r i a l c a p a c i t y . A t t h e same t i m e , t h e p e n e t r a t i o n o f i n t e r n a t i o n a l c a p i t a l i n t o t h e i r s o c i a l and economic l i f e i s i n c r e a s i n g l y t h o r o u g h . " I n t e r n a t i o n a l f o r c e s a r e t h e r e f o r e s t i l l "an i n t e g r a l p a r t o f t h e . . . 43 p o l i t i c a l and s o c i a l o r d e r . " The n e w l y - i n d u s t r i a l i z i n g LDCs ( t h e s o -c a l l e d "NICs") a r e woven e v e r more t i g h t l y i n t o t h e f a b r i c o f i n t e r n a t i o n a l c a p i t a l i s m , and p o v e r t y , i n e q u a l i t y and above a l l non-autonomy c o n t i n u e t o p e r s i s t o r , i n some f o r m u l a t i o n s , even worsen. T h i s h i g h l y p e s s i m i s t i c a n a l y s i s o f t h e e x p e r i e n c e s o f t h e i n d u s t r i a l -i z i n g S outh i s c o n f i r m e d f o r dependency t h e o r i s t s by t h e r e c e n t h i s t o r y o f B r a z i l , a c l a s s i c c a s e o f e x p o r t - l e d growth and i n d u s t r i a l i z a t i o n . The s h a r p i n c r e a s e i n t h e volume and t e c h n o l o g i c a l s o p h i s t i c a t i o n o f B r a z i l i a n e x p o r t s o f m a n u f a c t u r e s h a s , i t i s a r g u e d , i n no way p e r m i t t e d t h a t c o u n t r y t o e x e r c i s e m e a n i n g f u l n a t i o n a l i ndependence, s i n c e t h e p r i v i l e g e d c l a s s e l e ments c o n t i n u e t o l o o k outward and d o m e s t i c problems t h a t c o n f r o n t t h e b u l k o f t h e p e o p l e go u n t r e a t e d : I f d o m e s t i c B r a z i l i a n i n d u s t r y i s e v e r more dependent on t h e i m p e r i a l i s t m e t r o p o l i s , t h e n so i s t h e B r a z i l i a n b o u r g e o i s i e . I f t h e development o f c a p i t a l i s m i n t h e w o r l d and i n B r a z i l r e n d e r s a t r u l y n a t i o n a l i n d u s t r y e v e r l e s s p o s s i b l e , t h e n i t s i m i l a r l y p r e c l u d e s t h e development o r even t h e c o n t i n u a n c e o f a n a t i o n a l i n d u s t r i a l b o u r g e o i s i e . 4 4 More complex t r e a t m e n t s o f t h e B r a z i l i a n case a s c r i b e a g r e a t e r scope f o r n a t i o n a l autonomy and n a t i o n a l i n d u s t r i a l and c a p i t a l i n t e r e s t s , but s t i l l p o r t r a y t h e r e s u l t i n g development as d i s t o r t e d and l a r g e l y dependent on 45 t h e v i c i s s i t u d e s o f i n t e r n a t i o n a l c a p i t a l i s m . Thus, t h e c o n c l u s i o n t h a t f o l l o w s from t h e dependency a n a l y s i s o f S o u t h e r n i n d u s t r i a l i z a t i o n i s s i m p l e : such "development" i s based on c o n t i n u e d o r i n c r e a s e d i n c o r p o r a t i o n i n t o t h e web o f i n t e r n a t i o n a l c a p i t a l i s m ; as such i t p r e v e n t s t h e a s s e r t i o n o f n a t i o n a l autonomy, skews and d i s t o r t s d o m e s t i c s o c i a l and economic s t r u c t u r e s , c o n t i n u e s t h e p r o c e s s o f s u r p l u s - a p p r o p r i a t i o n by t e c h n o l o g i c a l l y advanced and c a p i t a l - r i c h c e n t e r c a p i t a l i s t s t a t e s , and u t t e r l y f a i l s t o a d d r e s s t h e v a s t p roblems o f p o v e r t y and b a s i c human needs i n t h e LDCs. A f i n a l a s p e c t o f t h e dependency a n a l y s i s o f N o r t h - S o u t h economic r e l a t i o n s t h a t needs t o be b r i e f l y examined r e l a t e s t o t h e q u e s t i o n o f S o u t h e r n b a r g a i n i n g power (see f i g u r e 2 ) . Not s u r p r i s i n g l y , t h e n o t i o n t h a t t h e S o u t h e n j o y s s i g n i f i c a n t b a r g a i n i n g l e v e r a g e w i t h i n t h e w o r l d - 24 -c a p i t a l i s t system i s r e g a r d e d w i t h s k e p t i c i s m by dependency w r i t e r s . G i v e n t h a t , as dos Santos p u t s i t , t h e c a p i t a l i s t o r d e r d i c t a t e s t h a t t h e dominant economies "can expand and be s e l f - s u s t a i n i n g , w h i l e o t h e r c o u n t r i e s 46 ( t h e dependent ones) can do t h i s o n l y as a r e f l e c t i o n o f t h a t e x p a n s i o n , " how can one a s s e r t t h a t t h e South p o s s e s s e s b a r g a i n i n g power? Outcomes ar e d e t e r m i n e d by t h e dynamics o f a t o t a l i t y a g a i n s t w h i c h any p a r t i c u l a r power r e s o u r c e p o s s e s s e d by one o r more LDCs p a l e s i n t o i n s i g n i f i c a n c e . M oreover, as Samir Amin has argued, any " r e f o r m s " w h i c h S o u t h e r n governments are a b l e t o a c h i e v e w i l l n o t augur any b a s i c improvement i n t h e economic m a t u r i t y o f t h e i r s o c i e t i e s , n o r promote t h e g o a l s o f e q u a l i t y , b a s i c human needs, and n a t i o n a l independence. T h i s i s b e c a u s e , i n an o v e r a l l s e n s e , " e x t e r n a l demand would s t i l l be t h e main m o t i v e p r o p e l l i n g t h i s s t i l l 47 dependent t y p e o f development." I n a s t r u c t u r a l w o r l d - v i e w i n w h i c h t h e economies o f N o r t h and South form a " s y s t e m " and a r e c l o s e l y r e l a t e d , N o r t h - S o u t h i n e q u a l i t y s i m p l y cannot be r e d u c e d s i g n i f i c a n t l y t h r o u g h b a r g a i n i n g and n e g o t i a t i n g f o r r e f o r m s and changes i n p r i n c i p l e s and i n s t i -t u t i o n a l a r rangements. I n t h e g l o b a l c a p i t a l i s t s y stem, t h e p r o s p e r i t y o f th e N o r t h i s dependent upon and has a s t r u c t u r a l c o u n t e r p a r t i n t h e p l i g h t o f t h e S o u t h e r n p e r i p h e r y ; t h e y a r e two s i d e s o f t h e same c o i n . I n t h e dependency a n a l y s i s , t h e n , i t i s f o l l y t o e x p e c t t h e g o v e r n -ments o f t h e c a p i t a l i s t " m e t r o p o l e s " t o b a r g a i n s e r i o u s l y o v e r s t r u c t u r a l change w i t h t h e S o u t h , f o r t h e v e r y p r e s e r v a t i o n o f t h e i r p r i v i l e g e d p o s i -t i o n s i n t h e i n t e r n a t i o n a l d i v i s i o n o f l a b o r r e q u i r e s system-maintenance, n o t s y s t e m - t r a n s f o r m a t i o n . The N o r t h w i l l n o t — p e r h a p s even c a n n o t — a g r e e t o t h e t y p e s o f changes r e q u i r e d t o t a c k l e p o v e r t y , underdevelopment and i n e q u a l i t y i n t h e South f o r t o do so would n e c e s s i t a t e a d i r e c t a s s a u l t on - 25 -n a t i o n a l and i n t e r n a t i o n a l c a p i t a l i s m on a w h o l e s a l e b a s i s . The only-way f o r t h e South t o a c q u i r e " r e a l " b a r g a i n i n g s t r e n g t h - - t o b a r g a i n from a p o s i t i o n o f s t r e n g t h as i t w e r e - - i s t h r o u g h i t s disengagement from t h e g l o b a l c a p i t a l i s t s y s t e m , f o r i t i s o n l y t h r o u g h such disengagement t h a t t h e p a r a s i t i c a l l i n k a g e s w i t h t h e "market" t h a t undermine autonomy and 48 fragment t h e S o u t h e r n economies can be s e v e r e d . 2. N o r t h - S o u t h R e l a t i o n s : The I n t e r d e p e n d e n c e Metaphor The dependency l i t e r a t u r e p a i n t s a s t a r k p i c t u r e o f s t r u c t u r a l l y d e t e r m i n e d e x p l o i t a t i o n and h i e r a r c h y i n t h e i n t e r n a t i o n a l system. A r a t h e r d i f f e r e n t v i e w o f t h e n a t u r e and dynamics o f i n t e r n a t i o n a l p o l i t i c s and economics i s h e l d by most n o n - M a r x i s t s t u d e n t s o f N o r t h - S o u t h r e l a t i o n s . F o r t h i s s t u d y , t h r e e groups o f n o n - M a r x i s t s c h o l a r s have been i d e n t i f i e d and w i l l be examined below. The f i r s t group c o n s i s t s o f l i b e r a l e c o n o m i s t s who, u n l i k e t h e dependency w r i t e r s , c o n c e i v e o f N o r t h - S o u t h t r a d e and o t h e r economic exchanges as m u t u a l l y b e n e f i c i a l , a l t h o u g h n o t n e c e s s a r i l y e q u a l l y s o . A second group o f a n a l y s t s — m o s t l y p o l i t i c a l s c i e n t i s t s i n terms o f academic s p e c i a l i z a t i o n — h a s f o c u s e d on changes i n t h e i n t e r n a t i o n a l p o l i -t i c a l system i n t h e c o n t e x t o f g r o w i n g i n t e r d e p e n d e n c e , e s p e c i a l l y i n t h e economic s p h e r e ; t h e s e w r i t e r s s u g g e s t t h a t t h e c u r r e n t " i n t e r d e p e n d e n t " i n t e r n a t i o n a l o r d e r a f f o r d s s m a l l and weak c o u n t r i e s c o n s i d e r a b l e l a t i t u d e t o b a r g a i n w i t h s t r o n g e r a c t o r s o v e r a wide range o f economic and non-economic i s s u e s . F i n a l l y , some o f t h e n o n - M a r x i s t l i t e r a t u r e w h i c h a d v o c a t e s e x t e n s i v e r e f o r m o f t h e e x t a n t g l o b a l economy and w h i c h s u p p o r t s c u r r e n t S o u t h e r n e f f o r t s t o s t r u c t u r e a New I n t e r n a t i o n a l Economic O r d e r w i l l be examined. The a u t h o r s a s s o c i a t e d w i t h t h e s e t h r e e groups do n o t n e c e s s a r i l y - 26 -r e p r e s e n t d i s t i n c t p o s i t i o n s a l o n g any p a r t i c u l a r s p e c t r u m ; i n s t e a d , d i f f e r e n c e s i n i n t e l l e c t u a l f o c u s may ac c o u n t f o r some o f t h e v a r i a t i o n i n t h e v i e w s among them. I n any c a s e , i t i s argued h e r e t h a t a l l t h e s c h o l a r s d i s c u s s e d below s h a r e c e r t a i n f u n d a m e n t a l a s s u m p t i o n s about t h e g l o b a l p o l i t i c a l economy wh i c h need t o be k e p t i n mind when a s s e s s i n g t h e i r approaches t o N o r t h - S o u t h i s s u e s and w h i c h s h a r p l y d i f f e r e n t i a t e them from t h e dependency t h e o r i s t s . S p e c i f i c a l l y , t h e y a l l agree t h a t t h e S o u t h can d e r i v e economic b e n e f i t s and f u r t h e r i t s development t h r o u g h p a r t i c i p a t i o n i n t h e g l o b a l c a p i t a l i s t o r d e r ; t h a t t h e i n t e r n a t i o n a l economic system has grown i n c r e a s i n g l y i n t e r d e p e n d e n t i n t h e p o s t w a r y e a r s ; and t h a t , p a r t l y as a consequence o f t h i s , t h e South now e n j o y s s i g n i f i c a n t p o l i t i c a l and economic l e v e r a g e w i t h w h i c h t o engage i n " g l o b a l b a r g a i n i n g " w i t h t h e N o r t h . L i b e r a l economic t h e o r y , w h i c h has s t r o n g l y i n f l u e n c e d much academic s c h o l a r s h i p on economic development, e x h i b i t s a well- k n o w n i n t e l l e c t u a l p r e f e r e n c e f o r markets "as more o r l e s s d e s i r a b l e mechanisms f o r h a n d l i n g 49 economic i n t e r d e p e n d e n c e among n a t i o n s . " T h i s m a r k e t - o r i e n t a t i o n f l o w s from t h e b e l i e f t h a t m a r k e t s , b o t h n a t i o n a l l y and i n t e r n a t i o n a l l y , a r e i n h e r e n t l y t h e most e f f i c i e n t means o f a l l o c a t i n g s c a r c e r e s o u r c e s . I n s o f a r as i t s approach t o g l o b a l economic i s s u e s i s c o n c e r n e d , l i b e r a l economic t h e o r y h o l d s t h a t a l l n a t i o n s s t a n d t o g a i n from t r a d i n g w i t h each o t h e r , e s p e c i a l l y under c o m p e t i t i v e market c o n d i t i o n s . A c c o r d i n g t o t h e famous d o c t r i n e o f c o m p a r a t i v e advantage, w h i c h r e m a i n s t h e c e n t r a l a s s u m p t i o n u n d e r l y i n g c o n v e n t i o n a l i n t e r n a t i o n a l economic a n a l y s i s , " I t w i l l pay a c o u n t r y t o produce more o f t h o s e goods i n w h i c h i t i s r e l a t i v e l y more e f f i c i e n t and t o e x p o r t t h e s e i n r e t u r n f o r goods i n w h i c h i t s . . . advantage i s l e a s t . N a t i o n s w i l l t e n d t o be " r e l a t i v e l y more e f f i c i e n t " i n t h e p r o d u c t i o n o f goods wh i c h make i n t e n s i v e use o f t h o s e f a c t o r s o f p r o d u c t i o n ( o r r e s o u r c e s ) w h i c h a r e i n r e l a t i v e l y abundant, hence cheap, s u p p l y . From t h i s a n a l y s i s i t f o l l o w s t h a t i n t e r n a t i o n a l t r a d e p a t t e r n s and t h e c o m p o s i t i o n o f t r a d e d goods w i l l be s t r o n g l y a f f e c t e d by c o m p a r a t i v e f a c t o r endowments i n v a r i o u s c o u n t r i e s , and t h i s i s e x a c t l y what t h e modern H e c k s c h e r - O h l i n t h e o r y o f t r a d e p r e d i c t s . I t i s i m p o r t a n t t o n o t e b o t h t h e o r i g i n a l R i c a r d i a n d o c t r i n e o f c o m p a r a t i v e advantage and t h e modern H e c k s c h e r -O h l i n t h e o r y s t r e s s t h e f a c t t h a t a l l c o u n t r i e s , r e g a r d l e s s o f l e v e l o f economic development, s t a n d t o g a i n from t r a d e and w i l l u s u a l l y maximize t h e i r g a i n s by s p e c i a l i z a t i o n a c c o r d i n g t o c o m p a r a t i v e advantage. That i s , i f t h e y f o l l o w t h e d i s c i p l i n e imposed by t h e " n e u t r a l " i n t e r n a t i o n a l m a r k e t , t h e y w i l l enhance t h e i r w e l f a r e t o t h e maximum e x t e n t , e s p e c i a l l y i f t h e y a r e s m a l l c o u n t r i e s w i t h o u t t h e d i v e r s i t y o f i n d i g e n o u s r e s o u r c e s t h a t , . . 51 l a r g e economies e n j o y . L i b e r a l e c o n o m i s t s argue t h a t a l t h o u g h much i n t e r n a t i o n a l t r a d e i n t h e " r e a l w o r l d " t a k e s p l a c e under c o n d i t i o n s w h i c h i n i m p o r t a n t r e s p e c t s f a i l t o a c c o r d w i t h t h e o r t h o d o x c o m p e t i t i v e model, i n g e n e r a l t h e LDCs 52 can s t i l l b e n e f i t t r e m e n d o u s l y from t r a d e w i t h t h e N o r t h . S e v e r a l s u c h b e n e f i t s a r e u s u a l l y i d e n t i f i e d . An i n c r e a s e i n n a t i o n a l income w i l l , i t i s h e l d , r e s u l t from t h e s p e c i a l i z a t i o n o f p r o d u c t i o n and e x p o r t o c c a s i o n e d by e n g a g i n g i n t r a d e . I n a d d i t i o n , consumers and i n d u s t r y w i l l g a i n t h r o u g h l o w e r p r i c e s f o r i m p o r t s t h a t would be more c o s t l y o r , i n many c a s e s , s i m p l y u n a v a i l a b l e i f an e f f o r t were made t o produce them d o m e s t i c a l l y . C o m p e t i t i o n - 28 -i n d o m e s t i c m a r kets w i l l r e c e i v e a h e a l t h y f i l l i p as a r e s u l t o f e x p o s u r e t o i n t e r n a t i o n a l market f o r c e s . F u r t h e r m o r e , t r a d e l i n k s w i t h advanced i n d u s t r i a l economies w i l l s e r v e as " c o n d u i t s f o r t h e t r a n s m i s s i o n from abroad o f i d e a s and t e c h n i c a l knowhow w h i c h can be a p p l i e d o r a d a p t e d t o 53 t h e d o m e s t i c economy." I n f a c t , p r o d u c t i o n o f goods f o r e x p o r t t o t h e i n t e r n a t i o n a l market can g r e a t l y c o n t r i b u t e t o t h e h e a l t h o f t h e e n t i r e economy t h r o u g h " l i n k a g e " e f f e c t s : P r o d u c t i o n o f goods f o r e x p o r t may i n d u c e an e x p a n s i o n i n t h e i n d u s t r i e s f u r n i s h i n g i n p u t s t o t h e e x p o r t s e c t o r -s o - c a l l e d "backward l i n k a g e s . " Moreover t h e o u t p u t o f e x p o r t i n d u s t r i e s u s u a l l y i s n o t e n t i r e l y e x p o r t e d but p a r t l y r e m a i n s i n t h e l o c a l economy. To t h e e x t e n t t h a t t h e o u t p u t i s an i n p u t t o o t h e r d o m e s t i c i n d u s t r i e s — f o r example, a c o t t o n e x p o r t i n d u s t r y f u r n i s h i n g i n p u t s t o a d o m e s t i c c l o t h i n g i n d u s t r y — t h e r e a r e " f o r w a r d l i n k a g e s . " 5 4 Because o f t h e i r f a i t h i n t h e p o s i t i v e e f f e c t s p a r t i c i p a t i o n i n t h e i n t e r -n a t i o n a l economy w i l l have on a c o u n t r y , l i b e r a l e c o n o m i s t s a r e s t r o n g l y c o n v i n c e d t h a t t h e o p t i m a l p a t h t o development and i n d u s t r i a l i z a t i o n f o r most LDCs r e q u i r e s t h e i r i n c o r p o r a t i o n i n t o t h e g l o b a l c a p i t a l i s t s y s t e m . ^ Contemporary l i b e r a l economic t h e o r y seems t o f a v o r a two-pronged s t r a t e g y f o r f a c i l i t a t i n g S o u t h e r n economic development t h r o u g h more e x t e n -s i v e e x t e r n a l economic l i n k a g e s , and t h i s c u r r e n t p o l i c y p r e s c r i p t i o n i s o f p a r t i c u l a r r e l e v a n c e f o r t h e p r e s e n t s t u d y . F i r s t , many l i b e r a l development e c o n o m i s t s a d v o c a t e e x p o r t - o r i e n t e d i n d u s t r i a l i z a t i o n f o r a l a r g e number o f LDCs, and t h i s i n v o l v e s a heavy emphasis on t h e p r o d u c t i o n o f m a n u f a c t u r e s , s e m i - m a n u f a c t u r e s and p r o c e s s e d a g r i c u l t u r a l c ommodities f o r e x p o r t t o t h e w o r l d m a r k e t . ^ ( T h i s i s o f c o u r s e a l m o s t t h e p r e c i s e o p p o s i t e o f a c e n t r a l p r e s c r i p t i o n a r t i c u l a t e d by dependency w r i t e r s — n a m e l y , disengagement from - 29 -t h e c a p i t a l i s t economic system and " s e l f - r e l i a n t " development.) The second p a r t o f t h i s s t r a t e g y f o r S o u t h e r n development c a l l s f o r changes i n N o r t h e r n t r a d e p o l i c i e s and i n t h e o p e r a t i o n o f c e r t a i n i n t e r n a t i o n a l m a r k e ts so t h a t t h e y w i l l f u n c t i o n more i n a c c o r d a n c e w i t h l i b e r a l p r i n - c i p l e s . Here t h e f o c u s i s on making i n t e r n a t i o n a l m a r k e t s more c o m p e t i t i v e , and on e x h o r t i n g N o r t h e r n governments t o e l i m i n a t e t a r i f f and n o n - t a r i f f b a r r i e r s t h a t i n h i b i t t h e e x p a n s i o n o f LDC e x p o r t s o f p r o d u c t s , e s p e c i a l l y 57 m a n u f a c t u r e d p r o d u c t s , i n w h i c h t h e y e n j o y a c o m p a r a t i v e advantage. Sometimes i t i s a l s o s u g g e s t e d by exponents o f t h i s development s t r a t e g y t h a t t h e LDCs t h e m s e l v e s ought t o r e d u c e t h e i r h i g h t r a d e b a r r i e r s on i n d u s t r i a l p r o d u c t s e r e c t e d d u r i n g t h e p e r i o d when i m p o r t - s u b s t i t u t i o n was p e r c e i v e d as t h e key t o economic development. T h i s a p p r o a c h , i t i s a r g u e d , w i l l n o t o n l y promote e f f i c i e n c y i n South economies, b u t a l s o expand t h e 5 8 t r a d e o p p o r t u n i t i e s f o r o t h e r i n d u s t r i a l i z i n g LDCs. W h i l e l i b e r a l e c o n o m i s t s s t r e s s t h e e x i s t i n g and p o t e n t i a l economic b e n e f i t s a v a i l a b l e t o t h e South t h r o u g h t r a d i n g w i t h t h e N o r t h and by f o l l o w i n g e x p o r t - l e d i n d u s t r i a l i z a t i o n p o l i c i e s , many p o l i t i c a l s c i e n t i s t s have ar g u e d t h a t i n c r e a s i n g i n t e r n a t i o n a l ( i n c l u d i n g N o r t h - S o u t h ) i n t e r -dependence, e s p e c i a l l y economic i n t e r d e p e n d e n c e , has f u n d a m e n t a l l y a l t e r e d t h e i n t e r n a t i o n a l p o l i t i c a l system i n ways t h a t may enhance t h e p o l i t i c a l i n f l u e n c e o f s m a l l and weak s t a t e s , most o f w h i c h o f c o u r s e a r e LDCs. A c c o r d i n g t o t h i s v i e w , t h e n a t u r e o f w o r l d p o l i t i c s has been t r a n s f o r m e d by t h e v a r i o u s p r o c e s s e s o f " m o d e r n i z a t i o n " — t h e advent o f r a p i d and w i d e -s p r e a d i n d u s t r i a l i z a t i o n , t h e r e v o l u t i o n i n communications and t r a n s p o r t a t i o n t e c h n o l o g i e s , t h e emergence o f "consumer" s o c i e t i e s and o f "mass" p o l i t i c s , - 30 -and t h e a s t o n i s h i n g growth i n t h e number o f n a t i o n - s t a t e s i n t h e i n t e r -59 n a t i o n a l system, most o f w h i c h a r e i n t h e T h i r d W o r l d . These t r e n d s , i t i s a r g u e d , have g r e a t l y c o n t r i b u t e d t o t h e i n c r e a s i n g degree and g r o w i n g p o l i t i c a l s a l i e n c e o f i n t e r d e p e n d e n c e s among n a t i o n s , and e s p e c i a l l y among t h e i r economies. F o r many s c h o l a r s , t h i s modern i n t e r n a t i o n a l i n t e r d e p e n d e n c e has c r e a t e d a "new t y p e o f i n t e r n a t i o n a l p o l i t i c s t h a t cannot be u n d e r s t o o d o r d e s c r i b e d by u s i n g t h e c o n c e p t s and c a t e g o r i e s o f t r a d i t i o n a l i n t e r n a t i o n a l 60 r e l a t i o n s a n a l y s i s . " The b a s i c a n a l y t i c a l a s s u m p t i o n s t r a d i t i o n a l l y employed by ( n o n - M a r x i s t ) s t u d e n t s o f w o r l d p o l i t i c s a r e no l o n g e r v a l i d f o r t h e s t u d y o f much o f contemporary i n t e r n a t i o n a l r e l a t i o n s . C o n t r a r y t o t h e o l d e r " r e a l i s t " a p p r o a c h , Keohane and Nye argue t h a t i n a n a l y z i n g p o l i t i c a l outcomes i n c o n d i t i o n s c h a r a c t e r i z e d by e x t e n s i v e i n t e r d e p e n d e n c e t h e s c h o l a r must make t h e f o l l o w i n g a s s u m p t i o n s : 1) " m u l t i p l e c h a n n e l s " c o n n e c t s o c i e t i e s , so s t a t e s a r e n o t " c o h e r e n t u n i t s , " and n o n - s t a t e and b u r e a u c r a t i c a c t o r s w i e l d c o n s i d e r a b l e i n f l u e n c e ; 2) no c l e a r h i e r a r c h y among i n t e r n a t i o n a l i s s u e s e x i s t s ; and 3) m i l i t a r y f o r c e , t h e u l t i m a t e a r b i t e r among c o n f l i c t i n g i n t e r e s t s i n t h e r e a l i s t w o r l d - v i e w , i s n o t r e a l l y a p l a u s i b l e p o l i c y i n s t r u -m e n t . ^ The m e r i t s o f t h e s e "new" a n a l y t i c a l a s s u m p t i o n s f o r t h e s t u d y o f w o r l d p o l i t i c s have been n o t e d by numerous c o n t r i b u t o r s t o c u r r e n t i n t e r -6 2 n a t i o n a l r e l a t i o n s s c h o l a r s h i p . Many s t u d e n t s o f contemporary N o r t h - S o u t h r e l a t i o n s have employed some o f t h e arguments and a s s u m p t i o n s p u t f o r t h by t h e o r e t i c a l a n a l y s e s o f modern i n t e r d e p e n d e n c e . A u t h o r s who s t r e s s t h e i n t e r d e p e n d e n c e o f N o r t h and South 6 3 a r e i n c l i n e d t o o f f e r "a much more e g a l i t a r i a n a s s e s s m e n t " o f p o l i t i c a l - 31 -and economic r e l a t i o n s among them t h a n do dependency w r i t e r s . As N o r t h and South grow more i n t e r c o n n e c t e d e c o n o m i c a l l y , t h e n a t u r e o f t h e i r p o l i t i c a l r e l a t i o n s h i p w i l l e v o l v e i n a d i r e c t i o n o f g r e a t e r e q u a l i t y . A c c o r d i n g t o Haas, t h e South w i l l b e n e f i t from t h e f a c t t h a t t h e " k i n d s o f systems change a s s o c i a t e d w i t h r i s i n g i n t e r d e p e n d e n c e . . . i m p l y a t e n d e n c y t o w a r d s t r e n g t h e n i n g weaker a c t o r s a g a i n s t s t r o n g s t a t e s as t h e web o f r e l a t i o n s h i p s i n c r e a s e s p e r c e i v e d s e n s i t i v i t i e s , v u l n e r a b i l i t i e s 6 4 and o p p o r t u n i t y c o s t s f o r t h e s t r o n g e r . " I n p a r t , t h i s r a t h e r e g a l i -t a r i a n p r o g n o s i s i s r o o t e d i n t h e b e l i e f t h a t t h e e l e m e n t s o f power i n t h e i n t e r n a t i o n a l system a r e "more w i d e l y d i s p e r s e d t h a n p e r h a p s a t any 6 5 t i m e i n t h e w o r l d ' s h i s t o r y . " M o r e o v er, t h e a b i l i t y t o p r e d i c t outcomes by e x a m i n i n g r e l a t i v e power r e s o u r c e s i s d e c r e a s i n g as i s s u e s become more complex, n a t i o n a l d e c i s i o n - m a k i n g becomes more f r a g m e n t e d , and t h e r o l e s o f i n t e r n a t i o n a l o r g a n i z a t i o n s and n o n - s t a t e a c t o r s grow more i m p o r t a n t . Keohane and Nye s u g g e s t t h a t t h e " o v e r a l l power s t r u c t u r e " model, w h i c h i s a k i n t o t h e r e a l i s t model and p r e d i c t s outcomes a c c o r d i n g t o s t a t e s ' r e l a -t i v e o v e r a l l power r e s o u r c e s , i s o f t e n a h i g h l y m i s l e a d i n g framework f o r a n a l y z i n g c ontemporary w o r l d p o l i t i c s . They argue t h a t t h e most p e r s u a s i v e e x p l a n a t i o n s o f how i s s u e s a r e d e a l t w i t h i n i n t e r n a t i o n a l r e l a t i o n s a r e f r e q u e n t l y b a s e d on t h e d i s t r i b u t i o n o f power i n a p a r t i c u l a r i s s u e - a r e a , on t h e i m p e r a t i v e s a s s o c i a t e d w i t h t e c h n o l o g i c a l and economic p r o c e s s e s , and on t h e i n c r e a s i n g l y s i g n i f i c a n t r o l e s o f i n t e r n a t i o n a l i n s t i t u t i o n s i n m e d i a t i n g c l a s h e s o f i n t e r e s t s between n a t i o n s and f a c i l i t a t i n g t h e i r c o l l a b o r a t i o n i n p u r s u i t o f common g o a l s . ^ - 32 -Thus, a c c o r d i n g t o t h i s i n c r e a s i n g l y p o p u l a r i n t e r p r e t a t i o n o f i n t e r -n a t i o n a l p o l i t i c s , i n t e r d e p e n d e n c e has become a b e t t e r "metaphor" t h a n dependency f o r u n d e r s t a n d i n g N o r t h - S o u t h r e l a t i o n s . " B a r g a i n i n g and n e g o t i a t i o n s " have r e p l a c e d "command and f o r c e " i n t h e i n v e n t o r y o f 6 7 c o n c e p t s w h i c h t h e a n a l y s t b r i n g s t o b e a r on N o r t h - S o u t h i s s u e s . I n t e r d e p e n d e n c e , by r e d u c i n g t h e advantages t h a t a c c r u e t o t h e N o r t h by v i r t u e o f i t s s u p e r i o r i t y i n " o v e r a l l " power, has improved t h e r e l a t i v e b a r g a i n i n g p o s i t i o n o f t h e LDCs. The more t h e i n t e r n a t i o n a l p o l i t i c a l system and t h e g l o b a l economy can be c h a r a c t e r i z e d as i n t e r d e p e n d e n t , "t h e h a r d e r i t becomes t o m a i n t a i n q u a l i t a t i v e l y u n e q u a l ( i . e . s u p e r -68 o r d i n a t e - s u b o r d i n a t e ) r e l a t i o n s among t h e u n i t s o f t h e s y s t e m . " As economic i n t e r d e p e n d e n c e grows and t h e South e x p e r i e n c e s a c c r e t i o n s i n i t s power, t h e b a r g a i n i n g p r o c e s s , w h i c h " i s e s s e n t i a l l y a form o f i n t e r d e p e n d e n t 69 b e h a v i o r , " becomes e v e r more c e n t r a l t o N o r t h - S o u t h r e l a t i o n s . S o u t h e r n b a r g a i n i n g p o s i t i o n s have improved t h a n k s t o s u c h " s y s t e m i c " changes as " t h e d i m i n i s h i n g u t i l i t y o f f o r c e i n N o r t h - S o u t h r e l a t i o n s , t h e g r o w i n g c o n s t r a i n t s on N o r t h e r n f o r e i g n p o l i c i e s l i n k e d t o g r o w i n g w e l f a r e s t a t e demands, and enhanced S o u t h e r n c a p a c i t i e s t o use i n t e r n a t i o n a l o r g a n i z a t i o n s 70 and l i n k a g e s t r a t e g i e s t o a c h i e v e t h e i r own g o a l s . " I n a d d i t i o n , many LDCs a r e a b l e t o improve t h e i r t e c h n i c a l , i n t e l l e c t u a l and b u r e a u c r a t i c c a p a b i l i t i e s as t h e y l e a r n from p a s t e x p e r i e n c e s w i t h t h e i n t e r n a t i o n a l m a r k e t p l a c e and f o r e i g n c a p i t a l . Thus a d e v e l o p i n g c o u n t r y ' s b a r g a i n i n g p o s i t i o n may be enhanced t h r o u g h t h e a c q u i s i t i o n o f knowledge, as Moran has d e m o n s t r a t e d i n h i s a n a l y s i s o f C h i l e a n p o l i c y t o w a r d f o r e i g n - o w n e d copper c o r p o r a t i o n s . - 33 -I n s h o r t , a l t h o u g h power asymmetries and v a r i a t i o n i n degrees o f dependence and v u l n e r a b i l i t y c o n t i n u e t o f a v o r t h e N o r t h , much o f t h e r e c e n t l i t e r a t u r e on t h e i n t e r n a t i o n a l p o l i t i c a l system s u g g e s t s t h a t weaker a c t o r s can o f t e n e x p l o i t t h e i r asymmetric s t a t u s i n c o n d i t i o n s o f economic i n t e r d e p e n d e n c e , t h a t such asymmetries w i l l i n any case t e n d t o be r e d u c e d as i n t e r d e p e n d e n c e i n c r e a s e s between N o r t h and S o u t h , and t h a t t h e p r o c e s s o f b a r g a i n i n g and t h e f o r a i n w h i c h i t t a k e s p l a c e a r e o f 72 c r i t i c a l i m p o r t a n c e i n a n a l y z i n g N o r t h - S o u t h i s s u e s . The t h i r d group o f n o n - M a r x i s t s t u d e n t s o f N o r t h - S o u t h r e l a t i o n s can p e r h a p s be l a b e l l e d t h e " g l o b a l r e f o r m e r s , " i n o r d e r t o d i s t i n g u i s h them from t h e m a r k e t - o r i e n t e d l i b e r a l r e f o r m e r s d i s c u s s e d above. These s c h o l a r s a r e s t r o n g l y s u p p o r t i v e o f t h e T h i r d World's a t t e m p t s t o o b t a i n e x t e n s i v e r e f o r m o f t h e g l o b a l economic system and i t s i n s t i t u t i o n s and i t s c u r r e n t e f f o r t t o i n s t i t u t e a New I n t e r n a t i o n a l Economic O r d e r . A l t h o u g h t h e y a r e by no means s a t i s f i e d w i t h t h e South's c u r r e n t p l a c e i n t h e i n t e r n a t i o n a l d i v i s i o n o f l a b o r , t h e g l o b a l r e f o r m e r s do a c c e p t two p r o p o s i t i o n s o f c r i t i c a l i m p o r t a n c e t o t h i s s t u d y . F i r s t , t h e y agree t h a t N o r t h - S o u t h t r a d e can b e n e f i t t h e South and h e l p i t t o d e v e l o p , even w i t h i n t h e c o n t e x t o f a c a p i t a l i s t i n t e r n a t i o n a l o r d e r . Second, t h e y p e r c e i v e t h a t t h e LDCs e n j o y s u f f i c i e n t economic and p o l i t i c a l power t o make t h e p r o c e s s o f b a r g a i n i n g t o a c h i e v e r e f o r m s a f e a s i b l e and meaning-f u l s t r a t e g y . The. g l o b a l r e f o r m e r s o f f e r a h a r s h c r i t i q u e o f contemporary g l o b a l t r a d e and economic r e l a t i o n s , i n c l u d i n g t h e N o r t h - S o u t h t r a d e component. The c h i e f t a r g e t o f t h i s c r i t i q u e i s n o t , as f o r t h e l i b e r a l r e f o r m e r s , - 34 -t r a d e r e s t r i c t i o n s and t h e l a c k o f c o m p e t i t i o n i n c e r t a i n m a r k e t s , b u t r a t h e r t h e n o t i o n t h a t t h e u n r e g u l a t e d market i t s e l f w i l l o p e r a t e so as t o r e d u c e t h e s t a g g e r i n g g l o b a l i n e q u a l i t y t h a t f a c e s t h e i n t e r n a t i o n a l community. A c c o r d i n g t o M y r d a l , " U n r e g u l a t e d market f o r c e s w i l l n o t work toward r e a c h i n g any e q u i l i b r i u m w h i c h c o u l d i m p l y a t r e n d t o w a r d an 73 e q u a l i z a t i o n o f incomes" i n t h e w o r l d , I n l a r g e p a r t t h i s i s due t o t h e r o l e o f t e c h n o l o g y i n t h e modern i n t e r n a t i o n a l economy, w h i c h r e c e i v e s 74 c o n s i d e r a b l e a t t e n t i o n from t h e g l o b a l r e f o r m e r s . A c c o r d i n g t o S i n g e r and A n s a r i , t h e N o r t h ' s monopoly o v e r t e c h n o l o g y " e x p l a i n s more o f t h e m a l d i s t r i b u t i o n o f b e n e f i t s from t r a d e and i n v e s t m e n t " t h a n do t h e p a t t e r n o f S o u t h e r n f a c t o r endowments o r t h e a l l e g e d m i s a l l o c a t i o n o f r e s o u r c e s by i n e f f e c t i v e S o u t h e r n governments s t r e s s e d by l i b e r a l a n a l y s t s . Thus, t h e LDCs "cannot overcome th e p r o b l e m o f underdevelopment as l o n g as e f f o r t s a r e n o t made t o b r i d g e t h e t e c h n o l o g i c a l gap t h a t s e p a r a t e s them from 75 t h e r i c h e r c o u n t r i e s . " I n g e n e r a l , t h e g l o b a l r e f o r m e r s argue t h a t " t h e s o - c a l l e d market mechanism i s w e i g h t e d h e a v i l y a g a i n s t t h e i n t e r e s t s o f t h e p o o r n a t i o n s and t h a t t h e y a r e o f t e n d e n i e d an e q u a l i t y o f o p p o r t u n i t y " i n t h e c u r r e n t i n t e r -76 n a t i o n a l economic o r d e r . The s o l u t i o n s f a v o r e d by a d h e r e n t s t o t h i s v i e w i n v o l v e t h e c r e a t i o n o f new and t h e s t r e n g t h e n i n g o f e x i s t i n g i n t e r n a t i o n a l economic o r g a n i z a t i o n s i n o r d e r t o p r o v i d e t h e LDCs w i t h a k i n d o f c o u n t e r -w e i g h t t o t h e i n t e r n a t i o n a l market p r o c e s s e s t h a t have a l l e g e d l y f a i l e d t o promote s u f f i c i e n t l y t h e i r economic development and i n d u s t r i a l i z a t i o n . W a l l e r i s u c c i n c t l y summarizes t h e g l o b a l r e f o r m e r s ' p r e s c r i p t i o n : - 35 -S i n c e t h e r e i s no w o r l d government t o i n t e r v e n e i n t h e i n t e r n a t i o n a l market t o c o r r e c t t h e uneven development among n a t i o n s , i t i s e s s e n t i a l t h a t i n t e r n a t i o n a l i n s t i -t u t i o n s be c r e a t e d . t o d e a l w i t h problems a r i s i n g f o r t h e p e r i p h e r y s t a t e s . 