9:45 AM Oct 17, 1995


Geneva 17 Oct (Chakravarthi Raghavan) -- There is no single recipe or path for development applicable to all countries and UNCTAD should play a role, with integrity of thinking, in promoting a healthy debate keeping in mind the role of the markets and also of the State as proved by the success stories of East Asia and Chile in Latin America, the UNCTAD Secretary-General Rubens Ricupero declared Tuesday.

Ricupero, who was addressing a press conference to outline some of his views and ideas about the relevance and indispensable role of UNCTAD in contributing to the objective of Development, provided an eloquent and strong defence of the relevance of UNCTAD as an international organization devoted to Trade and Development and rebutted the argument that it would be duplicating the work of the World Trade Organization.

While he was for free market and free trade, "free trade should be in all sectors and not selective", Ricupero said, adding: "You can't advocate free trade in financial services and telecommunication services, but not in textiles and clothing or footwear etc. You can't argue for low tariffs in some goods or categories, but deny it for others. You can't say zero tariffs for cocoa or raw coffee, but not for cocoa butter or soluble coffee."

The former Brazilian diplomat and Minister for Environment and then Finance, referred to the fact that though 'trade' was not their focus, the International Monetary Fund had 17 economists dealing with trade, the World Bank had an entire division dealing with trade and similarly the Interamerican Development Bank. There was also the OECD and its division on trade which had an enormous group of economists dealing with trade and which in fact had for years done the preparatory work for the Uruguay Round and was now preparing for the new issues. Yet no one was asking why these organizations were dealing with trade and duplicating the work of the WTO.

The WTO, like the old GATT, he said dealt mainly or mostly with Dispute Settlement, negotiating and framing rules and the implementation of the Uruguay Round agreements. When he was the Chairman of the GATT Council in 1990, 80 percent of the time was taken up with disputes and it would not be very different now either. UNCTAD dealt with none of these, and there was thus no question of duplication.

Ricupero said that he himself personally had good relations with the WTO head, Renato Ruggiero, and both had met and agreed on the need to carry forward their existing cooperation, including in the work of the International Trade Centre (ITC).

Earlier, Ricupero said UNCTAD in its work would have to focus on both the issues of trade that have not been attended to in the Uruguay Round or the earlier Tokyo Round, such as tariff escalation and tariff peaks as well as other issues like Commodities.

Unctad, he said, had its main focus on development and its contribution will have to be to help redefine development issues in the light of new realities. For that, trade, as a means for development, remains a very substantial element.

There have been enormous changes in the world trading system, and he himself (as delegate of Brazil) had been associated with various stages of the Uruguay Round negotiations and as such remained faithful to that commitment and did believe in the markets, free trade and the WTO.

But that was no impediment to see what remained to be done, and keep in mind not everything has been done in trade. For example, Ricupero said, "we are still very much at a loss" on Commodities, an area of fundamental importance for many countries, and particularly Africa where over 60 percent of the work force is engaged in that sector, but which remained neglected, without even economists paying too much attention to it. At a recent meeting he had in New York with a group of economists, all of them were surprised and at a loss when he raised this issue and confessed they had not paid much attention to it for many years.

Besides trade and development, and its contribution through its analytical research work, UNCTAD also helped countries through technical cooperation to meet the challenge of competing in the international economy. He referred in this connection to UNCTAD's work on trade efficiency and trade points -- to help countries to access markets through modern communications. He had just signed an agreement with the Spanish government for a $2 million fund to train some 200 small and medium entrepreneurs from Latin America.

The UNCTAD was asked about his own thinking on development strategies in the aftermath of the failure of the 'Washington Consensus' and its neo-liberal model as brought out by the recent Mexican peso crisis. Ricupero said that without taking any ideological approach, he would say that it was clear that there was a high degree of convergence in the world on two criteria in relation to development: low inflation and low budget deficits as a necessary, but not a sufficient condition for development and on the role of the markets, "but without detriment to the need for a strong and efficient role on the part of the State".

