DEVELOPMENT MUST BE DRIVEN BY THE DEMANDS AND NEEDS OF DEVELOPING COUNTRIES

9:45 PM May 8, 1996

DEVELOPMENT MUST BE DRIVEN BY THE DEMANDS AND NEEDS OF DEVELOPING COUNTRIES
Mr. Martin Khor of the Third World Network said those providing more of the funds should not make use of this to whittle away the real functions of UNCTAD, "robbing it of its soul and leaving a shell."

Khor referred to the important role of NGOs in recent years in many UN Conferences and the work of many agencies, and said wherever NGOs have been active there has been greater public interest and profile for the issues discussed.

In the four ministerial round-tables (which has acquired a higher profile than plenary statements and injected some 'debate' on issues), the only one where NGOs were enabled to speak was the Friday's round-table on institutional questions. NGOs have been excluded, even as silent observers, from the work of the conference at the two drafting groups, and be present only for plenary.

In a reference to this, Khor said UNCTAD too must change and get the active participation of more NGOs in its activities.

A revitalized UNCTAD must facilitate the entry of more NGOs into its forum and in its activities, through more NGO-friendly accreditation mechanisms, and give NGOs more space and access to meetings, more slots to speak and intervene in discussions, and facilities to make their documents available to participants.

The proposal for a Development Senate for UNCTAD, Khor said was interesting and welcome in principle, but should be part of an overall policy on participation of NGOs in UNCTAD activities, and not a substitute. In the proposed composition of the Senate, there was no provision for representation of labour and small farmers. This should be rectified, and the share of NGOs and social movements in the composition should be raised to at least 40%. The terms of reference for the Development Senate should be decided after adequate consultations with NGOs. The TWN was opposed to the proposal for funding the Senate by big business, since it would bias the forum towards business interests. Instead the financing should be part of the UNCTAD budget or through a separate Trust Fund. Governments should ensure a fair and adequate representation of developing country NGOs by providing for their funding.

Khor said the more than 100 NGOs at UNCTAD-9 have had many discussions on the issues of globalization and future of UNCTAD and are very concerned about the globalization and liberalization process and its effects of inequitable distribution of benefits. Whilst some stronger countries and individuals may benefit greatly from growth and exports, many other countries and people suffer its adverse effects through greater marginalisation, and poverty.

This is borne out by the wide experiences of NGOs working in communities throughout the world. The safety net approach of giving aid to those adversely affected is not good enough. Instead, NGOs believe that governments and international agencies must not remain passive onlookers, but must "control, regulate and rechannel globalization processes and make it socially and environmentally accountable."

The NGOs are concerned about the shift of powers from UN agencies such as UNCTAD that have a broad social and developmental approach to the Bretton Woods institutions and the WTO which by their very nature were more narrowly oriented to growth. Due to this shift, social and development interests have made way to business interests. The social dimensions was increasingly left out in economic and trade policy making, causing many serious social problems and political instability.

"We are also concerned that here at UNCTAD-9 some Northern governments are trying to restrict UNCTAD's work to only technical aid to LDCs. NGOs call for a revitalized UNCTAD with a strong mandate for analytical work, a supportive role for developing countries and as a discussion forum for development including trade linkages with investment, finance and technology.

"Having UNCTAD do only technical assistance work to implement policies decided elsewhere would rob the world of its most important and needed functions. Analytical work is the key as it sets the framework and design of macroeconomic and development policy. If the policy design is wrong then the operations will be geared wrongly, leading to wastage and social problems. The design then has to be changed."

In the area of macroeconomic policy, the TWN said, It is now widely recognized, including in the Social Summit process of 1995, that structural adjustment programmes have led in many poor countries to greater poverty, social dislocation and upheaval. The major fault was that the social element was missing in policy design, and only a single model was applied to all countries, despite their differing conditions. The Social Summit resolved that the design of structural adjustment has to be changed to include the social dimension. UNCTAD in this regard could play an important role. The lessons drawn from its project on the East Asian experience and the factors that made growth possible, could be applied to other countries, for instance in Africa, to provide a range of possible policy options.

