BOLD BREAK WITH DECADE-OLD POLICIES NEEDED

5:42 AM Sep 20, 1994

BOLD BREAK WITH DECADE-OLD POLICIES NEEDED
Geneva 19 Sep (Chakravarthi Raghavan) -- "A bold break with the policies pursued for over a decade is necessary if the pressing problems of global inequity, growing impoverishment and increasing unemployment are to be tackled", the President of the Trade and Development Board declared Monday at the opening plenary.

Ambassador Richard Pierce of Jamaica made this declaration, soon after his election, in an address to the Board's 40th session which opened this morning.

The Trade and Development Report, Pierce said, had succinctly summarised the global economic trends: world emerging from recession, after slow growth of four consecutive years, but with a "hesitant and uneven" process stemming mainly from one geographical region -- the economies of Eastern and Southeastern Asia.

In underlining the solutions advocated by the TDR, Pierce said only if the industrialized countries departed from their supply-side, restrictive approaches to macro-economic management, and promoted growth by a process of demand stimulation would the decade-old efforts of the developing countries to open their economies to world markets would bear the promised fruit.

Referring to the TDR's "well-researched analysis" of role of governments in steering development, the Board President said the conclusions drawn from the East Asian development experience "may appear unfashionable in that they substantially qualify widespread notions as to what constitutes appropriate development policies".

But the analysis forcefully underlined the role of the State in triggering and guiding the process of diversification and industrialization in successful developing economies. The TDR analysis and conclusions had been corroborated by the 30th anniversary issue of the UNCTAD review which had a selection of country-case studies reassessment of policies -- BOP policies pursued in Latin America and macroeconomic adjustments in subs-Saharan Africa.

"It is obvious from UNCTAD's work on these subjects", the Board President said, "that the divergent socioeconomic and political conditions prevailing in developing countries call for an equally diverse and differentiated spectrum of economic policies. (It) highlights the validity of pragmatic approaches to economic policy-making... (and) to 'rethink economic policies' learning from experience."

The issue of sustainable development, Pierce said, was gaining prominence in intergovernmental fora -- "not least because there is a growing recognition that developing countries face a dilemma in that they must at one and the same time endeavour to preserve the environment, ensure growth and overcome poverty, while also restoring internal and external balances".

But there was a danger that environmental regulations and criteria could come to be used as a new barrier to trade, further jeopardizing developing country competitiveness where processes or products did not meet environmental standards set by the more affluent countries.

"If trade is to be a means of achieving sustainable development, it is essential to mitigate any negative impact of environmental policies on the market access of developing countries."

On the conclusion of the Uruguay Round, Pierce stressed the importance of the Marrakesh agreement being ratified by end of the year and the developed countries confirming their participation in the process of creating a more transparent international trading system.

But the efforts should not end there, the Board President said.

The process of trade liberalization engendered by the Round threatened to widen the gap between successful developing countries, those that had succeeded in establishing a firm economic base and in penetrating world markets, from a large number of disadvantaged countries - those primarily exporting primary commodities or dependent on international markets for food supplies.

Some 80 Third World countries -- 30 in Latin America and 35 in Africa -- remained dependent on non-primary commodity exports to the tune of 50% or more, with all that this implied for generating finance for development or mobilizing investment flows.

While in a few of these countries political instability was at the heard of the problem, and progress could not be achieved in them without establishing peace and democracy, "in the majority of 'late developers' it is the persistent unfavourable international environment that is contribution to a situation of 'under-development' and poverty."

The late-comers or late-developers were finding it difficult to emulate the more successful countries. The discipline of the new trade regime, coupled with the unilateral trade liberalization measures adopted by many of the developing countries "has reduced their manoeuvring power" with regard to their domestic economic policies, making it increasingly difficult to create a vibrant productive in the disadvantaged countries.

"Hence, it is our task at this session of the Board to recommend that the 'development dimension' is incorporated into multilateral rule making and that the disciplines agreed to at Marrakesh are implemented.

"Remaining escalation in tariffs on products of vital export interest to commodity-based economies is one issue that needs to be tackled as we continue the debate on the international trading system. Further improving market access for all developing countries is another. Negotiating a mechanism to compensate net losers in the Uruguay Round is a third. A safety net is required during the process of adjusting to the liberalized world trade order which would cushion the impact for disadvantaged economies: the commodity-dependent countries, net food importers, severely indebted countries and least developed countries who are not in a position to compete effectively.

"Hence developing countries continue to look to UNCTAD for support in their endeavours, both at level of negotiating improvements in the international trading system, and in terms of their enhancing their institutional and human resource capacities to enable them to benefit from the Uruguay Round Agreements."

In an introductory statement, Carlos Fortin, officer-in-charge of UNCTAD, stressed on the TDR's messages the need for the industrialized countries to solve the problem of global demand deficiency, on the role of government and business in successful growth and adjustment strategies and the initial assessment of the UNCTAD secretariat on the results of the Uruguay Round.