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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  by 'Jock A. 1  Finlayson  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 I N P A R T I A L FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in 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 a s c o n f o r m i n g to t h e r e q u i r e d standard  THE U N I V E R S I T Y OF B R I T I S H COLUMBIA May 1 9 8 1 J o c k A. F i n l a y s o n , 1 9 8 1  In p r e s e n t i n g  this thesis i n partial  f u l f i l m e n t o f the  requirements f o r an advanced degree a t the U n i v e r s i t y of B r i t i s h Columbia, I agree t h a t the L i b r a r y s h a l l make it  f r e e l y a v a i l a b l e f o r reference  and study.  I further  agree t h a t p e r m i s s i o n f o r e x t e n s i v e copying o f t h i s t h e s i s f o r s c h o l a r l y purposes may be granted by the head o f my department o r by h i s o r her r e p r e s e n t a t i v e s . understood t h a t  copying o r p u b l i c a t i o n o f t h i s t h e s i s  f o r f i n a n c i a l gain  s h a l l n o t be allowed without my  permission.  Department o f  P o l i t i c a l  The U n i v e r s i t y o f B r i t i s h 2075 Wesbrook P l a c e Vancouver, Canada V6T 1W5 Da  t  e  October  Itis  2, 1 9 8 1  Science  Columbia  written  ABSTRACT This study examines the evolution of international negotiations between the developed and developing countries i n connection with the attempts of the l a t t e r to obtain improved access to the markets of the r i c h i n d u s t r i a l countries f o r exports of manufactured products.  The primary  focus i s on the bargaining which has taken place i n two d i s t i n c t  institu-  t i o n a l s e t t i n g s — t h e General Agreement on T a r i f f s and Trade (GATT), and the United Nations Conference on Trade and Development (UNCTAD).  Although  the period covered by the study i s the entire t h i r t y - f i v e 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 f a i l u r e s of the developing countries i n t h e i r e f f o r t s to obtain improved market access, use i s made of several d i f f e r e n t a n a l y t i c a l approaches currently employed by international r e l a t i o n s scholars.  A  major concern of the study i s to analyze how valuable or i n s i g h t f u l these various approaches appear to be with respect to the p a r t i c u l a r case under examination here.  Some schools of thought ascribe considerable bargaining  power to r e l a t i v e l y weak actors i n international p o l i t i c s , but in case of manufactured exports the developing countries, who  lack influence i n this  issue area, are shown to possess l i t t l e leverage i n negotiating for better access to the markets of developed economies.  It i s the v u l n e r a b i l i t y and  weakness of developing countries that must be stressed i n seeking to portray how  they are situated i n r e l a t i o n to t h i s important area of international  p o l i t i c a l and economic r e l a t i o n s .  - iii  -  TABLE OF CONTENTS Page Abstract  i  List  o f Tables  List  of Figures  v v i i  INTRODUCTION  1  Notes  4  CHAPTER ONE: I II  NORTH-SOUTH P O L I T I C A L ECONOMY  Addressing t h e North-South Relations Literature  2.  14 16  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  Conclusion  39 41  CHAPTER TWO: THE STRUGGLE FOR MARKET ACCESS  II  5  N o r t h - S o u t h R e l a t i o n s : The Dependency "Metaphor"  Notes  I  5  Economic  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 1.  III  i  Introduction  49 49  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  Relations  52  - Introduction  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 - Increasing Complaints o f Developing  58  Countries - Activities  64 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 Textiles  74  - Conclusion  79  - i vPage III  Phase I I :  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 and  t h e R e f o r m o f I n t e r n a t i o n a l E c o n o m i c Norms - Introduction  79 79  - LDC M a n u f a c t u r e d E x p o r t s , An O v e r v i e w  1964-73 82  - T r a d e B a r g a i n i n g a n d t h e R e f o r m o f Norms and  Rules  86  1.  LDCs a n d T r a d e P r e f e r e n c e s  2.  The T h r u s t i n GATT  3.  Toward N o n r e c i p r o c i t y  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 Barriers  - Conclusion IV  86 110  117 135  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 W o r l d Manufactured Exports  136  - Introduction  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 Study o f P r o t e c t i o n i s m  145  - T r a d e B a r g a i n i n g i n GATT a n d UNCTAD  153  - LDC R e a c t i o n UNCTAD V  166  - Conclusion  t o t h e T o k y o Round a n d  and Overview  Notes  168 171  CHAPTER THREE: A N A L Y S I S  190  I Introduction II Developing  Countries  190 and t h e B e n e f i t s o f Trade  192  1. T h e V i e w From D e p e n d e n c y T h e o r y  192  2. T h e V i e w 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 Developing Countries Manufactured Exports  and B a r g a i n i n g Power i n t h e Issue Area  1. S o u t h e r n B a r g a i n i n g P o w e r : T h e D e p e n d e n c y Answer 2.  207 208  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"  IV C o n c l u s i o n Notes SELECTED BIBLIOGRAPHY  211 227 228 235  - V -  L I S T OF TABLES  1  Manufactured  Export Categories  2  Number o f T a r i f f A g r e e m e n t s E n t e r e d I n t o b y LDCs a t GATT C o n f e r e n c e s , 1947-61  3  Exports o f Manufactures  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  Exports o f Manufactures,  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 : Indices  8  A v e r a g e E f f e c t i v e and N o m i n a l T a r i f f R a t e s on Manufactures 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 1 9 7 0 GSP I m p o r t s o f I n d u s t r i a l f r o m 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  ( S I T C 5-8)  1963-73  V a l u e and Volume  Products  10  I n d i c a t i v e L i s t o f Manufactures o f Apparent Export I n t e r e s t t o LDCs S u b j e c t t o M e a s u r e s o f I m p o r t R e s t r a i n t i n Recent Years  11  OECD I m p o r t s  12  LDC E x p o r t s o f T e x t i l e s Industrial Countries  13  OECD I m p o r t s of Imports  14  LDC P r o p o s a l s t o S a f e g u a r d  15  D i f f e r e n t i a l T r e a t m e n t i n T o k y o Round NTB C o d e s  16  V o l u m e a n d 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.  of Textiles  from  LDCs  and C l o t h i n g t o t h e  o f T e x t i l e s and C l o t h i n g :  Source  GSP M a r g i n s  - v i -  17  P r o d u c t C o m p o s i t i o n o f LDC i n L a t e 1970s  Exports of Manufactures  18  S h a r e s o f LDCs i n W o r l d M a n u f a c t u r e s E x p o r t s  19  I m p o r t a n c e o f LDCs a s M a r k e t s f o r D e v e l o p e d Countries Exports of Manufactures  20  I m p l i c a t i o n s o f V a r i o u s A p p r o a c h e s 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 a n d G l o b a l R e f o r m e r s f o r LDC B a r g a i n i n g P o w e r and O p p o r t u n i t i e s i n the Trade B a r r i e r / M a r k e t Access Issue Area  - V l l -  L I S T OF  E x t e n t o f M u t a l i t y o f G a i n s From Economic L i n k s Degree o f B a r g a i n i n g i n G l o b a l Economy  FIGURES  North-South  Power P o s s e s s e d b y  South  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 d e c a d e o f t h e 1 9 7 0 s 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 .  that period, be  t h e g l o b a l a g e n d a u n d e r w e n t a r e m a r k a b l e c h a n g e a n d came t o  i n c r e a s i n g l y dominated by v a r i o u s  international sions  (the South).  i n not only  Some s c h o l a r s , t a k i n g s t o c k  o f the  with military  aspects o f i n t e r n a t i o n a l r e l a t i o n s served  conceptual  questions politics  Yet there  c a n be l i t t l e  t o warn  politics  developed  doubt t h a t  i s a legacy  growth o f s e v e r a l "political  concern  scholars  o f t h e decade j u s t  i nthe  a r e d e f i n i t i o n o f what  a n d t o p i c s a r e w o r t h y o f e x a m i n a t i o n by a n a l y s t s  Among t h e m o s t s i g n i f i c a n t  the  1970s a n d a r e n e w e d  i t w o u l d 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  approaches t o t h e study o f world  1950s a n d 1 9 6 0 s .  wondered  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 . " ^  superpower r e l a t i o n s i n t h e l a t e  statesmen that  ten-  t h e g l o b a l agenda o f i s s u e s b u t a l s o t h e t o p i c s  Deteriorating  and  growing  ( t h e N o r t h ) and t h e  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 ,  whether a l l t h i s didn't  a  with  e c o n o m i c i n t e r d e p e n d e n c e on t h e one h a n d a n d e s c a l a t i n g  world  transformation and  problems a s s o c i a t e d  i n r e l a t i o n s between t h e developed c o u n t r i e s  developing  During  of international  past.  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  i n t e r e s t i n g l i t e r a t u r e s dealing with  economy" o f N o r t h - S o u t h r e l a t i o n s .  various  aspects of  I n t h e p a s t few y e a r s  l a r g e number o f s t u d i e s h a v e a p p e a r e d w h i c h a d d r e s s s u c h N o r t h - S o u t h  issues  as commodity s t a b i l i z a t i o n  schemes, debt r e l i e f f o r t h e T h i r d  World,  - 2 -  use  and  control  national  of the resources o f the oceans,  and  the r o l e of  corporations i n host developing countries.  critically  important North-South  i s s u e t h a t has  In t h i s  multi-  study,  received rather  a  little  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 m a r k e t s N o r t h e r n economies f o r e x p o r t s o f manufactured countries--is of  e x a m i n e d i n some d e t a i l .  this particular  South  agenda.  the North  i s s u e from  First,  i s seen  orthodoxy World  access f o r t h e i r  as an i n c r e a s i n g l y  of import  Several reasons  justify  selection  critical  i s s u e by a growing  Since the e c l i p s e of the former  substitution  examining  element i n t h e i r development s t r a t e g y .  number o f  development  Another  to  s e r v e d by  p r o d u c t s e x p o r t e d by the South.  while c e r t a i n import-competing an e x p a n s i o n  i n t e r e s t s c a n be  s e c t o r s and  interest  imported products  Northern  liberalizing  Specifically,  g r o u p s may  of exports from d e v e l o p i n g c o u n t r i e s (or elsewhere  m a t t e r ) , N o r t h e r n e c o n o m i e s as a w h o l e may  be h a r m e d  products  by  for that  g a i n by v i r t u e o f l o w e r  compared w i t h p r o t e c t e d d o m e s t i c  the  reason f o r  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 a c a d e m i c e x p e r t s and  f o r manufactured  to  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  governments r e c o g n i z e t h a t mutual access  North-  exports of manufactures  c o u n t r i e s h a v e 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  N o r t h as a k e y  for  developing  among t h e many i m p o r t a n t o n e s on t h e  improved  developing countries.  products from the  of  prices  and  2 t h r o u g h more e f f i c i e n t mutual is  i n t e r e s t s has  discussed later Finally,  their  resource a l l o c a t i o n .  Thus a p e r c e p t i o n o f  e x i s t e d d u r i n g the b a r g a i n i n g over market access  i n the  that  study.  examination o f T h i r d World  interests  c o m p a r e and  domestic  i n world manufactures  evaluate c r i t i c a l l y  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 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  some o f t h e v a r i o u s a p p r o a c h e s  to the  study  - 3 of North-South  political  of t h i s North-South factured exports  economy t h a t h a v e r e c e n t l y d e v e l o p e d .  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-  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  T h i r d World i n d u s t r i a l i z a t i o n  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 the international  highlights the contrasting i n t e l l e c t u a l underlie various analytical  to  study  perform.  Chapter  The f i r s t  of labor  a s s u m p t i o n s and w o r l d - v i e w s  and i d e o l o g i c a l  chapter  the essential  that  traditions.  attempts  t o survey  r e l a t i o n s and p o l i t i c a l  and c l a s s i f y  task  the diverse  economy i n o r d e r t o  f e a t u r e s o f v a r i o u s approaches t o the s u b j e c t .  Two t h e n p r o v i d e s a l o n g a n d q u i t e d e t a i l e d t r e a t m e n t  of the l e s s developed  of the e f f o r t s  c o u n t r i e s (LDCs) t o i m p r o v e t h e i r p o s i t i o n  i n t e r n a t i o n a l trade system. gone on w i t h i n i n t e r n a t i o n a l  Here t h e focus institutions  e s p e c i a l l y trade barrier--matters. and  division  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  l i t e r a t u r e on N o r t h - S o u t h determine  edge o f  a n d e c o n o m i c d e v e l o p m e n t 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 t h o u g h t  This  Selection  i s on t h e b a r g a i n i n g t h a t h a s  concerned  A survey  i n the  with  trade--and  o f the changing  composition  v o l u m e 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  offered  i n this  chapter.  Finally,  the t h i r d  surveyed  c h a p t e r r e f l e c t s b a c k on t h e  political  economy l i t e r a t u r e  i n the f i r s t  of events  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  e v a l u a t i o n o f t h e s e v e r a l schools o f thought through  examination  of "real world" experience;  relations.  of the patterns  issue area.  i s really  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 South  i n light  this  A  critical  only possible  study  seeks t o f o r c e  area o f contemporary  North-  - 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 C o m p l e x 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 1 9 7 8 ) : 5 1 3 . 2 T h i s i s the c o n v e n t i o n a l argument, o r p a r t o f the 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 b e 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 . For a strong statement o f t h e v i e w t h a t N o r t h and S o u t h h a v e m u t u a l i n t e r e s t i n s o f a r a s 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, " T r a d e , the 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 P O L I T I C A L ECONOMY  I.  Addressing the North-South The  Economic R e l a t i o n s  Literature  decade o f t h e 1970s w i t n e s s e d t h e development  several interesting  literatures  and r e f i n e m e n t o f  dealing with various aspects o f t h e  political  economy o f r e l a t i o n s b e t w e e n t h e i n d u s t r i a l i z e d  countries  (the North)  LDCs o r t h e S o u t h ) . South economic  capitalist  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 I n p a r t , t h e growth  relations  of scholarly  countries (the  interest  stemmed f r o m a b e l i e f t h a t e c o n o m i c  i n North-  m a t t e r s more  g e n e r a l l y w e r e b e c o m i n g 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 . " ^  Also  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 North-South  issues  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 b y b o t h  M a r x i s t a n d many l i b e r a l not b e i n g remedied two  intellectual  and economic  analysts,  that global  inequality  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  and p o v e r t y were economy.  These  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 e n o r m o u s 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  political  problems.  How t o c a t e g o r i z e t h i s v a r i e d for  economic  l i t e r a t u r e poses  the student o f " i n t e r n a t i o n a l p o l i t i c s .  cription with analysis,  several  difficulties  S i n c e much o f i t m i x e s  i t i s o f t e n d i f f i c u l t t o know w h e t h e r  pres-  a particular  s c h o l a r ' s a r g u m e n t i s b a s e d 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  relations or, alternatively,  these r e l a t i o n s  ought  t o evolve.  2  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  A more s e r i o u s p r o b l e m  stems from t h e  - 6 -  marked d i v e r s i t y of conceptual approaches, ideologies, and  research  methodologies employed by the several groups of scholars who  have c o n t r i -  buted to these l i t e r a t u r e s .  makes i t  impossible  This i n t e l l e c t u a l heterogeneity  to discern any s i g n i f i c a n t degree of consensus in the writings  on North-South p o l i t i c a l economy, and thus the a r t i c u l a t i o n of a "synthetic" perspective  i s precluded.  At best, certain d i s t i n c t i v e and competing  schools of thought can be i d e n t i f i e d .  Fortunately, a number of p o l i t i c a l  s c i e n t i s t s have endeavored to come to grips with and c l a s s i f y the vast l i t e r a t u r e on contemporary North-South issues. R.D.  Walleri i d e n t i f i e s 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 i n p a r t i c u l a r .  These four approaches, or schools, d i f f e r both  a n a l y t i c a l l y and p r e s c r i p t i v e l y i n the way  they address what Walleri c a l l s  the central "dilemma" of North-South r e l a t i o n s — t h e simultaneous development of "increasing global interdependence" and "increasing inequality 4 between and within nations." A b e l i e f i n the e f f i c a c y of the market as a mechanism of resource a l l o c a t i o n characterizes the l i b e r a l approach.  According to Walleri,  l i b e r a l analysts exhibit a basic f a i t h i n the market i n regard to both the domestic economic development of LDCs and t h e i r external economic strategies. The view that domestic inequality i s a secondary problem to that of c a p i t a l accumulation—the "trickle-down"  theory of economic development—" has i t s  counterpart in the l i b e r a l 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 movement of c a p i t a l , free trade would maximize world production  -  7  -  through optimal e f f i c i e n c y i n resource 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 actions, conducted according to 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 m i n o r . 5 Most Western i n t e r n a t i o n a l w i t h the  liberal  other p o l i t i c a l  school.  d e v e l o p m e n t e c o n o m i s t s can  Walleri  a l s o p l a c e s Nye  scientists in this tradition.^  advocate " f u r t h e r countries  and  incorporation  i n t o the  global  and  and  be  associated  Keohane, Morse,  Most o f t h e s e  integration  of the  Third  economy" as  the  m o s t e f f e c t i v e way  suggest that  the  optimal path of  and  scholars  World to  enhance  7  development;  many a l s o  international  economy i n v o l v e s  improving the  "reform" of  o p e r a t i o n of  the  the  m a r k e t so  that  g it  more c l o s e l y  approximates the  A different by  scholars  approach to  sympathetic to  an  requires  that the  and  a strong  o f A m e r i c a n and  support f o r the under the  state  trade barriers role  i n the  of  to  foster  economy.  evidenced perspective. World  indigenous  Walleri  n i n e t e e n t h c e n t u r y , as  notes well  as  J a p a n e s e 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  economic n a t i o n a l i s t t h e s i s .  influence  economy i s  economic development f o r T h i r d  Germany's e c o n o m i c d e v e l o p m e n t i n t h e history  political  economic n a t i o n a l i s t / m e r c a n t i l i s t  s t i f f protective  industrialization  economic model.  international  According to t h i s view, national countries  liberal  Raul Prebisch of  the  UN  Many L a t i n A m e r i c a n  states,  Economic Commission  for  L a t i n America, experimented w i t h economic n a t i o n a l i s t development  strategies  9 d u r i n g the from t h i s  1950s.  A t p r e s e n t , few  writers  analyze North-South  issues  perspective.  Walleri  terms the  "internationalism."  t h i r d approach to North-South p o l i t i c a l  Like  the  economic n a t i o n a l i s t s c h o o l ,  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 are attendant prescriptions.  critical  of the  liberal  economy  analysts  m o d e l and  They seek to reduce i n t e r n a t i o n a l  assoits  inequality  by  - 8 -  promoting g l o b a l market i n t e r v e n t i o n i n order p o s i t i o n f o r LDCs, s i n c e more d e t r i m e n t a l school.  of the  Myrdal).  aegis  t y p e and  t h o s e s t r e s s e d by the  S o u t h can  continued report  are  (e.g.  i n e f f e c t advocating  r e a l l y has  strategies  i n the  Walleri  choice  reform  intervention  institutions.  q u a l i t a t i v e l y d i f f e r e n t than  l i k e the but  search  l a t t e r they believe  to) mature e c o n o m i c a l l y  suggests that the  original Marxist  explains  last  approach to the  both e a r l i e r Marxist  study of and  through The  recent this  the  middle c l a s s e s . ^  T h i r d World s t a t e s  dependency  t o be  of a persisting  i n t e r n a t i o n a l c a p i t a l i s m , which  Although there  grouped under the  North-South  failure  i m p o s s i b i l i t y of genuine " n a t i o n a l i s m "  among s c h o l a r s  capitalist  and  problems.^  current  e m e r g e d i n t h e wake o f t h e  Southern bourgeoisie  among LDC  1) p o r t r a y  that  located within  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  a l l i a n c e between the  differences  be  f o r s o l u t i o n s t o T h i r d World economic  Dependency t h e o r y  imperialism"  and  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 "  economy i n c o r p o r a t e s  theories.  national  no  market  regional  s o - c a l l e d "Brandt Commission" should  since  alliance  a n a l y s t s , but  sensi-  Gosovic)  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.  of the  political  o f r e f o r m s t h e y seek are  liberal  (and  tradition,  to:  scientists  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  extent  liberal  South i s a c e n t r a l p r e s c r i p t i o n of  both p o l i t i c a l These a n a l y s t s  the  regimes h i g h l y  i n t e r n a t i o n a l economic system through e x t e n s i v e  under the The  (e.g.  and  bargaining  market i s f a r  S o u t h t h a n i s b e l i e v e d by  problems f a c i n g the  school, which includes  economists  the  a better  unregulated  of i n t e r n a t i o n a l organizations  t i v e t o t h e n e e d s and this  i t i s argued t h a t the  i n i t s e f f e c t s on  Creation  to provide  and  are  dependency l a b e l ,  as b a s i c a l l y i n t e g r a t e d  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  "anti-  significant they a l l tend  i n t o an  inter-  least rewarding  and  - 9 -  l e a s t p r o f i t a b l e economic t a s k s manufactures with economic s u r p l u s linkages, with  l o w amounts o f v a l u e  producing  i n v e s t m e n t and o t h e r  (the "periphery")  to the North  of multinational corporations.  advocate s o c i a l i s t capitalist  raw m a t e r i a l s ,  a d d e d , e t c . ) ; a n d 2) a r g u e  i s channeled,"via trade,  from t h e South  the help  (exporting  that  economic  (the "core"),  Many d e p e n d e n c i a  often  analysts  r e v o l u t i o n among t h e LDCs a n d t h e i r d i s e n g a g e m e n t f r o m t h e  international division  of labor.  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 p u t f o r w a r d b y R o b e r t  12 Cox.  In examining recent  create  tive";  "opinion  a reformist  which shares with relatively  clusters"--an essentially liberal "social  the l a t t e r  "a b a s i c  "establishment  f r e e movement  commitment t o . . .  of capital,  is b a s i c a l l y reformist with  to current  regard  a "neo-mercantilist" perspective  view,"  a world  encompasses d i v e r s e  both r i g h t -  and l e f t - w i n g  economy l i t e r a t u r e  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 b e t w e e n an " A m e r i c a - F i r s t " 14  which stresses  represented  but  includes  approaches.  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  mercantilism,  an  North-South economic r e l a t i o n s ;  which contains  n e o - M a r x i s t dependency  economy  viewpoints  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 13  various  five  perspec-  goods, and t e c h n o l o g y " ;  that  variants;  Cox d e t e c t s  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  indigenous T h i r d World p e r s p e c t i v e  the  LDCs' e f f o r t s t o  a c o m p r e h e n s i v e new i n t e r n a t i o n a l e c o n o m i c o r d e r ,  distinct  with  literature dealing with  by Robert T u c k e r ,  i s somewhat  school  a n d a more r a d i c a l  o f neo-  school  ( a n d a p p l a u d s ) t h e d e c l i n e o f A m e r i c a n hegemony and t h e  g r o w t h o f West E u r o p e a n a n d T h i r d W o r l d e c o n o m i c i n d e p e n d e n c e f r o m t h e U n i t e d States.  H o w e v e r , one i s e n t i t l e d  mercantilism" political  t o doubt whether " r i g h t - w i n g  c a n 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  economy, s i n c e  only  a s i n g l e author  neo-  approach t o North-South  (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  rubric.  T u c k e r o u g h t t o be p l a c e d  -  M o r e o v e r , Cox i n the  liberal  himself  seems t o s u g g e s t  establishment  camp when he  Tucker a proponent of " o l d l i b e r a l i s m , " " ^ which a f t e r a l l bears a resemblance to the p e r s p e c t i v e Cooper, Bergsten, the  indigenous  reformist  and  Bhagwati).  the  i s Cox's t h i r d  He  includes  d i f f e r markedly.  l i k e Mahbub u l Haq,  "social-democratic reform  curious  of the  who  Cox  reformist" tradition,  g l o b a l economy, a l b e i t  the  d e p e n d e n c y s c h o o l . "^  In examining these v a r i o u s  to recognize  that the  "models," " s c h o o l s , "  Walleri,  and  part  Cox  of scholars  views d i f f i c u l t  others  grouped under these to categorize  fairly  l e g i t i m a t e t o e n g a g e i n an i n the  effort  •  to the  extensive  in  and  Haq  nature, the  more  the important  "approaches" suggested  only  a general  by  o r i e n t a t i o n on  the  Individuals often exhibit Still,  to c l a s s i f y  i d e a l type.  i t i s both useful  t h e many p o i n t s  international political  E a c h m o d e l c o n s t i t u t e s an  to  cluster."  economy, i t i s  l i t e r a t u r e u n d e r a s m a l l number o f h e a d i n g s .  commented i n r e g a r d  pres-  strategy advocated f o r i n  labels.  i n t h i s way.  and  both  since i t i s clear that  international political  a r e meant t o i m p l y  cluster,"  extensively, within  a t t e m p t s t o come t o g r i p s w i t h  on  (e.g.,  I t seems more s e n s i b l e  m a t e r i a l i s t "opinion  burgeoning l i t e r a t u r e  close  "opinion  R a d i c a l T h i r d World s c h o l a r s  p r o p e r l y belong i n the h i s t o r i c a l  labels  i n t h i s category  discusses  r a t h e r than the revolutionary-disengagement S o u t h by  economists  n e o - M a r x i s t T h i r d W o r l d s c h o l a r s whose a n a l y t i c a l  a scholar  favors  Also  T h i r d World p e r s p e c t i v e .  c r i p t i v e points of departure place  o f most e s t a b l i s h m e n t  that  As  and  of view  Robert G i l p i n  economy  P e r h a p s no  literature: one  i n d i v i d u a l w o u l d s u b s c r i b e t o e a c h a r g u m e n t made b y any one position. 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 . . . are r e a l enough; t h e y have a p r o f o u n d  found has  -  11 -  i n f l u e n c e on p o p u l a r , a c a d e m i c , t r a d e , monetary, and investment In o r d e r to  to acquire a general  North-South p o l i t i c a l  made b y v a r i o u s ance  answers p r o v i d e d  s e n s e o f how t h e s e  economy d i f f e r  from  by  relations  warrant  2)  schools  approaches  the assumptions  of critical  import-  In p a r t i c u l a r , t h e  t o two c e n t r a l  t r a n s a c t i o n s and l i n k a g e s between t h e  a n d t h e LDCs m u t u a l l y  beneficial?  questions  to conceive provide  o f them a s a r r a y e d  t o each  question,  from North-South perspective  liberal  analysts stress  economic r e l a t i o n s ,  emphasize  may  i n understanding  1:  Extent  among t h e s e  a continuum  Thus, w i t h  most  even  intended  competing  according  the mutuality  while  the exploitative,  The f o l l o w i n g d i a g r a m ,  Figure  along  o f t h e above q u e s t i o n s .  linkages. assist  capitalist  I f s o , t o what  degree?  Given t h e i r c u r r e n t l y extensive i n t e g r a t i o n i n t o the Northernd o m i n a t e d 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 t h e S o u t h e n j o y v i s - a - v i s t h a t economic s y s t e m and N o r t h e r n g o v e r n m e n t s ?  One way o f p o r t r a y i n g t h e r e l a t i o n s h i p s  first  one a n o t h e r ,  close scrutiny.  ( o r assumed b y ) t h e s e  A r e economic North  they  diverse  be s t r e s s e d : 1)  is  t h i n k i n g on  c o n t r i b u t i n g scholars regarding matters  f o r North-South  should  and o f f i c i a l problems.17  respect  how t h e d i f f e r e n t  o f M u t u a l i t y o f Gains  to the deriving  t o a dependency  zero-sum, n a t u r e  solely  t o t h e answers  of benefits  adherents  o f such  forillustrative  schools  schools  purposes,  are arrayed.  From N o r t h - S o u t h  Economic  Links  "reformers" liberals  dependency writers  absolutely reciprocal gains  "liberal reformer's"  "global reformers"  absolute exploitation of 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 p o l a r view, students of North-South p o l i t i c a l different  groups  to subscribe to either economy w i l l  cluster  extreme into  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 the dimension o f  mutuality of benefit.  Those s y m p a t h e t i c t o a l i b e r a l  (including  liberal-  r e f o r m i s t ) p e r s p e c t i v e tend 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 North-South economic  relations,  gain i n  o r a t t h e v e r y l e a s t a r g u e , a s many r e f o r m i s t s  do, t h a t t h e S o u t h 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  participating 18  i n the global  capitalist  economy g i v e n c e r t a i n c h a n g e s i n r u l e s .  While  liberal  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  benefit  from c u r r e n t North-South economic  as w i l l  be d i s c u s s e d b e l o w ,  p a t i o n i n the i n t e r n a t i o n a l  l i n k a g e s , t h e y do t e n d t o s h a r e ,  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 economic  " i n t e r n a t i o n a l i s t s " b y W a l l e r i and evince this  system.  Many s c h o l a r s  " T h i r d World  partici-  labelled  i n t e l l e c t u a l s " b y Cox  also  view.  A t t h e o t h e r e n d 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 of or r e j e c t a l t o g e t h e r the view that s i g n i f i c a n t  economic  the 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 Certain radicals or neo-Marxists labelled subsumed u n d e r perhaps  LDCs  are  benefits accrue to  capitalist  economy.  " i n t e r n a t i o n a l i s t s " b y Cox  t h e g e n e r a l dependency r u b r i c and  skeptical  can  be  located near t h i s pole,  as  c a n 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  are d i f f i c u l t  to  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 b e c a u s e 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 m o s t 19 North-South  issues.  A second dimension a l o n g which be a r r a y e d r e l a t e s  students of North-South r e l a t i o n s  can  t o t h e e x t e n t o f b a r g a i n i n g p o w e r a t t r i b u t e d t o t h e LDCs  in  the c a p i t a l i s t  economic system.  Obviously  specific  i s s u e area under c o n s i d e r a t i o n .  leverage  enjoyed  will  be  by  a central  concern  i n s o f a r as t h e  several  schools  degree of  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  b a r g a i n i n g power i n o t h e r But  The  this varies with  of t h i s  study,  issue-areas  international  n e e d n o t be  on N o r t h - S o u t h p o l i t i c a l  bargaining  i s s u e - a r e a , which equivalent to  in international  economy as  economic  international  system.  scholarly "opinion  a l s o be  F i g u r e 2:  portrayed  the  different  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  can  their  relations.  a whole i s concerned,  economy c l e a r l y make  T h i s v a r i a t i o n among t h e d i f f e r e n t  the  capitalist clusters"  diagrammatically.  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  "reformers" liberals  dependency writers  "symmetric interdependence"  In  this  "liberal reformers"  figure  liberal  "global reformers"  a n a l y s t s , a s w e l l as  no S o u t h e r n b a r g a i n i n g power in c a p i t a l i s t world economy  "reformers"  who  fall  under the " 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 W a l l e r i and  Cox  interdependence," arrayed  r e s p e c t i v e l y , are p l a c e d toward the pole of w h i l e M a r x i s t s and  dependency s c h o l a r s are  c l o s e r t o the p o l e o f a b s o l u t e dependency.  even t h e most s a n g u i n e l i b e r a l h a r d l y s u g g e s t t h a t an t h e g l o b a l economy.  absolute  observer  "symmetric definitely  I t s h o u l d be  of North-South r e l a t i o n s  noted  be  that  would  symmetry i n b a r g a i n i n g power p r e v a i l s  However, as w i l l  by  in  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 with the l i b e r a l  -  approach t o North-South 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 c e r t a i n k e y i s s u e s on t h e g l o b a l a g e n d a .  in relation  Authors grouped  under  the  d e p e n d e n c y h e a d i n g , on t h e o t h e r h a n d , t e n d t o p e r c e i v e t h e S o u t h essentially policy  II.  i m p o t e n t i n t e r m s o f s h a p i n g i t s own  development  choices w i t h i n the context of i n t e r n a t i o n a l  D e p e n d e n c y , 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 E c o n o m i c That t h e South i s g e n e r a l l y h i g h l y dependent  f o r c e s and has  limited  exercising  20  Relations  on e x t e r n a l  economic  "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 contemporary politics.  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 d e g r e e o f t h i s  and i n t h e i r emerge.  interpretation of this  James C a p o r a s o  literature  Caporaso's  has examined  i n some d e t a i l ,  very d i f f e r e n t  "modal"  state of affairs  the North-South p o l i t i c a l  approaches  v a r i o u s groups o f s c h o l a r s .  He  economy  images:  analysis,  image,  concept  by  dependency as form  which accords with  on  the of a  "the o p p o s i t e o f dependence i s  W h i l e autonomy r e s t s on t h e i d e a o f  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  T h e s e two d i f f e r e n t  relations.'  argues that i n the d i v e r s e " l i t e r a t u r e  A c c o r d i n g t o the second  approach t o p o l i t i c a l  two  (or " r e l a t i o n a l  o f a c t o r autonomy and dependence as a h i g h l y a s y m m e t r i c  i n t e r d e p e n d e n c e — n o t autonomy. control,  differences  to the analysis of North-South  c a n a b s t r a c t two p r e d o m i n a n t  interdependence." liberal  dependence  and he s u g g e s t s t h a t t h e r e a r e i n f a c t  i n e q u a l i t y " ) and t h e d i f f e r e n t m e a n i n g s a t t r i b u t e d t o t h i s  absence  world  that sharp  p o i n t o f d e p a r t u r e i s the concept o f dependence  d e p e n d e n c e , one  as  and  capitalism.  to  images o f " r e l a t i o n a l  control."  inequality"  22  reflect  self-  - 15 sharply contrasting assumptions about the correct a n a l y t i c a l focus i n the study of North-South r e l a 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 e s s e n t i a l  features the bargaining perspective i s actor oriented and leads to a c a r e f u l a n a l y s i s of s p e c i f i c contests among actors based on clashes of consciously held i n t e r e s t s . The outcomes o f bargaining contests may be due t o d i f f e r e n c e s i n c a p a b i l i t i e s but they are not an automatic f u n c t i o n of these. Outcomes may also be affected by p u t t i n g a greater amount of resources i n t o the e f f o r t , by being w i l l i n g to s u f f e r higher costs, or through the s k i l l of . . . n e g o t i a t o r s . ^ A very d i f f e r e n t approach involves focusing on " s t r u c t u r a l 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 , a l l i a n c e o p p o r t u n i t i e s , and payoffs that actors may u t i l i z e . "  The  s t r u c t u r a l a n a l y s i s s i t u a t e s an  LDC w i t h i n 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 t h i s l a r g e r context. According to t h i s view, dependence i s not a p o s i t i o n 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 . . . i n t o the global c a p i t a l i s t system 24  and the . . . d i s t o r t i o n s r e s u l t i n g therefrom."  This conception of  r e l a t i o n a l i n e q u a l i t y bears l i t t l e resemblance to that found i n the works of most non-Marxist students o f North-South r e l a t i o n s . In what f o l l o w s , the bargaining and s t r u c t u r a l perspectives are studied by examining several contemporary l i t e r a t u r e s on i n t e r n a t i o n a l relations;  these are d i v i d e d i n t o 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 w r i t i n g s  - 16 -  of 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 , a n d t h o s e who  e x t e n s i v e g l o b a l r e f o r m a n d a New l a t t e r group  i s obviously less  International  coherent because  Economic  Order.  The  of the d i f f e r e n t  topics  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 a r g u e d 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  study the i n s i g h t s  t h a t c a n be  to North-South p o l i t i c a l area i s concerned w i l l different goal  economy i n s o f a r a s t h e m a n u f a c t u r e d  s c h o o l s examined.  In the remainder of t h i s  i s s i m p l y t o i n d i c a t e how  North-South Relations:  approaches  exports issue  explanations of c h a p t e r , t h e main  these various "opinion c l u s t e r s " conceive  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  1.  Later i n  gleaned from these v a r i o u s  be d i s c u s s e d , and t h e c o m p e t i n g  that  "metaphor"  of interdependence i n t h e i r analyses of North-South r e l a t i o n s . this  favor  The  generally.  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 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  have  within  the  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 has  affected  specific  L D C s , b u t a g e n e r a l m o d e l o f how  mines T h i r d World development  this  order deter-  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 26  w i t h i n the dependency t r a d i t i o n .  D e p e n d e n c y t h e o r i s t s a r e b y no means  i n unanimous agreement i n t h e i r a n a l y t i c a l  approaches  b u t t h e r e a r e c e r t a i n themes and arguments  which are ubiquitous  literature. international  Virtually all capitalism  order  dependency w r i t e r s  and  prescriptions,  a g r e e t h a t t h e way  "has m o l d e d t h e d o m e s t i c c l a s s  i n the i n which  structures  and  external  r e l a t i o n s of the  periphery  s t a t e s p r e c l u d e s the  genuine n a t i o n a l development i n the  possibility  T h i r d World w i t h i n the  of  context p r o v i -  27  ded  by  the  present i n t e r n a t i o n a l order."  economic l i n k a g e s i n f a c t s e r v e as p r i a t e d by  transmission  the  South are  b e l t s by  advanced c a p i t a l i s t  t h e o r y argue t h a t capitalist  b e t w e e n N o r t h and  T h e y a g r e e as w e l l inherently  "unequal"  which economic s u r p l u s  "metropoles."  that  i s appro-  Most p r o p o n e n t s o f  South ought t o disengage from the  s y s t e m i n o r d e r t o promote what i s f o r t h e  dependency  international  dependency  the 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  school  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 tend t o devote bulk  of t h e i r s c h o l a r l y a t t e n t i o n to the  and  economic c h a r a c t e r i s t i c s of Southern 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  are  l a r g e l y s y s t e m i c and  a  major c o n t r i b u t o r  to the  i n nature.  literature,  dependency t h e o r i s t ' s s y s t e m i c  of the  the  political  transnational  analysis  and  Andre Gunder F r a n k ,  p r o v i d e s an  e x c e l l e n t example o f  the  bias:  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 c h a n g e ) a p a r t o f s o m e t h i n g , i n t h i s c a s e u n d e r d e v e l o p m e n t , 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 w h o l e i n t e r m s o f w h i c h t h a t p a r t c a n be u n d e r s t o o d . ^ This  s t r u c t u r a l , systemic explanatory  Marxist  t r a d i t i o n s of  social  narrow economic d e t e r m i n i s t s , devotion  to explaining  system—in this LDCs as the  but  i s strongly  they d i f f e r  from o t h e r schools  r e f e r r i n g to the  D e p e n d e n c y w r i t e r s w o u l d no  constitutes  the  in their of  includes  doubt agree  " i t i s not  decisive difference  by  not  "imperatives"  system that  t h e o r e t i c i a n George Lukacs t h a t  o f economic motives t h a t  informed  Dependency t h e o r i s t s are  international capitalist  s u b o r d i n a t e members.  