In the trade area, the analytical and policy role of UNCTAD is even more important, especially with the emergence of the WTO. The original concept of the International Trade Organization (ITO) a half century ago envisaged the need for an agency with multiple functions, of which the making of rules to regulate trade between countries was only one function. Other roles included promoting development of poor countries' capacity, employment, fair commodity prices and regulating restrictive practices of large corporations.

The ITO never materialized, and rule-making for trade liberalization became GATT's and WTO's role. It was recognized that the other functions were still needed, so that other agencies were formed, with UNCTAD to take care of the development dimension, the ILO to look after employment and labour rights, and so on. The coexistence of agencies is needed to attain a more balanced and comprehensive trading and economic system that would be more fair and thus more sustainable.

"Therefore it is a great mistake to confuse the WTO with the original ITO concept and to say that with the creation of the WTO we can now erode the roles of or to eliminate UNCTAD. The reality is that with the strengthened liberalization role of GATT-WTO, and the inequities this generates, we need UNCTAD and its social and developmental dimension even more than ever as a counterbalancing and complementary force."

"On the opening day of UNCTAD-9, we heard the WTO Director General say that the trading system's role was to favour the most competitive producers and raise resources in the most efficient way, but that the use and distribution of these resources is not the WTO's responsibility but that of other international institutions or governments. In other words, equity or the distribution of benefits and costs of trade liberalization is not in the realm of WTO's responsibility of rule making."

Yet many developing country delegate have raised the equity issue and the problems of implementing the Uruguay Round agreements.

"We predict that an inequitable system of trade rules will lead to social problems and upheaval and we are on the verge of making the same mistakes as with structural adjustment, with serious flaws in the design of policies and rules.

"It is much more fair and cost effective to build fairness and the social dimension into trade rules, than to base these rules on equal competition between unequal parties, and then later having to face the serious adverse consequences of the marginalised.

The role of UNCTAD then should not just be to provide technical aid to implement the rules but to help ensure that the rules are fair. UNCTAD should, therefore, monitor and assess present rules, identify problems which can be improved, help analyze the social and development aspects of new issues. Before new issues are brought up in the WTO, with its unsuitable tense atmosphere of negotiations, they should be discussed in UNCTAD, where the many facets of these issues can be thoroughly discussed. Only issues (or aspects of an issue) deemed appropriate through this process, should be brought up for discussion to the WTO, and within the appropriate contextual framework.

Developing countries are also still facing massive problems arising from unequal international economic structures, that result in several hundreds of billions of dollars of financial resources moving from South to North. UNCTAD needs to strengthen its contribution to debt relief, improving aid and tackling the commodities problem.

Some countries, like Canada, have made the argument that UNCTAD covers too many issues and should give up the subjects covered by the World Bank, or IMF or WTO, on the grounds that there is duplication. These same countries should actually look at the over-bloated bureaucracies and salaries of other institutions. We agree that UNCTAD has to change, to be more relevant, to modernise the way it deals with civil society. But we should not make use of the argument that UNCTAD has to be more efficient to eliminate the most important contents of UNCTAD's functions.

As the examples given just now on structural adjustment and the WTO show, it is vital that UNCTAD participate in the design of macro-economic and trade policies by bringing in the development and social dimensions. This can be done through the Secretariat's analytical work as well as through the use of UNCTAD as a discussion and consensus- building forum. It is inappropriate to restrict UNCTAD's role to merely help in implementing policies made elsewhere (in the WTO, World Bank or IMF) or to handle the social fallout and adverse effects of such policies. Instead, UNCTAD must be able to bring its unique perspectives (or help governments to evolve such perspectives) to the policy design table.

UNCTAD must be driven by the demand and needs of developing countries and not by the interests of the donors. Those who provide more of the funds should not make use of this to whittle away the real functions of UNCTAD, robbing it of its soul and leaving a shell.

UNCTAD must be preserved and strengthened in its role as promoter of the people's interests, of South's development nationally and to have a fairer position in the international economy.