8:09 AM Oct 9, 1995


Geneva 9 Oct (Chakravarthi Raghavan) -- The UN Conference on Trade and Development has a continued useful role to play in trade, both in helping developing countries and transition economies to take advantage of the new opportunities created through the Uruguay Round and ensure, through policy analysis and consensus-building, that the development dimension does not get lost in the built-in future negotiating agenda of the WTO as well as those arising from the Marrakesh Ministerial meeting, the new Secretary-General of UNCTAD declared Monday.

The former Brazilian diplomat, Mr. Rubens Ricupero, who took over the job on 15 September, was addressing the first session of UNCTAD's Ad Hoc Working Group on Trading Opportunities in the New International Trading Context and took the opportunity to spell out his views about the role of UNCTAD in the new context of the establishment of the World Trade Organization.

It was Mr. Ricupero's first opportunity to interact with delegates. Soon after the confirmation of his appointment by the General Assembly and taking over, Ricupero has been at New York, first to meet with the UN Secretary-General and the other administrative preoccupations due to the financial crisis of the UN, as well as attending the High-Level meeting of LDCs.

Ricupero told the UNCTAD delegates: "It is my strong conviction that UNCTAD has a continued useful role to play in trade. Trade has been the raison d'etre for the creation of UNCTAD back in the 60s. And even if the world has changed considerably since then, and we have seen with great joy the establishment of a new organization that deals with trade matters, the WTO... despite all this, UNCTAD has still a central role to play in the field to complement the WTO's work." "My only motivation to take up this office is to try to help this organization be relevant and helpful to the international community. I have no other personal objective than this one," Ricupero said.

The achievement of this objective would be the result of collective efforts (of the secretariat and the governments) and the answers to the questions they should put to themselves every day: "in what way can we be relevant and how what we are doing here is really helpful to the countries... in the international context ... in matters relating to trade and development"

The Ad Hoc Working Group, Ricupero said, is to identify in the "new context", namely the strengthened and extended set of multilateral trade rules emanating from the Uruguay Round and the establishment of the WTO, the new trading opportunities arising from the implementation of the Uruguay Round agreements in particular sectors and markets.

The secretariat documents before the group deals with all the sectors, but with particular focus on agriculture and textiles and clothing, which are the subject of separate multilateral trade agreements under the WTO, and focus on some specific questions on how the ability of developing countries and transition economies to take advantage of the agreements can be enhanced.

Stressing the importance of these two sectors for developing countries, Ricupero said that "while the overall result in these two areas is unequivocally positive, there may be many pitfalls facing the actual translation of the commitments into concrete trading opportunities"

On the agricultural accord, Ricupero said few could have foreseen, whether at Punta del Este when the negotiations were launched or at the time of the 1988-89 mid-term accord or the failed 1990 Brussels meeting that the Uruguay Round would result in an agreement virtually eliminating all non-tariff barriers, binding all tariff rates in the sector and placing disciplines on support measures.

"What has been achieved is a binding standstill and rollback, which provides a firm basis for the continuation of the process to an open, market-based world agricultural economy".

Similarly the agreement to terminate the discriminatory and restrictive MFA regime that had distorted world trade in textiles for over three decades, and had particularly penalized the developing countries, was one of the greatest successes of the Uruguay Round.

The MFA had set a bad example of 'managed trade' and was emulated in the proliferation of 'grey area' measures threatening the very integrity of the system. In earlier GATT rounds, negotiators from some countries were expressly precluded from touching the textile regime and each successive renewal of the MFA had resulted in an intensification of its restrictive and discriminatory character.

"The Agreement on Textiles and Clothing thus constitutes a complete reversal of direction, which illustrates the manner in which the Uruguay Round has served to restore the credibility of the multilateral trading system."

"However," the UNCTAD head warned, "one should not ignore the complexity of these agreements and the fact that they leave a considerable margin for interpretation and for the retention and reintroduction of protective devices... it is necessary to focus on these, to identify the actions required to ensure that the opportunities presented by these agreements are realized and to prepare the basis for the continuation of the process of liberalization in the future.

"In short while the overall result of the Uruguay Round is unequivocally positive, there may be many pitfalls facing the actual translation of the commitments into concrete trading opportunities. If countries are not aware of these pitfalls, they risk not drawing the expected benefits from these agreements."

