Developing countries in the world trade regime
Developing countries in the world trade regime

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Developing countries in the world trade regime

4.3 Asymmetry between labour and capital

Finally, stepping back to get a broader picture, I would like to point to the asymmetry built into the emerging institutional framework governing international economic relations, of which the WTO is one important pillar. The various WTO agreements encourage free movement of goods and certain kinds of services. Possible agreements on cross-border investment and competition policy may allow for freer international movement of capital, already encouraged by the IMF. Yet there is no move towards opening up the international movement of labour; if anything, barriers are being raised rather than dismantled.

This asymmetry is particularly evident in a Uruguay Round agreement that has not been discussed so far in this unit: the General Agreement on Trade in Services (GATS). Under the GATS, restrictions are being dismantled on cross-border provision of services such as telecommunications, banking and insurance through the setting up of branches of multinational corporations. This again is encouraging the free movement of capital mainly from developed to developing countries. Developed countries have shown far less interest in liberalising services involving the movement of people. What concessions have been made relate mainly to the temporary movement of business visitors and of managers and technicians employed by companies in the services markets dominated by Western corporations. In contrast, note that the movement of capital is not treated as temporary, that the transmission of technology has been severely restricted by the TRIPS agreement, and that no one is talking about allowing free migration of the vast army of skilled and unskilled manual workers who constitute the vast majority of the labour force in the developing world.

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