G77 Ministerial ends with wide-ranging declaration

by Martin Khor

Marrakech 16 Sept -- The Ninth Ministerial Conference of the Group of 77, preparing for UNCTAD-X, ended here today with the adoption of a Marrakech Declaration covering a wide range of issues and proposals, including international finance, debt, commodities, trade and the WTO.

The section on WTO related issues, which is the most topical part of the declaration, has also been extracted and made into a separate document, to be sent as a message of the G77 to the Third WTO Ministerial Conference at Seattle Nov 30 - Dec 3 (see separate article).

The declaration is the culmination of a lengthy process of consultations in Geneva as well as at regional levels of the G77 members in their preparation for negotiations on UNCTAD X to be held in Bangkok next year.

Besides the declaration, the Ministerial Meeting also debated two documents, a draft Bangkok Consensus and a draft Plan of Action which a G77 preparatory committee in Geneva had drawn up, as the G77's proposed text to be presented for negotiation at the Trade And Development Board as the final UNCTAD X documents.

During this Ministerial Meeting several delegations proposed amendments. The Meeting agreed to mandate the preparatory committee of the G77 in Geneva to negotiate with other countries on the basis of these two documents, bearing in mind the views expressed during this Ministerial Meeting.

The Meeting also adopted a Ministerial Statement on Economic Cooperation among Developing Countries (ECDC).

The Marrakech Declaration reaffirmed the role of UNCTAD as the principal forum of the United Nations for the integrated treatment of development and inter-related issues in the areas of trade, money and finance, investment, technology, commodities, competition and sustainable development.

"The significance of this role," the Declaration said, "has increased in an era characterized by the complex relationship between globalization and development and by the inherent imbalances in the structure of the international systems governing development, trade and finance. The recent monetary and financial crises have shown how contagious they can be in countries and regions, with far-reaching negative effects on trade and economic growth.

"The differential reach and impact of globalization has generated economic asymmetries, both at the global and national levels, and poses new challenges to our development aspirations."

The declaration added that many developing countries have faced difficulties in their efforts to integrate effectively into the world economy, and have suffered the consequences of globalization.

UNCTAD-X could thus review and re-invigorate international cooperation to enhance development and to provide fresh orientations for a development paradigm consistent with the exigencies of the new millennium.

Globalization presents opportunities, risks and challenges, a process which can be uneven and unpredictable, but if it is properly managed, the foundations for growth can be laid.

The declaration called for a new approach to international development cooperation and a new policy aimed at the creation of more equitable and effective international economic structures in finance, trade and transfer of technology, as well as address the endemic problems of debt and transfer of resources, financial vulnerability, declining terms of trade in primary commodities, and restricted access to developed country markets.

The declaration called for a smooth functioning of the international financial markets. "The Asian financial crisis has highlighted the deficiencies of the existing international system. These deficiencies require a vigorous international response aimed at establishing a new international financial architecture.

"UNCTAD should contribute, in close consultation and cooperation with other competent entities, proposals that guarantee the full participation of the developing countries. These proposals should include, among other aspects, reforms of the monitoring and regulation systems, improved response capabilities for dealing with the emergence and spread of financial crises, and give the developing countries greater flexibility and autonomy in the management of capital flow policies.

"The discussions on the reform of the global financial architecture should place more emphasis on financing for development, in addition to greater financial stability. It is also important that these reforms should include greater participation by the developing countries in the decision-making processes of the international financial institutions, consistent with the growing weight of these countries in international trade and investment flows and the significant impact the reforms will have on them."

The G77 Ministers expressed grave concern over the decline in levels of ODA to less than one-third of the internationally agreed target of 0.7 per cent of GNP of donor countries. The budget constraints of the countries of the Development Assistance Committee (DAC) can no longer be advanced as a reason for such a dramatic decline in ODA, as many developed countries have reduced budget deficits or enjoy unprecedented surpluses.

"This trend in ODA flows should be reversed as a matter or urgency. We reiterate that the agreed principle of non- conditionality should be followed when development assistance is provided."

Ministers also stated that the burden of external debt continues to be one of the main obstacles to development. "The heavy debt of the HIPCs (Highly Indebted Poor Countries), the majority of which are also LDCs, continues to be a cause for great concern. Current conditions make it necessary for a high percentage of the gross domestic product to be devoted to debt-service payment, with the consequent risks for social and political stability.

