Global Trends by Martin Khor

Monday 23 April 2012

Uncertainty as UNCTAD XIII begins

The 13th UNCTAD conference started last weekend with an impressive turnout of political leaders, but there is uncertainty on whether countries will reach agreement on the future of UNCTAD’s scope of work.

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The ministerial meeting of the UN Conference on Trade and Development kicked off to a good start last Saturday with a opening session marked by a modern play and dance depicting the inequalities of the modern world, and with speeches by an impressive group of political leaders, including the Emir of Qatar, the President of Tunisia who came to power in the wake of the Arab Spring, and the Prime Ministers or Presidents of Turkey and Bangladesh.

Most of them stressed the need to rethink the model of economic growth that was driven by a financial system that is now seen as dysfunctional and by a pattern of development that may be economically and environmentally unsustainable.

This echoed the theme of the UNCTAD conference, known as UNCTAD XIII because it is 13th in a series of high-level sessions, held once in four years, since the founding in 1964 of this most important of United Nations development organisations.

The UNCTAD XIII theme is “Development-led globalisation:  Towards sustainable and inclusive development paths.”

The conference report of the UNCTAD secretary general, Supachai Panitchpakdi, speaks of a “world turned upside down.”  Much of it criticised the way globalisation had been driven by speculative finance, which had destabilised the world economy but also damaged development in developing countries.

The report advocated the start of a new era, of a development-led globalisation in which the state has to resume its leading role in development, with a new North-South deal based on taming the financial sector, turning trade and investment towards development, managing new threats and there is more democratic governance of the world economy.

Since UNCTAD XIII’s start on 21 April, many sessions have already been held, with Ministers, business leaders and academics debating investment promotion and investment agreements, the global environment influencing development, trade and poverty.

On Sunday, the UN General Assembly President Mr. Nassir Abdulaziz Al-Nasser, opened the main plenary, re-affirming the leading role of UNCTAD on trade and development issues in the UN system.

However, below the surface calm of the many events, there is an undercurrent of a tense atmosphere because of the uncertainties surrounding the main outcome of UNCTAD XIII, a declaration of Ministers that spells out the main issues of the present and the main functions of UNCTAD in future.
The latest draft of this declaration, dated 21 April, shows how far the countries are from agreement on many issues, both in stating the problems the world faces and in the future role of UNCTAD on these issues.

It is evident from this draft that developed countries, especially the group known as JZ (that includes US, Japan, Canada, Australia, New Zealand, Switzerland), are proposing to delete or severely dilute the text in many areas.  If their proposals are accepted, the future role of UNCTAD may be seriously curtailed.

This is being resisted by developing countries and their Group of 77 and China, which want to retain UNCTAD’s mandate to work on its present broad range of issues.

The most notable divisions, along North-South lines, are the following:

The G77 wants UNCTAD XIII to reaffirm the Accra Accord of 2008 adopted at the previous UNCTAD session, and to build on it.  This will allow UNCTAD to continue work on all the issues it presently deals with.  However, the JZ group wants to delete “reaffirm” and keep only “builds upon” only, implying that there is no agreement to maintain the present mandate.

The text has only two simple paragraphs on the financial crisis, and the need to connect finance to the real economy, which JZ wants to delete.  JZ and the European Union also want to delete another paragraph on the role of UNCTAD to contribute to the UN’s work in addressing the causes and effects of the economic crisis.

The paragraphs on the work of UNCTAD on debt, debt restructuring and responsible lending are also being diluted or deleted by developed countries.

The JZ group wants to delete UNCTAD’s work in servicing the GSTP, the South-South trade preference scheme of developing countries.

There is only one paragraph referring to UNCTAD’s work on intellectual property and development.  The JZ and EU propose deletion of this.

Similarly JZ proposes deletion of the only reference to the important role of industrial policies.

There is also deletion or dilution of UNCTAD’s work on environment and sustainable development, such as climate change and the follow up to the Rio Plus 20 summit.

Other areas of dilution include food and agriculture, preferences to least developed countries, technology transfer, traditional knowledge and genetic resources.

At a meeting of Ministers of the G77 and China on 20 April, it was agreed that the developing countries’ group will maintain its stand that the Accra Accord be reaffirmed and that there should not be dilution of the issues.

This is to be expected, because the G77 and China consider UNCTAD to be their organisation. Indeed, it was the formation of UNCTAD in 1964 that led to the birth of the G77 and China itself.

A puzzling question is why some of the developed countries are so adamant to erode the mandate and work of UNCTAD.   It is well known that UNCTAD is not the developed countries’ favourite organisation, since its Secretariat has continuously produced research that flies in the face of the orthodox policies of organisations they control, especially the World Bank and IMF.

But then the work of UNCTAD, which has often proved correct, is even more important today, when the old economic theories are crumbling and the traditional policies are being reviewed.  UNCTAD has proved it can contribute immensely to the new ideas so much needed.

What if there is no agreement on the draft Declaration?  That would be a setback not only to UNCTAD but the whole framework of international cooperation, which is also much needed in these turbulent times for the global economy.

Thus, it is hoped that all the countries at UNCTAD XIII will this week agree on a good Declaration in Doha.