7 7 These i n t e r n a t i o n a l i n s t i t u t i o n s , p r e s u m a b l y dominated by t h e more numerous LDCs, would seek t o promote such g l o b a l economic p o l i c i e s as a u t o m a t i c t e c h n o l o g y t r a n s f e r s t o t h e South t o reduc e t h e t e c h n o l o g i c a l gap, s t r i c t e r c o n t r o l s on t h e a c t i v i t i e s o f m u l t i n a t i o n a l c o r p o r a t i o n s (MNCs), s t a b i l i z a t i o n o f commodity p r i c e s and e a r n i n g s , improvement i n t h e e x i s t i n g G e n e r a l i z e d System o f P r e f e r e n c e (GSP) schemes t h a t g r a n t t h e LDCs p r e f e r e n t i a l t a r i f f t r e a t m e n t f o r t h e i r e x p o r t s o f m a n u f a c t u r e s and s e m i - m a n u f a c t u r e s , and a g e n e r a l r e d u c t i o n o f N o r t h e r n t r a d e b a r r i e r s t h a t harm LDCs'- e x p o r t p o s s i b i l i t i e s . I t i s i m p o r t a n t t o r e c o g n i z e t h a t t h e v a r i o u s r e f o r m p r o p o s a l s p u t f o r w a r d by s u p p o r t e r s o f a New I n t e r n a t i o n a l Economic Order aim n o t t o d e s t r o y t h e market ( i . e . c a p i t a l i s t ) s y s t e m , b u t r a t h e r t o m i t i g a t e some o f i t s p e r c e i v e d d e l e t e r i o u s e f f e c t s on t h e So u t h . Indeed, t h e v e r y n o t i o n t h a t t h e N o r t h e r n - d o m i n a t e d c a p i t a l i s t s ystem can be " r e f o r m e d " b e t r a y s a b e l i e f t h a t t h e LDCs can b e n e f i t from p a r t i c i p a t i n g i n t h a t economic o r d e r , e s p e c i a l l y o f c o u r s e i f t h e p r e f e r r e d r e f o r m s a r e e n a c t e d . That t h e g l o b a l r e f o r m e r s c o n t i n u e t o e v i n c e a b a s i c f a i t h i n t h e South's a b i l i t y t o d e v e l o p w i t h i n an e s s e n t i a l l y c a p i t a l i s t i n t e r n a t i o n a l economy i s made a l l t h e more c l e a r by e x a m i n i n g t h e i r v i e w s about t h e r e v o l u t i o n a r y / d i s e n g a g e -ment s t r a t e g y e n u n c i a t e d by t h e dependency s c h o o l . Mahbub u l . H a q , a key f i g u r e among t h e g l o b a l r e f o r m e r s , c h a r g e s t h a t t h e disengagement p r e s c r i p t i o n i s h i g h l y " i d e a l i s t i c " and t h a t t h e So u t h s t a n d s t o g a i n much more from - 36 -78 c o o p e r a t i o n and b a r g a i n i n g t h a n from r e v o l u t i o n and s e l f - r e l i a n c e . 79 Development e c o n o m i s t s S i n g e r and A n s a r i c o n c u r w i t h t h i s v i e w . A n o t h e r s y m p a t h i z e r w i t h t h e T h i r d World's p l i g h t c h a r a c t e r i z e s t h e disengagement s t r a t e g y as "an e l u s i v e dream," inasmuch as t h e i n t e r n a t i o n a l c a p i t a l i s t system w i l l c o n t i n u e t o e x i s t even i f a l a r g e number o f LDCs opt out o f i t and t h e l a t t e r a r e n o t l i k e l y t o s u r v i v e w i t h o u t e x t e r n a l economic l i n k a g e s 80 i n any c a s e . R a t h e r t h a n e x p l o i t a t i o n and r e v o l u t i o n , t h e metaphors o f b a r g a i n i n g and i n t e r d e p e n d e n c e a r e i n v o k e d by many g l o b a l r e f o r m e r s . A c c o r d i n g t o one eminent spokesman, i t i s e s s e n t i a l t h a t whatever p r o p o s a l s we f o r m u l a t e b a l a n c e t h e i n t e r e s t s o f b o t h r i c h and p o o r n a t i o n s . I t i s easy t o f o r m u l a t e p a r t i s a n p o s i t i o n s . But we l i v e i n an i n t e r d e p e n d e n t w o r l d . I f we a r e t o l i v e w i t h o u t major c o n f r o n t a t i o n s , we s h o u l d t h i n k o f p r o -p o s a l s w h i c h , w h i l e b e n e f i t t i n g t h e T h i r d W o r l d , do n o t h u r t t h e i n t e r e s t s o f t h e w o r l d as a whole and w h i c h can o b t a i n more w i l l i n g c o o p e r a t i o n from t h e r i c h n a t i o n s . 8 1 T h i s i s h a r d l y t h e t y p e o f u t t e r a n c e one would e x p e c t t o h e a r from a Gunder F r a n k , an Amin, o r a G a l t u n g . The T h i r d W o r l d Forum, an i n f l u e n t i a l group o f T h i r d W o r l d i n t e l l e c t u a l s c o n c e r n e d w i t h development i s s u e s , e x p r e s s e s i t s f a i t h t h a t " i t i s p o s s i b l e t o e v o l v e p r o p o s a l s w h i c h b a l a n c e t h e l o n g e r -term i n t e r e s t s o f t h e d e v e l o p e d c o u n t r i e s and t h e T h i r d W o r l d and . . . a r e 82 a c c e p t a b l e t o t h e e n t i r e i n t e r n a t i o n a l community." However, w h i l e i t i s t r u e t h a t t h e g l o b a l r e f o r m e r s t e n d t o see b o t h N o r t h and South embedded i n a s t r u c t u r e o f i n t e r d e p e n d e n c e , t h e y d e p l o r e t h e asymmetry w h i c h c o n t i n u e s t o e x i s t between them, and argue s t r o n g l y f o r a d e l i b e r a t e " t i l t " t o w a r d d e v e l o p i n g n a t i o n s . Such a t i l t i n g would r e q u i r e : a) removal o f t h o s e a s p e c t s o f - 37 -i n t e r n a t i o n a l economic r e l a t i o n s w h i c h a c t as r e s t r a i n t s on t h e development o f t h e S o u t h , and b) w i l l i n g n e s s on t h e p a r t o f t h e N o r t h t o make " i n t e r d e p e n d e n c e " . . . n o t a mere " c o v e r " f o r p r o t e c t i n g i t s own i n t e r e s t s , b u t r a t h e r a means t o b r i n g about a genuine c o m p l e m e n t a r i t y o f N o r t h e r n and S o u t h e r n i n t e r e s t s . 8 3 I t s h o u l d be n o t e d t h a t t h e r e f o r m e r s ' b e l i e f t h a t such a " c o m p l e m e n t a r i t y " o f i n t e r e s t s between N o r t h and South i s p o s s i b l e i n t h e c o n t e x t o f an i n t e r n a t i o n a l c a p i t a l i s t system ( a l b e i t a " r e f o r m e d " one) s h a r p l y d i s t i n -g u i s h e s them from dependency w r i t e r s . I n c o n n e c t i o n w i t h N o r t h - S o u t h t r a d e r e l a t i o n s c o n c e r n i n g m a n u f a c t u r e s , t h e g l o b a l r e f o r m e r s s t r e s s t h e need f o r more l i b e r a l and a s s u r e d a c c e s s t o d e v e l o p e d c o u n t r y markets f o r LDC e x p o r t s o f m a n u f a c t u r e d goods; f o r c o n t i n u o u s a d j u s t m e n t on t h e p a r t o f d e v e l o p e d c o u n t r i e s ; and f o r t i g h t e r i n t e r n a t i o n a l c o n t r o l and s u r v e i l l a n c e o v e r t h e use o f s a f e g u a r d s by i n d u s -t r i a l c o u n t r i e s . These p r e s c r i p t i o n s a r e q u i t e c o m p a t i b l e w i t h t h e v i e w s o f l i b e r a l e c o n o m i s t s . But t h e g l o b a l r e f o r m e r s go on t o a d v o c a t e t r a d i n g p r e f e r e n c e s f o r LDCs and o t h e r forms o f "market i n t e r v e n t i o n " t h a t a r e anathema t o many l i b e r a l s . They a l s o argue i n f a v o r o f a g r e a t e r measure o f " c o l l e c t i v e s e l f - r e l i a n c e " ( i . e . i n t r a - L D C t r a d e i n m a n u f a c t u r e s ) as a c o n s c i o u s p o l i c y c h o i c e , i n s p i t e o f t h e f a c t t h a t e x p o r t i n g t o t h e N o r t h i s t y p i c a l l y more p r o f i t a b l e . F i n a l l y , t h e g l o b a l r e f o r m e r s a r e q u i c k t o p o i n t t o t h e a l l e g e d s h o r t c o m i n g s c h a r a c t e r i z i n g e x i s t i n g i n s t i t u t i o n a l arrangements and su g g e s t t h a t a new u n i v e r s a l g l o b a l r e g u l a t o r y i n s t i t u t i o n 84 s h o u l d r e p l a c e t h e N o r t h e r n - d o m i n a t e d GATT and l a r g e l y c o n s u l t a t i v e UNCTAD. A f i n a l a s p e c t o f t h e g l o b a l r e f o r m e r s ' a n a l y s i s o f N o r t h - S o u t h p o l i t i c a l economy t h a t r e q u i r e s b r i e f e x a m i n a t i o n c o n c e r n s t h e q u e s t i o n o f - 38 -S o u t h e r n b a r g a i n i n g power r a i s e d e a r l i e r . I t i s o f c o u r s e t r u e t h a t t h e whole t h r u s t o f t h e v i g o r o u s i n t e l l e c t u a l a dvocacy o f g l o b a l r e f o r m s on t h e p a r t o f t h e s e s c h o l a r s p r e s u p p o s e s some s o r t o f f a i t h i n t h e work-a b i l i t y and p o t e n t i a l i t i e s o f p o l i t i c a l b a r g a i n i n g from t h e p e r s p e c t i v e o f t h e LDCs. L i k e t h e s t u d e n t s o f i n t e r n a t i o n a l i n t e r d e p e n d e n c e d i s c u s s e d above, t h e g l o b a l r e f o r m e r s argue t h a t t h e South p o s s e s s e s s i g n i f i c a n t b a r g a i n i n g power and t h a t i t w i l l l i k e l y e n j o y even more l e v e r a g e i n t h e f u t u r e . One p r o p o n e n t o f "poor power" s u g g e s t s t h a t t h e c o n c e p t o f " c o l l e c t i v e b a r g a i n i n g " i s e n l i g h t e n i n g : " t h e b a s i c o b j e c t i v e o f t h e emerging t r a d e u n i o n o f t h e p o o r n a t i o n s i s t o n e g o t i a t e a new d e a l w i t h 85 t h e r i c h n a t i o n s t h r o u g h t h e i n s t r u m e n t o f c o l l e c t i v e b a r g a i n i n g . " Not s u r p r i s i n g l y , t h o s e who c o n c e i v e o f t h e LDCs as c o n s t i t u t i n g a k i n d o f f l e d g l i n g g l o b a l t r a d e u n i o n s t r e s s t h e i m p o r t a n c e o f S o u t h e r n p o l i t i c a l s o l i d a r i t y w h i l e n e g o t i a t i n g w i t h t h e N o r t h e r n " e m p l o y e r . " ^ The t y p e o f power t h e S o u t h e n j o y s i n n e g o t i a t i n g w i t h t h e advanced c a p i t a l i s t c o u n t r i e s i s , a c c o r d i n g t o t h e g l o b a l r e f o r m e r s , l a r g e l y p o l i -t i c a l i n n a t u r e . Mahbub u l Haq n o t e s t h a t demographic t r e n d s , t h e p o s s i b l e s p r e a d o f n u c l e a r weapons, t h e need t o s e c u r e S o u t h e r n s u p p o r t o r a t l e a s t a c q u i e s c e n c e f o r g l o b a l common p r o p e r t y r e g i m e s , and t h e f a c t t h a t " t h e d e v e l o p e d c o u n t r i e s a r e l i k e l y t o need t h e T h i r d W o r l d i n t h e f u t u r e . . . 87 t o s u s t a i n t h e e f f e c t i v e demand f o r t h e i r e x p a n d i n g p r o d u c t i o n , " a l l p o i n t t o an a u g m e n t a t i o n o f S o u t h e r n p o l i t i c a l power i n t h e i n t e r n a t i o n a l s ystem. T h i s power e s s e n t i a l l y r e s t s on an i n c r e a s i n g a b i l i t y " t o d i s r u p t t h e l i f e s t y l e s o f t h e r i c h . I n any c o n f r o n t a t i o n , t h e r i c h have f a r more t o l o s e and a r e g e n e r a l l y f a r more w i l l i n g t o come t o a w o r k a b l e compromise. - 39 -Thus, w h i l e t h e y d i f f e r i n t h e i r a n a l y t i c a l f o c i somewhat, t h e g l o b a l r e f o r m e r s appear t o s h a r e w i t h s t u d e n t s o f i n t e r d e p e n d e n c e t h e b e l i e f t h a t an i n t e r d e p e n d e n t i n t e r n a t i o n a l system h e r a l d s a growth i n weaker s t a t e s ' c a p a c i t y t o e x e r c i s e p o l i t i c a l i n f l u e n c e o v e r t h e ways i n w h i c h i n t e r n a t i o n a l economic i s s u e s a r e d e a l t w i t h . I I I . C o n c l u s i o n D i f f e r e n t i n t e l l e c t u a l approaches t o t h e a n a l y s i s o f N o r t h - S o u t h r e l a t i o n s f l o w from c o n t r a s t i n g p e r c e p t i o n s c o n c e r n i n g t h e scope f o r m e a n i n g f u l n e g o t i a t i o n s between r i c h and p o o r and t h e e x t e n t t o w h i c h a " s y s t e m " s t i l l l a r g e l y dominated by t h e f o r m e r can n o n e t h e l e s s p r o v i d e b e n e f i t s f o r t h e l a t t e r . I t i s contended h e r e t h a t t h e dependency s c h o o l comes t o q u i t e d i f f e r e n t c o n c l u s i o n s r e g a r d i n g t h e s e m a t t e r s t h a n do t h e a u t h o r s grouped under t h e i n t e r d e p e n d e n c e r u b r i c . Even though t h e " i n t e r -dependence" s c h o l a r s a r e a d i v e r s e l o t and t h e r e i s c e r t a i n l y no consensus among them on t h e need f o r r e f o r m o r t h e p r e c i s e n a t u r e o f t h e South's economic a f f l i c t i o n s , t h e y do s h a r e enough common s t r a n d s o f a g e n e r a l p o l i t i c a l - e c o n o m i c w o r l d - v i e w t o j u s t i f y c a t e g o r i z i n g them under a s i n g l e l a b e l , a t l e a s t f o r t h e p u r p o s e s o f t h e p r e s e n t s t u d y . U n l i k e t h a t o f t h e dependency t h e o r i s t s , t h i s more l i b e r a l w o r l d - v i e w does n o t see t h e p o v e r t y o f t h e South as an i n e v i t a b l e p r o d u c t o f t h e p r o s p e r i t y o f t h e N o r t h ; does n o t p o r t r a y t h e n o n - s o c i a l i s t d e v e l o p i n g c o u n t r i e s as l o c k e d i n t o a w o r l d c a p i t a l i s t o r d e r t h a t p e r p e t u a t e s t h e i r p r o b l e m s ; and does n o t b e l i e v e t h a t weaker a c t o r s a r e b e r e f t o f b a r g a i n i n g power w i t h i n t h e i n t e r n a t i o n a l c a p i t a l i s t system. - 40 -E v a l u a t i n g t h e m e r i t s o f t h e arguments o f t h e v a r i o u s s c h o o l s o f t h o u g h t d i s c u s s e d above i s n o t an easy t a s k . F o r one t h i n g , t h e a u t h o r can s c a r c e l y l o d g e a c l a i m t o p e r f e c t " o b j e c t i v i t y " i n h i s c o n f r o n t a t i o n w i t h t h e N o r t h - S o u t h p o l i t i c a l economy l i t e r a t u r e . A more s e r i o u s d i f f i c u l t y d e r i v e s from t h e f a c t t h a t t h e c o n c e p t u a l b a s e s o f t h e d e p e n d e n c i a a n a l y s i s , w h i c h a r e t r a c e a b l e t o M a r x i s t t r a d i t i o n s o f t h o u g h t and i n q u i r y , have l i t t l e i n common w i t h t h e b a s i c i n t e l l e c t u a l a s s u m p t i o n s u n d e r l y i n g most o f t h e w r i t i n g s h e r e grouped under t h e i n t e r d e p e n d e n c e l a b e l . But w h i l e i t i s u n d o u b t e d l y i m p o s s i b l e t o p r o v e t h a t one s c h o l a r l y a pproach t o N o r t h - S o u t h p o l i t i c a l economy i s " r i g h t " o r d e f i n i t i v e l y " s u p e r i o r " t o o t h e r s , one can hope t o g a i n some i n s i g h t s i n t o how t h e y d i f f e r and d i s c o v e r whether one "metaphor" might be more p e r s u a s i v e o r a c c u r a t e t h a n a n o t h e r by s e l e c t i n g a p a r t i c u l a r a s p e c t o f N o r t h - S o u t h r e l a t i o n s f o r c l o s e e x a m i n a t i o n . I n t h e n e x t c h a p t e r , a f a i r l y d e t a i l e d , l a r g e l y d e s c r i p t i v e a c c o u n t o f N o r t h - S o u t h b a r g a i n i n g o v e r a c c e s s t o N o r t h e r n markets f o r LDC e x p o r t s o f m a n u f a c t u r e s i s p r o v i d e d . The p u r p o s e o f t h i s l e n g t h y t r e a t m e n t i s t o answer t h e f o l l o w i n g q u e s t i o n s : 1) What have been t h e m a j o r p r i o r i t i e s o f t h e LDCs i n t h e i r r e l a t i o n s w i t h t h e d e v e l o p e d c a p i t a l i s t c o u n t r i e s i n s o f a r as t h e i s s u e o f market a c c e s s f o r m a n u f a c t u r e d e x p o r t s i s concerned? 2). How has t h e b a r g a i n i n g proceeded? 3) What outcomes have e v e n t u a t e d from t h i s b a r g a i n i n g ? 4) How has t h e p o s i t i o n o f t h e LDCs i n w o r l d m a n u f a c t u r e s t r a d e e v o l v e d d u r i n g t h e p o s t w a r p e r i o d ? An a t t e m p t t o a n a l y z e t h e e v e n t s and t r e n d s o u t l i n e d i n C h a p t e r Two i s o f f e r e d i n t h e t h i r d c h a p t e r , where a p r i m a r y c o n c e r n w i l l be t o e v a l u a t e t h e dependency and i n t e r d e p e n d e n c e "metaphors" i n t h e l i g h t o f t h e m a n u f a c t u r e d e x p o r t s case s t u d y . - 41 -Notes t o C h a p t e r 1 1 Among n o n - M a r x i s t s , a v e r y i m p o r t a n t e a r l y s t a t e m e n t o f t h e gro w i n g s a l i e n c e o f economic i s s u e s i n w o r l d p o l i t i c s was R i c h a r d Cooper, The  Economics o f I n t e r d e p e n d e n c e (New Y o r k : M c G r a w - H i l l , 1968). 2 Three s t u d i e s , r e p r e s e n t a t i v e o f d i f f e r e n t s c h o o l s o f th o u g h t on t h e s u b j e c t , w h i c h a l l combine p r e s c r i p t i o n w i t h a n a l y s i s , a r e Roger D. Hansen, Beyond t h e N o r t h - S o u t h S t a l e m a t e (New Y o r k : M c G r a w - H i l l f o r t h e C o u n c i l on F o r e i g n R e l a t i o n s , 1979); R o b e r t W. T u c k e r , The I n e q u a l i t y o f N a t i o n s (New Y o r k : B a s i c Books, 1977); and Samir Amin, A c c u m u l a t i o n on a W o r l d  S c a l e (New Y o r k : M o n t h l y Review P r e s s , 1974). 3 R. D. W a l l e r i , "The P o l i t i c a l Economy L i t e r a t u r e on N o r t h - S o u t h R e l a t i o n s , " I n t e r n a t i o n a l S t u d i e s Q u a r t e r l y 22 (December 1978): 587. 4 I b i d . , p. 587. 5 I b i d . , p. 594. 6 I b i d . , 590. Examples o f ma i n s t r e a m l i b e r a l e c o n o m i s t s who have w r i t t e n e x t e n s i v e l y on N o r t h - S o u t h r e l a t i o n s i n c l u d e C. F r e d B e r g s t e n , Toward a New I n t e r n a t i o n a l Economic O r d e r ( L e x i n g t o n , Mass.: D. C. Heath, 1975); J a g d i s h B h a g w a t i , ed., The New I n t e r n a t i o n a l Economic O r d e r (Cambridge, Mass.: MIT P r e s s , 1977); and R i c h a r d Cooper, "A New I n t e r n a -t i o n a l Economic O r d e r f o r M u t u a l G a i n , " F o r e i g n P o l i c y , no. 36 ( S p r i n g 1977). P o l i t i c a l s c i e n t i s t s who would f a l l u nder W a l l e r i ' s l i b e r a l l a b e l w i t h r e s p e c f t o N o r t h - S o u t h i s s u e s i n c l u d e R o b e r t Keohane and J o s e p h Nye, Power and I n t e r d e p e n d e n c e : World P o l i t i c s i n T r a n s i t i o n ( B o s t o n : L i t t l e , Brown, 1977); Edward Morse, M o d e r n i z a t i o n and t h e T r a n s f o r m a t i o n o f I n t e r n a t i o n a l R e l a t i o n s (New Y o r k : The F r e e P r e s s , 1976); and Hansen. 7 W a l l e r i , p. 595. 8 Cooper, "A New I n t e r n a t i o n a l Economic O r d e r f o r M u t u a l G a i n . " A l s o , Hansen, c h. 7. 9 W a l l e r i , pp. 596-97. See t h e d i s c u s s i o n i n s e c t i o n one o f t h e n e x t c h a p t e r . 10- . N o r t h - S o u t h : A Programme f o r S u r v i v a l (London: Pan Books, 1980). H e r e i n a f t e r c i t e d as N o r t h - S o u t h . 11 W a l l e r i , p. 606. 12 Ro b e r t Cox, " I d e o l o g i e s and t h e New I n t e r n a t i o n a l Economic O r d e r : R e f l e c t i o n s on Some Recent L i t e r a t u r e , " I n t e r n a t i o n a l O r g a n i z a t i o n 33 ( S p r i n g 1979): 257-300. 13 I b i d . , pp. 260-65. - 42 -14 T u c k e r , ch. 1. 15 Cox, p. 287. 16. See Haq's ma j o r work on N o r t h - S o u t h r e l a t i o n s , The P o v e r t y C u r t a i n : C h o i c e s f o r t h e T h i r d W o r ld (New Y o r k : C o l u m b i a U n i v e r s i t y P r e s s , 1976), e s p e c i a l l y c h s . 10 and 11. 17 R o b e r t G i l p i n , "Three Models o f t h e F u t u r e . " I n t e r n a t i o n a l O r g a n i z a t i o n 29 ( W i n t e r 1975): 38-9. 18 That many c r i t i c s o f t h e e x i s t i n g i n t e r n a t i o n a l economic s y s t e m none-t h e l e s s a r e a d h e r e n t s t o t h e v i e w t h a t LDCs can g a i n a g r e a t d e a l from p a r t i c i p a t i o n i n t h a t system w i l l be d e m o n s t r a t e d l a t e r i n t h i s c h a p t e r . 19 As W a l l e r i n o t e s , t h e major m e r c a n t i l i s t ( o r economic n a t i o n a l i s t ) w r i t i n g s have f o c u s e d on p o l i t i c a l - e c o n o m i c r e l a t i o n s among t h e N o r t h e r n s t a t e s . I n t h e e a r l y 1 9 t h c e n t u r y , m e r c a n t i l i s t a n a l y s t s a d v o c a t e d p o l i c i e s t o f o s t e r d o m e s t i c i n d u s t r i e s i n t h e t h e n "newly i n d u s t r i a l i z i n g " c o u n t r i e s - -Germany, J a p a n , and t h e U n i t e d S t a t e s . More r e c e n t m e r c a n t i l i s t w r i t e r s have t r a c e d t h e e s t a b l i s h m e n t o f t h e p o s t w a r l i b e r a l economic system t o A m e r i c a ' s p o l i t i c a l and m i l i t a r y hegemony, and t h e d e c l i n e o f t h a t system t o t h e e r o s i o n o f t h a t A m e r i c a n power. See D a v i d C a l l e o and Benjamin Rowland, A m e r i c a i n t h e World P o l i t i c a l Economy ( B l o o m i n g d a l e : I n d i a n a U n i v e r s i t y P r e s s , 1973). I t i s u n l i k e l y , g i v e n t h e s m a l l number o f c i t a t i o n s p r o v i d e d by W a l l e r i and Cox, t h a t t h e r e i s an i m p o r t a n t p e r s p e c t i v e on N o r t h - S o u t h r e l a t i o n s t h a t can be s a i d t o employ a m e r c a n t i l i s t framework f o r a n a l y s i s o f i s s u e s . 20 S i n c e t h i s s t u d y a t t e m p t s t o a n a l y z e a p a r t i c u l a r N o r t h - S o u t h economic i s s u e a r e a , and n o t t o e l a b o r a t e on t h e v a r i o u s ways i n w h i c h s c h o l a r s d i f f e r f r om one a n o t h e r i n t h e i r a p p r o a c h t o N o r t h - S o u t h p o l i t i c a l economy as a whole, i t seems j u s t i f i a b l e t o f o c u s on a s m a l l number o f groups o f s c h o l a r s r a t h e r t h a n on d e l i n e a t i n g t h e o f t e n s u b t l e d i f f e r e n c e s between a n a l y s t s who n o n e t h e l e s s s h a r e a s i m i l a r b a s i c s e t o f v i e w s . Thus, i n what f o l l o w s , b o t h more c o n s e r v a t i v e e c o n o m i s t s and many r e f o r m e r s who f a v o r some degree o f market i n t e r v e n t i o n i n t h e g l o b a l economy a r e grouped w i t h i n t h e i n t e r d e p e n -dence p e r s p e c t i v e , because t h e y t e n d t o s h a r e a b e l i e f i n t h e e f f i c a c y o f LDC i n v o l v e m e n t i n t h e i n t e r n a t i o n a l c a p i t a l i s t economy. I t i s p r i m a r i l y t h i s t h a t s h a r p l y d i f f e r e n t i a t e s them f r o m t h e i r r a d i c a l (as opposed t o " r e f o r m i s t " ) d e p e n d e n c i a c o l l e a g u e s . 21 See James Ca p o r a s o , " I n t r o d u c t i o n : Dependence and Dependency i n t h e G l o b a l System," and "Dependence, Dependency and Power i n t h e G l o b a l System: A S t r u c t u r a l and B e h a v i o r a l A n a l y s i s , " I n t e r n a t i o n a l O r g a n i z a t i o n 32 ( W i n t e r 1978): 1-12, 13-44. 22 C a p o r a s o , "Dependence, Dependency and Power," p. 18. - 43 -23 C a p o r a s o , " I n t r o d u c t i o n , " p. 4. 24 I b i d . , p. 1. A v e r y s i m i l a r d i c h o t o m y i n t h e N o r t h - S o u t h r e l a t i o n s l i t e r a t u r e i s d e t e c t e d by Johan G a l t u n g ; see "Appendix: World S o c i a l G o a l s , " c i t e d i n C a p o r a s o , "Dependence, Dependency and Power," p. 33. 25 The b a s i c L a t i n A m e r i c a n dependency works c o n s i d e r e d h e r e a r e T. dos S a n t o s , "The S t r u c t u r e o f Dependence,'" The A m e r i c a n Economic Review, P a p e r s and P r o c e e d i n g s o f t h e E i g h t y - S e c o n d A n n u a l M e e t i n g o f t h e A m e r i c a n Economic A s s o c i a t i o n , 60 (May 1970): 231-36; Andre Gunder F r a n k , Development  and Underdevelopment i n L a t i n A m e r i c a (New Y o r k : M o n t h l y Review P r e s s , 1968); F r a n k , L a t i n A m e r i c a : Underdevelopment o r R e v o l u t i o n (New Y o r k : M o n t h l y Review P r e s s , 1969); F r a n k , C a p i t a l i s m and Underdevelopment i n L a t i n A m e r i c a : H i s t o r i c a l S t u d i e s o f C h i l e and B r a z i l (New Y o r k : M o n t h l y Review P r e s s , 1967); F r a n k , James D. C o c k c r o f t and D a l e L. J o h n s o n , Dependence and Under- development: L a t i n A m e r i c a ' s P o l i t i c a l Economy (New Y o r k : Doubleday, 1972); Fernando H. C a r d o s o , " A s s o c i a t e d - D e p e n d e n t Development: T h e o r e t i c a l and P r a c t i c a l I m p l i c a t i o n s , " i n A l f r e d S t e p a n , e d . , A u t h o r i t a r i a n B r a z i l (New Haven: Y a l e U n i v e r s i t y P r e s s , 1973); J u l i o C o t l e r and R i c h a r d Fagen, eds., L a t i n A m e r i c a and t h e U n i t e d S t a t e s : The Changing P o l i t i c a l R e a l i t i e s ( S t a n f o r d , C a l i f . : S t a n f o r d U n i v e r s i t y P r e s s , 1974); P e t e r Evans, Dependent  Development: The A l l i a n c e o f M u l t i n a t i o n a l , S t a t e , and L o c a l C a p i t a l i n  B r a z i l ( P r i n c e t o n : P r i n c e t o n U n i v e r s i t y P r e s s , 1979); and Fernando Cardoso and Enzo F a l e t t o , Dependency and Development i n L a t i n A m e r i c a ( B e r k e l e y : U n i v e r s i t y o f C a l i f o r n i a P r e s s , 1979). 26 S c h o l a r s who have w r i t t e n about N o r t h - S o u t h r e l a t i o n s more g e n e r a l l y and u s e d a d e p e n d e n c i a framework i n d o i n g so i n c l u d e Samir Amin, A c c u m u l a t i o n  on a World S c a l e (New Y o r k : M o n t h l y Review P r e s s , 1974); Amin, " S e l f - R e l i a n c e and t h e New I n t e r n a t i o n a l Economic O r d e r , " M o n t h l y Review 29 ( J u l y - A u g u s t 1977): 8-18; A Emmanuel, Unequal Exchange: A S t u d y o f t h e I m p e r i a l i s m o f  Trade (New Y o r k : M o n t h l y Review P r e s s , 1972); R i c h a r d Fagen, " E q u i t y i n t h e South i n t h e C o n t e x t o f N o r t h - S o u t h R e l a t i o n s , " i n A l b e r t F i s h l o w e t a l . , R i c h N a t i o n s and Poor N a t i o n s i n t h e World Economy (New Y o r k : M c G r a w - H i l l f o r t h e C o u n c i l on F o r e i g n R e l a t i o n s , 1978); Fagen, "A Funny T h i n g Happened on t h e Way t o t h e M a r k e t : Thoughts on E x t e n d i n g Dependency I d e a s , " I n t e r n a t i o n a l O r g a n i z a t i o n 32 ( W i n t e r 1978): 287-300; Johan G a l t u n g , "A S t r u c t u r a l Theory o f I m p e r i a l i s m , " i n George M o d e l s k i , ed., T r a n s n a t i o n a l  C o r p o r a t i o n s and World Order (San F r a n c i s c o : Freeman, 1979); Immanuel W a l l e r s t e i n , The Modern World System: C a p i t a l i s t A g r i c u l t u r e and t h e O r i g i n s  o f t h e European World-Economy i n t h e S i x t e e n t h C e n t u r y (New Y o r k : Academic P r e s s , 1974); W a l l e r s t e i n , "Dependence i n an I n t e r d e p e n d e n t W o r l d : The L i m i t e d P o s s i b i l i t i e s f o r T r a n s f o r m a t i o n W i t h i n t h e C a p i t a l i s t World Economy," A f r i c a n S t u d i e s Review 17 ( A p r i l 1974): 2-27; W a l l e r s t e i n , "The R i s e and F u t u r e Demise o f t h e World C a p i t a l i s t System: Concepts f o r C o m p a r a t i v e A n a l y s i s , " C o m p a r a t i v e S t u d i e s i n H i s t o r y and S o c i e t y 16 (September 1974): 387-415. - 44 -27 W a l l e r i , p. 611. 28 F r a n k , " I n t r o d u c t i o n , " i n F r a n k , C o c k c r o f t and J o h n s o n , Dependence  and Underdevelopment, p p t - x - x i . 29 George L u k a c s , "The Marxism o f Rosa Luxembourg," i n L u k a c s , H i s t o r y  and C l a s s C o n s c i o u s n e s s (London: M e r l i n P r e s s , 1968), p. 27; c i t e d i n W a l l e r s t e i n , "The R i s e and F u t u r e Demise," p. 387. 30 T h i s i s t h e e s s e n t i a l p i c t u r e t h a t emerges i n t h e v a r i o u s works c i t e d i n f n . 25 and i n t h e work o f Amin and Fagen. W a l l e r s t e i n and G a l t u n g have u t i l i z e d somewhat d i f f e r e n t a n a l y t i c a l a p p r o a c h e s , and have f o c u s s e d more on t h e i n t e r n a t i o n a l s t r u c t u r e as a whole. 31 C a p o r a s o , "Dependence, Dependency and Power," pp. 41, 23. 32 Emmanuel, pp. 60-64 and 76-80. 33 I b i d . , p. 13. 34 See C h a r l e s K i n d l e b e r g e r , I n t e r n a t i o n a l Economics (Homewood, 111.: I r w i n , 1 9 73), pp. 30-35 f o r a c o n v e n t i o n a l e x p o s i t i o n . 35 Amin, " S e l f - R e l i a n c e , " p. 18. 36 W a l l e r s t e i n , The Modern World System, pp. 15-16. 37 G a l t u n g , "A S t r u c t u r a l T h e o r y o f I m p e r i a l i s m , " pp. 163-64. 38 F r a n k , C a p i t a l i s m and Underdevelopment i n L a t i n A m e r i c a , p. 9. 39 Dos S a n t o s , "The S t r u c t u r e o f Dependence," p. 233. 40 Dos S a n t o s , "The C r i s i s o f Contemporary C a p i t a l i s m , " L a t i n A m e r i c a n  P e r s p e c t i v e s 3 ( S p r i n g 1976): 86; c i t e d i n W a l l e r i , p. 609. 41 C a r d o s o , p. 163. 42 Dos S a n t o s , "The S t r u c t u r e o f Dependence," p. 234. 43 Evans, p. 9. 44 F r a n k , C a p i t a l i s m and Underdevelopment i n L a t i n A m e r i c a , p. 214; emphasis added. See a l s o t h e d i s c u s s i o n i n W a l l e r i , pp. 606-08. 45 Evans, p a s s i m . 46 Dos S a n t o s , "The S t r u c t u r e o f Dependence," p. 231. 47 Amin, " S e l f - R e l i a n c e " pp. 13-14. - 45 -48 Advocacy o f disengagement i s w i d e s p r e a d i n t h e d e p e n d e n c i a l i t e r a t u r e , as i s s u p p o r t f o r r e v o l u t i o n a r y u p h e a v a l i n t h e T h i r d W o r l d . See f o r example Amin, " S e l f - R e l i a n c e , " p a s s i m ; t h e a r t i c l e s by Fagen c i t e d above; and F r a n k , L a t i n A m e r i c a : Underdevelopment o r R e v o l u t i o n , pp. 371-409. Emmanuel t a k e s a more c o n v e n t i o n a l M a r x i s t v i e w , a r g u i n g t h a t r e v o l u t i o n i n t h e S o u t h i s n o t r e a l l y p o s s i b l e u n t i l a h i g h e r s t a g e o f economic development has been a t t a i n e d --and t h i s r e q u i r e s c o n t i n u e d p a r t i c i p a t i o n i n t h e c a p i t a l i s t w o r l d economy. See t h e exchange between Emmanuel and C h a r l e s B e t t e l h e i m a t t h e end o f Unequal Exchange, and t h e d i s c u s s i o n o f Emmanuel i n Cox. 49 C a r l o s D i a z - A l e j a n d r o , " N o r t h - S o u t h R e l a t i o n s : The Economic Component,' I n t e r n a t i o n a l O r g a n i z a t i o n 29 ( W i n t e r 1975): 213. 50 K i n d l e b e r g e r , p. 33, 51 D e l b e r t S n i d e r , I n t r o d u c t i o n t o I n t e r n a t i o n a l Economics (Homewood, 111.: I r w i n , 1 9 7 5 ) , c h . 2. 52 See i b i d . , c h . 5, and pp. 427-35. 53 I b i d . , pp. 429-30. 54 I b i d . , p. 430. 55 T h i s i s n o t e d by W a l l e r i , p. 595. Some o f t h e main l i b e r a l economic t r e a t m e n t s o f N o r t h - S o u t h t r a d e and o t h e r economic r e l a t i o n s c o n s u l t e d f o r t h e p r e s e n t s t u d y a r e H a r r y G. Johnson, Economic P o l i c i e s Toward t h e  D e v e l o p i n g C o u n t r i e s (Washington: B r o o k i n g s , 1967); H o l l i s B. Chenery, " T a r g e t s f o r Development," i n B a r b a r a Ward, e d . , The W i d e n i n g Gap (New Y o r k : C o l u m b i a U n i v e r s i t y P r e s s , 1971); Chenery and H e l e n Hughes, " I n d u s t r i a l i -z a t i o n and Trade T r e n d s : Some I s s u e s f o r t h e 1970s," i n Hughes, ed., P r o s p e c t s f o r P a r t n e r s h i p ( B a l t i m o r e : Johns H o p k i n s U n i v e r s i t y P r e s s , 1973); Chenery e t a l , R e d i s t r i b u t i o n W i t h Growth (London: O x f o r d U n i v e r s i t y P r e s s , 1974); R i c h a r d Cooper, "Economic I n t e r d e p e n d e n c e and F o r e i g n P o l i c y i n t h e 1970s," World P o l i t i c s 24 ( J a n u a r y 1972): 159-81; Cooper "A New I n t e r n a -t i o n a l Economic O r d e r f o r M u t u a l G a i n , " ; I s a i a h F r a n k , "The R o l e o f Tra d e i n Economic Development," i n R i c h a r d Gardner and Max M i l l i k a n , e d s., The G l o b a l P a r t n e r s h i p (New Y o r k : P r a e g e r , 1968); C h a r l e s R. F r a n k , F o r e i g n  T r a d e and Dom e s t i c A i d (Washington: B r o o k i n g s , 1977); and D o n a l d K e e s i n g , "Outward-Looking P o l i c i e s and Economic Development," Economic J o u r n a l 77 (June 1967): 303-20. 