Apart from these particular sectors, the outcome of the Round has also resulted in important liberalization of tariff rates, and a notable increase in the proportion of imports enjoying duty free treatment in major markets. There has also been a significant tightening of the multilateral disciplines and thus directly addressing the perceived erosion of the multilateral system. The dramatic extent of tariff reduction and binding in developing countries also provided new opportunities for their mutual trade as well as for exporters in the developed world.

Ricupero saw this work of continuous analysis of trade issues as the key to the process of integrating developing countries and the transition economies more fully into the trading system -- one of the major challenges set for UNCTAD-IX.

The objective was to support these countries in their policy shift towards reliance on trade expansion as a major instrument for development and economic reform.

"Developing countries which participated in the Uruguay Round," Ricupero stressed, "undertook more stringent obligations in the WTO Agreements, both with regard to trade liberalization and rule-making areas, that will affect their national policy options, in the belief that the longer term gains would compensate for the short term sacrifices. The differential and more favourable treatment in their favour is more narrow, and expressed in the form of time-framed transition periods for assuming full obligations or more flexible thresholds.

"Fuller integration of developing countries and countries in transition into the international trading system would necessitate that the momentum towards trade liberalization is continued and any protectionist trends and double standards are offset by effective application of the WTO rules and disciplines by major trading partners."

Developing countries, the UNCTAD head said, would have difficulties in meeting their obligations within the rather stringent time-periods laid out in the agreements. They might also face problems in effectively defending the rights they have acquired as a result of the same agreements so as to enjoy fully the new trading opportunities and benefits that would support their development strategies.

Substantial efforts, he added, would be needed to identify their trading opportunities and to enable them to take full advantage of such opportunities, to strengthen institutions for trade policy formulation, coordination and implementation, to build negotiating capacities for effective participation in multilateral, regional, and bilateral trade negotiations, to adapt domestic trade legislation to the new international trading system and provide them access to trade information. A programme for such capacity building should be considered a key for integrating these countries into the trading system. The threat of marginalization from the benefits of globalization and liberalization was most acute for the least-developed and net-food importing countries. The initial difficulties of these countries in adapting to the results of the Uruguay Round should be mitigated through international support, as agreed at Marrakesh, and the specific components of a safety net mechanism would need to be established. Some of these countries would also face greater competition in traditional export markets due to erosion of preferential tariff margins.

Hence the identification of export opportunities for these countries warranted special attention -- with a view to developing supportive measures, including those addressed to raising the level of competitiveness and export capacity to ensure that these countries were able to benefit from such opportunities.

There was also need to bear in mind the situation of non-WTO members, Ricupero declared.

The accession process to the WTO, he noted, had become a "complicated and time consuming process", given the increase in scope and intensity of the multilateral trade obligations.

"It would seem important," he added, "that some formula be found so that these countries, many of which are going through the difficult process of transition to a market economy, are permitted to benefit from the opportunities of the Uruguay Round agreements while the accession negotiations are in progress, so as to avoid a situation under which such countries would find themselves negotiating under a duress."

In addition to these difficulties, the developing countries and the transition economies would also have to deal with the "built-in agenda for future negotiations", under the Multilateral Agreements themselves. Many of these agreements - such as TRIMs, GATS and Agriculture -- provided for new negotiating initiatives within five years of WTO's entry into force, by 1999 -- only three years from UNCTAD-IX.

"The international trading community will be confronted with the need to decide upon the approaches to be taken in pursuing these initiatives and countries will have to begin to prepare themselves for future negotiations."

At Cartegena (in 1992), UNCTAD had been mandated to carry out the important responsibilities of policy analysis and consensus building in the area of international trade. With the conclusion of the Uruguay Round, and in the light of the new issues raised, both in the Multilateral Agreements as well as the final outcome of the Marrakesh Ministerial meeting, "we have again entered a period where the consensus as to the appropriate course of action has not been defined in any text -- in other words in a period of search for consensus".

"The enormity of the task facing the WTO in the implementation and enforcement of the Multilateral Trade Agreements is now becoming evident, but the policy analysis and consensus building process for the future is a continuing activity, taking place at the international, regional and national contexts, in both official and non-governmental bodies," Ricupero said.

"UNCTAD's role," he added, "is to ensure that the development dimension does not get lost in this process and I am determined to ensure that UNCTAD will live up to its responsibilities which have become more onerous in the new trading context of globalization and liberalization."