Broad support for a revitalized UNCTAD

by Chakravarthi Raghavan

The consensus arising from the plenary speeches at UNCTAD-IX in Midrand, S. Africa, indicates a widespread support for a revitalized UNCTAD, with a mandate to address, in a flexible and adaptive manner, the whole range of issues concerning the international community but with particular focus on pressing issues relevant to the needs of its membership.

MIDRAND: Judged by plenary speeches, the UN Conference on Trade and Development (UNCTAD) has received an unexpectedly high level of support for its future as a global organization with a broad mandate covering all aspects of the international economy, capable of constant adaptation and focusing on some high priority areas of work of relevance to the needs of its universal membership.

Reform and a restructuring and action-oriented future were words echoed by almost every speaker, but its meaning and direction was varied and, in terms of priorities suggested by individual delegations, seemed to cover the whole spectrum of international economics.

The President of the Conference, South African Trade Minister Alec Erwin, tried to set a tone in his opening speech to the plenary, saying that the organization "must be driven by the need to solve problems, answer difficult questions and create new possibilities."

How far these sentiments will be translated into the work programme for UNCTAD, its inter-governmental bodies and secretariat, in analytical work and as a policy-dialogue forum remains to be seen.

Working in three drafting groups, the Conference is trying to hammer together a final document, working towards a new deadline of concluding the work of the Conference a day ahead to facilitate the host country's ability to host, beginning in the 2nd week of May, another major conference on the information super-highway, with participation of the G7 countries and a number of developing countries.

In the drafting groups, the US, the EU/EC, Canada and Japan seemed to be working more closely to restrict an UNCTAD role on issues like debt (including technical assistance to debtor countries at the Paris Club) and on trade issues, though Japan and the European Commission (EC) seem to be less strident and more sensitive to the views of Asia and Africa.

In the plenary speech even the United States (which had tried unsuccessfully at the 1995 G7 summit to wind up UNCTAD), gave support for the future work of UNCTAD. US Vice-President Al Gore, in a televised address, set the priority goals for the Conference as speeding up the integration of developing countries into the world economy and trading system.

UNCTAD should facilitate sustainable development

The leader of the US delegation, State Department's Ms Melinda Kimble, who used the occasion to announce that the US was paying up in full its 1995 contribution to the UN budget (16 months behind schedule), qualified heavily, support for the future of UNCTAD by calls for reform and restructuring and not duplicating the work of the World Trade Organization (WTO) and the Bretton Woods institutions (BWIs), and focusing more on technical assistance on policies decided elsewhere (BWIs and WTO).

The Canadians too spoke in a similar vein, with their two interventions in the parallel Ministerial round-tables, standing out like a sore thumb in pressing for a reduced UNCTAD role, confining its activities mostly to providing technical assistance to the least developed countries (LDCs) and some low income countries.

European Union Member-States seemed more open and forthcoming (except perhaps for the UK, which closely toes to the US line).

Mario D'Urso of Italy, speaking for the European Union (EU) said UNCTAD should focus on trade and development questions, supplementing but remaining distinct from the WTO and UN bodies such as regional economic commissions.

But in a later speech, EC Commissioner Joa de Deus Pinheiro said UNCTAD brought out the Janus-face of the EU. UNCTAD's main role, he said, should be to facilitate sustainable development through trade and investment and participation of developing countries in the international trading system, and pursue work in the more traditional areas, such as commodities and preferences.

D'Urso said UNCTAD must take account of increasing differences among developing countries and concentrate on promoting the development aspects of international trade. At operational level, UNCTAD must reduce the number of programmes and sub-programmes and limit its commitments to cross-cutting issues such as UNCTAD Standing Committee on Economic Cooperation among Developing Countries (ECDC) or fight against poverty.