56 The l i t e r a t u r e a d v o c a t i n g e x p o r t - l e d Southern i n d u s t r i a l i z a t i o n and an i n c r e a s e i n S o u t h e r n e x p o r t s o f m a n u f a c t u r e s and s e m i - m a n u f a c t u r e s i s v a s t . F o r t h i s s t u d y , t h e f o l l o w i n g were c o n s u l t e d : K e e s i n g ; J a l e e l Ahmad, " T h i r d W o r ld E x p o r t s o f M a n u f a c t u r e s , " i n W i l l i a m T y l e r , ed., I s s u e s and  P r o s p e c t s f o r t h e New I n t e r n a t i o n a l Economic O r d e r ( L e x i n g t o n , Mass.: D. C. H e a t h , 1977); Thomas K. M o r r i s o n , M a n u f a c t u r e d E x p o r t s From D e v e l o p i n g  C o u n t r i e s (New Y o r k : P r a e g e r , 1976), c h . 1; F i s h l o w , pp. 26-32; B e l a B a l a s s a , " T r a d e P o l i c i e s i n D e v e l o p i n g C o u n t r i e s , " A m e r i c a n Economic Review 61 (May 1971):178-87; and R i c h a r d B l a c k h u r s t , N i c o l a s M a r i a n and J a n T u m l i r , A d j u s t m e n t , Trade and Growth i n Deve l o p e d and D e v e l o p i n g C o u n t r i e s (Geneva: - 46 -G e n e r a l Agreement on T a r i f f s and T r a d e , S t u d i e s i n I n t e r n a t i o n a l T r a d e , no. 6, September 1978). 57 Among t h e l i b e r a l e c o n o m i s t s who d i s c u s s t h e need t o make markets more c o m p e t i t i v e and who seem t o s u g g e s t t h e LDCs w i l l b e n e f i t from d o i n g s o , c o n s u l t F i s h l o w ; J a g d i s h B h a g w a t i , "Market D i s r u p t i o n , E x p o r t M a r k e t D i s r u p t i o n , C ompensation, and GATT Reform," i n B h a g w a t i , ed., The New  I n t e r n a t i o n a l Economic O r d e r ; G. K. H e l l e i n e r , "World Market I m p e r f e c t i o n s and t h e D e v e l o p i n g C o u n t r i e s , " i n W i l l i a m R. C l i n e , e d . , P o l i c y A l t e r n a - t i v e s f o r a New I n t e r n a t i o n a l Economic O r d e r (New Y o r k : P r a e g e r , 1979); and Ahmad. Among t h o s e who s t r e s s t h e need t o r e d u c e N o r t h e r n t r a d e b a r r i e r s a g a i n s t LDC e x p o r t s o f m a n u f a c t u r e s and s e m i - m a n u f a c t u r e s a r e M o r r i s o n , c h s . 1 and c o n c l u s i o n ; Ahmad; F i s h l o w ; and B h a g w a t i . 58 See B a l a s s a , "Trade P o l i c i e s i n D e v e l o p i n g C o u n t r i e s , " pp. 180-91; and I a n L i t t l e , T i b o r S c i t o v s k y and M a u r i c e S c o t t , I n d u s t r y and Trade i n  Some D e v e l o p i n g C o u n t r i e s ( P a r i s : OECD Development C e n t e r , 1970). 59 Morse, c h . 1, i s t h e b e s t e x p o s i t i o n o f t h i s v i e w . 60 K. J . H o l s t i , "A New I n t e r n a t i o n a l P o l i t i c s ? D i p l o m a c y i n Complex I n t e r d e p e n d e n c e , " I n t e r n a t i o n a l O r g a n i z a t i o n 52 ( S p r i n g 1978): 520. 61 R o b e r t 0. Keohane and J o s e p h S. Nye, Power and I n t e r d e p e n d e n c e : World  P o l i t i c s i n T r a n s i t i o n ( B o s t o n : L i t t l e , Brown, 1977), pp. 24-28. T h i s s t u d y has had more i m p a c t on t h e way i n w h i c h many s t u d e n t s o f c o n t e m p o r a r y w o r l d p o l i t i c s c o n c e i v e o f t h e i r s u b j e c t t h a n p e r h a p s any o t h e r s i n c e Morgenthau's c l a s s i c r e a l i s t work. I n a d d i t i o n , i t i s t h e most j u d i c i o u s s t a t e m e n t o f t h e i n t e r d e p e n d e n c e p e r s p e c t i v e among s t u d e n t s o f t h e i n t e r -n a t i o n a l p o l i t i c a l system. 62 F o r example, Morse, c h . 1; S t a n l e y Hoffmann, "Notes on t h e E l u s i v e -n e s s o f Modern Power," I n t e r n a t i o n a l J o u r n a l 30 ( S p r i n g 1975) : 183-206; and Werner F e l d , I n t e r n a t i o n a l R e l a t i o n s : A T r a n s n a t i o n a l Approach (Sherman Oaks: A l f r e d , 1979). 63 H o l s t i , p. 523. 64 E r n s t Haas, " I s There a H o l e i n t h e Whole? Knowledge, T e c h n o l o g y , I n t e r d e p e n d e n c e and t h e C o n s t r u c t i o n o f I n t e r n a t i o n a l Regimes," I n t e r n a t i o n a l O r g a n i z a t i o n 29 (Summer 1975): 860. 65 W i l l i a m P. Bundy, "Elements o f N a t i o n a l Power," F o r e i g n A f f a i r s 56 ( O c t o b e r 1977): 2. 66 Keohane and Nye, pp. 42-57. 67 W. Howard W r i g g i n s , " T h i r d W o r l d S t r a t e g i e s f o r Change: The P o l i t i -c a l C o n t e x t o f N o r t h - S o u t h I n t e r d e p e n d e n c e , " i n W r i g g i n s and G. A d l e r -K a r l s s o n , R e d u c ing G l o b a l I n e q u i t i e s (New Y o r k : M c - G r a w - H i l l f o r t h e C o u n c i l on F o r e i g n R e l a t i o n s , 1978), pp. 23-24. - 47 -68 Oran Young, " I n t e r d e p e n d e n c e s i n W o r l d P o l i t i c s , " I n t e r n a t i o n a l  J o u r n a l 24 (Autumn 1969): 748. 69 M o r s e , p. 123. 70 Hansen, p. 284. 71 Theodore Moran, M u l t i n a t i o n a l C o r p o r a t i o n s and t h e P o l i t i c s o f  Dependence ( P r i n c e t o n : P r i n c e t o n U n i v e r s i t y P r e s s , 1974). 72 I b i d . , c o n c l u s i o n ; Hansen, pp. 283-87; Morse, pp. 140-41; Keohane and Nye, pp. 29-37. 73 G. M y r d a l , The C h a l l e n g e o f World P o v e r t y (New Y o r k : V i n t a g e Books, 1 9 7 0 ) , p. 279; c i t e d i n W a l l e r i , p. 600. 74 The Programme o f A c t i o n on t h e E s t a b l i s h m e n t o f a New I n t e r n a t i o n a l Economic O r d e r ( R e s o l u t i o n 3202, S - V I ) , p a s s e d a t t h e S i x t h S p e c i a l S e s s i o n o f t h e U n i t e d N a t i o n s G e n e r a l Assembly i n 1974), d e c l a r e s , i n t e r a l i a , t h a t : " A l l e f f o r t s s h o u l d be made: To f o r m u l a t e an i n t e r n a t i o n a l code o f c o n d u c t f o r t h e t r a n s f e r o f t e c h -n o l o g y c o r r e s p o n d i n g t o t h e needs and c o n d i t i o n s p r e v a l e n t i n d e v e l o p i n g c o u n t r i e s ; To g i v e a c c e s s on improved terms t o modern t e c h n o l o g y and t o adapt t h a t t e c h n o l o g y , as a p p r o p r i a t e t o s p e c i f i c economic, s o c i a l and e c o l o g i c a l c o n d i t i o n s and v a r y i n g s t a g e s o f development i n d e v e l o p i n g c o u n t r i e s . To expand s i g n i f i c a n t l y t h e a s s i s t a n c e from d e v e l o p e d c o u n t r i e s t o d e v e l o p i n g c o u n t r i e s i n r e s e a r c h and development programmes and i n t h e c r e a t i o n o f s u i t a b l e i n d i g e n o u s t e c h n o l o g y ; To adapt c o m m e r c i a l p r a c t i c e s g o v e r n i n g t r a n s f e r o f t e c h n o l o g y t o t h e r e q u i r e m e n t s o f t h e d e v e l o p i n g c o u n t r i e s and t o p r e v e n t abuse o f t h e r i g h t s o f t h e s e l l e r s . " C i t e d i n E r v i n L a s z l o e t a l . , The O b s t a c l e s t o t h e New I n t e r n a t i o n a l  Economic Order (New Y o r k : Permagon P r e s s , 1980), p. 113. 75 Hans S i n g e r and J a v e d A n s a r i , R i c h and Poor C o u n t r i e s (London: A l l e n and Unwin, 1977), pp. 38, 40. 76 Haq, p. 142. 77 W a l l e r i , p. 600. 78 Haq, pp. 142-43; and a l s o Haq, The T h i r d W o r l d and t h e I n t e r n a t i o n a l  Economic O r d e r (Washington: O v e r s e a s Development I n s t i t u t e , 1 9 7 6 ) , pp. 52-53. 79 S i n g e r and A n s a r i , pp. 57-58. - 48 -80 A l i M a z r u i , "The New I n t e r d e p e n d e n c e , " i n Guy F. E r b and C o n s t a n t i n e V a i t s o s , e ds., Beyond Dependency: The D e v e l o p i n g World Speaks Out (New Y o r k : P r a e g e r , 1975), pp. 41-42. 81 Haq, The T h i r d W o r l d , pp. 52-53. 82 The T h i r d W o r ld Forum, S p e c i a l Task F o r c e , P r o p o s a l s f o r a New I n t e r - n a t i o n a l Economic O r d e r (New Y o r k : n.p. S e p t . - O c t . 1975); c i t e d i n Haq, The P o v e r t y C u r t a i n , p. 148. 83 Samuel L. Parmar, " S e l f - R e l i a n t Development i n an ' I n t e r d e p e n d e n t ' W o r l d , " i n Erb and V a i t s o s , p. 17. 84 N o r t h - S o u t h , c h . 11. 85 Haq, The P o v e r t y C u r t a i n , p. 181. 86 I b i d . , p. 181. 87 I b i d . , pp. 172-73. 88 I b i d . , p. 179; N o r t h - S o u t h , p. 267. r .49 -CHAPTER TWO THE STRUGGLE FOR MARKET ACCESS I . I n t r o d u c t i o n I n t h i s c h a p t e r , t h e e f f o r t s o f t h e d e v e l o p i n g c o u n t r i e s t o improve t h e i r p o s i t i o n i n w o r l d m a n u f a c t u r e s t r a d e w i l l be d e s c r i b e d i n some d e t a i l . The p r i m a r y f o c u s w i l l be on t h e n e g o t i a t i o n s and b a r g a i n i n g t h a t have t a k e n p l a c e i n i n t e r n a t i o n a l i n s t i t u t i o n a l s e t t i n g s - - b a s i c a l l y t h e G e n e r a l Agreement on T a r i f f s and Trade (GATT) and, s i n c e 1964, t h e U n i t e d N a t i o n s C o n f e r e n c e on Trade and Development (UNCTAD). The n e c e s s a r y background i n f o r m a t i o n , p a r t i c u l a r l y e m p i r i c a l d a t a on LDCs' p r o d u c t i o n and e x p o r t o f m a n u f a c t u r e d goods, w i l l be p r o v i d e d as t h e d i s c u s s i o n o f t h e n e g o t i a t i o n s and b a r g a i n i n g p r o c e e d s . B r i e f d e s c r i p t i o n s o f two economic " o r t h o d o x i e s " - - i m p o r t -s u b s t i t u t i o n i n d u s t r i a l i z a t i o n and e x p o r t - o r i e n t e d i n d u s t r i a l i z a t i o n — t h a t have p r o v e d q u i t e i n f l u e n t i a l i n s h a p i n g t h e o u t l o o k o f T h i r d W o r ld p o l i c y -makers a t v a r i o u s t i m e s w i t h r e s p e c t t o t h e whole i s s u e o f m a n u f a c t u r e d e x p o r t s w i l l be o f f e r e d a t t h e a p p r o p r i a t e t i m e . The d i s c u s s i o n below p r o c e e d s c h r o n o l o g i c a l l y . An i n i t i a l and q u i t e b r i e f s e c t i o n d e a l s w i t h t h e e a r l y p o s t w a r p e r i o d , b e g i n n i n g w i t h t h e e s t a b l i s h m e n t o f GATT and e n d i n g i n 1963, j u s t b e f o r e t h e b i r t h o f UNCTAD. D u r i n g t h i s p e r i o d , few LDCs were c a p a b l e o f e x p o r t i n g m a n u f a c t u r e s on any s i g n i f i c a n t s c a l e , because o f b o t h t h e l a c k o f t e c h n i c a l m a t u r i t y c h a r a c t e r i s -t i c o f S o u t h e r n economies and t h e f a c t t h a t t h o s e c o u n t r i e s c a p a b l e o f i n d u s t r i a l p r o d u c t i o n t e n d e d f o r t h e most p a r t t o adhere t o t h e d o c t r i n e o f - 50 -i n w a r d l o o k i n g , i m p o r t - s u b s t i t u t i o n i n d u s t r i a l i z a t i o n . The i s s u e o f a c c e s s t o t h e markets o f N o r t h e r n c a p i t a l i s t s t a t e s f o r S o u t h e r n m a n u f a c t u r e s was t h u s n o t a ma j o r t o p i c o f n e g o t i a t i o n s a t t h i s t i m e . I n t h e second s e c t i o n , t h e e f f o r t s o f t h e LDCs t o enhance t h e i r o p p o r t u n i t i e s i n i n t e r n a t i o n a l t r a d e i n m a n u f a c t u r e s by c h a n g i n g t h e N o r t h e r n -s p o n s o r e d r u l e s and norms t h a t had h i t h e r t o p r e v a i l e d i n i n t e r n a t i o n a l t r a d e r e l a t i o n s a r e d i s c u s s e d . T h i s s e c t i o n c o v e r s t h e p e r i o d 1964-73, d u r i n g w h i c h t i m e major n e g o t i a t i o n s d e a l i n g w i t h t h e r u l e s , norms and i n s t i t u t i o n a l arrangements i n i n t e r n a t i o n a l t r a d e r e l a t i o n s o c c u r r e d i n b o t h GATT and UNCTAD. T h i s decade w i t n e s s e d a c r u c i a l change i n t h e approach o f most T h i r d W o r l d governments t o t h e w o r l d economy. The p r e v i o u s s t r a t e g y o f i m p o r t -s u b s t i t u t i o n was e i t h e r d i s c a r d e d o r downgraded i n i m p o r t a n c e by most S o u t h e r n governments, and f o r many c o u n t r i e s a b e l i e f i n t h e c r i t i c a l r o l e o f m a n u f a c t u r e d e x p o r t s as a c a t a l y s t t o i n d u s t r i a l i z a t i o n and g e n e r a l s o c i o -economic p r o g r e s s became t h e new o r t h o d o x y ( t h a n k s i n p a r t t o t h e e n t h u s i a s -t i c e s p o u s a l o f t h i s d o c t r i n e by N o r t h e r n e c o n o m i s t s ) . R a p i d growth i n t h e volume, v a l u e and d i v e r s i t y o f LDC m a n u f a c t u r e d e x p o r t s was r e g i s t e r e d i n the l a t e 1960s and e a r l y 1970s. The r i s i n g t i d e o f N o r t h e r n p r o t e c t i o n i s m a f t e r t h e 1973-74 o i l c r i s i s and t h e subsequent g l o b a l r e c e s s i o n had an e s p e c i a l l y s e v e r e impact on d e v e l o p i n g c o u n t r i e s t h a t sought t o expand t h e i r e x p o r t s o f m a n u f a c t u r e s t o t h e N o r t h , and t h r e a t e n e d v i r t u a l l y t o choke o f f g r e a t e r a c c e s s t o N o r t h e r n markets f o r c e r t a i n p r o d u c t s i n w h i c h many LDCs e n j o y e d a g l o b a l c o m p a r a t i v e advantage. The t h i r d s e c t i o n w i l l e l a b o r a t e upon t h e i n c r e a s i n g l y s a l i e n t i s s u e o f s e l e c t i v e N o r t h e r n p r o t e c t i o n i s m and d i s c u s s LDCs' e f f o r t s i n GATT - 51 -and UNCTAD t o p r o t e c t t h e m s e l v e s from t h i s u n f a v o r a b l e t r e n d . I n a d d i t i o n , t h e S outh's p r o p o s a l s f o r g l o b a l economic r e f o r m s and a New I n t e r n a t i o n a l Economic O r d e r , w h i c h were e x h a u s t i v e l y d i s c u s s e d i n UNCTAD and o t h e r U n i t e d N a t i o n s b o d i e s b e g i n n i n g i n 1974, w i l l be a n a l y z e d i n s o f a r as t h e y r e l a t e t o th e i s s u e o f LDCs m a n u f a c t u r e d e x p o r t s . A f i n a l i n t r o d u c t o r y p o i n t c o n c e r n s t h e d e f i n i t i o n a l p r oblems t h a t i n e v i t a b l y a r i s e when a b r o a d d e s c r i p t i v e c a t e g o r y such as "man u f a c t u r e d e x p o r t s " i s employed i n a s t u d y such as t h e p r e s e n t one. U n f o r t u n a t e l y , s e v e r a l d e f i n i t i o n s o f what c o n s t i t u t e s " m a n u f a c t u r e s " can be l o c a t e d i n t h e works o f e c o n o m i s t s and p u b l i c a t i o n s o f i n t e r n a t i o n a l economic o r g a n i z a t i o n s . The degree o f p r o c e s s i n g w h i c h a commodity undergoes i s t h e b a s i c c r i t e r i o n , b u t such a measure must be chosen i n a n e c e s s a r i l y a r b i t r a r y way. B r o a d l y s p e a k i n g , t h e most i m p o r t a n t c a t e g o r i e s o f m a n u f a c t u r e s a r e c l o t h i n g and t e x t i l e s , m a c h i n e r y and e n g i n e e r i n g p r o d u c t s , i r o n and s t e e l , c h e m i c a l s , consumer d u r a b l e s , and t r a n s p o r t a t i o n equipment and v e h i c l e s . " ^ These p r o d u c t s f a l l w i t h i n s e c t i o n s 5-8 o f t h e r e v i s e d S t a n d a r d I n t e r n a t i o n a l T rade C l a s s i f i c a t i o n ( S I T C ) . I n i t s r e c e n t p u b l i c a t i o n s , GATT has c l a s s i f i e d as m a n u f a c t u r e s a l l p r o d u c t s f a l l i n g w i t h i n SITC s e c t i o n s 5-8, i n c l u d i n g n o n - f e r r o u s m e t a l s (SITC 6 8 ) . A l t h o u g h a d o p t i o n o f t h i s d e f i n i t i o n means t h a t some b a r e l y p r o c e s s e d m i n e r a l s and m e t a l s a r e i n c l u d e d as m a n u f a c t u r e s , i t does seem t o be a more p l a u s i b l e d e f i n i t i o n t h a n t h a t o f t e n employed by UNCTAD, whi c h i n c l u d e s c e r t a i n c r u d e p e t r o l e u m p r o d u c t s and p r o c e s s e d 2 a g r i c u l t u r a l p r o d u c t s as m a n u f a c t u r e s . The more r e s t r i c t i v e GATT d e f i n i t i o n w i l l be us e d i n t h i s s t u d y . Recent GATT s t u d i e s have i d e n t i f i e d t h e f o l l o w i n g b r o a d p r o d u c t c a t e g o r i e s and s u b - c a t e g o r i e s i n d i s c u s s i n g LDC m a n u f a c t u r e d e x p o r t s : ^ - 5 2 -T a b l e 1: M a n u f a c t u r e d E x p o r t C a t e g o r i e s A n o n - f e r r o u s m e t a l s B i r o n and s t e e l C c h e m i c a l s : D consumer goods E p l a s t i c s F wood s e m i - m a n u f a c t u r e s and p a p e r G o t h e r s e m i - m a n u f a c t u r e s H e n g i n e e r i n g p r o d u c t s : I a g r i c u l t u r a l / i n d u s t r i a l / m a c h i n e r y J machine p a r t s K o f f i c e / t e l e c o m m u n i c a t i o n s equipment L p o w e r - g e n e r a t i n g m a c h i n e r y M o t h e r e n g i n e e r i n g p r o d u c t s N r o a d motor v e h i c l e s 0 o t h e r t r a n s p o r t equipment P h o u s e h o l d a p p l i a n c e s Q t e x t i l e s R c l o t h i n g S o t h e r consumer goods I n t h e d i s c u s s i o n t h a t f o l l o w s , an e f f o r t w i l l be made t o use t h i s c l a s s i f i c a t o r y scheme whenever p o s s i b l e . I I Phase I : I m p o r t - S u b s t i t u t i o n and N o r t h - S o u t h Trade R e l a t i o n s I n t r o d u c t i o n W r i t i n g i n 1949, t h e i n f l u e n t i a l L a t i n A m erican economist R a u l P r e b i s c h a s s e r t e d t h a t f o r t h e u n d e r d e v e l o p e d w o r l d , " I n d u s t r i a l i z a t i o n has become t h e most i m p o r t a n t means o f /economicj 7 e x p a n s i o n . " P r e b i s c h b e l i e v e d t h a t p o o r c o u n t r i e s c o u l d n o t r e l y on t h e e x p a n s i o n o f e x p o r t s o f p r i m a r y - 53 -p r o d u c t s as t h e b a s i s f o r t h e i r f u t u r e economic growth and development. Because o f t h e p r i c e i n s t a b i l i t y c h a r a c t e r i s t i c o f i n t e r n a t i o n a l p r i m a r y commodity m a r k e t s , t h e f a c t t h a t t h e e a r n i n g s and e x p o r t growth p o t e n t i a l o f commodities were e x t r e m e l y l i m i t e d , and t h e i n h e r e n t i n a b i l i t y o f raw m a t e r i a l e x t r a c t i o n p r o c e s s e s t o s t i m u l a t e b r o a d l y - b a s e d economic growth i n an u n d e r d e v e l o p e d s o c i e t y , P r e b i s c h argued t h a t t h e p r o d u c t i o n o f m a n u f a c t u r e s had t o r e p l a c e t h e e x p o r t i n g o f commodities as t h e c e n t r a l 4 economic a c t i v i t y i n c o u n t r i e s s e e k i n g t o d e v e l o p mature economies. The t y p e o f i n d u s t r i a l i z a t i o n a d v o c a t e d by P r e b i s c h and a c t u a l l y p r a c t i s e d by most i n d u s t r i a l i z i n g LDCs i n t h e 1950s was o r i e n t e d t o w a r d r e p l a c i n g i m p o r t e d m a n u f a c t u r e s and i n d u s t r i a l goods w i t h d o m e s t i c p r o d u c -t i o n ; i n t e r e s t i n m a n u f a c t u r e d e x p o r t s was m i n i m a l . Hirschman has s u g g e s t e d t h a t f o u r " i m p u l s e s " c o n t r i b u t e d t o t h e p o p u l a r i t y o f i m p o r t - s u b s t i t u t i o n i n d u s t r i a l i z a t i o n i n t h e S o u t h , and e s p e c i a l l y L a t i n A m e r i c a , d u r i n g t h e e a r l y p o s t w a r p e r i o d . F i r s t , t h e two W o r l d Wars and t h e G r e a t D e p r e s s i o n undermined " a c c e p t a n c e o f t r a d i t i o n a l i d e a s about t h e i n t e r n a t i o n a l d i v i s i o n o f l a b o r between advanced and backward c o u n t r i e s . . . " The "sudden d e p r i v a t i o n o f i m p o r t s " c a u s e d by wartime c o n d i t i o n s and economic c r i s i s l e d c e r t a i n u n d e r d e v e l o p e d c o u n t r i e s t o e x p l o i t t h e i r own c a p a c i t i e s t o p r o d u c e i n d u s t r i a l and consumer goods. Second, t h e c r i t i c a l need t o c o n s e r v e scarce f o r e i g n exchange f e l t by LDCs p r o v i d e d a s e c o n d , s t r u c t u r a l impetus t o r e p l a c e f o r e i g n w i t h i n d i g e n o u s i n d u s t r i a l p r o d u c t i o n . T h i r d , a c e r t a i n amount o f n a t u r a l i m p o r t s u b s t i t u t i o n o c c u r r e d " i n r e s p o n s e t o t h e growth o f d o m e s t i c m a r k e t s , " as incomes i n s e v e r a l c o u n t r i e s a t t a i n e d a l e v e l " a t w h i c h d o m e s t i c p r o d u c t i o n /becamej 7 p r o f i t a b l e . . . w i t h o u t t h e need o f e x t e r n a l s h o c k s o r g o v e r n m e n t a l i n t e r v e n t i o n . " F i n a l l y , and most - 54 -i m p o r t a n t l y , i m p o r t - s u b s t i t u t i o n i n d u s t r i a l i z a t i o n was u n d e r t a k e n i n many c o u n t r i e s as a m a t t e r o f d e l i b e r a t e government p o l i c y , c a r r i e d out . . . by means o f p r o -t e c t i v e d u t i e s . . . t h r o u g h a wide a r r a y o f c r e d i t and f i s c a l p o l i c y d e v i c e s , t h r o u g h p r e s s u r e s on f o r e i g n i m p o r t i n g f i r m s t o s e t up m a n u f a c t u r i n g o p e r a t i o n s as w e l l as t h r o u g h d i r e c t a c t i o n : t h e e s t a b l i s h m e n t o f s t a t e - o w n e d i n d u s t r i e s . . . .5 I n t h e l a t e 1940s and e a r l y 1950s, v i r t u a l l y a l l LDCs wh i c h e n j o y e d p o l i t i c a l i ndependence f a v o r e d economic development p o l i c i e s t h a t were p r e -d i c a t e d on t h e a s s u m p t i o n t h a t i m p o r t s u b s t i t u t i o n was t h e r o u t e t o i n d u s t r i a l i z a t i o n and g r o w t h . ^ However, by t h e l a t e 1950s a number o f d e v e l o p i n g c o u n t r i e s had d e c i d e d t h a t i m p o r t - s u b s t i t u t i o n was i n a p p r o p r i a t e g i v e n t h e i r economic p o s i t i o n and g o a l s ; and by t h e l a t e 1960s, a new o r t h o d o x y embraced by many i n d u s t r i a l i z i n g LDCs s t r e s s e d t h e s u p e r i o r i t y o f e x p o r t - o r i e n t e d i n d u s t r i a l i z a t i o n s t r a t e g i e s . T h i s i m p o r t a n t t r a n s i t i o n w i l l be d i s c u s s e d l a t e r i n t h i s c h a p t e r . F o r now, i t need o n l y be n o t e d t h a t t h e v a s t m a j o r i t y o f c o u n t r i e s c o n s t i t u t i n g t h e " u n d e r d e v e l o p e d w o r l d " o f t h e l a t e 1940s e x h i b i t e d a m a n i f e s t l y i n w a r d - l o o k i n g f o c u s i n r e g a r d t o t h e i r f u t u r e i n d u s t r i a l i z a t i o n p o t e n t i a l . Not s u r p r i s i n g l y , t h i s o r i e n t a t i o n s t r o n g l y shaped t h e i r a p p r o a c h t o t h e n e g o t i a t i o n s l a u n c h e d i n 1946 aimed a t c r e a t i n g a comprehensive i n t e r n a t i o n a l t r a d e o r d e r based on t h e d o c t r i n e o f f r e e t r a d e . The C r e a t i o n o f GATT D u r i n g t h e l a t t e r phase o f W o r l d War I I , U n i t e d S t a t e s government o f f i c i a l s d e v e l o p e d an a m b i t i o u s scheme t o c o n s t r u c t a p o s t w a r g l o b a l t r a d e o r d e r based on t h e p r i n c i p l e s o f n o n d i s c r i m i n a t i o n , r e c i p r o c a l t a r i f f - 55 -r e d u c t i o n s , and t h e o u t l a w i n g o f q u a n t i t a t i v e r e s t r i c t i o n s on t r a d e . T h i s l i b e r a l t r a d e o r d e r would be p r e s i d e d o v e r by a new i n t e r n a t i o n a l o r g a n i z a -t i o n , t o be c a l l e d t h e I n t e r n a t i o n a l Trade O r g a n i z a t i o n ( I T O ) , w h i c h would be a s p e c i a l i z e d agency o f t h e p r o p o s e d U n i t e d N a t i o n s . I n 1945, t h e U.S. p u b l i s h e d i t s P r o p o s a l s f o r E x p a n s i o n o f W o r l d Trade and Employment, w h i c h were based on b i l a t e r a l w artime d i s c u s s i o n s h e l d w i t h t h e B r i t i s h . From 1946 t o 1948, m u l t i l a t e r a l n e g o t i a t i o n s i n v o l v i n g upwards o f f i f t y c o u n t r i e s were u n d e r t a k e n , and t h e end r e s u l t was t h e Havana C h a r t e r f o r t h e ITO, s i g n e d by 53 c o u n t r i e s i n March 1948. The C h a r t e r was a comprehensive document i n d e e d , c o n s i s t i n g o f n i n e c h a p t e r s and 106 a r t i c l e s . I n c l u d e d among t h e many t r a d e - r e l a t e d p o l i c i e s o f n a t i o n a l governments w h i c h t h e ITO was t o r e g u l a t e were t h e use o f t r a d e b a r r i e r s , r e s t r i c t i v e b u s i n e s s p r a c t i c e s , commodity p o l i c i e s and t h e n e g o t i a t i o n o f i n t e r g o v e r n m e n t a l 7 commodity agreements, and t r a d e b a r g a i n i n g a r r a n g e m e n t s . Fo r a v a r i e t y o f r a t h e r p e c u l i a r r e a s o n s w h i c h need n o t d e t a i n us h e r e , t h e H a v a n a C h a r t e r was n o t r a t i f i e d by t h e U n i t e d S t a t e s , and t h e ITO was s t i l l b o r n . A l l t h a t remained a f t e r y e a r s o f n e g o t i a t i o n s was an O c t o b e r 1947 " t r a d e agreement d e s i g n e d t o r e c o r d t h e r e s u l t s o f a t a r i f f c o n f e r e n c e t h a t was e n v i s i o n e d a t t h e t i m e as b e i n g t h e f i r s t o f a number o f such 9 c o n f e r e n c e s t o be c o n d u c t e d under t h e a u s p i c e s o f t h e ITO." T h i s c o n f e r e n c e had been h e l d a t t h e u r g i n g o f U n i t e d S t a t e s o f f i c i a l s a n x i o u s t o t a k e advantage o f t h e P r e s i d e n t ' s C o n g r e s s i o n a l l y - g r a n t e d t a r i f f - c u t t i n g a u t h o r i t y b e f o r e i t e x p i r e d . The r e s u l t s were c o d i f i e d i n a G e n e r a l Agree-ment on T a r i f f s and Trade (GATT), w h i c h c o n s i s t e d o f t h e t a r i f f c o n c e s s i o n s n e g o t i a t e d by t h e p a r t i c i p a n t s and most o f t h e c o m m e r c i a l p o l i c y p r o v i s i o n s - 56 -l a t e r i n c l u d e d i n t h e Havana C h a r t e r , t h e l a t t e r h a v i n g been added " t o a s s u r e t h a t t h e t a r i f f c o n c e s s i o n s . . . r e c o r d e d would n o t be u n d e r c u t by o t h e r t r a d e m e a s u r e s . " ^ Through t h i s s t r a n g e t u r n o f e v e n t s GATT " a c c i d e n t l y " emerged as t h e g l o b a l t r a d e i n s t i t u t i o n t h a t was t h e b a s i s f o r t h e l i b e r a l t r a d e o r d e r so f e r v e n t l y sought by t h e U n i t e d S t a t e s . The u n d e r d e v e l o p e d c o u n t r i e s a c t u a l l y c o n s t i t u t e d a m a j o r i t y a t t h e Havana n e g o t i a t i o n s i n 1948, and t h e y succeeded i n i n s e r t i n g a c h a p t e r t h a t d e a l t l a r g e l y w i t h economic development i n t o t h e C h a r t e r . Led by t h e L a t i n A m e rican c o u n t r i e s and I n d i a , u n d e r d e v e l o p e d c o u n t r i e s a t t a c k e d t h e n o t i o n t h a t i n t h e new t r a d e o r d e r a l l c o u n t r i e s ought t o be t r e a t e d a l i k e . "They opposed t h e commitment t o n e g o t i a t e on t a r i f f s and t h e need t o o b t a i n p r i o r _ITG_7 a p p r o v a l b e f o r e e s t a b l i s h i n g p r e f e r e n c e s , as w e l l as t h e ban on i m p o r t q u o t a s and o t h e r r e s t r i c t i v e measures.""^ Because o f t h e i r keen i n t e r e s t i n p r o t e c t i n g t h e i r f l e d g l i n g d o m e s t i c i n d u s t r i a l and m a n u f a c t u r i n g b a s e , t h e u n d e r d e v e l o p e d c o u n t r i e s i n s i s t e d on t h e i r r i g h t t o r a i s e t a r i f f s bound i n p r e v i o u s agreements and t o use f r e e l y q u a n t i t a t i v e r e s t r i c t i o n s and o t h e r n o n - t a r i f f measures i n a c c o r d a n c e w i t h t h e i r i m p o r t - s u b s t i t u t i o n s t r a t e g i e s . A l t h o u g h t h e C h a r t e r c o n t a i n e d numerous p r o v i s i o n s r e l a t i n g t o economic development and c e r t a i n e x c e p t i o n s f o r LDCs, t h e u n d e r d e v e l o p e d c o u n t r i e s f a i l e d t o s e c u r e a c c e p t a n c e o f t h e p r i n c i p l e o f s p e c i a l t r e a t m e n t . S i m i l a r l y , t h e co m m e r c i a l p o l i c y p r o v i s i o n s i n s e r t e d i n t o t h e G e n e r a l Agreement i n 1947 d i d n o t g r a n t u n d e r d e v e l o p e d c o u n t r i e s s i g n i f i c a n t l y g r e a t e r l a t i t u d e i n t h e use o f t r a d e b a r r i e r s t h a n e n j o y e d by o t h e r GATT members. U n d e r d e v e l o p e d c o u n t r i e s were p a r t i c u l a r l y unhappy t h a t i n d u s t r i a l c o u n t r i e s succeeded i n e x c l u d i n g a g r i c u l t u r e and f i s h e r i e s from t h e g e n e r a l - 57 -ban on quotas because t h e s e were deemed " s p e c i a l c a s e s / ' y e t v e h e m e n t l y opposed t h e argument t h a t m a n u f a c t u r i n g was a " s p e c i a l c a s e " f o r a non-i n d u s t r i a l c o u n t r y . The Cuban d e l e g a t e , r e f e r r i n g t o i n d u s t r i a l c o u n t r i e s ' a p p r o a c h t o " s p e c i a l cases,", p r o p o s e d t h a t "where t h e y t a l k o f i m p o r t r e s -t r i c t i o n s on a g r i c u l t u r a l o r f i s h e r i e s p r o d u c t s ; we s i m p l y want t o add one 13 word, t h a t i s , t o i n c l u d e . . . i n d u s t r i a l p r o d u c t s . " Not o n l y d i d t h e u n d e r d e v e l o p e d c o u n t r i e s f a i l t o s i g n i f i c a n t l y m o d i f y th e t e x t o f t h e G e n e r a l Agreement, b u t t h e y a l s o s u f f e r e d f r o m t h e f a c t t h a t , u n l i k e t h e Havana C h a r t e r , t h e GATT c o n t a i n e d no c h a p t e r s d e a l i n g w i t h economic development o r commodity agreements, t h e two i s s u e s t h a t most c o n c e r n e d them. GATT was e s s e n t i a l l y a d d r e s s e d t o t r a d e b a r r i e r r e g u l a t i o n , n o t t o b r o a d e r t r a d e - r e l a t e d economic i s s u e s . Thus, a l t h o u g h 10 o f t h e 23 c o u n t r i e s t h a t s i g n e d t h e G e n e r a l Agreement were u n d e r d e v e l o p e d , t h e y d i d 14 so w i t h l i t t l e e n t h u s i a s m . T h e i r l a c k o f i n t e r e s t i n b a r g a i n i n g o v e r t a r i f f s on m a n u f a c t u r e s e n s u r e d t h a t t h e u n d e r d e v e l o p e d c o u n t r i e s were l i t t l e more t h a n o b s e r v e r s d u r i n g t h e i n i t i a l t a r i f f n e g o t i a t i o n s i n 1947. I n f a c t , t h e L a t i n A m e r i c a n c o u n t r i e s wanted t o n e g o t i a t e i n c r e a s e s i n t h e i r i n d u s t r i a l t a r i f f s , b u t d i s c o v e r e d t h a t t h e n a s c e n t GATT was d i s t i n c t l y i n h o s p i t a b l e t o t h i s i d e a . " ^ N o n - i n d u s t r i a l c o u n t r i e s s i m p l y d i d n o t p e r c e i v e any b e n e f i t s a c c r u i n g t o them t h r o u g h t h e r e d u c t i o n o f i n d u s t r i a l c o u n t r y t a r i f f s on m a n u f a c t u r e s n e g o t i a t e d a t Geneva, even though t h e s e l o w e r t a r i f f s a p p l i e d t o a l l GATT s i g n a t o r i e s as a r e s u l t o f t h e most-f a v o r e d - n a t i o n r u l e s e t out i n A r t i c l e I o f t h e Agreement. I n s t e a d , t h e y saw t h e whole GATT t h r u s t t o w a r d f r e e r t r a d e i n m a n u f a c t u r e s as a t h r e a t t o t h e i r e n t i r e economic s t r a t e g y , based as i t was on h i g h t a r i f f s and - 58 -o t h e r b a r r i e r s t o promote a wide a r r a y o f " i n f a n t i n d u s t r i e s " i n t h e m a n u f a c t u r i n g s e c t o r . P r o m o t i o n o f t h e i r own m a n u f a c t u r e d e x p o r t s was n o t a g o a l o f t h o s e u n d e r d e v e l o p e d c o u n t r i e s embarking on i n d u s t r i a l i z a t i o n i n t h e l a t e 1940s, and t h e i r a p p roach t o GATT a t t h i s t i m e c o u l d perhaps b e s t be termed "damage l i m i t a t i o n . " Trade B a r g a i n i n g and P o l i t i c a l I n f l u e n c e i n GATT Throughout t h e 1950s, t h e d e v e l o p i n g c o u n t r i e s i n GATT were p r i m a r i l y c o n c e r n e d w i t h t h r e e m a t t e r s : o b t a i n i n g f o r t h