UNCTAD-IX CAUTIONS ON BUILT-IN AGENDA, NEW ISSUES

10:42 AM May 14, 1996

UNCTAD-IX CAUTIONS ON BUILT-IN AGENDA, NEW ISSUES
Geneva 14 May (Chakravarthi Raghavan) -- The pursuit of the built-in agenda in various Uruguay Round Agreements, and the "new issues" should be carried out in a balanced way, and taking into account the concerns of developing countries, the just concluded ninth session of the UN Conference on Trade and Development has affirmed in the final document of the Conference, "A Partnership for Growth and Development".

All WTO members, the final document adopted by consensus says, should implement their commitments fully and all provisions of the Marrakesh Final Act should be effectively applied to maximise economic growth and developmental benefits for all, taking into account the specific interests of all developing countries.

The full realisation of anticipated benefits from the conclusion of the Uruguay Round requires that the confidence in the integrity and credibility of the multilateral trading system be upheld. The WTO's dispute settlement is the key element of the credibility of the multilateral trading system and it is essential for all countries to respect and fulfil the totality of undertakings of the Uruguay Round, and refrain from adopting measures inconsistent with their WTO obligations, UNCTAD-IX said.

Earlier, in an analysis, the final document said that while globalization and liberalization had increased the potential for international trade to be an unprecedented engine of growth, and an important mechanism for integrating countries into the world economy, and while "a good number" of developing countries have seized the opportunities, there were others unable to do so and there is a "real risk" that these countries, especially the LDCs and other structurally weak economies could become marginalized.

While this formulation, and use of the term "good number" suggested that the malaise of marginalisation affects only a small number, statements and documents, mostly unofficial, before the Conference, showed that a very large proportion of the world's population - the two billion excluded, as UN Secretary-General Boutros Boutros-Ghali, put it - are in fact now excluded and marginalized.

A major effort, and one that partially succeeded, of the EU and the US at Midrand was to prevent any focus on the "losers" in the Uruguay Round or of compensation to them.

And while the governments gathered at Midrand for UNCTAD-IX, in the final document expressed their concerns over the marginalized, there is a lack of specificity on how the problems of the marginalized can be addressed, and as an integral part of the WTO rules.

At the Round table of the heads of specialized agencies, the WTO head, Mr. Rained Ruggiero, went so far as to state that the WTO's concern was only to favour the most competitive producers and thus raise resources in the most efficient way, but "how these resources are used is not our responsibility, (but) that of international institutions and national governments."

This laissez faire view found little support earlier at the Round of Table of Heads of States, nor in the many plenary speeches or the Ministerial Round tables, with a large majority calling for equity measures to be built into the system, a view that was also upheld at the Copenhagen Social Summit.

Nevertheless, the UNCTAD-IX final document (for which responsibility must rest with the participating governments, and the major industrial nations who resisted any specifics) is vague on how this equity is to be built into the trade and financial systems.

The challenges facing developing countries and the transition economies, in the context of globalization and liberalization, the document said are not confined to domestic policy reforms, identifying and exploiting the trading opportunities, but also of identifying, from a development perspective, ways and means of expanding such opportunities.

"In this context, the pursuit of the built-in future work programme contained in the Uruguay Round agreements and the key new emerging issues need attention and the interests of developing countries should be taken into account in this regard."

While thus seeking to focus attention on the future, there was a concerted, and largely successful effort, on the part of the WTO and the major industrial nations, to prevent any effort to look at the agreed rules, identify those posing problems to developing countries, and put on the Singapore agenda the need to change them.

A joint WTO-UNCTAD document for the Conference, and one which seemed to have been hastily put together, drawing to a great extent on an assessment that was produced by the GATT secretariat in December 1994, on the outcome of the Uruguay Round sought to put in the forefront the positive benefits, and skirted around the 'costs' for many.

The NGOs at the Midrand meeting had repeatedly raised questions not only about the future agenda, but the need for the Singapore meeting to review the existing rules themselves, in terms of implementation of the Round and identifying the difficulties faced by the South.

The demand was sought to be diverted with the argument that after nine years of hard negotiations, the final compromises in the Final Act of the Uruguay Round and its agreements had been reached and they should not be reopened.

