Background
The Second Committee (Economic and Financial) met this morning to take up trade and development. Before it was a report of the Trade and Development Board on its thirtieth executive session (document A/58/15 (Part I), which took place in Geneva from 2 to 4 December 2002. The session focused on the theme “Escaping the poverty trap: national and international policies for more effective poverty reduction in least developed countries (LDCs)”.
Among its agreed conclusions, the report says, the Board recommended increased efforts to ensure that LDCs achieve the poverty-reduction goals set out in the Brussels Programme of Action and the Millennium Declaration. Among other things, this would mean achieving sustained economic growth that increased and eventually doubled average household incomes. The Board also recommended that LDCs carefully consider the Least Developed Countries Report 2002, which calls for reducing poverty through long-term development strategies, including growth-oriented macroeconomic policies, investment–friendly environment, and vigorous trade diversification and promotion. The Board also stresses the need for speedy implementation of the Heavily Indebted Poor Countries (HIPC) initiative, which should be supplemented by meaningful market access for LDCs.
In addition, the Board suggests that the international community work to overcome the negative effects of falling commodity prices, the report says. It also recommends that aid flows be made more predictable, and that LDCs themselves monitor aid performance to improve its level, quality and effectiveness.
During panel discussions throughout the session, participants highlighted the scarcity of domestic resources in LDCs for promoting investment and productivity, as well as environmental degradation, the report states. These problems were compounded by unsustainable debt burdens, declining financial flows, falling and unstable commodity prices and lack of market access for LDC exports. Geographical disadvantages, including landlockedness, infertile soils and endemic diseases (notably malaria), were added problems for many LDCs.
Despite new promises made at Monterrey and Johannesburg, participants said, no “real financial partnership” of LDCs with rich countries, or sufficient science and technology collaboration had taken place, according to the report. LDCs had yet to experience an “open and fair” trading system, problems of market access and tariff peaks continued, and rich-country agricultural subsidies had drastic effects on growth and poverty in poor countries. Participants also noted weaknesses in the Integrated Framework and the HIPC initiative. Financial resources currently committed to the Framework were inadequate ($10 million for
49 countries over seven years), given the urgent need to improve supply-side capabilities in LDCs. The HIPC initiative had led to lower debt-service payments, but was hampered by deliberately over-optimistic export projections; the slow rate of some countries to arrive at completion point, when debt relief is irrevocably committed; and inappropriate conditionality.
The Committee also had before it the report of the Trade and Development Board on its twentieth special session (document A/58/15 (Part II), which took place in Geneva on 27 January 2003, which contains a decision on financing for experts from developing and transition countries to participate in expert meetings of the United Nations Conference on Trade and Development (UNCTAD). By that decision, the Board agreed that such participation would be financed through extrabudgetary contributions, when sufficient, or through a reserve fund. Funds currently available to finance participation in expert meetings would make up the reserve fund and the process of obtaining extrabudgetary contributions for expert meetings in 2003 would begin immediately.
Also before the Committee was the report of the Trade and Development Board on its thirty-first executive session (document A/58/15 (Part III), which took place in Geneva on 10 March 2003 and contains a Board decision that official documents of the Joint Advisory Group of the International Trade Centre -- a combined effort of UNCTAD and the World Trade Organization (WTO) –- should be issued in the other two United Nations official languages, Arabic and Chinese, in addition to its current languages.
In addition, the Committee had before it the report of the Trade and Development Board on its thirty-second executive session (document A/58/15
(Part IV), which was held in Geneva on 28 July 2003.
Another document before the Committee was the Secretary-General’s report on unilateral economic measures as a means of political and economic coercion against developing countries (document A/58/301), which transmits views and other relevant information from States on unilateral economic measures as political and economic coercion against developing countries. The report includes texts received from Argentina, Costa Rica, Cuba, Czech Republic, Iran, Libya, Syria, Thailand, Tunisia and Venezuela.
The Committee also had before it a note by the Secretary-General on the report of the Meeting of Eminent Persons on Commodity Issues (document A/58/401), held from 22 to 23 September 2003 in Geneva. It recommends several short-term, medium-term and long-term steps to improve commodity market conditions and the lives of poor commodity producers through better crop management systems, among other solutions. Proposals include equitable and predictable market access for key commodities from developing countries, addressing the oversupply of commodities, making compensatory financing schemes user-friendly and operational, strengthening capacity and institutions, and creating an International Diversification Fund.
The Committee also had before it a report of the Secretary-General on International trade and development (document A/58/414), the report of the Trade and Development Board (document A/58/154), and a paper on Construction of additional office facilities at the Economic Commission for Africa (document A/58/154).