eminent M a r x i s t  analysis.  o u t c o m e s by  case the  perspective  the  the the with  primacy  between  Marxist  and  b o u r g e o i s thought, but  In a d d i t i o n the  takes a transnational  approach.  s t a t e , but  are  linked across national  class.  The  subordinate peripheral  an  LDC  labor  a local  c a p i t a l and  or even a g r a r i a n , i s that  strongly  d e p e n d i n g on  as  a whole.  oriented  the  control  p r o m o t i n g t h e i r own  the  material nation's  economy as  and  p o v e r t y i n the  society.  Decisions  the  nation's  economic development are  market i n mind, not International  a c c o r d i n g to the  evolution  be  intimately  tied  international  industrial,  commercial,  the  main  evolution  of  system.  The  outward-looking  t h e i r p o l i c i e s , while  will  exacerbate  and- s t r a t e g i e s w i t h the  inequality  respect  to  international  r e a l needs of the  capitalist  s o c i e t y and  masses.  domestic "comprador"  o f a m a t u r e , e g a l i t a r i a n economy  the  class and  polity. Thus t h e  dependency e x p l a n a t i o n  a  in  r e t a r d or even r e v e r s e  made w i t h  the  s u p p o r t e d by  a similar interest  a w h o l e and  c a p i t a l i s m , r u l i n g through the  elements, stymies the  t y p i c a l dependency  u s u a l l y be  a p p a r a t u s , and  development of the  system  exploitative  i t shapes the  interests, will  not  to the  under examination;  world c a p i t a l i s t  political  is  also  cement w h i c h  T h i s c l a s s may  It will  explanations,  underdevelopment  toward export to the  period  29  the  In the  " a r i s t o c r a c y " w h i c h has  these t i e s to the  will  totality."  "comprador" b o u r g e o i s i e  i t i s " o u t w a r d - l o o k i n g , " and  small, p r i v i l e g e d labor  classes  constitute  Southern nations  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 .  maintaining  of view of  international capitalist  b o u n d a r i e s and  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 .  point  point  c e n t r a l u n i t of a n a l y s i s  C l a s s e s i n the  i n t e r n a t i o n a l d i v i s i o n of  to foreign  the  o f S o u t h e r n d e v e l o p m e n t and  the  analysis, within  -  to e x h i b i t i n g a c l e a r preference f o r systemic  dependencia a n a l y s i s  binds the  18  of Southern underdevelopment  and  dependence p o i n t s and  the  systemic  to "both the  19  -  t r a n s n a t i o n a l f u s i o n of c l a s s i n t e r e s t s  s t r u c t u r e of the  international capitalist  t h i s w o r l d - v i e w , "dependency i s equated w i t h a p a r t i c u l a r non-autonomy, s p r i n g i n g from the e c o n o m i c s e c t o r s on  the  one  faced. and  I t has  an  an  internal  t h e i r corresponding  the o t h e r . "  itself  As  in  i s Janus-  fragmentation  n o t e d a b o v e , d e p e n d e n c y t h e o r i s t s a r g u e t h a t few LDCs as  a r e s u l t of North-South trade  Many e x p o n e n t s o f t h e o f Emmanuel, who  dependency model are  to  foreign  the  LDCs i s i n h e r e n t l y u n e q u a l .  The  Imperialism  why  t r a d e b e t w e e n N o r t h and  theory  of value,  bution  to production  In h i s i n f l u e n t i a l  South b e n e f i t s the  Emmanuel p o s i t s t h a t t h e i n the  South i s not  institutional  from the  capitalist  above t h e i r t r u e w o r t h because o f t h e h i g h wages and  of Northern c a p i t a l  " p a i d f o r " w i t h the Moreover, t h i s and  linkages.  surplus  and core  book, Unequal  f o r m e r and  impoverishes  of labor's  political  weakness o f  countries  are  d e v e l o p m e n t b e t w e e n N o r t h and  Southern  labor.  in fact priced  of Northern labor to  from the  even g r e a t e r  South:  the  contri-  obtain  to e x t r a c t p r o f i t s , both of which  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  of  labor  r e f l e c t e d i n the p r i c e s of  extracted, v i a trade,  Exchange:  interesting explanation  "true value"  ability  thesis  countries  the b a s i s o f a modern v e r s i o n o f the M a r x i s t  because of the  Southern imports  investment  advanced c a p i t a l i s t  o f T r a d e , Emmanuel s e t s f o r t h an  R e a s o n i n g on  and  economic b e n e f i t s  i n broad sympathy w i t h the  argues t h a t t r a d e between the  and  exports  on  a c«-• t i v •* i t y . ",.31  accrue t o the  latter.  of  domestic  "Dependency, t h e n ,  anatomy m a n i f e s t i n g  In  dependence  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  economic  wealth  species  lack of interdependence of  h a n d and  e x t e r n a l e c o n o m i c a c t i v i t y on  system."  Southern  are workers.  inequality in  32  -  20  -  Once a c o u n t r y h a s g o t a h e a d . . . 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 p a y f o r i t s h i g h wage l e v e l s t h r o u g h unequal exchange. From t h a t p o i n t o n w a r d , t h e impoverishment 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 While not  a l l dependency t h e o r i s t s are  Emmanuel's a n a l y s i s , t h e y do  all  liberal  nations  its  In f a c t , r e j e c t i o n of the  neo-  doctrine of comparative advantage—which i n s i s t s  that  regardless  each concentrates  with  accept the metaphor o f unequal exchange i n  t h e i r discussions of North-South trade. classical  i n complete agreement  of l e v e l  o f development can  on p r o d u c t i o n  f a c t o r endowments p r o v i d e  and  export  i t with  gain through trade i f  of those commodities i n which  a comparative  (not  absolute)  34 advantage For  — i s a hallmark  Samir Amin, " i f the  of a l l w r i t i n g s i n the  dependencia  tradition.  i n t e r n a t i o n a l d i v i s i o n of labor i s unequal,  the  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 . " W a l l e r s t e i n suggests that trade new  "technology"  the  South without  ties  constitute a crucial part  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 constant  and  Immanuel of  the North t o  costly resort to direct m i l i t a r y  the pillage  action:  I t i s t h e s o c i a l a c h i e v e m e n t o f t h e modern w o r l d . . . to h a v e 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 the f l o w of s u r p l u s . . . from p e r i p h e r y t o the c e n t e r , f r o m 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 superstructure.36 J o h a n G a l t u n g e c h o e s t h i s v i e w w i t h h i s comment t h a t t h e 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 of the  s u p e r i o r i t y of  "mechanisms  "structural  37 rather than 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  that  North-South trade  the  associated  trade)  are  the  exchanges  (and  c e n t r a l means b y w h i c h t h e  from i t s s a t e l l i t e s  and  ideology  North "expropriates  appropriates  i t f o r i t s own  of free  economic  economic  surplus  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  encounters  the 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 structured economies  so as t o p r e v e n t t h e emergence o f mature  Southern  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 o w t h , c r e a t i n g a mass  domestic market ments.  industrial  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  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  a different  set of priorities:  manufactures  p r o m o t i o n o f economic  detrimental to the goals of equality, p a r t i c i p a t i o n , and m a i n t e n a n c e  i n control o f the state apparatus.  of privileged  policies  externally-oriented  at a rapid  T h a t some S o u t h e r n e c o n o m i e s markedly  because  i tis still  countries  h a v e become n e w l y  which  i n d u s t r i a l i z e d and  does n o t , a c c o r d i n g t o  i n v a l i d a t e the dependencia t h e s i s o f unequal  the case that "the i n d u s t r i a l  i s dependent  producers  pace?  increased t h e i r exports o f manufactures  dependency t h e o r i s t s ,  classes  B u t 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  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 a n d h a v e d e v e l o p e d e c o n o m i e s industrializing  highly  s e l f - s u f f i c i e n c y and  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 h a v e become m a j o r  are c l e a r l y  dictates  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  t o N o r t h e r n economies;  n a t i o n a l autonomy;  require-  development  exchange,  o f these  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 existence o f which they are o b l i g e d t o accept." industrial  development  this  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  is externally-induced. international  I n o t h e r words,  capitalist  As dos S a n t o s p u t s i t ,  this  "new p h a s e "  i n the  d i v i s i o n of labor  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 d e g r e e 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 centers . . . which . . . 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 the p a r a s i t i s m t y p i c a l o f the i m p e r i a l i s t powers t o i t s highest l e v e l . ^ Thus t h e vitiating attained the  the  growth o f manufactured e x p o r t s from the  South, f a r  from  dependencia t h e s i s , merely confirms that  imperialism  has  a h i g h e r , and  f o r dos  S a n t o s more e x p l o i t a t i v e , l e v e l .  dependency l i t e r a t u r e , Southern i n d u s t r i a l development i s p o r t r a y e d  as n o n - a u t o n o m o u s " d e p e n d e n t d e v e l o p m e n t " : is  Within  conditioned  e n j o y e d by  by  the  technological  Northern capitalism;  and  i t i s export-oriented;  i t  f i n a n c i a l - c a p i t a l monopolies  i n short,  " i t must i n s e r t i t s e l f  into  41 the  circuit  of  international capitalism."  evolved to the  point  w h e r e t h e y no  E v e n t h o u g h some LDCs h a v e  l o n g e r s i m p l y e x p o r t raw  materials  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 o b t a i n s f o r much o f  the  global  i n dos  capitalism;  S o u t h — t h e y r e m a i n r e l i a n t on Santos' phrase, the  the  and  still  structure  of  "productive system" remains  42 " e s s e n t i a l l y d e t e r m i n e d by a d v a n c e d LDCs " h a v e now industrial capital  capacity.  At  these i n t e r n a t i o n a l r e l a t i o n s . "  within the  same t i m e , t h e  i n t o t h e i r s o c i a l and  International  forces  are  t h e i r b o r d e r s an  therefore  still  of  international  i s increasingly  "an  more  increasingly diversified  penetration  economic l i f e  The  integral part  thorough." of the  . . .  43 political called  and  s o c i a l order."  "NICs") are  The  w o v e n e v e r more t i g h t l y  capitalism,  and  p e r s i s t or,  i n some f o r m u l a t i o n s ,  p o v e r t y , i n e q u a l i t y and  This highly izing  newly-industrializing  pessimistic  i n t o the  LDCs ( t h e  f a b r i c of  so-  international  above a l l non-autonomy c o n t i n u e  to  even worsen.  analysis  of the  experiences of the i n d u s t r i a l -  S o u t h i s c o n f i r m e d f o r d e p e n d e n c y t h e o r i s t s by  the  recent h i s t o r y  of  Brazil,  a c l a s s i c case of export-led  sharp increase  i n the  v o l u m e and  e x p o r t s of manufactures has, to exercise  b u l k of the  technological  The  s o p h i s t i c a t i o n of B r a z i l i a n way  permitted that  independence, since  l o o k o u t w a r d and  p e o p l e go  industrialization.  i t i s a r g u e d , i n no  meaningful national  elements continue to  g r o w t h and  the  privileged  domestic problems that  country class  confront  the  untreated:  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 d e p e n d e n t 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 d e v e l o p m e n t 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 renders a t r u l y n a t i o n a l industry ever less p o s s i b l e , then i t s i m i l a r l y p r e c l u d e s the development o r even the c o n t i n u a n c e of a national i n d u s t r i a l bourgeoisie.44 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  national  i n d u s t r i a l and  portray  a u t o n o m y and the  national  r e s u l t i n g d e v e l o p m e n t as  a greater  scope  c a p i t a l i n t e r e s t s , but  d i s t o r t e d and  for still  l a r g e l y dependent  on  45 the  v i c i s s i t u d e s of  follows  from the  international capitalism.  dependency a n a l y s i s  s u c h " d e v e l o p m e n t " i s b a s e d on  i n t o the  web  a u t o n o m y , s k e w s and  structures,  c o n t i n u e s the  a d v a n c e d and address the  s t a t e s , and  basic  dependency a n a l y s i s briefly  power (see  that  Not  South enjoys s i g n i f i c a n t bargaining  assertion  economic  by  technologically  utterly fails  human n e e d s i n t h e of North-South  examined r e l a t e s t o the  f i g u r e 2).  incorporation  such i t prevents the  process of surplus-appropriation  aspect o f the  Southern bargaining  increased  d i s t o r t s d o m e s t i c s o c i a l and  v a s t p r o b l e m s o f p o v e r t y and  r e l a t i o n s t h a t n e e d s t o be  the  as  c a p i t a l - r i c h center c a p i t a l i s t  A final  that  continued or  international capitalism;  of national  conclusion  of Southern i n d u s t r i a l i z a t i o n i s  simple:  of  Thus, the  LDCs.  economic  question  s u r p r i s i n g l y , the  leverage within  to  the  of  notion world  - 24 capitalist  s y s t e m 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  Given that, dominant  as dos S a n t o s p u t s i t , t h e c a p i t a l i s t  economies  "can expand  writers.  order dictates that  the  a n d 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 (the  dependent  o n e s ) c a n do t h i s  how  c a n one  are  d e t e r m i n e d by t h e dynamics  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?  p o w e r r e s o u r c e p o s s e s s e d b y one Moreover, are  of a t o t a l i t y  Outcomes  a g a i n s t w h i c h any  o r more LDCs p a l e s i n t o  particular  insignificance.  as S a m i r A m i n h a s a r g u e d , a n y " r e f o r m s " w h i c h S o u t h e r n  able to achieve w i l l  maturity of their needs,  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 , "  n o t a u g u r any b a s i c i m p r o v e m e n t i n t h e  governments economic  s o c i e t i e s , n o r p r o m o t e t h e g o a l s o f e q u a l i t y , b a s i c human  and n a t i o n a l  independence.  " e x t e r n a l demand w o u l d  still  This i s because,  i n an o v e r a l l  be t h e m a i n m o t i v e p r o p e l l i n g t h i s  sense, still  47 dependent  type o f development."  economies  o f N o r t h and S o u t h f o r m a " s y s t e m " and a r e c l o s e l y  North-South i n e q u a l i t y  In a s t r u c t u r a l world-view i n which  tutional the of  arrangements.  N o r t h i s dependent  In the g l o b a l u p o n and h a s  the Southern p e r i p h e r y ; In  capitalist  a structural  t h e y a r e two  the dependency a n a l y s i s ,  ments o f t h e c a p i t a l i s t  related,  s i m p l y c a n n o t be r e d u c e d s i g n i f i c a n t l y  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  through  in principles  and  counterpart i n the  to  then, i t i s f o l l y  inequality  plight  to expect the govern-  i n the i n t e r n a t i o n a l d i v i s i o n of labor requires  t h e t y p e s o f changes  of  s i d e s o f t h e same c o i n .  "metropoles" to bargain s e r i o u s l y over  n o t s y s t e m - t r a n s f o r m a t i o n . The  insti-  system, the p r o s p e r i t y  structural  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 tions  the  North w i l l  not—perhaps  posi-  system-maintenance, even  cannot—agree  r e q u i r e d to t a c k l e p o v e r t y , underdevelopment  i n t h e S o u t h f o r t o do s o w o u l d n e c e s s i t a t e a d i r e c t  and  assault  on  - 25  national way  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-  f o r the South t o acquire " 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 d i s e n g a g e m e n t global capitalist the p a r a s i t i c a l fragment  2.  system, f o r i t i s o n l y through such disengagement  l i n k a g e s w i t h the "market" t h a t undermine  t h e S o u t h e r n economies  N o r t h - S o u t h R e l a t i o n s : The The  c a n be s e v e r e d .  Interdependence  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 d y n a m i c s  autonomy  system.  of international  For 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  and w i l l  be e x a m i n e d  who,  u n l i k e t h e dependency w r i t e r s ,  economic so.  exchanges  group  politics relations.  economists  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  as m u t u a l l y b e n e f i c i a l ,  specialization—has  A  identified  consists of l i b e r a l  although not n e c e s s a r i l y  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  academic tical  first  and  structurally  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  The  that  Metaphor  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  below.  f o c u s e d on c h a n g e s  scientists  sphere; these w r i t e r s  international order affords  i n the i n t e r n a t i o n a l  issues.  Finally,  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  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 The  poli-  i n the  and  latitude non-  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  extensive reform of the extant global  examined.  of  suggest that the current "interdependent"  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 economic  equally  i n terms  system i n the c o n t e x t o f growing interdependence, e s p e c i a l l y  economic  the  48  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  and economics  from  advocates  economy and w h i c h s u p p o r t s c u r r e n t  International  Economic  Order w i l l  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 g r o u p s do n o t  be  necessarily  - 26 -  represent d i s t i n c t positions differences i n intellectual i n t h e v i e w s among t h e m .  a l o n g any p a r t i c u l a r  spectrum;  f o c u s may a c 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 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  share c e r t a i n fundamental  assumptions  global p o l i t i c a l  economy w h i c h n e e d  their  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  approaches  t o be k e p t i n m i n d when  them f r o m t h e d e p e n d e n c y t h e o r i s t s . the South can d e r i v e economic participation economic  i n the global  Specifically,  capitalist  system h a s grown i n c r e a s i n g l y  and economic  about t h e  assessing  differentiate  they a l l agree  that  b e n e f i t s and f u r t h e r i t s development  and t h a t , p a r t l y a s a c o n s e q u e n c e political  instead,  order;  through  that the international  interdependent i n the postwar years;  of this,  t h e S o u t h now e n j o y s  significant  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  bargaining"  with the North. Liberal  economic  s c h o l a r s h i p on economic preference f o rmarkets  t h e o r y , w h i c h h a s s t r o n g l y i n f l u e n c e d much development,  exhibits  a well-known  academic  intellectual  " a s more o r l e s s d e s i r a b l e m e c h a n i s m s 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 . "  This market-orientation flows  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 m o s t 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 . as i t s a p p r o a c h t o g l o b a l  economic  issues i s concerned, 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 e s p e c i a l l y under  c o m p e t i t i v e market  conditions.  international  economic  other,  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 comparative advantage, which remains t h e c e n t r a l underlying conventional  Insofar  analysis,  assumption  "It will  pay a  c o u n t r y t o p r o d u c e more o f t h o s e g o o d s i n w h i c h i t i s r e l a t i v e l y more  efficient  and t o e x p o r t these  i n r e t u r n f o r goods i n w h i c h  advantage i s l e a s t . N a t i o n s w i l l in  t h e p r o d u c t i o n o f goods w h i c h  production supply. and  ( o r resources) which  t e n d t o b e " r e l a t i v e l y more  make i n t e n s i v e u s e o f t h o s e are i n r e l a t i v e l y  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  factors of  trade patterns  be s t r o n g l y a f f e c t e d b y  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 , a n d t h i s  original  efficient"  abundant, hence cheap,  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  Heckscher-Ohlin  its . . .  theory of trade predicts.  i s e x a c t l y what t h e modern  I t i s important  R i c a r d i a n d o c t r i n e o f comparative  comparative  t o note both the  a d v a n t a g e and t h e modern  Heckscher-  Ohlin theory stress the fact that a l l countries, regardless o f level o f economic development, stand t o g a i n from  t r a d e and w i l l  usually  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  according t o comparative  if  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  they follow the d i s c i p l i n e  they w i l l  advantage.  e n h a n c e 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  are small c o u n t r i e s without t h e d i v e r s i t y o f indigenous resources , . l a r g e economies Liberal  market,  i f they that  . 51 enjoy.  economists  a r g u e 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  the " r e a l w o r l d " takes p l a c e under c o n d i t i o n s which fail  That i s ,  t o accord w i t h the orthodox  trade i n  i n important  respects  c o m p e t i t i v e m o d e l , i n g e n e r a l t h e LDCs 52  can  still  b e n e f i t tremendously  from  benefits are usually identified. is held, result by engaging lower p r i c e s unavailable  from  i n trade.  trade with the North.  An i n c r e a s e i n n a t i o n a l  Several  such  income w i l l , i t  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 I n a d d i t i o n , consumers and i n d u s t r y w i l l  occasioned gain  f o r i m p o r t s t h a t w o u l d be more c o s t l y o r , i n many c a s e s , i f a n e f f o r t w e r e made t o p r o d u c e them d o m e s t i c a l l y .  through simply  Competition  - 28  i n domestic  markets w i l l  receive a healthy f i l l i p  to i n t e r n a t i o n a l market f o r c e s . industrial abroad  economies w i l l  o f i d e a s and  -  Furthermore,  as a r e s u l t  of  trade links with  exposure  advanced  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 f r o m  t e c h n i c a l knowhow w h i c h  c a n be  a p p l i e d or adapted  to  53 the domestic  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  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 the h e a l t h o f the economy t h r o u g h  the  entire  "linkage" effects:  P r o d u c t i o n o f g o o d s 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 the 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 the export s e c t o r s o - c a l l e d "backward l i n k a g e s . " Moreover the output o f export i n d u s t r i e s u s u a l l y i s not e n t i r e l y exported 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 export 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 domestic c l o t h i n g i n d u s t r y — t h e r e are "forward l i n k a g e s . " 5 4 Because o f t h e i r national  faith  economy w i l l  convinced  i n the 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 h a v e on a c o u n t r y , l i b e r a l  t h a t t h e o p t i m a l p a t h t o d e v e l o p m e n t and  m o s t LDCs r e q u i r e s t h e i r  strategy for f a c i l i t a t i n g  Southern  p a r t i c u l a r relevance f o r the present  study.  this  world market.^  First,  many l i b e r a l  agricultural  (This i s of course  almost  i s of  development  f o r a l a r g e number o f  i n v o l v e s a h e a v y e m p h a s i s on t h e p r o d u c t i o n o f processed  exten-  current policy prescription  export-oriented industrialization  s e m i - m a n u f a c t u r e s and  for  system.^  e c o n o m i c d e v e l o p m e n t t h r o u g h more this  LDCs, and  industrialization  e c o n o m i c t h e o r y seems t o f a v o r a t w o - p r o n g e d  s i v e e x t e r n a l e c o n o m i c l i n k a g e s , and  advocate  inter-  are s t r o n g l y  i n c o r p o r a t i o n i n t o the g l o b a l c a p i t a l i s t  Contemporary l i b e r a l  economists  economists  i n the  manufactures,  commodities f o r export t o  the p r e c i s e opposite of a  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  the  central from  - 29 the c a p i t a l i s t  economic  second p a r t o f t h i s  s y s t e m and " s e l f - r e l i a n t " d e v e l o p m e n t . )  s t r a t e g y f o r Southern development  in Northern trade p o l i c i e s markets  so t h a t t h e y w i l l  ciples .  and i n t h e o p e r a t i o n o f c e r t a i n  for  changes  international  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  H e r e t h e f o c u s i s on m a k i n g  a n d on e x h o r t i n g N o r t h e r n g o v e r n m e n t s barriers that inhibit  calls  The  i n t e r n a t i o n a l m a r k e t s more to eliminate t a r i f f  t h e e x p a n s i o n o f LDC  and  prin-  competitive,  non-tariff  exports of products, especially 57  manufactured  products, i n which they enjoy a comparative  Sometimes i t i s a l s o s u g g e s t e d by e x p o n e n t s t h a t t h e LDCs t h e m s e l v e s o u g h t  advantage.  o f t h i s development  strategy  t o reduce 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 p e r c e i v e d as t h e key t o economic  development.  will  i n South economies, b u t a l s o expand 58  not o n l y promote e f f i c i e n c y  trade opportunities f o r other i n d u s t r i a l i z i n g While l i b e r a l  This approach, i t i s argued,  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 S o u t h 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 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 international  dependence, e s p e c i a l l y economic the i n t e r n a t i o n a l p o l i t i c a l influence  the  LDCs.  economists s t r e s s the e x i s t i n g  have argued t h a t i n c r e a s i n g  was  scientists  ( i n c l u d i n g North-South)  i n t e r d e p e n d e n c e , has  s y s t e m i n ways t h a t may  by  inter-  fundamentally altered enhance t h e  political  o f s m a l l a n d weak s t a t e s , m o s t 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 a d v e n t o f r a p i d spread i n d u s t r i a l i z a t i o n ,  the r e v o l u t i o n i n communications  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  and  wide-  transportation  and o f " m a s s "  politics,  - 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 the inter-  59 national it  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 .  i s argued, have g r e a t l y c o n t r i b u t e d  political their  These  trends,  t o t h e i n c r e a s i n g degree and growing  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 ,  a n d e s p e c i a l l y among  economies. F o r many s c h o l a r s , t h i s m o d e r n 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 h a s  created  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  described  by using  that  t h e c o n c e p t s and c a t e g o r i e s 60  relations analysis."  The b a s i c  analytical  c a n n o t be u n d e r s t o o d o r  of traditional international  assumptions  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 the  s t u d y o f much o f c o n t e m p o r a r y  older " r e a l i s t "  a r e no l o n g e r  international relations.  a p p r o a c h , K e o h a n e a n d Nye a r g u e t h a t  outcomes i n c o n d i t i o n s  traditionally  c h a r a c t e r i z e d by e x t e n s i v e  m u s t make t h e f o l l o w i n g a s s u m p t i o n s :  Contrary to the  i n analyzing  issues  exists;  interests ment.^  influence;  a n d 3) m i l i t a r y  i n the r e a l i s t The m e r i t 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 ,  2) no c l e a r h i e r a r c h y force, the ultimate  world-view, i s not r e a l l y  o f t h e s e "new" a n a l y t i c a l  world p o l i t i c s national  actors  among i n t e r n a t i o n a l a r b i t e r among  conflicting  a plausible policy  assumptions  instru-  f o r the study o f  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 62 relations scholarship.  Many s t u d e n t s o f c o n t e m p o r a r y  political  interdependence the scholar  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 wield considerable  valid for  inter-  N o r t h - S o u t h r e l a t i o n s h a v e e m p l o y e d 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 interdependence. are  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 a n d S o u t h 63 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 " of political  -  31  -  and  e c o n o m i c r e l a t i o n s among them t h a n  and  S o u t h g r o w 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 ,  political  relationship will  evolve  According  t o Haas, the South w i l l  do d e p e n d e n c y w r i t e r s . the nature  of  As  North  their  i n a direction of greater equality. b e n e f i t from the  o f systems change a s s o c i a t e d w i t h r i s i n g  f a c t t h a t the  interdependence  "kinds  . . . imply  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 w e a k e r 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 web  of r e l a t i o n s h i p s increases perceived  sensitivities,  the  vulnerabilities  64  and  opportunity costs f o r the stronger."  tarian prognosis the  i s rooted  international  In p a r t , t h i s  rather  egali-  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  system are  "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  65  time by  i n the world's  history."  M o r e o v e r , the a b i l i t y t o p r e d i c t outcomes  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  complex, n a t i o n a l decision-making 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 K e o h a n e and  Nye  i s decreasing  as  i s s u e s become more  becomes more f r a g m e n t e d , and non-state  a c t o r s g r o w more  the r o l e s important.  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 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 contemporary world p o l i t i c s . e x p l a n a t i o n s o f how  to states' r e l a -  They argue t h a t t h e most  persuasive  i s s u e s are 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  are  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 p o w e r i n a p a r t i c u l a r  issue-area,  on  processes,  and  the on  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 the  economic  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 of i n t e r n a t i o n a l  i n mediating  c l a s h e s o f i n t e r e s t s b e t w e e n n a t i o n s and  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 . ^  institutions  facilitating  their  -  Thus, a c c o r d i n g t o t h i s national p o l i t i c s ,  32  -  increasingly popular interpretation of  inter-  i n t e r d e p e n d e n c e h a s become a b e t t e r " m e t a p h o r " t h a n  dependency f o r u n d e r s t a n d i n g North-South r e l a t i o n s .  "Bargaining  n e g o t i a t i o n s " h a v e r e p l a c e d "command a n d f o r c e " i n t h e i n v e n t o r y  and of 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 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 a d v a n t a g e s virtue of i t s superiority  that accrue to the North  i n " o v e r a l l " power, has  b a r g a i n i n g p o s i t i o n o f t h e LDCs.  issues.  improved the  The more t h e i n t e r n a t i o n a l  by  relative  political  s y s t e m a n d t h e g l o b a l economy c a n 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 , "the  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 . super68 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 e c o n o m i c i n t e r d e p e n d e n c e grows and t h e S o u t h 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 , which " i s e s s e n t i a l l y  a form of interdependent  69 behavior,"  becomes e v e r more c e n t r a l  to North-South r e l a t i o n s .  Southern  b a r g a i n i n g p o s i t i o n s have improved thanks t o such " s y s t e m i c " changes "the  diminishing u t i l i t y  of force i n North-South r e l a t i o n s ,  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  the  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  LDCs a r e a b l e t o i m p r o v e capabilities  their technical,  p o s i t i o n may  intellectual  organizations  I n a d d i t i o n , many and  bureaucratic international  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  be e n h a n c e d t h r o u g h t h e a c q u i s i t i o n o f k n o w l e d g e , as M o r a n  has d e m o n s t r a t e d copper  goals."  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  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 .  growing  l i n k e d to growing w e l f a r e s t a t e  demands, and e n h a n c e d S o u t h e r n c a p a c i t i e s t o u s e i n t e r n a t i o n a l 70 and  as  i n h i s a n a l y s i s o f Chilean p o l i c y toward  corporations.  foreign-owned  - 33 In  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  of  d e p e n d e n c e a n d 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 recent  literature  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  weaker a c t o r s can o f t e n e x p l o i t economic interdependence, be r e d u c e d  t h e i r asymmetric  t h a t such asymmetries  as interdependence  system  suggests  status i n conditions of will  i n any case tend t o  i n c r e a s e s between N o r t h and S o u t h ,  the 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 which  that  and t h a t  i ttakes place are o f 72  critical The  importance  i n a n a l y z i n g North-South  t h i r d group o f non-Marxist  can perhaps  be l a b e l l e d  issues.  students o f North-South  relations  the "global reformers," i n order to d i s t i n g u i s h  them f r o m 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.  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 attempts 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 its  current effort to institute  a New I n t e r n a t i o n a l  the international d i v i s i o n o f labor,  two p r o p o s i t i o n s o f c r i t i c a l that North-South  importance  Economic  to this  study.  First,  order.  they  Second,  economic and p o l i t i c a l  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 ful  current place  a feasible  even  they  power t o  and meaning-  strategy. 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 c o n t e m p o r a r y  t r a d e and economic r e l a t i o n s , The  agree  and h e l p i t t o d e v e l o p ,  international  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  Order.  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  t r a d e can b e n e f i t t h e South  within the context o f a c a p i t a l i s t  to obtain  and i t s i n s t i t u t i o n s and  A l t h o u g h t h e y a r e b y no means s a t i s f i e d w i t h t h e S o u t h ' s in  These  chief target of this  i n c l u d i n g the North-South  critique  global  t r a d e component.  i s n o t , as f o r t h e l i b e r a l  reformers,  -  trade  r e s t r i c t i o n s and  rather  the  notion  to reduce the community.  the  t h a t the  staggering  -  lack of competition  i n c e r t a i n markets,  unregulated market i t s e l f  global  inequality that  will  faces  any  e q u i l i b r i u m which could  equalization of  incomes" i n the  r o l e of technology i n the  world,  73  the  as  international  imply a trend  In l a r g e p a r t  but  o p e r a t e so  A c c o r d i n g to M y r d a l , "Unregulated market f o r c e s  toward reaching  the  34  will  not  toward  an  this  i s due  m o d e r n i n t e r n a t i o n a l economy, w h i c h  work  to receives  74 considerable and  Ansari,  a t t e n t i o n from the the  global reformers.  N o r t h ' s monopoly over t e c h n o l o g y " e x p l a i n s  m a l d i s t r i b u t i o n of benefits  from trade  o f S o u t h e r n f a c t o r endowments o r t h e by  According to  and  the  LDCs " c a n n o t o v e r c o m e t h e  are  not  the  richer  made t o b r i d g e countries."  In g e n e r a l ,  the  the 75  alleged m i s a l l o c a t i o n of by  liberal  technological  gap  that  g l o b a l r e f o r m e r s argue t h a t  "the  that  equality of opportunity"  the pattern  resources Thus,  long  s e p a r a t e s them  against  o f t e n d e n i e d an 76  the  the  analysts.  p r o b l e m o f u n d e r d e v e l o p m e n t as  mechanism i s w e i g h t e d h e a v i l y they are  more o f  i n v e s t m e n t " t h a n do  i n e f f e c t i v e Southern governments s t r e s s e d  Singer  as e f f o r t s from  s o - c a l l e d market  i n t e r e s t s of the  poor nations  i n the  current  and inter-  n a t i o n a l economic order.  The  solutions favored  by  involve  and  the  of e x i s t i n g i n t e r n a t i o n a l  the  c r e a t i o n o f new  economic o r g a n i z a t i o n s weight to the  i n order to provide  the  LDCs w i t h  a kind  of  t h e i r e c o n o m i c d e v e l o p m e n t and  s u c c i n c t l y summarizes the  industrialization.  global reformers' p r e s c r i p t i o n :  view  counter-  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  promote s u f f i c i e n t l y Walleri  strengthening  adherents to t h i s  to  - 35 S i n c e t h e r e i s no w o r l d g o v e r n m e n t 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 p r o b l e m s a r i s i n g f o r t h e periphery states.77 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 d o m i n a t e d b y t h e more  n u m e r o u s LDCs, w o u l d s e e k t o p r o m o t e s u c h automatic gap,  technology  stricter  g l o b a l economic p o l i c i e s  as  t r a n s f e r s t o t h e South t o reduce the t e c h n o l o g i c a l  c o n t r o l s on t h e a c t i v i t i e s  of multinational corporations  (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 the 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 LDCs p r e f e r e n t i a l  tariff  treatment  (GSP) s c h e m e s t h a t g r a n t t h e  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 h a r m LDCs'- e x p o r t It  t o recognize that the various reform proposals put  f o r w a r d b y s u p p o r t e r s o f a New  International  (i.e. capitalist)  Economic Order aim n o t t o  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 S o u t h . that the Northern-dominated  capitalist  e s p e c i a l l y o f course  develop  i f the p r e f e r r e d reforms  continue to evince a b a s i c f a i t h  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  t h e more c l e a r b y e x a m i n i n g ment s t r a t e g y e n u n c i a t e d  betrays  i n t h a t economic  are enacted.  notion a  order,  That t h e g l o b a l  i n the South's a b i l i t y t o  international  economy i s made a l l  t h e i r views 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 -  by t h e dependency s c h o o l .  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 , is highly "idealistic"  Indeed, t h e very  s y s t e m c a n be " r e f o r m e d "  b e l i e f t h a t t h e LDCs c a n b e n e f i t f r o m p a r t i c i p a t i n g  reformers  that  possibilities.  i s important  d e s t r o y t h e market  trade barriers  charges  Mahbub u l . H a q ,  t h a t t h e disengagement  and t h a t t h e S o u t h s t a n d s  a key prescription  t o g a i n much more f r o m  -  36  -  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 f r o m r e v o l u t i o n and  self-reliance.  78  79 Development economists sympathizer  and  will  the  A n s a r i concur  w i t h t h i s view.  w i t h the 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 the  s t r a t e g y as "an system  S i n g e r and  latter  disengagement  e l u s i v e dream," i n a s m u c h as t h e i n t e r n a t i o n a l  continue to exist are not  Another  capitalist  e v e n i f a l a r g e number o f LDCs o p t o u t o f i t  likely  to survive without  e x t e r n a l economic l i n k a g e s  80 i n any  case. Rather  and  t h a n e x p l o i t a t i o n and  interdependence  eminent  r e v o l u t i o n , the metaphors o f b a r g a i n i n g  a r e i n v o k e d b y many g l o b a l r e f o r m e r s .  According to  one  spokesman, i t i s e s s e n t i a l t h a t w h a t e v e r 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 formulate p a r t i s a n p o s i t i o n s . B u t 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 m a j o r 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 a s a w h o l e and w h i c h c a n 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 f r o m t h e r i c h nations.81  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 Frank,  an A m i n , o r a G a l t u n g .  