Mar 17, 1993




Geneva 15 March (Chakravarthi Raghavan) -- Trade issues and concerns dogging the world economy were the main focus of opening statements at the two-week resumed 39th session of the UNCTAD Trade and Development Board which began Monday under the chairmanship of Guntaz Aktan of Turkey.

Besides the trade issues which normally figure at the spring session of the Board other questions on the agenda include the review of the implementation of the Programme of Action for Least Developed Countries adopted at Paris in 1990 and an evaluation of the implementation of the UN New Agenda for Development of Africa in the 1990s.

Future work in UNCTAD in the areas of sustainable development and structural adjustment for the transition to disarmament also figure on the agenda of the Board.

In an opening statement at the plenary Monday morning, Carlos Fortin, the deputy to the Secretary-General of UNCTAD, focused on some major concerns on world trade, particularly for developing countries. The opening statement of the Chairman of the Group of 77, Amb. T.J.B.Jonkoya of Zimbabwe also raised some of these concerns.

Fortin said that foremost among the trade issues was the "growing uncertainty" on the outcome of the Uruguay Round, with recent developments suggesting that there was now "a real risk of forfeiting prospective benefits from freer trade". Developing countries, as a group, he suggested, would be the "major losers" in view of the "considerable benefits" embodied in the agreements already reached in a number of important areas such as tropical products, textiles and services.

The developing countries were already suffering from the persistent differences and re-emerging trade conflicts among the industrialized countries. But most of the developing countries did not have the "regionalization" option as a second best solution and "could indeed lose out as a result of consolidation of regional trade blocs centred upon the developed countries."

The world, Fortin further argued, "urgently needs a balanced and comprehensive conclusion of the Uruguay Round...A successful conclusion encompassing more comprehensive and precise multilateral rules and disciplines is the only way to strengthen the international trading system... (and reduce) the current proliferation of trade tensions."

The UNCTAD official also said that the present draft Final Act (put forward by the TNC Chairman Arthur Dunkel) still seemed to offer 'the best basis' for concluding the round. The 'core' of the draft consisted of agreements on issues which had been, and would otherwise continue to be, a source of misunderstanding and trade disputes. The draft agreements on agriculture and services also contained a detailed mechanism and methodology for future multilateral trade negotiations, Fortin argued adding that the draft however needed to be supplemented by a "meaningful market access package" in goods and services, in particular concerning items of export interest to the Third World countries. 

The DFA, Fortin said, implied a "drastic increase" in the obligations of developing countries who had already liberalized their own trade regimes and had accepted a reduced freedom of action in trade policy, and more importantly, their future policies on technology transfer and protection of intellectual property rights.

"Stricter disciplines would be in their interest, however, provided their major trading partners are willing to incorporate their own obligations into their respective national legislation and to renounce bilateral or unilateral approaches in dealing with weaker trading partners," he said.

And while it was important to reach an early conclusion of the Round, it was equally important to start giving thought to a number of emerging issues likely to call for attention in coming years, Fortin said, citing as an examples such issues as the considerable potential for trade tensions arising out of difficulties in coordinating macroeconomic policies and the rapidly shifting technology frontiers.

The international community would be well advised to anticipate these latent problems and undertake as a first step analytical work and a consensus-building process in which UNCTAD could play a constructive role according to modalities envisaged in the Cartegena Commitment at UNCTAD-VIII.

Referring to the trade policy reforms and unilateral liberalization policies instituted in the developing countries in the late 1980s and early 1990s, generally as a part of comprehensive structural adjustment programmes (under IMF/World Bank conditionalities), Fortin said that the countries now liberalizing would be able to achieve rapid export growth only if the developed countries "become more flexible in opening up their markets."

Otherwise, a simultaneous adoption of liberal trade regimes by many developing countries would depress further the export prices of their raw materials and labour-intensive manufactures. 

Unfortunately, Fortin added, trend towards greater openness in developing countries had been accompanied by "more, not less, protectionism in developed ones."

Another trade issue with "far-reaching consequences" for developing countries, Fortin said, was the emergence of new sources of competitive advantage in international trade.

Triggered by the deregulation trends of the 1970s, technological innovation had triggered a hug global market for funds and financial instruments. Assisted by information and communication technologies, international linkages had developed, triggered by investment and technology flows and increased international corporate and research networking.

A result of this globalization process was the growing share of international trade within corporations of or among related firms. Corporate decisions on sourcing, production and marketing were increasing taken within a global frame of reference, often in the context of strategic alliances, in particular among the TNCs.

The international community had to take action to help the developing countries gain access to new technologies and successfully absorb them. Without such actions, many of the Third World countries would risk becoming marginalized in the world economy.

The recent restructuring of the UN secretariat, and shifting of the programmes and activities on TNCs and science and technology to UNCTAD, as well as the work programme adopted by the UNCTAD ad hoc Working Group on Investment and Technology transfer would enable UNCTAD to make an even stronger contribution than in the past to these issues.

The threat of marginalization applied particularly strongly to the LDCs, most of whom were in Africa. The share of LDCs in world trade had more than halved in the 1980s and their trading opportunities may have been severely curtailed. A reversal of this trend could not be achieved by LDCs alone, since these countries were least likely to be drawn into global, integrated production process. Their difficulties could even worsen under the impetus of trade liberalization. Most African LDCs were unlikely to benefit from liberalization on the trade in tropical products, given the low income-elasticities of these products