Development Straitjacket

Jul 24, 2013 Editorial

At the beginning of the millennium, the Government of Guyana announced that international trade and its regulatory environment had become so complex in the globalised order it was launching a Ministry of Foreign Trade and Economic Cooperation (MOFTEC), with Clement Rohee at its head. It was to be “the lead agency in the development and pursuit of Guyana’s trade policy and programmes of International Cooperation, effective trade policymaking, and implementation of policy decisions”.
MOFTEC, however, disappeared from the map by the end of the decade, after Clement Rohee was reassigned to his present remit and Henry Jeffrey, his successor, departed. This is quite unfortunate, because events have proven the government’s original assessment of the international environment to be quite prescient. The World Trade Organisation (WTO), for instance, where smaller nations had some influence, has been sidelined by the developed nations after they were challenged in their unilateral dominance by China and other emerging economies.
The Doha Development Round of the WTO, specifically designed to assist the lesser developed economies such as Guyana, and launched in 2001 at the same time as MOFTEC, is now in limbo.
In the meantime, the developed nations have been feverishly crafting new bilateral and multilateral agreements, all designed to maintain their dominant position economically. And without a designated agency to keep tabs on these development, our top policymakers in the government and the Opposition, lacking the information to make informed decisions on the macro-environment, battle each other to the death over local decisions that might very well be moot in light of the new developments.
Let us take the matter of the type of state structure that might be most appropriate for our development needs at this stage of our struggle to climb out of the underdeveloped state bequeathed by colonialism. Under the straitjacket of the Washington Consensus, imposed by the IMF after 1989, our economy has been liberalised, privatised and financialised even as the role of the government was miniaturised, especially on matters concerning production of goods and services. In this area, the “market” would reign supreme.
However, experience had shown that the only countries that had lifted themselves out of poverty and joined the “developed” club – Japan, Singapore, South Korea, Malaysia and now China -had utilised the state very strategically to both protect local markets and to push and/or become involved in production of specific goods and services, either directly or through assistance to private companies. This newspaper has consistently supported this “developmental state” for our country – with the caveat that it would have to be guided under a national consensual mechanism. Interestingly, the developed countries had all utilised much the same practices back in the 19th century during their early stages of industrialisation.
But now that the developed countries are being challenged via the “developmental state” model, they are utilising their remaining clout to influence the global community to see such an approach as “unfair” and to be abjured. Right now, there are two initiatives in which the US has taken a lead role to head off the challenge: the Trans-Pacific Partnership Agreement (TPPA) and the Trans-Atlantic Trade and Investment Partnership (TTIP).
The TPPA, which will involve most of the countries on both sides of the Pacific, and being negotiated right now, has a chapter on “state-owned enterprises” (SOEs), which the US and Australia are pushing, that forbids firms linked to governments (even in a minority way) to obtain advantages given to other private companies. Most Chinese firms would in this fashion be blacklisted. In the TTIP, which is between the US and the EU, negotiations which are also ongoing, there is also a chapter on SOE similar to the one in TPPA.
If this agreement is consummated, it could have severe repercussions for Guyana and Cariforum, which signed an Economic Partnership Agreement (EPA) with the EU. The EU’s paper on SOE states will guide “other bilateral agreements”. These negotiations are only the tip of the iceberg of what is going on in the trade arena that will affect us directly. Shouldn’t a MOFTEC be minding the store?

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