However this has not blocked the efforts of the US and the EU to reopen through 'new issues', the points that they had pressed but failed to get in the Round -- for e.g. the right of establishment and investments via the Trade-Related Investment Measures (where foreign investors were sought to be given freedom from domestic regulations of any kind) or in the General Agreement on Trade in Services (where the US came up with right to provide services to a foreign market through 'establishment').

The final document has referred to the possibilities of expanded trade in services as a result of the GATS, and where developing countries face major challenges in terms of strengthening their domestic service capabilities and on the need for further liberalisation of services sectors in areas of important to the developing countries.

It refers in this connection to Art. IV of GATS (for increasing the participation of developing countries in the services trade) and calling for specific negotiated commitments on strengthening of domestic services capacities of developing countries, improvement of their access to distribution channels and information networks and liberalisation of market access in sectors and modes of supply of export interest to developing countries, the document calls for appropriate technical assistance to developing countries to develop and strengthen their services sectors.

Governments and international organizations are also called upon to extent appropriate technical cooperation to developing countries and transition economies to enable their more effective participation in the international trading system, including assistance to enable them to more effectively exercise their rights and meet their obligations, and for prospective members to help under the rights and obligations arising from accession to the WTO. Technical assistance is also called for non-WTO members to facilitate their accession efforts.

The document calls for appropriate measures to maximize opportunities, and minimise difficulties of developing countries, especially LDCs and countries in transition, in adjusting to the changes introduced in the Uruguay Round.

Governments have also been called upon to implement fully and expeditiously the Marrakesh Ministerial Decision on Measures favouring the LDCs, and for effective application of the Decision on measures concerning possible negative effects of the reform programme on LDCs and net food-importing developing countries. On the agriculture sector, while speaking positively of the multilateral rules and disciplines introduced for the first time and the conversion of wide range of non-tariff measures into transparent bound tariffs and enhanced and secure market access commitments, the final document is again silent on the fact that the wide use of "dirty tariffication" by the major industrial nations has resulted in little liberalization of market access.

The document has also spoken of the value of the GSP as an instrument for trade expansion, of the erosion of preferences as a result of the MFN-based tariff reductions in the Round, and the potential for maintenance in the post-Uruguay Round environment of using the GSP to foster the industrialization in developing countries, and the steps already taken by some preference giving countries to review their systems. It has also referred to the concerns of beneficiaries about the enlargement of scope of GSP by linking eligibility to non-trade considerations.

But beyond this, the document does not take the issue further.

It however invites preference-giving countries to continue to improve and renew their GSP schemes and find ways and means to ensure more effective utilization of GSP schemes, particularly LDCs. The document also speaks of globalizatiuon having highlighted differences in regulatory regimes in various policy areas, and the interest to enlarge the world trade agenda into new areas.

Identifying competition policy as one such, the document refers to the negative influence on trade opportunities arising from anti-competitive practices, the need for effective national policies to counter such practices and the consideration of the issue at international levels, the formal recognition in the TRIMs accord that competition policy and investment policy are closely related and require parallel consideration, and the relevance in this regard of the current only multilateral instrument (the UNCTAD negotiated, but voluntary) the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of RBPs.

It also focuses on the issue of integrating trade, environment and development, and of the concerns about use of environmental policies and measures for protectionist purposes, and stresses the importance, in developing environmental policies with a trade impact, of ensuring their transparency and appropriate attention being paid to the special conditions and development needs of developing countries.

On commodities and commodity trade, the document notes this is the mainstay of hundreds of millions of poor farmers and mine workers in the developing countries, and speaks of the special challenges facing countries heavily dependent on commodity exports and earnings, due among others to instability and decline in real terms of commodity prices, difficulties of horizontal and vertical diversification and of various services and resources including access to credits and risk management mechanisms.

But by and large, while identifying the many problems of the commodity sector, the document has not come up with any old or new solutions.

