V. MULTILATERAL TRADE AND ENVIRONMENTAL AGREEMENTS, AND DOMESTIC POLICY FORMULATION
A. Multilateral trade agreements
1. Implications for Tonga of the Uruguay Round
The economic implications for Tonga of the Uruguay Round Agreements are mixed. The liberalization of trade, and the wide and varied membership, means that Tonga will have to compete with Asian countries that have distinct advantages such as large markets, economies of scale and very cheap labour.
With respect to the export sector, the mainstay and the biggest earner of foreign exchange for Tonga has always been agriculture. Liberalization as set out in the Uruguay Round does not provide the agricultural sector in Tonga with any further advantages. While Tonga retains preferential access to some of her traditional markets, that right will be extended to all other countries. The sector will have to become competitive as larger suppliers enter the scene. Subsidies in the agricultural sector will have to be carefully looked at, and some may have to be abolished.
As far as environmental implications are concerned, Tonga will need to closely follow the Trade and Environment Committee. The rules generally govern not so much what can be done, but what must not be done, thus implying that if an issue is not covered under the agreement there are no binding restrictions or obligations. That situation can be seen in the original General Agreement on Tariffs and Trade (GATT) agreement which did not include agriculture and textiles, thus allowing members to formulate policies that are inconsistent with GATT philosophy. Unless environmental concerns are specified in the agreement, countries will pursue differing policies that may not be consistent with GATT or the philosophy behind the Uruguay Round.
The differences in environmental standards between the developed and developing countries appear to favour the developed world. The developed world is enabled, through the exclusion of such agreement, to pursue shifting highly polluting industries to countries with lower environmental standards and regulations, while keeping lesser polluting industries in their own countries where environmental standards are stringent.