e m s e l v e s e x c e p t i o n s f r o m t h e q u i t e s t r i n g e n t and p r e c i s e GATT r u l e s r e g a r d i n g t h e use o f q u o t a s ; o b t a i n i n g commitments from i n d u s t r i a l c o u n t r i e s t o p e r m i t more l i b e r a l a c c e s s t o t h e i r markets f o r LDC e x p o r t s o f a g r i c u l t u r a l and t o a l e s s e r e x t e n t m i n e r a l c o m m o d i t i e s ; and g a i n i n g t h e a p p r o v a l o f GATT members t o d i s c u s s i n t h a t body t h e i s s u e s o f commodity p r i c e i n s t a b i l i t y and s u r p l u s disposal."'" E v i d e n c e o f LDC c o n c e r n o v e r a c c e s s t o d e v e l o p e d c o u n t r y markets f o r manu-f a c t u r e s i s h a r d t o l o c a t e i n GATT documents f o r most o f t h e 1950s. The r o l e s and p r i o r i t i e s o f t h e LDCs i n GATT d u r i n g t h i s p e r i o d would p r o v i d e an i n t e r e s t i n g s t u d y inasmuch as such an e x a m i n a t i o n would r e v e a l t h a t t h e T h i r d World's d i s s a t i s f a c t i o n w i t h t h e p o s t w a r economy i s by no means o f r e c e n t o r i g i n . However, because t h e f o c u s o f t h i s s t u d y i s on LDCs and i s s u e s r e l a t e d t o t h e i r m a n u f a c t u r e d e x p o r t s , t h e s e o t h e r t o p i c s can n o t be d e a l t w i t h h e r e . I n s t e a d , a b r i e f d i s c u s s i o n o f how n e g o t i a t i o n s have been c o n d u c t e d and i n f l u e n c e w i e l d e d i n GATT w i l l p r o v i d e t h e background f o r subsequent a n a l y s i s o f LDC e f f o r t s t o b a r g a i n o v e r improved a c c e s s f o r t h e i r m a n u f a c t u r e d e x p o r t s . - 59 -The most i m p o r t a n t n e g o t i a t i o n s i n GATT o c c u r i n t h e c o n t e x t o f t r a d e " r o u n d s " o r c o n f e r e n c e s , o f w h i c h t h e r e have been seven (1947, 1949, 1951, 1956, 1960-61, 1963-67, and 1973-79). I t i s d u r i n g t h e s e " r o u n d s " t h a t t h e r e a l b a r g a i n i n g among GATT members t a k e s p l a c e . P r i o r t o t h e 1963-67 n e g o t i a t i o n s (known as t h e Kennedy Round), t h e p r o c e s s o f t a r i f f b a r g a i n i n g p r o c e e d e d as f o l l o w s : c o u n t r i e s p r e s e n t e d " r e q u e s t l i s t s " o f t a r i f f c o n c e s s i o n s sought f o r i n d i v i d u a l p r o d u c t s o f w h i c h t h e y were t h e p r i n c i p a l 17 ( o r a major) s u p p l i e r t o v a r i o u s i m p o r t i n g c o u n t r i e s ; t h e l a t t e r would 18 f o l l o w w i t h " o f f e r l i s t s , " and b a r g a i n i n g would b e g i n . I n o r d e r f o r any two c o u n t r i e s t o have a s u b s t a n t i a l r e a s o n t o engage i n b a r g a i n i n g , each had t o be t h e p r i n c i p a l s u p p l i e r t o t h e o t h e r o f s e v e r a l i n d i v i d u a l i t e m s , f o r o n l y t h e n c o u l d m e a n i n g f u l t r a d e - o f f s be made. F o r example, i f c o u n t r y A was t h e p r i n c i p a l s u p p l i e r o f p r o d u c t Y t o c o u n t r y B, i t s a b i l i t y t o o b t a i n a r e d u c t i o n i n B's t a r i f f on Y was c r u c i a l l y dependent on t h e e x t e n t t o w h i c h B was a major s u p p l i e r o f , s a y , X t o A; i n t h e absence o f such a m u t a l i t y o f i n t e r e s t s i n r e d u c e d t a r i f f s , a sound b a s i s f o r c o m m e r c i a l b a r g a i n i n g s i m p l y d i d n o t e x i s t . S i n c e LDCs t e n d e d t o be n e i t h e r p r i n c i p a l ( o r even major) s u p p l i e r s o f m a n u f a c t u r e s ( o r most o t h e r p r o d u c t s ) t o d e v e l o p e d c o u n t r i e s , n o r t h e most i m p o r t a n t i m p o r t m a r kets f o r d e v e l o p e d c o u n t r y e x p o r t s o f any p r o d u c t s , t h e i r a b i l i t y t o p a r t i c i p a t e i n t h i s t y p e o f market-19 b a s e d , t a r i f f b a r g a i n i n g was i m p a i r e d . ( I t s h o u l d be n o t e d t h a t w h i l e t h i s n e g o t i a t i o n p r o c e s s was l a r g e l y b i l a t e r a l o r l i m i t e d t o perhaps t h r e e o r f o u r c o u n t r i e s f o r each i n d i v i d u a l p r o d u c t , a c e r t a i n degree o f m u l t i -l a t e r a l i s m , o r a t l e a s t t r a n s p a r e n c y , was e n s u r e d by t h e f a c t t h a t t h e m u l t i t u d i n o u s p a i r s o f r e q u e s t and o f f e r l i s t s were d i s t r i b u t e d t o a l l c o u n t r i e s . ) - 60 -P r i o r t o t h e 1956 C o n f e r e n c e , i t was d e c i d e d t h a t c o u n t r i e s c o u l d band t o g e t h e r and r e q u e s t t a r i f f c o n c e s s i o n s , and t o some e x t e n t t h i s a s s i s t e d t h e LDCs i n t h a t t h e y c o u l d now make j o i n t r e q u e s t s f o r n e g o t i a t i o n s on " p r o d u c t s o f w h i c h t h e y i n d i v i d u a l l y o r c o l l e c t i v e l y a r e , o r a r e l i k e l y t o be, t h e p r i n c i p a l s u p p l i e r s t o t h e c o u n t r i e s from w h i c h t h e c o n c e s s i o n s a r e 20 a s k e d . " I t was s t i l l t h e c a s e , however, t h a t t h e d e v e l o p i n g c o u n t r i e s i n GATT remained d i s t i n c t l y d i s a d v a n t a g e d by t h i s n e g o t i a t i o n p r o c e s s , s i n c e 2 t h e y l a c k e d t h e e s s e n t i a l " b a r g a i n i n g c h i p " - - n a m e l y , l a r g e d o m e s t i c m a r k e t s . N e e d l e s s t o s a y , t h e i m p o r t - s u b s t i t u t i o n d o c t r i n e f u r t h e r h i n d e r e d t h e i r c a p a b i l i t y t o p l a y t h e game o f t r a d i n g improved a c c e s s t o t h e i r markets f o r b e t t e r a c c e s s t o t h o s e o f d e v e l o p e d c o u n t r i e s . A second and c l o s e l y r e l a t e d a s p e c t o f GATT t r a d e b a r g a i n i n g t h a t has c aused t h e LDCs much c o n s t e r n a t i o n i s t h e r o l e o f t h e p r i n c i p l e o f r e c i p r o -c i t y , " t h e c o r e o f t h e i n t e r n a t i o n a l t r a d e system as i t has e v o l v e d s i n c e 22 1947 . . . ." I n s i m p l e s t t e r m s , r e c i p r o c i t y r e f e r s t o t h e i n c l i n a t i o n o f t r a d e n e g o t i a t o r s t o seek t o b a l a n c e an e x p e c t e d i n c r e a s e o f i m p o r t s f rom a t r a d i n g p a r t n e r i n t o t h e i r c o u n t r y by e x p a n d i n g t h e i r c o u n t r y ' s 23 e x p o r t s t o t h a t t r a d i n g p a r t n e r by a t l e a s t an e q u i v a l e n t amount. A l t h o u g h i t i s nowhere d e f i n e d i n GATT documents, t h e c e n t r a l i t y o f r e c i p r o c i t y i s i l l u s t r a t e d by t h e u b i q u i t o u s appearance o f such key p h r a s e s as " b a l a n c e o f a d v a n t a g e s , " " s u b s t a n t i a l l y e q u i v a l e n t c o n c e s s i o n s , " and "compensatory 24 a d j u s t m e n t " i n GATT r e c o r d s . One v e r y b a s i c r e a s o n f o r t h e prominence o f r e c i p r o c i t y i n GATT d e r i v e s from t h e o r i g i n s o f p o s t w a r A m e r i c a n t r a d e p o l i c y . I n 1939 C o n g r e s s , w h i c h u l t i m a t e l y c o n t r o l s U.S. t r a d e p o l i c y , p a s s e d t h e f i r s t Trade Agree-ments A c t . T h i s law r e s t r i c t e d t h e E x e c u t i v e t o n e g o t i a t i n g r e c i p r o c a l - 61 -t a r i f f c o n c e s s i o n s w i t h o t h e r c o u n t r i e s ; what c o n s t i t u t e d r e c i p r o c i t y was not s p e c i f i e d , s i n c e t h i s c r u c i a l q u e s t i o n c o u l d be d e t e r m i n e d by Congress 25 a f t e r t h e n e g o t i a t i o n s had c o n c l u d e d . S u c c e s s i v e e x t e n s i o n s o f t h e Trade Agreements A c t , w h i c h p r o v i d e d a u t h o r i t y f o r U.S. p a r t i c i p a t i o n i n t h e f i r s t f i v e GATT t r a d e " r o u n d s , " c o n t i n u e d t o i n s i s t on r e c i p r o c i t y i n t a r i f f con-c e s s i o n s , and a l s o mandated t h a t n e g o t i a t i o n s o c c u r on an i t e m - b y - i t e m b a s i s . T h i s e f f e c t i v e l y r u l e d o u t , a t l e a s t from t h e U.S. p e r s p e c t i v e , b o t h p r e f e r e n t i a l t r e a t m e n t o f LDCs d u r i n g n e g o t i a t i o n s and t h e a d o p t i o n o f 2 6 g e n e r a l , a c r o s s - t h e - b o a r d t a r i f f c u t t i n g f o r m u l a s . I n s t e a d , A m erican n e g o t i a t o r s were r e q u i r e d t o r e a c h r e c i p r o c a l b a r g a i n s w i t h each t r a d i n g 27 p a r t n e r . As a r e s u l t , t h e b a r g a i n i n g p r o c e s s i n GATT was e s s e n t i a l l y b i l a t e r a l , f o r t h e tremendous i n f l u e n c e o f t h e U.S. e n s u r e d t h a t Washington's a p p r o a c h t o n e g o t i a t i n g on t a r i f f s d e t e r m i n e d t h e approach adopted i n GATT as a whole. As e q u a l l y i m p o r t a n t and more g e n e r a l impetus f o r r e c i p r o c i t y i n GATT b a r g a i n i n g stems from t h e p a r t i c u l a r p o l i t i c a l c a l c u l u s t h a t a t t e n d s t r a d e n e g o t i a t i o n s . The s i m p l e r e a l i t y i s t h a t , r e g a r d l e s s o f t h e f a c t t h a t economic t h e o r y nowhere s u g g e s t s t h a t r e c i p r o c a l t r a d e b a r r i e r r e d u c t i o n s a r e e c o n o m i c a l l y o p t i m a l (and, i n d e e d , s t r o n g l y s u g g e s t s t h a t u n i l a t e r a l 2 8 r e d u c t i o n s w i l l b e n e f i t a c o u n t r y ) , governments f e e l c o m p e l l e d t o d e f e n d t h e i r t r a d e " c o n c e s s i o n s " by p o i n t i n g out t h a t o t h e r s have made at l e a s t e q u i v a l e n t " s a c r i f i c e s . " The p o l i t i c a l a s s a u l t s t h a t governments f a c e from businessmen and w o r k e r s i n i m p o r t - c o m p e t i n g s e c t o r s when t r a d e b a r r i e r s a r e l o w e r e d a r e w e l l - k n o w n . The r e s u l t i s t h a t t h e i n c r e a s e i n e x p o r t p o t e n t i a l a s s o c i a t e d w i t h GATT t r a d e b a r g a i n i n g i s s t r e s s e d by governments, w h i l e t h e e x p a n s i o n o f i m p o r t s w i l l n e c e s s a r i l y o c c u r (because o f o t h e r - 62 -c o u n t r i e s ' need t o o b t a i n r e c i p r o c i t y ) i s f r e q u e n t l y p e r c e i v e d as a s o u r c e 29 o f p o l i t i c a l embarrassment. As w i l l be d i s c u s s e d l a t e r i n t h i s c h a p t e r , LDCs have succeeded i n o b t a i n i n g a c c e p t a n c e o f t h e p r i n c i p l e o f n o n - r e c i p r o c i t y i n t r a d e n e g o t i a -t i o n s , and th u s t o some e x t e n t have been a b l e t o improve t h e i r b a r g a i n i n g p o s i t i o n i n t h e GATT system. But t h e p r i n c i p l e d a c c e p t a n c e o f non-r e c i p r o c i t y v i s - a - v i s t h e d e v e l o p i n g c o u n t r i e s has n o t n e c e s s a r i l y t r a n s -l a t e d i n t o m e a s u r a b l e economic g a i n s , f o r i n d u s t r i a l c o u n t r i e s c o n t i n u e , i n an a l m o s t i n s t i n c t i v e f a s h i o n , t o seek " b a l a n c e d a d v a n t a g e s " i n co m m e r c i a l n e g o t i a t i o n s w i t h LDCs. The absence o f any consensus on how t o a s s e s s r e c i p r o c i t y i n q u a n t i t a t i v e terms has made t h e whole debate q u i t e m y s t e r i o u s . As t h e Curzons n o t e , "Each c o u n t r y r e m a i n s f r e e . . . t o judge r e c i p r o c i t y f o r i t s e l f . A l l a t t e m p t s t o i n t r o d u c e p r e d e t e r m i n e d f o r m u l a s 30 . . . have f a i l e d . " LDCs' e f f o r t s t o s e c u r e s p e c i a l , n o n - r e c i p r o c a l t r e a t m e n t f o r t h e i r e x p o r t s , e s p e c i a l l y m a n u f a c t u r e d e x p o r t s , have a l s o been h i n d e r e d by t h e n o n - d i s c r i m i n a t i o n p r i n c i p l e o f GATT, w h i c h r e q u i r e s t h a t 31 t a r i f f and n o n - t a r i f f b a r r i e r s be a p p l i e d e q u a l l y t o a l l members. I n t h e i r a t t e m p t s t o o b t a i n a p p r o v a l f o r t h e p r i n c i p l e o f n o n - r e c i p r o c i t y , LDCs have had t o escape from t h i s r e q u i r e m e n t as w e l l , and t h i s s t r u g g l e w i l l be e x p l o r e d i n c o n n e c t i o n w i t h t h e d i s c u s s i o n o f p r e f e r e n c e s below. D e v e l o p i n g c o u n t r i e s ' i n f l u e n c e has been l i m i t e d i n day-t o - d a y GATT a f f a i r s by t h e r e l a t i v e u n i m p o r t a n c e o f f o r m a l v o t i n g i n t h e o r g a n i z a t i o n . On t h e s u r f a c e , GATT appears t o be a h i g h l y " d e m o c r a t i c " i n s t i t u t i o n i n t h a t t h e r e i s no p r o v i s i o n f o r w e i g h t e d v o t i n g a c c o r d i n g t o economic o r t r a d i n g i m p o r t a n c e ( u n l i k e t h e I n t e r n a t i o n a l Monetary Fund o r World Bank). There a r e t h r e e c a t e g o r i e s o f GATT members: f u l l members, known i n GATT - 63 -l e x i c o n as " C o n t r a c t i n g P a r t i e s " ; c o u n t r i e s w h i c h have p r o v i s i o n a l l y acceded; and f o r m e r c o l o n i e s " t o whose t e r r i t o r i e s GATT has been a p p l i e d s i n c e 1948 and w h i c h now, as in d e p e n d e n t S t a t e s , m a i n t a i n a de_ f a c t o a p p l i c a t i o n o f 32 t h e GATT p e n d i n g f i n a l d e c i s i o n s as t o t h e i r f u t u r e c o m m e r c i a l p o l i c y . " O n ly c o u n t r i e s i n t h e f i r s t c a t e g o r y a r e e l i g i b l e t o v o t e and e n t i t l e d t o t a k e p a r t i n a l l GATT a c t i v i t i e s . B e g i n n i n g i n t h e e a r l y 1960s, LDCs con-s t i t u t e d a m a j o r i t y o f t h e C o n t r a c t i n g P a r t i e s , and t h e o r e t i c a l l y t h e y s h o u l d have been a b l e t o w i e l d c o n s i d e r a b l e i n f l u e n c e as a group s i n c e most d e c i s i o n s ( e x c e p t i n g amendments, w a i v e r s o f GATT o b l i g a t i o n s , a c c e s s i o n , and a p p r o v a l o f customs u n i o n and f r e e t r a d e a r e a schemes) r e q u i r e o n l y a s i m p l e 33 m a j o r i t y o f v o t e s c a s t . However, a c o n s e n s u a l and r a t h e r i n f o r m a l s t y l e o f d e c i s i o n - m a k i n g n o r m a l l y p r e v a i l s i n GATT, and " t h e v o t e s o f p a r t i c u l a r c o n t r a c t i n g p a r t i e s a r e g e n e r a l l y n o t r e c o r d e d . . . e x c e p t on s p e c i a l 34 o c c a s i o n s and, even t h e n , t h e y u s u a l l y a r e n o t p u b l i s h e d . " M o r e o ver, i t i s c r u c i a l t o r e c o g n i z e t h a t t h e most i m p o r t a n t agreements r e a c h e d i n GATT--namely, t h e t a r i f f c o n c e s s i o n s and n o n - t a r i f f a c c o r d s n e g o t i a t e d d u r i n g t h e t r a d e r o u n d s - - a r e n o t f o r m a l l y s u b j e c t t o t h e a p p r o v a l o f t h e GATT membership as a whole. Thus, i f a m a j o r i t y o f members, say t h e LDCs, d i s a p p r o v e s o f c e r t a i n t r a d e agreements r e a c h e d b y , s a y , t h e i n d u s t r i a l i z e d GATT members, t h e y cannot b l o c k s u c h agreements by v o t i n g a g a i n s t them i n t h e o r g a n i z a t i o n . Indeed, t h e t a r i f f c o n c e s s i o n s n e g o t i a t e d between, f o r example, t h e U n i t e d S t a t e s and t h e European Economic Community, become a l e g a l p a r t o f t h e G e n e r a l Agreement i t s e l f t h r o u g h i n c o r p o r a t i o n i n t o t h e t a r i f f s c h e d u l e s p r o v i d e d f o r by A r t i c l e I I (which r e q u i r e s u n a n i m i t y t o 35 amend). S i m i l a r l y , n o n - t a r i f f b a r r i e r a c c o r d s n e g o t i a t e d by a p a r t i c u -- 64 -l a r group o f GATT members cannot be a l t e r e d o r d i s a p p r o v e d by t h e GATT membership as a whole, a l t h o u g h c o u n t r i e s n ot p a r t y t o such a c c o r d s a r e n o t o f c o u r s e r e q u i r e d t o adhere t o t h e i r p r o v i s i o n s . Thus, d e v e l o p i n g c o u n t r i e s a r e g e n e r a l l y u n a b l e t o i n f l u e n c e t h e n a t u r e o f t r a d e b a r g a i n s s t r u c k by i n d u s t r i a l i z e d GATT members, d e s p i t e t h e i r m a j o r i t y i n t h e o r g a n i z a t i o n , and t h e p a u c i t y o f f o r m a l v o t i n g i n GATT d e p r i v e s them o f some o f t h e i n f l u e n c e t h a t t h e i r numbers would w a r r a n t i n day-t o - d a y a f f a i r s as w e l l . I n c r e a s i n g C o m p l a i n t s o f D e v e l o p i n g C o u n t r i e s The l a t e 1950s w i t n e s s e d an i n t e n s i f i c a t i o n o f d e v e l o p i n g c o u n t r i e s ' c o n c e r n s t h a t t h e GATT t r a d e r egime was f a i l i n g t o accommodate t h e i r i n t e r e s t s . I n a d d i t i o n , f o r t h e f i r s t t i m e a few LDCs began t o t a k e n o t e o f t h e e f f e c t o f d e v e l o p e d c o u n t r y t r a d e b a r r i e r s on t h e i r e x p o r t s o f m a n u f a c t u r e d p r o d u c t s . As n o t e d above, from t h e v e r y s t a r t d e v e l o p i n g c o u n t r i e s i n GATT e x p r e s s e d d i s s a t i s f a c t i o n w i t h t h e o r g a n i z a t i o n , b u t t h i s v i e w l a r g e l y d e r i v e d from t h e c o n t i n u i n g absence o f e f f e c t i v e GATT r e g u l a -t i o n o f i n d u s t r i a l c o u n t r i e s ' a g r i c u l t u r a l t r a d e p o l i c i e s and t h e f a c t t h a t many GATT r u l e s were r e g a r d e d as i n c o m p a t i b l e w i t h LDC development s t r a t e g i e s . I n t h e l a t e 1950s, however, d e v e l o p i n g c o u n t r i e s i n GATT began t o argue more g e n e r a l l y t h a t t h e b a s i c norms and p r o c e d u r e s t h a t g u i d e d t r a d e b a r g a i n i n g and d e c i s i o n - m a k i n g were u n f a v o r a b l e t o them. One r e s u l t o f t h i s i n c r e a s i n g u n h a p p i n e s s was a s t a g n a t i o n i n t h e membership o f LDCs a f t e r t h e t h i r d GATT t a r i f f c o n f e r e n c e i n 1951. By 1954, t h r e e o f GATT's o r i g i n a l t e n d e v e l o p i n g c o u n t r i e s ( S y r i a , Lebanon, and - 65 -China) had l e f t t h e o r g a n i z a t i o n ; i n 1957, t h e t o t a l number o f d e v e l o p i n g 36 c o u n t r i e s i n GATT rem a i n e d t h e same as i n 1954, namely f o u r t e e n . Ghana and M a l a y s i a became C o n t r a c t i n g P a r t i e s i n l a t e 1957, and N i g e r i a i n l a t e 37 1960, making a t o t a l GATT membership o f 38, o f whi c h 17 were LDCs. L i n d e r a l s o n o t e s t h a t t h e number o f t a r i f f agreements made by LDCs a f t e r 38 t h e 1951 C o n f e r e n c e d e c l i n e d s h a r p l y . The f o l l o w i n g t a b l e i n d i c a t e s t h e p a t t e r n o f i n d i v i d u a l t a r i f f c o n c e s s i o n agreements between LDCs and i n d u s t r i a l c o u n t r i e s up t o t h e f i f t h C o n f e r e n c e . Note t h a t c e r t a i n c o u n t r i e s were n e g o t i a t i n g f o r membership, b u t were n o t y e t members; some, e.g. t h e P h i l i p p i n e s , were n o t t o j o i n u n t i l t h e 1970s. As T a b l e 2 r e v e a l s , LDC i n t e r e s t i n n e g o t i a t i n g t a r i f f agreements, b o t h w i t h i n d u s t r i a l c o u n t r i e s and w i t h each o t h e r , i n t h e framework p r o -v i d e d by GATT C o n f e r e n c e s d e c l i n e d m a r k e d l y t h r o u g h o u t t h e decade (note t h a t 11 o f 29 t a r i f f agreements a t t h e 1960-61 C o n f e r e n c e r e l a t e d t o I s r a e l ' s n e g o t i a t i o n o f a c c e s s i o n ) . I n s p i t e o f t h e MFN r u l e , w h i c h a u t o m a t i c a l l y p r o v i d e d f o r t h e g e n e r a l a p p l i c a t i o n o f t h e e n t i r e GATT membership o f t a r i f f c o n c e s s i o n s n e g o t i a t e d by any two C o n t r a c t i n g P a r t i e s , d e v e l o p i n g c o u n t r i e s d e r i v e d few economic g a i n s from t a r i f f l i b e r a l i z a t i o n a t t h e f i r s t f i v e C o n f e r e n c e s . Because o f t h e tend e n c y o f d e v e l o p e d c o u n t r i e s t o agree t o s i g n i f i c a n t t a r i f f r e d u c t i o n s o n l y on t h o s e p r o d u c t s o f wh i c h t h e y were each o t h e r ' s major s u p p l i e r s and t o eschew b r o a d l y - b a s e d t a r i f f l i b e r a l i -z a t i o n f o r a g r i c u l t u r a l p r o d u c t s , t h e LDCs l a r g e l y f a i l e d t o b e n e f i t from t h e o p e r a t i o n o f t h e MFN r u l e . T h i s f a c t , i n a d d i t i o n t o t h e p r i n c i p a l s u p p l i e r r u l e and t h e r e c i p r o c i t y norm, made t h e LDCs p e r i p h e r a l t o t h e GATT n e g o t i a t i n g p r o c e s s . I n s o f a r as m a n u f a c t u r e s were c o n c e r n e d , u n l e s s t h e y became e i t h e r t h e ma j o r s u p p l i e r s o f , o r major markets f o r , a g i v e n p r o d u c t , - 66V -T a b l e 2: Numb er o f T a r i f f Agreements E n t e r e d I n t o by LDCs a t GATT C o n f e r e n c e s , 1947-6139 1947 1949 1951 1956 1960-61 B r a z i l 14(5) 6(2) 2(0) 0 0 Burma 7(2) 0 0 0 0 Cambodia - - - - 5(0)* C e y l o n 7(1) 4(0) 2(0) 0 0 C h i l e 12(4) 9(5) 3(1) 2(0) 1(0) C h i n a 16(6) 6(1) - - -C o l o m b i a - 0* - - -Cuba 6(3) K D 0 2(0) 0 D o m i n i c a n R e p u b l i c - 9(2) 3(0) 2(0) 0 E l S a l v a d o r - 0* - - -Ghana - - - - 0* Guatemala - - 0* - -H a i t i - 10(3)* 2(0) 2(0) 2(0) I n d i a 9(3) 6(1) 7(3) 0 4(0) I n d o n e s i a - - 8(1) 0 0 I s r a e l - - - - 11(0)* S. K o r e a - - 0* - -L e b a n o n / S y r i a 6(1) 2(0) 0 - — L i b e r i a - 6(1)* 0 - -M a l a y a - - - - 0* N i c a r a g u a - 9(1)* 0 0 0 N i g e r i a - - - 3(0)* P a k i s t a n 9(3) 4(0) 5(1) 0 1(0) P e r u - 0* 13(3)* KO) 2(0) P h i l i p p i n e s - - 0* - -S i e r r a Leone - - - - 0* Uruguay ' - 14(3)* 4(2)* 0 0 T o t a l 72(14) 76(10) 42(4) 9(0) 29(0) *At C o n f e r e n c e b u t n o t y e t C o n t r a c t i n g P a r t y -Not i n GATT o r a t C o n f e r e n c e Number i n p a r e n t h e s e s — t a r i f f agreements w i t h o t h e r LDCs. - 67 -t h e i r b a r g a i n i n g l e v e r a g e was e x t r e m e l y l i m i t e d ; and u n t i l t h e y were p r e p a r e d t o o f f e r r e c i p r o c a l c o n c e s s i o n s f o r i n d u s t r i a l c o u n t r i e s ' r e d u c -t i o n s o f b a r r i e r s on t h o s e few m a n u f a c t u r e d and s e m i - m a n u f a c t u r e d p r o d u c t s o f w h i c h t h e y were, o r soon might be, major s u p p l i e r s , t h e i r " r e q u e s t s " were not g o i n g t o be t r e a t e d s e r i o u s l y . I n t h e autumn o f 1957, m i n i s t e r s from t h e GATT C o n t r a c t i n g P a r t i e s met i n Geneva, and t h e c o m p l a i n t s o f d e v e l o p i n g c o u n t r i e s were major t o p i c s o f d i s c u s s i o n . By now, v i r t u a l l y a l l o f t h e i n d u s t r i a l market economies were 40 i n GATT, but t h e membership o f LDCs were s t a g n a t i n g . I n a d d i t i o n , t h e S o v i e t U n i o n was r a p i d l y e x p a n d i n g i t s c o m m e r c i a l r e l a t i o n s w i t h t h e T h i r d W o r l d and c a l l i n g f o r c r e a t i o n o f a new g l o b a l t r a d e o r g a n i z a t i o n w i t h i n t h e UN system. These f a c t s c o n t r i b u t e d t o t h e i n d u s t r i a l c o u n t r i e s ' con-c u r r e n c e w i t h t h e s u g g e s t i o n t h a t a P a n e l o f E x p e r t s be a p p o i n t e d t o examine 41 t h e t r a d e r e l a t i o n s o f LDCs. T h e i r f i n d i n g s , p u b l i s h e d by GATT as 42 Trends i n I n t e r n a t i o n a l Trade ( t h e " H a b e r l e r R e p o r t , " a f t e r t h e P a n e l ' s C h a i r m a n ) , c o n c l u d e d t h a t d e v e l o p e d c o u n t r y p o l i c i e s o f a g r i c u l t u r a l p r o t e c t i o n i s m and h i g h t r a d e b a r r i e r s imposed on c e r t a i n m i n e r a l c o m m o d i t i e s , as w e l l as t h e p r i c e i n s t a b i l i t y o f p r i m a r y commodity m a r k e t s , were t h e major t r a d e problems a f f e c t i n g d e v e l o p i n g c o u n t r i e s . The e x p e r t s u r g e d m o d i f i c a t i o n o f i n d u s t r i a l c o u n t r i e s ' p o l i c i e s i n t h e s e a r e a s , but a l s o c r i t i c i z e d i m p o r t - s u b s t i t u t i o n development s t r a t e g i e s i n t h e T h i r d World as i n e f f i c i e n t and i n a p p r o p r i a t e . A l t h o u g h t h e H a b e r l e r R e p o r t o n l y b r i e f l y m e ntioned t h e need f o r 43 g r e a t e r T h i r d W o r l d e x p o r t s o f m a n u f a c t u r e s , i t d i d mark an i m p o r t a n t s h i f t i n GATT's r e s p o n s e t o t h e i s s u e o f development, i n t h a t "by emphasi-z i n g t h e e x p o r t s i d e o f t h e p r o b l e m , a t t e n t i o n was drawn t o t h e . . . - 68 -44 approach i n t h e G e n e r a l Agreement / o f / r e l y i n g on t h e i m p o r t s i d e o n l y . " From t h e l a t e 1950s onward, t h e GATT membership, and i n d e e d t h e i n t e r n a t i o n a l community g e n e r a l l y , became i n c r e a s i n g l y p r e o c c u p i e d w i t h e x p a n d i n g LDCs' e x p o r t e a r n i n g s . D e v e l o p i n g c o u n t r i e s c o n t i n u e d t o i n s i s t t h a t t h e y were e n t i t l e d t o s p e c i a l d i s p e n s a t i o n i n s o f a r as GATT r u l e s g o v e r n i n g i m p o r t b a r r i e r s were c o n c e r n e d , b u t t h e y a l s o began t o emphasize t h e c r u c i a l r o l e o f t r a d e l i b e r a l i z a t i o n on t h e p a r t o f i n d u s t r i a l c o u n t r i e s i n i m p r o v i n g t h e T h i r d World's e x p o r t p o t e n t i a l , b o t h f o r " t r a d i t i o n a l " p r i m a r y p r o d u c t s and, i n c r e a s i n g l y , f o r m a n u f a c t u r e d p r o d u c t s as w e l l . As T a b l e 3 r e v e a l s , t h e LDCs' s h a r e o f w o r l d m a n u f a c t u r e d e x p o r t s was n o t o n l y s m a l l , but 45 a c t u a l l y d e c l i n e d o v e r t h e 1955-63 p e r i o d . T a b l e 3: E x p o r t s o f M a n u f a c t u r e s (SITC s e c t i o n s 5-8) ( B i l l i o n s o f $U.S. and p e r c e n t ) 1955 1963 LDCs 3.05 (6.7%) 4.9 (5.7%) I n d u s t r i a l M arket 37.-65 (83%) 69.50 (81%) Economies World 45.35 (100%) 85.60 (100%) I f t h e p r o d u c t c o m p o s i t i o n o f LDC m a n u f a c t u r e d e x p o r t s d u r i n g t h i s p e r i o d i s examined, t h e i m p o r t a n c e o f two p r o d u c t c a t e g o r i e s , n o n - f e r r o u s •metals and t e x t i l e s , i s n o t e w o r t h y , e s p e c i a l l y g i v e n t h a t many e c o n o m i s t s 46 e x c l u d e t h e f o r m e r from t h e i r d e f i n i t i o n o f m a n u f a c t u r e s . T a b l e 4 p r o v i d e s a b r e a k d o w n . ^ - 69 -T a b l e 4: P r o d u c t C o m p o s i t i o n o f LDC E x p o r t s o f M a n u f a c t u r e s ( i n p e r c e n t ) 1955 1965 N o n - f e r r o u s m e t a l s 40 29.1 I r o n and s t e e l 1.3 2.8 C h e m i c a l s 8.2 8 Wood se m i - m a n u f a c t u r e s and p a p e r 1 2 Ot h e r s e m i - m a n u f a c t u r e s 9.5 9.6 E n g i n e e r i n g p r o d u c t s 5.6 9.3 T e x t i l e s 21.6 22.4 C l o t h i n g 2.6 6.1 Oth e r consumer goods 10.1 10.4 T o t a l * 100% 100% ($3.05 b i l l i o n ) ($4.90 b i l l i o n ) * W i l l n o t add up t o 100% due t o r o u n d i n g . C l e a r l y , d e v e l o p i n g c o u n t r i e s were i n s i g n i f i c a n t as e x p o r t e r s o f manufac-t u r e d p r o d u c t s i n b o t h an a b s o l u t e and a r e l a t i v e sense i n t h e e a r l y 1960s. Moreover, a l m o s t t w o - t h i r d s o f what l i t t l e t h e y d i d e x p o r t i n 1955 was a c c o u n t e d f o r by two p r o d u c t s , one o f w h i c h c o u l d , a r g u a b l y , be e x c l u d e d from t h e d e f i n i t i o n o f m a n u f a c t u r e s ; and i n 1963, t e x t i l e s and n o n - f e r r o u s m e t a l s s t i l l c o n s t i t u t e d o v e r h a l f o f LDC m a n u f a c t u r e d e x p o r t s . However, i n s p i t e o f t h e v e r y l i m i t e d volume o f LDC e x p o r t s o f m a n u f a c t u r e s , and t h e c o n t i n u e d r e l i a n c e o f most i n d u s t r i a l i z i n g T h i r d W o r l d c o u n t r i e s on i m p o r t - s u b s t i t u t i o n s t r a t e g i e s , c e r t a i n LDCs began t o e v i n c e a g r o w i n g c o n c e r n w i t h t h e i s s u e o f a c c e s s t o d e v e l o p e d c o u n t r y m a r k e t s f o r t h e i r m a n u f a c t u r e d e x p o r t s . I n GATT, a new committee (known - 70 -as Committee I I I ) was c r e a t e d i n 1959 i n t h e wake o f t h e H a b e r l e r R e p o r t , w i t h t h e f o l l o w i n g terms o f r e f e r e n c e : To c o n s i d e r and r e p o r t t o t h e C o n t r a c t i n g P a r t i e s r e g a r d i n g o t h e r measures f o r t h e e x p a n s i o n o f t r a d e , w i t h p a r t i c u l a r r e f e r e n c e t o t h e i m p o r t a n c e o f t h e maintenance and e x p a n s i o n o f e x p o r t r: e a r n i n g s o f t h e l e s s - d e v e l o p e d c o u n t r i e s t o t h e development and d i v e r s i f i c a t i o n o f t h e i r economies.48 D e t a i l e d e x a m i n a t i o n o f d e v e l o p i n g c o u n t r i e s ' e x p o r t problems and p o t e n t i a l was u n d e r t a k e n i n t h e n e x t few y e a r s by Committee I I I , and a l t h o u g h much o f t h e a t t e n t i o n was f o c u s e d on impediments t o LDC e x p o r t s o f p r i m a r y p r o -d u c t s , p a r t i c u l a r l y a g r i c u l t u r a l c o m m o d i t i e s , t r a d e i n m a n u f a c t u r e s and se m i - m a n u f a c t u r e s was a l s o d i s c u s s e d . The Committee's f i r s t r e p o r t i n c l u d e d a b r i e f a n a l y s i s o f d e v e l o p e d c o u n t r y t r a d e b a r r i e r s i n r e l a t i o n t o c o t t o n and j u t e m a n u f a c t u r e s , and s u g g e s t e d t h a t h i g h t a r i f f s f o r t h e s e i n c r e a s i n g l y 49 i m p o r t a n t LDC e x p o r t s be l o w e r e d f o r t h w i t h . I n March 1960, a second l i s t o f p r o d u c t s t o be examined w i t h a v i e w t o d e t e r m i n i n g LDCs' e x p o r t i n t e r e s t s and t h e e f f e c t s o f t r a d e b a r r i e r s was ag r e e d t o and, s i g n i f i c a n t l y , t h r e e o f t h e f i v e p r o d u c t c a t e g o r i e s chosen were m a n u f a c t u r e s - - l i g h t e n g i n e e r i n g goods ( b i c y c l e s , s e w i n g machines, e l e c t r i c a l f a n s , d i e s e l e n g i n e s , and e l e c t r i c a l m o t o r s ) , f i n i s h e d l e a t h e r and l e a t h e r goods, and s p o r t i n g g o o d s . ^ The p r o c e d u r e f o l l o w e d w i t h r e s p e c t t o m a n u f a c t u r e s (as w e l l as o t h e r p r o d u c t s ) i d e n t i f i e d as i m p o r t a n t f o r d e v e l o p i n g c o u n t r i e s i n v o l v e d an e x a m i n a t i o n , by GATT S e c r e t a r i a t s t a f f , o f " t a r i f f s , q u a n t i t a t i v e r e s t r i c -t i o n s , r evenue d u t i e s and i n t e r n a l f i s c a l c h a r g e s . . . and o t h e r measures i n f o r c e i n r e l a t i o n t o i m p o r t s o f t h e s e c o m m o d i t i e s " ; t h i s i n f o r m a t i o n was t h e n " s u b m i t t e d t o i n d i v i d u a l c o n t r a c t i n g p a r t i e s f o r comment/amendment." 