of T h i r d World its term  faith  intellectuals  The  would expect  T h i r d World  concerned  to hear  acceptable to the e n t i r e  w i t h development i s s u e s ,  a structure of interdependence, t o e x i s t b e t w e e n t h e m , and  balance  group  expresses the  longer-  c o u n t r i e s and  international  true that the g l o b a l reformers  a Gunder  F o r u m , an i n f l u e n t i a l  t h a t " i t i s p o s s i b l e to evolve p r o p o s a l s which  i n t e r e s t s of the developed  from  t h e T h i r d W o r l d and . . . a r e 82 community." However, w h i l e i t i s  t e n d t o s e e b o t h N o r t h and  South  t h e y d e p l o r e t h e asymmetry which  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 " toward 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) r e m o v a l o f t h o s e a s p e c t s o f  embedded i n continues  - 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 d e v e l o p m e n t o f t h e S o u t h , a n d b ) w i l l i n g n e s s o n 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 a b o u t a g e n u i n e 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 s u c h 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 international  capitalist  system  g u i s h e s them f r o m d e p e n d e n c y  i spossible  i n t h e c o n t e x t o f an  ( a l b e i t a " r e f o r m e d " one) s h a r p l y  writers.  In c o n n e c t i o n w i t h North-South t r a d e r e l a t i o n 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 n e e d f o r more l i b e r a l developed country markets  distin-  concerning manufactures, and a s s u r e d a c c e s s t o  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;  for  continuous adjustment  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 ;  international  and s u r v e i l l a n c e o v e r t h e u s e o f s a f e g u a r d s b y i n d u s -  trial  control  countries.  of l i b e r a l  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  economists.  B u t t h e g l o b a l r e f o r m e r s go o n t o a d v o c a t e  p r e f e r e n c e s f o r LDCs a n d o t h e r f o r m s a n a t h e m a t o many l i b e r a l s . of " c o l l e c t i v e  is  o f "market  They a l s o a r g u e  self-reliance"  conscious p o l i c y  trading  intervention" that are  i n f a v o r o f a g r e a t e r measure  ( i . e .intra-LDC trade i n manufactures)  as a  choice, i n spite of the fact that exporting t o the North  t y p i c a l l y more p r o f i t a b l e .  Finally,  the global reformers are quick t o  point t o the alleged shortcomings c h a r a c t e r i z i n g arrangements  and f o r t i g h t e r  existing  institutional  a n d s u 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  institution 84  should replace the Northern-dominated A final political  GATT a n d l a r g e l y c o n s u l t a t i v e  UNCTAD.  aspect o f the global reformers' a n a l y s i s o f North-South  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 Southern bargaining  power r a i s e d e a r l i e r .  whole t h r u s t of the v i g o r o u s the p a r t ability o f the  of these scholars and  L i k e the  intellectual  of p o l i t i c a l  bargaining  above, the  g l o b a l reformers argue t h a t the  bargaining  p o w e r and  future.  One  proponent of  "collective bargaining" emerging trade  i n the  from the  i t will  likely  South possesses  perspective discussed  significant  e n j o y e v e n more l e v e r a g e  "poor power" suggests t h a t the  i s enlightening:  "the  union of the poor nations  in  concept  a new  the  of  basic objective of  i s to negotiate  on  work-  students of i n t e r n a t i o n a l interdependence  that  the  advocacy of g l o b a l reforms  p r e s u p p o s e s some s o r t o f f a i t h  potentialities  LDCs.  I t i s of course true that  the  deal  with  85 the  r i c h nations  Not  s u r p r i s i n g l y , t h o s e who  fledgling  global trade  s o l i d a r i t y while The  spread of nuclear  conceive of the  negotiating with  countries  i n nature.  instrument of c o l l e c t i v e  union s t r e s s the  t y p e o f power the  capitalist tical  through the  the  LDCs as  bargaining."  constituting a kind  importance of Southern  Northern  Mahbub u l Haq  to the  political  "employer."^  South enjoys i n n e g o t i a t i n g with  i s , according  global reformers,  the  advanced  largely poli-  notes t h a t demographic t r e n d s ,  the  possible  weapons, the 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 at  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 developed countries  are  likely  r e g i m e s , and  t o need the  of  the  f a c t that  T h i r d World i n the  least "the  future  . . .  87 t o s u s t a i n the point  t o an  system. the  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 , "  augmentation of Southern p o l i t i c a l  This  p o w e r e s s e n t i a l l y r e s t s on  lifestyles  t o l o s e and  are  of the  rich.  I n any  an  power i n t h e i n t e r n a t i o n a l  increasing a b i l i t y  confrontation,  g e n e r a l l y f a r more w i l l i n g  a l l  the  "to  disrupt  r i c h h a v e f a r more  t o come t o a w o r k a b l e  compromise.  -  Thus, w h i l e reformers  they d i f f e r  39  -  in their analytical  appear to share w i t h students  t h a t an  interdependent  states'  capacity to exercise p o l i t i c a l  international  III.  somewhat, t h e  global  of interdependence the  belief  i n t e r n a t i o n a l system h e r a l d s  economic i s s u e s are  a growth i n weaker  i n f l u e n c e o v e r t h e ways i n w h i c h  dealt  with.  Conclusion Different  intellectual  approaches to the  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 m e a n i n g f u l n e g o t i a t i o n s b e t w e e n r i c h and "system" s t i l l  l a r g e l y d o m i n a t e d by  b e n e f i t s f o r the  latter.  the  authors grouped under the dependence" s c h o l a r s among them on  are  concerning  p o o r and  the  f o r m e r can  regarding  North-South  the  scope f o r  extent  a diverse  t h e y do  l o t and  nonetheless  there  i s c e r t a i n l y no of the  s h a r e e n o u g h common s t r a n d s  of a  study.  does not world  order  that perpetuates  countries  t h e i r problems;  b e l i e v e t h a t weaker a c t o r s are b e r e f t o f b a r g a i n i n g international  capitalist  system.  "inter-  consensus  South's general  see  i n e v i t a b l e product of the p r o s p e r i t y o f the  p o r t r a y the n o n - s o c i a l i s t d e v e l o p i n g  capitalist  the  Unlike that of  d e p e n d e n c y 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 d o e s n o t an  school  c a t e g o r i z i n g them u n d e r a s i n g l e  at l e a s t f o r the purposes o f the present  S o u t h as  a  provide  Even though the  or the p r e c i s e nature  political-economic world-view to j u s t i f y  o f the  to which  t h e s e m a t t e r s t h a n do  interdependence r u b r i c .  the need f o r reform  economic a f f l i c t i o n s ,  a n a l y s i s of  I t i s contended here t h a t the dependency  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  label,  foci  as  the  poverty  North;  locked  and  the  does  power w i t h i n  into a not the  - 40  -  E v a l u a t i n g the m e r i t s o f the 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 a b o v e i s n o t an e a s y t a s k . scarcely lodge a claim to perfect the North-South p o l i t i c a l  F o r one t h i n g , t h e a u t h o r c a n  "objectivity"  i n his confrontation  economy l i t e r a t u r e .  A more s e r i o u s  difficulty  d e r i v e s from the f a c t t h a t the conceptual bases o f the dependencia 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 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 w r i t i n g s here grouped under  i n q u i r y , have  and d i s c o v e r whether  one  economy i s " r i g h t " o r  scholarly  definitively  c a n h o p e t o g a i n some i n s i g h t s  i n t o how  In the next chapter, a f a i r l y d e t a i l e d ,  largely  i s provided.  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 :  The  purpose of t h i s  1) What h a v e b e e n t h e m a j o r  2).  How  has  access f o r manufactured  the b a r g a i n i n g proceeded?  this bargaining?  4) How  primary concern w i l l "metaphors"  LDC  priorities  countries  insofar  exports i s concerned?  h a s t h e p o s i t i o n o f t h e LDCs i n w o r l d  i n C h a p t e r Two  for  3) What o u t c o m e s h a v e e v e n t u a t e d f r o m  trade evolved d u r i n g the postwar p e r i o d ? and t r e n d s o u t l i n e d  f o r close  lengthy treatment  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 as t h e i s s u e o f m a r k e t  differ  descriptive  account of North-South b a r g a i n i n g over access t o Northern markets exports of manufactures  they  " m e t a p h o r " m i g h t 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 examination.  little  label.  B u t 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 u p e r i o r " t o o t h e r s , one  analysis,  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  the interdependence  approach to North-South p o l i t i c a l  with  An  i s offered  attempt to analyze the events i n the t h i r d  be t o e v a l u a t e t h e d e p e n d e n c y and  i n the l i g h t of the manufactured  manufactures  c h a p t e r , where a  interdependence  exports case study.  - 41 -  Notes  t o Chapter 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 g r o w i n g s a l i e n c e o f e c o n o m i c 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 C o o p e r , The E c o n o m i c s 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 , 1 9 6 8 ) . 2 T h r e e 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 t h o u g h t on t h e s u b j e c t , w h i c h a l l c o m b i n e 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 R o g e r D. H a n s e n , B e y o n d 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 o n 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 , T h e 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 B o o k s , 1 9 7 7 ) ; and S a m i r 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 R e v i e w P r e s s , 1 9 7 4 ) . 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 o n 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 1 9 7 8 ) : 5 8 7 . 4  Ibid.,  p. 587.  5  Ibid.,  p . 594.  6 I b i d . , 5 9 0 . E x a m p l e s o f 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 h a v e w r i t t e n e x t e n s i v e l y o n 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 , T o w a r d a New I n t e r n a t i o n a l E c o n o m i c O r d e r ( L e x i n g t o n , M a s s . : D. C. H e a t h , 1975); J a g d i s h B h a g w a t i , e d . , T h e New I n t e r n a t i o n a l E c o n o m i c O r d e r ( C a m b r i d g e , M a s s . : MIT P r e s s , 1 9 7 7 ) ; a n d R i c h a r d C o o p e r , "A New I n t e r n a t i o n a l E c o n o m i c 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 , n o . 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 w o u l d f a l l u n d e r 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 : W o r l d 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 , 1 9 7 6 ) ; a n d H a n s e n . 7  W a l l e r i , p. 595.  8 C o o p e r , "A New I n t e r n a t i o n a l E c o n o m i c H a n s e n , c h . 7. 9 W a l l e r i , pp. 596-97. chapter.  See t h e d i s c u s s i o n  10- . N o r t h - S o u t h : A Programme f o r S u r v i v a l 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  Order f o r Mutual Gain."  Also,  i n s e c t i o n one o f t h e n e x t  (London: Pan Books,  1980).  W a l l e r i , p. 606.  12 R o b e r t C o x , " I d e o l o g i e s a n d t h e New I n t e r n a t i o n a l E c o n o m i c O r d e r : R e f l e c t i o n s o n Some R e c e n t 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  Tucker, ch.  15  C o x , p.  -  1.  287.  16. See Haq's m a j o r w o r k 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 : Choices f o r the T h i r d World (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 , 1 9 7 6 ) , e s p e c i a l l y c h s . 10 a n d 1 1 . 17 29  Robert G i l p i n , "Three Models ( W i n t e r 1 9 7 5 ) : 38-9.  of the Future." International  Organization  18 T h a t 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 e c o n o m i c s y s t e m n o n e 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 c a n g a i n a g r e a t d e a l f r o m p a r t i c i p a t i o n i n t h a t s y s t e m 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 m a j o r m e r c a n t i l i s t ( o r e c o n o m i c n a t i o n a l i s t ) w r i t i n g s h a v e 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 states. In the e a r l y 19th 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 advocated p o l i c i e s t o f o s t e r domestic i n d u s t r i e s i n the then "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 the e s t a b l i s h m e n t o f t h e postwar l i b e r a l economic system t o America's p o l i t i c a l a n d m i l i t a r y hegemony, a n d t h e d e c l i n e o f t h a t s y s t e m t o t h e e r o s i o n o f t h a t American power. See D a v i d C a l l e o a n d B e n j a m i n R o w l a n d , A m e r i c a i n t h e W o r l d 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 b y W a l l e r i a n d C o x , 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 c a n be s a i d t o e m p l o y a m e r c a n t i l i s t f r a m e w o r k 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 , a n d 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 o m o n e 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 a s a w h o l e , 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 g r o u p s 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 b e t w e e n 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 . T h u s , 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 a n d many r e f o r m e r s who f a v o r some d e g r e e o f m a r k e t 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 g r o u p e d 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 tend t o share a b e l i e f i n the 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. It i s primarily this 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 " ) dependencia colleagues. 21 See J a m e s C a p o r a s o , " I n t r o d u c t i o n : D e p e n d e n c e a n d D e p e n d e n c y 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 a n d 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 1 9 7 8 ) : 1-12, 1 3 - 4 4 . 22  Caporaso,  " D e p e n d e n c e , D e p e n d e n c y a n d P o w e r , " p.  18.  - 43  23  Caporaso,  " I n t r o d u c t i o n , " p.  -  4.  24 I b i d . , p . 1. A very s i m i l a r dichotomy i n the North-South 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 , " D e p e n d e n c e , D e p e n d e n c y and P o w e r , " p. 3 3 . 25 The b a s i c L a t i n A m e r i c a n d e p e n d e n c y w o r k s c o n s i d e r e d h e r e a r e T. d o s 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 E c o n o m i c 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 E c o n o m i c A s s o c i a t i o n , 60 (May 1 9 7 0 ) : 2 3 1 - 3 6 ; A n d r e G u n d e r F r a n k , D e v e l o p m e n t a n d U n d e r d e v e l o p m e n t 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 R e v i e w P r e s s , 1 9 6 8 ) ; F r a n k , L a t i n A m e r i c a : U n d e r d e v e l o p m e n t 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 , 1 9 6 9 ) ; F r a n k , C a p i t a l i s m and U n d e r d e v e l o p m e n t 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 a n d B r a z i l (New Y o r k : M o n t h l y R e v i e w P r e s s , 1 9 6 7 ) ; F r a n k , James D. C o c k c r o f t a n d D a l e L. J o h n s o n , Dependence and Underd e v e l o p m e n t : 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 : D o u b l e d a y , 1 9 7 2 ) ; F e r n a n d o 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 D e v e l o p m e n t : T h e o r e t i c a l a n d 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 Stepan, ed., A u t h o r i t a r i a n B r a z i l (New H a v e n : Y a l e U n i v e r s i t y P r e s s , 1 9 7 3 ) ; J u l i o C o t l e r and R i c h a r d F a g e n , e d s . , L a t i n A m e r i c a a n d t h e U n i t e d S t a t e s : The C h a n g i n g 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 D e v e l o p m e n t : 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 , a n d L o c a l C a p i t a l i n Brazil ( 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 C a r d o s o and E n z o F a l e t t o , D e p e n d e n c y a n d D e v e l o p m e n t 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 h a v e w r i t t e n a b o u t 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 f r a m e w o r k i n d o i n g s o i n c l u d e S a m i r A m i n , 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 R e v i e w P r e s s , 1 9 7 4 ) ; A m i n , " S e l f - R e l i a n c e a n d t h e New I n t e r n a t i o n a l E c o n o m i c O r d e r , " M o n t h l y R e v i e w 29 ( J u l y - A u g u s t 1 9 7 7 ) : 8-18; A Emmanuel, U n e q u a l E x c h a n g e : A S t u d y o f t h e I m p e r i a l i s m o f T r a d e (New Y o r k : M o n t h l y R e v i e w P r e s s , 1 9 7 2 ) ; R i c h a r d F a g e n , " E q u i t y i n t h e South i n the Context o f North-South R e l a t i o n s , " i n A l b e r t F i s h l o w et a l . , R i c h N a t i o n s a n d P o o r N a t i o n s i n t h e W o r l d 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 , 1 9 7 8 ) ; F a g e n , "A F u n n y T h i n g H a p p e n e d on t h e Way t o t h e M a r k e t : T h o u g h t s on E x t e n d i n g D e p e n d e n c y 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 1 9 7 8 ) : 2 8 7 - 3 0 0 ; J o h a n 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 a n d W o r l d O r d e r (San F r a n c i s c o : F r e e m a n , 1 9 7 9 ) ; Immanuel W a l l e r s t e i n , The M o d e r n W o r l d S y s t e m : C a p i t a l i s t A g r i c u l t u r e a n d t h e O r i g i n s o f t h e E u r o p e a n W o r l d - E c o n o m y 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 : A c a d e m i c P r e s s , 1 9 7 4 ) ; W a l l e r s t e i n , " D e p e n d e n c e 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 W o r l d Economy," A f r i c a n S t u d i e s R e v i e w 17 ( A p r i l 1 9 7 4 ) : 2-27; W a l l e r s t e i n , "The R i s e a n d 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 a n d S o c i e t y 16 ( S e p t e m b e r 1 9 7 4 ) : 387-415.  - 44 -  27 28 and  W a l l e r i , p. 611. Frank, " I n t r o d u c t i o n , " i n Frank, Cockcroft Underdevelopment, p p t - x - x i .  and J o h n s o n , Dependence  29 G e o r g e L u k a c s , "The M a r x i s m o f R o s a L u x e m b o u r g , " 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 ( L o n d o n : M e r l i n P r e s s , 1 9 6 8 ) , p . 2 7 ; c i t e d i n W a l l e r s t e i n , "The R i s e a n d F u t u r e D e m i s e , " p . 3 8 7 . 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 w o r k s c i t e d i n f n . 25 a n d i n t h e w o r k o f A m i n a n d F a g e n . W a l l e r s t e i n a n d G a l t u n g h a v e 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 , a n d h a v e 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 w h o l e . 31  C a p o r a s o , "Dependence, Dependency and Power," pp. 4 1 , 23.  32  Emmanuel, p p . 60-64 and 7 6 - 8 0 .  33  I b i d . , p. 13.  34 S e e 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 E c o n o m i c s (Homewood, 1 1 1 . : I r w i n , 1 9 7 3 ) , p p . 30-35 f o r a c o n v e n t i o n a l exposition. 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 M o d e r n W o r l d S y s t e m , p p .  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 , "  38  Frank, C a p i t a l i s m  39  Dos S a n t o s , "The S t r u c t u r e  15-16. pp.  163-64.  and U n d e r d e v e l o p m e n t i n L a t i n A m e r i c a , p.  9.  o f Dependence," p. 233.  40 Dos S a n t o s , "The C r i s i s o f C o n t e m p o r a r y 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 1 9 7 6 ) : 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  43  E v a n s , p.  o f Dependence," p.  234.  9.  44 F r a n k , C a p i t a l i s m and U n d e r d e v e l o p m e n t i n L a t i n A m e r i c a , p. 214; e m p h a s i s 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, passim.  46  Dos S a n t o s , "The S t r u c t u r e  47  Amin, " S e l f - R e l i a n c e " pp.  o f Dependence," p. 231. 13-14.  - 45 -  48 Advocacy o f disengagement i s widespread i n t h e dependencia 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 b y 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 , p p . 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 South 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. S e e t h e e x c h a n g e b e t w e e n Emmanuel a n d 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 C o x . 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 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 1 9 7 5 ) : 2 1 3 . 50  Component,'  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 1 1 1 . : I r w i n , 1 9 7 5 ) , c h . 2. 52  See i b i d . ,  53  I b i d . , pp. 429-30.  54  I b i d . , p. 430.  (Homewood,  c h . 5, a n d p p . 4 2 7 - 3 5 .  55 T h i s i s n o t e d b y W a l l e r i , p . 5 9 5 . Some o f t h e m a i n l i b e r a l e c o n o m i c 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. J o h n s o n , E c o n o m i c P o l i c i e s T o w a r d t h e D e v e l o p i n g C o u n t r i e s ( W a s h i n g t o n : B r o o k i n g s , 1 9 6 7 ) ; H o l l i s B. C h e n e r y , " T a r g e t s f o r D e v e l o p m e n t , " i n B a r b a r a W a r d , e d . , T h e W i d e n i n g Gap (New Y o r k : Columbia 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 a n d T r a d e T r e n d s : Some I s s u e s f o r t h e 1 9 7 0 s , " i n H u g h e s , e d . , 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 Hopkins 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 1 9 7 0 s , " W o r l d P o l i t i c s 24 ( J a n u a r y 1 9 7 2 ) : 1 5 9 - 8 1 ; C o o p e r "A New I n t e r n a t i o n a l E c o n o m i c 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 T r a d e i n E c o n o m i c D e v e l o p m e n t , " i n R i c h a r d G a r d n e r a n d 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 , 1 9 6 8 ) ; C h a r l e s R. F r a n k , F o r e i g n Trade and Domestic A i d (Washington: B r o o k i n g s , 1977); and Donald K e e s 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 a n d E c o n o m i c D e v e l o p m e n t , " E c o n o m i c 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 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 a n d a n i n c r e a s e i n Southern e x p o r t s o f manufactures and semi-manufactures 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 World E x p o r t s o f Manufactures," i n W i l l i a m T y l e r , e d . , 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 E c o n o m i c O r d e r ( L e x i n g t o n , M a s s . : D. C. H e a t h , 1 9 7 7 ) ; 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 F r o m D e v e l o p i n g Countries (New Y o r k : P r a e g e r , 1 9 7 6 ) , c h . 1; F i s h l o w , p p . 2 6 - 3 2 ; B e l a 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 , " American Economic Review 61 (May 1 9 7 1 ) : 1 7 8 - 8 7 ; a n d 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 a n d J a n T u m l i r , A d j u s t m e n t , Trade and Growth i n D e v e 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 A g r e e m e n t on T a r i f f s n o . 6, S e p t e m b e r 1 9 7 8 ) .  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  Trade,  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 n e e d t o make m a r k e t s more c o m p e t i t i v e a n d 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 f r o m 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 Bhagwati, "Market D i s r u p t i o n , E x p o r t Market D i s r u p t i o n , C o m p e n s a t i o n , a n d GATT R e f o r m , " i n B h a g w a t i , e d . , The New I n t e r n a t i o n a l E c o n o m i c O r d e r ; G. K. H e l l e i n e r , " W o r l d M a r k e t I m p e r f e c t i o n s a n d 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 E c o n o m i c O r d e r (New Y o r k : P r a e g e r , 1 9 7 9 ) ; a n d Ahmad. Among t h o s e who s t r e s s t h e n e e d 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 a n d 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 a n d c o n c l u s i o n ; Ahmad; F i s h l o w ; a n d B h a g w a t i . 58 See 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 , " p p . 1 8 0 - 9 1 ; 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 T r a d e 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 D e v e l o p m e n t C e n t e r , 1 9 7 0 ) . 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  view.  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 1 9 7 8 ) : 5 2 0 . 61 R o b e r t 0. K e o h a n e a n d J o s e p h S. N y e , P o w e r a n d I n t e r d e p e n d e n c e : W o r l d 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, 1 9 7 7 ) , pp. 24-28. This s t u d y h a s h a d 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 national political system. 62 F o r e x a m p l e , M o r s e , c h . 1; S t a n l e y H o f f m a n n , " N o t e s on t h e E l u s i v e n e s s o f M o d e r n P o w e r , " 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) : 1 8 3 - 2 0 6 ; 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 A p p r o a c h (Sherman Oaks: A l f r e d , 1 9 7 9 ) . 63  H o l s t i , p.  523.  64 E r n s t Haas, " I s T h e r e 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 1 9 7 5 ) : 8 6 0 . 65 W i l l i a m P. B u n d y , " E l e m e n t s ( O c t o b e r 1 9 7 7 ) : 2. 66  Keohane and Nye, pp.  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  42-57.  67 W. H o w a r d 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 C h a n g e : 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 a n d G. A d l e r K a r l s s o n , R e d u c i n g 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 , 1 9 7 8 ) , p p . 2 3 - 2 4 .  - 47 -  68  Oran Young, " I n t e r d e p e n d e n c e s i n World P o l i t i c s , "  J o u r n a l 24  (Autumn 1 9 6 9 ) :  69  M o r s e , p.  70  Hansen, p.  International  748.  123. 284.  71 T h e o d o r e M o r a n , 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 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  Ibid.,  c o n c l u s i o n ; Hansen, pp.  and Nye, pp.  283-87; Morse, pp.  140-41;  of  Keohane  29-37.  73 G. M y r d a l , The C h a l l e n g e o f W o r l d P o v e r t y (New Y o r k : V i n t a g e B o o k s , 1 9 7 0 ) , p . 2 7 9 ; 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 o n 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 Session o f the U n i t e d N a t i o n s General 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 b e made: To f o r m u l a t e a n i n t e r n a t i o n a l c o d e 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 countries; To g i v e a c c e s s on i m p r o v e d t e r m s t o m o d e r n t e c h n o l o g y a n d t o a d a p t 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 e c o n o m i c , 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 d e v e l o p m 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 e x p a n d 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 f r o m 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 creation of suitable indigenous technology; To a d a p t 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 of the 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 E c o n o m i c O r d e r (New Y o r k : P e r m a g o n P r e s s , 1 9 8 0 ) , p . 113. 75 Hans S i n g e r a n d J a v e d A n s a r i , R i c h a n d P o o r C o u n t r i e s and Unwin, 1 9 7 7 ) , pp. 38, 40. 76  Haq,  p.  77  W a l l e r i , p.  Allen  142. 600.  78 Haq, p p . 1 4 2 - 4 3 ; a n d a l s o H a q , T h e T h i r d W o r l d a n d t h e Economic Order (Washington: Overseas Development I n s t i t u t e , pp. 52-53. 79  (London:  S i n g e r and A n s a r i , pp.  57-58.  International 1976),  - 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 a n d C o n s t a n t i n e V a i t s o s , e d s . , B e y o n d D e p e n d e n c y : The D e v e l o p i n g W o r l d S p e a k s Out (New Y o r k : P r a e g e r , 1 9 7 5 ) , p p . 4 1 - 4 2 . 81  H a q , The T h i r d  W o r l d , pp.  52-53.  82 The T h i r d W o r l d F o r u m , S p e c i a l T a s k 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 E c o n o m i c O r d e r (New Y o r k : n.p. S e p t . - O c t . 1 9 7 5 ) ; c i t e d i n H a q , The P o v e r t y C u r t a i n , p . 148. 83 S a m u e l L. P a r m a r , " S e l f - R e l i a n t D e v e l o p m e n t W o r l d , " i n E r b a n d V a i t s o s , p . 17. 84  N o r t h - S o u t h , c h . 11.  85  H a q , The P o v e r t y C u r t a i n , p .  86  I b i d . , p.  87  I b i d . , pp.  88  I b i d . , p. 179; N o r t h - S o u t h , p.  181.  181. 172-73. 267.  i n an  'Interdependent'  r .49  -  CHAPTER THE  I.  STRUGGLE FOR  chapter,  the  t h e i r p o s i t i o n i n world primary focus  place  will  efforts  of the  and  Trade  be  on  the n e g o t i a t i o n s  (GATT) a n d ,  on T r a d e and  Development  particularly  empirical data  goods, w i l l proceeds.  be  provided  (UNCTAD). on  as t h e  industrialization  have p r o v e d q u i t e i n f l u e n t i a l makers at v a r i o u s exports  will  The brief  be  The  1964,  and  described bargaining  the United  LDCs' p r o d u c t i o n  and  and  outlook  establishment  o f GATT and  D u r i n g t h i s p e r i o d , few significant  the  manufactured and  bargaining  manufactured  An  initial  j u s t before  and  with  the b i r t h  quite  the  o f UNCTAD.  LDCs w e r e 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  s c a l e , because of both the  o f S o u t h e r n e c o n o m i e s and  i n d u s t r i a l production  information,  of T h i r d World p o l i c y -  e a r l y postwar p e r i o d , beginning  e n d i n g i n 1963,  Conference  time.  d i s c u s s i o n below proceeds c h r o n o l o g i c a l l y . with  Agreement  industrialization—that  t o the whole i s s u e o f  appropriate  General  "orthodoxies"--import-  export-oriented  times with respect  section deals  of  d i s c u s s i o n of the n e g o t i a t i o n s economic  detail.  t h a t have t a k e n  Nations  export  improve  i n some  necessary background  i n shaping the  o f f e r e d at the  be  countries to  s e t t i n g s - - b a s i c a l l y the  since  B r i e f d e s c r i p t i o n s o f two  substitution  developing  manufactures trade w i l l  in international institutional  on T a r i f f s  tic  MARKET ACCESS  Introduction In t h i s  The  TWO  the  lack of t e c h n i c a l maturity  characteris-  f a c t that those countries capable  t e n d e d f o r t h e most p a r t  to adhere t o the  any  of  doctrine  of  - 50 -  inward to  looking, import-substitution  the markets o f Northern  industrialization.  capitalist  states f o rSouthern  thus not a major t o p i c o f n e g o t i a t i o n s at t h i s In  t h e second  section, the efforts  rules  relations  are discussed.  manufactures  was  time.  o f t h e LDCs t o e n h a n c e  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 trade i n manufactures sponsored  The i s s u e o f a c c e s s  by changing  and norms t h a t h a d h i t h e r t o p r e v a i l e d  their the Northern-  i n international  trade  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  which  t i m e m a j o r 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 UNCTAD. World  trade relations  T h i s decade w i t n e s s e d a c r u c i a l  g o v e r n m e n t s t o t h e w o r l d economy.  o c c u r r e d i n b o t h GATT a n d  change i n t h e approach  of  g o v e r n m e n t s , a n d f o r many c o u n t r i e s a b e l i e f  manufactured  espousal o f t h i s d o c t r i n e by N o r t h e r n  1960s and e a r l y  The and  rising  and g e n e r a l  socio-  e c o n o m i s t s ) . Rapid growth  i n the  e x p o r t s was r e g i s t e r e d i n  1970s.  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  t h e subsequent  global  r e c e s s i o n h a d an e s p e c i a l l y  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  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  The t h i r d  section w i l l  severe  impact on  exports o f manufactures  to  t o choke o f f g r e a t e r access t o N o r t h e r n  markets f o r c e r t a i n products i n which advantage.  role  (thanks i n p a r t t o t h e e n t h u s i a s -  v o l u m e , v a l u e a n d d i v e r s i t y o f LDC m a n u f a c t u r e d the l a t e  b y most  i n the c r i t i c a l  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  e c o n o m i c p r o g r e s s became t h e new o r t h o d o x y tic  Third  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 d o w n g r a d e d i n i m p o r t a n c e Southern  o f most  many LDCs e n j o y e d  a global  comparative  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  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 a n d d i s c u s s LDCs' e f f o r t s  salient 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 f r o m t h i s u n f a v o r a b l e t r e n d . the  South's p r o p o s a l s f o r g l o b a l economic  Economic  O r d e r , which were e x h a u s t i v e l y d i s c u s s 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 the  r e f o r m s a n d a New  i s s u e o f LDCs A final  manufactured  In addition,  International  i n UNCTAD a n d o t h e r U n i t e d  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  exports.  i n t r o d u c t o r y p o i n t concerns t h e d e f i n i t i o n a l problems  that  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 s u c h a s " m a n 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.  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 " c a n be l o c a t e d  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 The  degree o f p r o c e s s i n g which a commodity undergoes  b u t s u c h a m e a s u r e must be c h o s e n  i n a necessarily  economic  and e n g i n e e r i n g p r o d u c t s , i r o n  consumer d u r a b l e s , and t r a n s p o r t a t i o n products f a l l  within  Trade C l a s s i f i c a t i o n as m a n u f a c t u r e s  (SITC).  criterion,  a r b i t r a r y way.  Broadly  a r e c l o t h i n g and  and s t e e l , c h e m i c a l s ,  and v e h i c l e s . " ^  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  These  International  I n i t s r e c e n t p u b l i c a t i o n s , GATT h a s c l a s s i f i e d  a l lproducts f a l l i n g  non-ferrous metals  equipment  i n the  organizations.  i sthe basic  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 t e x t i l e s , machinery  Unfortunately,  (SITC 6 8 ) .  w i t h i n S I T C s e c t i o n s 5-8, i n c l u d i n g  Although adoption of t h i s  definition  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 a n d m e t a l s a r e i n c l u d e d a s m a n u f a c t u r e s , it  d o e s seem t o b e a more p l a u s i b l e d e f i n i t i o n  UNCTAD, w h i c h i n c l u d e s c e r t a i n  than t h a t o f t e n employed  by  crude 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  agricultural  p r o d u c t s as m a n u f a c t u r e s .  definition will the  be used  i n this  study.  f o l l o w i n g broad product categories  manufactured  exports:^  T h e more r e s t r i c t i v e Recent  GATT  GATT s t u d i e s h a v e  identified  a n d 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  -  Table  1:  -  52  Manufactured  A  non-ferrous  B  iron  C  chemicals:  and  Categories  metals  steel  D  consumer goods  E  plastics  F  wood s e m i - m a n u f a c t u r e s and  G  other  H  engineering  I  paper  semi-manufactures products:  agricultural/industrial/machinery  J  machine p a r t s  K  office/telecommunications  L  power-generating  M  other engineering  N  road 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  household textiles  R  clothing  S  o t h e r consumer goods  effort will  classificatory  scheme w h e n e v e r p o s s i b l e .  II  I m p o r t - S u b s t i t u t i o n and  equipment  machinery products  appliances  Q  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  Phase I :  Export  be made t o u s e  North-South  this  Trade R e l a t i o n s  Introduction Writing  i n 1949,  the  influential  L a t i n American economist Raul  asserted that f o r the underdeveloped  w o r l d , " I n d u s t r i a l i z a t i o n has  t h e m o s t i m p o r t a n t means o f / e c o n o m i c j  7  poor c o u n t r i e s could not  rely  expansion."  on t h e e x p a n s i o n  Prebisch become  Prebisch believed that  of exports of  primary  - 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 Because  of the p r i c e  f u t u r e economic  instability  g r o w t h and  characteristic  development.  of i n t e r n a t i o n a l primary  c o m m o d i t y 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 g r o w t h o f commodities were e x t r e m e l y l i m i t e d , material  and t h e i n h e r e n t  potential  inability  of  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 a r g u e d t h a t t h e p r o d u c t i o n m a n u f a c t u r e s h a d t o r e p l a c e t h e e x p o r t i n g o f c o m m o d i t i e s as t h e  raw  of  central 4  economic  activity  The  i n countries  s e e k i n g t o develop mature  type of i n d u s t r i a l i z a t i o n  p r a c t i s e d by m o s t i n d u s t r i a l i z i n g  a d v o c a t e d by P r e b i s c h and LDCs i n t h e 1 9 5 0 s was  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 tion; that  interest  i n m a n u f a c t u r e d e x p o r t s was  First,  toward  minimal.  Hirschman has  import-substitution  advanced  and backward  i d e a s about t h e i n t e r n a t i o n a l countries  ..."  The  led c e r t a i n underdeveloped countries to e x p l o i t  t h e i r own  produce i n d u s t r i a l  the c r i t i c a l  and consumer goods.  conserve scarce f o r e i g n  exchange  impetus t o r e p l a c e f o r e i g n w i t h amount o f n a t u r a l  Second,  need  crisis  need  to  to  structural  indigenous i n d u s t r i a l production.  Third,  import s u b s t i t u t i o n occurred " i n response to i n several  " 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  of external  division  capacities  f e l t b y LDCs p r o v i d e d a s e c o n d ,  t h e g r o w t h o f d o m e s t i c m a r k e t s , " as incomes a level  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 w a r t i m e c o n d i t i o n s and economic  a certain  suggested  t h e t w o W o r l d Wars a n d t h e G r e a t D e p r e s s i o n  "acceptance of t r a d i t i o n a l  o f l a b o r between  oriented  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  e a r l y postwar period. undermined  actually  goods w i t h d o m e s t i c p r o d u c -  four "impulses" contributed to the p o p u l a r i t y of  industrialization  economies.  7  countries  profitable  shocks or governmental i n t e r v e n t i o n . "  attained  . . . without the  Finally,  and most  - 54  importantly,  -  import-substitution industrialization  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 . . . b y 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 w i d e 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 a s 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 of s t a t e - o w n e d i n d u s t r i e s . . . .5 In the political  late  1 9 4 0 s and  independence favored  d i c a t e d on  the  assumption that  industrialization developing given  e a r l y 1950s, v i r t u a l l y  and  their  economic development p o l i c i e s i m p o r t s u b s t i t u t i o n was  growth.^  c o u n t r i e s had  However, by  decided  that  e c o n o m i c p o s i t i o n and  goals;  will  be  discussed  industrialization later  that the vast m a j o r i t y world"  of the  regard  to their  orientation 1946  late  in this  late  and  by  the  late  1960s, a  important  c o n s t i t u t i n g the  The  Creation  order  transition noted  inward-looking Not  focus  in  surprisingly, this  approach to the n e g o t i a t i o n s  launched  order  based  in on  trade.  o f GATT  During the officials  new  "underdeveloped  aimed at 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 doctrine of free  of  inappropriate  i t n e e d o n l y be  future industrialization potential.  the  to  1950s a number  This  F o r now,  1940s e x h i b i t e d a m a n i f e s t l y  s t r o n g l y shaped t h e i r  route  pre-  LDCs s t r e s s e d t h e s u p e r i o r i t y  strategies.  chapter.  of countries  the  the  enjoyed  t h a t were  i m p o r t - s u b s t i t u t i o n was  o r t h o d o x y e m b r a c e d by many i n d u s t r i a l i z i n g of export-oriented  a l l LDCs w h i c h  l a t t e r p h a s e o f W o r l d War  d e v e l o p e d an  b a s e d on  ambitious  I I , United  scheme t o c o n s t r u c t  States  government  a postwar g l o b a l  the p r i n c i p l e s of 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  trade  - 55  r e d u c t i o n s , and liberal tion, be  the  outlawing  -  of q u a n t i t a t i v e r e s t r i c t i o n s  t r a d e o r d e r w o u l d be p r e s i d e d o v e r  t o be  c a l l e d the  by  a new  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  w e r e b a s e d on b i l a t e r a l  wartime d i s c u s s i o n s h e l d w i t h the  s i g n e d by  o f W o r l d T r a d e and  53  and  the  end  r e s u l t was  c o u n t r i e s i n M a r c h 1948. c o n s i s t i n g of nine  chapters  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 t o r e g u l a t e were t h e use  practices,  C h a r t e r was and  106  British.  From  a  and  countries  f o r the  ITO,  comprehensive  articles.  