Jul 12, 1985


GENEVA, JULY 10 (IFDA/CHAKRAVARTHI RAGHAVAN) – Multilateral efforts to expand trade and to strengthen the trading system should be part of a concerted international strategy to get the world economy onto a path of more vigorous and broadly-based growth and development, the UN Economic and Social Council was told Thursday.-

Speaking in the ECOSOC's general debate, the Deputy Secretary-General and officer-in-charge of UNCTAD, Alistair McIntyre said continuing uncertainties were beclouding prospects for sustained and widely diffused recovery in the world economy.-

It was necessary to create "revival of confidence and vibrancy"" in the economic environment through action on a broad front.-

While it might not be possible to advance on all fronts simultaneously, a strategy for more broadly-based growth and development should accommodate the interests of all countries, and deal with inter-related problems of trade, commodities, money, finance and debt.-

Multilateral efforts to expand trade through a rollback of protectionism and strengthening of the open trading system could no doubt promote more accelerated and sustained growth in world trade, investment and production.-

But to be successful, trade expansion must provide opportunities for all countries to expand trade, and there should be policy efforts at national and international levels, to strengthen the export capabilities and prospects, particularly of the Third World countries.-

Multilateral efforts must focus on end to the wide array of protectionist measures, many discriminating against the Third World, and ensure secure access to markets.-

Such security of access would be facilitated by a comprehensive safeguards system, involving unequivocal adherence to non-discrimination and unconditional most-favoured-nation treatment.-

With such a system the "stand-still" and "roll-back" commitments could be implemented, and without it there was a danger of drifting into a situation of escalating protectionism.-

On the issue of "appropriate balance" between rights and obligations of participating states in multilateral trade liberalisation efforts, McIntyre said the case for reciprocity among Industrial and Third World countries should not be over-stated.-

In a highly differentiated and unequal world, all countries could not assume equivalent obligations, and there was a valid case for special and differential treatment in favour of the weak, he added.-

This was the essence of the infant industry argument for protection that provided the conceptual basis for Generalised System of Preferences (GSP) and for part four of GATT.-

Since GSP was based on infant industry argument, it could be argued that over time the export industries of Third World countries would grow up and become internationally competitive.-

But there was no link between international competitiveness, in particular lines of production and the criteria of level of GNP being used for graduation.-

Both the concept of graduation and the criteria for application needed wider discussion in UNCTAD, he added.-

Liberalisation of protection in Third World countries could no doubt improve efficiency in the economy.-

But in a country facing severe foreign exchange shortage, import liberalisation would merely change the composition of imports and not its volume.-

It would induce a shift in import expenditure favouring luxury consumer goods at the expense of essential inputs food, medicine and capital eouipment.-

Trade expansion efforts should also go beyond across-the-board measures, and should look at particular sectors, including the commodity sector.-

Without prompt and detailed attention to this sector, it was difficult to see how exports of the majority of low-income and least developed countries, particularly in Africa, could benefit from a new multilateral trade effort.-

Trade liberalisation could help in products like meat and sugar (where Third World exports are hurt by protectionist actions of Industrial countries), in the elimination or reduction of consumption taxes on tropical products, and in tackling problems of tariff escalation and non-tariff measures discouraging the processing of raw materials at source.-

But such trade measures would have to be part of a more comprehensive effort to strengthen commodity export earnings - through strengthened or new commodity agreements making the common fund operational, and enlarging facilities for compensatory financing of export earnings shortfalls and creating an additional commodity-specific facility.-

Dismantling of the Multifibre Arrangement and bringing textiles under GATT rules, and similar actions in other heavily protected like footwear, steel, shipbuilding and automobiles - would also make an enormous difference to the trading environment of the Third World.-

On services, McIntyre said the international debate on the issue would be "more constructive" if it addressed the broad issues of the role of services in the development process, production and trade.-

It was UNCTAD’s preliminary conclusion that services could contribute to the development process of Third World countries by enabling the design of more coherent development strategies.-

International policy decisions on the trade and production of services could well determine whether the Third World countries could seize the opportunity of achieving a more dynamic and broadly-based development.-

"If a proper international framework and orientation can be established, the services issue might well provide an opening for launching an authentic development-oriented international initiative", McIntyre added.-

The expansion of trade also needed a stable monetary environment, and lower interest rates that would facilitate international trade as also investment.-

Hence the need for greater coordination of macro-economic policies among Industrial countries, including a less expansionary fiscal stance in the U.S. and a measure of fiscal stimulus in Western Europe and Japan.-