Statement by General Assembly President
JULIAN HUNTE (
Saint Lucia), President of the fifty-eighth session of the General Assembly, summarized the discussion of the 22 to 23 September meetings in Geneva of the Eminent Persons on Commodity Issues. During those meetings, the eminent persons covered a broad range of issues, notably the long-standing dependence of many developing-country economies on export earnings from a few commodities. The performance of commodities markets had a major impact on their ability to achieve sustainable development and the Millennium Development Goals. The commodities issue required greater attention by the international community, including the creation of a new development regime for commodity-dependent countries.
Introductory StatementsRUBENS RICUPERO, Secretary-General of UNCTAD, introduced the report on the International Trade and Development and that of the independent Eminent Persons on commodities issues. Noting that multilateral trading system had become a symbol of global economic interdependence, he said trade flows between developed and developing countries had become increasingly significant and the contribution of developing countries to growth in world trade and sustained economic development had increased. In 2001, developing countries relied on the markets of developed economies for about 57 per cent of their exports. That same year, developing countries accounted for 48 per cent of Japanese exports, around 43 per cent of exports from the United States, and 34 per cent of exports from the European Union. The economic fate of different regions and countries was more intertwined than ever.
Developing countries needed the multilateral trading system as a shelter against arbitrariness and a guarantor of fairness and equity in trade relations, he said. Trade was becoming more and more a determinant of their economic growth and development, as well as their ability to escape the poverty trap. Developed countries needed the multilateral trading system to engage developing countries in ever-expending circles of trade liberalization and openness, so that their economic operators could trade and invest with greater freedom, certainty, predictability and security across borders. They also used the system as a checks-and-balances mechanism for one another in challenging policies and practices of their peers in the Organisation for Economic Cooperation and Development (OECD).
Calling Doha 2001 a milestone in the evolution of the multilateral trading system, he said all countries would gain through its core agenda on development. Growth in developed countries would speed up, allowing them to offer new and expanding opportunities for the exports of both developed and developing countries. The growth potential in some developed countries was likely to level off in the future, reflecting long-term demographic trends and high consumption. Developing countries, on the other hand, had a vast reservoir of untapped demand, which could give exponential impetus to growth in international trade and world economic expansion, with huge benefits for developed countries as well. For that potential to be realized, the international community must make significant investments in overall development.
ZHA ZUKANG, President of the Trade and Development Board, introduced that body’s report, which details its fiftieth session in October on interdependence and global economic issues from a trade and development perspective, capital accumulation, economic growth and structural changes. He noted the persistently weak growth in developing countries and the disparity between rich and poor, saying the report provided an in-depth analysis of the links between fixed capital formulation, industrialization, and international competitiveness, among other factors, in the developing world.
He said the report revealed that developing countries had varying degrees of vulnerability to external shocks, be they weakened exports, falling international prices or other factors. Latin America and the Caribbean were most affected by the international economic slowdown, Africa by falling commodity prices and poor inward capital inflows that had sparked a real crisis, and Asia by the management of development. Applying a one-size-fits-all model to economic growth and management of developing nations was inappropriate. He went on to detail the wide range of trade-related issues addressed in the report, including official development assistance (ODA), particularly for LDCs, debt relief and predictable market access, necessary global sustainable development and economic growth.
ANWARUL CHOWDHURY, Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, said developments in the international trade regime were vital for LDCs, landlocked developing countries (LLDCs) and small island developing States. Those countries deserved international support in overcoming specific disadvantages in an increasingly globalized world, which were largely due to a persistent lack of political will in the international community. Trade in such developing nations suffered from factors beyond their control, despite relentless efforts to reform their national economies. The share of LDCs in international trade had fallen from 3 per cent in the 1960s to the current 0.4 per cent, and small island developing States also had a share below one half per cent.
He said one positive development of the recent Cancún WTO meeting had been the emergence of several issue-based alliances among developing countries. They included the grand alliance of the African Union, the African, Caribbean and Pacific Group and LDCs, and the Cotton Initiative of Benin, Burkina Faso, Chad and Mali, which had underscored the negative effects of agricultural subsidies. Another development that would continue to support the most vulnerable countries was the activism of civil society, parliamentarians and the media.
Several factors had affected the abilities of LDCs to take full advantage of market access preferences, he continued. They lacked inherent domestic capacities, such as adequate market information and supply-side constraints, and suffered from security as well as political problems. In addition, many non-tariff barriers had proved highly restrictive, bottling up the export potential of LDCs. Stringent sanitary and phytosanitary standards and complex rules of origin, as well as domestic subsidies granted in developed countries had inhibited LDCs from gaining access to developed-country markets. Other serious concerns in LLDCs were transit facilities and transport infrastructures, while the small size, vulnerability and isolation from world markets of small island developing States made their economies highly dependent on external trade.