"UNCTAD should continue to study and propose strategies with a view to arriving at a lasting solution to the problem of the external debt of the developing countries, which also covers the elimination of the structural causes of indebtedness. These proposals should comprise various types of solution which take into account the payment capacity of each country.

"We welcome the recent initiative on debt reduction undertaken in the context of the G-7 Cologne Summit; it needs to be implemented speedily, from additional resources, to give real hope to the world's poorest countries. However, the new initiative may prove to be insufficient to support globally agreed targets for poverty reduction by the year 2015.

"We express concern that relief is still attached to performance under the Enhanced Structural Adjustment Facility (ESAF). Such reform programmes should be designed and developed with a view to enhancing economic development and poverty reduction. The Cologne initiative should be flexibly interpreted by the international financial institutions to the full benefit of all debtors without discrimination, and appropriate resources should be devoted to reduce considerably the stock of debt and its servicing, while bearing in mind that debt relief measures should safeguard social, economic and political stability in developing countries. Furthermore, the debt problems of middle-income countries need to be addressed, through inter alia the expanded use of debt swaps and conversion and more generous refinancing terms."

On commodities, the declaration said this issue is still a priority, as commodity export revenues continue to be of cardinal importance. UNCTAD needs to carry out studies and provide technical cooperation to support G77 countries in the horizontal and vertical diversification of export products. The international community is urged to further support the Common Fund for Commodities, including fulfilment of the pledges for contributions.

Recognizing the importance of FDI, the declaration welcomed investment in productive activities to create jobs and share skills, technology and know-how and to do business and form partnerships with our enterprises. "We call on major home countries to expand their guarantee facilities for investment in especially LDCs, and we urge the (World Bank's) Multilateral Investment Guarantee Agency (MIGA) to provide preferential premia for investors from developing countries that have no guarantee systems of their own.

"Further study of issues related to the development dimensions of international investment agreements is needed. We encourage the development of viable and internationally competitive enterprises in developing countries and we will continue to support cooperative arrangements for enterprise networking across regions and subregions.

"We reiterate the importance of expanding the opportunities and channels for transfer of technology and know-how to developing countries. There is a need to analyze the impact of existing multilateral trade agreements on access to technology. There is also a need to implement commitments, embodied in existing international agreements, related to technology transfers to developing countries. We believe that the transfer of technology should not be restricted on an arbitrary or discriminatory basis, especially to developing countries. Rather, the international community should establish principles and guidelines for the sharing of knowledge and technology for development."

The declaration also said the capacities of developing countries to participate effectively in electronic commerce need to be strengthened. There is also need for analysis of the implications of electronic commerce on trade and development prospects for developing countries. The fiscal, legal and regulatory aspects of electronic commerce should be analyzed.

Ministers welcomed the fact that some developing countries are becoming important foreign investors and actors in international trade. Thus, there were greater possibilities for Economic Cooperation among Developing Countries (ECDC) to increase investment and mutual trade, as well as have close industrial and technological cooperation.

"ECDC at the regional, subregional and interregional levels is important for linking our economies into viable economic spaces necessary for stimulating dynamic trade and investment growth. We welcome the successful conclusion of the second round of negotiations on the Global System of Trade Preferences among Developing Countries (GSTP) and invite participant countries to join efforts in deepening, speeding up and expanding the GSTP to enhance its impact and to examine possible ways of rationalizing the process of negotiations for a third round."

The Ministers also stated that the South Summit of the year 2000 (in Havana) should be an important landmark towards enhancing North-South cooperation and ECDC and make recommendations to meet the challenges of the new millennium.

They called on UNCTAD to define a new development paradigm and proposed that UNCTAD devote the high-level segment of the sessions of the Trade and Development Board to debate on new strategies for development. UNCTAD should be provided with the necessary resources to become the driving-force behind the new consensus for development.

UNCTAD, the G77 said, has a vital role to play in shedding light on emerging trends and shaping policies, and should continue to provide assistance to developing countries in the analysis of international trade issues and in the formulation of their positive agenda for future deliberations and negotiations in the WTO. UNCTAD should also provide analytical inputs on international economic and trade issues so as to facilitate the effective participation of developing countries in multilateral discussions and negotiations.

UNCTAD should also plan for a centre with teaching and support capability for the developing countries, as proposed in the Plan of Action. (SUNS4511)

Martin Khor is the Director of Third World Network. The above article first appeared in the South-North Development Monitor (SUNS).