Colombian Foreign Minister, Mr. Rodrigo Pardo Garcia-Pena, speaking on behalf of the Non-Aligned Movement (NAM), said the global integration of markets had benefitted developed countries. The integration of financial markets in a speculative environment does not lead to transfer of resources or expansion of production. There were no effective mechanisms to manage the world economic system. The old concept of comparative advantage had been replaced by the new one of competitive advantage. Unilateral measures had increased and had assumed extra-territorial character in flagration of international instruments.

The attempt to establish a link between trade and labour was developing into a new conditionality. Industrialized countries were in the process of agreeing on foreign direct investment (FDI) rules at the Organization for Economic Cooperation and Development (OECD) without the participation of developing countries. These issues should be dealt with in UNCTAD, the most appropriate forum.

Promoting South-South cooperation

Japan's Foreign Minister, Yukihiko Ikeda, said it was important for both developing and developed countries to have a common vision of results to be achieved by development, and establish goals that focus on achievable results. UNCTAD should be able to help developing countries to integrate themselves into the world economy and take advantage of opportunities, and engage in action-oriented dialogue based on high-level research and analysis conducted by the secretariat. The conference must agree on concrete reform plans and give priority to promotion of South-South cooperation in trade and investment. Japan, he said, was prepared to make contributions to UNCTAD's efforts to analyze factors that contributed to economic growth in East Asia and study on adapting them to other regions.

Thailand's Deputy Prime Minister, Amnuay Viravan, said that as developing countries moved towards integration into the world economy, "the nature of that integration should not be dictated by the North or by transnational corporations". The role and contribution of UNCTAD to economic development offered hope to billions of people and the Conference, in discussing UNCTAD's future must build on its past work and enhance its future role. In the Thai view, UNCTAD should contribute to the agenda for future multilateral trade negotiations, starting with the WTO Ministerial meeting in Singapore.

There was a role for UNCTAD outside the WTO and the OECD, but it must be built on the honing down of sectors of the organization, according to the British Trade Minister Anthony Nelson. UNCTAD, he argued, must reflect the change of outlook on development - with good government and sound economic management, rather than international action, seen as essential for trade and development.

Adopt a more analytical role

UNCTAD, Nelson said, should adopt a more analytical role. If UNCTAD failed to change, the major countries of the world would lose interest.

But Gong Ro-Myung, South Korean Foreign Minister said the Republic of Korea expected a heightened role for UNCTAD in the years to come, but with UNCTAD carrying out its work programme in a more practical and action-oriented manner, focusing on a limited number of priority areas. While defining its own distinct role and establishing reinforcing partnerships with other international organizations, Ro-Myung said UNCTAD and WTO must form a "complementary synergy" in the international trade area. Efforts of developing countries to share experiences should be encouraged in a more systematic manner within UNCTAD. Triangular cooperation mechanism, that is South-South cooperation assisted by developed countries is a highly desirable action-oriented policy idea. UNCTAD could be a moderator and focal point in that triangular cooperation.

Franz Blankart, Secretary of State for external economic affairs of Switzerland felt a more rational use of financial resources was needed and called for strengthening the "control" of the Trade and Development Board over all UNCTAD activities, including policy regarding publications and technical cooperation.

Chinese Minister for Foreign Trade and Economic Cooperation, Mr. Wu Yi said that UNCTAD was the only inter-governmental body within the UN system for a comprehensive review of trade, development and related issues. A pressing task of UNCTAD-IX was how to enhance UNCTAD's role and function.

The problems faced by many in Africa in following the orthodox liberalization policies was brought out by Ghana's Deputy Trade Minister, Dan Abodakpi, who said for his country, trade liberalization had proved to be a two-edged sword for the private sector. The benefits of improved access were heavily eroded by rapid growth of imports of finished products and it was difficult for Ghana's manufacturers to compete. This was the central and burning question that UNCTAD must resolve. The reform of UNCTAD should be driven by need rather than by strict financial considerations. Just as UNCTAD should not duplicate the WTO work, WTO should not take on tasks where UNCTAD had undisputed comparative advantage.