Included  of n a t i o n a l governments which the  of trade b a r r i e r s , r e s t r i c t i v e  commodity p o l i c i e s  U.S.  Employment, w h i c h  the Havana C h a r t e r The  would  the  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  document i n d e e d ,  was  organiza-  I n 1945,  f o r Expansion  were u n d e r t a k e n ,  This  (ITO), which  published i t s Proposals  t o 1948,  trade.  international  a s p e c i a l i z e d agency of the proposed U n i t e d N a t i o n s .  1946  on  the n e g o t i a t i o n of  ITO  business  intergovernmental 7  c o m m o d i t y a g r e e m e n t s , and For  stillborn.  ratified  by  the United  A l l t h a t remained a f t e r years  t o be  as b e i n g  conducted under the  been h e l d at the u r g i n g  S t a t e s , and  ment on T a r i f f s n e g o t i a t e d by  i t expired. and  Trade  the  o f n e g o t i a t i o n s was  the  first  ITO  an  auspices  of the  ITO."  of United States o f f i c i a l s  The  r e s u l t s were c o d i f i e d  most o f t h e  such  conference take  tariff-cutting i n a General  (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  t h e p a r t i c i p a n t s and  to  was  conference  This  anxious  here,  October  o f a number o f 9  advantage of the 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 authority before  d e t a i n us  to record the r e s u l t s of a t a r i f f  e n v i s i o n e d at the time  conferences had  not  " t r a d e agreement d e s i g n e d  t h a t was  arrangements.  a v a r i e t y of r a t h e r p e c u l i a r reasons which need not  t h e H a v a n a C h a r t e r was  1947  trade bargaining  Agree-  concessions  commercial p o l i c y p r o v i s i o n s  - 56 -  later  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  assure  that the t a r i f f  concessions  other trade measures."^  . . . recorded  Through t h i s  would n o t be u n d e r c u t  strange t u r n o f events  " 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 the  liberal The  GATT  t h a t was t h e b a s i s f o r  t r a d e order 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 .  underdeveloped  countries actually  constituted a majority atthe  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 dealt  by  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 .  American c o u n t r i e s and I n d i a , underdeveloped  a chapter  that  L e d by t h e L a t i n  countries attacked the notion  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 o u g h t t o be t r e a t e d a l i k e . "They o p p o s e d t h e c o m m i t m e n t t o n e g o t i a t e o n t a r i f f s prior on  _ITG_7 a p p r o v a l b e f o r e  import  interest  i nprotecting their  bound i n p r e v i o u s and  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 a s t h e b a n  q u o t a s and o t h e r r e s t r i c t i v e measures.""^  base, t h e underdeveloped  and t h e need t o o b t a i n  f l e d g l i n g domestic  countries insisted  Because o f t h e i r  industrial  keen  and m a n u f a c t u r i n g  on t h e i r r i g h t t o r a i s e  tariffs  agreements and t o u s e 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  o t h e r n o n - t a r i f f measures i n accordance 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  strategies.  Although  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 countries failed Similarly,  t o secure  exceptions  acceptance  of the principle  latitude  countries  i n the use o f trade b a r r i e r s than  underdeveloped  of special  t h e commercial p o l i c y p r o v i s i o n s i n s e r t e d  A g r e e m e n t 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 greater  f o r LDCs, t h e  treatment.  i n t o t h e General significantly  enjoyed  b y 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  countries  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  industrial  from t h e general  - 57 -  ban  on q u o t a s b e c a u s e t h e s e w e r e 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  o p p o s e d t h e a r g u m e n t 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 n o n industrial  country.  T h e Cuban d e l e g a t e ,  referring to industrial  approach t o " s p e c i a l cases,", p r o p o s e d t h a t t r i c t i o n s on a g r i c u l t u r a l  "where t h e y t a l k  or fisheries products;  we s i m p l y  countries'  o f import  res-  w a n t t o a d d one  13 word, t h a t Not the  i s , to include  only  . . . industrial  products."  d i d the underdeveloped countries  fail  to significantly  t e x t o f t h e General Agreement, b u t they a l s o s u f f e r e d from t h e f a c 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  economic development o r commodity agreements, t h e two i s s u e s c o n c e r n e d them. not  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  t o broader t r a d e - r e l a t e d economic i s s u e s .  countries  that  signed  little  tariffs  on m a n u f a c t u r e s e n s u r e d t h a t  enthusiasm.  more t h a n o b s e r v e r s d u r i n g fact,  Their  t a r i f f s , but discovered  inhospitable to this perceive country  idea."^  any b e n e f i t s a c c r u i n g tariffs  lower t a r i f f s favored-nation  with most  barrier regulation,  Thus, a l t h o u g h  10 o f t h e 23  lack of interest i n bargaining the underdeveloped countries  the i n i t i a l  t h e L a t i n American c o u n t r i e s  industrial  that  that,  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  saw  modify  t a r i f f negotiations  wanted t o n e g o t i a t e that  over  were  little  i n 1947. I n  increases  i n their  t h e n a s c e n t GATT was d i s t i n c t l y  Non-industrial  countries  simply  t o them t h r o u g h t h e r e d u c t i o n  on m a n u f a c t u r e s n e g o t i a t e d  did not of industrial  a t Geneva, even though  these  a p p l i e d t o a l l GATT s i g n a t o r i e s a s a r e s u l t o f t h e m o s t r u l e s e t out i n A r t i c l e  I o f t h e Agreement.  t h e w h o l e GATT t h r u s t t o w a r d f r e e r t r a d e  Instead,  they  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 e c o n o m i c s t r a t e g y , b a s e d a s i t was o n h i g h  t a r i f f s and  - 58 -  other barriers  t o promote a wide  manufacturing sector.  be t e r m e d  Trade  1940s,  industries" i n the  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  a goal o f those underdeveloped the l a t e  array o f "infant  c o u n t r i e s embarking  and t h e i r approach  e x p o r t s was n o t  on i n d u s t r i a l i z a t i o n i n  t o GATT a t t h i s  time could perhaps  best  "damage l i m i t a t i o n . "  B a r g a i n i n g and P o l i t i c a l Throughout  t h e 1950s,  I n f l u e n c e i n GATT  the developing countries  concerned w i t h three matters:  i n GATT w e r e  primarily  o b t a i n i n g f o r themselves exceptions from  t h e q u i t e s t r i n g e n t a n d 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 u s e o f q u o t a s ; o b t a i n i n g commitments f r o m i n d u s t r i a l to 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  mineral commodities; in  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 and t o a l e s s e r e x t e n t  a n d 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  t h a t body t h e i s s u e s o f commodity p r i c e  instability  and s u r p l u s  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 m a r k e t s  disposal."'"  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 d o c u m e n t s f o r m o s t o f t h e 1 9 5 0 s . roles  and p r i o r i t i e s  recent o r i g i n .  as s u c h an e x a m i n a t i o n w o u l d  reveal that the  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 b y n o means o f However, because  the focus o f t h i s  issues r e l a t e d t o t h e i r manufactured 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  a n a l y s i s o f LDC e f f o r t s  t h e i r manufactured  s t u d y i s o n LDCs a n d  exports, these other t o p i c s can not  b e e n c o n d u c t e d a n d i n f l u e n c e w i e l d e d i n GATT w i l l f o r subsequent  The  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 w o u l d p r o v i d e  an i n t e r e s t i n g s t u d y i n a s m u c h T h i r d World's  access  exports.  have  p r o v i d e t h e background  t o b a r g a i n over improved  access f o r  - 59 The  most i m p o r t a n t  "rounds" 1956,  -  n e g o t i a t i o n s i n GATT o c c u r  or conferences,  i n the context of  o f which t h e r e have been seven  1 9 6 0 - 6 1 , 1 9 6 3 - 6 7 , and  1973-79).  negotiations  concessions  countries presented  sought f o r i n d i v i d u a l products  "request  "rounds"  Prior  (known as t h e K e n n e d y R o u n d ) , t h e p r o c e s s  p r o c e e d e d as f o l l o w s :  ( 1 9 4 7 , 1949,  I t i s during these  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 .  trade  that  to the  of t a r i f f  lists"  of  1951,  1963-67 bargaining  tariff  o f w h i c h t h e y were t h e  principal  17 (or  a major)  s u p p l i e r to v a r i o u s importing c o u n t r i e s ; the 18  follow with "offer  lists,"  and  b a r g a i n i n g would begin.  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  had  t o be  for  only then  A was  the p r i n c i p a l  a r e d u c t i o n i n B's B was  s u p p l i e r of product tariff  i n reduced  simply d i d not  exist.  In order f o r  on Y was  tariffs,  B,  i t s ability  c r u c i a l l y d e p e n d e n t on  i n the absence o f such  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  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  import markets f o r developed  based, t a r i f f  products,  their  b a r g a i n i n g was  t h i s n e g o t i a t i o n process  was  ability  to p a r t i c i p a t e 19  impaired.  largely bilateral  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  countries.)  of request  and  offer  developed country  noted  that  of market-  while  or l i m i t e d to perhaps a c e r t a i n degree o f  ensured lists  to  ( o r even  i n t h i s type  ( I t s h o u l d be  or 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 ,  multitudinous pairs  a mutality  a sound b a s i s f o r commercial b a r g a i n i n g  ( o r most o t h e r p r o d u c t s )  o f any  to obtain  the extent to which  major) s u p p l i e r s of manufactures  exports  items,  For example, i f c o u n t r y  Y to country  X t o A;  any  t o engage i n b a r g a i n i n g , e a c h  t r a d e - o f f s be made.  a major s u p p l i e r o f , say,  of interests  would  s u p p l i e r to the other of s e v e r a l i n d i v i d u a l  could meaningful  the p r i n c i p a l  reason  latter  by  the f a c t  that  three  multithe  were d i s t r i b u t e d t o a l l  - 60 P r i o r to the together the  and  1956  request  -  C o n f e r e n c e , i t was  tariff  concessions,  LDCs i n t h a t t h e y c o u l d now  the p r i n c i p a l  and  make j o i n t  "products of which they i n d i v i d u a l l y be,  decided  s u p p l i e r s to the  that countries  t o some e x t e n t  requests  or c o l l e c t i v e l y  countries  could  this  assisted  for negotiations are, or are  from which the  band  on  likely  to  concessions  are  20 asked."  I t was  still  GATT r e m a i n e d d i s t i n c t l y  the  case, however, t h a t the  d i s a d v a n t a g e d by  developing  countries  t h i s negotiation process,  in  since 2  they lacked the  essential "bargaining  Needless to say,  the  import-substitution doctrine further hindered  c a p a b i l i t y to p l a y the better  LDCs much c o n s t e r n a t i o n  city,  core  of the  for  countries.  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  caused the "the  their  game o f t r a d i n g i m p r o v e d a c c e s s t o t h e i r m a r k e t s  access to those of developed  A s e c o n d and  chip"--namely, large domestic markets.  i s the  i n t e r n a t i o n a l trade  r o l e of the p r i n c i p l e s y s t e m as  i t has  that  has  of r e c i p r o -  evolved  since  22 1947  . . . ."  In simplest  of trade negotiators  it  into their  to that trading partner  i s nowhere d e f i n e d  i l l u s t r a t e d by  country  by  at  derives  equivalent  amount.  This  p h r a s e s as  concessions,"  and  is  "balance  "compensatory  records.  o r i g i n s of postwar American trade p o l i c y .  law  Although  c e n t r a l i t y of r e c i p r o c i t y  appearance o f such key  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. ments A c t .  imports  country's 23  very b a s i c reason f o r the prominence of r e c i p r o c i t y from the  inclination  of  expanding t h e i r  l e a s t an  of advantages," " s u b s t a n t i a l l y equivalent 24  One  by  i n GATT d o c u m e n t s , t h e  the u b i q u i t o u s  a d j u s t m e n t " i n GATT  r e f e r s to the  t o s e e k 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  from a t r a d i n g p a r t n e r  exports  terms, r e c i p r o c i t y  restricted  trade p o l i c y , passed the the  Executive  i n GATT I n 1939  first  Congress,  Trade Agree-  to negotiating r e c i p r o c a l  - 61 -  tariff not  concessions  with other  s p e c i f i e d , since this  c o u n t r i e s ; w h a t c o n s t i t u t e d r e c i p r o c i t y was  crucial  question  c o u l d be d e t e r m i n e d b y C o n g r e s s  25 a f t e r the n e g o t i a t i o n s had concluded. Agreements A c t , which p r o v i d e d f i v e GATT t r a d e cessions, This  to insist  and a l s o mandated t h a t n e g o t i a t i o n s  preferential  extensions  o f t h e Trade  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  "rounds," continued  e f f e c t i v e l y r u l e d out,  general,  Successive  on r e c i p r o c i t y  i n the f i r s t  intariff  con-  o c c u r on an i t e m - b y - i t e m b a s i s .  a t l e a s t f r o m t h e U.S. p e r s p e c t i v e ,  both  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  across-the-board  tariff  and t h e adoption o f 26 c u t t i n g formulas. Instead, American  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 bargains  with  each  trading  27 partner.  As a r e s u l t ,  bilateral,  the bargaining  f o r t h e t r e m e n d o u s 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  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 as  Washington's  d e t e r m i n e d t h e a p p r o a c h a d o p t e d i n GATT  a whole. As  equally important  bargaining  The s i m p l e  economic theory economically  reductions  will  t h e i r trade equivalent  a n d more g e n e r a l  impetus f o r r e c i p r o c i t y  stems from t h e p a r t i c u l a r p o l i t i c a l  negotiations.  are  p r o c e s s i n GATT was e s s e n t i a l l y  reality  c a l c u l u s that attends  i s that, regardless  of the fact  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 optimal  (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 28  benefit a country),  "concessions" "sacrifices."  governments f e e l  by p o i n t i n g out that others The p o l i t i c a l  i n GATT trade  that  reductions  unilateral  compelled t o defend h a v e made a t l e a s t  a s s a u l t s t h a t governments  face  f r o m b u s i n e s s m e n a n d 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 are  lowered are well-known.  potential while  The r e s u l t i s t h a t t h e i n c r e a s e  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  t h e expansion o f imports  will  i n export  i s s t r e s s e d by governments,  n e c e s s a r i l y occur  (because o f other  - 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 frequently perceived  as a s o u r c e  29 of p o l i t i c a l As  will  obtaining tions,  embarrassment. be d i s c u s s e d  later i n this  i n t h e GATT s y s t e m .  have been a b l e t o improve t h e i r  countries  l a t e d i n t o measurable economic g a i n s , an a l m o s t i n s t i n c t i v e  negotiations reciprocity mysterious. reciprocity  with  LDCs.  negotia-  bargaining  But t h e p r i n c i p l e d acceptance o f non-  r e c i p r o c i t y v i s - a - v i s the developing  in  LDCs h a v e s u c c e e d e d i n  acceptance 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 trade  a n d t h u s t o some e x t e n t  position  chapter,  has n o t n e c e s s a r i l y  forindustrial  countries  trans-  continue,  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 commercial The a b s e n c e o f a n y c o n s e n s u s on how t o a s s e s s  i n q u a n t i t a t i v e t e r m s h a s made t h e w h o l e d e b a t e As t h e C u r z o n s n o t e , " E a c h c o u n t r y foritself.  quite  remains f r e e  A l l attempts t o introduce  . . .  predetermined  t o judge  formulas  30  . . . have f a i l e d . " treatment f o r t h e i r hindered  LDCs' e f f o r t s t o s e c u r e s p e c i a l , exports,  non-reciprocal  e s p e c i a l l y manufactured exports,  by t h e n o n - d i s c r i m i n a t i o n  have a l s o  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  been  that  31  tariff  a n d 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  t h e i r attempts t o obtain  approval  e q u a l l y t o a l l members.  f o r the p r i n c i p l e of non-reciprocity,  LDCs h a v e h a d t o e s c a p e f r o m t h i s r e q u i r e m e n t a s w e l l , a n d t h i s will  be e x p l o r e d  i n connection  Developing countries'  with  the discussion o f preferences  that there  below.  voting  i n the organization.  GATT a p p e a r s t o b e 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  i s no p r o v i s i o n f o r weighted v o t i n g  t r a d i n g importance There a r e three  struggle  i n f l u e n c e h a s b e e n l i m i t e d i n d a y - 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 unimportance o f formal On t h e s u r f a c e ,  In  according  t o economic o r  ( u n l i k e t h e I n t e r n a t i o n a l M o n e t a r y Fund o r W o r l d  categories  o f GATT members: f u l l  Bank).  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 which 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 h a s b e e n a p p l i e d s i n c e 1948  and  w h i c h now, a s i n 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  the  GATT p e n d i n g f i n a l  Only c o u n t r i e s take part  d e c i s i o n s as t o t h e i r  i n the f i r s t  category  i n a l l GATT a c t i v i t i e s .  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  Beginning  stituted a majority of the Contracting have been a b l e (excepting  t o wield considerable  i n t h e e a r l y 1 9 6 0 s , LDCs c o n -  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  i n f l u e n c e a s a g r o u p s i n c e most  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 ,  o f customs u n i o n and f r e e t r a d e 33 majority  f u t u r e commercial p o l i c y . "  o f votes  cast.  of decision-making  area  schemes) r e q u i r e o n l y a  p r e v a i l s i n GATT, a n d " t h e  contracting p a r t i e s are generally not recorded  occasions is  and, even then,  c r u c i a l t o recognize  the trade  and a p p r o v a l simple  votes  they u s u a l l y are not published."  concessions  style  of particular  . . . e x c e p t on s p e c i a l 34  t h a t t h e most i m p o r t a n t  GATT--namely, t h e t a r i f f during  decisions  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  normally  should  Moreover, i t  agreements reached i n  and n o n - t a r i f f a c c o r d s  rounds--are not formally subject  negotiated  t o the approval  o fthe  GATT m e m b e r s h i p a s a w h o l e .  Thus, i f a m a j o r i t y  disapproves  agreements reached b y , s a y , t h e i n d u s t r i a l i z e d  o f c e r t a i n trade  GATT members, t h e y c a n n o t b l o c k the  organization.  example, t h e U n i t e d legal part tariff  such agreements by v o t i n g a g a i n s t  Indeed, t h e t a r i f f States  concessions  negotiated  them i n  between, f o r  a n d t h e E u r o p e a n E c o n o m i c C o m m u n i t y , become a  o f t h e G e n e r a l Agreement i t s e l f  schedules provided  o f members, s a y t h e L D C s ,  f o r by A r t i c l e  through i n c o r p o r a t i o n i n t o the  II  (which r e q u i r e s unanimity  to  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 accords negotiated  by a p a r t i c u -  - 64 -  lar  g r o u p o f GATT members c a n n o t b e a l t e r e d  membership as a w h o l e , a l t h o u g h  or disapproved  c o u n t r i e s not p a r t y t o such accords a r e n o t  o f course 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 . are  generally unable t o i n f l u e n c e t h e nature  i n d u s t r i a l i z e d GATT members, d e s p i t e and  the paucity  o f formal  voting  b y t h e GATT  Thus, d e v e l o p i n g  o f trade bargains  their majority  i n GATT d e p r i v e s  countries  struck by  i n the organization,  t h e m 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 w o u l d w a r r a n t i n d a y - t o - d a y a f f a i r s as w e l l .  Increasing The  Complaints o f Developing  late  1950s w i t n e s s e d  c o n c e r n s t h a t t h e GATT t r a d e interests.  r e g i m e was f a i l i n g  o f developed country  manufactured products.  derived  from t h e c o n t i n u i n g  with  their  start  developing  the organization, but t h i s GATT r e g u l a -  t r a d e p o l i c i e s and t h e f a c t with  1950s, however, d e v e l o p i n g  bargaining One  result  and d e c i s i o n - m a k i n g of this  m e m b e r s h i p o f LDCs a f t e r three  that  LDC d e v e l o p m e n t countries  i n GATT b e g a n  t o a r g u e more g e n e r a l l y t h a t t h e b a s i c n o r m s a n d p r o c e d u r e s t h a t trade  note  exports o f  absence o f e f f e c t i v e  many GATT r u l e s w e r e r e g a r d e d a s i n c o m p a t i b l e In the late  on t h e i r  As n o t e d above, from t h e v e r y  of industrial countries' agricultural  strategies.  countries'  t o accommodate  trade barriers  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  view l a r g e l y tion  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  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 f e w LDCs b e g a n t o t a k e  of the effect  countries  Countries  were u n f a v o r a b l e  guided  t o them.  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 the  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 1 9 5 1 . By 1 9 5 4 ,  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  countries  (Syria,  Lebanon, and  - 65 -  China) had l e f t countries and  became C o n t r a c t i n g  making a t o t a l  Linder  developing  i n GATT r e m a i n e d t h e same a s i n 1 9 5 4 , n a m e l y f o u r t e e n .  Malaysia  1960,  t h e o r g a n i z a t i o n ; i n 1 9 5 7 , t h e t o t a l number o f  Parties i n late  36  1957, and N i g e r i a i n l a t e  GATT m e m b e r s h i p o f 3 8 , o f w h i c h 17 w e r e LDCs.  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  Ghana  37  a g r e e m e n t s made b y LDCs a f t e r  38 the  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 .  pattern of individual industrial  tariff  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  concession  a g r e e m e n t s b e t w e e n LDCs a n d  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 w e r e n e g o t i a t i n g f o r m e m b e r s h i p , b u t w e r e 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 As  t h e 1970s.  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  both with  industrial  countries  and w i t h  each o t h e r ,  agreements,  i n t h e framework  v i d e d b y 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 d e c a d e that  11 o f 29 t a r i f f  tariff  f o r the general  concessions  countries  derived  f i v e Conferences. to s i g n i f i c a n t each other's  I n s p i t e o f t h e MFN r u l e , w h i c h  operation  automatically  a p p l i c a t i o n o f t h e e n t i r e GATT m e m b e r s h i p o f  negotiated  b y any two C o n t r a c t i n g  few economic g a i n s  from t a r i f f  Parties,  liberalization  developing at the f i r s t  Because o f t h e tendency o f developed c o u n t r i e s t o agree  tariff  reductions  o n l y on t h o s e p r o d u c t s o f w h i c h t h e y were  m a j o r 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  zation for a g r i c u l t u r a l products, the  (note  a g r e e m e n t s 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  negotiation of accession). provided  pro-  o f t h e MFN r u l e .  t h e LDCs l a r g e l y f a i l e d This  fact,  liberali-  to benefit  from  i n addition to the principal  s u p p l i e r r u l e a n d t h e r e c i p r o c i t y n o r m , made t h e LDCs p e r i p h e r a l t o t h e GATT negotiating process.  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  became e i t h e r t h e m a j o r s u p p l i e r s o f , o r m a j o r m a r k e t s f o r , a g i v e n  they product,  -  T a b l e 2:  at  GATT C o n f e r e n c e s ,  Liberia Malaya Nicaragua Nigeria Pakis tan Peru Philippines S i e r r a Leone Uruguay Total  1947-61  39  1956  1947  1949  1951  14(5) 7(2) 7(1) 12(4) 16(6) 6(3)  6(2) 0 4(0) 9(5) 6(1) 0* KD  2(0) 0 2(0) 3(1) 0  0 2(0) 2(0)  -  9(2) 0* 10(3)*  3(0) 0* 2(0)  2(0) 2(0)  9(3) 6(1)  6(1) 2(0)  7(3) 8(1) 0* 0  0 0 -  4(0) 0 11(0)* -  6(1)* 9(1)* 4(0)  0 0 5(1)  -  0  0* 0 3(0)* 1(0)  -  -  0* 14(3)*  13(3)* 0* 4(2)*  KO) 0  2(0) 0* 0  72(14)  76(10)  42(4)  9(0)  29(0)  Dominican R e p u b l i c E l Salvador Ghana Guatemala Haiti India Indonesia Israel S. K o r e a Lebanon/Syria  -  o f T a r i f f A g r e e m e n t s E n t e r e d I n t o b y LDCs  Numb e r  Brazil Burma Cambodia Ceylon Chile China Colombia Cuba  66V  9(3)  '  -  0 0  -  0  -  *At Conference 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 - N o t 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 a g r e e m e n t s w i t h o t h e r L D C s .  1960-61 0 0 5(0)* 0 1(0) -  0 0 0* 2(0)  —  - 67  their bargaining  leverage  was  -  extremely  limited;  and  until  prepared to o f f e r r e c i p r o c a l concessions f o r i n d u s t r i a l t i o n s o f b a r r i e r s on  t h o s e few  of which they were, or were not  g o i n g t o be  In the  the  soon might be,  1957,  ministers  from the  i n GATT, b u t  t h e m e m b e r s h i p o f LDCs w e r e s t a g n a t i n g .  W o r l d and the  UN  currence with the  trade  a l l of the  f o r c r e a t i o n o f a new  These f a c t s c o n t r i b u t e d the  suggestion  r e l a t i o n s o f LDCs.  that 41  Chairman), concluded that  as  w e l l as  major trade  and  42  Their  criticized as  trade  be  countries'  policies  by  GATT  of  as Panel's  commodities,  o f p r i m a r y commodity m a r k e t s , were  countries' policies  The  examine  agricultural  certain mineral  countries.  con-  appointed to  Report," a f t e r the  b a r r i e r s i m p o s e d on  experts  i n these areas,  the  urged  but  also World  inappropriate. Haberler  T h i r d World exports  Report only b r i e f l y mentioned the 43 of manufactures,  i n GATT's r e s p o n s e t o t h e  z i n g the  industrial  Third  within  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 the T h i r d and  of  the  the  organization  findings, published  developed country  industrial  Although the  shift  high  to the  problems a f f e c t i n g developing  inefficient  greater  In a d d i t i o n ,  global trade  (the "Haberler  the p r i c e i n s t a b i l i t y  modification of  were m a j o r t o p i c s  met  i n d u s t r i a l market economies were 40  a Panel of Experts  Trends i n I n t e r n a t i o n a l Trade  protectionism  Parties  r a p i d l y expanding i t s commercial r e l a t i o n s with  calling  system.  virtually  countries  By  U n i o n was  products  "requests"  GATT C o n t r a c t i n g  discussion.  Soviet  reduc-  semi-manufactured  major s u p p l i e r s , t h e i r  complaints of developing  now,  countries'  treated seriously.  autumn o f  i n G e n e v a , and  m a n u f a c t u r e d and  t h e y were  i t d i d mark an  i s s u e o f development, i n that  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  need  for  important "by  drawn t o t h e  emphasi-  . . .  - 68 -  approach  i n t h e G e n e r a l Agreement / o f / r e l y i n g  From t h e l a t e  on t h e i m p o r t  side only."  1 9 5 0 s o n w a r d , t h e GATT m e m b e r s h i p , a n d i n d e e d t h e i n t e r n a t i o n a l  c o m m u n i t y 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 export earnings.  Developing  entitled to special  countries continued t o i n s i s t  of trade l i b e r a l i z a t i o n  LDCs'  t h a t t h e y were  d i s p e n s a t i o n i n s o f a r a s GATT r u l e s g o v e r n i n g  b a r r i e r s were c o n c e r n e d ,  import  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 on t h e p a r t o f i n d u s t r i a l  increasingly,  t h e LDCs' s h a r e  f o r manufactured  p r o d u c t s as w e l l .  o f world manufactured  (SITC  s e c t i o n s 5-8)  o f $U.S. a n d p e r c e n t ) 1955  LDCs  1963  3.05  (6.7%)  4.9  I n d u s t r i a l Market Economies  37.-65  (83%)  69.50  World  45.35  (100%)  85.60  I f the product  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  p e r i o d i s examined, t h e importance •metals a n d t e x t i l e s , exclude t h e former  i s noteworthy,  o f two p r o d u c t  (5.7%) (81%) (100%)  exports during  this  categories, non-ferrous  e s p e c i a l l y g i v e n t h a t many  from t h e i r d e f i n i t i o n o f manufactures.  provides a breakdown.^  3 reveals,  45  Exports o f Manufactures (Billions  As T a b l e  products  e x p o r t s was n o t o n l y s m a l l , b u t  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:  role  countries i n improving  the T h i r d World's export p o t e n t i a l , both f o r " t r a d i t i o n a l " primary and,  44  46  economists Table  4  - 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 (in p e r cent) 1955  Non-ferrous metals  1965  40  29.1  I r o n and s t e e l  1.3  2.8  Chemicals  8.2  8  1  2  Other semi-manufactures  9.5  9.6  Engineering products  5.6  9.3  Textiles  21.6  22.4  Clothing  2.6  6.1  10.1  10.4  Wood s e m i - m a n u f a c t u r e s  and paper  Other consumer goods Total*  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 a d d u p t o 1 0 0 % 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 a n d a r e l a t i v e 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  metals s t i l l  1960s.  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 b y t w o p r o d u c t s , one o f w h i c h from t h e d e f i n i t i o n o f manufactures;  sense i n t h e e a r l y  c o u l d , a r g u a b l y , be e x c l u d e d  and i n 1963, t e x t i l e s  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  and n o n - f e r r o u s  exports.  H o w e v e r , i n s p i t e o f t h e v e r y l i m i t e d v o l u m e o f LDC e x p o r t s o f manufactures, World  and t h e c o n t i n u e d r e l i a n c e  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  o f most i n d u s t r i a l i z i n g  strategies,  certain  LDCs b e g a n t o  evince a growing concern w i t h t h e i s s u e o f access t o developed markets  f o rt h e i r manufactured  exports.  Third  country  I n GATT, a new c o m m i t t e e  (known  - 70 -  as C o m m i t t e e 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  Report,  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 a n d 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 expansion 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 : 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 r  Detailed examination was u n d e r t a k e 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 p r o b l e m s and p o t e n t i a l  i n the next  f e w y e a r s b y C o m m i t t e e I I I , a n d 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 o n i m p e d i m e n t s t o LDC e x p o r t s o f p r i m a r y ducts, p a r t i c u l a r l y  agricultural  commodities,  s e 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 . a b r i e f a n a l y s i s o f developed and  j u t e manufactures,  trade i n manufactures  The Committee's f i r s t  country trade barriers  and suggested  proand  report included  i n relation to cotton  that high t a r i f f s  f o r these  increasingly  49 important  LDC e x p o r t s b e l o w e r e d  of products and  o f t r a d e b a r r i e r s was a g r e e d  of the f i v e product (bicycles,  sewing  products)  procedure  machines, e l e c t r i c a l  finished  interests  t o and, s i g n i f i c a n t l y ,  three  fans, diesel  f o l l o w e d w i t h respect t o manufactures  identified  as i m p o r t a n t  (as w e l l  as o t h e r  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 staff,  t i o n s , r e v e n u e d u t i e s and i n t e r n a l  of "tariffs,  fiscal  charges  contracting parties  quantitative  restric-  . . . and o t h e r measures  f o r c e i n r e l a t i o n t o imports o f these commodities";  then "submitted t o i n d i v i d u a l  e n g i n e s , and  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 . ^  e x a m i n a t i o n , b y GATT S e c r e t a r i a t  in  list  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  e l e c t r i c a l motors), The  I n March 1960, a second  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  the effects  goods  forthwith.  this  i n f o r m a t i o n was  f o r comment/amendment." ^ 5  D i s c u s s i o n a t s u b s e q u e n t m e e t i n g s o f t h e C o m m i t t e e was f o c u s e d o n t h e d e g r e e o f p r o g r e s s made b y 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 -  in  removing o r reducing  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 exports  o f these products.  A third  list  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 w o u l d b e u n d e r t a k e n was a g r e e d t o i n 1 9 6 1 ; 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 , a n d c o p p e r r o l l i n g s w e r e among t h e 53 products i n t h i s l i s t . By 1 9 6 2 , C o m m i t t e e I I I h a d 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 tions that country  several broad conclusions  c o u l d b e made.  t a r i f f b a r r i e r s o f t e n h a r m e d LDC e x p o r t  because o f t h e high  according  developed  p o s s i b i l i t i e s , not only  levels of protection afforded  LDCs w e r e c o m p e t i t i v e ,  First,  certain sectors  where  but 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  t o t h e degree o f p r o c e s s i n g .  This  latter  rates  i s s u e , "one o f t h e  m a j o r 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 t e 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 imports  o f r a w m a t e r i a l s , b u t much h i g h e r  such commodities. cult  and the  C l e a r l y , t h i s widespread  f o rdeveloping  greater  tariffs  on p r o c e s s e d forms o f  p r a c t i c e made i t m o r e  countries to i n d u s t r i a l i z e , that  amounts o f " v a l u e  manufacturing.  d u t i e s on  i s , to contribute  added" t o p r i m a r y commodities through  processing  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  m a i n t e n a n c e b y 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  w h i c h were l e s s l i b e r a l  less-developed  countries."*'*'  cotton, jute, coir, admitted  duty-free  that  tariffs  t o w a r d s s e m i - p r o c e s s e d goods t h a n t o w a r d s 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 d e v e l o p m e n t o f p r o c e s s i n g in  diffi-  industries  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 p p e r 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  often  i n raw b u t n o t semi-manufactured form by i n d u s t r i a l  countries. Another 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 -  export 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 continued r e s o r t , by c e r t a i n  c o u n t r i e s , t o q u a n t i t a t i v e import i n t e r e s t t o t h e T h i r d World. and  c o n t r o l s on a w i d e r a n g e o f p r o d u c t s o f  I n s p i t e o f t h e general d i s m a n t l i n g o f quotas  other controls during the l a t t e r  restrictions  developed  1950s and e a r l y  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 ,  1960s, q u a n t i t a t i v e sewing machines, and  b i c y c l e s w e r e common i n a number o f d e v e l o p e d  countries.  quotas 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 affecting trade i n leather  goods, footwear, to  s p o r t i n g g o o d s , 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  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  connection with the l a t t e r ' s products  internal  fiscal  Activities  c o u n t r i e s arose i n  and revenue charges  not produced 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  commodities, but t h i s p r a c t i c e had l i t t l e  l e v i e d on  agricultural  e f f e c t on e x p o r t s o f  manufactures.  i n t h e UN  T h i s GATT e x a m i n a t i o n ted  Fortunately,  by developed  o f LDC t r a d e p r o s p e c t s  a n d how t h e y w e r e  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  affecfairly  d e t a i l e d i n v e n t o r y o f k e y i s s u e s a n d p r o b l e m s was e s t a b l i s h e d ; i n subsequent y e a r s , developing  c o u n t r i e s i n GATT w o u l d c o n t i n u e t o e m p h a s i z e  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 manufactured exports greater interest evident beginning endorsed,  i nparticular.  i n t h e LDC p o s i t i o n i n the late  1950s.  Meanwhile, w i t h i n t h e United  Nations  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 In February  1957 t h e G e n e r a l  Assembly  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 to  w i t h impediments t o t h e i r  "make e v e r y  alia,  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  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 products  . . . 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 develop57  ment o f new m a r k e t s ,  and t h e e x p a n s i o n  I n 1961 t h e G e n e r a l A s s e m b l y i n i t i a t e d ( R e s o l u t i o n 1711 ( X V I ) . ) rate of at least  o f t h e i r range o f p r o d u c t i o n . " the first  UN D e v e l o p m e n t D e c a d e  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  5 p e r c e n t was n e c e s s a r y  GNP g r o w t h  f o r LDCs i n t h e 1 9 6 0 s , a n d 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 to reach t h i s manufactures A shift  goal. at this  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  time.  t o a more o u t w a r d - l o o k i n g  t r i a l i z a t i o n was a p p a r e n t  which  necessary  examined North-South  focus r e g a r d i n g T h i r d World  indus-  i n a 1 9 6 1 r e p o r t b y t h e ECOSOC S e c r e t a r y - G e n e r a l 58 trade r e l a t i o n s .  The r e p o r t n o t e d  that  b a r r i e r s t o t h e export o f manufactures  from  LDCs w e r e l i k e l y t o l o o m  in future discussions of international  trade policy.  of h o l d i n g a United Nations Conference  o n T r a d e a n d D e v e l o p m e n t was  larger  When t h e p o s s i b i l i t y  d i s c u s s e d i n t h e Second Committee o f t h e General 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 e m p h a s i s t h a n h i t h e r t o o n t h e n e e d f o r t h e international  c o m m u n i t y t o e n c o u r a g e 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 A s s e m b l y p a s s e d R e s o l u t i o n 1785 ( X V I I ) w h i c h  endorsed  without dissent  a n e a r l i e r ECOSOC R e s o l u t i o n ( 9 1 7  (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 . Assembly r e s o l u t i o n mentioned, i n t e r  The G e n e r a l  alia,  the 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 world trade which, i n p a r t i c u l a r adversely a f f e c t the n e c e s s a r y expansion and d i v e r s i f i c a t i o n and manufactured goods b y 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 w e r e 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  to link  t r a d e a n d d e v e l o p m e n t i s s u e s i n a new g l o b a l f o r u m s e n s i t i v e t o t h e i r interests  and p r i o r i t i e s .  The W e s t e r n c o u n t r i e s sought d u r i n g t h e  - 74 -  preparatory meetings p r i o r t o the conference 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 a s 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 b o d y f o r t r a d e  questions.  M o s t LDCs a n d t h e S o v i e t b l o c c o u n t r i e s , o n t h e o t h e r h a n d , 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 T r a d e O r g a n i z a t i o n t h a t w o u l d u s u r p a n d 59 e x p a n d GATT's r o l e tutional  i n the trade f i e l d .  As w i l l  be s e e n , t h i s  "insti-  i s s u e " was c e n t r a l t o t h e s u b s e q u e n t b a r g a i n i n g o v e r i m p r o v e d  access f o r exports o f manufactures from developing "Market D i s r u p t i o n " : A development  countries.  The Case o f C o t t o n T e x t i l e s  i n t h e e a r l y 1960s w h i c h d i d n o t a u g u r w e l l  f o r future  LDC e f f o r t s t o e x p a n 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 t o t h e i n d u s t r i a l market  e c o n o m i e s 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 " m a r k e t  into the international trade p o l i c y vocabulary. to  the acute fears f e l t  disruption"  I t s o r i g i n c a n be t r a c e d  b y t h e U n i t e d S t a t e s and o t h e r Western  countries  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 manufactures it  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 W e s t e r n i n d u s t r i e s .  governments the  GATT r u l e s , GATT member.  