5^ D i s c u s s i o n a t subsequent m e e t i n g s o f t h e Committee was f o c u s e d on t h e degree o f p r o g r e s s made by C o n t r a c t i n g P a r t i e s , e s p e c i a l l y i n d u s t r i a l c o u n t r i e s , - 71 -i n r e m o v i n g o r r e d u c i n g t h e enumerated o b s t a c l e s t o t h e e x p a n s i o n o f LDC 52 e x p o r t s o f t h e s e p r o d u c t s . A t h i r d l i s t o f p r o d u c t s f o r w h i c h an e x a m i n a t i o n o f t r a d e b a r r i e r s would be u n d e r t a k e n was agreed t o i n 1961; c o i r m a n u f a c t u r e s , s t e e l f u r n i t u r e , and co p p e r r o l l i n g s were among t h e 53 p r o d u c t s i n t h i s l i s t . By 1962, Committee I I I had made s u f f i c i e n t p r o g r e s s i n i t s i n v e s t i g a -54 t i o n s t h a t s e v e r a l b r o a d c o n c l u s i o n s c o u l d be made. F i r s t , d e v e l o p e d c o u n t r y t a r i f f b a r r i e r s o f t e n harmed LDC e x p o r t p o s s i b i l i t i e s , n o t o n l y because o f t h e h i g h l e v e l s o f p r o t e c t i o n a f f o r d e d c e r t a i n s e c t o r s where LDCs were c o m p e t i t i v e , b u t a l s o because o f d i s c r i m i n a t i o n i n t a r i f f r a t e s a c c o r d i n g t o t h e degree o f p r o c e s s i n g . T h i s l a t t e r i s s u e , "one o f t h e major themes o f t h e r e p o r t s o f Committee I I I , " * ' * ' a r o s e as a r e s u l t o f t h e te n d e n c y o f many d e v e l o p e d c o u n t r i e s t o l e v y s m a l l o r z e r o d u t i e s on i m p o r t s o f raw m a t e r i a l s , b u t much h i g h e r t a r i f f s on p r o c e s s e d forms o f such c o m m o d i t i e s . C l e a r l y , t h i s w i d e s p r e a d p r a c t i c e made i t more d i f f i -c u l t f o r d e v e l o p i n g c o u n t r i e s t o i n d u s t r i a l i z e , t h a t i s , t o c o n t r i b u t e g r e a t e r amounts o f " v a l u e added" t o p r i m a r y c ommodities t h r o u g h p r o c e s s i n g and m a n u f a c t u r i n g . As t h e Committee n o t e d , " i t had t o be r e c o g n i z e d t h a t t h e maintenance by many i n d u s t r i a l i z e d c o u n t r i e s o f t r a d i t i o n a l t a r i f f s w h i c h were l e s s l i b e r a l t owards s e m i - p r o c e s s e d goods t h a n towards raw m a t e r i a l s was a f a c t o r r e t a r d i n g t h e development o f p r o c e s s i n g i n d u s t r i e s i n l e s s - d e v e l o p e d c o u n t r i e s . " * ' * ' T h i s was e s p e c i a l l y t r u e i n t h e c a s e s o f c o t t o n , j u t e , c o i r , c o pper and c e r t a i n f e r r o - a l l o y s , w h i c h were o f t e n a d m i t t e d d u t y - f r e e i n raw b u t n o t se m i - m a n u f a c t u r e d form by i n d u s t r i a l c o u n t r i e s . A n o t h e r f i n d i n g o f t h e Committee o f r e l e v a n c e f o r LDC m a n u f a c t u r e d - 72 -e x p o r t o p p o r t u n i t i e s r e l a t e d t o t h e c o n t i n u e d r e s o r t , by c e r t a i n d e v e l o p e d c o u n t r i e s , t o q u a n t i t a t i v e i m p o r t c o n t r o l s on a wide range o f p r o d u c t s o f i n t e r e s t t o t h e T h i r d W o r l d . I n s p i t e o f t h e g e n e r a l d i s m a n t l i n g o f qu o t a s and o t h e r c o n t r o l s d u r i n g t h e l a t t e r 1950s and e a r l y 1960s, q u a n t i t a t i v e r e s t r i c t i o n s on c o t t o n , j u t e and c o i r m a n u f a c t u r e s , sewing machines, and b i c y c l e s were common i n a number o f d e v e l o p e d c o u n t r i e s . F o r t u n a t e l y , q u otas d i d n o t ( y e t ) appear t o be s i g n i f i c a n t i n a f f e c t i n g t r a d e i n l e a t h e r goods, f o o t w e a r , s p o r t i n g goods, o r most o t h e r s e m i - m a n u f a c t u r e s o f i n t e r e s t t o LDCs. A t h i r d p r o b l e m a r e a f o r LDC e x p o r t s t o i n d u s t r i a l c o u n t r i e s a r o s e i n c o n n e c t i o n w i t h t h e l a t t e r ' s i n t e r n a l f i s c a l and revenue c h a r g e s l e v i e d on p r o d u c t s not pr o d u c e d d o m e s t i c a l l y , e s p e c i a l l y t r o p i c a l a g r i c u l t u r a l c o m m o d i t i e s , b u t t h i s p r a c t i c e had l i t t l e e f f e c t on e x p o r t s o f m a n u f a c t u r e s . A c t i v i t i e s i n t h e UN T h i s GATT e x a m i n a t i o n o f LDC t r a d e p r o s p e c t s and how t h e y were a f f e c -t e d by d e v e l o p e d c o u n t r y t r a d e p o l i c i e s was q u i t e u s e f u l i n t h a t a f a i r l y d e t a i l e d i n v e n t o r y o f key i s s u e s and problems was e s t a b l i s h e d ; i n subsequent y e a r s , d e v e l o p i n g c o u n t r i e s i n GATT would c o n t i n u e t o emphasize t h e s e p o i n t s , and grow i n c r e a s i n g l y c o n c e r n e d w i t h impediments t o t h e i r m a n u f a c t u r e d e x p o r t s i n p a r t i c u l a r . M e a nwhile, w i t h i n t h e U n i t e d N a t i o n s g r e a t e r i n t e r e s t i n t h e LDC p o s i t i o n i n w o r l d m a n u f a c t u r e s t r a d e was a l s o e v i d e n t b e g i n n i n g i n t h e l a t e 1950s. I n F e b r u a r y 1957 t h e G e n e r a l Assembly e n d o r s e d , w i t h t h e S o v i e t b l o c d i s s e n t i n g , an e a r l i e r r e s o l u t i o n o f t h e Economic and S o c i a l C o u n c i l t h a t , i n t e r a l i a , c a l l e d on d e v e l o p i n g c o u n t r i e s t o "make e v e r y e f f o r t t o d i v e r s i f y t h e markets f o r t h e i r p r o d u c t s . . . by - 73 -such measures as t h e a c c e l e r a t i o n o f t h e i r i n d u s t r i a l i z a t i o n , t h e d e v e l o p -57 ment o f new m a r k e t s , and t h e e x p a n s i o n o f t h e i r r ange o f p r o d u c t i o n . " I n 1961 t h e G e n e r a l Assembly i n i t i a t e d t h e f i r s t UN Development Decade ( R e s o l u t i o n 1711 ( X V I ) . ) The r e s o l u t i o n s t a t e d t h a t an a n n u a l GNP growth r a t e o f a t l e a s t 5 p e r c e n t was n e c e s s a r y f o r LDCs i n t h e 1960s, and n o t e d t h a t b o t h g r e a t e r a i d f l o w s and expanded t r a d e o p p o r t u n i t i e s were n e c e s s a r y t o r e a c h t h i s g o a l . However, l i t t l e was s a i d r e g a r d i n g LDC e x p o r t s o f ma n u f a c t u r e s a t t h i s t i m e . A s h i f t t o a more o u t w a r d - l o o k i n g f o c u s r e g a r d i n g T h i r d World i n d u s -t r i a l i z a t i o n was ap p a r e n t i n a 1961 r e p o r t by t h e ECOSOC S e c r e t a r y - G e n e r a l 58 w h i c h examined N o r t h - S o u t h t r a d e r e l a t i o n s . The r e p o r t n o t e d t h a t b a r r i e r s t o t h e e x p o r t o f m a n u f a c t u r e s from LDCs were l i k e l y t o loom l a r g e r i n f u t u r e d i s c u s s i o n s o f i n t e r n a t i o n a l t r a d e p o l i c y . When t h e p o s s i b i l i t y o f h o l d i n g a U n i t e d N a t i o n s C o n f e r e n c e on Trade and Development was d i s c u s s e d i n t h e Second Committee o f t h e G e n e r a l Assembly i n l a t e 1962, d e v e l o p i n g c o u n t r i e s p u t more emphasis t h a n h i t h e r t o on t h e need f o r t h e i n t e r n a t i o n a l community t o encourage g r e a t e r LDC e x p o r t s o f m a n u f a c t u r e s . On 8 December 1962 t h e G e n e r a l Assembly p a s s e d w i t h o u t d i s s e n t R e s o l u t i o n 1785 (X V I I ) w h i c h e n d o r s e d an e a r l i e r ECOSOC R e s o l u t i o n (917 (XXXIV) t o convene a w o r l d t r a d e and development c o n f e r e n c e . The G e n e r a l Assembly r e s o l u t i o n m e n t i o n e d , i n t e r a l i a , t h e need t o e l i m i n a t e o b s t a c l e s , r e s t r i c t i o n s and d i s c r i m i n a t o r y p r a c t i c e s i n w o r l d t r a d e w h i c h , i n p a r t i c u l a r a d v e r s e l y a f f e c t t h e n e c e s s a r y e x p a n s i o n and d i v e r s i f i c a t i o n and m a n u f a c t u r e d goods by t h e d e v e l o p i n g c o u n t r i e s . The LDCs--who were now a c l e a r m a j o r i t y i n t h e UN--were d e t e r m i n e d t o l i n k t r a d e and development i s s u e s i n a new g l o b a l forum s e n s i t i v e t o t h e i r i n t e r e s t s and p r i o r i t i e s . The Western c o u n t r i e s sought d u r i n g t h e - 74 -p r e p a r a t o r y m e e t i n g s p r i o r t o t h e c o n f e r e n c e t o r e s t r i c t t h e number o f t r a d e i s s u e s d i s c u s s e d i n o r d e r t o p r e s e r v e GATT's s p e c i a l competence and a u t h o r i t y as t h e i n t e r n a t i o n a l r e g u l a t o r y body f o r t r a d e q u e s t i o n s . Most LDCs and t h e S o v i e t b l o c c o u n t r i e s , on t h e o t h e r hand, w i s h e d t o c r e a t e a new UN I n t e r n a t i o n a l Trade O r g a n i z a t i o n t h a t would u s u r p and 59 expand GATT's r o l e i n t h e t r a d e f i e l d . As w i l l be se e n , t h i s " i n s t i -t u t i o n a l i s s u e " was c e n t r a l t o t h e subsequent b a r g a i n i n g o v e r improved a c c e s s f o r e x p o r t s o f m a n u f a c t u r e s from d e v e l o p i n g c o u n t r i e s . "Market D i s r u p t i o n " : The Case o f C o t t o n T e x t i l e s A development i n t h e e a r l y 1960s w h i c h d i d n o t augur w e l l f o r f u t u r e LDC e f f o r t s t o expand t h e i r e x p o r t s o f m a n u f a c t u r e s t o t h e i n d u s t r i a l market economies was t h e i n t r o d u c t i o n o f t h e c o n c e p t o f "market d i s r u p t i o n " i n t o t h e i n t e r n a t i o n a l t r a d e p o l i c y v o c a b u l a r y . I t s o r i g i n can be t r a c e d t o t h e a c u t e f e a r s f e l t by t h e U n i t e d S t a t e s and o t h e r Western c o u n t r i e s about t h e p o t e n t i a l growth o f Japan's e x p o r t s o f c e r t a i n m a n u f a c t u r e s w h i c h i t c o u l d p r o d u c e f a r more c h e a p l y t h a n Western i n d u s t r i e s . West European governments d e c i d e d t o i n v o k e A r t i c l e XXXV o f t h e GATT when J a p a n j o i n e d t h e o r g a n i z a t i o n i n 1955, and t h i s l e g i t i m i z e d t h e " n o n a p p l i c a t i o n " o f GATT r u l e s , i n c l u d i n g t h e MFN o b l i g a t i o n , v i s - a - v i s t h e new and f e a r e d GATT member. These c o u n t r i e s , r e c a l l i n g t h e v i c i o u s and h i g h l y s u c c e s s f u l prewar Japanese t r a d e p r a c t i c e s and r e c o g n i z i n g Japan's tremendous c o m p e t i -t i v e advantage i n c e r t a i n m a n u f a c t u r e s ( l a r g e l y due t o lower l a b o r c o s t s ) , d e t e r m i n e d t o p r o t e c t t h e i r m a r k ets and i n d u s t r i e s from t h e d i s r u p t i o n l i k e l y t o be c a u s e d i f J a p a n e s e e x p o r t s o f t e x t i l e s and o t h e r l a b o r -- 75 -i n t e n s i v e m a n u f a c t u r e s were a c c o r d e d n o n d i s c r i m i n a t o r y t r e a t m e n t . ^ The U n i t e d S t a t e s , as t h e l e a d i n g p r o p o n e n t o f Japan's a c c e s s i o n t o GATT, f e l t c o n s t r a i n e d n o t t o a p p l y A r t i c l e XXXV a g a i n s t t h e new " c l u b " member, and Canada s i m i l a r l y a c c o r d e d Japan MFN s t a t u s . Not s u r p r i s i n g l y , J a p a nese e x p o r t s t o t h e U.S. mushroomed. By 1960, J a p a n was e x p o r t i n g o v e r $1 b i l l i o n w o r t h o f m e r c h a n d i s e t o t h e U.S. and o v e r $100 m i l l i o n w o r t h t o Canada, b u t o n l y $165 m i l l i o n w o r t h t o t h e e n t i r e EEC and $120 m i l l i o n t o t h e U.K.^ The A m e r i c a n c o t t o n t e x t i l e i n d u s t r y began i n t h e mid-1950s t o c o m p l a i n r a t h e r v o c i f e r o u s l y t h a t "low-wage" i m p o r t s f r o m J a p a n were c a u s i n g s e r i o u s i n j u r y . Under GATT, t h e U.S. c o u l d have i n v o k e d A r t i c l e X IX, w h i c h p e r m i t t e d "emergency" a c t i o n t o p r o t e c t a p a r t i c u l a r i n d u s t r y . But because t h a t A r t i c l e d i d n o t a l l o w f o r s e l e c t i v e o r d i s c r i m i n a t o r y a c t i o n a g a i n s t a p a r t i c u l a r e x p o r t e r , r e s t r i c t e d q u i t e s t r i n g e n t l y t h e scope o f any "emergency" measures, and was f e l t t o be t o o cumbersome t o a p p l y , Washington s u c c e s s f u l l y n e g o t i a t e d i n 1957 a " v o l u n t a r y e x p o r t r e s t r a i n t " (VER) agreement w i t h J a p a n , under w h i c h t h e l a t t e r c o n s e n t e d t o 62 r e s t r i c t i t s e x p o r t s o f c o t t o n t e x t i l e s t o t h e U.S. Two y e a r s l a t e r , p e r c e i v i n g t h a t t h e p r o b l e m o f r a p i d i n c r e a s e s i n e x p o r t s o f s t a n d a r d i z e d , l a b o r i n t e n s i v e m a n u f a c t u r e s — e s p e c i a l l y t e x t i l e s - -f r o m Japan and c e r t a i n u n d e r d e v e l o p e d c o u n t r i e s was l i k e l y t o be a p e r -s i s t e n t one, t h e U.S. a s k e d f o r t h e c r e a t i o n o f a GATT Working P a r t y t o i n v e s t i g a t e t h e " q u e s t i o n o f t h e a v o i d a n c e o f market d i s r u p t i o n . " On t h e b a s i s o f t h e Working P a r t y ' s e x a m i n a t i o n , GATT C o n t r a c t i n g P a r t i e s adopted a " d e c i s i o n " o u t l i n i n g p r o c e d u r e s t o be f o l l o w e d i n i n s t a n c e s o f r e a l o r imminent market d i s r u p t i o n , t h e l a t t e r b e i n g d e f i n e d as a s i t u a t i o n c h a r a c t e r i z e d by t h e f o l l o w i n g c o n d i t i o n s : - 76 -( i ) a s h a r p and s u b s t a n t i a l i n c r e a s e o r p o t e n t i a l i n c r e a s e o f i m p o r t s o f p a r t i c u l a r p r o d u c t s f r o m p a r t i c u l a r s o u r c e s ; ( i i ) t h e s e p r o d u c t s a r e o f f e r e d a t p r i c e s w h i c h a r e s u b s t a n -t i a l l y b elow t h o s e p r e v a i l i n g f o r s i m i l a r goods o f comparable q u a l i t y i n t h e market o f t h e i m p o r t i n g c o u n t r y ; ( i i i ) t h e r e i s a danger t o d o m e s t i c p r o d u c e r s o r t h r e a t t h e r e o f ; ( i v ) t h e p r i c e d i f f e r e n t i a l s . . . do n o t a r i s e from g o v e r n -m e n t a l i n t e r v e n t i o n i n t h e f i x i n g o r f o r m a t i o n o f p r i c e s o r from dumping p r a c t i c e s . 6 3 Measures t o d e a l w i t h e x p o r t s a l l e g e d l y c a u s i n g such d i s r u p t i o n would go beyond t h o s e p r o v i d e d by GATT i t s e l f and c o u l d p r e s u m a b l y i n c l u d e b i l a t e r a l e x p o r t r e s t r a i n t agreements. I t was s t r e s s e d t h a t " t h e o r d e r l y e x p a n s i o n " 64 o f t r a d e i n a p r o d u c t c a u s i n g market d i s r u p t i o n was t h e b a s i c g o a l . Now, however, i t was t h e e x p o r t e r s who were b e i n g asked t o a d j u s t t o s h i f t s i n g l o b a l c o m p a r a t i v e a d v a n t a g e , where h i t h e r t o t h e g e n e r a l presump-t i o n had been t h a t t h e burden o f a d j u s t m e n t i n a l i b e r a l t r a d e r egime f e l l on i m p o r t i n g n a t i o n s . Thus, " t h e p r i n c i p l e o f c o m p a r a t i v e advantage i t s e l f was b e i n g c a l l e d i n t o q u e s t i o n . " ^ 5 C o n s i d e r a t i o n o f t h e p r o b l e m o f market d i s r u p t i o n q u i c k l y became c o n c e n t r a t e d on t h e p r o d u c t c a t e g o r y i n w h i c h d e v e l o p e d c o u n t r i e s ' i m p o r t s from "low-wage" c o u n t r i e s (Japan and LDCs) were e x p a n d i n g most r a p i d l y -c o t t o n t e x t i l e s . By 1963, and e x c l u d i n g n o n f e r r o u s m e t a l s , t e x t i l e p r o d u c t s a c c o u n t e d f o r w e l l o v e r 40 p e r c e n t o f LDC e x p o r t s o f m a n u f a c t u r e s , and t w o - t h i r d s o f t h e s e were c o t t o n t e x t i l e s . ^ Hong Kong, I n d i a , P a k i s t a n and a few o t h e r LDCs were e s p e c i a l l y dependent on t e x t i l e s i n terms o f t h e i r t o t a l e x p o r t s . A t t h e i n s i s t e n c e o f t h e U.S., and w i t h t h e c o n c u r r e n c e o f o t h e r d e v e l o p e d c o u n t r i e s , a m u l t i l a t e r a l Short-Term Arrangement R e g a r d i n g I n t e r n a t i o n a l Trade i n C o t t o n T e x t i l e s was n e g o t i a t e d under t h e r u b r i c o f GATT, c o v e r i n g t h e p e r i o d f r o m 1 O c t o b e r 1961 t o 31 September 1962; a Long-Term Arrangement (LTA) t h e n was n e g o t i a t e d t o c o v e r t h e f o l l o w -i n g f i v e y e a r s . The LTA was t h e f i r s t GATT a t t e m p t t o r e g u l a t e t r a d e - 77 -b a r r i e r s on a m u l t i l a t e r a l b a s i s f o r a p a r t i c u l a r p r o d u c t . I t was a l s o t h e f i r s t a t t e m p t t o r e g u l a t e market a c c e s s f o r an i m p o r t a n t LDC e x p o r t o u t s i d e o f t h e e x i s t i n g GATT r u l e s and norms, even though GATT p r o v i d e d t h e framework f o r n e g o t i a t i o n and i m p l e m e n t a t i o n o f t h e agreement. The LTA s i g n i f i e d t h e d e v e l o p e d c o u n t r i e s ' u n w i l l i n g n e s s o r i n a b i l i t y t o a l l o w t h e i n t e r n a t i o n a l market p l a c e and market f o r c e s t o d e t e r m i n e t h e g l o b a l d i s t r i b u t i o n o f p r o d u c t i o n f o r an i m p o r t a n t m a n u f a c t u r i n g s e c t o r . They were c l e a r l y d e t e r m i n e d t o r e t a r d t h e s h i f t o f g l o b a l c o m p a r a t i v e advantage i n t e x t i l e p r o d u c t i o n t o LDCs and J a p a n . The LTA c o n t a i n e d b o t h a g e n e r a l commitment by t h e d e v e l o p e d c o u n t r i e s t o f a c i l i t a t e t h e e x p a n s i o n o f LDC e x p o r t s o f c o t t o n t e x t i l e s b y r e d u c i n g t r a d e b a r r i e r s and u n d e r -t a k i n g s t r u c t u r a l a d j u s t m e n t ( A r t i c l e s 1 and 2 ) , and an agreement by s i g n a t o r i e s t h a t i n c a s e s o f market d i s r u p t i o n b i l a t e r a l e x p o r t r e s t r a i n t a c c o r d s between e x p o r t i n g and i m p o r t i n g c o u n t r i e s c o u l d be n e g o t i a t e d ( A r t i c l e s 3 and 4 ) . The p o s s i b i l i t y f o r p o l i t i c a l d i s p u t e was o b v i o u s g i v e n t h e c o n f l i c t i n g s e n t i m e n t s e x p r e s s e d i n t h e s e two groups o f A r t i c l e s . Some b e n e f i t s t o t h e e x p o r t i n g n a t i o n s s e e m e d ' l i k e l y t o r e s u l t from t h e LTA. I t was, f o r example, a g r e e d t h a t f o r t h o s e c o t t o n t e x t i l e i m p o r t s s u b j e c t t o q u a n t i t a t i v e i m p o r t c o n t r o l s i n 1962, t h e f o l l o w i n g p e r -c e n t a g e i n c r e a s e s i n qu o t a s would be r e a c h e d by c e r t a i n West European c o u n t r i e s by 1967: A u s t r i a , 95 p e r c e n t ; Denmark, 15; t h e EEC, 82; Norway 67 and Sweden, 15. However, " h i g h p e r c e n t a g e s f o r t h e EEC and A u s t r i a r e f l e c t e d s u c h low l e v e l s o f q u o t a s i n 1962 t h a t some e x p o r t e r s r e g a r d e d 68 even t h e new commitment as b o r d e r i n g on f r a u d . " I n a d d i t i o n , any new i m p o r t q u o t a s imposed on c o t t o n t e x t i l e i m p o r t s o r b i l a t e r a l l y n e g o t i a t e d u nder A r t i c l e s 3 o r 4 were t o be i n c r e a s e d by a t l e a s t 5 p e r c e n t a n n u a l l y , - 78 -e x c e p t i n g t h e f i r s t y e a r . F i n a l l y , t h e c r e a t i o n o f a GATT T e x t i l e s Committee t o a d m i n i s t e r t h e LTA en s u r e d a c e r t a i n degree o f m u l t i l a t e r a l r u l e s u p e r v i s i o n and p r o v i d e d a forum i n w h i c h t h e LDCs c o u l d p r e s s t h e i m p o r t i n g c o u n t r i e s t o l i b e r a l i z e a c c e s s , o r a t l e a s t t o l i v e up t o t h e " s p i r i t " o f t r a d e e x p a n s i o n e x p r e s s e d i n A r t i c l e 1 o f t h e LTA and i n GATT as a whole. On t h e o t h e r hand, t h e f a c t t h a t t h e d e c i s i o n as t o whether "market d i s r u p t i o n " e x i s t e d o r was imminent "was l e f t . . . e n t i r e l y i n t h e hands o f t h e i m p o r t i n g c o u n t r i e s " appeared t o l e s s e n g r e a t l y t h e v a l u e o f h a v i n g 69 a m u l t i l a t e r a l agreement and forum. M o r e o v e r , t h e LTA as a whole h e r a l d e d a new t r e n d i n i n t e r n a t i o n a l t r a d e r e l a t i o n s w h i c h was f r a u g h t w i t h u n p l e a s a n t p o r t e n t s f o r LDCs s e e k i n g t o i n c r e a s e t h e i r m a n u f a c t u r e d e x p o r t s . Y e t LDC c o t t o n t e x t i l e e x p o r t e r s had l i t t l e c h o i c e b u t t o accede t o t h e agreement, s i n c e i t was c l e a r t h a t t h e i m p o r t i n g c o u n t r i e s would 70 impose even more s t r i n g e n t measures i n t h e absence o f t h e LTA. A t t h e t i m e ( o r soon a f t e r ) t h e LTA was n e g o t i a t e d , t h e f o l l o w i n g e x p o r t e r s acceded: T a i w a n , C o l o m b i a , I n d i a , I s r a e l , J a m a i c a , J a p a n , M e x i c o , P a k i s t a n , P o r t u g a l , S p a i n , Hong Kong, K o r e a , t h e U.A.R., Y u g o s l a v i a , Greece, T u r k e y , and t h e P h i l i p p i n e s . LTA s i g n a t o r i e s b a s i c a l l y i n t e r e s t e d i n c o n t r o l l i n g i m p o r t s were A u s t r a l i a , A u s t r i a , B e l g i u m , Canada, Denmark, F i n l a n d , F r a n c e , Germany, I t a l y , Luxembourg, t h e N e t h e r l a n d s , Norway, Sweden, t h e U.K., and 71 t h e U.S. I n t e r e s t i n g l y , c o u n t r i e s n o t members o f GATT were p e r m i t t e d t o j o i n t h e LTA and t h e GATT T e x t i l e s Committee c h a r g e d w i t h a d m i n i s t e r i n g i t . The e v o l u t i o n o f n e g o t i a t i o n s and o f t r a d e i n t e x t i l e p r o d u c t s and LDCs' e f f o r t s t o p r o t e c t t h e i r i n t e r e s t s i n subsequent n e g o t i a t i o n s o v e r - 79 -market d i s r u p t i o n w i l l be d i s c u s s e d l a t e r i n t h e c h a p t e r . C o n c l u s i o n The 1950s and e a r l y 1960s were y e a r s when d e v e l o p i n g c o u n t r i e s i n t h e p r o c e s s o f i n d u s t r i a l i z i n g were n o t g e n e r a l l y p r e o c c u p i e d w i t h t h e i s s u e o f market a c c e s s f o r t h e i r m a n u f a c t u r e d e x p o r t s . Most LDCs c a p a b l e o f s i g n i -f i c a n t i n d u s t r i a l p r o d u c t i o n t e n d e d t o adhere t o an i n w a r d - l o o k i n g s t r a t e g y t h a t d i s c o u r a g e d r e l i a n c e on e x t e r n a l economic s t i m u l i , a l t h o u g h t h e r e were o f c o u r s e a few e x c e p t i o n s i n terms o f b o t h c o u n t r i e s ( e . g . Hong Kong, Taiwan) and p r o d u c t s ( t e x t i l e s ) . However, LDCs members o f GATT i n c r e a s i n g l y c o m p l a i n e d t h a t t h e norms o f r e c i p r o c i t y and n o n d i s c r i m i n a t i o n worked t o t h e i r d i s a d v a n t a g e , and t h e y j o i n e d w i t h o t h e r d e v e l o p i n g c o u n t r i e s (as w e l l as t h e S o v i e t b l o c ) i n demanding b o t h new t r a d e r u l e s and norms and a new i n s t i t u t i o n a l forum f o r t h e d i s c u s s i o n and r e g u l a t i o n o f i n t e r n a t i o n a l t r a d e p o l i c y . As w i l l be d i s c u s s e d p r e s e n t l y , t h i s b r o a d a s s a u l t on e x i s t i n g r u l e s , norms and i n s t i t u t i o n a l s e t t i n g s became i n e x t r i c a b l y l i n k e d t o more s p e c i f i c LDC e f f o r t s t o expand t h e i r e x p o r t s o f m a n u f a c t u r e d goods t o t h e N o r t h . I l l Phase I I : T h i r d W o r ld M a n u f a c t u r e d E x p o r t s and t h e Reform o f I n t e r n a t i o n a l Economic Norms I n t r o d u c t i o n By t h e e a r l y 1960s, an i n c r e a s i n g number o f T h i r d W o r l d economic p l a n n e r s were r e j e c t i n g t h e i m p o r t - s u b s t i t u t i o n a p p r o a c h t o i n d u s t r i a l i z a t i o n and b e g i n n i n g t o a g r e e more and more w i t h m a i n s t r e a m l i b e r a l e c o n o m i s t s who - 80 -s t r e s s e d t h e b e n e f i t s a v a i l a b l e t o LDCs from c l o s e r i n t e g r a t i o n i n t o t h e i n t e r n a t i o n a l economic system. Most d e v e l o p i n g c o u n t r y e l i t e s and i n t e l l e c t u a l s b e l i e v e d t h a t t h e p r o s p e c t s f o r economic development t h r o u g h e x p o r t i n g p r i m a r y commodities were e x t r e m e l y l i m i t e d . As P r e b i s c h and o t h e r s had argued i n t h e 1950s, c o u n t r i e s r e l y i n g on such commodity e x p o r t s f o r t h e i r f o r e i g n exchange e a r n i n g s would s u f f e r from d e c l i n i n g "terms o f t r a d e " as t h e p r i c e s o f t h e i r e x p o r t e d p r i m a r y p r o d u c t s p r o g r e s s i v e l y d e c l i n e d r e l a t i v e t o t h o s e o f t h e i r i m p o r t e d m a n u f a c t u r e s and i n d u s t r i a l goods. But whereas P r e b i s c h and h i s s u p p o r t e r s had p r e v i o u s l y sought t o a l l e v i a t e t h i s f o r e i g n exchange "gap" by p r o m o t i n g i m p o r t - s u b s t i t u t i o n , LDC spokesmen were now more d i s p o s e d towards an o u t w a r d - l o o k i n g s t r a t e g y t h a t f o c u s e d on ex p a n d i n g T h i r d W o r l d e x p o r t s o f m a n u f a c t u r e s and s e m i - m a n u f a c t u r e s . A new consensus was emerging t h a t t h e e a r l i e r s t r a t e g y was u n w o r k a b l e . As P r e b i s c h h i m s e l f commented: As i s w e l l known,the p r o l i f e r a t i o n o f i n d u s t r i e s o f e v e r y k i n d i n a c l o s e d market has d e p r i v e d t h e L a t i n A m e r i c a n c o u n t r i e s o f t h e advantages o f s p e c i l i z a t i o n and economies o f s c a l e , and owing t o t h e p r o t e c t i o n a f f o r d e d by e x c e s s i v e t a r i f f d u t i e s and r e s t r i c t i o n s , a h e a l t h y form o f . . . c o m p e t i t i o n has f a i l e d t o d e v e l o p , t o t h e d e t r i m e n t o f e f f i c i e n t p r o d u c t i o n . 7 2 T h i s c o n s t i t u t e d q u i t e a r e m a r k a b l e r e v e r s a l o f t h e e a r l i e r o r t h o d o x y embraced and espoused by T h i r d W o r l d e l i t e s . I t was now r e c o g n i z e d by many e x p e r t s and p o l i c y - m a k e r s t h a t t h e s m a l l s i z e o f LDC markets made i t e x t r e m e l y d i f f i c u l t t o c o n s t r u c t i n d u s t r i e s o f s u f f i c i e n t s i z e t o a l l o w f o r t h e r e a l i z a t i o n o f s c a l e economies. H i g h t a r i f f s and o t h e r b a r r i e r s i n s t i t u t e d by LDCs s e e k i n g t o i n d u s t r i a l i z e i n t h e 1950s r e d u c e d t h e degree o f c o m p e t i t i o n f a c e d by h e a v i l y p r o t e c t e d and s u b s i d i z e d d o m e s t i c i n d u s -t r i e s and t h u s i n t r o d u c e d a s t r u c t u r a l i n c e n t i v e f o r i n e f f i c i e n t p r o d u c t i o n I - 81 -p r a c t i c e s and r e s o u r c e misallocation.'° I n a d d i t i o n t o t h e p r o l i f e r a t i o n o f s m a l l , i n e f f i c i e n t i n d u s t r i e s , most LDCs f o l l o w i n g " i n w a r d - l o o k i n g " development p o l i c i e s d i s c o v e r e d t h a t c o n s i d e r a b l e f o r e i g n exchange was r e q u i r e d t o p u r c h a s e t h e i m p o r t s o f c a p i t a l goods and o t h e r i n p u t s needed by d o m e s t i c p l a n t s . However, t h e l a c k o f m a n u f a c t u r e d e x p o r t s made i t d i f f i c u l t t o a c q u i r e f o r e i g n c u r r e n c y . I n f a c t , p e r s i s t e n t exchange c r i s e s l e d t o r e s t r i c t i o n s w h i c h o v e r v a l u e d t h e exchange r a t e and t h u s f u r t h e r p e n a l i z e d e x p o r t s - - a v i c i o u s c i r c l e . I n o r d e r t o p r o v i d e a sounder economic b a s i s f o r t h e i r f u t u r e i n d u s -t r i a l i z a t i o n , LDCs would i n c r e a s i n g l y have t o g e a r t h e i r p r o d u c t i o n o f m a n u f a c t u r e s t o t h e w o r l d market. The r i c h i n d u s t r i a l economies were t h e o b v i o u s m a r kets f o r e x p o r t s o f m a n u f a c t u r e d p r o d u c t s from d e v e l o p i n g coun-t r i e s , b o t h because o f t h e i r g e n e r a l economic p r o s p e r i t y and because i t was c l e a r t h a t LDCs c o u l d p r o d u c e many t y p e s o f m a n u f a c t u r e d goods--p a r t i c u l a r l y t h o s e c h a r a c t e r i z e d by s i m p l e , s t a n d a r d i z e d , l a b o r - i n t e n s i v e p r o d u c t i o n t e c h n o l o g i e s and p r o c e s s e s - - f a r more c h e a p l y t h a n c o u l d t h e advanced economies. That i s , d e v e l o p i n g c o u n t r i e s c o u l d promote t h e i r i n d u s t r i a l i z a t i o n by s h i f t i n g r e s o u r c e s i n t o t h o s e s e c t o r s i n w h i c h t h e y e n j o y e d a g l o b a l c o m p a r a t i v e a d v a n t a g e , e s p e c i a l l y v i s - a - v i s t h e OECD n a t i o n s . Thus t h e N o r t h - S o u t h t r a d e b a r g a i n i n g t h a t i s examined i n t h i s and t h e subsequent s e c t i o n o f t h i s c h a p t e r was e s s e n t i a l l y c o n c e r n e d w i t h t h e c o n d i t i o n s and r u l e s a f f e c t i n g a c c e s s t o N o r t h e r n m a r k e t s f o r LDC e x p o r t s o f t h e g r o w i n g number o f m a n u f a c t u r e d p r o d u c t s i n w h i c h t h e y were e i t h e r g l o b a l l y c o m p e t i t i v e o r soon would be. - 82 -LDC M a n u f a c t u r e d E x p o r t s , 1964-73: An O v e r v i e w . S p e c t a c u l a r i n c r e a s e s i n t h e volume and v a l u e o f m a n u f a c t u r e d e x p o r t s were r e c o r d e d by t h e d e v e l o p i n g c o u n t r i e s i n t h e 1964-73 p e r i o d , and s e v e r a l o f t h e s e c o u n t r i e s underwent c o n s i d e r a b l e i n d u s t r i a l i z a t i o n as a r e s u l t . Many l i b e r a l e c o n o m i s t s i n t e r p r e t e d t h i s t r e n d as s u p p o r t i v e o f t h e i r v i e w t h a t g r e a t e r e x p o s u r e t o t h e i n t e r n a t i o n a l economy was t h e o p t i m a l p o l i c y f o r LDCs w a n t i n g t o i n d u s t r i a l i z e (see t h e p r e v i o u s c h a p t e r ) . That t r a d e i s an " e n g i n e o f g r o w t h " f o r d e v e l o p i n g economies i s a t h e s i s v i g o r o u s l y p r o -pounded by l i b e r a l economic t h e o r y , and m a n u f a c t u r e d p r o d u c t s a r e v i e w e d as t h e most p r o f i t a b l e and e f f e c t i v e c a n d i d a t e s f o r e x p o r t s by c o u n t r i e s 75 s e e k i n g t o mature e c o n o m i c a l l y . Nor i s t h i s argument o n l y p r o f f e r e d by " m a i n s t r e a m " e c o n o m i s t s . UNCTAD and o t h e r UN b o d i e s have i s s u e d s t u d i e s w h i c h p o i n t o u t t h a t h i g h e r p e r c a p i t a GNP growth was a c h i e v e d by m a j o r LDC e x p o r t e r s o f m a n u f a c t u r e s d u r i n g t h i s p e r i o d t h a n was e n j o y e d by any o t h e r group o f d e v e l o p i n g c o u n t r i e s , w i t h t h e e x c e p t i o n o f t h e l a r g e s t p e t r o l e u m 7 6 e x p o r t e r s . T a b l e 5 p r o v i d e s a b r o a d c o n t e x t f o r e x a m i n i n g t h e growth o f LDC m a n u f a c t u r e d e x p o r t s up t o 1973. I t i s n o t e w o r t h y t h a t w h i l e t h e n o m i n a l v a l u e o f such e x p o r t s i n c r e a s e d by a l m o s t 6 t i m e s , t h e LDC s h a r e o f w o r l d m a n u f a c t u r e s e x p o r t s o n l y grew by about one p e r c e n t i n t h e decade 1963-73. E x a m i n a t i o n o f t h e p r o d u c t c o m p o s i t i o n o f d e v e l o p i n g c o u n t r i e s ' e x p o r t s o f m a n u f a c t u r e s r e v e a l s s i g n i f i c a n t growth i n t h e s h a r e s o f e n g i n e e r i n g p r o d u c t s , c l o t h i n g , and wood m a n u f a c t u r e s and a r e l a t i v e d e c l i n e " i n non-f e r r o u s m e t a l s and t e x t i l e s — t w o o l d e r " m a n u f a c t u r e s . " P a r t i c u l a r l y s t r i k i n g (and h e a r t e n i n g t o l i b e r a l e c o n o m i s t s ) has been t h e r a p i d growth - 83 -i 77 T a b l e 5: E x p o r t s o f M a n u f a c t u r e s , 1963-73 (SITC5-8) ( B i l l i o n s o f U.S.$ and p e r c e n t ) LDCs 4.90 (6.7%) 9.1 (6.1%) 28.5 (7.8%) I n d u s t r i a l M a r k e t Economies 69.50 (81%) 123.85 (82.8%) 299.85 (82.2%) World 85.60 (100%) 149.55 (100%) 364.75 (100%) o f LDC e x p o r t s o f c l o t h i n g and e n g i n e e r i n g goods ( t h e l a t t e r c a t e g o r y i n c l u d e s such h i g h " v a l u e - a d d e d " p r o d u c t s as m a c h i n e r y , t r a n s p o r t v e h i c l e s , and t e l e c o m m u n i c a t i o n s e q u i p m e n t ) . T a b l e 6: P r o d u c t C o m p o s i t i o n o f LDC E x p o r t s  o f M a n u f a c t u r e s , 1963-7378 (p e r c e n t ) 1963 1968 1973 N o n - f e r r o u s m e t a l s 29.1 31.7 15.4 I r o n and s t e e l 2.8 3.4 3.3 C h e m i c a l s 8 7.5 7.2 Wood semi m a n u f a c t u r e s 2 2.9 3.4 and p a p e r O t h e r s e m i m a n u f a c t u r e s 9.6 7.7 8.6 E n g i n e e r i n g p r o d u c t s 9.3 10.7 20.8 T e x t i l e s 22.4 17.3 15.3 C l o t h i n g 6.1 9.7 13.5 Ot h e r Consumer Goods 16.4 9.0 11.2 T o t a l * 100% 100% 100% $4.9 $9.1 $25.5 ( b i l l i o n d o l l a r s ) * W i l l n o t add up t o 100% due t o r o u n d i n g . - 84 -A c l e a r e r p i c t u r e o f t h e t r e n d can be o b t a i n e d by t h e use o f d a t a r e l a t i n g t o t h e volume o f e x p o r t s . I t appears t h a t t h e volume o f d e v e l o p i n g c o u n t r y e x p o r t s o f m a n u f a c t u r e s grew a t an average a n n u a l r a t e o f about 12 p e r c e n t i n t h e 1964-73 p e r i o d , i n d i c a t i n g t h a t an e x t e n s i v e r e a l i n c r e a s e 79 i n e x p o r t s was r e g i s t e r e d . T a b l e 7 p r o v i d e s volume and v a l u e i n d i c e s o f t h e growth p a t t e r n s o f LDC m a n u f a c t u r e d e x p o r t s . 