An integrated approach to development

For Argentina's Alfredo V. Chiafradia, UNCTAD is the only instrument available for an integrated approach to development and it should focus on an analysis of policies, particularly those not covered by multilateral rules and disciplines, and concentrate on technical cooperation with developing countries. In this last area, Argentina put particular value on the programme for management of debt.

The future work of UNCTAD, according to Chile's Planning Minister, Mr. Luis Maira, should be in the context of numerous international social contracts that have been adopted.

The Dutch Minister for Foreign Trade, A. van Dok-Van Weele said unlike many other UN family organizations, UNCTAD had a tradition of adapting itself to new realities. To make it vital and dynamic, the Conference should agree on a stronger focus for a limited number of so called core issues. The Minister also suggested a merger of the UN Industrial Development Organization (UNIDO) into UNCTAD, and suggested with this "the continuity of valuable work to reinforce the social-economic sector would be safeguarded."

The critical juncture of the world economy and the need for renewed collective commitment to global development,India's Commerce Secretary, Mr. Tejendra Khanna, said had made UNCTAD's mandate and agenda even more pressing and relevant, rather than an attenuated role. While individual specialized agencies were competent to deal with specific variables such as finance or trade or social infrastructure, the formulation of a comprehensive world-view of development and monitoring its dynamics in different parts of the world must be undertaken by UNCTAD, which alone could develop a holistic perspective in pursuit of world welfare functions.

UNCTAD could analyze the effects of trade liberalization

In the trade area, where the conclusion of the Uruguay Round and the WTO's establishment had significantly taken forward the trade liberalization process, UNCTAD could play a useful role by analyzing consequences for developing countries, in terms of rewards and challenges. Such analysis would provide a valuable basis for future evolution of trade policy by addressing, in a balanced manner, the built-in as well as future WTO agenda, and provide a forum for analysis and shared understanding of implications of these issues before they are taken up, if considered appropriate, for negotiations and rule-making in the WTO.

Brazil's Ambassador Gilberto Saboia, said cost-cutting while important must be part of an integrated approach and reforms for improving efficiency. But the role of the UN in treatment of economic issues, in particular that of development, must be preserved and strengthened. UNCTAD, as the main focal point for integrated treatment of economic issues, from the viewpoint of development, can contribute significantly to promotion of a more effective insertion of developing countries in the processes of globalization and liberalization. Through its accumulated experience in policy-oriented analytical work, UNCTAD could make important contributions in areas not sufficiently or completely encompassed by other organizations. It could be invited to examine new and emerging issues that will probably be topics of consultation and negotiations among governments, either in UNCTAD or other fora.

Brazil proposed in this regard that UNCTAD should examine two central issues of the new trade agenda - competition policy and foreign direct investment (FDI) - two areas where significant endeavours will be needed to provide comprehensive understanding and dialogue on policy recommendations and internal principles and guidelines.

South Africa's Labour Minister and leader of the delegation, Tito Mboweni said his country's experience showed that liberalization of the economy in the context of globalization and in the absence of pro-active measures from the State, would merely reinforce inherited inequities. "A managed approach to integrating into the global economy is therefore essential." Earlier, Mboweni complained over the World Bank's classification of South Africa as a middle income country, when in reality it has a low-income world in which the majority of the black people live juxtaposed against a sophisticated modern economy. And the classification of South Africa as a middle income country or as a developed country in the WTO, is akin to asserting that "if an individual puts one foot on a block of ice and the other on a hot plate or burning charcoal, this person is on average warm."

Mr. Vijay S. Makhan, Asst. Secretary-General of the Organization of African Unity regretted the current trend of "systematic down-scaling" of institutions and organizations which were established with the primary objective of helping the developing world in their development endeavours. The solution to Africa's debt problem should go hand in hand with investment and trade flows. "You should not perceive Africa as a continent with a begging bowl! Africa needs an honest chance to participate in this great shift of the world economy."