West E u r o p e a n  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  o r g a n i z a t i o n i n 1955, and t h i s  which  joined  legitimized the "nonapplication" of  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 a n d f e a r e d 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  successful  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  competi-  t i v e advantage i n c e r t a i n manufactures  costs),  ( l a r g e l y due t o l o w e r l a b o r  d e t e r m i n e d t o p r o t e c t t h e i r markets and i n d u s t r i e s from t h e likely  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  disruption labor-  - 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 The  United  GATT, f e l t  S t a t e s , as t h e  c o n s t r a i n e d not  member, a n d  $1 b i l l i o n  l e a d i n g proponent of Japan's accession  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  Canada s i m i l a r l y  Japanese exports  treatment.^  t o t h e U.S.  a c c o r d e d J a p a n MFN mushroomed.  By  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.  status.  1960, and  J a p a n was  o v e r $100  to  Canada, but  o n l y $165  to  t h e U.K.^  The  to  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  causing XIX, But  m i l l i o n worth to the  American cotton t e x t i l e  serious injury.  which permitted  s c o p e o f any apply,  "club"  surprisingly, exporting  million and  million  i n d u s t r y began i n the  mid-1950s  f r o m J a p a n were  c o u l d have i n v o k e d  Article industry.  allow f o r s e l e c t i v e or d i s c r i m i n a t o r y  a particular exporter, restricted quite stringently  " e m e r g e n c y " m e a s u r e s , and  (VER)  over  worth  $120  "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  was  Washington s u c c e s s f u l l y n e g o t i a t e d  restraint"  e n t i r e EEC  U n d e r GATT, t h e U.S.  because t h a t A r t i c l e d i d not  action against  Not  to  felt  t o be  i n 1957  too  cumbersome t o  a "voluntary  agreement w i t h J a p a n , under w h i c h the  the  latter  export consented  to  62 restrict Two exports  i t s exports years  of cotton t e x t i l e s  s i s t e n t one,  labor intensive manufactures—especially  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  t h e U.S.  i n v e s t i g a t e the  U.S.  l a t e r , p e r c e i v i n g that the problem of r a p i d increases  of standardized,  f r o m J a p a n and  to the  asked f o r the  "question  of the  b a s i s of the Working P a r t y ' s  a  per-  a v o i d a n c e o f m a r k e t d i s r u p t i o n . " On  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  c h a r a c t e r i z e d by t h e  textiles--  c r e a t i o n o f a GATT W o r k i n g P a r t y  examination,  imminent market d i s r u p t i o n , the  l i k e l y t o be  in  to the  GATT C o n t r a c t i n g P a r t i e s a d o p t e d followed i n instances of r e a l  l a t t e r being  following conditions:  d e f i n e d as a  situation  or  - 76 ( i ) a sharp 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 imports o f p a r t i c u l a r products from p a r t i c u l a r sources; ( i i ) these products a r e o f f e r e d at p r i c e s which a r e substant i a l l y b e l o w 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 c o m p a r a b l e 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 country; ( i i i ) t h e r e i s a danger t o domestic producers 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 f r o m g o v e r n mental i n t e r v e n t i o n i n the f i x i n g o r formation 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 exports beyond those export  provided  restraint  a l l e g e d l y causing  b y GATT i t s e l f  agreements.  s u c h d i s r u p t i o n w o u l d go  and c o u l d p r e s u m a b l y i n c l u d e  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  bilateral expansion" 64  of trade  i n a product  causing  m a r k e t d i s r u p t i o n was t h e b a s i c  Now, h o w e v e r , i t was t h e e x p o r t e r s shifts  who w e r e b e i n g  asked t o a d j u s t t o  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  t i o n had been t h a t t h e burden o f adjustment i n a l i b e r a l on was  importing nations. being  called  into  Consideration concentrated  question."^  of other  i n which developed c o u n t r i e s '  ( J a p a n a n d LDCs) w e r e e x p a n d i n g m o s t  By 1 9 6 3 , a n d e x c l u d i n g n o n f e r r o u s  two-thirds o f these  their total  fell itself  5  category  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  a few o t h e r  trade regime  o f t h e p r o b l e m o f m a r k e t d i s r u p t i o n q u i c k l y became  on t h e p r o d u c t  cotton t e x t i l e s .  presump-  Thus, "the p r i n c i p l e o f comparative advantage  from "low-wage" c o u n t r i e s  and  goal.  o f LDC e x p o r t s  were c o t t o n t e x t i l e s . ^  metals,  rapidly-  textile  products  o f m a n u f a c t u r e s , and  Hong K o n g , I n d i a , P a k i s t a n  LDCs w e r e e s p e c i a l l y d e p e n d e n t o n t e x t i l e s  exports.  imports  i n terms o f  A t t h e i n s i s t e n c e o f t h e U.S., a n d w i t h t h e c o n c u r r e n c e  developed c o u n t r i e s , a m u l t i l a t e r a l  Regarding I n t e r n a t i o n a l Trade i n Cotton  Short-Term Arrangement  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 S e p t e m b e r 1962; ing  a Long-Term Arrangement f i v e years.  ( L T A ) t h e n was n e g o t i a t e d  t o cover  T h e 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  the followtrade  - 77 -  b a r r i e r s on a m u l t i l a t e r a l the  first  basis f o r a p a r t i c u l a r product.  attempt t o r e g u l a t e market access  I t was a l s o  f o r an i m p o r t a n t  LDC  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 a n d n o r m s , e v e n t h o u g h GATT the  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 The  LTA s i g n i f i e d  global distribution of production  o f t h e agreement.  and market f o r c e s t o d e t e r m i n e t h e  f o r an i m p o r t a n t  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 advantage i n t e x t i l e p r o d u c t i o n  manufacturing  o f g l o b a l comparative  t o LDCs a n d J a p a n .  The LTA c o n t a i n e d  o f cotton t e x t i l e s by reducing  structural  adjustment  (Articles  1 and 2 ) , and an agreement by  between e x p o r t i n g and i m p o r t i n g  ( A r t i c l e s 3 and 4 ) . the c o n f l i c t i n g  The p o s s i b i l i t y  sentiments  expressed  LTA.  imports  for political i n these  centage increases  67 Sweden, 1 5 .  reflected  given  two groups o f A r t i c l e s .  seemed'likely  to result  cotton  from  textile  c o n t r o l s i n 1962, t h e f o l l o w i n g per-  i n q u o t a s w o u l d b e r e a c h e d b y c e r t a i n West E u r o p e a n  c o u n t r i e s b y 1 9 6 7 : A u s t r i a , 95 p e r c e n t ; and  restraint  d i s p u t e was o b v i o u s  I t was, f o r example, agreed t h a t f o r those  subject t o q u a n t i t a t i v e import  export  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  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 the  both  t r a d e b a r r i e r s and under-  s i g n a t o r i e s t h a t i n cases o f market d i s r u p t i o n b i l a t e r a l accords  sector.  commitment b y 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 taking  provided  t h e developed c o u n t r i e s ' u n w i l l i n g n e s s or 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  a general  export  Denmark, 1 5 ; t h e E E C , 8 2 ; N o r w a y  H o w e v e r , " h i g h p e r c e n t a g e s f o r t h e EEC a n d A u s t r i a  s u c h l o w 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  regarded  68 e v e n t h e new c o m m i t m e n t a s b o r d e r i n g import  on f r a u d . "  q u o t a s imposed on c o t t o n t e x t i l e  under A r t i c l e s  imports  I n a d d i t i o n , a n y new or b i l a t e r a l l y  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 percent  negotiated annually,  - 78 -  excepting the f i r s t  year.  Finally,  t h e c r e a t i o n o f a GATT T e x t i l e s  C o m m i t t e e t o a d m i n i s t e r t h e LTA e n s u r e d a c e r t a i n d e g r e e 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 f o r u m i n w h i c h t h e LDCs c o u l d p r e s s t h e  importing countries t o l i b e r a l i z e access, "spirit" as  o f trade expansion  expressed  o r a t l e a s t t o l i v e up t o t h e  i nArticle  1 o f t h e LTA a n d i n GATT  a whole. On t h e o t h e r h a n d , t h e f a c t t h a t t h e d e c i s i o n a s t o w h e t h e r  d i s r u p t i o n " e x i s t e d o r was i m m i n e n t "was l e f t  . . . entirely  "market  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 value o f having 69 a multilateral heralded  agreement and forum.  a new t r e n d i n i n t e r n a t i o n a l  with unpleasant exports.  M o r e o v e r , t h e LTA a s a w h o l e 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  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  Y e t LDC c o t t o n t e x t i l e  exporters had l i t t l e  manufactured  c h o i c e b u t t o accede  t o t h e a g r e e m e n t , 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 w o u l d 70 i m p o s e e v e n more s t r i n g e n t m e a s u r e s i n t h e a b s e n c e o f t h e LTA. time  At the  ( o r s o o n 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:  Taiwan, Colombia, I n d i a , I s r a e l , Jamaica,  Japan, Mexico, P a k i s t a n ,  P o r t u g a l , S p a i n , Hong K o n g , K o r e a , t h e U.A.R., Y u g o s l a v i a , G r e e c e , T u r k e y , and  the Philippines.  imports  LTA s i g n a t o r i e s b a s i c a l l y  were A u s t r a l i a , A u s t r i a , Belgium,  Germany, I t a l y ,  interested i n controlling  C a n a d a , Denmark, F i n l a n d ,  Luxembourg, t h e N e t h e r l a n d s ,  France,  N o r w a y , Sweden, t h e U.K., a n d  71 t h e U.S.  Interestingly,  c o u n t r i e s n o t members o f GATT w e r e  permitted  t o j o i n t h e LTA a n d t h e GATT T e x t i l e s C o m m i t t e e c h a r g e d w i t h a d m i n i s t e r i n g it.  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  interests  i n subsequent n e g o t i a t i o n s  over  - 79  market d i s r u p t i o n w i l l  be  -  discussed later  i n the  chapter.  Conclusion The process  1950s and  i n d u s t r i a l p r o d u c t i o n tended  of course  a few  T a i w a n ) and complained  generally preoccupied  f o r t h e i r manufactured exports.  that discouraged  M o s t LDCs c a p a b l e  t o a d h e r e t o an  exceptions  products  i n terms o f both  issue of  of  signi-  inward-looking strategy  (textiles).  c o u n t r i e s ( e . g . Hong K o n g ,  H o w e v e r , LDCs members o f GATT i n c r e a s i n g l y  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 w o r k e d and  they j o i n e d with other developing c o u n t r i e s  as t h e S o v i e t b l o c ) i n d e m a n d i n g b o t h new  a new  w i t h the  r e l i a n c e on e x t e r n a l e c o n o m i c s t i m u l i , a l t h o u g h t h e r e w e r e  t h e i r disadvantage, well  1 9 6 0 s w e r e 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  o f i n d u s t r i a l i z i n g were not  market access ficant  early  institutional  trade policy.  f o r u m f o r t h e d i s c u s s i o n and  As w i l l  more s p e c i f i c  to  the  LDC  institutional  (as  and n o r m s  regulation of  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  e x i s t i n g r u l e s , n o r m s and to  trade rules  to  and  international  a s s a u l t on  s e t t i n g s became i n e x t r i c a b l y  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  linked goods  North.  Ill  Phase I I :  T h i r d World Manufactured  Exports  and  the  R e f o r m o f I n t e r n a t i o n a l E c o n o m i c Norms Introduction By t h e e a r l y  1 9 6 0 s , an  i n c r e a s i n g number o f T h i r d W o r l d  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 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  economic industrialization economists  who  - 80 -  stressed  t h e b e n e f i t s a v a i l a b l e t o LDCs f r o m c l o s e r i n t e g r a t i o n i n t o t h e  international  economic system.  i n t e l l e c t u a l s believed that exporting others  Most d e v e l o p i n g  the prospects  trade"  e l i t e s and  f o r economic development  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 .  had argued i n t h e 1950s, c o u n t r i e s  for their  country  through  As P r e b i s c h and  r e l y i n g on s u c h commodity  exports  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  as t h e p r i c e s o f t h e i r  r e l a t i v e t o those o f t h e i r whereas P r e b i s c h  exported primary products p r o g r e s s i v e l y  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  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  declined  goods.  But  sought t o a l l e v i a t e  this  f o r e i g n e x c h a n g e " g a p " b y 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 s p o k e s m e n w e r e now more d i s p o s e d  t o w a r d s 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  expanding T h i r d World exports  o f m a n u f a c t u r e s and semi-manufactures.  c o n s e n s u s was e m e r g i n g t h a t t h e e a r l i e r Prebisch himself  s t r a t e g y was u n w o r k a b l e .  A new  As  commented:  As i s w e l l k n o w n , t h e 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 American c o u n t r i e s o f t h e a d v a n t a g e s 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 develop, t o the detriment o f e f f i c i e n t production.72 This  c o n s t i t u t e d quite a remarkable r e v e r s a l o f the e a r l i e r  orthodoxy  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  many e x p e r t s  s i z e o f LDC m a r k e t s made i t  and p o l i c y - m a k e r s t h a t  extremely d i f f i c u l t  to construct  the small  industries of sufficient  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. i n s t i t u t e d b y LDCs s e e k i n g of competition tries  faced  I  to industrialize  by h e a v i l y protected  and thus i n t r o d u c e d  High t a r i f f s  by  size t o allow  and o t h e r  barriers  i n t h e 1950s r e d u c e d t h e d e g r e e and s u b s i d i z e d  domestic  a structural incentive f o rinefficient  indusproduction  -  practices  and  resource  of small, i n e f f i c i e n t  -  81  misallocation.'°  In a d d i t i o n to the  proliferation  i n d u s t r i e s , m o s t 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 required t o purchase the by  domestic p l a n t s .  difficult led  imports  of capital  However, t h e  to r e s t r i c t i o n s which overvalued  In  order to provide  trialization,  I n f a c t , p e r s i s t e n t exchange  the  e x c h a n g e r a t e and  thus  a sounder economic b a s i s f o r t h e i r  markets f o r exports  tries,  both because of t h e i r  The  rich  industrial  of manufactured products general  future  indus-  c h a r a c t e r i z e d by  from developing  of manufactured  the coun-  because i t goods--  simple, standardized, labor-intensive  p r o d u c t i o n t e c h n o l o g i e s a n d p r o c e s s e s - - f a r more c h e a p l y advanced economies.  That i s , d e v e l o p i n g  i n d u s t r i a l i z a t i o n by  shifting  a g l o b a l comparative  of  economies were  e c o n o m i c p r o s p e r i t y and  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  p a r t i c u l a r l y those  crises  further  LDCs w o u l d i n c r e a s i n g l y h a v e t o g e a r t h e i r p r o d u c t i o n  obvious  enjoyed  i n p u t s needed  circle.  manufactures to the world market.  was  other  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  to acquire foreign currency.  penalized exports--a v i c i o u s  goods and  was  resources  than  could  c o u n t r i e s c o u l d promote into those  the  their  sectors i n which  they  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 the  subsequent s e c t i o n o f t h i s  c o n d i t i o n s and  chapter  r u l e s a f f e c t i n g access  was  e s s e n t i a l l y concerned with  to Northern  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 g l o b a l l y c o m p e t i t i v e o r soon would  be.  m a r k e t s f o r LDC  i n w h i c h t h e y were  and  the  exports either  -  LDC  Manufactured  Exports,  82  -  1964-73:  An  Overview  . 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 v o l u m e and v a l u e o f m a n u f a c t u r e d were r e c o r d e d by t h e d e v e l o p i n g of these  c o u n t r i e s i n the  economists  interpreted this  t r e n d as  that g r e a t e r exposure to the i n t e r n a t i o n a l for  1 9 6 4 - 7 3 p e r i o d , and  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  Many l i b e r a l  LDCs w a n t i n g  to i n d u s t r i a l i z e  as a  of growth" f o r developing  pounded by  liberal  economy was  result.  the optimal  view  policy  That trade i s  economies i s a t h e s i s v i g o r o u s l y p r o -  e c o n o m i c 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  as t h e m o s t p r o f i t a b l e and  several  supportive of their  (see t h e p r e v i o u s c h a p t e r ) .  an " e n g i n e  exports  e f f e c t i v e candidates  are  viewed  f o r e x p o r t s by c o u n t r i e s  75 seeking t o mature e c o n o m i c a l l y . "mainstream" economists. which p o i n t out  Nor  UNCTAD and  i s this  o t h e r UN  t h a t h i g h e r p e r c a p i t a GNP  argument o n l y p r o f f e r e d by bodies  have i s s u e d s t u d i e s  g r o w t h was  a c h i e v e d by major  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 group o f d e v e l o p i n g  enjoyed  c o u n t r i e s , w i t h the exception of the  by any  largest  LDC  other  petroleum  7 6  exporters. Table  5 provides  m a n u f a c t u r e d e x p o r t s up v a l u e o f such  exports  a broad  context  t o 1973.  Examination  of the product  clothing,  ferrous metals striking  and  and  almost  a b o u t one  composition  of manufactures r e v e a l s s i g n i f i c a n t products,  6 t i m e s , t h e LDC percent  growth i n the shares a relative  economists)  has  LDC nominal of  world  1963-73.  countries' exports  o l d e r "manufactures."  (and h e a r t e n i n g t o l i b e r a l  share  i n the decade  of developing  wood m a n u f a c t u r e s and  textiles—two  the growth o f  I t i s noteworthy that w h i l e the  i n c r e a s e d by  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  f o r examining  of  engineering  decline" in  non-  Particularly  been the r a p i d  growth  - 83 -  i  T a b l e 5:  Exports of Manufactures, (Billions  LDCs I n d u s t r i a l Market  Economies  World  o f LDC e x p o r t s o f c l o t h i n g such h i g h "value-added" telecommunications  o f U.S.$  1963-73  (SITC5-8)  77  and p e r c e n t )  4.90  (6.7%)  9.1  69.50  (81%)  123.85  85.60  (100%)  149.55  (6.1%)  28.5  (7.8%)  (82.8%)  299.85  (82.2%)  (100%)  364.75  (100%)  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  p r o d u c t s as m a c h i n e r y ,  transport vehicles,  and  equipment).  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 of Manufactures, (per  Exports  1963-7378  cent) 1963  1968  1973  29.1  31.7  15.4  I r o n and s t e e l  2.8  3.4  3.3  Chemicals  8  7.5  7.2  Wood s e m i m a n u f a c t u r e s and p a p e r  2  2.9  3.4  Other  9.6  7.7  8.6  9.3  10.7  20.8  Textiles  22.4  17.3  15.3  Clothing  6.1  9.7  13.5  16.4  9.0  11.2  Non-ferrous  semimanufactures  Engineering  Other Total*  metals  products  Consumer  Goods  100%  100%  100%  $4.9  $9.1  $25.5  (billion * W i l l n o t a d d up t o 1 0 0 % due t o r o u n d i n g .  dollars)  includes  - 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 c a n be o b t a i n e d b y relating  t o the volume o f e x p o r t s .  country exports of manufactures 12 p e r c e n t  i n the  the use  of  I t appears t h a t the volume o f  g r e w a t an a v e r a g e a n n u a l  data developing  rate of  about  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  increase  79 in  e x p o r t s was  registered.  Table  o f t h e g r o w t h p a t t e r n s o f LDC  7 p r o v i d e s v o l u m e and v a l u e  manufactured  indices  exports. 8 0  Table  7:  LDC  Exports of Manufactures, (1970  = 100  Value  f o r b o t h v o l u m e and  and V o l u m e I n d i c e s value)  Volume 1963  46  36  1968  71  66  1973  151  205  A c c o r d i n g t o t h i s m e a s u r e , t h e v o l u m e o f LDC tripled 500  of world  manufactured  i n ten years, while the value of those  percent  Value  (the l a t t e r  e x p o r t s more  e x p o r t s g r e w b y more  f i g u r e o f course b e i n g p a r t l y d i s t o r t e d by  t h e a b s o l u t e and  decade were q u i t e r e m a r k a b l e ,  real  growth r a t e s experienced d u r i n g  virtue  In the f i r s t  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 w e r e a d o p t i n g o u t w a r d - l o o k i n g endeavoring  t o expand o r b r a n c h  i n t o manufactured  as a whole c o n t i n u e d t o account  world exports of manufactures  this  t h e LDCs w e r e b y no means s a t i s f i e d w i t h  l o c a t i o n within the i n t e r n a t i o n a l d i v i s i o n of labor.  World  than  inflation).  While  and  than  $50  place,  policies  exports, the T h i r d  f o r only a very small p r o p o r t i o n of  (see Table  market economies e x p o r t e d almost  their  5).  billion  And worth  while the  industrial  of manufactures  t o LDCs  - 85 in  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 f r o m t h e s e  thus generating a net manufactures  trade d e f i c i t  countries,  o f more t h a n $30  billion  81 f o r the developing countries; years  1964-73.  In a d d i t i o n ,  grew s t e a d i l y d u r i n g  i t i s c l e a r t h a t a s m a l l number o f  a c c o u n t e d f o r t h e b u l k o f LDC UNCTAD e s t i m a t e d t h a t  such d e f i c i t s  manufactured  exports.  F o r example,  (exclusive of non-ferrous metals).  r a n k e d , i n d e s c e n d i n g o r d e r , a s f o l l o w s : Hong K o n g , T a i w a n ,  S.  as d e v e l o p e d i n GATT d a t a e m p l o y e d  in this  Korea, B r a z i l , Argentina, P a k i s t a n , P h i l i p p i n e s , 82  Colombia, C h i l e , of t o t a l  LDC  Indonesia.  manufactured  Although d i f f e r e n t  different  in  1970  They were India, Yugoslavia  study),  Mexico,  Iran, Malaysia,  Nigeria,  H o n g K o n g 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  exports;  Taiwan,  b e t w e e n 8 and 9 p e r c e n t e a c h ; a n d t h e f i r s t cent.  countries  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  exports of manufactures  (classified  the  I n d i a , and Y u g o s l a v i a f o r t e n c o u n t r i e s f o r about  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  f i g u r e s , a l l e x p e r t s a g r e e on t h e d o m i n a n t  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  manufactured  70 p e r -  somewhat  role of a handful of  e x p o r t s d u r i n g t h e 1960s  and  83 early  1970s.  Finally,  period partly reflect  the early  tricted  1960s,  and  1964-73 manufactures  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 some w h i c h w e r e e x p o r t i n g s u c h p r o d u c t s w e r e  t o n o n - f e r r o u s m e t a l s - - n o t even  number o f d e f i n i t i o n s .  f o r the  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  from the T h i r d World. in  i m p r e s s i v e growth s t a t i s t i c s  a manufactured  res-  good a c c o r d i n g t o a  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  indicate  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 v o l u m e o f manu-  factures  i n 1973  as o p p o s e d  t o v i r t u a l l y none i n  1963.  - 86 -  T r a d e B a r g a i n i n g a n d t h e R e f o r m o f Norms a n d R u l e s As a n 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  exporting manufactures t o t h e developed c o n d i t i o n s under which t h i s both w i t h i n i n t e r n a t i o n a l development p o l i c y . taken then  economies, t h e q u e s t i o n o f t h e  trade would take p l a c e took  institutions  The i n i t i a l  on a h i g h e r  profile,  and i n academic d i s c u s s i o n s o f  UNCTAD s e s s i o n i n 1964 a n d t h e d e c i s i o n  over t h e vigorous 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 a s a p e r m a n e n t UN o r g a n w e r e 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 South trade r e l a t i o n s . occurred  i n t h e b a s i c norms a n d r u l e s g o v e r n i n g  The c e n t r a l p o l i t i c a l  i n GATT a n d i t s new c o m p e t i t o r  w o r l d trade--UNCTAD.  developed  1) p r e f e r e n c e s  arena o f  ( a n d a r e ) r e l e v a n t t o LDC f o r such  exports i n i n trade  i n t h e GATT c o n t e x t , a n d 3) t h e e f f e c t a n d i n c i d e n c e o f  country trade b a r r i e r s  considered  1.  i n the institutional  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  negotiations developed  b a r g a i n i n g and d i s c u s s i o n  The m a j o r i s s u e s w h i c h were  exports o f manufactures concerned:  North-  o n LDC m a n u f a c t u r e d e x p o r t s .  Each i s  below.  LDCs a n d T r a d e  Preferences  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  states to the principle of  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 commercial p o l i c y  almost  from t h e beginning  i n t h e quasi-sacrosanct s t a t u s accorded  of the nation"  t h e MFN c l a u s e i n GATT.  p r o v i s i o n s w e r e 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 preferences  --was r e f l e c t e d Although  the role o f trade  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 XXIV),  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 development--in  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 these  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 lized countries.  Developing  c o u n t r i e s and t h e i r  the 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 enshrined  supporters  i n GATT's MFN  argued t h a t  obligation  p r e s u p p o s e d a n 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 . academic expert sympathetic  t o T h i r d W o r l d 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 a n e q u i t a b l e o n e ; should be equal; b u t i f ,  A s one  i n fact,  i t i s an i d e a l  they a r e not, equal  that a l l nations  treatment  becomes  inequality. " ^ The in  question o f preferences  North-South  exports  t r a d e n e g o t i a t i o n s over market access  f r o m LDCs.  i n k , both  s u p p o r t i v e and c r i t i c a l  tial  and market access  debate cannot be r e c o u n t e d  f o r developing  issue  f o r manufactured  I t i s a l s o a t o p i c which has e l i c i t e d  of scholarly tariffs  h a s been b y f a r t h e most i m p o r t a n t  a great  o f t h e concept countries.  This  outpouring  of preferenacademic  i n d e t a i l here, but since the divergent  opinions  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 political  b a r g a i n i n g t h a t e n s u e d a t UNCTAD I a n d I I , b r i e f  summaries o f t h e  contrasing views are i n order. Those o p p o s i n g dangerous p o l i c y accrue  t a r i f f preferences  instruments  t o LDCs t h r o u g h  Several reasons  i n t h e mid-1060s p e r c e i v e d them a s  and doubted t h a t any s i g n i f i c a n t  developed  country preferences 87  were t y p i c a l l y advanced.  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  First,  i n their  gains  would  favor.  i t was a r g u e d t h a t MFN  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 -  less than  10 p e r c e n t  negotiations  o f t h e GATT  ( t h e s o - c a l l e d K e n n e d y Round) t h e n u n d e r way, a n d w o u l d  certainly fall ful  f o r most m a n u f a c t u r e s a s a r e s u l t  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-  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 .  a relatively  Second, s i n c e  s m a l l number o f LDCs w e r e 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 m a n u f a c -  tured products,  and o n l y a few p r o d u c t  l i n e s w e r e i n v o l v e d , " i t was n o t  88 worth tampering preferences  w i t h t h e MFN s y s t e m . "  t o cover  exports o f primary  Moreover, extension o f t a r i f f  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  their  commodities e i t h e r f a c e d l o w o r zero 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  tariff  preferences.  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 w o u l d g i v e LDC  beneficiaries  a vested  interest  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  r e d u c t i o n s which would l e s s e n t h e p r e f e r e n c e margins enjoyed developed  country markets.  Finally,  sources  not enjoying preferences  b y them i n  t o the extent that t a r i f f  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 imports  tariff  preferences  from low cost  t o h i g h e r - c o s t LDC s o u r c e s  benefiting  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 world resources would a u t o m a t i c a l l y r e s u l t . Partisans of preferences  f o r developing countries countered 89  s e v e r a l p l a u s i b l e a r g u m e n t s o f t h e i r own.  Given  with  the internationally  r e c o g n i z e d need o f t h e T h i r d World 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 this  f u t u r e r o l e o f manufactures i n b r i n g i n g about  i n c r e a s e , ways h a d t o b e f o u n d  T a r i f f preferences reasons.  f o r developing  t o boost  LDC e x p o r t s o f  manufactures.  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  T h e y w o u l d h e l p t o c o m p e n s a t e LDCs f o r t h e c o m p a r a t i v e  weakness o f t h e i r nascent  manufacturing  industries vis-a-vis  competitive  theestablished  - 89  -  i n d u s t r i e s i n the 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 "infant  i n d u s t r y " argument f o r d o m e s t i c  d e s c r i b e d the essence  of this  tariff  protection.  the  P a t t e r s o n has  argument:  ... i t was commonly b e l i e v e d b y 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 f r o m 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 w o u l d be h i g h b e c a u s e t h e y w e r e n o t y e t i n a p o s i t i o n t o t a k e a d v a n t a g e 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 e t s 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 In  a d d i t i o n , although developed  c o u n t r i e s ' MFN  p r o d u c t s w o u l d i n m o s t c a s e s be r e d u c e d of  the 1960s, t a r i f f  to  be  to less than  r a t e s on many m a n u f a c t u r e s  c o n s i d e r a b l y h i g h e r , and  strict  some p r o d u c t s  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 .  p r o c e s s and  the operation of the p r i n c i p a l  negotiating rules tariffs  tariffs  M o r e g e n e r a l l y , i t was  LDC  faced  GATT's r e c i p r o c i t y b a r g a i n i n g  s u p p l i e r and  product-by-product country  other developed  countries.  t h a t the s t r u c t u r e of developed  m a t e r i a l s but 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  coun-  imports  of  imposed a c c o r d i n g  the degree o f p r o c e s s i n g — d i s c o u r a g e d the development o f p r o c e s s i n g  typical  developed  the "nominal problem:  t h e raw  country's t a r i f f  p r o t e c t i o n to domestic  the  tended  were t h e major e x p o r t e r s were u s u a l l y  argued  c a p a c i t y i n t h e LDCs f r o m w h i c h  of  o f i n t e r e s t t o LDCs  s c h e d u l e s — w i t h l o w o r z e r o d u t i e s i m p o s e d on  i n d u s t r i a l raw to  10 p e r c e n t b y t h e c l o s e  ( 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  on p r o d u c t s o f w h i c h  tariff  nonagricultural  (e.g. c o t t o n t e x t i l e s )  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 b y  tries'  on  structure provided "effective"  i n d u s t r y which  tariffs"  m a t e r i a l s were e x t r a c t e d .  was  would i n d i c a t e .  much g r e a t e r t h a n an As  one  o b s e r v e r has  The tariff  examination described  - 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 m a n u f a c t u r e r a n d 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 o n 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 effective protection.91 7  Although and  the associated discrepancy  affected was  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  between " e f f e c t i v e " and "nominal"  LDCs m o s t 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  a l s o t h o u g h t t o i m p e d e LDC m a n u f a c t u r e d e x p o r t s  element i n t h e d i s p u t e over t a r i f f p r e f e r e n c e s arguments t h a t developed c o u n t r y major exporters  were h i g h e r  tariffs  than those  protection  commodities, i t  a n d was a n  important  d u r i n g t h e 1960s.  LDC  on m a n u f a c t u r e s o f w h i c h t h e y  on m a n u f a c t u r e s i n g e n e r a l  the  " 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 domestic i n d u s t r y i n developed  was  a l s o greater i n sectors competing w i t h  were  and t h a t countries  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 b y 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 ,  s e r i o u s l y disputed by other These v a r i o u s for  experts.  "academic" arguments f o r and a g a i n s t  LDCs w e r e r e p e a t e d  incidentally,  tariff  preferences  b y 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 1 9 6 4 .  UNCTAD I m a r k e d a c r u c i a l  turning point  i n i n t e r n a t i o n a l economic  relations  in  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  in  a forum i n which t h e views o f t h e Western c o u n t r i e s d i d n o t dominate.  The  discussed  F i n a l A c t adopted a t t h e c l o s e o f t h e Conference r e f l e c t e d t h e d e c l i n e  o f W e s t e r n i n f l u e n c e : o f t h e 15 " g e n e r a l " a n d 13 " s p e c i a l " (adopted by m a j o r i t y vote) t o govern i n t e r n a t i o n a l t r a d e  principles  and development  91  J a b l e 8: A v e r a g e E f f e c t i v e a n d N o m i n a l T a r i f f R a t e s on Manufactures  I m p o r t e d b y 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 Averages on T o t a l I m p o r t s o f Manufactures  T a r i f f A v e r a g e s on Imports o f Manufact u r e s f r o m LDCs  Effective  Nominal  E%N  Nominal  Effective  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  6.6  12.5  189  9.8  21.2  216  Japan -  16.1  29.5  183  18.0  36.7  207  All Industrial Countries  12.3  21.7  176  17.1  33.4  195  Sweden  r e l a t i o n s , t h e U.S. o p p o s e d o r a b s t a i n e d o n 11 g e n e r a l a n d n i n e ciples;  t h e U.K.  on t e n a n d s i x ; F r a n c e ,  on e i g h t and f i v e ;  special  prin-  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 ,  close observer,  respectively.  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  According  t o one  i n the Final Act  r e f l e c t e d the b e l i e f o f the m a j o r i t y o f c o u n t r i e s i n three key " p r i n c i p l e s " : 1) t h e n e e d t o s t a b i l i z e cial  commodity p r i c e s ;  2) t h e n e e d t o e f f e c t  f l o w s t o t h e T h i r d W o r l d ; a n d , 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  3) t h e n e e d f o r " / " i / n c r e a s e d a c c e s s by r e d u c i n g n o r t h e r n  f o r developing  both on  adopted,  a v o t e o f 78 t o 1 1 , 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  stated, inter alia, developing to  countries' products,  The C o n f e r e n c e  finan-  study,  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 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 . " by  larger  that "preferential  concessions  . . . s h o u l d b e made t o  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 developed c o u n t r i e s . " V i r t u a l l y a l l developed 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 . preferences  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  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  contained i n special p r i n c i p l e o p p o s i t i o n o f t h e U.S.  recommendation t h a t noted called  three.  country markets  was  However, because o f t h e v o c i f e r o u s  in particular,  a c t i o n on t h i s p r i n c i p l e .  p o s a l and  -  the Conference decided  Instead, i t adopted without  to take  dissent a  t h e l a c k o f c o n s e n s u s on t h e p r e f e r e n c e s  f o r the establishment  no  o f a committee t o e x p l o r e  pro-  the  96 matter  f u r t h e r and The  marked h o s t i l i t y  for developing allies  and  c o u n t r i e s tended  to support  C a n a d a , J a p a n , and  On  of the United States to the idea of  trading partners.  quite prepared  t h e U.S.  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.  i t from s e v e r a l major  I n f a c t , many o t h e r d e v e l o p e d  preferences, at least  general p r i n c i p l e  t h e o t h e r h a n d , s i x EEC  c o u n t r i e s were  in principle.  The  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  some s y m p a t h y f o r p r e f e r e n c e s  i n f a v o r o f LDC  exports.  countries prepared  t a r i f f preferences  f o r LDCs i n t h e i r m a r k e t s w e r e d i v i d e d on how  p r e f e r e n c e s w o u l d be  tial  "felt  implemented.  to e n t e r t a i n the proposal  West Germany, Denmark, and  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  scheme a p p l i e d t o a l l d e v e l o p i n g  this  several other countries.  However, developed  Netherlands  U.K.,  e i g h t , which alluded to preferences.  as d i d F i n l a n d , D e n m a r k , I r e l a n d a n d  They i n d i c a t e d  developed  s e v e r a l s m a l l non-EEC West E u r o p e a n c o u n t r i e s j o i n e d  i n opposing  principle,  to isolate  preferences  c o u n t r i e s by  for such  the  a single preferena l l industrial  97 nations." I t a l y and  B r i t a i n a l s o supported Belgium  this position.  proposed " s e l e c t i v e "  n e g o t i a t e d on a b i l a t e r a l  In c o n t r a s t ,  preferences which would  France,  be  or 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 the  - 93  -  context of r e g i o n a l cooperation arrangements. this  approach i s not hard  allow f o r the  to discern:  flexibility  and  Their reason  selective preferences  trade preference  w i t h former  recently codified  c o l o n i e s i n A f r i c a and  o f t h e "Group o f 77" w e r e d i v i d e d on two  LDCs w a n t e d s p e c i a l of developed  for  critical  issues.  First,  erence  those  t h e G r o u p o f 77  accepted  producing  being  assured  appropriate.  d i s p u t e concerned  the  the markets of c e r t a i n developed i n c l u d i n g some m a n u f a c t u r e s . preferential  treatment  well.  treatment  fate of existing  pref-  p r e f e r e n t i a l margins i n products,  In 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 were a n x i o u 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 f a g e n e r a l i z e d scheme.  as  A s e c o n d , more  countries f o r a variety of  f r o m t h e EEC  of existing preferences  share  p e r h a p s t o more g e n e r o u s  t h a t some f o r m o f s p e c i a l  among t h e m was  rubric  industrialized  e n t i t l e m e n t t o an  schemes u n d e r w h i c h v a r i o u s LDCs e n j o y e d  achieved  Yaounde  preferences,  s c a l e i n s i s t e d on  c o u n t r y m a r k e t s i n t h e f u t u r e , and  i n t r a - G r o u p o f 77  margins,  1963  LDCs a l r e a d y  scheme, whereas l e s s  recognition of t h e i r  less developed  serious  up  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 w e r e c o n c e r n e d  t h e end, the  i n the  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  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  In  schemes b u i l t  c o u n t r i e s , w h i l e agreeing under the  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  treatment  their  9 8  S i m i l a r l y , the developing  and  would  d i s c r e t i o n required to safeguard  " s p e c i a l " e c o n o m i c c o o p e r a t i o n and  Cr o n v e n t i o n .  for favoring  to safeguard  o t h e r LDCs i n s i s t e d  their  on t h e  abolition  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 No  w o r k a b l e G r o u p o f 77  c o n s e n s u s was  really  on t h i s p r o b l e m a t UNCTAD I b e y o n d a v a g u e f o r m u l a t i o n t h a t  stressed that "equivalent advantages" to current b e n e f i c i a r i e s  of  t  - 94 -  99 preferences The  s h o u l d be m a i n t a i n e d .  developing  necessary  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 c o n s e n s u s  t o translate t h e i r proposal f o r t a r i f f preferences  i n t e r n a t i o n a l l y accepted  p r i n c i p l e , b u t t h e y w e r e a b l e t o go t o a c o n -  siderable distance i n this direction. country--the  United States--was  The m a j o r r e c a l c i t r a n t  i n p r i n c i p l e though unable  towards  preferences  t o a g r e e o n how t h e y s h o u l d b e i m p l e m e n t e d .  