8 0 T a b l e 7: LDC E x p o r t s o f M a n u f a c t u r e s , V a l u e and Volume I n d i c e s (1970 = 100 f o r b o t h volume and v a l u e ) Volume V a l u e 1963 46 36 1968 71 66 1973 151 205 A c c o r d i n g t o t h i s measure, t h e volume o f LDC m a n u f a c t u r e d e x p o r t s more t h a n t r i p l e d i n t e n y e a r s , w h i l e t h e v a l u e o f t h o s e e x p o r t s grew by more t h a n 500 p e r c e n t ( t h e l a t t e r f i g u r e o f c o u r s e b e i n g p a r t l y d i s t o r t e d by v i r t u e o f w o r l d i n f l a t i o n ) . W h i l e t h e a b s o l u t e and r e a l growth r a t e s e x p e r i e n c e d d u r i n g t h i s decade were q u i t e r e m a r k a b l e , t h e LDCs were by no means s a t i s f i e d w i t h t h e i r l o c a t i o n w i t h i n t h e i n t e r n a t i o n a l d i v i s i o n o f l a b o r . I n t h e f i r s t p l a c e , a l t h o u g h many d e v e l o p i n g c o u n t r i e s were a d o p t i n g o u t w a r d - l o o k i n g p o l i c i e s and e n d e a v o r i n g t o expand o r b r a n c h i n t o m a n u f a c t u r e d e x p o r t s , t h e T h i r d World as a whole c o n t i n u e d t o a c c o u n t f o r o n l y a v e r y s m a l l p r o p o r t i o n o f w o r l d e x p o r t s o f m a n u f a c t u r e s (see T a b l e 5 ) . And w h i l e t h e i n d u s t r i a l market economies e x p o r t e d a l m o s t $50 b i l l i o n w o r t h o f m a n u f a c t u r e s t o LDCs - 85 -i n 1973, t h e y i m p o r t e d o n l y some $19 m i l l i o n w o r t h from t h e s e c o u n t r i e s , t h u s g e n e r a t i n g a n e t m a n u f a c t u r e s t r a d e d e f i c i t o f more t h a n $30 b i l l i o n 81 f o r t h e d e v e l o p i n g c o u n t r i e s ; s u c h d e f i c i t s grew s t e a d i l y d u r i n g t h e y e a r s 1964-73. I n a d d i t i o n , i t i s c l e a r t h a t a s m a l l number o f c o u n t r i e s a c c o u n t e d f o r t h e b u l k o f LDC m a n u f a c t u r e d e x p o r t s . F o r example, i n 1970 UNCTAD e s t i m a t e d t h a t 17 LDCs a c c o u n t e d f o r some 78 p e r c e n t o f S o u t h e r n e x p o r t s o f m a n u f a c t u r e s ( e x c l u s i v e o f n o n - f e r r o u s m e t a l s ) . They were r a n k e d , i n d e s c e n d i n g o r d e r , as f o l l o w s : Hong Kong, Taiwan, I n d i a , Y u g o s l a v i a ( c l a s s i f i e d as d e v e l o p e d i n GATT d a t a employed i n t h i s s t u d y ) , M e x i c o , S. K o r e a , B r a z i l , A r g e n t i n a , P a k i s t a n , P h i l i p p i n e s , I r a n , M a l a y s i a , N i g e r i a , 82 C o l o m b i a , C h i l e , I n d o n e s i a . HongKong a l o n e a c c o u n t e d f o r o v e r 20 p e r c e n t o f t o t a l LDC m a n u f a c t u r e d e x p o r t s ; T a i w a n , I n d i a , and Y u g o s l a v i a f o r between 8 and 9 p e r c e n t each; and t h e f i r s t t e n c o u n t r i e s f o r about 70 p e r -c e n t . A l t h o u g h d i f f e r e n t e c o n o m i s t s and o r g a n i z a t i o n s o f f e r somewhat d i f f e r e n t f i g u r e s , a l l e x p e r t s agree on t h e dominant r o l e o f a h a n d f u l o f c o u n t r i e s i n t h e e x p a n s i o n o f LDC m a n u f a c t u r e d e x p o r t s d u r i n g t h e 1960s and 83 e a r l y 1970s. F i n a l l y , i m p r e s s i v e growth s t a t i s t i c s f o r t h e 1964-73 p e r i o d p a r t l y r e f l e c t t h e v e r y low base r a t e s f o r e x p o r t s o f m a n u f a c t u r e s f r o m t h e T h i r d W o r l d . Many LDCs e x p o r t e d no m a n u f a c t u r e d p r o d u c t s a t a l l i n t h e e a r l y 1960s, and some w h i c h were e x p o r t i n g such p r o d u c t s were r e s -t r i c t e d t o n o n - f e r r o u s m e t a l s - - n o t even a m a n u f a c t u r e d good a c c o r d i n g t o a number o f d e f i n i t i o n s . Thus, h i g h growth r a t e s f o r i n d i v i d u a l LDCs o f t e n i n d i c a t e l i t t l e more t h a n t h a t t h e y e x p o r t e d some m i n i m a l volume o f manu-f a c t u r e s i n 1973 as opposed t o v i r t u a l l y none i n 1963. - 86 -Trade B a r g a i n i n g and t h e Reform o f Norms and R u l e s As an i n c r e a s i n g number o f T h i r d W o r l d s t a t e s became i n t e r e s t e d i n e x p o r t i n g m a n u f a c t u r e s t o t h e d e v e l o p e d economies, t h e q u e s t i o n o f t h e c o n d i t i o n s under w h i c h t h i s t r a d e would t a k e p l a c e t o o k on a h i g h e r p r o f i l e , b o t h w i t h i n i n t e r n a t i o n a l i n s t i t u t i o n s and i n academic d i s c u s s i o n s o f development p o l i c y . The i n i t i a l UNCTAD s e s s i o n i n 1964 and t h e d e c i s i o n t a k e n t h e n o v e r t h e v i g o r o u s o p p o s i t i o n o f t h e Western c o u n t r i e s t o c o n s t i -t u t e UNCTAD as a permanent UN o r g a n were i n s t r u m e n t a l i n p r e c i p i t a t i n g t h e subsequent growth o f i n t e r e s t i n t h e b a s i c norms and r u l e s g o v e r n i n g N o r t h -South t r a d e r e l a t i o n s . The c e n t r a l p o l i t i c a l b a r g a i n i n g and d i s c u s s i o n o c c u r r e d i n GATT and i t s new c o m p e t i t o r i n t h e i n s t i t u t i o n a l a r e n a o f w o r l d trade--UNCTAD. The major i s s u e s w h i c h were (and a r e ) r e l e v a n t t o LDC e x p o r t s o f m a n u f a c t u r e s c o n c e r n e d : 1) p r e f e r e n c e s f o r such e x p o r t s i n d e v e l o p e d c o u n t r y m a r k e t s , 2) t h e r o l e o f t h e norm o f r e c i p r o c i t y i n t r a d e n e g o t i a t i o n s i n t h e GATT c o n t e x t , and 3) t h e e f f e c t and i n c i d e n c e o f d e v e l o p e d c o u n t r y t r a d e b a r r i e r s on LDC m a n u f a c t u r e d e x p o r t s . Each i s c o n s i d e r e d below. 1. LDCs and Trade P r e f e r e n c e s The s t r o n g a t t a c h m e n t o f t h e d e v e l o p e d s t a t e s t o t h e p r i n c i p l e o f n o n d i s c r i m i n a t i o n i n t r a d e r e l a t i o n s - - " t h e c e n t r a l theme o f A m e r i c a n 84 c o m m e r c i a l p o l i c y a l m o s t from t h e b e g i n n i n g o f t h e n a t i o n " --was r e f l e c t e d i n t h e q u a s i - s a c r o s a n c t s t a t u s a c c o r d e d t h e MFN c l a u s e i n GATT. A l t h o u g h p r o v i s i o n s were i n c l u d e d i n t h e GATT t h a t a c c e p t e d t h e r o l e o f t r a d e p r e f e r e n c e s i n c o n n e c t i o n w i t h r e g i o n a l i n t e g r a t i o n and f r e e t r a d e schemes - 87 -( A r t i c l e X X I V ) , w a i v i n g o f t h e MFN o b l i g a t i o n was n o t p e r m i t t e d f o r p u r p o s e s o f economic d e v e l o p m e n t - - i n s p i t e o f t h e f a c t t h a t t h e Havana C h a r t e r c o n t a i n e d a p r o v i s i o n ( A r t i c l e XV) w h i c h d i d a l l o w new p r e f e r e n c e s i f t h e s e were i n t e n d e d p r i m a r i l y t o f o s t e r t h e economic development o f n o n i n d u s t r i a -85 l i z e d c o u n t r i e s . D e v e l o p i n g c o u n t r i e s and t h e i r s u p p o r t e r s argued t h a t t h e p r i n c i p l e o f n o n d i s c r i m i n a t i o n e n s h r i n e d i n GATT's MFN o b l i g a t i o n p r e s u p p o s e d an e q u a l i t y among n a t i o n s t h a t p a t e n t l y d i d n o t e x i s t . As one academic e x p e r t s y m p a t h e t i c t o T h i r d W o r ld c o m p l a i n t s p u t i t , "The MFN p r i n c i p l e o f t h e GATT i s an e q u i t a b l e one; i t i s an i d e a l t h a t a l l n a t i o n s s h o u l d be e q u a l ; b u t i f , i n f a c t , t h e y a r e n o t , e q u a l t r e a t m e n t becomes i n e q u a l i t y . " ^ The q u e s t i o n o f p r e f e r e n c e s has been by f a r t h e most i m p o r t a n t i s s u e i n N o r t h - S o u t h t r a d e n e g o t i a t i o n s o v e r market a c c e s s f o r m a n u f a c t u r e d e x p o r t s f r o m LDCs. I t i s a l s o a t o p i c w h i c h has e l i c i t e d a g r e a t o u t p o u r i n g o f s c h o l a r l y i n k , b o t h s u p p o r t i v e and c r i t i c a l o f t h e co n c e p t o f p r e f e r e n -t i a l t a r i f f s and market a c c e s s f o r d e v e l o p i n g c o u n t r i e s . T h i s academic d e b a t e cannot be r e c o u n t e d i n d e t a i l h e r e , b u t s i n c e t h e d i v e r g e n t o p i n i o n s o f t h e " e x p e r t s " appear t o have e x e r t e d c o n s i d e r a b l e i n f l u e n c e on t h e p o l i t i c a l b a r g a i n i n g t h a t ensued a t UNCTAD I and I I , b r i e f summaries o f t h e c o n t r a s i n g v i e w s a r e i n o r d e r . Those o p p o s i n g t a r i f f p r e f e r e n c e s i n t h e mid-1060s p e r c e i v e d them as dangerous p o l i c y i n s t r u m e n t s and doubted t h a t any s i g n i f i c a n t g a i n s would a c c r u e t o LDCs t h r o u g h d e v e l o p e d c o u n t r y p r e f e r e n c e s i n t h e i r f a v o r . 87 S e v e r a l r e a s o n s were t y p i c a l l y advanced. F i r s t , i t was argued t h a t MFN t a r i f f r a t e s imposed by t h e key i n d u s t r i a l c o u n t r i e s were l i k e l y t o f a l l t o - 88 -l e s s t h a n 10 p e r c e n t f o r most m a n u f a c t u r e s as a r e s u l t o f t h e GATT n e g o t i a t i o n s ( t h e s o - c a l l e d Kennedy Round) t h e n under way, and would c e r t a i n l y f a l l even f u r t h e r i n l a t e r y e a r s . Thus t h e scope f o r a meaning-f u l p r e f e r e n c e m a r g i n i n f a v o r o f LDCs s i m p l y d i d n o t e x i s t . S econd, s i n c e a r e l a t i v e l y s m a l l number o f LDCs were a c t u a l l y a c t i v e e x p o r t e r s o f manufac-t u r e d p r o d u c t s , and o n l y a few p r o d u c t l i n e s were i n v o l v e d , " i t was n o t 88 w o r t h t a m p e r i n g w i t h t h e MFN s y s t e m . " M o r e o v e r , e x t e n s i o n o f t a r i f f p r e f e r e n c e s t o c o v e r o t h e r LDC e x p o r t s made l i t t l e sense s i n c e t h e i r e x p o r t s o f p r i m a r y commodities e i t h e r f a c e d low o r z e r o d u t i e s o r were i n h a b i t e d by r i g i d n o n t a r i f f b a r r i e r s t h a t would be u n a f f a c t e d by t a r i f f p r e f e r e n c e s . T h i r d , t h e i n t r o d u c t i o n o f p r e f e r e n c e s would g i v e LDC b e n e f i c i a r i e s a v e s t e d i n t e r e s t i n r e t a r d i n g o r p r e v e n t i n g f u t u r e MFN t a r i f f r e d u c t i o n s w h i c h would l e s s e n t h e p r e f e r e n c e m a r g i n s e n j o y e d b y them i n d e v e l o p e d c o u n t r y m a r k e t s . F i n a l l y , t o t h e e x t e n t t h a t t a r i f f p r e f e r e n c e s promoted t r a d e d i v e r s i o n - - i . e . , t h e d i v e r s i o n o f i m p o r t s from low c o s t s o u r c e s n o t e n j o y i n g p r e f e r e n c e s t o h i g h e r - c o s t LDC s o u r c e s b e n e f i t i n g from p r e f e r e n c e s - - a m i s a l l o c a t i o n o f w o r l d r e s o u r c e s would a u t o m a t i c a l l y r e s u l t . P a r t i s a n s o f p r e f e r e n c e s f o r d e v e l o p i n g c o u n t r i e s c o u n t e r e d w i t h 89 s e v e r a l p l a u s i b l e arguments o f t h e i r own. G i v e n t h e i n t e r n a t i o n a l l y r e c o g n i z e d need o f t h e T h i r d W o r ld f o r a l a r g e i n c r e a s e i n f o r e i g n exchange e a r n i n g s , and t h e c r i t i c a l f u t u r e r o l e o f m a n u f a c t u r e s i n b r i n g i n g about t h i s i n c r e a s e , ways had t o be f o u n d t o b o o s t LDC e x p o r t s o f m a n u f a c t u r e s . T a r i f f p r e f e r e n c e s f o r d e v e l o p i n g c o u n t r i e s were a t t r a c t i v e f o r s e v e r a l r e a s o n s . They would h e l p t o compensate LDCs f o r t h e c o m p a r a t i v e c o m p e t i t i v e weakness o f t h e i r n a s c e n t m a n u f a c t u r i n g i n d u s t r i e s v i s - a - v i s t h e e s t a b l i s h e d - 89 -i n d u s t r i e s i n t h e Western c o u n t r i e s — a n i n t e r n a t i o n a l v a r i a n t o f t h e " i n f a n t i n d u s t r y " argument f o r d o m e s t i c t a r i f f p r o t e c t i o n . P a t t e r s o n has d e s c r i b e d t h e e s s e n c e o f t h i s argument: . . . i t was commonly b e l i e v e d by t h o s e s p e a k i n g f o r t h e l e s s -d e v e l o p e d c o u n t r i e s t h a t t h e i r i n a b i l i t y t o p r o d u c e goods a t c o m p e t i t i v e p r i c e s v e r y f r e q u e n t l y stemmed from t h e f a c t t h a t t h e i r u n i t c o s t s d u r i n g t h e e a r l y y e a r s would be h i g h because t h e y were n o t y e t i n a p o s i t i o n t o t a k e advantage o f t h e known economies o f l a r g e - s c a l e p r o d u c t i o n . They argued t h a t i f m a r k ets c o u l d be p r o v i d e d t o p e r m i t them t o r e a c h s u c h a l e v e l o u t p u t , t h e y c o u l d t h e n s u c c e s s f u l l y compete.90 I n a d d i t i o n , a l t h o u g h d e v e l o p e d c o u n t r i e s ' MFN t a r i f f s on n o n a g r i c u l t u r a l p r o d u c t s would i n most c a s e s be r e d u c e d t o l e s s t h a n 10 p e r c e n t by t h e c l o s e o f t h e 1960s, t a r i f f r a t e s on many m a n u f a c t u r e s o f i n t e r e s t t o LDCs tended t o be c o n s i d e r a b l y h i g h e r , and some p r o d u c t s ( e . g . c o t t o n t e x t i l e s ) f a c e d s t r i c t q u a n t i t a t i v e i m p o r t b a r r i e r s as w e l l . GATT's r e c i p r o c i t y b a r g a i n i n g p r o c e s s and t h e o p e r a t i o n o f t h e p r i n c i p a l s u p p l i e r and p r o d u c t - b y - p r o d u c t n e g o t i a t i n g r u l e s ( a l l d e s c r i b e d e a r l i e r ) meant t h a t d e v e l o p e d c o u n t r y t a r i f f s on p r o d u c t s o f w h i c h LDC were t h e major e x p o r t e r s were u s u a l l y h i g h e r t h a n t h o s e on p r o d u c t s m a i n l y e x p o r t e d by o t h e r d e v e l o p e d c o u n t r i e s . More g e n e r a l l y , i t was a r g u e d t h a t t h e s t r u c t u r e o f d e v e l o p e d coun-t r i e s ' t a r i f f s c h e d u l e s — w i t h low o r z e r o d u t i e s imposed on i m p o r t s o f i n d u s t r i a l raw m a t e r i a l s b u t p r o g r e s s i v e l y h i g h e r t a r i f f s imposed a c c o r d i n g t o t h e degree o f p r o c e s s i n g — d i s c o u r a g e d t h e development o f p r o c e s s i n g c a p a c i t y i n t h e LDCs from w h i c h t h e raw m a t e r i a l s were e x t r a c t e d . The t y p i c a l d e v e l o p e d c o u n t r y ' s t a r i f f s t r u c t u r e p r o v i d e d " e f f e c t i v e " t a r i f f p r o t e c t i o n t o d o m e s t i c i n d u s t r y w h i c h was much g r e a t e r t h a n an e x a m i n a t i o n o f t h e " n o m i n a l t a r i f f s " w ould i n d i c a t e . As one o b s e r v e r has d e s c r i b e d t h e p r o b l e m : - 90 -t o t h e e x t e n t t h a t t a r i f f s on i n p u t s a r e " l o w e r " t h a n t h e t a r i f f s on t h e o u t p u t , t h e / d o m e s t i c j 7 m a n u f a c t u r e r and t h e p r o c e s s w h i c h added t h e v a l u e t o t h e i n p u t a r e s u b s i d i z e d . The h i g h e r t h e n o m i n a l t a r i f f on t h e o u t p u t i s r e l a t i v e t o t h e n o m i n a l t a r i f f on t h e i n p u t , t h e more i s t h e p r o c e s s w h i c h adds t h e v a l u e e f f e c t i v e l y p r o t e c t e d . Even low n o m i n a l t a r i f f s on i m p o r t s o f p r o c e s s e d . . . c o m m o d i t i e s , f o r example, combined w i t h z e r o - l e v e l t a r i f f s on t h e raw m a t e r i a l s / f r o m / . . . d e v e l o p i n g c o u n t r i e s , amount t o h i g h e f f e c t i v e p r o t e c t i o n . 9 1 A l t h o u g h t h e phenomenon o f t a r i f f e s c a l a t i o n by degree o f p r o c e s s i n g and t h e a s s o c i a t e d d i s c r e p a n c y between " e f f e c t i v e " and " n o m i n a l " p r o t e c t i o n a f f e c t e d LDCs most s e v e r e l y i n r e l a t i o n t o a g r i c u l t u r a l c o m m o d i t i e s , i t was a l s o t h o u g h t t o impede LDC m a n u f a c t u r e d e x p o r t s and was an i m p o r t a n t element i n t h e d i s p u t e o v e r t a r i f f p r e f e r e n c e s d u r i n g t h e 1960s. LDC arguments t h a t d e v e l o p e d c o u n t r y t a r i f f s on m a n u f a c t u r e s o f w h i c h t h e y were ma j o r e x p o r t e r s were h i g h e r t h a n t h o s e on m a n u f a c t u r e s i n g e n e r a l and t h a t t h e " e f f e c t i v e " p r o t e c t i o n o f f e r e d d o m e s t i c i n d u s t r y i n d e v e l o p e d c o u n t r i e s was a l s o g r e a t e r i n s e c t o r s c o m p e t i n g w i t h LDC m a n u f a c t u r e d e x p o r t s were b o t h v a l i d a t e d i n an a n a l y s i s c o n d u c t e d by B e l a B a l a s s a on b e h a l f o f UNCTAD. T a b l e 8 summarizes h i s f i n d i n g s , w h i c h were n o t , i n c i d e n t a l l y , s e r i o u s l y d i s p u t e d by o t h e r e x p e r t s . These v a r i o u s "academic" arguments f o r and a g a i n s t t a r i f f p r e f e r e n c e s f o r LDCs were r e p e a t e d by t h e p r o t a g o n i s t s a t t h e f i r s t UNCTAD i n 1964. UNCTAD I marked a c r u c i a l t u r n i n g p o i n t i n i n t e r n a t i o n a l economic r e l a t i o n s i n t h a t f o r t h e f i r s t t i m e m a j o r g l o b a l economic i s s u e s were b e i n g d i s c u s s e d i n a forum i n w h i c h t h e v i e w s o f t h e Western c o u n t r i e s d i d n o t dominate. The F i n a l A c t adopted a t t h e c l o s e o f t h e C o n f e r e n c e r e f l e c t e d t h e d e c l i n e o f Western i n f l u e n c e : o f t h e 15 " g e n e r a l " and 13 " s p e c i a l " p r i n c i p l e s ( a dopted by m a j o r i t y v o t e ) t o gov e r n i n t e r n a t i o n a l t r a d e and development 91 J a b l e 8: Average E f f e c t i v e and Nominal T a r i f f R ates on M a n u f a c t u r e s Imported by t h e I n d u s t r i a l C o u n t r i e s , 1964^2 T a r i f f A v e r a g e s T a r i f f A v e r a g e s on on T o t a l Imports o f Imports o f Manufac-M a n u f a c t u r e s t u r e s from LDCs Nom i n a l E f f e c t i v e E%N Nominal E f f e c t i v e E%N U.S. 11.5 20.0 174 17.9 35.4 198 U.K. 15.2 27.8 183 19.5 37.3 191 EEC 11.0 18.6 169 14.3 27.7 194 Sweden 6.6 12.5 189 9.8 21.2 216 J a p a n - 16.1 29.5 183 18.0 36.7 207 A l l I n d u s t r i a l C o u n t r i e s 12.3 21.7 176 17.1 33.4 195 r e l a t i o n s , t h e U.S. opposed o r a b s t a i n e d on 11 g e n e r a l and n i n e s p e c i a l p r i n -c i p l e s ; t h e U.K. on t e n and s i x ; F r a n c e , on e i g h t and f i v e ; West Germany on 93 t e n and f i v e ; and J a p a n , on e i g h t and f i v e , r e s p e c t i v e l y . A c c o r d i n g t o one c l o s e o b s e r v e r , t h e v a r i o u s p o l i c y recommendations c o n t a i n e d i n t h e F i n a l A c t r e f l e c t e d t h e b e l i e f o f t h e m a j o r i t y o f c o u n t r i e s i n t h r e e key " p r i n c i p l e s " : 1) t h e need t o s t a b i l i z e commodity p r i c e s ; 2) t h e need t o e f f e c t l a r g e r f i n a n -c i a l f l o w s t o t h e T h i r d W o r l d ; and, most i m p o r t a n t l y f o r t h e p r e s e n t s t u d y , 3) t h e need f o r " / " i / n c r e a s e d a c c e s s f o r d e v e l o p i n g c o u n t r i e s ' p r o d u c t s , b o t h by r e d u c i n g n o r t h e r n T . . p r o t e c t i o n i s m , and by i n t r o d u c i n g p r e f e r e n c e s on 94 t h e i r m a n u f a c t u r e d and s e m i - m a n u f a c t u r e d p r o d u c t s . " The C o n f e r e n c e a d o p t e d , by a v o t e o f 78 t o 11, w i t h 23 a b s t e n t i o n s , g e n e r a l p r i n c i p l e e i g h t , w h i c h s t a t e d , i n t e r a l i a , t h a t " p r e f e r e n t i a l c o n c e s s i o n s . . . s h o u l d be made t o d e v e l o p i n g c o u n t r i e s as a whole and such p r e f e r e n c e s s h o u l d n o t be extended 95 t o d e v e l o p e d c o u n t r i e s . " V i r t u a l l y a l l d e v e l o p e d c o u n t r i e s opposed o r - 92 -a b s t a i n e d on t h i s v o t e . A more s p e c i f i c commitment t o n o n - r e c i p r o c a l p r e f e r e n c e s f o r t h e m a n u f a c t u r e s o f LDCs i n d e v e l o p e d c o u n t r y m a r kets was c o n t a i n e d i n s p e c i a l p r i n c i p l e t h r e e . However, because o f t h e v o c i f e r o u s o p p o s i t i o n o f t h e U.S. i n p a r t i c u l a r , t h e C o n f e r e n c e d e c i d e d t o t a k e no a c t i o n on t h i s p r i n c i p l e . I n s t e a d , i t adopted w i t h o u t d i s s e n t a recommendation t h a t n o t e d t h e l a c k o f consensus on t h e p r e f e r e n c e s p r o -p o s a l and c a l l e d f o r t h e e s t a b l i s h m e n t o f a committee t o e x p l o r e t h e 96 m a t t e r f u r t h e r and r e p o r t t o t h e S e c r e t a r y - G e n e r a l o f UNCTAD. The marked h o s t i l i t y o f t h e U n i t e d S t a t e s t o t h e i d e a o f p r e f e r e n c e s f o r d e v e l o p i n g c o u n t r i e s t e n d e d t o i s o l a t e i t from s e v e r a l major d e v e l o p e d a l l i e s and t r a d i n g p a r t n e r s . I n f a c t , many o t h e r d e v e l o p e d c o u n t r i e s were q u i t e p r e p a r e d t o s u p p o r t p r e f e r e n c e s , a t l e a s t i n p r i n c i p l e . The U.K., Canada, J a p a n , and s e v e r a l s m a l l non-EEC West European c o u n t r i e s j o i n e d t h e U.S. i n o p p o s i n g g e n e r a l p r i n c i p l e e i g h t , w h i c h a l l u d e d t o p r e f e r e n c e s . On t h e o t h e r hand, s i x EEC s t a t e s a b s t a i n e d on t h e v o t e r e g a r d i n g t h i s p r i n c i p l e , as d i d F i n l a n d , Denmark, I r e l a n d and s e v e r a l o t h e r c o u n t r i e s . They i n d i c a t e d some sympathy f o r p r e f e r e n c e s i n f a v o r o f LDC e x p o r t s . However, d e v e l o p e d c o u n t r i e s p r e p a r e d t o e n t e r t a i n t h e p r o p o s a l f o r t a r i f f p r e f e r e n c e s f o r LDCs i n t h e i r m a r k ets were d i v i d e d on how s u c h p r e f e r e n c e s would be implemented. West Germany, Denmark, and t h e N e t h e r l a n d s " f e l t i t d e s i r a b l e t h a t t h e r e s h o u l d be a s i n g l e p r e f e r e n -t i a l scheme a p p l i e d t o a l l d e v e l o p i n g c o u n t r i e s by a l l i n d u s t r i a l 97 n a t i o n s . " B r i t a i n a l s o s u p p o r t e d t h i s p o s i t i o n . I n c o n t r a s t , F r a n c e , I t a l y and B e l g i u m p r o p o s e d " s e l e c t i v e " p r e f e r e n c e s w h i c h would be n e g o t i a t e d on a b i l a t e r a l o r l i m i t e d m u l t i l a t e r a l b a s i s , u s u a l l y i n t h e - 93 -c o n t e x t o f r e g i o n a l c o o p e r a t i o n a r r a n g e m e n t s . T h e i r r e a s o n f o r f a v o r i n g t h i s a p p roach i s n o t h a r d t o d i s c e r n : s e l e c t i v e p r e f e r e n c e s would a l l o w f o r t h e f l e x i b i l i t y and d i s c r e t i o n r e q u i r e d t o s a f e g u a r d t h e i r " s p e c i a l " economic c o o p e r a t i o n and t r a d e p r e f e r e n c e schemes b u i l t up w i t h f o r m e r c o l o n i e s i n A f r i c a and r e c e n t l y c o d i f i e d i n t h e 1963 Yaounde r 9 8 C o n v e n t i o n . S i m i l a r l y , t h e d e v e l o p i n g c o u n t r i e s , w h i l e a g r e e i n g u n d e r t h e r u b r i c o f t h e "Group o f 77" t o a j o i n t n e g o t i a t i n g p o s i t i o n on p r e f e r e n c e s , were d i v i d e d on two c r i t i c a l i s s u e s . F i r s t , t h o s e LDCs a l r e a d y p r o d u c i n g and e x p o r t i n g m a n u f a c t u r e s on a s i g n i f i c a n t s c a l e i n s i s t e d on b e i n g i n c l u d e d i n any p r o p o s e d p r e f e r e n c e scheme, whereas l e s s i n d u s t r i a l i z e d LDCs wanted s p e c i a l r e c o g n i t i o n o f t h e i r e n t i t l e m e n t t o an a s s u r e d s h a r e o f d e v e l o p e d c o u n t r y m a r kets i n t h e f u t u r e , and perhaps t o more generous t r e a t m e n t i n s o f a r as p r e f e r e n c e m a r g i n s o r q u o t a s were c o n c e r n e d as w e l l . I n t h e end, t h e Group o f 77 a c c e p t e d t h a t some form o f s p e c i a l t r e a t m e n t f o r t h e l e s s d e v e l o p e d among them was a p p r o p r i a t e . A s e c o n d , more s e r i o u s i n t r a - G r o u p o f 77 d i s p u t e c o n c e r n e d t h e f a t e o f e x i s t i n g p r e f - e r e n c e schemes under w h i c h v a r i o u s LDCs e n j o y e d p r e f e r e n t i a l m a r g i n s i n t h e m a r kets o f c e r t a i n d e v e l o p e d c o u n t r i e s f o r a v a r i e t y o f p r o d u c t s , i n c l u d i n g some m a n u f a c t u r e s . I n p a r t i c u l a r , A f r i c a n c o u n t r i e s r e c e i v i n g p r e f e r e n t i a l t r e a t m e n t from t h e EEC were a n x i o u s t o s a f e g u a r d t h e i r m a r g i n s , w h i l e t h e L a t i n A m e r i c a n s and o t h e r LDCs i n s i s t e d on t h e a b o l i t i o n o f e x i s t i n g p r e f e r e n c e s f o r m a n u f a c t u r e s as a p r e c o n d i t i o n t o t h e c r e a t i o n o f a g e n e r a l i z e d scheme. No w o r k a b l e Group o f 77 consensus was r e a l l y a c h i e v e d on t h i s p r o b l e m a t UNCTAD I beyond a vague f o r m u l a t i o n t h a t s t r e s s e d t h a t " e q u i v a l e n t a d v a n t a g e s " t o c u r r e n t b e n e f i c i a r i e s o f t - 94 -99 p r e f e r e n c e s s h o u l d be m a i n t a i n e d . The d e v e l o p i n g c o u n t r i e s f a i l e d a t UNCTAD I t o o b t a i n t h e consensus n e c e s s a r y t o t r a n s l a t e t h e i r p r o p o s a l f o r t a r i f f p r e f e r e n c e s i n t o an i n t e r n a t i o n a l l y a c c e p t e d p r i n c i p l e , b u t t h e y were a b l e t o go t o a con-s i d e r a b l e d i s t a n c e i n t h i s d i r e c t i o n . The major r e c a l c i t r a n t d e v e l o p e d c o u n t r y - - t h e U n i t e d S t a t e s - - w a s somewhat i s o l a t e d from s e v e r a l o t h e r Western powers, some o f whom were f a v o r a b l y d i s p o s e d towards p r e f e r e n c e s i n p r i n c i p l e t hough u n a b l e t o agre e on how t h e y s h o u l d be implemented. The LDCs were a b l e t o ensure t h a t a c o n t i n u o u s i n s t i t u t i o n a l p r e s s u r e would be e x e r t e d on t h e d e v e l o p e d c o u n t r i e s when t h e y v o t e d , a t t h e c l o s e o f UNCTAD I , t o e s t a b l i s h i t as a permanent UN i n s t i t u t i o n - - a g a i n s t t h e vehement o p p o s i t i o n o f Western d e l e g a t i o n s . T h i s i n s t i t u t i o n a l outcome was an u n p r e c e d e n t e d v i c t o r y f o r t h e l e s s d e v e l o p e d c o u n t r i e s . They had n o t o n l y been a b l e t o c a l l a c o n f e r e n c e w h i c h had been i n i t i a l l y r e s i s t e d by t h e d e v e l o p e d c o u n t r i e s ; t h e y had been a b l e , f o r t h e f i r s t t i m e i n h i s t o r y , t o c r e a t e a ma j o r new i n t e r n a t i o n a l agency w h i c h t h e Western c o u n t r i e s had n o t wanted a t a l l . 1 0 0 I n December 1964 t h e G e n e r a l Assembly, o v e r Western o p p o s i t i o n , v o t e d t o c r e a t e a c o n t i n u i n g UNCTAD m a c h i n e r y ( R e s o l u t i o n 1995 ( X I X ) . The d e v e l o p i n g c o u n t r i e s had i n e f f e c t s e i z e d t h e i n i t i a t i v e i n N o r t h - S o u t h economic r e l a t i o n s by e n g i n e e r i n g a new i n t e r n a t i o n a l o r g a n i z a t i o n w i t h a b r o a d mandate t o e x p l o r e t r a d e and development i s s u e s . That UNCTAD was (and re m a i n s ) " t h e i r " i n s t i t u t i o n was e v i d e n t from t h e s t a r t . I t s s e c r e t a r i a t - - d u b b e d a " s e c t a r i a t " by d i s g r u n t l e d Western d e l e g a t e s -c o n c e i v e d o f i t s r e s p o n s i b i l i t i e s i n terms o f a s s i s t i n g t h e LDCs t o  a c h i e v e t h e i r g o a l s on p r e f e r e n c e s and o t h e r i s s u e s ; t h i s marked a r a d i c a l d e p a r t u r e from t h e way i n w h i c h o f f i c i a l s o f i n t e r n a t i o n a l o r g a n i -- 95 -z a t i o n s t r a d i t i o n a l l y d e f i n e d t h e i r t a s k s . The S e c r e t a r y - G e n e r a l o f t h e new body, R a u l P r e b i s c h , e x e r c i s e d an enormous i n f l u e n c e o v e r t h e Group o f 77's t h i n k i n g about t r a d e problems and on t h e n e g o t i a t i n g s t a n c e o f t h e T h i r d W o r ld as a whole. P r e b i s c h ' s r e p o r t t o t h e f i r s t c o n f e r e n c e , "Towards a New Trade P o l i c y f o r Development," a c t u a l l y o u t l i n e d t h e e s s e n t i a l s o f a l l o f t h e Group o f 77's main p r o p o s a ^ ' ^ — s u r e l y an u n u s u a l r o l e f o r t h e " n e u t r a l " c h a i r m a n o f an i n t e r n a t i o n a l o r g a n i z a t i o n ! The c o n t i n u i n g i n s t i t u t i o n a l m a c h i n e r y e s t a b l i s h e d by R e s o l u t i o n 1995 (XIX) c o n s i s t e d . o f a Trade and Development B o a r d , w h i c h can c r e a t e s u b s i d i a r y c o m m i t t e e s . The Board had 55 members e l e c t e d by t h e C o n f e r e n c e , i n a c c o r d a n c e w i t h t h e need t o g u a r a n t e e b o t h e q u i t a b l e g e o g r a p h i c d i s t r i b u t i o n and t h e membership o f a l l p r i n c i p a l t r a d i n g n a t i o n s . C o u n t r i e s were d i v i d e d i n t o f o u r " l i s t s " - - l i s t A ( A f r o - A s i a n c o u n t r i e s and Y u g o s l a v i a ) , l i s t B ( t h e OECD n a t i o n s and C y p r u s ) , l i s t C ( L a t i n A m e r i c a n and C a r i b b e a n c o u n t r i e s ) , and l i s t D ( s o c i a l i s t s t a t e s - - b a s i c a l l y t h e S o v i e t U n i o n and i t s a l l i e s ) . The LDCs e n j o y a c l e a r m a j o r i t y on t h e Board and on any committees s t r u c k by i t . A t i t s f i r s t s e s s i o n , t h e Board e s t a b l i s h e d a Committee on Commodities, a Committee on M a n u f a c t u r e s , a Committee on I n v i s i b l e s and F i n a n c i n g R e l a t e d t o T r a d e , and a Committee on S h i p p i n g ; t h e s e have remained i t s major s u b s i d i a r y b o d i e s . I n a c c o r d a n c e w i t h recommendation A . I I I . 