Malaysia's Kerk Choo Ting, Deputy Minister for International Trade and Industry, said UNCTAD could effectively complement the WTO, especially in enhancing the ability of developing countries to meet their commitments, prepare for negotiations, meet new challenges and integrate into the multilateral trading system. But recent pronouncements and intended actions by some developed trading nations did not augur well for the credibility of the multilateral trading system.

In Malaysia's view, a more realistic and objective analytical work is needed before a global consensus on new multilateral trade issues, such as labour standards and environmental protection could be secured. And developing countries need to be assured that transnational corporations (TNCs), while exploiting the potentials of globalization and liberalization, will continue to be good corporate citizens, contributing to growth and development and transfer of technology to host countries, and assure host countries they would avoid business practices detrimental to the interests of developing countries and to free trade based on rules of the multilateral trading system.

Cooperation is needed in the area of commodities

Indonesia's Mining and Energy Minister, Ida Bagus Sudjana called for re-activation of international cooperation on commodities. The positive results achieved in the Uruguay Round would remain incomplete unless and until the interests of the net food importing developing countries are taken care of and the problems of developing countries highly dependent on some commodities or a single one, taken into account. With its developmental orientation, universal composition and substantive experience, UNCTAD can inject a sense of direction into the globalization and liberalization process towards a world economy that will be more vibrant, efficient, just and equitable.

Cote d'Ivoire's Commerce Minister, Mr. Ferdinand Kacou Angora, said that while the speed of globalization and liberalization had strengthened the possibility for growth and development, many developing countries, particularly African countries, ran the risks of exclusion from the benefits of this process. This situation must be confronted on an urgent basis by several measures, particularly in the area of commodities where a new system is required to stabilize commodity prices.

Singapore's Parliamentary Secretary to the Minister of Finance, Mr. Tsai Kee Koo said UNCTAD should continue to be the forum for sharing and dissemination of international practical experiences in development and provide a development dimension to global policy-making. This was necessary because "the lack of coherence in economic policies, leading to misalignments and fluctuations in exchange rates, interest rates and commodity prices adversely affects developing countries."

UNCTAD, the UAE's Under-Secretary for Economy and Commerce said, is an important forum for constructive dialogue to establish a basis for justice and equity in the international economic order. It must support the interests of developing countries and defend their views in the WTO, and ensure that the WTO does not become "a tool to serve the interests of the developed countries". For example, he said, the TRIPs agreement should not become a pretext to deprive developing countries from acquiring the necessary technology for management, production and communication for optimal allocation of resources. Similarly, the General Agreement on Trade in Services (GATS) should not be used to force developing countries into opening their markets to international trade in services and granting concessions without taking into consideration their right to provide a minimum level of protection in this sector or the variation in development levels of their management structure and technical skills.

Among the NGOs who spoke at the plenaries, the ICFTU asked UNCTAD to continue its work on TNCs and FDI, including collation of trends in FDI and role of TNCs in development, as well as analysis of emerging issues on the WTO agenda including labour standards. UNCTAD should support the establishment of a WT working group on Trade and Labour Standards to examine the idea of a social clause and possible operating mechanisms and cooperation between WTO and International Labour Organization (ILO) for consideration of links between labour rights and international trade.

The statement of the ICFTU, the international workers' body dominated by the unions of the industrial world, lent support to the idea of a comprehensive and universal framework for FDI and for the WTO to commence discussions and negotiations for a global investment treaty, with UNCTAD providing advice and expertise to the WTO on these issues.

The Consumers International said it was not at ease with UNCTAD's new avatar of promoting FDI as an instrument for development and buttressing the role of TNCs. It called for a freeze on all discussions on new trade issues until existing agreements were implemented equitably, losses and gains to all parties are assessed. The Consumers also asked that problems of trade and environment be addressed as issues of sustainable production and consumption and global regulatory mechanisms set for regulation of business. (SUNS3754)

Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS)from which the above article first appeared.