LDCs w e r e a b l e t o e n s u r e t h a t a c o n t i n u o u s  w o u l d be e x e r t e d on t h e d e v e l o p e d o f UNCTAD I , t o e s t a b l i s h  developed  somewhat i s o l a t e d f r o m s e v e r a l o t h e r  W e s t e r n p o w e r s , some o f whom w e r e f a v o r a b l y d i s p o s e d  The  i n t o an  i n s t i t u t i o n a l pressure  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  i t a s a p e r m a n e n t 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 o u t c o m e was a n 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 developed 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 conference which had been i n i t i a l l y r e s i s t e d by t h e developed countries; t h e y had been a b l e , f o r t h e f i r s t time i n h i s t o r y , t o c r e a t e a m a j o r new i n t e r n a t i o n a l a g e n c y w h i c h t h e W e s t e r n 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 to  Assembly, over Western o p p o s i t i o n , voted  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  developing c o u n t r i e s had i n e f f e c t  ( R e s o l u t i o n 1995 ( X I X ) .  seized the initiative  e c o n o m i c r e l a t i o n s b y 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 a broad was  The  i n North-South  organization with  mandate t o e x p l o r e t r a d e and development i s s u e s .  T h a t UNCTAD  ( a n d r e 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 f r o m 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 conceived  delegates-  o f i t s r e s p o n s i b i l i t i e s i n t e r m s o f a s s i s t i n g t h e LDCs t o  achieve  t h e i r g o a l s on p r e f e r e n c e s  radical  departure  and o t h e r i s s u e s ;  f r o m t h e way i n w h i c h o f f i c i a l s  t h i s marked a  of international  organi-  - 95 -  zations t r a d i t i o n a l l y defined new  their tasks.  body, Raul P r e b i s c h , e x e r c i s e d  The S e c r e t a r y - G e n e r a l  of the  a n enormous i n f l u e n c e o v e r t h e G r o u p  o f 77's t h i n k i n g about t r a d e p r o b l e m s and on t h e n e g o t i a t i n g s t a n c e o f the T h i r d World as a whole.  Prebisch's  report  to the f i r s t  conference,  " T o w a r d s a New T r a d e P o l i c y f o r D e v e l o p m e n t , " 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 1995  (XIX)  continuing  i n s t i t u t i o n a l machinery e s t a b l i s h e d by R e s o l u t i o n  consisted.of  s u b s i d i a r y committees. in  a Trade and Development Board, w h i c h c a n c r e a t e T h e B o a r d h a d 55 members e l e c t e d b y t h e C o n f e r e n c e ,  accordance w i t h t h e need t o guarantee b o t h e q u i t a b l e  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 Countries and  were d i v i d e d i n t o f o u r  Yugoslavia),  list  "lists"--list  B ( t h e OECD n a t i o n s  trading  nations.  A (Afro-Asian  and C y p r u s ) ,  American and C a r i b b e a n c o u n t r i e s ) , and l i s t  geographic  list  countries C (Latin  D (socialist states--basically  the  S o v i e t Union and i t s a l l i e s ) .  T h e LDCs e n j o y a c l e a r m a j o r i t y o n  the  Board and on any committees s t r u c k by i t .  At i t s f i r s t  session, the  B o a r d e s t a b l i s h e d a Committee on C o m m o d i t i e s , 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 on  Shipping;  and F i n a n c i n g  Related  t o Trade, and a Committee  t h e s e have remained i t s major s u b s i d i a r y  In accordance w i t h recommendation A . I I I . 5 Secretary-General which reported  created  bodies.  o f UNCTAD I , t h e  i n 1965 a S p e c i a l C o m m i t t e e o n  Preferences,  t o t h e C o m m i t t e e o n M a n u f a c t u r e s o n c e a n d was t h e n 102  s u c c e e d e d b y a l a r g e r body, t h e Group on P r e f e r e n c e s . these 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  s i v e l y discussed  during  preferences  I t was w i t h i n was m o s t i n t e n -  t h e i n t e r v a l b e t w e e n UNCTAD I a n d t h e S e c o n d  - 96  Conference planned receiving  f o r 1968.  -  I n GATT, w h e r e LDCs' t r a d e p r o b l e m s w e r e  i n c r e a s i n g a t t e n t i o n throughout  as P a r t I V ) was  added t o t h e G e n e r a l  T r a d e and  D e v e l o p m e n t was  was  found  t o be  s e t up.  1 9 6 4 - 6 6 , a new  Agreement and  a new  chapter  (known  Committee  H o w e v e r , no m e n t i o n o f  on  preferences  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  at  the  103 t i m e by agreed  C h i l e and  India.  Indeed, although  a t UNCTAD I t h a t LDCs c o u l d g r a n t  without  the developed  countries  t a r i f f preferences  t o each  other  extending  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 n e e d f o r new r u l e s " - - e v e n 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 w e r e 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 I V t o GATT. A W o r k i n g G r o u p on I  Preferences  e s t a b l i s h e d i n 1965  C o m m i t t e e on T r a d e and 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  inconclusively,"'^*' but  the i n s t i t u t i o n a l  r e m a i n e d i n UNCTAD, s i n c e i t was LDC  views c a r r i e d Although  t o r y , an by  a t t h e i n s i s t e n c e o f LDCs i n GATT's  f a r more  locus of negotiations  a more u n i v e r s a l b o d y and  i n t e r e s t i n g prelude to the preference  LDCs.  countries occurred  A u s t r a l i a was  i n which  i n 1965  able to secure  quite perfunc-  schemes l a t e r  instituted  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 b e 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 to  one  weight.  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  the developed  briefly  a waiver  on c e r t a i n  of i t s A r t i c l e  products  I  MFN  o b l i g a t i o n f r o m 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 " T h i s 1966  w a i v e r was  t e n t a t i v e step toward  i n t o developed products  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 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 106  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 . "  on w h i c h p r e f e r e n c e s w o u l d be  g r a n t e d was  1966.  and imports  The  list  chosen a c c o r d i n g  to  of  - 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": export  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 .  utilized list  items which i n d i v i d u a l  " t a r i f f quotas,"  which provided that products  would enter a t lower p r e f e r e n t i a l r a t e s u n t i l  filled;  erence  scheme  on t h e p r e f e r e n c e  a c e r t a i n quota  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 o u l d a p p l y .  t h e y r e f e r r e d t o LDCs a s a g r o u p .  Quotas were  A key feature o f A u s t r a l i a ' s  later  i n UNCTAD--was i t s u n i l a t e r a l  remained f r e e " t o v a r y a t any t i m e t h e l i s t the s i z e o f quotas."  The m u l t i l a t e r a l  character.  was "global"--  pref-  s y s t e m - - a n d 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  that arose  and  Australia's  LDCs c o u l d  issue  Australia  o f goods, t h e r a t e s o f duty s u r v e i l l a n c e o f the waiver 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 trade d i v e r s i o n t h a t might  occur  107 to the detriment  o f other developed  Prebisch presented  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 h e r e v i e w e d developed surveyed  countries.  t h e major arguments f o r and a g a i n s t  country t a r i f f preferences  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  v a r i o u s a l t e r n a t i v e approaches t o implementing  a preference  108 scheme(s).  I n 1966 a n d e a r l y  monious d i s c u s s i o n s c o n c e r n i n g Manufactures  1967 i n c o n c l u s i v e a n d f r e q u e n t l y a c r i -  preferences  took p l a c e i n t h e Committee on  a n d i t s new G r o u p o n P r e f e r e n c e s .  E f f o r t s t o reach  consensus  ( o r e v e n a m e a s u r e o f a g r e e m e n t ) on how t a r i f f p r e f e r e n c e s w o u l d b e implemented were t h w a r t e d  b y 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.,  C a n a d a , Japan, S w i t z e r l a n d a n d , t o a l e s s e r e x t e n t , Sweden and-'Norway to t h e undermining  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 w o u l d  be  a consequence o f such p r e f e r e n c e s .  in  favor o f developing  Until  c o u n t r i e s was a c c e p t e d  the p r i n c i p l e of preferences by a l l t h e major  potential  - 98  -  donor s t a t e s , n e g o t i a t i o n s concerning t h e r e s h o u l d be one preferences  the  scope o f p r e f e r e n c e s , whether  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  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  EEC  differentiate 109  the  l e a s t - d e v e l o p e d f r o m o t h e r LDCs w e r e 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  W a s h i n g t o n was  b e c o m i n g 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 w h a t was  p e r c e i v e d t o be  an a t t e m p t  c o l o n i a l i s t hegemony o v e r o b n o x i o u s t o U.S. b e t w e e n t h e EEC  i n EEC  f a v o r o f EEC exports  and  countries U.S.  the  fruit  suppliers.  on t h i s g r o u n d . )  t h e f a c t t h a t t h e Yaounde  latter preferential  certain  1960s and  early  European and  preferences  Mediterranean  1970s were a l s o c r i t i c i z e d b y  In a d d i t i o n , reverse preferences i n h i b i t e d U.S.  e x p o r t s and  Finally,  t h e U.S.  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 b l o c " by  or secure  raised  the  leaders since  was  under  pressure  arrangements  the d i s s o l u t i o n  supporting a generalized global  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  f o r A f r i c a n countries.'*'**  the  f a v o r i n g the s i x  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.  scheme t h a t w o u l d be  in  Washington argued t h a t i t s  from L a t i n American c o u n t r i e s unhappy w i t h the E E C - A f r i c a n  preferences  for  also provided f o r reverse preferences  t h e e a r l y p a r t o f t h e c e n t u r y .'"*•* ^  preference  Convention  Madagascar  treatment  ( A g r e e m e n t s b e t w e e n t h e EEC  the emerging "Afro-European  neo-  Particularly  i n p a r t i c u l a r were harmed by  i n A f r i c a n markets c l e a r l y  widely  France) to a s s e r t a  colonies in Africa.  s u p p l i e r s i n t h e AASM c o u n t r i e s .  i n the l a t e  unpleasant  ( l e d by  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  markets, but  of c i t r u s  for African  former  p o l i c y m a k e r s was  (AASM) n o t o n l y a c c o r d e d products  b y t h e EEC  1967.  EEC  of  - 99 -  When P r e s i d e n t J o h n s o n S t a t e s was now w i l l i n g . . . the possibility developing countries the  last  announced, i n A p r i l  1967, t h a t t h e U n i t e d  " t o explore with other industrialized o f temporary p r e f e r e n t i a l  i n t h e markets  t a r i f f advantages  of a l l the industrialized  significant hurdle to international  countries for a l l  countries,"  agreement i n p r i n c i p l e  112 " T h o s e _bther7 d e v e l o p e d c o u n t r i e s w h i c h  was c l e a r e d .  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 h a d l i t t l e  fhadj choice butto  113 fall  i n line."  T h e U.S. a p p e a r e d  t o believe that by supporting the  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 which a l l developed donor c o u n t r i e s would  adopt  a similar  approach and e q u i t a b l y s h a r e t h e  " b u r d 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 w o u l d b e s e r v e d : m i s c h i e v o u s economic  regionalist  t h e EEC's  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 f r o m 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  crucial  i s s u e would be brought t o  an e n d . 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 s o u g h t t o f a s h i o n a unified position  i n t h e OECD.  While they agreed t o t h e p r i n c i p l e o f  temporary 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 (thanks t o c o n c e s s i o n s from France and  B e l g i u m ) , no consensus arrangements  was r e a c h e d o n t h e f a t e o f s p e c i a l  b e t w e e n t h e EEC a n d i t s LDC a l l i e s .  preferential  T h e 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 Y a o u n d e C o n v e n t i o n , w h e r e b y EEC s u p p l i e r s w e r e a c c o r d e d  preferential  treatment i n A f r i c a n markets.  B u t 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 a r r a n g e m e n t s  were l e g i t i m a t e ;  t h e A f r i c a n s were  also  - 100 -  reluctant t o discuss  this  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  political  r e l a t i o n s w i t h t h e EEC C o m m i s s i o n a n d P a r i s .  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 Canada and s e v e r a l o t h e r  There were  s y s t e m t o e m p l o y , t h e U.S.,  c o u n t r i e s f a v o r i n g an e s c a p e c l a u s e  A r t i c l e X I X o f GATT t h a t w o u l d o n l y o p e r a t e i f " s e r i o u s domestic i n d u s t r y occurred the  "tariff  o r was t h r e a t e n e d ,  similar to  injury" to a  w h e r e a s t h e EEC s u p p o r t e d  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  t h e v o l u m e 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 . c o u n t r i e s were agreed 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 Preferences  of  (GSP) w o u l d e s s e n t i a l l y b e r e s t r i c t e d  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  T h e OECD System o f  t o manufactures  (semi-  i n certain cases);  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 w e r e a l r e a d y safeguard GSP  and t o u n i l a t e r a l l y r e s o r t t o  a c t i o n i f they thought t h i s necessary;  would be t e n y e a r s ;  ineligible  that the duration o f the  that donor c o u n t r i e s c o u l d d e c l a r e  f o r p r e f e r e n t i a l treatment f o r "compelling  related to competitive the  competitive,  criteria;  form e i t h e r o f duty-free  c e r t a i n LDCs  reasons" not  and t h a t p r e f e r e n t i a l access c o u l d  t r e a t m e n t p_£ o f t a r i f f  reductions  take  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 G r o u p o f 77 a n d i n UNCTAD i t s e l f , 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 countries.  at variance  t h e LDCs  w i t h t h a t o f t h e donor  When t h e y met a n d a d o p t e d t h e A l g i e r s C h a r t e r  i n October  117 1967, by  t h e y were a b l e  developing  to resolve  a more e x t e n s i v e  ( o r a t l e a s t mute) t h e i r  "request  list."  differences  C e n t r a l t o t h e compromise  - 101 -  achieved  a t A l g i e r s was t h e a g r e e m e n t 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 for a strong  w i t h t h e EEC i n e x c h a n g e  c o m m i t m e n t o n t h e p a r t o f t h e G r o u p o f 77 a s a w h o l e t o  push f o r both wider product coverage  (i.e.,  c o m m o d i t i e s ) i n t h e GSP a n d s p e c i a l m e a s u r e s i n OECD c o u n t r i e s )  semi^processed (e-. g. r e s e r v e d  f o r t h e l e a s t d e v e l o p e d LDCs.  required  market  shares  The A f r i c a n s were  p a r e d t o a c c e p t f u t u r e a b a n d o n m e n t o f t h e i r EEC p r e f e r e n c e s could obtain  primary  "effective beneficial participation"  pre-  provided  they  i n t h e GSP; t h i s  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 b y a n d l a r g e w e r e b o t h insignificant  exporters  o f manufactures and r e l a t i v e l y poor i n comparison 118  with  L a t i n A m e r i c a n and E a s t  Asian  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 G r o u p o f 77 t h u s a s k e d f o r a n e x t r e m e l y b r o a d o f GSP p r o d u c t c o v e r a g e . duty-reduction  T h e LDCs a l s o demanded d u t y - f r e e  p r e f e r e n t i a l treatment;  surveillance i n respect  v  definition rather  than  i n t e r n a t i o n a l agreement and  o f t h e u s e o f safeguards by donor s t a t e s ;  inclu-  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 G r o u p o f 77 a s b e n e f i c i a r i e s u n d e r 119 the  GSP; a n d a 20 y e a r d u r a t i o n These d i v e r g e n t  progress The  preserve  p o s i t i o n s i n e v i t a b l y clouded  a t UNCTAD I I , h e l d  "maximalist"  group u n i t y i n t h e f a c e 120  i n s i s t e d t h a t "the  lateral  the prospects f o r  a t New D e l h i i n F e b r u a r y a n d M a r c h 1 9 6 8 .  G r o u p o f 77 b a r g a i n i n g  l a r g e number o f members" tries  f o r t h e GSP.  s t a n c e - - " d i c t a t e d by t h e need t o  o f d i v e r s i t y o f i n t e r e s t s /among7 a  --made c o m p r o m i s e u n l i k e l y . granting o f preferences  actions of the preference-giving  The donor coun-  would c o n s t i t u t e u n i -  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  into a legally binding  121 accord.  Nor were t h e y p r e p a r e d  commodities  ( c h a p t e r s 1-24  GSP,  the requirement  the use  to accept  f o r i n t e r n a t i o n a l concurrence  In essence,  i n connection with  criteria,  t r e a t m e n t meant  t h e donor s t a t e s were making i t q u i t e  t h a t they would u n i l a t e r a l l y determine cuts, e l i g i b i l i t y  processed  of the B r u s s e l s T a r i f f Nomenclature) i n the  of safeguards, or the view t h a t p r e f e r e n t i a l  free treatment.  GSP.  inclusion of  and  the product  coverage,  depth  in public.  As  a  R e s o l u t i o n 2 1 ( 1 1 ) o f UNCTAD I I r e f l e c t e d u n a n i m o u s a g r e e m e n t on p r i n c i p l e o f temporary  clear of  safeguard provisions associated with  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  duty-  the  result, the  preferences only; further detailed negotiations 122  w o u l d h a v e 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 remainder 1968  and  1969  produced  o n l y s l o w f o r w a r d movement s i n c e t h e  c o u n t r i e s d i d not submit factures  "illustrative  (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 )  the t a r i f f t h e s e had  their  c u t s t o b e made, and been f o r w a r d e d  thev argued  GSP,  developed  s p e c i f y i n g t h e manu-  t o be c o v e r e d b y t h e  other d e t a i l s u n t i l  late  1969.  GSP,  Once  t o UNCTAD, t h e LDCs r e a c t e d a s one w o u l d  f o r wider product coverage,  greater t a r i f f  of c o u n t r i e s not o f f e r i n g d u t y - f r e e treatment New  lists"  of  Zealand. S w i t z e r l a n d ) , fewer s p e c i a l measures f a v o r i n g  expect:  cuts i n the  (Canada. A u s t r i a .  e x c l u s i o n s of manufactures  less-developed T h i r d World  from states  case  Ireland. the  (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 u s e o f s a f e g u a r d m e c h a n i s m s . The 18 d e v e l o p e d d o n o r 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 a u t u m n 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 a n d  s t a t e s t o d r a f t Agreed Conclusions  developing  o n 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 w e r e e x t r e m e l y a n x i o u s t o s e e some  t y p e o f GSP a c t u a l l y i m p l e m e n t e d , a n d 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 determination creation "the  o f t h e donor c o u n t r i e s  and e v o l u t i o n and o p e r a t i o n  The  Agreed Conclusions  countries.  c o n t r o l over t h e  o f the t a r i f f preferences.  p o s i t i o n o f t h e OECD c o u n t r i e s  prevailed within the Special  and  to exercise rigid  regarding 126 Committee."  Thus,  t h e nature o f t h e system  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  Although provisions  r e c i p i e n t s were i n c l u d e d ,  r e q u i r i n g c o n s u l t a t i o n s between donors  i t was c l e a r t h a t  the developed  countries  e n j o y e d a w i d e l a t i t u d e t o f a s h i o n t h e i r GSP schemes a s 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 c o n c e p t o f a s i n g l e GSP was d e f a c t o a b a n d o n e d , i n s p i t e o f American r e l u c t a n c e .  W a s h i n g t o n now i n s i s t e d  among d o n o r s r a t h e r t h a n u n i f o r m i t y . ) " v i c t o r y " f o r t h e OECD c o u n t r i e s recognizing  on " e q u i t a b l e " b u r d e n  That t h e Agreed Conclusions  i s i n d i c a t e d by s p e c i f i c  C h a p t e r IX o f t h e C o n c l u s i o n s  t h e s e a s p e c t s o f t h e GSP i n n o u n c e r t a i n (1) T h e t a r i f f p r e f e r e n c e s  were a  statements  t h e temporary, 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  o f t h e i n d i v i d u a l GSP s c h e m e s .  sharing  character spelled out  terms:  a r e temporary i n nature;  (2) T h e i r g r a n t d o e s n o t c o n s t i t u t e a b i n d i n g c o m m i t m e n t a n d , i n p a r t i c u l a r , d o e s n o t i n a n y way p r e v e n t (a) t h e i r s u b s e q u e n t w i t h d r a w a l i n w h o l e o r i n p a r t , o r (b) t h e s u b s e q u e n t r e d u c t i o n i n t a r i f f s o n a m o s t f a v o u r e d - n a t i o n b a s i s . . .-^ With respect preferences,  t o the contentious  two c r i t i c a l  issue of v e r t i c a l  compromises p e r m i t t e d  and r e v e r s e  the generation  o f a vague  - 104 -  but  adequate consensus.  First,  t h e U n i t e d S t a t e s dropped i t s longstanding  position that v e r t i c a l preferences of the i n i t i a t i o n  h a d t o be a b o l i s h e d w i t h i n f i v e  o f t h e GSP a n d r e v e r s e p r e f e r e n c e s  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 eligible  for preferences  i n t h e U.S. m a r k e t .  quite evident that i t s t i l l out  i n a few y e a r s ' t i m e ;  reverse preferences (viz.  i n such  expected  years  concurrently with  arrangements t o be  H o w e v e r , W a s h i n g t o n made i t  existing preferences  i t also reserved i t s right  t o be phased  t o d e n y LDCs g r a n t i n g  t h e AASM s t a t e s ) GSP s t a t u s , a n d i n f a c t  128 Congress l a t e r  inserted this provision into the authorizing legislation.  S e c o n d , 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 w o u l d e v e n t u a l l y be r e d u c e d clusions  (Chapter  countries t o provide export I I , para.  acquiesced  ments.  t h e new a c c e s s  i n other  2 ) . The A f r i c a n s were unhappy w i t h t h i s  they expressed  concern  these  o p p o r t u n i t i e s t o compensate them"  i n order t o obtain the long-awaited  Still,  that  However, as t h e A g r e e d Con-  s t a t e d , they would i n t u r n "expect  developed  but  or abolished.  accepted  formulation  c o n c r e t e OECD c o m m i t -  t h a t t h e E E C ' s GSP o f f e r was t o o  129 "liberal"  --that i s , i t threatened  t o undermine p r e f e r e n c e s 130  t o them u n d e r t h e s e c o n d Y a o u n d e C o n v e n t i o n . sensitive to the Africans'  And t h e Community,  fears, "reserved the r i g h t t o take t h e necessary  m e a s u r e s w i t h i n t h e f r a m e w o r k d f i t s o f f e r on p r e f e r e n c e s  p o s s i b l e adverse Beginning GSP  schemes.  . . .  t o redress the 131  o n c o u n t r i e s a s s o c i a t e d w i t h /thej  i n mid-1971, t h e donor s t a t e s f i n a l l y  Except  p a t i n g developed a year.  effects  available  instituted  EEC." their  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 -  c o u n t r i e s had t h e i r preference  L i t t l e would be g a i n e d  systems i n p l a c e w i t h i n  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  exports.  From t h e d i s c u s s i o n s o 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 countries — i n c l u d i n g those not o r i g i n a l l y erences  opposed i n p r i n c i p l e t o p r e f -  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  with a great deal of t r e p i d a t i o n .  schemes  What r e q u i r e s e m p h a s i s i s t h e f a c t  t h a t w h i l e t h e G r o u p o f 77 a n d t h e i r  institutional  a l l y UNCTAD e v e n t u a l l y 133  achieved  international  acceptance  of t a r i f f preferences,  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  s c h e m e s was e x t r e m e l y  their  limited.  T h i s i s a t t e s t e d t o n o t s o much b y t h e t e x t o f t h e 1970 A g r e e d 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 comments  on t h e d e v e l o p e d  processed  t h e GSP w i l l  the donor s t a t e s tended  agricultural  p e r s i s t e n t l y argued  systems.  A few b r i e f  suffice.  t o exclude semi-processed  and f i s h e r y p r o d u c t s  from t h e i r  t h a t t h e GSP was d e s i g n e d  systems.  to facilitate  did not q u a l i f y .  Many LDCs w e r e p r i m a r i l y e x p o r t e r s o f r a w a n d  p r o d u c t s , a n d t h u s demanded  treatment;  agricultural  LDC  processed  tial  and p r i m a r y  and  of manufactures;  processed  Conclu-  c o u n t r i e s ' schemes a n d o n 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 First,  GSP  ability  They exports  commodities t h e r e f o r e  t h a t t h e y be e l i g i b l e  semi-  f o r preferen-  o t h e r w i s e , t h e GSP w o u l d b e o f no v a l u e t o t h e m .  H o w e v e r , a l t h o u g h m o s t d o n o r 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 tural  and f i s h e r y p r o d u c t s — t h e  major donor i n t h i s regard--the order t o p r o t e c t domestic  U n i t e d S t a t e s b e i n g t h e most general tendency  interests  was t o e x c l u d e t h e m i n  ( a n d i n t h e c a s e o f t h e EEC, t o  safeguard the preferences of the associated s t a t e s ) . that exclusion of these  important  generous  Murray  calculates  LDC e x p o r t s r e m o v e d 15 p e r c e n t  of  - 106 -  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 f r o m  Moreover, a l l t h e developed numerous m a n u f a c t u r e s  as w e l l .  steel  basis  F o r e x a m p l e , U.S. l e g i s l a t i o n a u t h o r i z i n g  footwear;  and g l a s s p r o d u c t s ; any a r t i c l e  "import-relief" action;  134  donor s t a t e s e x c l u d e d on a p r i o r i  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 c l a s s e s o f goods: t e x t i l e s ;  t h e GSP.  treatment  to the following  watches; " 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 u b j e c t t o "escape c l a u s e " o r other  and "any o t h e r a r t i c l e which  the President deter-  135 mines t o be i m p o r t - s e n s i t i v e . . . " called  sensitive preferential  example.  plywood  Japan excluded  . . . silk  developed  l e a t h e r and p e t r o l e u m  and g e l a t i n e and g l u e s  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 .  need" c r i t e r i o n tial  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  "textile,  fabrics,  T h e C o m m u n i t y a l s o d e n i e d many s o -  adopted  manufactured  f u r t h e r reduced  products 136  ..."  Other  In addition, the "competitive  b y t h e U.S. a n d t h e v e r y l o w q u o t a s  imports.adopted  . . .  for preferen-  b y t h e Community, J a p a n and o t h e r  the benefits potentially  donors  available to the beneficiaries.  U n d e r t h e U.S. s c h e m e , o n c e a n LDC h a s e x p o r t e d more t h a n $25 m i l l i o n of a p a r t i c u l a r product f o r 50 p e r c e n t preferential  t o t h e U.S. i n a n y c a l e n d a r y e a r , a n d / o r  o r more o f t o t a l  treatment  their  " c o m p e t i t i v e " t o c o m p e t e o n a n MFN  low import  ceilings  then  s i n c e t h e LDC i s 137  t h e EEC, J a p a n and o t h e r d o n o r s d i d n o t adopt t h i s  frequent resort t o very  accounts  U.S. i m p o r t s o f t h a t p r o d u c 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 ,  now deemed t o b e s u f f i c i e n t l y Although  annual  worth  f o r many  exact  basis. approach,  manufactures T h u s 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 e138 s to c o m p e t i t i v e l y e x p o r t e d b y LDCs p r o m i s e d t o h a v e a s i m i l a r e f f e c t .  - 107  the expansion various to  the  o f LDC  -  o p p o r t u n i t i e s i n world manufactures t r a d e ,  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 m u s t be k e p t  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  these  i n mind.  According  GSP  p r o v i d e s a wide scope f o r the d e v e l o p i n g c o u n t r i e s t o export 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 ; b u t 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 , a n d t h e r e f o r e i n w h i c h t h e y have a demonstrated i n t e r n a t i o n a l comparative a d v a n t a g e , a r e e x c l u d e d f r o m t h e GSP.139 In  f a c t , o f a l l LDC  13 p e r c e n t LDC  e x p o r t s t o the donor c o u n t r i e s i n the e a r l y 1970s,  consisted of products  e x p o r t s were e i t h e r e x c l u d e d  t r u l y "covered" f r o m t h e GSP  d u t y - f r e e u n d e r MFN  And  manufactured exports excluded  early  1 9 7 0 s t o $5.5  value of t o t a l  LDC  billion exports  (15 p e r c e n t  the bulk  b y t h e GSP  materials).  amounted i n t h e  exports)--more  preferences  of  schemes o r  (e.g. i n d u s t r i a l raw  o f a l l LDC  t o w h i c h t h e new  t h e GSP;  (e.g. t e x t i l e s )  already admitted d u t i a b l e LDC  tariffs  by  only  than  would apply  the  ($4.5  140 billion)!  I n a d d i t i o n , as T a b l e  9 reveals, only a handful  major b e n e f i c i a r i e s of the p r e f e r e n t i a l treatment f a c t u r e s a c t u a l l y i n c l u d e d under the O t h e r f e a t u r e s o f t h e GSP  accorded  to those  o f 77  rules of o r i g i n .  schemes w h i c h l e s s e n t h e i r v a l u e  But  the developed  in  treatment.  respect of country  OPEC a n d  The  covered  by  a l l donor  the  safeguard Group  country  c o u n t r i e s i n s i s t e d t h a t they alone would d e t e r -  mine whether a s e l f - e l e c t e d p o t e n t i a l preferential  manu-  from  In regard to country e l i g i b i l i t y , the  demanded t h a t a l l g r o u p members be  systems.  are  GSP;  p e r s p e c t i v e of the b e n e f i c i a r i e s r e l a t e to country coverage, a c t i o n s and  o f LDCs  b e n e f i c i a r y was  U n i t e d S t a t e s has  exclusions.  Originally,  o t h e r " c a r t e l " members, a n d  entitled to receive  been t h e most a c t i v e  donor  a l l communist c o u n t r i e s ,  LDCs g r a n t i n g r e v e r s e p r e f e r e n c e s  were  - 108 -  Table  9:  E s t i m a t e d 1970 GSP I m p o r t s From M a j o r  Supplier  of Industrial  B e n e f i c i a r y LDC S u p p l i e r s ^ ^ l Value  Share o f T o t a l  ($ m i l l i o n ) 565  16  Mexico  432  12  Yugoslavia  399  11  South  329  9  Hong Kong  254  7  Brazil  190  5  Singapore  168  5  India  144  4  Iran  104  3  Sub-total  2,585  72  Other  1,035  28  3,620  100  Korea  beneficiaries  * Including  non-ferrous  be d e n i e d e l i g i b i l i t y  American  (percei  Taiwan  Total  to  Products  metals  under t h e American  GSP.  In practice,  Latin  OPEC s t a t e s h a v e b e e n i n c l u d e d , a n d LDCs p a r t i c i p a t i n g  preferences only face the threat o f being declared i n e l i g i b l e 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  adverse  i n reverse  i f their  e f f e c t " o n 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 c a n e x e r t p r e s s u r e w i t h i n UNCTAD in  c o n n e c t i o n w i t h t h e u s e o f safeguards by donors  p r e f e r e n c e s u n d e r t h e GSP, t h e i n d u s t r i a l w i t h a view t o guaranteeing themselves action.  on p r o d u c t s  countries designed  a wide l a t i t u d e  142  forums  accorded  t h e i r schemes  for unilateral  The U.S. " c o m p e t i t i v e n e e d " r u l e o f c o u r s e e x c l u d e s many m a n u f a c -  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  f r o m GSP  eligibility.  -  All  -  109  the donors a l s o p r o v i d e d f o r the e x c l u s i o n of products  deemed t o  cause  143  " s e r i o u s i n j u r y " or "market d i s r u p t i o n . " c o u n t r y GSP  Finally,  each  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  goods p r e s e n t e d  f o r GSP  tariff  treatment  d u c e d w i t h i n a n e x p o r t i n g LDC; preferential  tariffs,  to ensure t h a t  are e i t h e r wholly or mainly  t h a t i s , t o be  a product  eligible  must have undergone a s u b s t a n t i a l  country.  exports  countries' rules of o r i g i n  for  Proving that their  An  regard.  in  the next  has  fallen  nonetheless  and  chapter.  F o r now,  i t s h o u l d be n o t e d  hopes  sought t o safeguard  recent efforts  complaints  surveyed  i n the t h i r d  of the  subsequent implementation  section of this  enhance t h e i r city" in  o f t h e GSP  But  t h e LDCs h a v e a l s o t r i e d  e x p o r t o p p o r t u n i t i e s by  i n GATT t r a d e n e g o t i a t i o n s a n d  respect of i n d u s t r i a l  t h e GSP  chapter. and  The  the  have  also to  will  The  more  be  to i n f l u e n c e the chapter  of  f o r the manufactured exports to further t h e i r  a t t a c k i n g the concept by a r g u i n g f o r s p e c i a l  c o u n t r i e s ' use  GSP  T h i r d World's  c o n s t i t u t e s the c e n t r a l  b a r g a i n i n g over market access  latter.  that although  LDCs c o n c e r n i n g  ;  i s offered  c o u n t r i e s ' schemes.  s t r u g g l e t o promote the p r i n c i p l e o f p r e f e r e n c e s  North-South  countries to obtain  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  coverage of the developed  briefly  difficult  specific  (and p e r h a p s e x p e c t a t i o n s ) , t h e y  expand t h e p r o d u c t  the  i s often  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  f a r s h o r t o f LDC  and  degree  144  a n a l y s i s of the e f f o r t s of the developing  t a r i f f preferences  under  manufactured  LDCs, t h e more so s i n c e t h e v a r i o u s d o n o r s h a v e d i f f e r e n t  provisions in this  pro-  f o r admission  of processing i n a developing s a t i s f y the developed  developed  of trade barriers,  interests of  of  and  "recipro-  dispensations and  i t i s to  - 110  a b r i e f consideration  2.  The  o f t h e s e m a t t e r s t h a t we  T h r u s t Toward N o n r e c i p r o c i t y  As at the  -  now  turn.  i n GATT  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  t i m e o f UNCTAD I , e f f o r t s w e r e made w i t h i n t h e  T h i r d World concerns.  These d e l i b e r a t i o n s culminated  a new  " T r a d e and  chapter e n t i t l e d  known as  Part  IV o f t h e  1965;  J u n e 1966.  Most o b s e r v e r s are  psychological  GATT t o r e s p o n d i n the  D e v e l o p m e n t " i n e a r l y 1965.  i t came i n t o f o r c e as inclined  an  to  d r a f t i n g of This  chapter-  G e n e r a l Agreement--was opened f o r s i g n a t u r e  F e b r u a r y 8,  c o n v e n e UNCTAD I and  intensified  on  amendment t o t h e A g r e e m e n t i n  to b e l i e v e that the  t h e n t o e s t a b l i s h i t as  decisions  a p e r m a n e n t b o d y "had  i m p a c t on n a t i o n a l r e p r e s e n t a t i v e s  to  a  t o GATT, p a r t i c u l a r l y  145 the  delegates  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  of  p r o t e c t i n g GATT's r o l e as t h e m a j o r i n t e r n a t i o n a l f o r u m f o r t r a d e felt the  that the  o r g a n i z a t i o n had  T h i r d World i n order  s o c i a l i s t b l o c and locus Part  f o r the IV o f t h e  obtaining 1)  the  the  t o be  s e e n t o "do  t o ward o f f the  r e g u l a t i o n and  something" dramatic  a t t e m p t s by  t h e UNCTAD s t a f f t o make t h e  new  c e r t a i n LDCs, i n s t i t u t i o n the  n e g o t i a t i o n of global trade  G e n e r a l Agreement a t t e s t e d t o the industrial  matters  the central  questions.  success of the  c o u n t r i e s ' a c c e p t a n c e o f two  for  LDCs i n  related principles:  a b a n d o n m e n t 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  negotiations; countries  and  2)  the need f o r u n i l a t e r a l  i n f a v o r o f LDCs i n c o n n e c t i o n  with  c o m m i t m e n t s by the  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). impact of the  new  p r i n c i p l e of n o n r e c i p r o c i t y  developed  employment o f The  is briefly  trade  development treated  and  here.  - 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 World 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 trade in the context industrial by  bargaining  o f GATT h a s p r i m a r i l y d e r i v e d f r o m t h e a t t a c h m e n t o f t h e  c o u n t r i e s t o t h e concept o f r e c i p r o c i t y .  former American S t a t e Department o f f i c i a l Harry  The v i e w , once  expressed  Hawkins, t h a t t h e goal  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 exports  f o r every  d o l l a r ' s worth o f increased  imports,"  has e x e r c i s e d a  146 pervasive  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 a r e d t o exchange " c o n c e s s i o n s " - - ! . e . ,  t o lower  tariffs  pre-  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 domestic market t o which  he  i swilling to offer  improved access  other n e g o t i a t o r s t o lower export all  interest  before  he c a n p l a u s i b l y e x p e c t  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  t o h i s country.  That severe  difficulties  have  of attended  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 diplomacy.  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  bargaining p o s i t i o n i n a trade n e g o t i a t i n g context e x p e c t e d o f them; f o r t h e y  lack a key bargaining  t o be i n an i n f e r i o r  where r e c i p r o c i t y i s  chip--a protected  m a r k e t 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  domestic 148 access.  M o r e o v e r , 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 tion policies,  h a s made t h e p r o s p e c t  exchange f o r developed c o u n t r y  with the pursuit o f import-substituo f agreeing  reductions  t o lower  distinctly  tariffs in  unpalatable:  The d e v e l o p i n g c o u n t r i e s c a n n o t p a r t i c i p a t e o n a n 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 b e , a form 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 domestic i n d u s t r i e s i n a process o f adjustment. 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 e c o n o m i c d e v e l o p m e n t a n d a n i m p o r t a n t s o u r c e o f r e v e n u e . . .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  inequality  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 e c o n o m i c p r i n c i p l e s p r e m i s e d a s s u m p t i o n o f e q u a l i t y was e m p l o y e d b y t h e LDCs t o a r g u e f o r preferences  i n t h e 1960s, so t h i s  reciprocity principle.  on a n  tariff  same p o i n t was made i n a t t a c k i n g t h e  When t h e G e n e r a l  A g r e e m e n t was amended i n 1 9 5 5 , 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 conducted a reciprocal be  and m u t u a l l y  a d v a n t a g e o u s 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  g i v e n t o "the needs o f i n d i v i d u a l  industries fiscal,  concerned."  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  . . . and . . . a l l o t h e r r e l e v a n t circumstances  developmental,  strategic  including the  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  ( A r t i c l e X X V I I I b i s ) H o w e v e r , t h e LDCs w e r e f a r f r o m  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  the e i g h t h general p r i n c i p l e which, countries should grant  "on  concessions  inter alia,  succeeded i n p a s s i n g  stated that  t o a l l developing  satis-  "developed  c o u n t r i e s . . . and  should n o t , i n g r a n t i n g these o r other c o n c e s s i o n s , r e q u i r e any concessions in  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  developed  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 o n t h i s p r i n c i p l e , b u t t h i s was d u e t o t h e f a c t that i t v o i c e d support reciprocity  o f p r e f e r e n c e s , n o t t o t h e concept  elucidated therein.)  m i n i s t e r i a l meeting agreed  o f non-  J u s t p r i o r t o t h e K e n n e d y R o u n d , a GATT  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 -  developed  c o u n t r i e s cannot expect  developed  c o u n t r i e s . T h e  tries  t o accept  reciprocity  to  articulation  coun-  o f t h e d o c t r i n e o f non-  s t a t e m e n t i n t h i s new c h a p t e r  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  reciprocity  articulates  c o n t r a c t i n g p a r t i e s do  f o r c o m m i t m e n t s made b y them i n t r a d e n e g o t i a t i o n s  r e d u c e o r remove t a r i f f s  developed  setfor the industrial  w i t h t h e 1965 a d d i t i o n o f P a r t I V t o t h e G e n e r a l  The most i m p o r t a n t  expect  from t h e less  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 e new p r i n c i p l e not  s t a g e was t h u s  a more f o r m a l , l e g a l  T h i s was a c c o m p l i s h e d Agreement.  to receive reciprocity  and o t h e r b a r r i e r s  contracting parties"  t o the trade of less-  ( A r t i c l e XXXVI:8).  Although  developed  GATT  members h a d g e n e r a l l y b e e n q u i t e l e n i e n t i n d e m a n d i n g e q u i v a l e n t LDC 152 "contributions" during past tance  trade negotiations,  their  explicit  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 a p p e a r e d t o s i g n a l  different least  qualitatively  approach t o commercial b a r g a i n i n g w i t h t h e T h i r d World  with those  LDCs members o f G A T T ) .  commitment n o t t o seek r e c i p r o c i t y during the actual trade barrier The  a  developing  accep-  (or at  T h e q u e s t i o n was w h e t h e r  would l e a d t o any c o n c r e t e  this  changes  negotiating process.  