ECDC NEEDS POLICY COORDINATION AND CONVERGENCE.

Jun 3, 1989

ECDC NEEDS POLICY COORDINATION AND CONVERGENCE.

GENEVA, JUNE 1 (BY CHAKRAVARTHI RAGHAVAN)— Success in the third world efforts at mutual economic cooperation requires strengthening of policy coordination on key ECDC issues and a greater degree of convergence in national policies, according to the secretary-general of UNCTAD, Kenneth Dadzie.

The committee whose fifth session is to run till June 9 has the main task of agreeing on a work programme in this area. It elected Hani Khalaf of Egypt as chairman.

In a speech read out on his behalf by his deputy, Yves Berthelot, Dadzie told the UNCTAD committee on economic cooperation among developing countries (ECDC) that ECDC would continue to have high priority for the third world in the years ahead, and success in ECDC efforts would continue to be an important factor in achieving their overall development objectives.

But success in such endeavours, Dadzie said, would require a strengthening of policy coordination on key ECDC issues among interested third world countries, and a greater degree of convergence between national policies of third world countries and their ECDC objectives and programmes.

Another essential ingredient for success, the UNCTAD official added, was adequate support by the international community, particularly the industrialised countries with long experience in regional cooperation mechanisms.

In their intervention, the Group of 77 sought a study by UNCTAD on the feasibility and operational modalities of a new international export financing facility to provide trade finance and promote and underpin south-south trade.

In his speech, Dadzie noted that the ECDC process had suffered serious setbacks during the 1980’s because many of the ECDC mechanisms were not strong enough to withstand the pressures generated by the adverse international economic environment.

South-south trade, for example, had suffered a major reversal due to the fall in average GDP growth rates and constriction of imports.

In reviewing their ECDC programmes and priorities, Dadzie said, the third world countries had given very high priority to south-south trade.

Dadzie viewed the establishment of the global system of trade preferences among G77 countries, as a result of the formal entry into force of the GSTP agreement on April 19, as a major landmark in third world efforts to promote south-south cooperation.

UNCTAD which had been instrumental in carrying out GSTP studies and in providing support to the negotiations through the GSTP project, was ready to play "a creative supporting role in the implementation and enhancement of GSTP", he added.

Speaking for the G77 Amb. Mustafa Elamin Moneim of Sudan appreciated the support provided to ECDC by the UNCTAD secretariat as well as by other UN system bodies, but felt that there were some areas, which needed to be given more emphasis.

New initiatives and timely actions in a number of areas, Moneim said, could significantly improve the immediate prospects for ECDC.

But the efficacy of such measures would depend on the extent to which the external economic environment would improve an enable third world countries to grapple with the debt crisis and the substantial shortfall in their earnings due to the falling commodity prices.

Moneim called for continued UNCTAD secretariat assistance to the next round of GSTP negotiations, particularly the requirements of least developed countries and African participation.

But south-south trade, the G77 spokesman added, could not achieve its optimal growth prospects without adequate financial underpinnings.

Such trade financing required normal facilities through clearing arrangements as well as requirements of medium- and long-term credits associated with exports of non-traditional goods.

In this regard the existing instruments would need to be complemented by an appropriate inter-regional trade financing mechanism.

UNCTAD should undertake a study both on the feasibility and operational modalities of a new international export financing facility to promote and underpin the south-south trade.

The G77 spokesman also sought UNCTAD studies on south-south cross border trade, and its contribution to inter-regional trade as well as south-south trade in general.

UNCTAD should also undertake a study for enhancing third world participation in the procurement programmes of projects financed by international and regional development financial institutions.

On the GSTP, Moneim noted that three more countries had now ratified the treaty since its entry into force, bringing the total to 18. Other signatories were engaged in the process of ratification.

The GSTP signatories who were GATT contracting parties were aware of their rights and obligations to GATT in this regard, and were in the process of making necessary arrangements to notify GATT in pursuance of the 1979 enabling clause which enabled third world countries to undertake mutual preferential trading arrangements.