One of the most contentious issues which will be raised during the Small Island Developing States (SIDS) meeting in Pailles concerns Paragraph XIII of the Draft Strategy which deals with globalisation and trade liberalisation. Developed countries are most likely to oppose even the inclusion of such an issue in the SIDS debate, claiming that this is not the appropriate forum. In any case without prejudging what will happen, we wish to share the following with readers of l?Express Economie.

The notion of sustainable development takes a special connotation when applied to SIDS because it is generally agreed that beyond differences in national resource base, population levels and economic and political structures SIDS do share a common basic necessity ? that of defining development policies which do not sacrifice environmental integrity to SHORT TERM economic growth.

It is important to emphasise the words SHORT TERM because it remains a fundamental tenet of developing countries that there is no insurmountable contradiction between growth and environmentally sound development policies. They are certainly not mutually exclusive.

In this connection the following quote from Upali Wickramasinghe regarding the definition of SUSTAINABILITY can prove to be very useful.

?Sustainability is the ability of countries to maintain sufficiently high growth rates over a long period of time enabling them to emerge out of poverty without affecting their environment beyond its regenerative capacity.?

It can be suggested that operationalising this concept of sustainability may be the closest we can come to a workable notion of development for SIDS.

Whereas SIDS are part of the developing world and as such, share most of the constraints imposed by the perpetuation of the colonial pact, it is now gene-rally agreed that they are also distinguishable to the extent that SIDS share a certain number of characteristics which are :

?Limited Resource bases

? Remoteness from markets

? Poor infrastructure

? Lack of capital investments, resources and appropriate labour skills

? Proneness to national disasters

It is the sum of most of these constraints if not all of them in many cases which constitute the VULNERABILITY OF SIDS and herein lies their entitlement to claim for special and differential treatment in a globalising and li-beralising world. Without these, the search for what is described as a more level playing field will ac-tually prove to be even more inequitable to them. Combating such vulnerability lies at the heart of any sound development policy for SIDS and any commitments taken by them in multilateral trade negotiations need to be subordinated to the imperatives of such development policies.

Thus the positions taken by Small Island Developing States and the alliances they strike at multilateral trade negotiations must be guided by the need to create RESILIENCE in their fragile economies.

<B>Integrate global economy</B>

The DOHA Development Round of multilateral trade negotiations are arguably one of the most potent expression of globalisation and it is a cliche to state that much of the future of the global economy will depend on their outcome. These multilateral trade negotiations are also a concentration of the fundamental contradictions which oppose the developing world to the developed countries.

As far as SIDS are concerned and to the extent that they have willy nilly agreed to engage in the World Trade Organisation (WTO) process the most important outcome of the DOHA DEVELOPMENT ROUND is that it will dictate the pace at which countries will integrate the global economy. The most desi-rable outcome will be attained when the terms (essentially but not only the length of the transition periods) of such integration corresponds to and reflects the existing level of development in the said countries.

Timing and sequencing will be of the essence. Ironically enough the best illustration of how timing and sequencing are important components of integration into the global economy is provided by the process of phasing out of the Multi Fiber Agreement which has happened on 1st January 2005 after nearly fifty years of hard negotiations. The developed countries have provided the best illustration of how openness should be adjusted with the capacity of countries to absorb its effects without disrupting their social fabric. This is a lesson which developing countries in general but SIDS in particular cannot afford to ignore.

The critical question concerning trade negotiations remains ?how can development be taken as a basic framework for evaluating trade liberalisation principles??

Recognising, as we have insisted before, that growth is a necessary condition for sustained reduction of poverty, what is the link between trade and growth? And following from that recogni-sing that growth is by no means a sufficient condition for poverty reduction what is the relationship between trade and income distribution (poverty reduction)?

The experience of South East Asia, although the subject of much debate, is often cited as a case in point to show that ?integration into the global economy? is growth inducing and it is fair to say that the bulk of the empirical li-terature leads to the same conclusion. These countries, however, were far from being the models of free market economies that some would have us believe. The supportive role of the state as a contributory factor in their success has finally been recognized even in studies carried out by the World Bank. This opens up the fundamental issue of POLICY space for countries to define their terms of engagement in the global integration process and the level of institution and capacity building required by them if they are to take real advantage of such integration.

<B>Defining the engagement of SIDS</B>

The ?behind the border? agenda is an essential prerequisite to complement liberalisation and reform at the border with supportive policies at the national and sectoral levels. This is manifest in two areas. One is the imperative for countries to design and implement standards systems, institutions and physical infrastructure that support openness to cross border trade (supply side capacity building).

The other is the growing importance of services in growth. Efficient services be the telecoms, financial services or trade logistics are necessary for countries to get on a sustainable growth path. This, as recent experience has proven, is even more relevant for SIDS, which are generally resource constrained and where smallness dictates, as we have mentioned earlier, the adoption of environmentally sound economic options. Recent development in information and telecommunications technologies are pregnant with opportunities for SIDS to at least partially over come their geographical remoteness while building on their competitive advantages of pollution free and attractive living environment.

Saying that participation in world trade is good for a country is like saying that upgrading technological capabilities is good for growth. The relevant question for policy makers is not whether trade per se is good or bad but what the correct sequencing policies is and how much priority deep integration into the global economy should receive in the reform process. This is a view that needs to be vigorously opposed to the sort of mantra which would lead us to believe that openness to trade will automatically lead to growth.

In conclusion, it would be fair to state that the best option for SIDS is not to reject outright any notion of integration into the global economy. Such integration, if based primarily on the identified needs of development oriented policies can be beneficial to them. Preparing the economy and providing it with the tools necessary to allow a beneficial integration will need a radical transformation in mindset as well as structures of SIDS. The proper sequencing of action is to start with capacity building and institutional strengthening keeping in view the need for a socially acceptable transition period which will take account of the inevitable losers in the process.

It is hoped that the Mauritius declaration which will come out of the present SIDS Conference at Pailles will define the rules of engagement of SIDS in the multilateral trade negotiations so as to contribute to make the DOHA round a truly development oriented exercise.

<B>Rajiv Servansingh</B>

Deputy Secretary-General