5 o f UNCTAD I , t h e S e c r e t a r y - G e n e r a l c r e a t e d i n 1965 a S p e c i a l Committee on P r e f e r e n c e s , w h i c h r e p o r t e d t o t h e Committee on M a n u f a c t u r e s once and was t h e n 102 s u c c e e d e d by a l a r g e r body, t h e Group on P r e f e r e n c e s . I t was w i t h i n t h e s e l a t t e r forums t h a t t h e i s s u e o f t a r i f f p r e f e r e n c e s was most i n t e n -s i v e l y d i s c u s s e d d u r i n g t h e i n t e r v a l between UNCTAD I and t h e Second - 96 -C o n f e r e n c e p l a n n e d f o r 1968. I n GATT, where LDCs' t r a d e p r o b l e m s were r e c e i v i n g i n c r e a s i n g a t t e n t i o n t h r o u g h o u t 1964-66, a new c h a p t e r (known as P a r t IV) was added t o t h e G e n e r a l Agreement and a new Committee on T r a d e and Development was s e t up. However, no m e n t i o n o f p r e f e r e n c e s was t o be f o u n d i n P a r t IV, d e s p i t e s p e c i f i c p r o p o s a l s p u t ' f o r w a r d a t t h e 103 t i m e by C h i l e and I n d i a . I n d e e d , a l t h o u g h t h e d e v e l o p e d c o u n t r i e s a g r e e d a t UNCTAD I t h a t LDCs c o u l d g r a n t t a r i f f p r e f e r e n c e s t o each o t h e r w i t h o u t e x t e n d i n g them t o o t h e r c o u n t r i e s - - " i m p l i c i t r e c o g n i t i o n o f t h e 104 need f o r new r u l e s " --even t h i s p r o p o s a l was r e j e c t e d when n e g o t i a t i o n s were c o n d u c t e d o v e r t h e a d d i t i o n o f P a r t IV t o GATT. A Working Group on I P r e f e r e n c e s e s t a b l i s h e d i n 1965 a t t h e i n s i s t e n c e o f LDCs i n GATT's Committee on Trade and • ^ Development d i s c u s s e d t a r i f f p r e f e r e n c e s b r i e f l y and i n c o n c l u s i v e l y , " ' ^ * ' b u t t h e i n s t i t u t i o n a l l o c u s o f n e g o t i a t i o n s r e m a i n e d i n UNCTAD, s i n c e i t was a more u n i v e r s a l body and one i n w h i c h LDC v i e w s c a r r i e d f a r more w e i g h t . A l t h o u g h d e b a t e i n GATT c o n c e r n i n g p r e f e r e n c e s was q u i t e p e r f u n c -t o r y , an i n t e r e s t i n g p r e l u d e t o t h e p r e f e r e n c e schemes l a t e r i n s t i t u t e d by t h e d e v e l o p e d c o u n t r i e s o c c u r r e d i n 1965 when A u s t r a l i a p r o p o s e d i n GATT t h a t i t be p e r m i t t e d t o g r a n t t a r i f f p r e f e r e n c e s on c e r t a i n p r o d u c t s t o LDCs. A u s t r a l i a was a b l e t o s e c u r e a w a i v e r o f i t s A r t i c l e I MFN o b l i g a t i o n from t h e r e q u i s i t e number o f GATT members ( t w o - t h i r d s ) i n 1966. " T h i s 1966 w a i v e r was v i e w e d as a t e s t c a s e , t h e f i r s t p a r t i a l and t e n t a t i v e s t e p t o w a r d i n t r o d u c i n g a system o f p r e f e r e n c e s f o r i m p o r t s 106 i n t o d e v e l o p e d c o u n t r i e s from l e s s - d e v e l o p e d c o u n t r i e s . " The l i s t o f p r o d u c t s on w h i c h p r e f e r e n c e s would be g r a n t e d was chosen a c c o r d i n g t o - 97 -a c r i t e r i o n o f " c o m p e t i t i v e need": i t e m s w h i c h i n d i v i d u a l LDCs c o u l d e x p o r t a t " c o m p e t i t i v e " p r i c e s were e x c l u d e d . A u s t r a l i a ' s scheme u t i l i z e d " t a r i f f q u o t a s , " w h i c h p r o v i d e d t h a t p r o d u c t s on t h e p r e f e r e n c e l i s t would e n t e r a t lo w e r p r e f e r e n t i a l r a t e s u n t i l a c e r t a i n q u o t a was f i l l e d ; t h e r e a f t e r , h i g h e r MFN t a r i f f s w ould a p p l y . Quotas were " g l o b a l " - -t h e y r e f e r r e d t o LDCs as a group. A key f e a t u r e o f A u s t r a l i a ' s p r e f -e r e n c e system--and w h i c h was a h a r b i n g e r o f a h i g h l y c o n t e n t i o u s i s s u e t h a t a r o s e l a t e r i n UNCTAD--was i t s u n i l a t e r a l c h a r a c t e r . A u s t r a l i a r e mained f r e e " t o v a r y a t any t i m e t h e l i s t o f goods, t h e r a t e s o f d u t y and t h e s i z e o f q u o t a s . " The m u l t i l a t e r a l s u r v e i l l a n c e o f t h e w a i v e r i n GATT was o r i e n t e d n o t t o e x p a n d i n g t h e b e n e f i t s o f t h e p r e f e r e n c e s f o r t h e LDCs, b u t i n s t e a d t o r e s t r i c t i n g t h e t r a d e d i v e r s i o n t h a t m ight o c c u r 107 t o t h e d e t r i m e n t o f o t h e r d e v e l o p e d c o u n t r i e s . P r e b i s c h p r e s e n t e d a r e p o r t t o t h e S p e c i a l Committee on P r e f e r e n c e s i n May 1965 i n w h i c h he r e v i e w e d t h e major arguments f o r and a g a i n s t d e v e l o p e d c o u n t r y t a r i f f p r e f e r e n c e s f o r LDC e x p o r t s o f m a n u f a c t u r e s and s u r v e y e d v a r i o u s a l t e r n a t i v e a p p roaches t o i m p l e m e n t i n g a p r e f e r e n c e 108 s c h e m e ( s ) . I n 1966 and e a r l y 1967 i n c o n c l u s i v e and f r e q u e n t l y a c r i -monious d i s c u s s i o n s c o n c e r n i n g p r e f e r e n c e s t o o k p l a c e i n t h e Committee on M a n u f a c t u r e s and i t s new Group on P r e f e r e n c e s . E f f o r t s t o r e a c h consensus ( o r even a measure o f agreement) on how t a r i f f p r e f e r e n c e s would be implemented were t h w a r t e d by t h e c o n t i n u i n g o p p o s i t i o n o f t h e U.S., Canada, Japan, S w i t z e r l a n d and, t o a l e s s e r e x t e n t , Sweden and-'Norway t o t h e u n d e r m i n i n g o f t h e n o n d i s c r i m i n a t i o n norm t h a t t h e y f e a r e d would be a consequence o f such p r e f e r e n c e s . U n t i l t h e p r i n c i p l e o f p r e f e r e n c e s i n f a v o r o f d e v e l o p i n g c o u n t r i e s was a c c e p t e d by a l l t h e major p o t e n t i a l - 98 -donor s t a t e s , n e g o t i a t i o n s c o n c e r n i n g t h e scope o f p r e f e r e n c e s , whether t h e r e s h o u l d be one o r s e v e r a l schemes, t h e f a t e o f e x i s t i n g EEC p r e f e r e n c e s f o r t h e A f r i c a n " a s s o c i a t e s , " and whether t o d i f f e r e n t i a t e 109 t h e l e a s t - d e v e l o p e d from o t h e r LDCs were q u i t e p r e m a t u r e . The U n i t e d S t a t e s began t o r e c o n s i d e r i t s p o s i t i o n i n e a r l y 1967. Washington was becoming i n c r e a s i n g l y d i s c o n c e r t e d w i t h what was w i d e l y p e r c e i v e d t o be an a t t e m p t by t h e EEC ( l e d by F r a n c e ) t o a s s e r t a neo-c o l o n i a l i s t hegemony o v e r f o r m e r c o l o n i e s i n A f r i c a . P a r t i c u l a r l y o b n o x i o u s t o U.S. p o l i c y makers was t h e f a c t t h a t t h e Yaounde C o n v e n t i o n between t h e EEC and t h e A s s o c i a t i o n o f A f r i c a n S t a t e s and Madagascar (AASM) n o t o n l y a c c o r d e d t h e l a t t e r p r e f e r e n t i a l t r e a t m e n t f o r c e r t a i n p r o d u c t s i n EEC m a r k e t s , b u t a l s o p r o v i d e d f o r r e v e r s e p r e f e r e n c e s i n f a v o r o f EEC s u p p l i e r s i n t h e AASM c o u n t r i e s . Washington argued t h a t i t s e x p o r t s o f c i t r u s f r u i t i n p a r t i c u l a r were harmed by European p r e f e r e n c e s f o r A f r i c a n s u p p l i e r s . (Agreements between t h e EEC and M e d i t e r r a n e a n c o u n t r i e s i n t h e l a t e 1960s and e a r l y 1970s were a l s o c r i t i c i z e d by t h e U.S. on t h i s ground.) I n a d d i t i o n , r e v e r s e p r e f e r e n c e s f a v o r i n g t h e s i x i n A f r i c a n m a r k ets c l e a r l y i n h i b i t e d U.S. e x p o r t s and r a i s e d t h e u n p l e a s a n t s p e c t r e o f a " t r a d i n g b l o c " - - a n a t h e m a t o U.S. l e a d e r s s i n c e t h e e a r l y p a r t o f t h e c e n t u r y .'"*•* ^  F i n a l l y , t h e U.S. was under p r e s s u r e from L a t i n A m e r i c a n c o u n t r i e s unhappy w i t h t h e E E C - A f r i c a n arrangements t o e i t h e r g r a n t them " v e r t i c a l " p r e f e r e n c e s o r s e c u r e t h e d i s s o l u t i o n o f t h e emerging " A f r o - E u r o p e a n b l o c " by s u p p o r t i n g a g e n e r a l i z e d g l o b a l p r e f e r e n c e scheme t h a t w o u l d be c o n t i n g e n t on t h e a b o l i t i o n o f EEC p r e f e r e n c e s f o r A f r i c a n countries.'*'** - 99 -When P r e s i d e n t Johnson announced, i n A p r i l 1967, t h a t t h e U n i t e d S t a t e s was now w i l l i n g " t o e x p l o r e w i t h o t h e r i n d u s t r i a l i z e d c o u n t r i e s . . . t h e p o s s i b i l i t y o f t e m p o r a r y p r e f e r e n t i a l t a r i f f a dvantages f o r a l l d e v e l o p i n g c o u n t r i e s i n t h e markets o f a l l t h e i n d u s t r i a l i z e d c o u n t r i e s , " t h e l a s t s i g n i f i c a n t h u r d l e t o i n t e r n a t i o n a l agreement i n p r i n c i p l e 112 was c l e a r e d . "Those _bther7 d e v e l o p e d c o u n t r i e s w h i c h fhadj e x h i b i t e d some m i s g i v i n g s v i s - a - v i s p r e f e r e n c e s had l i t t l e c h o i c e b u t t o 113 f a l l i n l i n e . " The U.S. appeared t o b e l i e v e t h a t b y s u p p o r t i n g t h e concept o f a s i n g l e , g e n e r a l i z e d p r e f e r e n c e system i n w h i c h a l l d e v e l o p e d donor c o u n t r i e s would adopt a s i m i l a r a p p roach and e q u i t a b l y s h a r e t h e "burd e n " among t h e m s e l v e s , s e v e r a l g o a l s would be s e r v e d : t h e EEC's m i s c h i e v o u s economic r e g i o n a l i s t a m b i t i o n s would be t h w a r t e d ; c o m p l a i n t s i s s u i n g from i t s L a t i n A m e r i c a n n e i g h b o r s would be met; and t h e p o l i t i c a l n e a r - i s o l a t i o n o f Washington on t h i s c r u c i a l i s s u e would be b r o u g h t t o an end. P r i o r t o UNCTAD I I , t h e d e v e l o p e d c o u n t r i e s sought t o f a s h i o n a u n i f i e d p o s i t i o n i n t h e OECD. W h i l e t h e y agreed t o t h e p r i n c i p l e o f temp o r a r y t a r i f f p r e f e r e n c e s , and t o t h e need f o r " g e n e r a l i z e d " as opposed t o " s e l e c t i v e " p r e f e r e n c e s ( t h a n k s t o c o n c e s s i o n s f r o m F r a n c e and B e l g i u m ) , no consensus was r e a c h e d on t h e f a t e o f s p e c i a l p r e f e r e n t i a l arrangements between t h e EEC and i t s LDC a l l i e s . The U.S. was e s p e c i a l l y d e t e r m i n e d t o p u t an end t o t h e r e v e r s e p r e f e r e n c e s p r o v i d e d f o r i n t h e Yaounde C o n v e n t i o n , whereby EEC s u p p l i e r s were a c c o r d e d p r e f e r e n t i a l t r e a t m e n t i n A f r i c a n m a r k e t s . But F r a n c e i n p a r t i c u l a r was e q u a l l y adamant t h a t s u c h arrangements were l e g i t i m a t e ; t h e A f r i c a n s were a l s o - 100 -r e l u c t a n t t o d i s c u s s t h i s i s s u e f o r f e a r o f j e o p a r d i z i n g economic and 115 p o l i t i c a l r e l a t i o n s w i t h t h e EEC Commission and P a r i s . There were a l s o d i f f e r e n c e s on t h e t y p e o f s a f e g u a r d system t o employ, t h e U.S., Canada and s e v e r a l o t h e r c o u n t r i e s f a v o r i n g an escape c l a u s e s i m i l a r t o A r t i c l e XIX o f GATT t h a t would o n l y o p e r a t e i f " s e r i o u s i n j u r y " t o a d o m e s t i c i n d u s t r y o c c u r r e d o r was t h r e a t e n e d , whereas t h e EEC s u p p o r t e d t h e " t a r i f f q u o t a " mechanism t h a t would p e r m i t p r i o r d e t e r m i n a t i o n o f t h e volume o f LDC p r o d u c t s a l l o w e d t o e n t e r under p r e f e r e n t i a l r a t e s and make i t p o s s i b l e t o d i s c r i m i n a t e among LDC s u p p l i e r c o u n t r i e s . The OECD c o u n t r i e s were a g r e e d t h a t p r o d u c t s i n c l u d e d i n a G e n e r a l i z e d System o f P r e f e r e n c e s (GSP) would e s s e n t i a l l y be r e s t r i c t e d t o m a n u f a c t u r e s ( s e m i -p r o c e s s e d p r i m a r y p r o d u c t s would o n l y be i n c l u d e d i n c e r t a i n c a s e s ) ; t h a t donor c o u n t r i e s would be f r e e t o e x c l u d e s e n s i t i v e p r o d u c t s and t h o s e i n w h i c h LDCs were a l r e a d y c o m p e t i t i v e , and t o u n i l a t e r a l l y r e s o r t t o s a f e g u a r d a c t i o n i f t h e y t h o u g h t t h i s n e c e s s a r y ; t h a t t h e d u r a t i o n o f t h e GSP would be t e n y e a r s ; t h a t donor c o u n t r i e s c o u l d d e c l a r e c e r t a i n LDCs i n e l i g i b l e f o r p r e f e r e n t i a l t r e a t m e n t f o r " c o m p e l l i n g r e a s o n s " n o t r e l a t e d t o c o m p e t i t i v e c r i t e r i a ; and t h a t p r e f e r e n t i a l a c c e s s c o u l d t a k e t h e f o r m e i t h e r o f d u t y - f r e e t r e a t m e n t p_£ o f t a r i f f r e d u c t i o n s below MFN r a t e s . N e g o t i a t i n g w i t h i n t h e Group o f 77 and i n UNCTAD i t s e l f , t h e LDCs d e v e l o p e d a common p o s i t i o n s h a r p l y a t v a r i a n c e w i t h t h a t o f t h e donor c o u n t r i e s . When t h e y met and adop t e d t h e A l g i e r s C h a r t e r i n O c t o b e r 117 1967, t h e y were a b l e t o r e s o l v e ( o r a t l e a s t mute) t h e i r d i f f e r e n c e s by d e v e l o p i n g a more e x t e n s i v e " r e q u e s t l i s t . " C e n t r a l t o t h e compromise - 101 -a c h i e v e d a t A l g i e r s was t h e agreement o f t h e A f r i c a n c o u n t r i e s t o e v e n t u a l l y suspend t h e i r v e r t i c a l p r e f e r e n c e s w i t h t h e EEC i n exchange f o r a s t r o n g commitment on t h e p a r t o f t h e Group o f 77 as a whole t o push f o r b o t h w i d e r p r o d u c t c o v e r a g e ( i . e . , s e m i ^ p r o c e s s e d p r i m a r y c o m m o d i t i e s ) i n t h e GSP and s p e c i a l measures (e-. g. r e s e r v e d market s h a r e s i n OECD c o u n t r i e s ) f o r t h e l e a s t d e v e l o p e d LDCs. The A f r i c a n s were p r e -p a r e d t o a c c e p t f u t u r e abandonment o f t h e i r EEC p r e f e r e n c e s p r o v i d e d t h e y c o u l d o b t a i n " e f f e c t i v e b e n e f i c i a l p a r t i c i p a t i o n " i n t h e GSP; t h i s r e q u i r e d i n c l u s i o n o f p r o c e s s e d commodities and o f s p e c i a l t r e a t m e n t f o r l e a s t d e v e l o p e d LDCs s i n c e A f r i c a n c o u n t r i e s by and l a r g e were b o t h i n s i g n i f i c a n t e x p o r t e r s o f m a n u f a c t u r e s and r e l a t i v e l y p o o r i n c o m p a r i s o n 118 w i t h L a t i n A m e r i c a n and E a s t A s i a n LDCs. I n c o n f l i c t w i t h t h e OECD p o s i t i o n , t h e Group o f 77 t h u s a s k e d f o r an e x t r e m e l y b r o a d d e f i n i t i o n o f GSP p r o d u c t c o v e r a g e . The LDCs a l s o demanded d u t y - f r e e r a t h e r t h a n d u t y - r e d u c t i o n p r e f e r e n t i a l t r e a t m e n t ; i n t e r n a t i o n a l agreement and s u r v e i l l a n c e i n r e s p e c t v o f t h e use o f s a f e g u a r d s by donor s t a t e s ; i n c l u -s i o n f o r a l l c o u n t r i e s members o f t h e Group o f 77 as b e n e f i c i a r i e s under 119 t h e GSP; and a 20 y e a r d u r a t i o n f o r t h e GSP. These d i v e r g e n t p o s i t i o n s i n e v i t a b l y c l o u d e d t h e p r o s p e c t s f o r p r o g r e s s a t UNCTAD I I , h e l d a t New D e l h i i n F e b r u a r y and March 1968. The " m a x i m a l i s t " Group o f 77 b a r g a i n i n g s t a n c e - - " d i c t a t e d by t h e need t o p r e s e r v e group u n i t y i n t h e f a c e o f d i v e r s i t y o f i n t e r e s t s /among7 a 120 l a r g e number o f members" --made compromise u n l i k e l y . The donor coun-t r i e s i n s i s t e d t h a t " t h e g r a n t i n g o f p r e f e r e n c e s would c o n s t i t u t e u n i -l a t e r a l a c t i o n s o f t h e p r e f e r e n c e - g i v i n g governments," and r e f u s e d t o - 102 -t r a n s l a t e t h e i r a p p r o v a l i n p r i n c i p l e o f t h e GSP i n t o a l e g a l l y b i n d i n g 121 a c c o r d . Nor were t h e y p r e p a r e d t o a c c e p t i n c l u s i o n o f p r o c e s s e d commodities ( c h a p t e r s 1-24 o f t h e B r u s s e l s T a r i f f N o m e n c l a t u r e ) i n t h e GSP, t h e r e q u i r e m e n t f o r i n t e r n a t i o n a l c o n c u r r e n c e i n c o n n e c t i o n w i t h t h e use o f s a f e g u a r d s , o r t h e v i e w t h a t p r e f e r e n t i a l t r e a t m e n t meant d u t y -f r e e t r e a t m e n t . I n e s s e n c e , t h e donor s t a t e s were making i t q u i t e c l e a r t h a t t h e y would u n i l a t e r a l l y d e t e r m i n e t h e p r o d u c t c o v e r a g e , d e p t h o f c u t s , e l i g i b i l i t y c r i t e r i a , and s a f e g u a r d p r o v i s i o n s a s s o c i a t e d w i t h t h e GSP. T h i s t h e LDCs r e f u s e d t o a c c e p t , a t l e a s t i n p u b l i c . As a r e s u l t , R e s o l u t i o n 21(11) o f UNCTAD I I r e f l e c t e d unanimous agreement on t h e p r i n c i p l e o f t e m p o r a r y p r e f e r e n c e s o n l y ; f u r t h e r d e t a i l e d n e g o t i a t i o n s 122 would have t o be u n d e r t a k e n i n a new S p e c i a l Committee on P r e f e r e n c e s . D e l i b e r a t i o n s i n t h e S p e c i a l Committee d u r i n g t h e r e m a i n d e r o f 1968 and 1969 p r o d u c e d o n l y s l o w f o r w a r d movement s i n c e t h e d e v e l o p e d c o u n t r i e s d i d n o t submit t h e i r " i l l u s t r a t i v e l i s t s " s p e c i f y i n g t h e manu-f a c t u r e s (and c e r t a i n p r o c e s s e d c o m m o d i t i e s ) t o be c o v e r e d by t h e GSP, t h e t a r i f f c u t s t o be made, and o t h e r d e t a i l s u n t i l l a t e 1969. Once t h e s e had been f o r w a r d e d t o UNCTAD, t h e LDCs r e a c t e d as one would e x p e c t : t h e v argued f o r w i d e r p r o d u c t c o v e r a g e , g r e a t e r t a r i f f c u t s i n t h e c a s e o f c o u n t r i e s n o t o f f e r i n g d u t y - f r e e t r e a t m e n t (Canada. A u s t r i a . I r e l a n d . New Z e a l a n d . S w i t z e r l a n d ) , f e w e r e x c l u s i o n s o f m a n u f a c t u r e s from t h e GSP, s p e c i a l measures f a v o r i n g l e s s - d e v e l o p e d T h i r d W o r l d s t a t e s (LDDCs), 123 and s t r i c t e r c r i t e r i a g o v e r n i n g t h e use o f s a f e g u a r d mechanisms. The 18 d e v e l o p e d donor c o u n t r i e s r e t u r n e d t o t h e OECD " t o f i n a l i z e t h e i r 124 s u b m i s s i o n s " i n t h e summer o f 1970. I n t h e autumn o f t h e same y e a r - 103 -a s u f f i c i e n t measure o f a c c o r d e x i s t e d among d e v e l o p e d and d e v e l o p i n g s t a t e s t o d r a f t A g r e e d C o n c l u s i o n s on t h e GSP w i t h i n t h e S p e c i a l 125 Committee. By t h i s t i m e t h e LDCs were e x t r e m e l y a n x i o u s t o see some t y p e o f GSP a c t u a l l y implemented, and t h e y r e l u c t a n t l y a c q u i e s c e d i n t h e d e t e r m i n a t i o n o f t h e donor c o u n t r i e s t o e x e r c i s e r i g i d c o n t r o l o v e r t h e c r e a t i o n and e v o l u t i o n and o p e r a t i o n o f t h e t a r i f f p r e f e r e n c e s . Thus, " t h e p o s i t i o n o f t h e OECD c o u n t r i e s r e g a r d i n g t h e n a t u r e o f t h e system 126 p r e v a i l e d w i t h i n t h e S p e c i a l Committee." The A g r e e d C o n c l u s i o n s l a r g e l y r e f l e c t e d t h e w i s h e s o f t h e OECD c o u n t r i e s . A l t h o u g h p r o v i s i o n s r e q u i r i n g c o n s u l t a t i o n s between donors and r e c i p i e n t s were i n c l u d e d , i t was c l e a r t h a t t h e d e v e l o p e d c o u n t r i e s e n j o y e d a wide l a t i t u d e t o f a s h i o n t h e i r GSP schemes as t h e y saw f i t . (Because o f t h e l a c k o f u n i f o r m i t y i n t h e d e v e l o p e d c o u n t r i e s ' GSP p r o p o -s a l s , t h e co n c e p t o f a s i n g l e GSP was de f a c t o abandoned, i n s p i t e o f Ame r i c a n r e l u c t a n c e . Washington now i n s i s t e d on " e q u i t a b l e " burden s h a r i n g among donors r a t h e r t h a n u n i f o r m i t y . ) That t h e Agree d C o n c l u s i o n s were a " v i c t o r y " f o r t h e OECD c o u n t r i e s i s i n d i c a t e d by s p e c i f i c s t a t e m e n t s r e c o g n i z i n g t h e t e m p o r a r y , l e g a l l y n o n - b i n d i n g and u n i l a t e r a l c h a r a c t e r o f t h e i n d i v i d u a l GSP schemes. C h a p t e r IX o f t h e C o n c l u s i o n s s p e l l e d out t h e s e a s p e c t s o f t h e GSP i n no u n c e r t a i n t e r m s : (1) The t a r i f f p r e f e r e n c e s a r e t e m p o r a r y i n n a t u r e ; (2) T h e i r g r a n t does n o t c o n s t i t u t e a b i n d i n g commitment and, i n p a r t i c u l a r , does n o t i n any way p r e v e n t (a) t h e i r subsequent w i t h d r a w a l i n whole o r i n p a r t , o r (b) t h e subsequent r e d u c t i o n i n t a r i f f s on a most-f a v o u r e d - n a t i o n b a s i s . . .-^ W i t h r e s p e c t t o t h e c o n t e n t i o u s i s s u e o f v e r t i c a l and r e v e r s e p r e f e r e n c e s , two c r i t i c a l compromises p e r m i t t e d t h e g e n e r a t i o n o f a vague - 104 -but adequate c o n s e n s u s . F i r s t , t h e U n i t e d S t a t e s dropped i t s l o n g s t a n d i n g p o s i t i o n t h a t v e r t i c a l p r e f e r e n c e s had t o be a b o l i s h e d w i t h i n f i v e y e a r s o f t h e i n i t i a t i o n o f t h e GSP and r e v e r s e p r e f e r e n c e s c o n c u r r e n t l y w i t h t h e GSP i n o r d e r f o r LDCs p a r t i c i p a t i n g i n such arrangements t o be e l i g i b l e f o r p r e f e r e n c e s i n t h e U.S. market. However, Washington made i t q u i t e e v i d e n t t h a t i t s t i l l e x p e c t e d e x i s t i n g p r e f e r e n c e s t o be phased out i n a few y e a r s ' t i m e ; i t a l s o r e s e r v e d i t s r i g h t t o deny LDCs g r a n t i n g r e v e r s e p r e f e r e n c e s ( v i z . t h e AASM s t a t e s ) GSP s t a t u s , and i n f a c t 128 Congress l a t e r i n s e r t e d t h i s p r o v i s i o n i n t o t h e a u t h o r i z i n g l e g i s l a t i o n . Second, LDCs a l r e a d y e n j o y i n g t a r i f f p r e f e r e n c e s a c c e p t e d t h a t t h e s e w o u l d e v e n t u a l l y be r e d u c e d o r a b o l i s h e d . However, as t h e Agree d Con-c l u s i o n s s t a t e d , t h e y would i n t u r n " e x p e c t t h e new a c c e s s i n o t h e r d e v e l o p e d c o u n t r i e s t o p r o v i d e e x p o r t o p p o r t u n i t i e s t o compensate them" ( C h a p t e r I I , p a r a . 2 ) . The A f r i c a n s were unhappy w i t h t h i s f o r m u l a t i o n but a c q u i e s c e d i n o r d e r t o o b t a i n t h e l o n g - a w a i t e d c o n c r e t e OECD commit-ments. S t i l l , t h e y e x p r e s s e d c o n c e r n t h a t t h e EEC's GSP o f f e r was t o o 129 " l i b e r a l " - - t h a t i s , i t t h r e a t e n e d t o undermine p r e f e r e n c e s a v a i l a b l e 130 t o them under t h e second Yaounde C o n v e n t i o n . And t h e Community, s e n s i t i v e t o t h e A f r i c a n s ' f e a r s , " r e s e r v e d t h e r i g h t t o t a k e t h e n e c e s s a r y measures w i t h i n t h e framework d f i t s o f f e r on p r e f e r e n c e s t o r e d r e s s t h e 131 p o s s i b l e a d v e r s e e f f e c t s . . . on c o u n t r i e s a s s o c i a t e d w i t h /thej EEC." B e g i n n i n g i n mid-1971, t h e donor s t a t e s f i n a l l y i n s t i t u t e d t h e i r GSP schemes. E x c e p t f o r Canada and t h e U n i t e d S t a t e s , a l l t h e p a r t i c i -p a t i n g d e v e l o p e d c o u n t r i e s had t h e i r p r e f e r e n c e systems i n p l a c e w i t h i n a y e a r . L i t t l e would be g a i n e d from a d e t a i l e d a n a l y s i s o f t h e s t r u c t u r e - 105 -o f t h e i n d i v i d u a l GSPs o r o f t h e e f f e c t s o f t h e GSP on LDC e x p o r t s . From t h e d i s c u s s i o n so f a r , i t s h o u l d be c l e a r t h a t t h e i n d u s t r i a l c o u n t r i e s — i n c l u d i n g t h o s e n o t o r i g i n a l l y opposed i n p r i n c i p l e t o p r e f -e r e n c e s f o r LDCs--approached t h e t a s k o f d e s i g n i n g p r e f e r e n c e schemes w i t h a g r e a t d e a l o f t r e p i d a t i o n . What r e q u i r e s emphasis i s t h e f a c t t h a t w h i l e t h e Group o f 77 and t h e i r i n s t i t u t i o n a l a l l y UNCTAD e v e n t u a l l y 133 a c h i e v e d i n t e r n a t i o n a l a c c e p t a n c e o f t a r i f f p r e f e r e n c e s , t h e i r a b i l i t y t o i n f l u e n c e t h e c h a r a c t e r o f t h e GSP schemes was e x t r e m e l y l i m i t e d . T h i s i s a t t e s t e d t o n o t so much by t h e t e x t o f t h e 1970 Agre e d C o n c l u -s i o n s as by t h e d e s i g n o f t h e i n d i v i d u a l GSP systems. A few b r i e f comments on t h e d e v e l o p e d c o u n t r i e s ' schemes and on t h e a p p a r e n t b e n e f i t s a c c r u i n g t o t h e LDCs t h r o u g h t h e GSP w i l l s u f f i c e . F i r s t , t h e donor s t a t e s t e n d e d t o e x c l u d e s e m i - p r o c e s s e d and p r o c e s s e d a g r i c u l t u r a l and f i s h e r y p r o d u c t s from t h e i r systems. They p e r s i s t e n t l y a r g u e d t h a t t h e GSP was d e s i g n e d t o f a c i l i t a t e LDC e x p o r t s o f m a n u f a c t u r e s ; p r o c e s s e d and p r i m a r y a g r i c u l t u r a l c o m modities t h e r e f o r e d i d n o t q u a l i f y . Many LDCs were p r i m a r i l y e x p o r t e r s o f raw and semi-p r o c e s s e d p r o d u c t s , and t h u s demanded t h a t t h e y be e l i g i b l e f o r p r e f e r e n -t i a l t r e a t m e n t ; o t h e r w i s e , t h e GSP would be o f no v a l u e t o them. However, a l t h o u g h most donor c o u n t r i e s i n c l u d e d some d u t i a b l e a g r i c u l -t u r a l and f i s h e r y p r o d u c t s — t h e U n i t e d S t a t e s b e i n g t h e most generous major donor i n t h i s r e g a r d - - t h e g e n e r a l t e n d e n c y was t o e x c l u d e them i n o r d e r t o p r o t e c t d o m e s t i c i n t e r e s t s (and i n t h e c a s e o f t h e EEC, t o s a f e g u a r d t h e p r e f e r e n c e s o f t h e a s s o c i a t e d s t a t e s ) . M u r r a y c a l c u l a t e s t h a t e x c l u s i o n o f t h e s e i m p o r t a n t LDC e x p o r t s removed 15 p e r c e n t o f - 106 -134 t o t a l T h i r d World e x p o r t s t o t h e OECD c o u n t r i e s from t h e GSP. Moreover, a l l t h e d e v e l o p e d donor s t a t e s e x c l u d e d on a p r i o r i b a s i s numerous m a n u f a c t u r e s as w e l l . F o r example, U.S. l e g i s l a t i o n a u t h o r i z i n g t h e GSP p r o h i b i t e d t h e g r a n t i n g o f p r e f e r e n t i a l t r e a t m e n t t o t h e f o l l o w i n g c l a s s e s o f goods: t e x t i l e s ; f o o t w e a r ; w a t c h e s ; " i m p o r t - s e n s i t i v e " e l e c t r o n i c , s t e e l and g l a s s p r o d u c t s ; any a r t i c l e s u b j e c t t o "escape c l a u s e " o r o t h e r " i m p o r t - r e l i e f " a c t i o n ; and "any o t h e r a r t i c l e w h i c h t h e P r e s i d e n t d e t e r -135 mines t o be i m p o r t - s e n s i t i v e . . . " The Community a l s o d e n i e d many so-c a l l e d s e n s i t i v e p r e f e r e n t i a l s t a t u s , t e x t i l e s b e i n g t h e most n o t a b l e example. J a p a n e x c l u d e d " t e x t i l e , l e a t h e r and p e t r o l e u m p r o d u c t s . . . 136 plywood . . . s i l k f a b r i c s , and g e l a t i n e and g l u e s . . . " Ot h e r d e v e l o p e d c o u n t r i e s made s i m i l a r e x c l u s i o n s . I n a d d i t i o n , t h e " c o m p e t i t i v e need" c r i t e r i o n adopted by t h e U.S. and t h e v e r y low quotas f o r p r e f e r e n -t i a l m a n u f a c t u r e d i m p o r t s . a d o p t e d by t h e Community, Japan and o t h e r donors f u r t h e r r e d u c e d t h e b e n e f i t s p o t e n t i a l l y a v a i l a b l e t o t h e b e n e f i c i a r i e s . Under t h e U.S. scheme, once an LDC has e x p o r t e d more t h a n $25 m i l l i o n w o r t h o f a p a r t i c u l a r p r o d u c t t o t h e U.S. i n any c a l e n d a r y e a r , and/or a c c o u n t s f o r 50 p e r c e n t o r more o f t o t a l a n n u a l U.S. i m p o r t s o f t h a t p r o d u c t , t h e n p r e f e r e n t i a l t r e a t m e n t must be a u t o m a t i c a l l y w i t h d r a w n , s i n c e t h e LDC i s 137 now deemed t o be s u f f i c i e n t l y " c o m p e t i t i v e " t o compete on an MFN b a s i s . A l t h o u g h t h e EEC, Japan and o t h e r donors d i d n o t adopt t h i s e x a c t a p p r o a c h , t h e i r f r e q u e n t r e s o r t t o v e r y low i m p o r t c e i l i n g s f o r many m a n u f a c t u r e s 138 c o m p e t i t i v e l y e x p o r t e d by LDCs p r o m i s e d t o have a s i m i l a r e f f e c t . Thus i n a s s e s s i n g t h e c o n t r i b u t i o n o f GSP t a r i f f p r e f e r e n c e s t o - 107 -t h e e x p a n s i o n o f LDC o p p o r t u n i t i e s i n w o r l d m a n u f a c t u r e s t r a d e , t h e s e v a r i o u s e x c l u s i o n s and p r o t e c t i v e d e v i c e s must be k e p t i n mind. A c c o r d i n g t o t h e l e a d i n g e x p e r t on t h e s u b j e c t , t h e GSP p r o v i d e s a wide scope f o r t h e d e v e l o p i n g c o u n t r i e s t o e x p o r t m a n u f a c t u r e d p r o d u c t s w h i c h t h e y c u r r e n t l y do n o t e x p o r t ; but t h e b u l k o f t h o s e p r o d u c t s w h i c h t h e y do e x p o r t , and t h e r e f o r e i n w h i c h t h e y have a d e m o n s t r a t e d i n t e r n a t i o n a l c o m p a r a t i v e a d v a n t a g e , a r e e x c l u d e d from t h e GSP.139 I n f a c t , o f a l l LDC e x p o r t s t o t h e donor c o u n t r i e s i n t h e e a r l y 1970s, o n l y 13 p e r c e n t c o n s i s t e d o f p r o d u c t s t r u l y " c o v e r e d " by t h e GSP; t h e b u l k o f LDC e x p o r t s were e i t h e r e x c l u d e d from t h e GSP ( e . g . t e x t i l e s ) schemes o r a l r e a d y a d m i t t e d d u t y - f r e e under MFN t a r i f f s ( e . g . i n d u s t r i a l raw m a t e r i a l s ) . And d u t i a b l e LDC m a n u f a c t u r e d e x p o r t s e x c l u d e d by t h e GSP amounted i n t h e e a r l y 1970s t o $5.5 b i l l i o n (15 p e r c e n t o f a l l LDC e x p o r t s ) - - m o r e t h a n t h e v a l u e o f t o t a l LDC e x p o r t s t o w h i c h t h e new p r e f e r e n c e s would a p p l y ($4.5 140 b i l l i o n ) ! I n a d d i t i o n , as T a b l e 9 r e v e a l s , o n l y a h a n d f u l o f LDCs a r e m a j o r b e n e f i c i a r i e s o f t h e p r e f e r e n t i a l t r e a t m e n t a c c o r d e d t o t h o s e manu-f a c t u r e s a c t u a l l y i n c l u d e d under t h e GSP; O t h e r f e a t u r e s o f t h e GSP schemes w h i c h l e s s e n t h e i r v a l u e from t h e p e r s p e c t i v e o f t h e b e n e f i c i a r i e s r e l a t e t o c o u n t r y c o v e r a g e , s a f e g u a r d a c t i o n s and r u l e s o f o r i g i n . I n r e g a r d t o c o u n t r y e l i g i b i l i t y , t h e Group o f 77 demanded t h a t a l l group members be c o v e r e d by a l l donor c o u n t r y s y s t e m s . But t h e d e v e l o p e d c o u n t r i e s i n s i s t e d t h a t t h e y a l o n e would d e t e r -mine whether a s e l f - e l e c t e d p o t e n t i a l b e n e f i c i a r y was e n t i t l e d t o r e c e i v e p r e f e r e n t i a l t r e a t m e n t . The U n i t e d S t a t e s has been t h e most a c t i v e donor i n r e s p e c t o f c o u n t r y e x c l u s i o n s . O r i g i n a l l y , a l l communist c o u n t r i e s , OPEC and o t h e r " c a r t e l " members, and LDCs g r a n t i n g r e v e r s e p r e f e r e n c e s were - 108 -T a b l e 9: E s t i m a t e d 1970 GSP Imports o f I n d u s t r i a l P r o d u c t s  From M a j o r B e n e f i c i a r y LDC S u p p l i e r s ^ ^ l S u p p l i e r V a l u e Share o f T o t a l ($ m i l l i o n ) ( p e r c e i Taiwan 565 16 Me x i c o 432 12 Y u g o s l a v i a 399 11 S o u t h Korea 329 9 Hong Kong 254 7 B r a z i l 190 5 S i n g a p o r e 168 5 I n d i a 144 4 I r a n 104 3 S u b - t o t a l 2,585 72 O t h e r b e n e f i c i a r i e s 1,035 28 T o t a l 3,620 100 * I n c l u d i n g n o n - f e r r o u s m e t a l s t o be d e n i e d e l i g i b i l i t y u nder t h e A m e r i c a n GSP. I n p r a c t i c e , L a t i n A m e r i c a n OPEC s t a t e s have been i n c l u d e d , and LDCs p a r t i c i p a t i n g i n r e v e r s e p r e f e r e n c e s o n l y f a c e t h e t h r e a t o f b e i n g d e c l a r e d i n e l i g i b l e i f t h e i r r e v e r s e p r e f e r e n c e s have a " s i g n i f i c a n t a d v e r s e e f f e c t " on U.S. commerce A l t h o u g h t h e d e v e l o p i n g c o u n t r i e s can e x e r t p r e s s u r e w i t h i n UNCTAD forums i n c o n n e c t i o n w i t h t h e use o f s a f e g u a r d s by donors on p r o d u c t s a c c o r d e d p r e f e r e n c e s under t h e GSP, t h e i n d u s t r i a l c o u n t r i e s d e s i g n e d t h e i r schemes w i t h a v i e w t o g u a r a n t e e i n g t h e m s e l v e s a wide l a t i t u d e f o r u n i l a t e r a l a c t i o n . The U.S. " c o m p e t i t i v e need" r u l e o f c o u r s e e x c l u d e s many manufac-t u r e s c o m p e t i t i v e l y e x p o r t e d by t h e T h i r d World from GSP e l i g i b i l i t y . 