In the portion of the document on measures to be taken, UNCTAD-IX merely repeats the need of all countries to endeavour to cooperate, including within framework of multilateral agreements, to promote horizontal and vertical diversification, continued assistance from donors for diversification of commodity sectors in commodity-dependent countries, specially the LDCs, and for special efforts to support commodity diversification efforts of African countries (as called for in the UN General Assembly resolution). The Common Fund has been asked to direct its commodity development programmes towards diversification projects and promoting commodity market development, with particular focus on needs of the LDCs. The members of the Fund have been asked to consider fulfilling the pledges they have made to the Second Account, and the Fund itself has been encouraged to explore effective ways and means of using the resources of the First Account (intended to support international commodity agreements for stabilizing prices).

The document also refers to the post-UNCED awakening of concerns about relationships between growth and environment, and the effects on the natural resource base of commodity and industrial production activities.

Changes in production and consumption patterns to make them consistent with sustainable natural resource use, the UNCTAD-IX document says, will be more difficult if environmental costs and benefits are not taken into account in prices of products, or if adoption of environmentally preferable production methods are not facilitated by market-based approaches. It also refers to concerns among developing countries about introduction of environment conditionalities in the commodity sector and the addition burdens it may place on commodity producers, diverting resources away from normal development programmes.

Here though the problem is not merely one of inability of international institutions, but of the economics community - academic and institutional.

Soon after taking over, Secretary-General Rubens Ricupero said at a meeting with economists in New York when he posed the problems of the commodity sector, most of them confessed they had not been doing much work in recent years.

In focusing on the priorities until UNCTAD-X, the main role in the field of trade in goods and services is to be to help maximise positive impact of globalization and liberalization on sustainable development by assisting effective integration of developing countries, particularly LDCs and the structurally weak and vulnerable developing countries, into the international trading system; and take specific interests of economies in transition.

Work in this area is to include issues related to commodity dependence, with work being undertaken in cooperation with WTO and other relevant international organizations and focusing on:

* enabling countries to respond to opportunities arising from the UR Agreements so as to derive maximum available benefits; * analysing impact of the UR Agreements on development; * enhancing national capacities, in terms of human resources and administrative infrastructures, to enable WTO members to adjust effectively to meet their obligations and take advantage of their rights; * assisting countries in process of accession to WTO, including helping them to enhance their understanding of rights and obligations and improving transparency of their trade regimes; * identifying impediments to trading success, including barriers to export expansion and diversification; * providing a forum for examination of issues related to trade preferences, including exploring opportunities for maximizing their utilisation; * facilitating understanding of multilateral trading system by analysing, from a development perspective, issues on the international trade agenda, as identified by the Conference and the Trade and Development Board, including new and emerging issues; * assisting developing countries, in collaboration with WIPO and WTO to identify opportunities provided by the TRIPs Agreement, including opportunities for attracting investment and new technologies; * contributing as appropriate to work of relevant international organizations in the implementation of the Uruguay Round Final Act Decision on measures favouring LDCs by assisting LDCs to take maximum advantage of special and differential measures provided to them.

Within the framework of its programme of cooperation with the WTO, UNCTAD should provide analytical information relating to the decision on measures concerning negative effects of the reform programme on LDCs and net food-importing developing countries.

UNCTAD is also called upon, in terms of priorities,

* to assist developing countries to strengthen their capacities in services sectors, and identifying export opportunities by undertaking directly related sectoral analysis,

* to examine issues related to competition law of particular reference to development, continue analytical work on RBPs, assist developing countries to formulate competition policies and legislation, institution-building, focus on Africa by holding a regional meeting, creating relevant inventories and data bases, and establishing a technical cooperation programme,

* to promote integration of trade, environment and development and continue UNCTAD's special role in this field in accordance with the UN General Assembly resolution, examine trade and environment issues from a development perspective, in close cooperation with WTO and UNEP and as task manager for the UN's Commission on Sustainable Development, undertaking work suggested for UNCTAD by the CSD at its just concluded Fourth Session.

UNCTAD is also called upon to address issues of particular relevance to commodity dependent countries by examining successful commodity diversification experiences, contributing to transparency of commodity markets and analysing trends in these markets, promoting management of commodity resources, in the context of sustainable development, and continuing to assist commodity producers to make use of risk-limiting instruments.