[Islam-Online- Economy]

The Muslim world in general, and the less developed countries (LDCs) in particular, will be adversely affected by the Agreement's implementation. As long as the United States and other potential importers of textiles and clothing do not provide free access to their markets, the Muslim world's share of textile exports will drastically decline. Until the MFA is enacted, increasing the volume of textile exports seems unlikely.
Analogous to textile exports are carpet exports. This industry extensively employs children under 15 years of age. The likelihood of raising its magnitude seems slim in the prevailing sociopolitical scenario. However, if the so-called child abuse and environmental issues are incorporated into the Agreement, these already disadvantaged countries will suffer all the more. After the culmination of the Uruguay Round, one thing is quite obvious for all the developing countries including the Muslim world, i.e., the oncoming cutthroat competition in international markets. In this scenario, it is essential that the Muslim world search for new markets for its products, diversify its exports, enhance the quality of its products, and increase economic cooperation and integration within its regions. If the Muslim world succeeds in doing these things, then the chances for increasing its share of world trade is bright; otherwise, maintaining even its existing meager share will be difficult.
The characteristics of the new trade order are market openness, trade liberalization, cutthroat competition, price and quality competitiveness and technical sophistication. Thus, while it opens up new avenues of world trade, only those who are efficient and technologically advanced are ensured benefits. Special treatment at any level and at any cost is no longer part of the emerging system. Against this backdrop, the implications for the Muslim world have been assessed.
Tariff Cuts:
The universal reduction in tariffs will lead to a greater opening of global markets for all nations, including the Muslim nations, and thus provide an opportunity to expand exports.
It seems that the implementation of this provision of the WTO is not going to pose any problem to Muslim countries because most of them have already liberalized their trade under their own preferences-they have embarked upon a path of tariff reduction prior to WTO reforms. Most of the South and Southeast Asian economies of the Muslim world are rapidly reducing tariff rates. For instance, in Pakistan, the maximum rate of tariff (including para tariffs) was brought down to 72 percent in the 1994-95 budget, with plans to reduce it further, to 50 percent in the 1995-96 budget and to 35 percent in the 1996-1997 budget. Thus, within a two-year period, tariffs in Pakistan will range from a minimum of 10 percent to a maximum of 35 percent. An analogous situation exists in other countries, including Turkey and Egypt. However, in some African countries the process of decreasing tariff rates is either progressing very slowly or not at all.
Another perception of the situation is that the demand for imports from the Muslim world will decrease because their goods do not adhere to standards and quality. Naturally, this further deteriorates their balance of payments position. The short-term impact may be discouragement of nascent domestic industries. In the long term, the process of their industrialization may be stalled.
In addition, a large number of developing countries are large importers of cereals and other temperate food products from the developing countries. As the developing country exporters continue to flood their markets with agricultural products below their market price, there will be little incentive for these countries to become more self-sufficient in food. Furthermore, the reduction in export subsidies will have the (adverse) effect of increasing the price that the developing countries must pay for some of their food imports from the developing countries. This eventuality was recognized by the UR negotiators, and the Agreement on agriculture has a provision to compensate net-importers for possible price increases. However, most developing countries feel this provision is too weak because the compensation will be no bigger than is currently available from exporting countries.9
Competition:
The universal reduction in tariffs would erode the tariff benefits under the GSP (generalized system of preferences), implying greater competition. The manufacturing sector of the Muslim world, which is in its embryonic stage of growth, will have to compete with the advanced and developed economies of the West. Doubtless, in fierce international market competition it will be difficult for the Muslim world to maintain its present share, and to increase its share will be even more difficult. The Muslim world will face multidimensional competition not only from the advanced nations of the West, but also from the countries of the Pacific Rim and the Western Hemisphere.
Looking at the prevailing trends in the manufacturing sector in the Muslim world, we find that they reflect that the manufacturing sector is still in its primary stage. It centers round consumer products only. For instance, in Bangladesh 25 percent of manufacturing comes from food, beverages, and tobacco. Figures for some other countries are: Mali, 36 percent; Uganda, 40 percent; Nigeria, 36 percent; Pakistan 30 percent; Indonesia, 25 percent; Sudan, 39 percent; Egypt, 31 percent; Morocco, 31 percent; Jordan, 26 percent; Syria, 24 percent; Algeria, 32 percent; and Iran, 30 percent.
Cutthroat competition may force them to improve the standard of their consumer goods, which ultimately means not to proceed toward semi- and high-technological industries. If they decide to immediately move toward high technology, they may further lower their present standard. Eventually, their own domestic consumers may switch to imported goods.