Jan 27, 1987

NEW GUIDELINES TO EXPAND EAST/WEST/SOUTH RELATIONS MOOTED.

GENEVA, JANUARY 23 (IFDA/CHAKRAVARTHI RAGHAVAN) Ė A 17 member ad hoc group of experts, convened by the Secretary-General of UNCTAD, has in effect endorsed the formulation of a new set of guidelines for expansion of east/west and east/south trade and economic cooperation.

These guidelines, the experts said, could be on the basis of the proposals of the UNCTAD secretariat in a report to the trade and development board last year (TD/B/1104) as well as the agreed contents of the text annexed to a resolution adopted by UNCTAD-VI on this issue.

The Belgrade UNCTAD-VI in 1983 which considered the entire range of UNCTAD activities in the area of trade and economic relations among countries with different economic and social systems (inter-system) was unable to agree on substantive recommendations, and remitted a partly-negotiated draft text before it, with several points already agreed and some to be further negotiated, to the trade board for further action.

The board in turn, remitted all the documents and the text to the expert group for its consideration and any recommendations.

The expert group had been asked to consider prospects for trade and economic cooperation among countries with different economic and social systems (east/west and east/south, and in particular among countries of the third world and socialist countries of Eastern Europe.

The group had also been asked to look at ways, means and measures for expanding the volume and diversifying the structure of east/south trade and development of economic cooperation.

The meeting, chaired by Pran Nath Nevile of India, ended its four-day deliberations Friday with its conclusions and adoption of its report to the UNCTAD trade and development board.

The experts noted that despite negative or negligible growth in world trade, east/west and east/south trade had continued to grow, though moderately compared to the 1970ís. In view of the interdependence of all trade flows, any expansion of world trade would have a favourable impact on east/south trade flows as well.

The world economy, they noted, had been passing through an unprecedented crisis since the 1980ís, and this had affected all trade flows.

And while there had been some recovery in the OECD countries, there had been no significant improvement in rates of growth and investment, and no positive signs of recovery in the overall world economy.

While the socialist countries too had been affected, the impact of the crisis on them had been less severe compared to the countries of the third world.

Faced with a heavy debt burden, sluggish growth and net financial transfers to the industrial countries, the third world countries "remain the most hard hit and are still grappling with the problem of debt and downward adjustment in development activities and in investment".

The experts said there were some uncertainties about the short- and medium-term outlook for further expansion of trade and intensification of economic cooperation, both east/south and east/west.

But the prospects for this depended primarily on a supportive international environment in which world trade could grow at a stable and reasonable rate in a more predictable setting while respecting recognised international trade rules and principles.

The other factors were the financial liquidity of indebted countries, the prevalence of stable and adequately remunerative prices for commodities, and increased access to international markets.

Any set of guidelines on east/west and east/south trade and economic relations, the group said, should aim at expanding such trade and economic cooperation, giving due consideration to the problems and development interests of the third world countries, and the specific needs of the least developed among them.

The wide-ranging discussion of the experts threw up a number of suggestions and proposals for expansion of east/south and east/west trade and economic cooperation.

Among these, the need for observance by all states of basic principles and rules of the international trading system and reduction and progressive elimination of obstacles to trade were stressed.

The content of intergovernmental trade agreements, it was suggested, should be enriched, and the practice of long-term intergovernmental agreements on trade, economic and technical cooperation and cooperation in science and technology, should be extended.

There should also be expansion of cooperation at enterprise and quasi-governmental levels.

The experts group also underscored the importance of improving the structure of the commodity composition of international trade, and in particular increasing the share of manufactures and semi-manufactures in the exports of the third world countries to the socialist world.

Future economic developments in the socialist countries, it was stated, would lead to increased specialisation and increased imports of manufactures and semi-manufactures from the third world.

Other ideas put forward included: further improvement in the generalised system of preference schemes of the socialist countries, establishment of joint ventures, encouragement of expanded cooperation at enterprise level as well as tripartite cooperation, and further improvements in terms and conditions of lending to the third world as well as in conditions of economic assistance provided.

The expert groupís conclusions also called for an enhanced UNCTAD role in promoting such trade and economic relations. The secretariatís analytical reports, it was suggested, should be expanded to cover participation in services, joint venture, etc.

Lack of adequate knowledge and information in third world countries about the trading systems of the socialist world and the opportunities for trade was seen as one of the constraints affecting further expansion of east/south trade.

UNCTADís operational programme of technical assistance in this area, the report said, could play an effective part in upgrading third world capacity to participate more actively in east-south trade.

The current UNCTAD programme should not only be continued, but enlarged in scope and content and made more business Ė and result-oriented, the group recommended.

Since the programme has a direct bearing on increased east-south trade, the group suggested that the UN development programme should consider favourably allocation of adequate financial resources to UNCTAD for implementing the programme.