He referred in this connection to the success stories of development in the world - East Asia, and in Latin America, Chile. These were examples of countries where the governmental apparatus was strong and efficient, without meddling in areas where they did not belong. Chile, in Latin America, was the most successful example of a successful development -- built on private enterprise and the market, but at the same having one of the most efficient public sectors on the continent.

"But the second aspect of development," Ricupero said, "is the recognition that development cannot come as a result of a single recipe. You cannot present a sort of ideological approach that would serve all and every country in the world. You have to take into account the enormous diversity of conditions and pursue a development approach suited to the individual needs of countries.

"I believe that if we work with these two elements in mind, we can contribute to this growing convergence. What it does mean is that we should recognise that there are many deficiencies in the present approach."

"As for the Mexican experience," Ricupero added, "different international organizations had different views on what happened in that country and I do not believe that honest differences of opinion should be suppressed in the name of an artificial convergence. We should keep our integrity and say the truth as we see it. It is part of developing a sound approach to development problems and contribute to a dialectical process in which different approaches can be taken into account. In social and economic matters we have no absolute certainties. We have to keep our integrity and promote a debate that should be healthy and influenced by truth."

The next UNCTAD conference to take place in South Africa, he said, would be very significant in that it would mark the reemergence of South Africa as a major player, and would also help attract international attention to the problems of Africa which as a continent was facing major problems.

The agenda of UNCTAD-IX should also provide the international community with new insights into the effects of globalization and liberalization. While these forces have positive and constructive effects on some, there were also countries threatened with marginalization by this process. Globalization and liberalization provided benefits to trade, and to production in manufacture of goods, particularly those with advanced technological inputs.

But these forces did very little for commodities, and in Africa some 75% of the work force is dependent on commodity sector.

UNCTAD, he reminded the journalists, was the only organization dealing with commodities, while most other agencies were dealing with issues like financial services or telecommunication services etc. But liberalization of these latter did not mean very much to countries which were so completely dependent on commodities. If UNCTAD is to be true to its mandate, it has to find some solutions to this question.

Ricupero confessed that he himself was not ready with an answer on what to do on commodities. But very little attention has been paid to it for quite some time. When he was meeting a group of economists in New York last week, and he posed the question about Commodities and commodity problems, the economists were surprised and confessed that they had not paid any attention to it for many years.

While it would not possible perhaps to go back to the era of commodity stabilization agreements, in his view solutions to the problem would have to be varied. In some areas it may need agreements, in others it would have to focus on diversification. Countries dependent on only one or two commodities and export earnings from them, would have to diversify their agricultural economy, and perhaps pay more attention to food production. There was also the question of diversification through higher value added -- something that required finance and technology. Another area for exploration was risk management and futures -- which would not stabilize prices or influence them, but would help countries avoid the dangers of violent fluctuations.

Referring also to UNCTAD's role in the problems of least developed countries, Ricupero somewhat wryly noted that while in 1990 (at the time of the Paris meeting on LDCs), there were only 41 countries or so in that list, now it had grown to 48. Only one country, Botswana, had graduated from that category.

Ricupero also spoke of the practical technical assistance that UNCTAD provided to developing countries, and said not many people knew that during the UN's role in Somalia, UNCTAD was responsible for managing three of that country's ports. And UNCTAD's technical assistance programme in the area of debt, had helped to his knowledge one Latin America to save atleast 20 million dollars in following UNCTAD's advice on the currency to choose for repayment of its debt.

On some of the new issues being talked about for a trade agenda, Ricupero said that much work had been going on in UNCTAD on competition issues as well as on environment. In pursuing these, and through analytical examination and dialogue, UNCTAD would be able to contribute to building an international consensus that would be necessary before any negotiations could take place.

The new UNCTAD also spoke of the greater openness of UNCTAD to business groups, academics and non-governmental organizations and his intention, finance and resource permitting, to making UNCTAD studies, reports etc to be more easily available to these through modern communication channels like internet.