12. Access to Markets

Background

The goal of the recent wave of free trade agreements has been the reciprocal lifting of trade barriers among nations, regardless of the countries' level of development or particular national interests. The dominant principle of these deals has been the concept of "national treatment," which means that governments should be required to treat foreign investors, investments, and products the same as their national counterparts.

This chapter, while not criticizing international trade, argues that trade liberalization should not be an end in itself for which everything else must be sacrificed. Instead, market access for foreign products and investments should be evaluated and defined within the framework of national development plans.

Guiding Principles

The complex process of reconciling national development plans with international trade rules should take the following matters into account:

• The differing levels of development among countries are a justification for allowing non-reciprocal and preferential treatment in market access. Articles 2, 4, 17 and 18 of the United Nations Charter of Economic Rights and Duties of States (1974) establish the legal and socio-economic bases for demanding equitable (not equal) treatment. Equal treatment among unequals leads to inequality.

• A development strategy should be multifaceted and must not treat the external market as the only influence over demand. Domestic markets must be appropriately valued for their role in generating a "virtuous cycle" of raising the population's standard of living and increasing economic growth. By linking economic development to per capita consumption, living standards for the majority inevitably rise. The fight against poverty and the pursuit of social justice cease to be simply ethical demands; they become levers for development.

• When internal markets are strong and economic activity is not dependent solely on external markets, the conditions exist for negotiating an opening to external trade without adopting a stance of appeasement.

• Permanent and predictable access to foreign markets is important for advancing growth of productive capacity and securing a healthy balance of payments. That is, necessary imports are financed through a strong and competitive export sector. However, market action only works to eliminate non-competitive producers; trade liberalization does not itself create a strong and competitive productive capacity. Development and competitiveness require concrete policies with clear objectives, goals and instruments. States have a responsibility to meet this challenge. Agreements must not impair the ability of states to set policy for the promotion and even the protection of certain strategic industries to achieve just and sustainable national development.

• At the present time, the fundamental obstacles to access to developed countries' markets are not tariff barriers, but "technical barriers to trade." Trade negotiations should address this issue.
• The goal of negotiations should be to establish clear and fair rules for permanent and predictable access to markets which benefit consumers, create jobs and well-being for the population, strengthen productive capacity, and protect the environment.

Specific Objectives

Tariffs

• Producers, and society in general, should agree on a transparent and widely participatory process for establishing a timetable and choosing products to be subject to lower duties.

• Internal timetables for trade liberalization and tariff reduction should be accompanied by coordinated programs to ensure that national industries become competitive during the transition. These programs should include access to consultants and training, technological research and development, and long-term credit. Sectoral programs should be accompanied by a national development plan, including commitments from the state to create the macro-economic conditions that enhance competitiveness. For developing countries, trade liberalization without an industrial policy is suicidal.

• An even-handed tariff policy must be implemented to ensure linkage between productive sectors so that no sector is disadvantaged. This could occur if tariffs on an end product were eliminated without a corresponding reduction of duties on imports of its intermediate inputs.

• The right to impose clear, transparent and agreed-upon performance requirements in conjunction with programs of tariff reduction must be preserved.

Non-Tariff Barriers and Standards

• Non-tariff barriers increasingly take the form of standards of various kinds: quality standards, processing standards, fulfilment of phyto-sanitary specifications (relating to the absence of agents of infection or disease in plants), certificates of origin, organic product standards (e.g., certification of production without toxics or chemical fertilizers), environmental standards, and labour standards, including minimum wage, prohibition of child and forced labour.

These standards, necessary to ensure that such matters as quality, health and environmental protection and workers' rights are taken into account, have also been used as hidden obstacles to the free flow of trade from developing to developed countries. They are imposed unilaterally, and may reflect the interests of corporations and their lobbyists to get governments to impose protectionist sanctions on foreign goods and/or services.

The challenge then is to eliminate bias and arbitrariness from the imposition of such standards to ensure they reflect legitimate interests and are not hidden protectionist measures to benefit specific companies.

• Laws, regulations, guidelines and standards for guaranteeing the quality of goods and services for consumer and environmental protection should be arrived at through broad public consultation. They should take into account the range of conditions prevailing in different countries and include realistic timetables. They should be written into wide-ranging agreements on scientific and technical cooperation and industrial development. These agreements, reinforced by adequate resources and specific sectoral accords, should raise standards by international consensus, especially for developing countries and for socially owned enterprises (such as cooperatives) and micro, small, and medium enterprises.

These provisions should require multinational corporations to meet the highest standards to prevent the sale of products banned in that company's own country, or in countries with lower standards or lax enforcement. Only through broad and democratic processes of consultation and negotiation can consumers' needs for high standards of health and environmental protections be met and unilateral, illegal and covert protectionist measures avoided.

Customs Procedures

• Customs procedures should be harmonized while they are modernized to reduce bureaucracy and simplify procedures. Assistance should be given to the social sector and micro, small and medium producers and entrepreneurs who engage in foreign trade.

• Customs valuation procedures should be linked to and integrated with those used for evaluating dumping and subsidy cases, the suppression of fraud, information gathering systems and dispute resolution mechanisms.

Rules of Origin

Rules of origin are the criteria by which products come to be considered to be originating in a given place, which then affects their treatment in cross-border exchange under free trade agreements. The trend in such agreements is to establish regional rules of origin specifying a percentage of components or inputs to be included in order to qualify for designation of origin.

While we do not exclude additional regional or sub-regional content requirements within the hemisphere, our view is that countries should be able to establish national content rules if the country feels that national economic development requires such designation. This demand or principle complements other proposals in Chapter 9 regarding the requirement for foreign companies to source a percentage of inputs in the country of production.

Countries may deem that, without national content rules, trade liberalization benefits only intra-firm integration and leads to the disintegration of national productive linkages. Lacking incentives to purchase production inputs within the country of production, large export companies revert to imports, which eliminates spin-off economic growth, despite increasing production. The neo-liberal model assumes that the export sector is the engine of economic growth. In practice, this "engine" becomes disconnected from the rest of the train. Rules of Origin that only require regional content transform the productive apparatus of many southern countries into maquiladoras or export processing zones.