142 - 109 -A l l t h e donors a l s o p r o v i d e d f o r t h e e x c l u s i o n o f p r o d u c t s deemed t o cause 143 " s e r i o u s i n j u r y " o r "market d i s r u p t i o n . " F i n a l l y , each d e v e l o p e d c o u n t r y GSP scheme c o n t a i n s " r u l e s o f o r i g i n " c r i t e r i a t o e n s u r e t h a t goods p r e s e n t e d f o r GSP t a r i f f t r e a t m e n t a r e e i t h e r w h o l l y o r m a i n l y p r o -duced w i t h i n an e x p o r t i n g LDC; t h a t i s , t o be e l i g i b l e f o r a d m i s s i o n under p r e f e r e n t i a l t a r i f f s , a p r o d u c t must have undergone a s u b s t a n t i a l degree o f p r o c e s s i n g i n a d e v e l o p i n g c o u n t r y . P r o v i n g t h a t t h e i r m a n u f a c t u r e d e x p o r t s s a t i s f y t h e d e v e l o p e d c o u n t r i e s ' r u l e s o f o r i g i n i s o f t e n d i f f i c u l t f o r LDCs, t h e more so s i n c e t h e v a r i o u s donors have d i f f e r e n t s p e c i f i c 144 p r o v i s i o n s i n t h i s r e g a r d . An a n a l y s i s o f t h e e f f o r t s o f t h e d e v e l o p i n g c o u n t r i e s t o o b t a i n ; t a r i f f p r e f e r e n c e s and t o i n f l u e n c e t h e c h a r a c t e r o f t h e GSP i s o f f e r e d i n t h e n e x t c h a p t e r . F o r now, i t s h o u l d be n o t e d t h a t a l t h o u g h t h e GSP has f a l l e n f a r s h o r t o f LDC hopes (and p e r h a p s e x p e c t a t i o n s ) , t h e y have n o n e t h e l e s s sought t o s a f e g u a r d t h e i r p r e f e r e n t i a l m a r g i n s and a l s o t o expand t h e p r o d u c t c o v e r a g e o f t h e d e v e l o p e d c o u n t r i e s ' schemes. The more r e c e n t e f f o r t s and c o m p l a i n t s o f t h e LDCs c o n c e r n i n g t h e GSP w i l l be b r i e f l y s u r v e y e d i n t h e t h i r d s e c t i o n o f t h i s c h a p t e r . The T h i r d World's s t r u g g l e t o promote t h e p r i n c i p l e o f p r e f e r e n c e s and t o i n f l u e n c e t h e subsequent i m p l e m e n t a t i o n o f t h e GSP c o n s t i t u t e s t h e c e n t r a l c h a p t e r o f N o r t h - S o u t h b a r g a i n i n g o v e r market a c c e s s f o r t h e m a n u f a c t u r e d e x p o r t s o f t h e l a t t e r . But t h e LDCs have a l s o t r i e d t o f u r t h e r t h e i r i n t e r e s t s and enhance t h e i r e x p o r t o p p o r t u n i t i e s by a t t a c k i n g t h e c o n c e p t o f " r e c i p r o -c i t y " i n GATT t r a d e n e g o t i a t i o n s and by a r g u i n g f o r s p e c i a l d i s p e n s a t i o n s i n r e s p e c t o f i n d u s t r i a l c o u n t r i e s ' use o f t r a d e b a r r i e r s , and i t i s t o - 110 -a b r i e f c o n s i d e r a t i o n o f t h e s e m a t t e r s t h a t we now t u r n . 2. The T h r u s t Toward N o n r e c i p r o c i t y i n GATT As t h e momentum f o r r e f o r m o f t h e i n t e r n a t i o n a l economy i n t e n s i f i e d a t t h e t i m e o f UNCTAD I , e f f o r t s were made w i t h i n t h e GATT t o r e s p o n d t o T h i r d W o r l d c o n c e r n s . These d e l i b e r a t i o n s c u l m i n a t e d i n t h e d r a f t i n g o f a new c h a p t e r e n t i t l e d "Trade and Development" i n e a r l y 1965. T h i s c h a p t e r -known as P a r t IV o f t h e G e n e r a l Agreement--was opened f o r s i g n a t u r e on F e b r u a r y 8, 1965; i t came i n t o f o r c e as an amendment t o t h e Agreement i n June 1966. Most o b s e r v e r s a r e i n c l i n e d t o b e l i e v e t h a t t h e d e c i s i o n s t o convene UNCTAD I and t h e n t o e s t a b l i s h i t as a permanent body "had a p s y c h o l o g i c a l impact on n a t i o n a l r e p r e s e n t a t i v e s t o GATT, p a r t i c u l a r l y 145 t h e d e l e g a t e s from i n d u s t r i a l i z e d n a t i o n s . " Those d e s i r o u s o f p r o t e c t i n g GATT's r o l e as t h e major i n t e r n a t i o n a l forum f o r t r a d e m a t t e r s f e l t t h a t t h e o r g a n i z a t i o n had t o be seen t o "do s o m e t h i n g " d r a m a t i c f o r t h e T h i r d W o r l d i n o r d e r t o ward o f f t h e a t t e m p t s by c e r t a i n LDCs, t h e s o c i a l i s t b l o c and t h e UNCTAD s t a f f t o make t h e new i n s t i t u t i o n t h e c e n t r a l l o c u s f o r t h e r e g u l a t i o n and n e g o t i a t i o n o f g l o b a l t r a d e q u e s t i o n s . P a r t IV o f t h e G e n e r a l Agreement a t t e s t e d t o t h e s u c c e s s o f t h e LDCs i n o b t a i n i n g t h e i n d u s t r i a l c o u n t r i e s ' a c c e p t a n c e o f two r e l a t e d p r i n c i p l e s : 1) t h e abandonment o f r e c i p r o c i t y v i s - a - v i s LDCs i n GATT c o m m e r c i a l n e g o t i a t i o n s ; and 2) t h e need f o r u n i l a t e r a l commitments by d e v e l o p e d c o u n t r i e s i n f a v o r o f LDCs i n c o n n e c t i o n w i t h t h e employment o f t r a d e b a r r i e r s , p a r t i c u l a r l y n o n - t a r i f f b a r r i e r s (NTBs). The development and impact o f t h e new p r i n c i p l e o f n o n r e c i p r o c i t y i s b r i e f l y t r e a t e d h e r e . - I l l -Then t h e i s s u e o f u n i l a t e r a l commitments i s c o n s i d e r e d . T h i r d W o r l d d i s s a t i s f a c t i o n w i t h t h e s t r u c t u r e o f t r a d e b a r g a i n i n g i n t h e c o n t e x t o f GATT has p r i m a r i l y d e r i v e d from t h e at t a c h m e n t o f t h e i n d u s t r i a l c o u n t r i e s t o t h e c o n c e p t o f r e c i p r o c i t y . The v i e w , once e x p r e s s e d by f o r m e r A m e r i c a n S t a t e Department o f f i c i a l H a r r y Hawkins, t h a t t h e g o a l o f t r a d e n e g o t i a t i o n s was t o g e n e r a t e "a d o l l a r ' s w o r t h o f i n c r e a s e d e x p o r t s f o r e v e r y d o l l a r ' s w o r t h o f i n c r e a s e d i m p o r t s , " has e x e r c i s e d a 146 p e r v a s i v e i n f l u e n c e i n GATT. Because c o u n t r i e s g e n e r a l l y a r e o n l y p r e -p a r e d t o exchange " c o n c e s s i o n s " - - ! . e . , t o lo w e r t a r i f f s o r r e d u c e NTBs--on a r e c i p r o c a l b a s i s , a g i v e n n e g o t i a t o r needs a d o m e s t i c market t o w h i c h he i s w i l l i n g t o o f f e r improved a c c e s s b e f o r e he can p l a u s i b l y e x p e c t o t h e r n e g o t i a t o r s t o lo w e r t h e i r c o u n t r i e s ' b a r r i e r s on p r o d u c t s o f e x p o r t i n t e r e s t t o h i s c o u n t r y . That s e v e r e d i f f i c u l t i e s have a t t e n d e d a l l e f f o r t s t o measure r e c i p r o c i t y p r e c i s e l y appears n o t t o have undermined most d e v e l o p e d c o u n t r i e s ' a l l e g i a n c e t o i t as a g o a l o f c o m m e r c i a l 147 d i p l o m a c y . I t i s c l e a r t h a t t h e LDCs a r e l i k e l y t o be i n an i n f e r i o r b a r g a i n i n g p o s i t i o n i n a t r a d e n e g o t i a t i n g c o n t e x t where r e c i p r o c i t y i s e x p e c t e d o f them; f o r t h e y l a c k a key b a r g a i n i n g c h i p - - a p r o t e c t e d d o m e s t i c 148 market t o w h i c h d e v e l o p e d c o u n t r i e s s t r o n g l y d e s i r e more l i b e r a l a c c e s s . M o r e o v er, o f t e n t h e i r c r i t i c a l r e l i a n c e on t a r i f f r e v e n u e s , b o t h f o r government income and i n c o n n e c t i o n w i t h t h e p u r s u i t o f i m p o r t - s u b s t i t u -t i o n p o l i c i e s , has made t h e p r o s p e c t o f a g r e e i n g t o l o w e r t a r i f f s i n exchange f o r d e v e l o p e d c o u n t r y r e d u c t i o n s d i s t i n c t l y u n p a l a t a b l e : The d e v e l o p i n g c o u n t r i e s cannot p a r t i c i p a t e on an e q u a l f o o t i n g i n t a r i f f n e g o t i a t i o n s . . . because t h e i r need f o r t a r i f f s i s much g r e a t e r t h a n t h a t o f t h e d e v e l o p e d c o u n t r i e s . F o r d e v e l o p e d c o u n t r i e s , t a r i f f s a r e , o r ought t o be, a fo r m o f t r a n s i t i o n a l - 112 -p r o t e c t i o n f o r d o m e s t i c i n d u s t r i e s i n a p r o c e s s o f a d j u s t m e n t . F o r d e v e l o p i n g c o u n t r i e s , on t h e o t h e r hand, t a r i f f s a r e an i n d i s p e n s a b l e weapon o f economic development and an i m p o r t a n t s o u r c e o f revenue . . .1^9 J u s t as t h e argument t h a t t h e e x i s t e n c e o f p a l p a b l e economic i n e q u a l i t y among n a t i o n s d e s t r o y s t h e v a l i d i t y o f economic p r i n c i p l e s p r e m i s e d on an a s s u m p t i o n o f e q u a l i t y was employed by t h e LDCs t o argue f o r t a r i f f p r e f e r e n c e s i n t h e 1960s, so t h i s same p o i n t was made i n a t t a c k i n g t h e r e c i p r o c i t y p r i n c i p l e . When t h e G e n e r a l Agreement was amended i n 1955, t h e d e v e l o p i n g c o n t r a c t i n g p a r t i e s were a b l e t o o b t a i n t h e i n s e r t i o n o f a p r o -v i s i o n r e c o g n i z i n g t h a t w h i l e t r a d e n e g o t i a t i o n s were t o be c o n d u c t e d "on a r e c i p r o c a l and m u t u a l l y advantageous b a s i s , " c o n s i d e r a t i o n was a l s o t o be g i v e n t o " t h e needs o f i n d i v i d u a l c o n t r a c t i n g p a r t i e s and i n d i v i d u a l i n d u s t r i e s . . . and . . . a l l o t h e r r e l e v a n t c i r c u m s t a n c e s i n c l u d i n g t h e f i s c a l , d e v e l o p m e n t a l , s t r a t e g i c and o t h e r needs o f t h e c o n t r a c t i n g p a r t i e s c o n c e r n e d . " ( A r t i c l e X X V I I I b i s ) However, t h e LDCs were f a r f r o m s a t i s -f i e d w i t h t h i s vague f o r m u l a t i o n . A t UNCTAD I , t h e y succeeded i n p a s s i n g t h e e i g h t h g e n e r a l p r i n c i p l e w h i c h , i n t e r a l i a , s t a t e d t h a t " d e v e l o p e d c o u n t r i e s s h o u l d g r a n t c o n c e s s i o n s t o a l l d e v e l o p i n g c o u n t r i e s . . . and s h o u l d n o t , i n g r a n t i n g t h e s e o r o t h e r c o n c e s s i o n s , r e q u i r e any c o n c e s s i o n s i n r e t u r n from d e v e l o p i n g c o u n t r i e s . ( T h e d e v e l o p e d c o u n t r i e s opposed o r a b s t a i n e d d u r i n g t h e v o t i n g on t h i s p r i n c i p l e , b u t t h i s was due t o t h e f a c t t h a t i t v o i c e d s u p p o r t o f p r e f e r e n c e s , n o t t o t h e c o n c e p t o f non-r e c i p r o c i t y e l u c i d a t e d t h e r e i n . ) J u s t p r i o r t o t h e Kennedy Round, a GATT m i n i s t e r i a l m e e t i n g a g r e e d t h a t i n t h e upcoming t r a d e n e g o t i a t i o n s , " t h e - 113 -d e v e l o p e d c o u n t r i e s cannot e x p e c t t o r e c e i v e r e c i p r o c i t y f rom t h e l e s s d e v e l o p e d c o u n t r i e s . T h e s t a g e was t h u s s e t f o r t h e i n d u s t r i a l coun-t r i e s t o a c c e p t a more f o r m a l , l e g a l a r t i c u l a t i o n o f t h e d o c t r i n e o f non-r e c i p r o c i t y i n N o r t h - S o u t h t r a d e n e g o t i a t i o n s w i t h i n t h e GATT c o n t e x t . T h i s was a c c o m p l i s h e d w i t h t h e 1965 a d d i t i o n o f P a r t IV t o t h e G e n e r a l Agreement. The most i m p o r t a n t s t a t e m e n t i n t h i s new c h a p t e r a r t i c u l a t e s t h e new p r i n c i p l e o f n o n r e c i p r o c i t y : "The d e v e l o p e d c o n t r a c t i n g p a r t i e s do n o t e x p e c t r e c i p r o c i t y f o r commitments made by them i n t r a d e n e g o t i a t i o n s t o r e d u c e o r remove t a r i f f s and o t h e r b a r r i e r s t o t h e t r a d e o f l e s s -d e v e l o p e d c o n t r a c t i n g p a r t i e s " ( A r t i c l e XXXVI:8). A l t h o u g h d e v e l o p e d GATT members had g e n e r a l l y been q u i t e l e n i e n t i n demanding e q u i v a l e n t LDC 152 " c o n t r i b u t i o n s " d u r i n g p a s t t r a d e n e g o t i a t i o n s , t h e i r e x p l i c i t a c c e p -t a n c e o f t h e new n o n r e c i p r o c i t y p r o v i s i o n appeared t o s i g n a l a q u a l i t a t i v e l y d i f f e r e n t a p p r o a c h t o c o m m e r c i a l b a r g a i n i n g w i t h t h e T h i r d World ( o r a t l e a s t w i t h t h o s e LDCs members o f GATT). The q u e s t i o n was whether t h i s commitment n o t t o seek r e c i p r o c i t y would l e a d t o any c o n c r e t e changes d u r i n g t h e a c t u a l t r a d e b a r r i e r n e g o t i a t i n g p r o c e s s . The d e v e l o p i n g c o u n t r i e s soon had a chance t o f i n d o u t . The Kennedy Round o f GATT t r a d e n e g o t i a t i o n s got unde r way i n May 1964 and s e v e r a l i n t e r e s t i n g i n n o v a t i o n s i n c o m m e r c i a l b a r g a i n i n g c h a r a c t e r i z e d t h i s c r u c i a l GATT Round. F i r s t , t h e t r a d i t i o n a l b i l a t e r a l , p r o d u c t - b y - p r o d u c t method o f n e g o t i a t i n g t a r i f f c o n c e s s i o n s was abandoned i n f a v o r o f a " l i n e a r " method, a c c o r d i n g t o w h i c h t h e " l i n e a r " p a r t i c i p a n t s would r e d u c e t h e i r t a r i f f s by a p r e s c r i b e d p e r c e n t a g e f o r a l l o r most p r o d u c t s . The U.S. Cong r e s s had f o r t h e f i r s t t i m e a l l o w e d t h e E x e c u t i v e t o a g r e e t o l i n e a r t a r i f f c u t s i n p a s s i n g t h e 1962 Trade E x p a n s i o n A c t ; r e d u c t i o n s o f up t o - 114 -50 p e r c e n t on most U.S. d u t i a b l e i m p o r t s c o u l d be made; and 50 p e r c e n t became t h e benchmark f i g u r e f o r a c r o s s - t h e - b o a r d t a r i f f r e d u c t i o n s d u r i n g t h e Kennedy Round b a r g a i n i n g . Second, because many c o u n t r i e s were n o t p r e p a r e d t o c o n s i d e r s u c h l i n e a r t a r i f f r e d u c t i o n s , two s p e c i f i c groups o f c o u n t r i e s were i d e n t i f i e d f o r t h e f i r s t t i m e i n GATT n e g o t i a t i n g h i s t o r y — n a m e l y , l i n e a r and n o n - l i n e a r c o u n t r i e s . S i x t e e n d e v e l o p e d con-t r a c t i n g p a r t i e s a c c e p t e d t h e l i n e a r a p p r oach; s e v e r a l o t h e r d e v e l o p e d s t a t e s (Canada, S. A f r i c a , New Z e a l a n d , G r e e c e, P o r t u g a l and A u s t r a l i a ) w i t h " s p e c i a l economic o r t r a d e s t r u c t u r e s " o p t e d t o c o n t i n u e t o n e g o t i a t e 153 on a r e c i p r o c a l , b i l a t e r a l p r o d u c t - b y - p r o d u c t . As f o r t h e LDCs, t h e y t o o announced t h a t t h e y would be n o n l i n e a r p a r t i c i p a n t s . M o r e o v e r — a n d t h i s c o n s t i t u t e s t h e t h i r d i n n o v a t i o n a s s o c i a t e d w i t h t h e Kennedy R o u n d — t h e d e v e l o p i n g c o u n t r i e s argued t h a t , because o f t h e new GATT p r i n c i p l e o f n o n r e c i p r o c i t y , t h e y would e x p e c t t h e d e v e l o p e d c o n t r a c t i n g p a r t i e s t o r e d u c e e x t e n s i v e l y t h e i r t a r i f f s on p r o d u c t s o f e x p o r t i n t e r e s t t o t h e T h i r d W o r l d w i t h o u t r e q u i r i n g much i n t h e way o f r e c i p r o c a l t a r i f f r e d u c -t i o n s f r o m t h e LDCs, who were u n a b l e t o o f f e r s u b s t a n t i a l c o n c e s s i o n s . The f i n a l i n n o v a t i o n o f t h e Kennedy Round i n v o l v e d a d e c i s i o n t o d e a l w i t h c e r t a i n p o t e n t i a l l y t r o u b l e s o m e i n d u s t r i a l s e c t o r s n o t s u i t a b l e f o r l i n e a r t a r i f f r e d u c t i o n s t h r o u g h t h e c r e a t i o n o f s e p a r a t e " s e c t o r " n e g o t i a t i n g g r o u p s . I r o n and s t e e l , c o t t o n t e x t i l e s , aluminum, p u l p and p a p e r and c h e m i c a l s were s i n g l e d out as i n d u s t r i a l s e c t o r s r e q u i r i n g s p e c i a l t r e a t m e n t ; t h e f i r s t two i n p a r t i c u l a r were o f c o n s i d e r a b l e i n t e r e s t t o 154 LDCs t r y i n g t o expand t h e i r m a n u f a c t u r e d e x p o r t s . The r e s u l t s o f t h e Kennedy Round were r e g a r d e d as d i s a p p o i n t i n g by - 115 -t h e LDCs and i n d i c a t e d t h a t a gap e x i s t e d between t h e r h e t o r i c a l a c c e p t a n c e o f n o n r e c i p r o c i t y by t h e i n d u s t r i a l c o u n t r i e s and t h e i r w i l l i n g n e s s t o a c t u a l l y make s i g n i f i c a n t n o n r e c i p r o c a l c o n c e s s i o n s t o t h e T h i r d W o r ld i n t r a d e b a r r i e r n e g o t i a t i o n s . W i t h r e s p e c t t o LDC m a n u f a c t u r e d e x p o r t s , a 1967 UNCTAD a n a l y s i s f ound t h a t t h e ave r a g e Kennedy Round t a r i f f r e d u c t i o n on " p r o d u c t s o f i n t e r e s t " t o t h e d e v e l o p i n g c o n t r a c t i n g p a r t i e s was 29 p e r c e n t , whereas t h e r e l e v a n t f i g u r e was 38 p e r c e n t f o r o t h e r p r o d u c t s . * 5 5 A s t u d y by t h e GATT S e c r e t a r i a t a l s o documented t h e t e n d e n c y o f t h e l i n e a r p a r t i c i p a n t s t o g r a n t n o t a b l y s m a l l e r t a r i f f r e d u c t i o n s on m a n u f a c t u r e s o f s u b s t a n t i a l e x p o r t i n t e r e s t t o LDCs t h a n on m a n u f a c t u r e s g e n e r a l l y . * 5 ^ The GATT s t u d l y l a c o n i c a l l y o b s e r v e d t h a t many o f t h e m a n u f a c t u r e s s u b j e c t t o t h e most e x t e n s i v e t a r i f f r e d u c t i o n s " a r e o f p o t e n t i a l , r a t h e r t h a n 157 a c t u a l , e x p o r t i n t e r e s t t o t h e d e v e l o p i n g c o u n t r i e s . " T h i s was s m a l l c o n s o l a t i o n t o LDC e x p o r t e r s o f c o t t o n t e x t i l e s , i r o n and s t e e l , l e a t h e r goods, c l o t h i n g and o t h e r s i m p l e m a n u f a c t u r e s — a l l o f w h i c h were g r a n t e d much s m a l l e r t a r i f f r e d u c t i o n s by t h e i n d u s t r i a l c o u n t r i e s t h a n were m a n u f a c t u r e s n o t p r i m a r i l y e x p o r t e d by t h e T h i r d W orld. T a k i n g t e x t i l e s " as an example, as a whole ( i . e . c o t t o n and n o n - c o t t o n ) t h e major i m p o r t i n g c o u n t r i e s a g r e e d t o r e d u c t i o n s o f a p p r o x i m a t e l y 18-22 p e r c e n t , f a r l e s s t h a n t h e t a r i f f c u t s (36-50 p e r c e n t ) a g r e e d t o on m a n u f a c t u r e s l a r g e l y e x p o r t e d by and t o t h e OECD c o u n t r i e s t h e m s e l v e s . S i m i l a r l y , i r o n and s t e e l , a n o t h e r i m p o r t a n t s e c t o r f o r t h e LDCs, was a c c o r d e d l e s s l i b e r a l t r e a t m e n t by t h e U.S., EEC, U.K. and t h e N o r d i c c o u n t r i e s t h a n was t r u e o f most o t h e r m a n u f a c t u r i n g s e c t o r s , w i t h r e d u c t i o n s o f o n l y 10-20 p e r c e n t 158 b e i n g a g r e e d t o . ( f t s h o u l d a l s o be n o t e d t h a t t h e d e v e l o p i n g c o u n t r i e s - 116 -were e x t r e m e l y unhappy w i t h t h e Kennedy Round r e s u l t s i n a g r i c u l t u r e , a l t h o u g h N o r t h - S o u t h t r a d e p roblems i n t h i s s e c t o r a r e n o t germane t o t h e p r e s e n t s t u d y . ) What t h e n d i d t h e Kennedy Round r e s u l t s i m p l y about t h e s a l i e n c e and impact o f t h e s h i n y new GATT p r i n c i p l e o f n o n r e c i p r o c i t y v i s - a - v i s t h e LDCs? The i n e s c a p a b l e c o n c l u s i o n appeared t o be t h i s : d e s p i t e t h e i r o b e i s a n c e t o t h e c o n c e p t , t h e d e v e l o p e d c o u n t r i e s c o n t i n u e d t o con d u c t t h e i r c o m m e r c i a l n e g o t i a t i o n s d u r i n g t h e 1964-67 GATT b a r g a i n i n g w i t h a v i e w t o a c h i e v i n g r e c i p r o c i t y o r a " b a l a n c e o f a d v a n t a g e s " w i t h t r a d i n g p a r t n e r s , d e v e l o p e d o r d e v e l o p i n g . The t r a d i t i o n a l g o a l o f co m m e r c i a l d i p l o m a c y e x e r c i s e d i t s p e r v a s i v e i n f l u e n c e i n t h e Kennedy Round as i t had done on p r e v i o u s o c c a s i o n s . T h i s i s h a r d l y s u r p r i s i n g , s i n c e t h e ( e s s e n t i a l l y p o l i t i c a l ) f a c t o r s t h a t compel t r a d e n e g o t i a t o r s t o seek t o o b t a i n a t l e a s t t h e appearance o f r e c i p r o c i t y d u r i n g t r a d e b a r g a i n i n g d i d n o t s u d d e n l y v a n i s h i n t h e mid-1960s. C e r t a i n l y t h e d e v e l o p e d c o u n t r i e s d i d n o t demand a b s o l u t e r e c i p r o c i t y o f t h e LDCs; b u t t h e n t h e y had n o t done so p r i o r t o P a r t IV and UNCTAD I e i t h e r . A l t h o u g h " t h e r e q u i r e m e n t f o r m u t u a l i t y o f t r a d e b e n e f i t s was n o t s t r i c t l y a p p l i e d " b y t h e OECD c o u n t r i e s d u r i n g t h e Kennedy Round, t h i s " d i d n o t mean f r e e g i f t s . There were c o n c e s s i o n s LDCs c o u l d make w i t h o u t damaging t h e i r ' i n f a n t i n d u s -t r i e s ' o r t h e i r economic development programs . " ^ ^ V e r y few LDC p a r t i c i -p a n t s a c t u a l l y o f f e r e d any t a r i f f c o n c e s s i o n s , and t h e y f r e q u e n t l y p o i n t e d t o t h e s t a t e m e n t o f n o n r e c i p r o c i t y c o n t a i n e d i n A r t i c l e XXXVI as l e g a l j u s t i f i c a t i o n f o r t h i s s t a n c e . But d e v e l o p e d c o u n t r y n e g o t i a t o r s u s u a l l y ' 161 demanded " a t l e a s t a t o k e n c o n t r i b u t i o n " from LDCs; and o f t e n , more t h a n t o k e n c o n c e s s i o n s were r e q u e s t e d . The p o o r t o m e d i o c r e r e s u l t s o f - 117 -t h e Kennedy Round f o r LDC e x p o r t e r s o f m a n u f a c t u r e s a r e u n d o u b t e d l y a t l e a s t p a r t l y t r a c e a b l e t o t h e p a u c i t y o f c o n c e s s i o n s o f f e r e d by them t o t h e i r d e v e l o p e d t r a d e p a r t n e r s . As i n t h e c a s e o f t a r i f f p r e f e r e n c e s , t h e d e v e l o p i n g c o u n t r i e s succeeded i n a c h i e v i n g i n t e r n a t i o n a l a c c e p t a n c e o f a new p r i n c i p l e t o g o v e r n t r a d e r e l a t i o n s , b u t were b a s i c a l l y u n a b l e t o a f f e c t how o r t o what e x t e n t non-r e c i p r o c i t y would be implemented once c o n c r e t e c o m m e r c i a l s i t u a t i o n s a r o s e . T h e i r c o n t i n u i n g e f f o r t s t o champion n o n r e c i p r o c i t y i n GATT d u r i n g t h e 1973-79 t r a d e n e g o t i a t i o n s w i l l be s u r v e y e d i n t h e t h i r d s e c t i o n o f t h i s c h a p t e r . An a n a l y s i s o f t h i s and o t h e r LDC a c t i v i t i e s and " s u c c e s s e s " i n i n t e r n a t i o n a l t r a d e d i p l o m a c y i s o f f e r e d i n t h e n e x t c h a p t e r . 3. D e v e l o p i n g C o u n t r i e s and " D i f f e r e n t i a l " Treatment i n t h e Use o f Trade B a r r i e r s The e f f o r t s o f t h e T h i r d W o r l d t o promote i n t e r n a t i o n a l a c c e p t a n c e o f t a r i f f p r e f e r e n c e s and o f t h e p r i n c i p l e o f n o n r e c i p r o c i t y i n N o r t h - S o u t h t r a d e r e l a t i o n s have been c l o s e l y i n t e r t w i n e d w i t h a b r o a d e r r e l a t e d i s s u e , namely, t h e q u e s t i o n o f " d i f f e r e n t i a l " t r e a t m e n t i n f a v o r o f LDCs i n connec-t i o n w i t h t h e employment o f t r a d e b a r r i e r s by t h e d e v e l o p e d c o u n t r i e s . The p u r s u i t o f d i f f e r e n t i a l t r e a t m e n t has i n v o l v e d a g e n e r a l T h i r d W o r ld campaign t o a s s e r t a k i n d o f permanent s p e c i a l s t a t u s i n t h e i n t e r n a t i o n a l t r a d e o r d e r . D i f f e r e n t i a l t r e a t m e n t i s a d i f f e r e n t c o n c e p t t h a n e i t h e r p r e f e r e n c e s o r n o n r e c i p r o c i t y , a l t h o u g h i t i s c e r t a i n l y l i n k e d t o t h e s e i n i t s i n t e l l e c t u a l o r i g i n and n e g o t i a t i n g h i s t o r y . F o r p r e s e n t p u r p o s e s , " p r e f e r e n t i a l " t r e a t m e n t ( i . e . , GSP) i s d e f i n e d as measures t o g r a n t LDC - 118 -e x p o r t s b e t t e r a c c e s s t o d e v e l o p e d c o u n t r i e s ' m a r kets t h a n non-LDC e x p o r t s ; " d i f f e r e n t i a l " t r e a t m e n t , on t h e o t h e r hand, i s d e f i n e d as measures "which a r e a p p l i e d on an MFN ( n o n d i s c r i m i n a t o r y ) b a s i s b u t t a r g e t e d s p e c i f i c a l l y 162 on p r o d u c t s o f p a r t i c u l a r c o n c e r n t o t h e d e v e l o p i n g c o u n t r i e s . " Those LDCs and s c h o l a r s s u p p o r t i v e o f d i f f e r e n t i a l t r a d e b a r r i e r p o l i c y measures f a v o r i n g t h e T h i r d W o r ld have ar g u e d t h a t w h i l e t e m p o r a r y t a r i f f p r e f e r e n c e s a r e i n d i s p e n s a b l e t o t h e g o a l o f i n c r e a s i n g d e v e l o p i n g c o u n t r i e s ' e x p o r t s o f goods ( e s p e c i a l l y m a n u f a c t u r e s ) , t h e r e b y e x p a n d i n g t h e i r f o r e i g n exchange e a r n i n g s , o t h e r measures a r e a l s o n e c e s s a r y , p a r t i c u l a r l y i n s o f a r as t h e n o n - t a r i f f b a r r i e r p o l i c i e s o f N o r t h e r n governments a r e c o n c e r n e d . I n t h e b r i e f s u r v e y o f n e g o t i a t i o n s t h a t f o l l o w s , a t t e n t i o n i s f o c u s e d on d i s c u s s i o n s and b a r g a i n i n g w i t h i n GATT and UNCTAD on t h e i s s u e o f d i f f e r e n t i a l t r e a t m e n t d u r i n g t h e mid-1960s t o e a r l y 1970s. The case o f t e x t i l e s i s s i n g l e d out f o r s p e c i a l e x a m i n a t i o n s i n c e t h e y remained t h e most i m p o r t a n t and most d i s r u p t i v e LDC m a n u f a c t u r e d e x p o r t s . I t w i l l be r e c a l l e d t h a t GATT's Committee I I I - - t h e p r e d e c e s s o r o f t h e Trade and Development Committee--undertook an e x a m i n a t i o n o f t r a d e b a r r i e r s i m p e d i n g LDC e x p o r t s o f s e v e r a l m a n u f a c t u r e d and o t h e r p r o d u c t s i n t h e e a r l y 1960s. F o l l o w i n g t h i s , i n 1963, a group o f 21 l e s s d e v e l o p e d GATT members i n t r o d u c e d a r e s o l u t i o n r e q u e s t i n g t h a t a program be l a u n c h e d w i t h a v i e w t o r e d u c i n g o r d i s m a n t l i n g d e v e l o p e d c o u n t r y t r a d e b a r r i e r s a f f e c t i n g LDC e x p o r t s ; t h i s became known i n GATT as t h e " A c t i o n Program." The r e s o l u t i o n c a l l e d f o r t h e f o l l o w i n g s p e c i f i c u n d e r t a k i n g s from d e v e l o p e d c o n t r a c t i n g p a r t i e s i n r e s p e c t o f t h e e x p o r t s o f d e v e l o p i n g c o n t r a c t i n g p a r t i e s : 1) a s o - c a l l e d " s t a n d s t i l l " on any new t r a d e b a r r i e r s ; 2) t h e d i s m a n t l i n g , by t h e end o f 1965, o f a l l e x i s t i n g q u a n t i t a t i v e r e s t r i c t i o n s - 119 -t h a t were i l l e g a l a c c o r d i n g t o GATT r u l e s ; 3) t h e speedy a b o l i t i o n o f t a r i f f s on t r o p i c a l p r o d u c t s (and on o t h e r p r i m a r y p r o d u c t s as w e l l ) ; 4) a f i r m commitment t o lo w e r t a r i f f s on s e m i - p r o c e s s e d and p r o c e s s e d p r o d u c t s by a t l e a s t 50 p e r c e n t o v e r t h r e e y e a r s ; 5) t h e e l i m i n a t i o n o f i n t e r n a l f i s c a l and rev e n u e t a x e s on p r o d u c t s m a i n l y p r o d u c e d i n t h e T h i r d W o r l d ; 6) and a n n u a l r e p o r t s on t h e e x t e n t o f c o m p l i a n c e w i t h t h e 163 above r e q u e s t s . The scope o f t h e s e measures o f c o u r s e e x t e n d e d beyond t h e m a n u f a c t u r i n g s e c t o r , b u t numbers 1, 2 and 4 i n p a r t i c u l a r were i n s e r t e d by t h e s p o n s o r i n g LDCs i n o r d e r t o a s s i s t i n t h e e x p a n s i o n o f t h e i r e x p o r t s o f m a n u f a c t u r e s and s e m i - m a n u f a c t u r e s . S i g n i f i c a n t l y , "none o f t h e . . . p r o p o s i n g c o u n t r i e s were a s s o c i a t e d w i t h t h e European Economic Community"; t h e A c t i o n Program i t s e l f was "a means o f b y - p a s s i n g t h e EEC a s s o c i a t e d c o u n t r i e s , " t h e l a t t e r b e i n g more i n t e r e s t e d i n r e g i o n a l p r e f e r e n c e s and l e s s i n v o l v e d i n e x p o r t i n g m a n u f a c t u r e s t h a n L a t i n 164 A m e r i c a n and A s i a n GATT members. Deve l o p e d c o u n t r y m i n i s t e r s a t t h e 1963 m e e t i n g endorsed t h e A c t i o n Program i n p r i n c i p l e , b u t d i d n o t make any b i n d i n g l e g a l commitments. O n l y d u r i n g t h e upcoming t r a d e n e g o t i a t i o n s w o u l d i t be p o s s i b l e t o r e a c h l e g a l agreements t o a c t u a l l y r e d u c e b a r r i e r s 165 a l o n g t h e l i n e s p r o p o s e d by t h e LDCs. The theme o f d i f f e r e n t i a l t r e a t m e n t was a l s o p u r s u e d by t h e T h i r d W o r l d a t UNCTAD I . LDCs argued i n t h e Second Committee o f t h e C o n f e r e n c e (which d e a l t w i t h "Trade i n M a n u f a c t u r e s and Se m i - M a n u f a c t u r e s " ) f o r i n t e r n a t i o n a l a c c e p t a n c e o f a " s t a n d s t i l l " p r o v i s i o n i n r e s p e c t o f t h e i r e x p o r t s o f m a n u f a c t u r e s and s e m i - m a n u f a c t u r e s . They a l s o s t r e s s e d t h e - 120 -need f o r t h e immediate removal o f e x i s t i n g q u a n t i t a t i v e r e s t r i c t i o n s i m p eding t h e i r m a n u f a c t u r e d e x p o r t s and n o t e d " t h e i m p o r t a n c e o f complete e l i m i n a -t i o n o f t a r i f f s on / m a n u f a c t u r e d ^ i t e m s o r i g i n a t i n g from d e v e l o p i n g 166 c o u n t r i e s . " The C o n f e r e n c e a d o p t e d , w i t h o u t d i s s e n t , Recommendation A . I I I . 4, w h i c h p o i n t e d t o t h e n e c e s s i t y f o r s p e c i a l measures and e f f o r t s on t h e p a r t o f d e v e l o p e d c o u n t r i e s t o r e d u c e t r a d e b a r r i e r s on LDC m a n u f a c t u r e d e x p o r t s . S e v e r a l " g u i d e l i n e s f o r t a r i f f and n o n - t a r i f f p o l i c i e s i n respect.' o f m a n u f a c t u r e s and s e m i - m a n u f a c t u r e s f r o m d e v e l o p i n g c o u n t r i e s " were u n a n i m o u s l y adopted: Developed c o u n t r i e s s h o u l d n o t , o r d i n a r i l y , r a i s e e x i s t i n g t a r i f f o r n o n - t a r i f f b a r r i e r s t o e x p o r t s from d e v e l o p i n g c o u n t r i e s , n o r e s t a b l i s h new t a r i f f o r n o n - t a r i f f b a r r i e r s o r any d i s c r i m i n a t o r y measures, where such a c t i o n would have t h e e f f e c t o f r e n d e r i n g l e s s f a v o u r a b l e t h e c o n d i t i o n s o f a c c e s s i n t o t h e i r markets o f m a n u f a c t u r e d and s e m i m a n u f a c t u r e d p r o d u c t s o f e x p o r t i n t e r e s t t o d e v e l o p i n g c o u n t r i e s . D eveloped c o u n t r i e s s h o u l d a c c o r d h i g h p r i o r i t y i n i n t e r n a t i o n a l t r a d e n e g o t i a t i o n s t o a c c o r d i n g maximum r e d u c t i o n s i n and, wherever p o s s i b l e , e l i m i n a t i o n o f d u t i e s on m a n u f a c t u r e d and s e m i - m a n u f a c t u r e d p r o d u c t s o f e x p o r t i n t e r e s t t o d e v e l o p i n g c o u n t r i e s D e v e l o p e d c o u n t r i e s s h o u l d as a m a t t e r o f u r g e n c y remove q u a n t i -t a t i v e r e s t r i c t i o n s on m a n u f a c t u r e d and s e m i - m a n u f a c t u r e d p r o d u c t s o f e x p o r t i n t e r e s t t o d e v e l o p i n g c o u n t r i e s . . . I t i s n o t e w o r t h y t h a t t h e i n d u s t r i a l c o u n t r i e s were p r e p a r e d t o commit t h e m s e l v e s t o u n d e r t a k e s p e c i a l e f f o r t s t o r e d u c e b a r r i e r s a f f e c t i n g LDC m a n u f a c t u r e d e x p o r t s t h r o u g h measures c o n s i s t e n t w i t h t h e p r i n c i p l e o f n o n d i s c r i m i n a t i o n , whereas i n r e g a r d t o o t h e r T h i r d W o r ld r e q u e s t s ( p r e f e r e n c e s , commodity p r i c e s t a b i l i z a t i o n , l a r g e r f i n a n c i a l a i d f l o w s , e t c . ) t h e y were e i t h e r opposed o r s h a r p l y d i v i d e d . T h i s w i l l i n g n e s s t o - 121 -s u p p o r t t h e p r i n c i p l e o f d i f f e r e n t i a l t r e a t m e n t i n t h e employment o f d o m e s t i c t r a d e b a r r i e r s v i s - a - v i s d e v e l o p i n g c o u n t r i e s ' e x p o r t s ( e s p e c i a l l y o f m a n u f a c t u r e s ) was a l s o r e f l e c t e d i n t h e new P a r t IV o f GATT d e a l i n g w i t h t r a d e and development. The d e v e l o p e d c o n t r a c t i n g p a r t i e s a greed t o t h e i n c l u s i o n o f s p e c i f i c "commitments" on t h e i r p a r t ( A r t i c l e XXXVII) t o g i v e s p e c i a l c o n s i d e r a t i o n t o t h e i n t e r e s t s o f d e v e l o p i n g c o n t r a c t i n g p a r t i e s i n t h e i r t r a d e b a r r i e r p o l i c i e s . I n p a r t i c u l a r , t h e d e v e l o p e d GATT members a g r e