Why Should Small Developing Countries Engage in the Global Trading System? - Finance Faizel Ismail; Sok Siphana

ur question could be rephrased as: Why are small developing countries afraid of multilateral trading negotiations? To emphasize fear as the central element of the problem does not mean we are adopting a negative approach; rather, it is simply a recognition of the truth of the matter. Fear is, in fact, the basic explanation of why small developing countries are reluctant to engage in the multilateral trading system. Fear is not always irrational or unexplainable. When it results from a real danger, there is no use pretending that it will go away under the influence of academic arguments about the theoretical gains from trade openness. The specific causes of fear must be addressed and exorcized. In the case of trade negotiations, they can be reduced to three generic types: • the fear of not understanding the issues at stake or of not possessing the negotiating skills and resources to effectively take part in the difficult game of negotiations; • the fear of very tangible negative consequences of negotiations: the loss of jobs, of preference margins, of food security, the deterioration in terms of trade for net food importers, and the extra cost of implementing complex enforcement systems like those required for intellectual property rights; and • the fear of not being competitive in quality, price, and range of products. Lack of skills The first variety of fear can be dealt with only through a systematic drive to train skilled negotiators and boost analysis of the pros and cons for developing countries of adopting certain positions. Boosting negotiating capacity has to go much beyond the traditional concept of technical cooperation to explain the content of trade agreements and to provide technical advice in particular cases. As we envisaged in UNCTAD, when we launched the “Positive Agenda for Trade Negotiations” in 1996, the ultimate goal has to be more ambitious. The aim should be to build up a country’s capacity to formulate its own negotiation strategy based on its potential competitive advantages and capacity to supply certain products. Several agencies are involved in this kind of work. Among the best results, at least in terms of conceptual planning, have been those from the interagency Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries (see box on page 17 for more on this). Difficulty in financing the implementation of projects has been a stumbling block, however. There may be a case, therefore, for making trade-oriented technical cooperation an integral and enforceable commitment for future negotiations.