IAN KINNIBURGH, Director, Development Policy and Planning Office, Department of Economic and Social Affairs, introduced the Secretary-General’s report on unilateral economic measures of political and economic coercion against developing countries, saying it detailed the replies of 10 Member States that had reported on such measures. Most said they had not applied such unilateral economic measures, which they viewed as inconsistent with international law and other aspects of international cooperation. Some governments gave specific examples of measures applied against them and subsequent adverse impact on their nations.
Statements
ABDELLAH BENMELLOUK (Morocco), speaking on behalf of the Group of 77 and China, said there was no alternative to multilateralism and a non-discriminatory trading system to spur economic growth, particularly in the developing world. The success of post-Cancún negotiations would depend largely on the ability of nations to restore confidence in trade liberalization as a key instrument of development.
He said that process would require a complete review of rules governing anti-dumping practices, technical obstacles, sanitary and phytosanitary measures, trade-related aspects of intellectual property laws and preferential market access. It was also necessary to expedite negotiations on agriculture, integrate agreements on textiles and clothing, reduce and eliminate tariff peaks on non-agricultural products, examine the coherence of financial, monetary and trading systems, provide technical assistance to the export industries of developing countries and resolve the cotton dispute.
ALOUNKEO KITTIKHOUN (Lao People’s Democratic Republic), speaking on behalf of the Group of LandLocked Developing Countries, said they reaped little from the world trading system, largely due to their remoteness from world markets. The Almaty Programme of Action had laid down actions to assist LLDCs with trade by simplifying and standardizing trade and custom norms and procedures. It had also stressed the need to bring more LLDCs into the WTO. The recent trade meeting at Cancún was the first in which LLDCs had had to form a common position on trade negotiations on the basis of the Almaty Programme of Action.
Noting that LLDCs priorities were trade facilitation and preferential market access for their products in international markets, he called for closer cooperation with the world community, especially WTO members. Hopefully, WTO negotiations would be brought back on track as soon as possible, and strong interdependence in today’s globalizing world would eventually lead to a fruitful conclusion. The rhetoric of trade as an engine for development would never prove itself by deeds without an open, fair, rules-based and equitable international trading regime.
HUANG XUEQI (China) said that despite some progress, the world economy still faced uncertainty, further exacerbated by the collapse of the recent trade talks at Cancún. The growing imbalance between rich and poor nations had widened due to high agricultural subsidies, market access barriers and inequities in the international monetary and financial systems. While global trade had reached
$6.2 trillion in 2002, many developing countries were not reaping trade’s full benefits. Provisions for the preferential treatment of exports from developing countries had not been implemented effectively.
The elimination of high agricultural subsidies for farmers in developed countries should be the number one priority of future trade negotiations, he went on. They continued to keep poorer nations at a major disadvantage. China had done its part by eliminating export subsidies for many products since joining the WTO. The creation of a new economic order based on fairness and equity was essential if the international community was serious about helping the developing world achieve the Millennium targets of sustainable development and poverty eradication.
VASSILY NEBENZIA (
Russian Federation) said that the setback at Cancûn had proven that the international trading system was still far from perfect. Stable, predictable and non-discriminatory access must be created for the goods and services of all nations. The gradual removal of trade barriers and protectionism was essential to economic and social development. Anti-dumping regulations against Russian exports had cost the Russian economy $2.5 billion annually, and hopefully they would be replaced with the standard procedure for Russian exports.
The WTO accession was a major priority for the Russian Federation, he said, adding that domestic laws would soon be brought in line with the WTO requirements. The Russian Federation had lowered customs duties and given preferential treatment to imports from many developing countries, particularly LDCs. The Russian Federation welcomed the creation of a comparative preferential trade scheme for LDCs, as called for during the Millennium Summit.
MUNIR AKRAM (
Pakistan) said it was time for an honest appraisal of the Doha agenda, and stressed the need to identify objectives that would make it an actual development round. They could include the genuine resolution of outstanding implementation; a commitment to eliminate tariff peaks and tariff escalation for developing-country exports; priority for the movement of natural persons in services liberalization; development-oriented discipline on anti-dumping actions; and specific development commitments in trade and debt, finance and trade, and the transfer of technology.
He also highlighted the need for a down payment for developing countries to build confidence in the Doha round. It could include a moratorium on dumping and other measures against low-income developing countries, as well as a positive response to the African cotton initiative. The international community should also make a visible commitment to capacity-building in developing countries in order to enhance their ability to expand exports and trade. Such a commitment could take the form of a capacity-building fund of at least $100 million, jointly managed by the WTO, UNCTAD, the United Nations Development Programme (UNDP) and the World Bank. In addition, the international community must agree on a more transparent and democratic decision-making process in the WTO.