c o u n t r i e s soon had a chance t o f i n d out.  The Kennedy  Round o f GATT t r a d e n e g o t i a t i o n s g o t u n d e r way i n May 1964 a n d s e v e r a l interesting GATT R o u n d .  innovations i n commercial 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 First, the traditional bilateral,  negotiating t a r i f f method, a c c o r d i n g tariffs  concessions  was a b a n d o n e d i n f a v o r o f a  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 .  method o f  "linear"  t o which t h e " l i n e a r " p a r t i c i p a n t s would reduce  Congress had f o r t h e f i r s t time tariff  product-by-product  crucial  their  T h e U.S.  allowed t h e Executive t o agree t o l i n e a r  c u t s i n p a s s i n g t h e 1962 T r a d e 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  o n m o s t U.S. d u t i a b l e i m p o r t s  c o u l d b e made; a n d 50  became t h e b e n c h m a r k f i g u r e f o r a c r o s s - t h e - b o a r d the  K e n n e d y Round b a r g a i n i n g .  prepared  to consider  history—namely,  states  r e d u c t i o n s , two s p e c i f i c  during  groups  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  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 .  t r a c t i n g p a r t i e s accepted  reductions  S e c o n d , b e c a u s e many c o u n t r i e s w e r e n o t  such l i n e a r t a r i f f  o f c o u n t r i e s were i d e n t i f i e d  tariff  percent  the linear  approach; s e v e r a l other  ( C a n a d a , S. A f r i c a , New Z e a l a n d ,  w i t h " s p e c i a l economic o r t r a d e  Sixteen developed  con-  developed  Greece, P o r t u g a l and A u s t r a l i a )  s t r u c t u r e s " opted t o continue  to negotiate  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 . too  As f o r t h e LDCs,  announced t h a t they would be n o n l i n e a r p a r t i c i p a n t s .  this  constitutes the third  the developing  they  Moreover—and  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  Round—  c o u n t r i e s a r g u e d t h a t , b e c a u s e 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 , they would expect t h e developed c o n t r a c t i n g p a r t i e s to  reduce e x t e n s i v e l y t h e i r t a r i f f s  T h i r d World without  on p r o d u c t s  o f export  interest  tothe  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  reduc-  t i o n s f r o m t h e L D C s , who w e r e u n a b l e t o o f f e r s u b s t a n t i a l The f i n a l  i n n o v a t i o n o f t h e K e n n e d y Round i n v o l v e d a d e c i s i o n t o d e a l  c e r t a i n p o t e n t i a l l y troublesome i n d u s t r i a l tariff  reductions  groups.  concessions.  chemicals treatment;  sectors not s u i t a b l e f o r linear  through the c r e a t i o n o f separate  I r o n and s t e e l , c o t t o n t e x t i l e s , were s i n g l e d o u t as i n d u s t r i a l  with  "sector" negotiating  aluminum, p u l p  and paper and  sectors requiring special  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 e x p a n d 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 K e n n e d y Round w e r e r e g a r d e d a s d i s a p p o i n t i n g b y  - 115 -  the  LDCs a n d i n d i c a t e d t h a t a gap e x i s t e d b e t w e e n t h e r h e t o r i c a l  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  countries  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 trade b a r r i e r negotiations. 1967 on  and t h e i r w i l l i n g n e s s t o  concessions  With respect  t o t h e T h i r d World i n  t o LDC m a n u f a c t u r e d e x p o r t s ,  UNCTAD a n a l y s i s f o u n d t h a t t h e a v e r a g e K e n n e d y Round t a r i f f "products o f i n t e r e s t " t o t h e developing  percent,  a  reduction  c o n t r a c t i n g p a r t i e s was 29  w h e r e a s 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  A study  for other  products.*  5 5  b y t h e GATT S e c r e t a r i a t a l s o d o c u m e n t e d 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 grant  notably  of s u b s t a n t i a l export  i n t e r e s t t o LDCs t h a n o n m a n u f a c t u r e s  The  acceptance  smaller t a r i f f  reductions  on m a n u f a c t u r e s generally.* ^ 5  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  t o t h e most e x t e n s i v e  tariff  reductions  "areo f p o t e n t i a l , rather  subject than  157 a c t u a l , export  i n t e r e s t t o the developing  c o n s o l a t i o n t o LDC e x p o r t e r s goods, c l o t h i n g and o t h e r much s m a l l e r t a r i f f  of cotton t e x t i l e s ,  simple  reductions  manufactures—all  by the i n d u s t r i a l  manufactures not p r i m a r i l y exported as  an example, as a w h o l e  countries  exported steel,  cuts  T h i s was s m a l l  i r o n and s t e e l ,  leather  o f w h i c h were  granted  countries  by t h e T h i r d World.  ( i . e . cotton  agreed t o reductions  than the t a r i f f  countries."  t h a n were  Taking  textiles"  and n o n - c o t t o n ) t h e major  o f approximately  18-22 p e r c e n t ,  importing  f a rless  (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  b y a n d 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 .  another important  Similarly,  i r o n and  s e c t o r f o r t h e L D C s , was a c c o r d e d l e s s  t r e a t m e n t b y t h e U.S., E E C , U.K. a n d t h e N o r d i c  liberal  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  of only  10-20 p e r c e n t  158 being  agreed t o .  ( f t should  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  countries  - 116 -  were e x t r e m e l y although present  u n h a p p y w i t h t h e K e n n e d y Round r e s u l t s  North-South trade problems i n t h i s  i n agriculture,  s e c t o r a r e n o t germane t o t h e  study.)  What t h e n d i d t h e K e n n e d y Round r e s u l t s  imply  about t h e s a l i e n c e and  i m p a c t 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 :  despite  obeisance t o the concept, the developed countries continued their  t o conduct  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  view t o achieving r e c i p r o c i t y o r a "balance p a r t n e r s , developed o r developing. diplomacy exercised i t s pervasive had  their  done o n p r e v i o u s  occasions.  (essentially political)  o f advantages" with  The t r a d i t i o n a l  trading  goal o f commercial  i n f l u e n c e i n t h e K e n n e d y Round a s i t This  i shardly surprising, since the  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 trade b a r g a i n i n g d i d not  suddenly vanish  i n t h e mid-1960s.  d i d n o t demand a b s o l u t e  C e r t a i n l y t h e developed  countries  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 h a d n o t  done s o p r i o r t o P a r t I V a n d UNCTAD I e i t h e r .  Although  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  "the requirement  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 .  were c o n c e s s i o n s  damaging t h e i r  tries'  or their  LDCs c o u l d make w i t h o u t  economic development programs . " ^ ^  pants a c t u a l l y o f f e r e d any t a r i f f  concessions,  to t h e statement o f n o n r e c i p r o c i t y contained justification demanded  for this  stance.  ' " a t l e a s t a token  than token  concessions  i nArticle  But developed country  were r e q u e s t e d .  indus-  V e r y f e w LDC p a r t i c i -  and they  c o n t r i b u t i o n " f r o m LDCs;  'infant  There  frequently  pointed  XXXVI a s l e g a l  negotiators usually  161  a n d o f t e n , more  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 K e n n e d y Round f o r LDC  -  exporters of manufactures are undoubtedly  least p a r t l y traceable to the paucity of concessions t h e i r developed As  at  o f f e r e d by them t o  trade partners.  i n the case  o f t a r i f f p r e f e r e n c e s , the developing  in achieving international  acceptance  r e l a t i o n s , but were b a s i c a l l y unable r e c i p r o c i t y w o u l d be  o f a new  p r i n c i p l e to govern  t o a f f e c t how  implemented once c o n c r e t e  c o u n t r i e s succeeded trade  o r t o what e x t e n t  commercial s i t u a t i o n s  T h e i r c o n t i n u i n g e f f o r t s t o c h a m p i o n n o n r e c i p r o c i t y i n GATT d u r i n g 1973-79 t r a d e n e g o t i a t i o n s w i l l chapter. in  3.  An  analysis of this  be  and  i n t e r n a t i o n a l trade diplomacy  D e v e l o p i n g C o u n t r i e s and Trade B a r r i e r s The  surveyed other  LDC  i n the t h i r d activities  i s o f f e r e d i n the next  this  "successes"  chapter.  " 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  of  e f f o r t s o f the T h i r d World t o promote i n t e r n a t i o n a l acceptance  t a r i f f preferences  and  of the p r i n c i p l e of n o n r e c i p r o c i t y i n  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 broader  namely, the q u e s t i o n o f " d i f f e r e n t i a l " treatment  pursuit of d i f f e r e n t i a l  treatment  has  preferences  D i f f e r e n t i a l treatment  status i n the  is a different  or n o n r e c i p r o c i t y , although  (i.e.,  GSP)  concept  i t is certainly  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 .  " p r e f e r e n t i a l " treatment  North-South related issue,  countries.  The  i n v o l v e d a general T h i r d World  campaign t o a s s e r t a k i n d o f permanent s p e c i a l trade order.  of  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 by t h e d e v e l o p e d  in  arose.  the  section of  and  non-  international than  linked to  For present  either these purposes,  i s d e f i n e d as m e a s u r e s t o g r a n t  LDC  - 118 -  exports b e t t e r access  t o developed  " d i f f e r e n t i a l " treatment, a r e a p p l i e d o n a n MFN  c o u n t r i e s ' m a r k e t s t h a n non-LDC  exports;  on t h e o t h e r hand, i s d e f i n e d as measures  (nondiscriminatory) basis but targeted  "which  specifically 162  on p r o d u c t s  o f p a r t i c u l a r concern  t o the developing  countries."  Those  LDCs a n d 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 World have argued t h a t w h i l e temporary t a r i f f are indispensable t o t h e goal o f goods  of increasing developing  (especially manufactures),  thereby  In  t h e b r i e f survey  c o u n t r i e s ' exports  expanding 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 , 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  preferences  o f Northern  particularly  insofar  governments a r e concerned.  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 a n d b a r g a i n i n g w i t h i n GATT a n d UNCTAD o n t h e i s s u e o f differential textiles  treatment  d u r i n g t h e mid-1960s t o e a r l y  i s singled out f o r s p e c i a l  most i m p o r t a n t  and most d i s r u p t i v e  examination  1970s.  The c a s e o f  s i n c e they remained t h e  LDC m a n u f a c t u r e d  exports.  I t w i l l b e r e c a l l e d t h a t GATT's C o m m i t t e e I I I - - t h e p r e d e c e s s o r T r a d e and Development C o m m i t t e e - - u n d e r t o o k an e x a m i n a t i o n impeding early  LDC e x p o r t s  1960s.  of trade  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  Following this,  of the barriers  i n the  i n 1 9 6 3 , a g r o u p 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 p r o g r a m b e l a u n c h e d a view t o reducing or d i s m a n t l i n g developed LDC e x p o r t s ;  country trade b a r r i e r s  t h i s became known i n GATT a s t h e " A c t i o n P r o g r a m . "  resolution c a l l e d f o r the following s p e c i f i c undertakings contracting parties parties:  i n respect o f the exports  1) a s o - c a l l e d  "standstill"  from  with  affecting The  developed  of developing contracting  o n a n y 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 tariffs  a c c o r d i n g t o GATT r u l e s ;  3) t h e s p e e d y  abolition of  on t r o p i c a l p r o d u c t s ( a n d on o t h e r p r i m a r y p r o d u c t s a s w e l l ) ;  4) a f i r m c o m m i t m e n t t o l o w e r t a r i f f s products by a t l e a s t internal  fiscal  on s e m i - p r o c e s s e d and p r o c e s s e d  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  a n d r e v 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 the  T h i r d W o r l d ; 6) a n d a n n u a l r e p o r t s o n 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 . beyond  The scope o f t h e s e measures o f c o u r s e  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 n u m b e r s 1, 2 a n d 4 i n p a r t i c u l a r  w e r e i n s e r t e d b y 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 t h e i r exports o f manufactures of  extended  the . . .  and s e m i - m a n u f a c t u r e s .  i n t h e expansion o f  Significantly,  "none  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  E c o n o m i c C o m m u n i t y " ; t h e A c t i o n P r o g r a m 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  involved i n exporting manufactures  than  Latin  164 American  a n d A s i a n GATT members.  Developed  1963 m e e t i n g e n d o r s e d t h e A c t i o n P r o g r a m any b i n d i n g would  l e g a l commitments.  i n p r i n c i p l e , b u t d i d n o t make  Only 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  i t be p o s s i b l e t o r e a c h l e g a l  agreements 165 a l o n g t h e l i n e s p r o p o s e d b y t h e LDCs. The  theme o f d i f f e r e n t i a l  W o r l d a t UNCTAD I .  country ministers atthe  t o a c t u a l l y reduce  barriers  t r e a t m e n t was a l s o p u r s u e d b y t h e T h i r d  LDCs a r g u e d i n t h e S e c o n d  Committee o f t h e Conference  (which d e a l t w i t h " T r a d e i n M a n u f a c t u r e s a n d S e 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 acceptance o f a " s t a n d s t i l l " p r o v i s i o n exports o f manufactures  and semi-manufactures.  i n respect of their  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 t h e i r manufactured tion of t a r i f f s  -  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  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 c o m p l e t e  on / m a n u f a c t u r e d ^  items o r i g i n a t i n g  impeding  elimina-  from d e v e l o p i n g  166 countries."  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  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 m e a s u r e s a n d e f f o r t s on 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 exports. of  Several  manufactures  unanimously  "guidelines f o r t a r i f f  and s e m i - m a n u f a c t u r e s  A.III.  the  manufactured  and n o n - t a r i f f p o l i c i e s  i n respect.'  from d e v e l o p i n g c o u n t r i e s " were  adopted:  Developed c o u n t r i e s should 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 exports 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 or any d i s c r i m i n a t o r y m e a s u r e s , where s u c h a c t i o n w o u l d have the 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 m a r k e t s 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 products of export i n t e r e s t t o developing countries. Developed c o u n t r i e s should accord 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 a n d , w h e r e v e r 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 a n d semi-manufactured products o f export i n t e r e s t to developing countries  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 r e m o v e 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 a n d s e m i - m a n u f a c t u r e d products of export i n t e r e s t to developing countries . . . It  i s noteworthy that the i n d u s t r i a l  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 LDC of  manufactured  c o u n t r i e s were p r e p a r e d t o  e f f o r t s t o reduce b a r r i e r s  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  affecting  principle  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 World 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 etc.)  stabilization,  larger financial  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 .  a i d flows,  This willingness  to  - 121  support domestic  the p r i n c i p l e o f d i f f e r e n t i a l  treatment  i n t h e employment  trade b a r r i e r s v i s - a - v i s developing countries' exports  o f m a n u f a c t u r e s ) was w i t h t r a d e and  also reflected  development.  the i n c l u s i o n of s p e c i f i c give special parties  -  The  i n t h e new  developed  contracting parties  agreed  to  ( A r t i c l e XXXVII) t o  interests of developing contracting  i n t h e i r trade barrier p o l i c i e s .  GATT members a g r e e d  (especially  P a r t I V o f GATT d e a l i n g  " c o m m i t m e n t s " on t h e i r p a r t  c o n s i d e r a t i o n to the  of  In p a r t i c u l a r , the  developed  to:  (a) a c c o r d h i g h p r i o r i t y t o t h e r e d u c t i o n and e l i m i n a t i o n o f b a r r i e r s to products c u r r e n t l y or p o t e n t i a l l y of p a r t i c u l a r export i n t e r e s t to less-developed c o n t r a c t i n g p a r t i e s , including c u s t o m s d u t i e s and o t h e r r e s t r i c t i o n s w h i c h d i f f e r e n t i a t e u n r e a s o n a b l y b e t w e e n s u c h p r o d u c t s i n t h e i r p r i m a r y and processed forms; (b) r e f r a i n f r o m i n t r o d u c i n g , o r i n c r e a s i n g t h e i n c i d e n c e o f , c u s t o m s d u t i e s o r n o n - t a r i f f i m p o r t b a r r i e r s on p r o d u c t s c u r r e n t l y or p o t e n t i a l l y of p a r t i c u l a r export i n t e r e s t to 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 ; and (c)  ( i ) r e f r a i n f r o m i m p o s i n g new f i s c a l m e a s u r e s , and ( i i ) i n any a d j u s t m e n t s o f f i s c a l p o l i c y a c c o r d h i g h p r i o r i t y t o t h e r e d u c t i o n and e l i m i n a t i o n o f f i s c a l m e a s u r e s , w h i c h w o u l d hamper . . . s i g n i f i c a n t l y t h e g r o w t h o f c o n s u m p t i o n o f p r i m a r y p r o d u c t s , i n raw o r p r o c e s s e d f o r m , w h o l l y o r m a i n l y produced i n the t e r r i t o r i e s of less-developed c o n t r a c t i n g p a r t i e s , and w h i c h a r e a p p l i e d s p e c i f i c a l l y t o t h o s e p r o d u c t s . The  p r o v i s i o n s i n ( c ) a b o v e l a r g e l y p e r t a i n e d t o LDC  products and  cessing industries because such  ( e . g . , c o f f e e r o a s t e r s and  t a x e s were a r e a d y  source  fiscal  charges pro-  chocolate manufactures)  o f government r e v e n u e .  ( b ) , however, c l e a r l y spoke t o the growing  processing.  XXXVII:1)  tropical  commodities i n order to p r o t e c t domestic  c o u n t r i e s t o upgrade the value of t h e i r and  exports of  t o Western European c o u n t r i e s which imposed s t i f f  l u x u r y t a x e s on t h o s e  (a) and  (Article  desire of  exports through  and  Paragraphs developing  manufacturing  - 122 -  L e g a l s c h o l a r s h a v e p o i n t e d o u t t h a t t h e s e " c o m m i t m e n t s " made b y t h e developed  GATT members t o t h e LDCs i n P a r t I V a r e n o t l e g a l l y b i n d i n g  because o f t h e i n s e r t i o n o f t h e q u a l i f y i n g phrase, p o s s i b l e , " a t t h e b e g i n n i n g o f A r t i c l e XXXVII.  "to the f u l l e s t  Dam s u g g e s t s  extent  t h a t t h e new  c h a p t e r i s c h a r a c t e r i z e d by " a g r e a t d e a l o f v e r b i a g e and v e r y few p r e c i s e commitments," w h i l e J a c k s o n a v e r s t h a t t h e l e g a l  obligations contained i n  168 P a r t IV a r e d e c i d e d l y " s o f t . " developed  Nonetheless,  c o u n t r i e s w i t h T h i r d World  i m p o s i t i o n o f new t r a d e b a r r i e r s riers to  argument f o r a s t a n d s t i l l  trade relations. countries'  ofthe i n the  and t h e r a p i d r e d u c t i o n o f e x i s t i n g  (especially quantitative restrictions)  signal the qualified  t h e concurrence  acceptance  impeding  LDC e x p o r t s  o f a n o t h e r new p r i n c i p l e  bar-  appeared  i n North-South  W i t h i n b o t h GATT a n d UNCTAD, t h e e x t e n t o f d e v e l o p e d  compliance  w i t h t h e new GATT p r o v i s i o n s a n d UNCTAD I recommen-  d a t i o n s was c l o s e l y m o n i t o r e d  b y t h e LDCs.  During t h e p e r i o d under  review  h e r e , GATT's C o m m i t t e e o n T r a d e a n d D e v e l o p m e n t f o c u s e d i t s a t t e n t i o n primarily  on q u a n t i t a t i v e r e s t r i c t i o n s  affecting  of  manufactures.  to  press f o r the a b o l i t i o n o f those i n d u s t r i a l  LDC e x p o r t s ,  especially  A G r o u p o n R e s i d u a l R e s t r i c t i o n s was c r e a t e d i n 1965 countries'  quantitative  i m p o r t c o n t r o l s i n c o n s i s t e n t w i t h GATT r u l e s a n d h a r m f u l t o t h e export.? 169 of 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 . The p r o c e d u r e s e a r l i e r f o l l o w e d i n C o m m i t t e e I I I w e r e c o n t i n u e d a n d somewhat i m p r o v e d u p o n : A t t e n t i o n i s devoted t o a l i s t o f p r o d u c t s n o t i f i e d by 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 a s b e i n g o f s p e c i a l i n t e r e s t t o them. Some 250 i t e m s w e r e / a l r e a d y / o n t h e l i s t b y 1 9 6 5 . D e v e l o p e d cont r a c t i n g p a r t i e s are required t o indicate a l l r e s t r i c t i o n s maintained on t h o s e p r o d u c t s t o g e t h e r w i t h t h e p r o p o s e d a b o l i t i o n d a t e , i f a n y , and t h e l e g a l b a s i s , i f a n y , f o r such r e s t r i c t i o n s u n d e r t h e G e n e r a l Agreement. E a c h d e v e l o p e d c o u n t r y i s summoned t o t h e G r o u p each year.170  - 123 -  Although t h e degree o f progress developed country "the  i n securing  the dismantling of  r e s t r i c t i o n s was g e n e r a l l y " d i s a p p o i n t i n g , "  necessity o f explaining r e s t r i c t i v e p o l i c i e s before  o f t h e major developed' and l e s s - d e v e l o p e d  nonetheless  representatives  c o u n t r i e s no d o u b t / h a d / some  171 i n f l u e n c e on s e n s i t i v e g o v e r n m e n t s . " D e v e l o p m e n t was n o r m a l l y it  s e i z e d o f a wide v a r i e t y o f trade  m e t , b u t T h i r d W o r l d members d i r e c t e d much o f t h e i r  impact o f t h e trade b a r r i e r p o l i c i e s LDC  The Committee on T r a d e and  manufactured export  possibilities  issues  criticism  whenever atthe  o f 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 on and argued f o r N o r t h e r n  more c o n s i s t e n t w i t h t h e " d i f f e r e n t i a l " p h i l o s o p h y  policies  s p e l l e d out i n A r t i c l e  172 XXXVII.  D u r i n g t h e K e n n e d y R o u n d o f GATT t r a d e n e g o t i a t i o n s  b o t h t h e Committee and o t h e r concerns with respect Since  "tariff  t o the trade b a r r i e r reductions  being  below),  countries' negotiated.  and o t h e r b a r r i e r s had been a c c e p t e d as f a l l i n g w i t h i n t h e  purview o f the current belief  GATT b o d i e s a d d r e s s e d d e v e l o p i n g  (see  t r a d e n e g o t i a t i o n s , " t h e LDCs e x p r e s s e d  i n the imperative  need " f o r e l i m i n a t i o n o f r e s t r i c t i o n s  to c e r t a i n products o f i n t e r e s t t o less-developed  countries  their applying 173  . . ."  T h i r d W o r l d c o u n t r i e s w e r e a l s o a c t i v e i n UNCTAD i n p r e s s i n g f o r c o m p l i a n c e on t h e p a r t dations  concerning  manufactures.  o f t h e OECD c o u n t r i e s w i t h t h e UNCTAD I recommen-  b a r r i e r s t o LDC e x p o r t s  High t a r i f f s  o f manufactures and semi-  on m a n u f a c t u r e s and " p e r s 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 which a f f e c t e d t h e exports  . . .  o f the developing 174  were t h e p r i m a r y f o c i o f T h i r d World d i s c o n t e n t .  I n a d d i t i o n , LDC  delegates  o f t e n argued t h a t governments i n t h e i n d u s t r i a l  not  e n o u g h , i n t h e way o f a d j u s t m e n t a s s i s t a n c e a n d o t h e r  doing  countries"  countries  were  measures,  - 124  to f a c i l i t a t e the  a r e a l l o c a t i o n of i n t e r n a t i o n a l i n d u s t r i a l  developed to the developing  t i v e s t o promote the textile  world.  A  1966  r e s o l u t i o n put  towards the  adoption  in their industrial t h a t t h i s was  an  W e s t e r n E u r o p e was  i n t e r n a l m a t t e r and  initia-  cotton frequently  a g r o u p o f LDCs i n UNCTAD's  the developed c o u n t r i e s to  o f measures conducive t o  s t r u c t u r e s , " was  from  p a u c i t y o f government  f o r t h by  on  activity  of t h e i r uncompetitive  C a n a d a and  C o m m i t t e e on M a n u f a c t u r e s c a l l i n g steps  The  orderly dismantling  i n d u s t r i e s i n t h e U.S.,  referred to.  -  opposed by  the  ...  a  "take  readjustment  l a t t e r , who  t h a t t h e y w e r e i n any  argued  case making  175 progress  in this  industrial  direction.  c o u n t r i e s t o implement i n advance any  barrier reductions  negotiated 176  o f i n t e r e s t t o LDCs.  This  d e f i n i t i o n of d i f f e r e n t i a l c u l a r i n t e r e s t t o LDC standstill  T h i r d World countries a l s o implored  on new  i n the  exporters  timetable The  only  trade b a r r i e r s , extraordinary any  trade negotiations  i f LDC  not  exports  were  the  LDCs.  In p a r t i c u l a r ,  t a r i f f b a r r i e r reductions  products of  efforts to  parti-  (i.e.,  a  reduce/  agreements t o reduce b a r r i e r s a c t u a l l y  should  be  i m p l e m e n t e d on  opportunity  countries to t r a n s l a t e t h e i r acceptance of the treatment  should  World  an  accelerated  involved.  K e n n e d y Round o f f e r e d an  of d i f f e r e n t i a l  products.  expansion of the T h i r d  receive special consideration  e l i m i n a t e e x i s t i n g b a r r i e r s ) but reached during  t a r i f f and n o n - t a r i f f  K e n n e d y Round on m a n u f a c t u r e d  c o n s t i t u t e d an  treatment:  the  f o r the  rich  industrial  ( a l b e i t vague)  i n t o something of concrete  principle  commercial value  i f they agreed to s i g n i f i c a n t t a r i f f on m a j o r T h i r d W o r l d e x p o r t s ,  and  then the  to  non-  LDCs  could  -  take s a t i s f a c t i o n  125 -  i n t h e k n o w l e d g e t h a t t h e new p r i n c i p l e h a d i n f l u e n c e d  t h e outcome o f a v e r y i m p o r t a n t because o f the e a r l i e r  series of trade negotiations.  commitment o f t h e d e v e l o p e d  c o u n t r i e s n o t t o seek  r e c i p r o c i t y f r o m t h e LDCs f o r t r a d e b a r r i e r c o n c e s s i o n s , many c o u n t r i e s hoped t h a t t h e o p e r a t i o n o f t h e t w i n p r i n c i p l e s treatment  Moreover,  developing  of differential  and n o n r e c i p r o c i t y would l e a d t o h i g h l y f a v o r a b l e r e s u l t s  their perspective.  However, as n o t e d  r e c i p r o c i t y , t h e major developed  i n t h e p r e v i o u s d i s c u s s i o n o f non-  c o u n t r i e s c o n c e n t r a t e d t h e i r most  f i c a n t t a r i f f r e d u c t i o n s on p r o d u c t s which themselves.  The " d i f f e r e n t i a l  by t h e i n d u s t r i a l  from  treatment"  they tended accorded  c o u n t r i e s g e n e r a l l y meant  signi-  t o t r a d e among  LDC m a n u f a c t u r e d  exports  smaller t a r i f f reductions  than 177  were agreed  t o f o r manufactures  l a r g e l y t r a d e d among t h e OECD c o u n t r i e s !  T h i s r e s u l t was a n i r o n i c t w i s t o n t h e o r i g i n a l tial  treatment." The K e n n e d y Round a l s o f a i l e d  t o address  c i a t e d w i t h t h e e f f e c t o f q u a n t i t a t i v e import t a r i f f b a r r i e r s o n LDC e x p o r t s o f m a n u f a c t u r e s 178 the Northern  countries.  nonagricultural  imports  In addition,  impeding  imports  asso-  c o n t r o l s and o t h e r nonand semi-manufactures t o  quotas  on  a r e b a n n e d u n d e r A r t i c l e X I o f GATT, n u m e r o u s  quantitative restrictions markets.  t h e thorny problems  I n s p i t e o f t h e f a c t t h a t import  LDC e x p o r t s o f m a n u f a c t u r e s  of  conception of "differen-  and s e m i - m a n u f a c t u r e s were f a c e d w i t h o f v a r i o u s k i n d s i n most d e v e l o p e d  other practices  (antidumping  country  and measures t h a t had t h e e f f e c t  and c o u n t e r v a i l i n g d u t i e s ,  customs v a l u a t i o n methods, and import  "illegal"  standards,  l i c e n s i n g ) were b e i n g r e c o g n i z e d as  - 126 -  s e r i o u s problems  b y t h e LDCs b y t h e l a t e  P a r t i c u l a r l y noteworthy quotas under  was to  both e x i s t i n g " i l l e g a l "  i n Cotton Textiles  (LTA).  The a u t h o r i z a t i o n  a n d new i m p o r t q u o t a s p r o v i d e d f o r b y t h e LTA  a poignant i l l u s t r a t i o n o f developed countries'  apparent  unwillingness  o b e y GATT " l a w " when t h e LDCs became h i g h l y c o m p e t i t i v e i n a  manufacturing sector. for  i n t h i s c o n t e x t was t h e l e g i t i m i z a t i o n o f  t h e terms o f t h e GATT-sponsored Long-Term A r r a n g e m e n t  Regarding I n t e r n a t i o n a l Trade of  1960s.  critical  T h e LTA ( o r i g i n a l l y n e g o t i a t e d i n 1962 a n d e x t e n d e d  a d d i t i o n a l t h r e e y e a r p e r i o d s i n 1967 a n d 1 9 7 0 ) s y m b o l i z e d f o r t h e  emerging  newly-industrializing countries  national  "law" o f comparative advantage.  arose through the l e g i t i m i z a t i o n  (NICs) t h e l i m i t s  of the inter-  The " i n t r i g u i n g p a r a d o x "  o f supposedly  that  outlawed'import'quotas  179 w i t h i n GATT i t s e l f was n o t l o s t that both the i n i t i a l the  o n t h e LDCs.  They c o m p l a i n e d  vigorously  i m p o r t quotas and t h e growth r a t e s p r e s c r i b e d by  LTA w e r e t o o s m a l l ; t h a t t h e i n c i d e n c e o f u n i l a t e r a l r e s t r a i n t s  by i m p o r t i n g c o u n t r i e s under A r t i c l e bilateral  accords allegedly  3 o f t h e LTA was e x c e s s i v e ; t h a t t h e  " n e g o t i a t e d " under A r t i c l e  4 w e r e more  than n o t "shotgun marriages" preceded by u n i l a t e r a l A r t i c l e and t h a t t h e a v a i l a b i l i t y  imposed  often  3 actions;  o f market  s h a r e s t o new LDCs a n d f o r new p r o d u c t 180 l i n e s / e x p o r t e r s was o f t e n u n c e r t a i n . K o r e a ' s r e a c t i o n t o t h e LTA was a t y p i c a l exporter's view: The r e p r e s e n t a t i v e o f t h e R e p u b l i c o f K o r e a , a f t e r r e f e r r i n g to t h e importance o f t h e c o t t o n t e x t i l e i n d u s t r y t o h i s country's economic growth, s a i d t h a t t h e r a t e o f e x p a n s i o n o f c o t t o n t e x t i l e e x p o r t s from Korea h a d d r a s t i c a l l y slowed s i n c e 1964. T h i s was m a i n l y d u e t o i m p o r t r e s t r i c t i o n s i m p o s e d b y some m a j o r developed countries. Small quotas a l l o c a t e d t o h i s country h i n d e r e d t h e growth o f e x p o r t s . Moreover, o u t l e t s f o r . . . n e w l y d e v e l o p e d i t e m s s u c h a s g a r m e n t s a n d made-up a r t i c l e s were s e v e r e l y r e s t r i c t e d . 1 8 1  - 127  Although  t h e i m p o r t i n g c o u n t r i e s had  t e x t i l e products the  f r o m t h e LDCs b y  1961-70 p e r i o d , "LDC  41 p e r c e n t  f o r the years  l i b e r a l i s m toward  c o u n t r i e s , " but  increased their  And  imports  an a v e r a g e o f 11 p e r c e n t  exports of cotton t e x t i l e s  other manufactured exports."  a new  -  while this  1970-73, " t h i s  of  cotton  annually during  grew s l o w e r  than  any  f i g u r e r o s e s h a r p l y t o some  s h o u l d n o t be  taken  t e x t i l e t r a d e on t h e p a r t o f t h e  i n s t e a d " i n d i c a t e s t h e e m e r g e n c e o f new  to  illustrate  industrial LDC  s u p p l i e r s which  182 were not / y e t / c o v e r e d  by  existing restraint  A t UNCTAD I I t h e T h i r d W o r l d c o n t i n u e d differential  treatment,  agreements." t o champion the p r i n c i p l e  but n o t h i n g o f substance  on t h i s q u e s t i o n  f r o m t h e d i s c u s s i o n s i n t h e S e c o n d C o m m i t t e e , w h i c h was 183 the i s s u e of t a r i f f preferences.  However, subsequent t o t h e  UNCTAD's C o m m i t t e e on M a n u f a c t u r e s LDC  exports  ment o f an  i n some d e t a i l .  The  intergovernmental  mainly  addressed  resulted  seized with Conference  the problem of b a r r i e r s  LDCs " s t r o n g l y recommended t h e  of  to  establish-  g r o u p w i t h i n UNCTAD on t h e q u e s t i o n o f  non-  184 tariff barriers." entertain this  The  developed  m a r k e t economy s t a t e s r e f u s e d  i d e a , a r g u i n g t h a t GATT was  d i s c u s s i o n o f such m a t t e r s .  But  t h e UNCTAD S e c r e t a r i a t u n d e r t a k e were t h e most s a l i e n t  to  t h e a p p r o p r i a t e body f o r  they d i d consent  to the suggestion  a study of which n o n - t a r i f f  that  barriers  i n terms o f a f f e c t i n g T h i r d World e x p o r t s  o f manu-  185 factures.  The  resulting  b a r r i e r s were i m p o r t a n t tions  i n d i c a t e d that the f o l l o w i n g  i m p e d i m e n t s t o LDC  ( e . g . , t h o s e p e r m i t t e d u n d e r t h e LTA  "illegal"), and  study  import  l i c e n s i n g procedures,  i n d u s t r i a l , h e a l t h and  non-tariff  exports: quantitative r e s t r i c as w e l l as o t h e r s w h i c h w e r e  customs v a l u a t i o n p r o c e d u r e s , 186 safety standards. The S e c r e t a r i a t ' s s t u d y  - 128 -  also  argued that  non-tariff barriers  existing or potential exporters.  were g e n e r a l l y  more h a r m f u l t o  LDC e x p o r t e r s t h a n t o o t h e r d e v e l o p e d  This c o n t e n t i o n has i n f a c t r e c e i v e d  country  support from  several  187 academic economists, barriers  who h a v e made t h e f o l l o w i n g  points:  1) n o n - t a r i f f  ( p a r t i c u l a r l y q u o t a s a n d s t a n d a r d s ) a r e more l i k e l y  to affect  i m p o r t s f r o m LDCs t h a n f r o m o t h e r s o u r c e s ; 2) LDCs a r e e s p e c i a l l y able because o f t h e i r lack  o f knowledge c o n c e r n i n g t h e  procedures and v a r i o u s r u l e s licenses,  governing the application  quotas and v a l u a t i o n  by  shifting  to alternative  of  are less  o f such  able  barriers  lines of production. was a l s o  proceeding i n  UNCTAD h e r e t h e p r i m a r y f o c u s was n o t o n t h e i n c i -  d e n c e a n d e f f e c t o f s u c h m e a s u r e s o n t h e LDCs. recognition  o f standards,  t o bypass t h e e f f e c t  Intensive examination o f n o n t a r i f f b a r r i e r s GATT, a l t h o u g h u n l i k e  administrative  m e t h o d s ; a n d 3) LDC s u p p l i e r s  than those i n i n d u s t r i a l countries  vulner-  among t h e d e v e l o p e d c o n t r a c t i n g  average i n d u s t r i a l t a r i f f s  T h e r e was a g r o w i n g  parties  that  with the lowering  t o s o m e t h i n g i n t h e o r d e r o f 10 p e r c e n t a s  a r e s u l t o f t h e K e n n e d y Round a c c o r d s , t h e v a r i o u s d i r e c t a n d i n d i r e c t /  nontariff  impediments t o t r a d e were l i k e l y  contention i n future the  t o be t h e m a j o r s o u r c e s o f  intra-OECD country trade r e l a t i o n s .  impact o f these b a r r i e r s  but the l a t t e r nonetheless stood t o benefit  from t h e general r e d u c t i o n o r t i g h t e r r e g u l a t i o n 188  of  p a r t o f t h e i n d u s t r i a l economies. differential  about  o n t h e LDCs was a d e c i d e d l y m i n o r theme  d u r i n g t h e GATT d e l i b e r a t i o n s ,  the  Concern  treatment played  little  o f n o n t a r i f f b a r r i e r s on  H o w e v e r , i t seems t h a t  t h e concept  o r no r o l e i n t h e d e t a i l e d  examination o f n o n t a r i f f b a r r i e r matters that  t o o k p l a c e i n GATT i n t h e  - 129  early  1970s.  That the key  on T r a d e i n I n d u s t r i a l  direct  e x a m i n a t i o n was  countries.  t o t h e v i e w t h a t t h i s was I n any  n o n t a r i f f i t e m s o r p r a c t i c e s was fications  for this  c o l l e c t e d by e a r l y  indirect  1970,  t r a d e r e s t r i c t i n g m e a s u r e s was  3)  i n t r a d e ; 2) c u s t o m s and  industrial/health  ( i . e . , q u o t a s ) ; and  based  classified 1)  administrative entry  s t a n d a r d s ; 4) d i r e c t ,  of  specific on  noti-  T h i s a s t o n i s h i n g number o f  c a t e g o r i e s , w i t h a c o n s u l t a t i v e group c r e a t e d f o r each: participation  and  l a r g e l y an a f f a i r  e v e n t , an i n v e n t o r y o f some 800  from numerous c o n t r a c t i n g p a r t i e s .  and  GATT's C o m m i t t e e  P r o d u c t s r a t h e r t h a n t h e C o m m i t t e e on T r a d e  Development lends credence the developed  forum  -  specific  5) r e s t r a i n t s on i m p o r t s b y way  into  government procedures;  limitations of the  five  on  imports  price  189 mechanism.  While a l l of these types of b a r r i e r s a f f e c t e d the  World's exports o f manufactures that the p r i o r i t i e s 1 9 0  The  p u b l i c a t i o n and  background  import c o n t r o l s r a t h e r  e x c h a n g e o f a v a s t amount o f i n f o r m a t i o n p e r t h a t t o o k p l a c e i n GATT a t t h i s  "Tokyo Round"  (1973-79) and  to tackle nontariff barriers chapter. appeared  The  so-  t h e s e r i o u s e f f o r t s made on t h a t o c c a s i o n  are explored i n the t h i r d  For present purposes,  be  outcome o f t h e  section of  this  i t n e e d o n l y be n o t e d t h a t a l t h o u g h i t  on t h e s u r f a c e t h a 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  v i r t u a l l y d i s a p p e a r e d i n t h e GATT c o n t e x t d u r i n g t h e e a r l y it  time provided  work n e c e s s a r y b e f o r e t h e s e i s s u e s c o u l d  s e r i o u s l y n e g o t i a t e d d u r i n g a formal trade "round." called  fact  indirect nontariff trade barriers merits  taining to nontariff barriers the c r u c i a l  t o the N o r t h e r n market economies, the  o f t h e LDCs r e l a t e d t o d i r e c t  t h a n o t h e r more s t u b l e and e m p h_ a s i•z i•n g .  Third  l a t e r r e t u r n e d t o t h e f o r e i n t h e Tokyo Round, a l b e i t  treatment  had  1970s, i n f a c t  in a  slightly  - 130 -  different  form.  Meanwhile t h e developing  countries  continued  t o adhere t o and  emphasize t h e o r i g i n a l d e f i n i 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 , namely s p e c i a l  e f f o r t s by t h e i n t e r n a t i o n a l community t o e l i m i n a t e , r e d u c e o r a t t h e v e r y least hold  constant  ( i . e . the " s t a n d s t i l l " provision)  tariff  and n o n t a r i f f  b a r r i e r s o n p r o d u c t s e x p o r t e d i n s i g n i f i c a n t v o l u m e b y LDCs. Secretariat reported developed country  on t h e p a u c i t y  of p o s i t i v e actions  governments t o g i v e  promises o f a s t a n d s t i l l  concrete  on t h e p a r t o f  expression  o n new b a r r i e r s a n d q u i c k  The UNCTAD  to their  reductions  earlier  of existing  191 b a r r i e r s r e t a r d i n g LDC e x p o r t s  o f manufactures.  Within  UNCTAD, t h e  LDCs d i r e c t e d p a r t i c u l a r a t t e n t i o n t o q u a n t i t a t i v e r e s t r i c t i o n s a f f e c t i n g t h e i r exports  of cotton  and o t h e r  textiles,  footwear, leather  goods,  standardized  consumer m a n u f a c t u r e s and p r o c e s s e d c o m m o d i t i e s .  plained that  " t h e e x p o r t p r o m o t i o n measures w h i c h t h e y had been  pursuing  were being  f r u s t r a t e d by q u a n t i t a t i v e r e s t r i c t i o n s  in  time f o rthe next quadriennial  countries for  persevered i n t h e i r  discussion o f trade  complex i s s u e s  involved  i n providing  countries  The d e v e l o p e d  argument t h a t t h e major  adjustment a s s i s t a n c e 193  industrial  to the d i f f i c u l t  developed countries  longstanding  o f these  forum  b a r r i e r s was GATT; t h e y a l s o s t r e s s e d t h e many  workers so as t o f a c i l i t a t e specifically  i n developed 192  c o n f e r e n c e i n 1972.  vigorously  and o t h e r  n o n t a r i f f b a r r i e r s , " and r e q u e s t e d f u r t h e r S e c r e t a r i a t s t u d i e s m a t t e r s and o f programs o f a d j u s t m e n t a s s i s t a n c e  T h e y com-  expressed  readjustment.  t o displaced  In regard  problem 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 , the strong  r e s e r v a t i o n s as t o t h e economic v a l i d i t y o f p r e f e r e n t i a l l i b e r a l i z a t i o n , inasmuch as s u c h a c t i o n w o u l d be t r a d e d i v e r t i n g and would preclude e f f i c i e n t s u p p l i e r s from competing; p r e f e r e n t i a l t a r i f f r e d u c t i o n s , a s i n t h e . . . GSP, w e r e q u i t e d i f f e r e n t f r o m  - 131 -  preferential  liberalization of quantitative restrictions.  