Chances for reforming globalization

Dear Krishnendu:
Since you asked for them, I am herewith sending you a slightly corrected 
version of
my proposals for a fairer distribution of the benefits of globalization, plus 
some
concrete ideas on how developing countries could make good use of the suggested
changes.
I should appreciate your comments, including constructive criticisms.
Regards            Paul

HOW THE BENEFITS OF GLOBALIZATION COULD BE DISTRIBUTED
MORE FAIRLY
In order to enable individual countries to carry out trade policies, well 
fitted to their
needs, it would be necessary to find enough votes among the present members of 
the WTO, for a motion that would establish a double standard for belonging to 
this
organization:

REGULAR MEMBERSHIP for countries, who accept all the present rules and
regulations of this body and
ASSOCIATE MEMBERSHIP for countries wanting to negotiate special terms,
according to their individual needs and degree of economic development. Since a
citizen of Thailand has been chosen as the next president of the WTO and since
developing countries command a majority of votes, such a motion should have a
reasonable chance to succeed.

Under such rules, the ASSOCIATE MEMBERS would have the right to protect
certain sectors of their economy, which employ a great part of their workforce 
and
are not (or not yet) capable to compete with imports. Some basic agricultural 
crops
and industries such as textiles, shoes etc. might be among the protected 
sectors.

On the other hand such countries would also want to have access to world markets
for products in which they enjoy comparative advantages and would naturally have
to offer a fair compensation for such privilege; e.g. the elimination of import 
duties for a number of goods, that might generate a volume of roughly similar 
value. Such a
BALANCED international trade might seem to offer a fair deal for both sides.

The pioneering country might also want to invite foreign investments in selected
sectors, where such investments offer both a lot of well paying jobs and other
benefits for the country and good profitability for the investors.  Conditions 
on
decent and slowly growing wages, workers protection and on safeguarding the
environment could be established in the invitation or could be negotiated. The 
free
withdrawal of yearly profits and conditions for a gradual repatriation of the
investment itself should also be determined in beforehand.
To make such investments desirable in spite of such limitations, compensations 
such
as reductions on taxes or import duties or other positive incentives might be 
needed.

As an example I have tried to imagine on how these proposals could work out in
practice here.

Chile has been very successful during a long period, through liberalizing its 
trade
relations and relying mostly on exports for economic growth. Nevertheless some 
much less beneficial results have appeared after the Asian economic crisis and 
are still with us several years later.
Many jobs have been lost through industrial reorganizations and investments in 
new
activities are lagging. The unemployment rate is now approaching 10 %, which is 
a
major disaster in a country that has as yet no functioning unemployment 
insurance
and no system of public welfare.  When people lose their jobs, they might be 
able to
go on for a little while, spending their very limited savings, but afterwards 
they have
only 2 options to survive: BEGGING OR STEALING.

But unemployment is not the only problem; while there are many VERY rich people,
a great % of families can barely survive on what they earn.

Under my proposals for "associate membership" Chile could apply the following
measures:
In order to protect the most vulnerable sectors of its economy against cheaper
imports, higher customs duties or quotas and other non-tariff barriers could be
established.
Among industrial products, textiles and shoes might benefit most from such 
policies,
creating jobs for many unemployed persons. At least the present number of 
workers
could be maintained.
As to other sectors, wheat and sugar beet farmers and cattlemen are most in 
need of protection. (see below for details).

On the other hand Chile would want to not only preserve the markets for its 
export
products, but to find also new ones for items with more added value. To achieve
such goals Chile would have to negotiate with its trade partners, first of all 
with the
many fully industrialized countries, who at present buy its copper, wine, 
fruits,
wood-pulp, salmon etc. But since Chile also imports many industrial goods such 
as
cars, computers from the US, Japan and Europe and many cheap consumer goods
from China, a roughly balanced foreign trade would be beneficial for BOTH 
SIDES, therefore such negotiations should be relatively easy.
To achieve similar results with other developing countries, such as Argentina, 
from
which it imports great quantities of wheat and meat, would be more difficult, 
but with some imagination any emerging problems could also be overcome. Chile 
could
temporarily raise some tariffs and impose some quotas on the items most 
resented by its farmers and cattlemen. Nevertheless, to really help them in the 
long run, they
should be guided towards more specialized crops and breeds of animals or towards
making better use of their forestry resources.

Chile should also replace the present trend of allowing absolute freedom for 
the flow
of capital, with fixed or negotiated conditions for withdrawing annual profits 
and the
gradual repatriation of the capital itself, deemed to be equitable. The flow of 
purely
speculative capital should be severely restricted.
To encourage new investments in chosen sectors, in spite of such limitations, 
positive inducements, such as tax exemptions and/or granting exploitation 
rights for desirable
mineral sites might be needed. One example:
Using such inducements for attracting investors into adding more value to its 
copper,
through transforming it HERE into cables, wire etc. would be especially 
beneficial:
Similar measures should be used to encourage the industrial development of
RENEWABLE energy sources, such as hydro ~, wind ~ and geothermal power.