While t h e developed countries refused and  to consider  194  applying  quotas  o t h e r n o n t a r i f f b a r r i e r s on a d i s c r i m i n a t o r y b a s i s so as t o a c c o r d  preferential  treatment  t o LDCs, t h e y  to the p r i n c i p l e o f d i f f e r e n t i a l  continued  treatment  a t l e a s t t o pay l i p s e r v i c e  enshrined  i n both Part  GATT a n d i n v a r i o u s UNCTAD r e s o l u t i o n s a n d r e c o m m e n d a t i o n s . developing  d i s s a t i s f i e d w i t h what t h e y p e r c e i v e d  lack o f compliance with the p r i n c i p l e ,  barriers  Butt h e  c o u n t r i e s , e v e n more s o t h a n i n t h e c a s e o f t h e n o n r e c i p r o c i t y  p r i n c i p l e , were e x t r e m e l y  of concrete  IV o f  as a  g i v e n t h e l i m i t e d number a n d e x t e n t  a c t i o n s by t h e developed c o u n t r i e s t o reduce t h e incidence o f  t o LDC 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 a n d s e m i m a n u f a c t u r e s .  When t h e G r o u p o f 77 met i n L i m a i n November 1971 t o t h r a s h o u t a common p o s i t i o n t o b r i n g t o t h e u p c o m i n g UNCTAD s e s s i o n , t h e y a h e a d i n UNCTAD o n c e a g a i n w i t h r e s o l u t i o n s c a l l i n g  resolved t o press  on t h e N o r t h  to e l i -  m i n a t e q u o t a s a n d o t h e r n o n t a r i f f b a r r i e r s o n LDC e x p o r t s , t o a g r e e t o a standstill basis  i n respect  o f new b a r r i e r s , a n d t o i m p l e m e n t o n a p r i o r i t y  l a r g e - s c a l e programs o f adjustment a s s i s t a n c e i n s e c t o r s  (e.g. c l o t h i n g  195 and  textiles)  i n w h i c h LDCs w e r e h i g h l y c o m p e t i t i v e .  developed country tariff  surcharge  of cotton t e x t i l e  However,  recent  t r a d e b a r r i e r p o l i c i e s - - s u c h a s t h e U.S. 10 p e r c e n t o f A u g u s t 1971 a n d t h e s t r o n g r e s i s t a n c e t o l i b e r a l i z a t i o n import  q u o t a s d e m o n s t r a t e d b y most d e v e l o p e d p a r t i c i p a n t s  d u r i n g t h e r e n e g o t i a t i o n o f t h e GATT t e x t i l e s 1970--did not s i g n a l  arrangement  ( t h e LTA) i n  a n y a p p a r e n t w i l l i n g n e s s t o c o n s e n t t o s p e c i f i c LDC 196 proposals f o r d i f f e r e n t i a l treatment i n the use o f trade b a r r i e r s . A t t h e t h i r d s e s s i o n o f UNCTAD, h e l d i n S a n t i a g o C h i l e ( 1 3 A p r i l t o  - 132  21 May  -  1 9 7 2 ) , t r a d e b a r r i e r i s s u e s were d i s c u s s e d  clearly recent  e c l i p s e d as  LDC  p r i o r i t i e s by  perceived  a t some l e n g t h b u t  problems a r i s i n g  t u r m o i l i n i n t e r n a t i o n a l m o n e t a r y r e l a t i o n s and  the  were  from  growing  the  exter-  197 nal  i n d e b t e d n e s s o f many d e v e l o p i n g  a marked d i v e r g e n c e o f 77  and  specific  a c c o r d s w o u l d emerge a t t h e 46  (III),  international trade bloc against  As  at previous  treatment of the  of trade b a r r i e r s arose,  the  Group  ensured that  few  c l o s e of the heated d e l i b e r a t i o n s .  which elaborated r e l a t i o n s , was  ("Group B")  13  "general  p a s s e d by  the  p r i n c i p l e s " to LDCs and  the o p p o s i t i o n o f a l l major Western s t a t e s .  of d i f f e r e n t i a l  sessions,  between the b a s i c n e g o t i a t i n g p o s i t i o n o f the  the Northern c a p i t a l i s t nations  Resolution  use  countries.  LDCs i n r e s p e c t  the  govern  socialist  When t h e  of developed  l a t t e r consented to continue  question  countries' their  e v i d e n t l y l a r g e l y h o r t a t o r y support f o r the p r i n c i p l e while  at the  time s t u d i o u s l y eschewing concrete  against a l l  e f f o r t s to enlarge  c o m m i t m e n t s and  UNCTAD's r o l e i n t h i s  area.  They a c q u i e s c e d  passage of three r e l e v a n t Conference Resolutions: the  battling  facilitate  the  the  asked so  t h e movement o f c e r t a i n i n d u s t r i e s t o t h e T h i r d W o r l d ;  ( I I I ) , which recognized t e r s and  in  72(111), which  developed c o u n t r i e s t o adopt adjustment a s s i s t a n c e p o l i c i e s  same  as 76  i m p o r t a n c e o f n o n t a r i f f b a r r i e r s t o LDC  called for accelerated  consideration of t h i s matter i n  to  expor-  the  C o m m i t t e e on M a n u f a c t u r e s t h r o u g h c r e a t i o n o f a s p e c i a l " s e s s i o n a l c o m m i t t e e " ; and  82(111), which noted the need f o r s p e c i a l c o n s i d e r a t i o n o f the  of the But  the  l e a s t d e v e l o p e d LDCs i n t h e n e x t r o u n d o f GATT t r a d e developed countries blocked  p e r m a n e n t UNCTAD i n t e r g o v e r n m e n t a l  LDC  needs  negotiations.  e f f o r t s to e s t a b l i s h a formal  g r o u p on n o n t a r i f f b a r r i e r s and  198  and  refused  - 133 -  t o s u p p o r t a p r o p o s e d LDC r e s o l u t i o n c a l l i n g  for the elimination of  quotas and o t h e r n o n t a r i f f b a r r i e r s t o imports No r e s o l u t i o n p e r t a i n i n g t o a s t a n d s t i l l  from t h e T h i r d  World.  199  o n new t r a d e b a r r i e r s was p a s s e d  at t h e conference,  although  f o r several developing  countries  major t o p i c during  d e l i b e r a t i o n s i n t h e Second Committee.  t h i s was a  D e v e l o p i n g c o u n t r i e s w e r e a c u t e l y a w a r e t h a t t h e u p c o m i n g GATT n e g o t i a t i o n s would provide concrete  bargains  more b i n d i n g  legal  o f the use o f trade b a r r i e r s .  i n a l l stages"  developing  Thus t h e y f o u g h t f o r  82 ( I I I ) n o t e d a b o v e , w h i c h c a l l e d  p a r t i c i p a t i o n o f the developing  Secretary-General  to actually strike  sense, t h e r a t h e r nebulous p r i n c i p l e o f d i f f e r e n t i a l  the passage o f R e s o l u t i o n  uously,  an o p p o r t u n i t y  w i t h t h e N o r t h t h a t m i g h t somehow i n c o r p o r a t e , i n a  treatment i n respect  full  them w i t h  o f t h e GATT n e g o t i a t i o n s  a n d a s k e d t h e UNCTAD  " t o prepare a l l relevant documentation t o a s s i s t t h e  c o u n t r i e s " t o p a r t i c i p a t e i n them.  o f GATT t r a d e n e g o t i a t i o n s w o u l d b e g i n  The U n i t e d  States  "round"  i n t h e i r attempts t o convince t h e major developed c o u n t r i e s t o  previous  trade negotiations  opportunity. special  treatment during the  ( t h e K e n n e d y R o u n d ) ; now t h e y h a d a n o t h e r  T h e N o r t h d i d seem more r e c e p t i v e t o L D C s ' a r g u m e n t s f o r  c o n s i d e r a t i o n o f t h e i r t r a d i n g i n t e r e s t s t h a n had been t h e case i n  1960s.  given  and t h e  i n 1 9 7 3 . T h e LDCs h a d l a r g e l y  i m p l e m e n t some s i g n i f i c a n t m e a s u r e o f d i f f e r e n t i a l  the  for "the  c o u n t r i e s , e f f e c t i v e l y and c o n t i n -  E u r o p e a n C o m m u n i t y h a d a g r e e d i n F e b r u a r y 1972 t h a t a s e v e n t h  failed  trade  At the very  l e a s t the constant  institutionalized  attention  t o a l l m a n n e r o f T h i r d W o r l d t r a d e p r o b l e m s w i t h i n UNCTAD o v e r t h e  y e a r s appeared t o have r a i s e d t h e c o n s c i o u s n e s s  (andperhaps p r i c k e d t h e  - 134 -  the  conscience?) o f the F i r s t  World.  From mid-1972 t o t h e f o r m a l the  initiation  o f w h a t came t o b e known a s  " T o k y o R o u n d " i n S e p t e m b e r 1973 t h e LDCs s o u g h t t o e n s u r e t h a t t h e  reduction  o f Northern country  be  a negotiating priority.  in  1972) s t r e s s e d t h a t  trade  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  would  T h o s e LDCs members o f GATT ( a p p r o x i m a t e l y  "their  association with  the negotiations  50  was  dependent upon t h e d e t a i l s t o be a p p l i e d t o t h e i r p a r t i c i p a t i o n . " O n l y i f "the  ground r u l e s , techniques and m o d a l i t i e s " adopted r e f l e c t e d " t h e 202  provisions o f Part  I V " would they j o i n  i n the negotiations.  d e v e l o p e d s t a t e s w e n t some way t o w a r d m e e t i n g t h e r e q u e s t s World.  When t h e " T o k y o D e c l a r a t i o n "  negotiated, goals.  launching  of the Third  t h e " T o k y o R o u n d " was  they agreed t o i n s e r t s e v e r a l p r o v i s i o n s  Significantly,  The  supportive  o f LDC  one o f t h e two m a j o r aims o f t h e n e g o t i a t i o n s  was  s a i d t o be t h e s e c u r i n g o f a d d i t i o n a l benefits f o r the i n t e r n a t i o n a l trade o f developing c o u n t r i e s so as t o a c h i e v e a s u b s t a n t i a l i n c r e a s e i n t h e i r f o r e i g n exchange e a r n i n g s , / a n d / t h e d i v e r s i f i c a t i o n o f t h e i r e x p o r t s . . . 203 A " s u b s t a n t i a l improvement i n t h e c o n d i t i o n s of i n t e r e s t t o the developing  o f access f o r the products  c o u n t r i e s " was m e n t i o n e d a s a p r i o r i t y o f  204 the n e g o t i a t i o n s . o f LDC e x p o r t s central  W h e t h e r o r how t h e c o n c e p t o f d i f f e r e n t i a l  would be d e a l t w i t h  concern o f developing  of manufactures t o t h e North.  treatment  i n t h e T o k y o Round was o f c o u r s e a  countries  a n x i o u s t o expand t h e i r  exports  - 135  -  Conclusion During the with varying  period  examined here the  degrees of success,  developing  countries  sought,  to achieve a fundamental reform of  the  t r a d i t i o n a l p r i n c i p l e s governing postwar i n t e r n a t i o n a l trade r e l a t i o n s . I n a s e n s e , t h e y were enormously s u c c e s s f u l : the  developed  eventually agreed to waive the n o n - d i s c r i m i n a t i o n  and  vis-a-vis effort  t h e T h i r d W o r l d ; t o i n s t i t u t e GSP  reciprocityprinciples  s c h e m e s ; and  t o make a s p e c i a l  t o r e d u c e 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 T B s ) i m p e d i n g LDC  possibilities.  H o w e v e r , as h a s  " v i c t o r i e s " at the nothing  of commercial value of d i f f e r e n t i a l  and  i n the  trends  f r o m what t h e receive by  real  to the  commercial world  LDCs h a s  intended:  industrial countries  exceedingly  difficult  intended  treatment--it  a type of " d i f f e r e n t i a l the  been amply documented above,  export  these  level of p r i n c i p l e s often translated into l i t t l e  case--that  out  countries  beneficiaries.  Indeed i n  seems q u i t e c l e a r t h a t moved i n t h e  opposite  t h e i r manufactured exports treatment" less favorable t o each o t h e r ' s  that  one  events  direction  tended  to  than that  major exports!  t o adduce e v i d e n c e s u g g e s t i n g  or  meted  It i s also  adoption of  the  d o c t r i n e o f n o n r e c i p r o c i t y i n GATT g e n e r a t e d m e a n i n g f u l b e n e f i t s f o r  the  205 LDCs, a t l e a s t i n r e s p e c t preferences value The by  o f most m a n u f a c t u r e s t r a d e .  i t i s indisputable that  t o LDC  b e n e f i c i a r i e s , but  exclusion of near-exclusion developing  present  study.  countries  the  GSP  generally  has  As  for  tariff  b e e n o f some e c o n o m i c  f a r l e s s t h a n t h e y had  expected.  o f many m a n u f a c t u r e s c o m p e t i t i v e l y  i s of course p a r t i c u l a r l y noteworthy f o r  exported  the  - 136 -  W h i l e t h e LDC e x p o r t e r s o f m a n u f a c t u r e s w e r e c e r t a i n l y f a r f r o m happy w i t h t h e t r a d e b a r r i e r p o l i c i e s late  of the industrial  1960s a n d e a r l y 1 9 7 0 s , t h e y w e r e n o n e t h e l e s s  exports  significantly  and t o d i v e r s i f y  economies i n t h e  a b l e t o expand  their  i n t o many new a n d more s o p h i s t i c a t e d  206 product  lines during this period.  I n a d d i t i o n , many p r o s p e c t i v e T h i r d  W o r l d e x p o r t e r s o f m a n u f a c t u r e d goods e x h i b i t e d c o n s i d e r a b l e  confidence  t h a t t h e y would be a b l e t o upgrade t h e q u a l i t y and i n c r e a s e t h e volume of t h e i r  exports  t o the North  the " o i l  crisis"  i n late  i n the years  ahead.  But t h e b e g i n n i n g o f  1973 a n d i t s s u b s e q u e n t d e v e l o p m e n t i n t o a l o n g -  t e r m s t r u c t u r a l p r o b l e m was a g l o o m y h a r b i n g e r termed t h e " r i s e o f p r o t e c t i o n i s m . "  o f w h a t h a s come t o b e  The p r o t e c t i o n i s t t r e n d d u r i n g t h e  r e m a i n d e r o f t h e 1 9 7 0 s c o n s t i t u t e s t h e m a i n theme o f t h e d i s c u s s i o n o f LDCs a n d m a n u f a c t u r e d e x p o r t s IV  t h a t now f o l l o w s .  Phase I I I : The " P r o t e c t i o n i s t Exports  Drift"  and T h i r d World  Manufactured  Introduction The  T h i r d World's challenge t o t h e p r i n c i p l e s  arrangements governing  international relations  a r e a was i n many r e s p e c t s a n a f f a i r years  assaults against the principles the  equal  treatment  i n the trade barrier  o f t h e 1960s.  o f UNCTAD's e x i s t e n c e t h a t t h e d e v e l o p i n g  and i n s t i t u t i o n a l issue  I t was d u r i n g t h e f i r s t  c o u n t r i e s launched  their  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 i t y , and  o f a l l s t a t e s i n t h e employment o f t r a d e b a r r i e r s  that  207 lay at the heart  o f t h e p o s t w a r GATT t r a d e b a r r i e r s r e g i m e .  I t was  a l s o d u r i n g t h i s p e r i o d t h a t many LDCs s o u g h t m o s t v i g o r o u s l y t o e x p a n d  - 137  UNCTAD's a u t h o r i t y a t t h e to reform already national  continued  Rise  during  the  the  institutions  1970s.  efforts and  of the  protect  the very  beginnings  negotiations  disastrous  the  However, i f a n y t h i n g  i n the  reforms  the  to  inter-  increase  North  c u r r e n t s have p l a g u e d the of m u l t i l a t e r a l  concerning  LDCs  markets.  of Protectionism  Protectionist  the  r u l e s and  But  e c o n o m i c c l i m a t e grew l e s s h o s p i t a b l e f o r LDCs s e e k i n g  t h e i r access to Northern  The  e x p e n s e o f GATT's.  i n t e r n a t i o n a l trade  achieved  -  i n t e r n a t i o n a l economy  commerce.  Those p r e s e n t  since  during  the  the p o s t w a r t r a d e o r d e r were a c u t e l y c o n s c i o u s  e f f e c t s which the  "beggar-thy-neighbor" p o l i c i e s  of  of  the  208 1930s had  had  on  a l l countries.  The  c r e a t i o n of the  b e l i e f o f many g o v e r n m e n t s i n t h e v i r t u e s o f a l i b e r a l e n c o u r a g e d r e m o v a l o f t r a d e b a r r i e r s and, t o monitor c l o s e l y the behavior sphere. derable  willingness to increase  the m u l t i l a t e r a l  i n the  t h i s has  the  s t a t e p r a c t i c e has  GATT t h e r e  has  other  been r e f l e c t e d i n the r e d u c t i o n  frequently f a i l e d to rules.  l i v e up  Yet  that  that  sought  consi-  GATT members of t a r i f f s  I t i s of course to the  since the  creation  trade.  Nonetheless, the r e l a t i v e l y  o p e n GATT t r a d e  1 9 7 0 s , when p r o t e c t i o n i s t s e n t i m e n t was  order  suffered  rapidly gaining  true  of and  in  ground,  to  and  ideals  b e e n an u n m i s t a k a b l e t r e n d t o w a r d f r e e r t r a d e 209 volume o f  the  commercial p o l i c y  a c c e s s e n j o y e d by  regulation of n o n - t a r i f f b a r r i e r s .  a hugely increased  the  equally important,  of countries  e x p r e s s e d i n GATT's p r i n c i p l e s and the  trade order  F o r m o s t o f t h e p o s t w a r p e r i o d , GATT members h a v e e v i n c e d  t h e i r m a r k e t s , and  that  GATT s y m b o l i z e d  also  - 138 -  especially  i n t h e U n i t e d S t a t e s . I n 1970, o r g a n i z e d  officially  abandoned i t s p r e v i o u s  The  steel  clothing  and e l e c t r o n i c s industries  f o ra liberal  trade  industries joined the textiles,  i n p r e s s i n g f o r g r e a t e r import  Congress t h e " M i l l s ' both  support  l a b o r i n t h e U.S.  Bill"  footwear and  protection.  o f 1970 a n d t h e B u r k e - H a r t k e  o f w h i c h would have mandated sharp  policy.  bill  In  o f 1972 —  i n c r e a s e s i n quotas and o t h e r  p r o t e c t i v e d e v i c e s f o r a wide range o f American i n d u s t r i e s — w e r e b a r e l y staved o f f a f t e r f r a n t i c steady  lobbying by the a d m i n i s t r a t i o n .  d e t e r i o r a t i o n i n t h e U.S. b a l a h c e - o f - p a y m e n t s was a l a r m i n g  t r a d i t i o n a l proponents o f f r e e trade. Western c a p i t a l s were a l s o growing tance  o f J a p a n t o make i t s d o m e s t i c  agricultural  and i n d u s t r i a l  more i r r i t a t e d  at the perceived  exports—even  though t h a t c o u n t r y had p r o f i t e d  EEC was a d o p t i n g p r o t e c t i o n i s t p o l i c i e s  t h e p o i n t where o t h e r d e v e l o p e d  than  residual  i n other developed  v i o u s l y t h e major a g r i c u l t u r a l fall at and  dramatically i n the late  to l i t t l e  Mediterranean exchange-rate  states.  This  e x p o r t e r t o t h e C o m m u n i t y , saw i t s e x p o r t s 1960s.  The U.S. g o v e r n m e n t was a l s o  Finally,  arrangements w i t h  upset  African  t h e b r e a k d o w n o f t h e B r e t t o n Woods  monetary regime d u r i n g t h e years  the u n c e r t a i n t y a f f l i c t i n g  more  a s t h e U.S., w h i c h was p r e -  t h e e x p a n d i n g n e t w o r k o f EEC p r e f e r e n t i a l  fixed  P o l i c y had evolved  c o u n t r i e s were r e d u c e d  o f American f r u s t r a t i o n  economies.  o f i t s own, e s p e c i a l l y i n  s u p p l i e r s o f t e m p e r a t e zone a g r i c u l t u r a l p r o d u c t s .  was a m a j o r s o u r c e  reluc-  m a r k e t more a c c e s s i b l e t o t h e i r  a g r i c u l t u r e w h e r e t h e s e m i - a u t a r k i c Common A g r i c u l t u r a l to  even  Washington and s e v e r a l o t h e r  enormously from t h e lowering o f t r a d e b a r r i e r s The  Meanwhile, a  the international trade  1971-73 a d d e d t o  system.  210  - 139  -  Thus p r e v a i l i n g i n t e r n a t i o n a l economic c o n d i t i o n s d i d not f o r the  GATT t r a d e b a r r i e r - r e d u c t i o n n e g o t i a t i o n s  S e p t e m b e r 1973.  The  o i l crisis  and  t h e most s e r i o u s s i n c e t h a t o f t h e a deteriorating situation u n l i k e the  latter,  the  the  among t h e m a j o r d e v e l o p e d c o u n t r i e s .  impact of a s t r o n o m i c a l l y higher  of the  countries s i g n i f i c a n t l y  i n the  recession--  1 9 3 0 s - - o n l y e x a c e r b a t e d w h a t was  LDCs was  factures trade  f o r m a l l y began i n  s u b s e q u e n t 1974-75 w o r l d  non-oil producing developing  that  augur w e l l  devastating.  1 9 7 0 s , o n l y a few  And  already  But  o i l p r i c e s on  i t must be  emphasized  the  that,  i n v o l v e d i n i n t e r n a t i o n a l manu-  are  c o i n c i d e n t a l l y exporters  of,  211 or s e l f - s u f f i c i e n t  i n , petroleum.  1973-74, f o l l o w e d by (particularly exporters  (Argentina,  K o n g , T a i w a n , S i n g a p o r e and only Mexico enjoys a net  surplus  But  the  other  R a t h e r , i t was the  the  as N I C s ,  four East  and  i n respect  the  Asian 213  Third  Latin  LDCs  Yugoslavia.  (Hong  Significantly,  of petroleum trade;  a l l the  commodity.  extent  on  exports  both of  c a p i t a l i s t North i n a d i f f i c u l t p o s i t i o n .  conjunction  served  LDC  Excluding certain 212  LDCs d e p e n d e n t t o a s i g n i f i c a n t  serious recession  OECD c o u n t r i e s t h a t  decade  e s c a l a t i o n of o i l p r i c e s alone that placed  m a n u f a c t u r e d goods t o t h e  and  South Korea);  critical  t h e N I C s and  i n the  under t h i s r u b r i c i n c l u d e three  B r a z i l , Mexico);  NICs l a c k t h i s not  s o - c a l l e d "NICs."  sometimes c l a s s i f i e d  World countries u s u a l l y placed  i t was  of o i l p r i c e s i n  b e e n a s e r i o u s b l o w t o t h e most a m b i t i o u s  of manufactures, the  Southern European c o u n t r i e s  other  quadrupling  f u r t h e r quantum jumps i n p r i c e l a t e r  i n 1 9 7 9 ) , has  American states  The  and as  of higher  prices for their  growing p r o t e c t i o n i s m t h e i r major export  fuel  imports  that a f f l i c t e d  markets t h a t posed  the an  - 140  -  a c u t e d i l e m m a f o r many i n d u s t r i a l i z i n g  LDCs: how  t o earn the vast  o f a d d i t i o n a l f o r e i g n exchange n e c e s s a r y t o purchase imports  when p r o t e c t i o n i s m was  t r a d i t i o n a l l y took the bulk  recovery  from the  1 9 7 0 s was  (indispensable) o i l  growing r a p i d l y i n those c o u n t r i e s  of t h e i r manufactured  While the p r e c i p i t o u s increase l a t t e r h a l f of the  amounts  that  exports.  i n p r o t e c t i o n i s t pressures  c l e a r l y r e l a t e d t o t h e o n s e t and  in  the  slow  1 9 7 4 - 7 5 r e c e s s i o n , many e c o n o m i s t s s t r e s s t h a t i t i s  necessary to "look  i n t o t h e more d i s t a n t p a s t  ...  to find  the roots  of  214 the malaise."  Specifically,  economic adjustment i n the d e t e r i o r a t e d since the as  the  advanced c a p i t a l i s t 1960s.  found during  exception  the  first  two  inflation  postwar decades.  (or  "stickiness,"  industrial and  and  market  unemployment  With the  notable  o f J a p a n , e c o n o m i c g r o w t h r a t e s i n t h e m a j o r OECD e c o n o m i e s h a v e  s h a r p l y d e c l i n e d as p r i c e s and pressure.  wages i n t h e  fostered a type of s t r u c t u r a l  of  economies have slowed  Downward r i g i d i t y  e c o n o m i s t s t e r m i t ) o f p r i c e s and  economies has not  late  the problem i s that the processes  wages h a v e g r o w n r e s i s t a n t t o downward  T h e s e e c o n o m i e s h a v e t h e r e f o r e become e x t r e m e l y s l o w t o  Governments have stepped i n t o p r o t e c t internationally  i n d u s t r i e s no  f r o m t h e v i c i s s i t u d e s and  p a r a t i v e advantage.  recession, especially i n agriculture:  What h a s  competitive  o f i n t e r n a t i o n a l com-  N o r t h e r n c o u n t r i e s were i n c r e a s i n g l y r e s o r t i n g t o  such " i n t e r v e n t i o n i s t " t a c t i c s w e l l before  a c c e l e r a t e d w h a t was  shifts  longer  adjust.  the  o i l crisis  these unfortunate  and  mid-1970s'  developments  only  a well-established trend.  made t h i s  s i t u a t i o n p a r t i c u l a r l y damaging from the  s p e c t i v e of T h i r d World countries h e a v i l y involved i n exporting  per-  manufac-  - 141 tured products t o Northern markets the  future)  ( o r a n x i o u s t o expand such e x p o r t s i n  i s t h e f a c t that developed c o u n t r i e s ' adjustment problems  a r e most a c u t e i n p r e c i s e l y t h o s e i m p o r t - c o m p e t i n g m a n u f a c t u r i n g  sectors  215 i n w h i c h LDCs a r e h i g h l y c o m p e t i t i v e . relatively other  These i n d u s t r i e s t e n d t o be  l a b o r - i n t e n s i v e and t o be p r o t e c t e d  manufacturing sectors.  i n t h e 1970s h a s n o t ,  by higher  But t h e p r o t e c t i o n i s m  f o r t h e most p a r t , i n v o l v e d  than  t h a t has a c c e l e r a t e d  the raising of t a r i f f s  (most o f w h i c h h a v e b e e n p r e v i o u s l y b o u n d i n p r e v i o u s i n any c a s e ) .  tariffs  GATT  negotiations  R a t h e r , n o n t a r i f f b a r r i e r s (NTBs) a r e u s u a l l y t h e p o l i c y  i n s t r u m e n t s now c h o s e n b y N o r t h e r n g o v e r n m e n t s u n d e r p r e s s u r e domestic import-competing i n d u s t r i e s . stated, the recent  protectionism  from  A s a GATT S e c r e t a r i a t s t u d y h a s  i n t h e OECD c o u n t r i e s  has r e l i e d  "heavily  on  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 has engendered " a d d i t i o n a l u n c e r t a i n t y  by  imposing and a d m i n i s t e r i n g  these obstacles  t o trade  i n a non-uniform,  d i s c r i m i n a t o r y manner." The  m o s t i m p o r t a n t NTBs a s f a r a s T h i r d W o r l d e x p o r t s  goods a r e c o n c e r n e d have been q u a n t i t a t i v e r e s t r i c t i o n s directly  limit  imports.  nonagricultural  imports,  them, f o r example a g a i n s t since against and  Japan.  was  this  (QRs) w h i c h  A l t h o u g h A r t i c l e X I o f GATT p r o h i b i t s QRs o n most d e v e l o p e d c o u n t r i e s h a v e f r e q u e n t l y Japanese exports  utilized  of textiles  i n t h e 1950s and  many m a n u f a c t u r e d p r o d u c t s c o m p e t i t i v e l y  e x p o r t e d b y LDCs  Under t h e GATT-sponsored t e x t i l e  e x p l i c i t l y recognized in  o f manufactured  as l e g i t i m a t e t o o l s f o r i m p o r t p r o t e c t i o n .  case a degree o f transparency  maintained.  arrangements, quotas were  and s u p e r v i s i o n o f s t a t e  M o r e r e c e n t l y , h o w e v e r , u s e o f QRs a g a i n s t  o f manufactures has e s c a l a t e d ,  and t h e developed c o u n t r i e s  LDC  At least  behavior exports  have grown t o  - 142  favor so-called "voluntary  export  -  restraints"  ( V E R s ) and  "orderly marketing  217 arrangements" negotiated varying  (OMAs).  (usually secret)  between i n d u s t r i e s i n i m p o r t i n g  and  d e g r e e s o f g o v e r n m e n t i n t e r v e n t i o n , up  ment i n t h e  actual negotiations.  a commitment t o level  VERs a r e  limit  exports  accords  exporting t o and  bilaterally  countries,  including involve-  Implementation o f a VER--which  to a given  import market to a  for a prescribed period--is usually left  with  to the  involves  prescribed  industry in  the  218 exporting country. U n d e r OMAs, e x p l i c i t g o v e r n m e n t - t o - g o v e r n m e n t n e g o t i a t i o n s d e t e r m i n e t h e n a t u r e o f t h e r e s t r a i n t s a d o p t e d by t h e exporting  i n d u s t r y and  country.  219  In both cases the  importing  countries 220  may  a d o p t " b a c k up  QRs  That such export  to assure  that  restraints  the r e s t r a i n t s  are  are h a r d l y v o l u n t a r y  effective."  is  Exporting  c o u n t r i e s a r e w e l l aware t h a t governments i n the  t r i e s may  unilaterally  absence of a n e g o t i a t e d developed country's  i m p o s e much more r e s t r i c t i v e 221 accord.  request  Thus t h e y t e n d  in  c e r t a i n instances  exporters  to "create  the b e n e f i t s to the activity  and  be  exporting  from the  imposed by  the  Walter l i s t  LDC  the may  t h r o u g h c o l l u s i o n among 222  be  However,  r e d u c e d as to  economic grow  t h e many c o s t s t h a t r e s u l t  i m p o s i t i o n of quotas  importing  to  for fear that  industry e i t h e r decline or f a i l  for  unilaterally  a  c o u n t r y as a w h o l e w i l l  M u r r a y and  LDC  to acquiesce  i n d u s t r y i n an  i t s profit  counthe  a monopoly element i n import s u p p l y . "  employment i n t h e  exporting  exporting  able to increase  b e c a u s e o f t h e VER. an  An  importing  arrangements i n  for "voluntary" restraint  a l t e r n a t i v e w i l l be more h a r m f u l .  obvious.  ( w h e t h e r V E R s , OMAs o r  country)against  i t s exports:  - 143  -  L i m i t a t i o n s o f m a r k e t a c c e s s b y means o f i m p o r t q u o t a s r e d u c e e x p o r t demand, e x p o r t e a r n i n g s , o u t p u t and e m p l o y m e n t i n t h e affected industries. P e r m a n e n t QR p r o t e c t i o n o f " s e n s i t i v e " s e c t o r s s k e w s t r a d e p a t t e r n s and i n d u s t r i a l s t r u c t u r e s o f e x p o r t i n g c o u n t r i e s away f r o m t h e d i c t a t e s o f i n t e r n a t i o n a l comparative advantage. E x p o r t s may f l o w t o t h i r d c o u n t r i e s a t l o w e r p r i c e s t h a n w o u l d h a v e o b t a i n e d i n t h e a b s e n c e o f QRs. Hence t h e / e x p o r t e r ' s ^ terms o f t r a d e d e t e r i o r a t e . . . /and/ t h e e x p o r t i n g c o u n t r y ' s g a i n s f r o m i n t e r n a t i o n a l t r a d e and s p e c i a l i z a t i o n w i l l be s m a l l e r . P e r m a n e n t QR p r o t e c t i o n a l s o damages t h e e c o n o m i e s o f t h e e x p o r t i n g c o u n t r i e s i n a growth c o n t e x t . Instead of permitt i n g exports to r e f l e c t domestic s h i f t s i n the labour f o r c e , c a p i t a l f o r m a t i o n and t e c h n o l o g i c a l c h a n g e , t h e s e a g e n t s o f g r o w t h h a v e t o be c h a n n e l l e d i n t o a l t e r n a t i v e s e c t o r s w h e r e t h e i r c o n t r i b u t i o n t o g r o w t h . . . w i l l be l e s s . Since exist i n g p a t t e r n s o f comparative advantage i n developing c o u n t r i e s tend t o favour l a b o u r - i n t e n s i v e i n d u s t r i e s , p r e c i s e l y those f r e q u e n t l y s u b j e c t t o ORs i n t h e i n d u s t r i a l c o u n t r i e s , t h e r e s u l t a n t r e d i r e c t i o n o f the sources o f economic growth i n such a s e t t i n g c a n be d a m a g i n g i n d e e d . 2 2 3 Given it  this  i s not  lengthy inventory of negative surprising  t h a t QRs  on  impacts  imports  on  exporting countries,  of manufactures from  developing  224 countries are roundly Manufactured to  t h e U.S.,  i n d i c t e d b y many  products  of post-1973 p r o t e c t i o n i s t  determine Walter  t h a t have been imposed,  the products  observe  actions.  q u o t a s on t h e  LDCs a r e c o n c e n t r a t e d  countries maintain  tools  and  other products  imports  on t h e t e x t i l e s  i n QRs  S e c r e t a r i a t r e l e a s e d an  i t i s not  Although  to and interest  s e c t o r , w h i l e most European  i n addition to t e x t i l e s . list"  Murray  of manufactures of  o f v a r i o u s s o r t s as f o o t w e a r , 226  "indicative  impact  difficult  most s u s c e p t i b l e t o s u c h b a r r i e r s .  t h a t U.S.  Japan  other Western European  i s i m p o s s i b l e t o measure p r e c i s e l y e i t h e r the i n c i d e n c e o r t h e 225  o f t h e n u m e r o u s QRs  to  f r o m T h i r d W o r l d c o u n t r i e s and  C a n a d a , t h e E u r o p e a n C o m m u n i t y and  s t a t e s have borne the brunt it  exported  economists.  o f LDC  cutlery,  In l a t e manufactured  toys,  1978  t h e GATT  exports  - 144 -  s u b j e c t t o QRs w h i c h  Table  illustrates  10: I n d i c a t i v e L i s t  Export  o f Manufactures  affected.  of  Apparent  I n t e r e s t t o LDCs S u b j e c t t o M e a s u r e s o f 227 R e s t r a i n t i n Recent Years  Import  C l o t h i n g , many t y p e s  Luggage  Carpets  Plywood  Electrical  apparatus  Tableware  Footwear  Television  I r o n and S t e e l , and p r o d u c t s thereof  Textile  L e a t h e r Goods  Tyres  Certain  light  e n g i n e e r i n g goods  That t h e major manufactured is  the types o f products  a striking  sets  fabrics  and t u b e s  Certain yarn  items  e x p o r t s o f t h e LDCs a r e i n c l u d e d i n t h i s  list  indication of t h e i r v u l n e r a b i l i t y to various kinds of  q u a n t i t a t i v e import r e s t r a i n t s . between t h r e e and f i v e p e r c e n t  B a l a s s a e s t i m a t e s t h a t i n t h e mid-1970s (US $3-5 b i l l i o n )  a f f e c t e d b y new q u a n t i t a t i v e r e s t r i c t i o n s ;  o f w o r l d t r a d e was  a n ; unknown b u t a s s u r e d l y  s u b s t a n t i a l p r o p o r t i o n o f n e w l y - r e s t r i c t e d t r a d e was a c c o u n t e d  f o r by 228  manufactured  exports from t h e T h i r d World  to the Northern  economies.  The "new p r o t e c t i o n i s m " o f t h e 1 9 7 0 s h a s a l s o b e e n m a n i f e s t e d i n other p o l i c y trends i n the developed but  still  significantly  c o u n t r i e s which  on LDC e x p o r t p o s s i b i l i t i e s .  impact  less  F o r example, t h e  U n i t e d S t a t e s a n d t h e EEC h a v e i n s t i t u t e d o r s t r e n g t h e n e d t h e i r o f s o - c a l l e d "minimum i m p o r t p r i c e s " w h i c h and  thus reduce  f o r c e up t h e r e l a t i v e  t h e demand f o r a n i m p o r t e d g o o d .  been t h e main t a r g e t o f such p o l i c i e s ,  directly  systems price  S t e e l manufactures  a n d w h i l e o t h e r OECD  states  have  - 145 have been t h e main v i c t i m s  ( e s p e c i a l l y J a p a n ) , " i m p o r t s f r o m t h e most  e f f i c i e n t producers i n developing countries,  such as Korea,  Brazil,  229 I n d i a and Mexico...were c u r t a i l e d " as w e l l . been t h e r e m a r k a b l e i n c r e a s e indirect  government a i d s  industries. and  Such a i d s  F a r more s i g n i f i c a n t h a s  i n the developed countries  and s u b s i d i e s  o f d i r e c t and  t o c e r t a i n depressed o r d e c l i n i n g  to industries protect  them f r o m i m p o r t  competition  t e n d t o encourage i n e f f i c i e n c y and r e s o u r c e m i s a l l o c a t i o n ,  nationally  and i n t e r n a t i o n a l l y .  tax holidays  and r e b a t e s ,  both  T h e y c a n t a k e many f o r m s - - o u t r i g h t  employment s u b s i d i e s ,  and s p e c i a l c r e d i t  ments.  Such p o l i c i e s a r e u s u a l l y aimed a t f o s t e r i n g o r p r o t e c t i n g  certain  industries i n p a r t i c u l a r regions  employment i n a g i v e n  industry  subsidization of industry  (e.g.  textiles).  I t i s no a c c i d e n t  It  was is  The t e x t i l e  to  industry  t h e most h e a v i l y p r o t e c t e d  developed world; the  t h e s e c t o r most s e r i o u s l y a f f e c t e d b y t h e  o f t h e 1970s a n d m o s t s u s c e p t i b l e  textiles.  with low-  Protectionism  i s not surprising that  recession  that  a n d e m p l o y m e n t i s v e r y common i n l a b o r - i n t e n s i v e  are l o s i n g the b a t t l e o f import-competition 230 LDC s u p p l i e r s .  T e x t i l e s : A Case Study o f  arrange-  o f a country or at preserving  industries that cost  grants,  to p r o t e c t i o n i s t pressures  i n t h e advanced i n d u s t r i a l  and most l a b o r - i n t e n s i v e i n d u s t r y  countries i n the  i t i s a l s o t h e s e c t o r whose u n c o m p e t i t i v e n e s s v i s - a - v i s  T h i r d W o r l d ' s m a n u f a c t u r i n g i n d u s t r i e s was m o s t m a r k e d . 1973, developed c o u n t r i e s '  F r o m 1963  i m p o r t s o f t e x t i l e p r o d u c t s f r o m LDCs  (Japan i s excluded here) i n c r e a s e d  a t an average a n n u a l r a t e o f about  231 15  percent.  LDC e x p o r t s o f c o t t o n  t e x t i l e s were o f c o u r s e c o n t r o l l e d  - 146 -  under t h e p r o v i s i o n s o f t h e GATT-sponsored t e x t i l e s  arrangement  (the LTA),  b u t t h e e m e r g e n c e o f a h o s t o f new LDC s u p p l i e r s n o t c o v e r e d b y t h e existing restraint of  t h e growing  a c c o r d s n e g o t i a t e d u n d e r t h e L T A - - i t s e l f an i n d i c a t i o n  emphasis on e x p o r t i n g m a n u f a c t u r e s  i n c r e a s i n g c a p a c i t y o f Southern  i n many LDCs a n d o f t h e  economies t o contemplate  d u c t i o n f o r t h e w o r l d m a r k e t - - l e d t o a huge, unplanned  industrial  pro-  a n d u n w e l c o m e d jump 232  i n OECD i m p o r t s o f c o t t o n t e x t i l e s  i nthe early  1970s.  I n a d d i t i o n , LDC  e x p o r t s o f n o n - c o t t o n t e x t i l e s , w h i c h were n o t i n c l u d e d u n d e r t h e LTA, were e x p a n d i n g  e v e n more r a p i d l y .  Table  11 p r o v i d e s d a t a . 233  T a b l e 1 1 : OECD I m p o r t s  of Textiles  (in percent) 1961-70 Annual Growth Rate  from  LDCs  1970-75 Annual Growth  Cotton T e x t i l e s  11  41  Wool T e x t i l e s  14  56  Synthetic Textiles  37  76  Other  13  28  Total  13  36  Rate  D e v e l o p i n g c o u n t r i e s were a l s o e x p o r t i n g i n c r e a s i n g volumes o f c l o t h i n g to  the North i n the late  1960s a n d e a r l y  1970s.  I n 1968 t h e i r  e x p o r t s t o t h e OECD r e g i o n w e r e w o r t h U.S.$.71 b i l l i o n ,  clothing  t h i s g r e w t o $1.2 234  billion  b y 1970 a n d t h e n a l m o s t t r i p l e d  f a c t , t h e GATT t e x t i l e  t o $3.23 b i l l i o n b y 1973.  agreements c o v e r i n g c o t t o n t e x t i l e s were a major  r e a s o n f o r t h e b r a n c h i n g o u t o f d e v e l o p i n g c o u n t r i e s i n t o more ted  In  lines of production.  Then t o o s u c h a t r e n d toward  more s o p h i s t i c a t e d t y p e s o f p r o d u c t s i s a w e l l - k n o w n  sophistica-  the manufacturing o f  phenomenon i n t h e  - 147 -  i n d u s t r i a l i z a t i o n process.  I t i s quite n a t u r a l f o r a country  a s i m p l e commodity o r manufactured production  good t o advance t o h i g h e r s t a g e s o f  ( p r o c e s s i n g a commodity; u p g r a d i n g  b a s i c manufactured  item)  t h e q u a l i t y o r form  h a v e i n m i n d when t h e y s p e a k o f i n d u s t r i a l i -  exports from t h e South  t o the North,  an i n c e n t i v e f o r LDC s u p p l i e r s t o s e a r c h f o r new p r o d u c t s  textile  Indeed,  I n a n y c a s e , t h e e x i s t e n c e o f t h e GATT L T A , w h i c h  restricted cotton t e x t i l e  upgrade t h e i r  of a  as i t s economic development p r o g r e s s e s .  t h i s p a t t e r n i s what e c o n o m i s t s z a t i o n and development.  producing  existing exports.  They t h u s d i v e r s i f i e d  exports, notably knitted fabrics  provided  t o e x p o r t and  "into  a n d man-made f i b r e s ,  different and i n t o t h e 235  export o f c l o t h i n g , which In response domestic  textile  were n o t c o v e r e d  b y t h e GATT a g r e e m e n t s . "  to the predictable rising and c l o t h i n g  industries  chorus  o f complaints  from  about t h e growth o f imports  s o - c a l l e d " l o w wage" c o u n t r i e s , t h e a d v a n c e d i n d u s t r i a l  from  countries insisted  t h a t t h e GATT LTA b e r e n e g o t i a t e d t o i n c l u d e b o t h new LDC s u p p l i e r s o f cotton textiles  and o t h e r t e x t i l e  of the o r i g i n a l  a n d r e n e g o t i a t e d v e r s i o n s o f t h e LTA, t h e r e was l i t t l e t h e  LDCs c o u l d do t o d i s s u a d e  and c l o t h i n g p r o d u c t s .  the Northern  c o u n t r i e s from t h i s  a r e s u l t t h e new GATT M u l t i f i b r e A r r a n g e m e n t December 1973 c o v e r e d and  or blends  thereof..."  blow t o T h i r d World  c o u r s e , and as  ( t h e MFA) a g r e e d  "tops, yarns, piecegoods,  other t e x t i l e manufactured 236  As i n t h e case  to i n  made-up a r t i c l e s ,  garments  p r o d u c t s . . . o f c o t t o n , w o o l , man-made  The c o v e r a g e  fibres,  o f new LDC s u p p l i e r s was a b i t t e r  c o u n t r i e s j u s t beginning t o manufacture f o r export,  s i n c e c o t t o n t e x t i l e s t e n d t o be t h e b a s i c " b u i l d i n g b l o c k " o f t h e i n d u s t r i a l i z a t i o n process.  And t h e e x p a n s i o n  of the textile  control  scheme  - 148  -  t o i n c l u d e a l l m a n n e r o f n o n - c o t t o n t e x t i l e p r o d u c t s and was,  n e e d l e s s t o say, not  branched out  to other  welcomed by  t e x t i l e p r o d u c t s and  t e x t i l e r e s t r i c t i o n s of the The  the  "temporary" The  1970  LTA.  patent  The  notion  fiction  o f q u o t a s and  the primary goal.  t h a t the  continued  a r r a n g e m e n t was  t o be  protectionism  accords having  l a t e r a l l y imposed q u o t a s , imports at the p r e v i o u s  year's  a n n u a l g r o w t h r a t e was of course provide  level  cotton  called  3 and  4  clothing  the heart  for higher  w i t h m i n i s c u l e market shares,  same e f f e c t .  from a given  for.  arrangement.  not  the  of the from  legiti-  MFA—legiexporting  s u p p l i e r c o u l d be  year only; thereafter, a 6  growth r a t e s .  To  be  In the case o f u n i -  B i l a t e r a l l y negotiated  i t was  be  i n a s e n s i t i v e sector--was s a i d to  the  f o r one  to  r e f l e c t e d i n the  i n t e x t i l e s and  However, A r t i c l e s  bilateral  purposely  s i m i l a r to those of i t s pre-  t i m i z e d b o t h u n i l a t e r a l q u o t a schemes t o c o n t r o l i m p o r t s s t a t e s and  had  c l o t h i n g t o escape the  were b r o a d l y  "orderly expansion" of trade  mization  s u p p l i e r s who  well  LTA.  p r o v i s i o n s o f t h e MFA  decessor,  o l d e r LDC  c l o t h i n g as  frozen percent  accords  protect very  small  could exporters  agreed that r e s t r i c t i o n s would  not  237 apply  t o them.  created  A new  "to supervise  body, t h e T e x t i l e s S u r v e i l l a n c e Body (TSB),  t h e MFA  and  . . . make r e c o m m e n d a t i o n s t o p a r t i c i p a n t  g o v e r n m e n t s r e g a r d i n g t h e i r a c t i o n s i n r e l a t i o n t o t h e MFA, 238 event of d i s p u t e s . " s u r v e i l l a n c e of the  A l t h o u g h c r e a t i o n o f t h e TSB actions of importing  d e f i n i t i o n o f t h e MFA,  c o u n t r i e s and  imposed by  the  i n f a c t the u n i l a t e r a l