7:37 AM Jan 16, 1996

ASIAN PERSPECTIVES FOR FUTURE UNCTAD WORK

Geneva 16 Jan (Chakravarthi Raghavan) -- The future work programme of the UN Conference on Trade and Development should be along two complementary axes of contributing, from a development perspective, to preparations for the future agenda of trade negotiations and of technical cooperation and advice in areas of trade efficiency and negotiations, investment promotion and enterprise development.

In a message out of the 8th Asian Ministerial meeting, the Asian Group of the Group of 77 and China said that without losing its "important global macro-economic analysis functions", the main thrust of UNCTAD's future work should be along these two 'complementary axes'.

The Asian Regional meeting (9-11 January) at Amman in Jordan was a preparatory meeting for the ninth session of the UN Conference on Trade and Development (UNCTAD-IX) to be held in South Africa (Midrand, near Johannesburg) from 26 April to 11 May.

A regional meeting of the Latin American and Caribbean countries is currently under way in Caracas, while the African regional meeting is to be held in Addis Ababa early in February.

The Asian meeting adopted a 42-para Amman Ministerial Declaration and a detailed 177-para document outlining the Asian views on the substantive items on the UNCTAD-IX agenda.

In their message, the Ministers declared their full commitment to cause of renewed multilateral efforts towards equitable development, economic prosperity and elimination of poverty and marginalization, notably the LDCs.

"Development," the Ministers said, "must remain the foremost concern of international cooperation and a central plank of the work of the United Nations."

Recalling the vital role of G77 and China in promoting the interests of developing countries in international economic negotiations and consensus-building, the Asian group reiterated "that their solidarity and cohesiveness should be further enhanced by establishing more effective methods for coordination among themselves."

The development experience of the Asian region, they said, could be helpful to other parts of the world. At the same time, the persistence of deep structural problems in parts of the region illustrate the magnitude of the task ahead and scale of resources required to overcome them.

The message said: "The assembled Ministers gave their full support to UNCTAD's continued role as the universal forum for intergovernmental deliberations on issues of trade and development. While reaffirming their commitment to modifications introduced at Cartagena (UNCTAD-VIII, 1992), to UNCTAD's methods of operation and to the concept of a partnership for development, they noted that recent far reaching changes in the international environment, resulting in part from such complex phenomena as globalization and liberalization, call for new tools for development and for imaginative new approaches to the inter-related issues at stake."

The Asian Ministers reaffirmed that UNCTAD's central role must continue to be that of a universal forum for intergovernmental deliberations and negotiations, confidence and consensus-building, policy formulation, offering of alternative paths to development, monitoring of implementation and follow-up and technical cooperation.

In reiterating in this regard their commitment (as adopted at Cartagena) to adapting UNCTAD methods of operation, the concept of a new partnership for development and emphasis on search for consensus, the Declaration said: "Consensus-building, however, should not be at the expense of the development needs and objectives of developing countries. This adaptation process should ensure the involvement of Ministers in action-oriented development policy dialogue and coordination."

In an analysis of the world economy and the systems, the Ministers noted that the 1990s continued to witness fundamental upheavals and changes in the international economic system and the major development challenges that faced developing countries in the 1980s still persist. The international economic environment is being weakened by high levels of instability and unpredictability. The rapid pace of liberalization and globalization in the world economy has not only increased the opportunities for growth and development, but also introduced new complexities and risks for developing countries.

There had been decline and stagnation in many developing countries, in particular the least developed countries (LDCs), "and the gap between the developed and developing nations has been further widened, despite structural adjustment efforts and economic reforms undertaken by many of them."

The Asian Ministers sincerely hoped that their partners from the developed countries would use the unique opportunity of UNCTAD-IX "to achieve a positive, realistic and action-oriented outcome from the Conference to reinvigorate development cooperation in the inter-related issues of trade, investment, technology, services, finance, commodities and environment with a view to revitalizing the development of developing countries through multilateral cooperation in the spirit of genuine partnership."

The Ministers were concerned that, while enhancing opportunities for growth and development, "globalization and liberalization also carry substantial risks of marginalization of developing countries and corresponding increases in poverty". Reduction and, ultimately, the elimination of poverty should be a high priority for the international community, they added.

The number of poor and hungry in the developing countries, of which more than two-thirds live in Asia, had doubled over the past several years in much of the developing world, including the LDCs, where social and economic problems have reached crisis proportions. Among the development challenges facing the developing countries, the most pressing are eradicating poverty and promoting transformation of the productive structures of their economies, including diversification of the commodity sector, to enhance international competitiveness.

Special efforts were needed at UNCTAD-IX to tackle the intractable problems of backwardness and poverty in most developing countries, in particular the LDCs, the low-income countries and other structurally weaker economies. This will require developed countries providing urgently an unprecedented package of financial, technological, managerial and investible resources, supported by a very high degree of international cooperation involving both private and public sector institutions.

Improved market access conditions in developed countries for all products from developing countries, including stabilization and strengthening of commodity markets to improve terms of trade of developing countries, would provide the necessary conditions for eradication of poverty and sustainable development and would compliment trade liberalization and restructuring in developing countries, the Asian Ministers said. They noted with serious concern the emergence of incomptability between trade policies in developed and developing countries,

While an increasing number of developing countries are unilaterally liberalizing their trade regimes, trade policies in developed countries were drifting towards greater protectionism and managed trade through such measures as anti-dumping and countervailing duties. As a result the comparative advantage in international competition of developing countries has been further eroded.

The strengthening of the commodity markets, they said, require measures to create conditions for achieving improved real price levels and there was need to inject new vigour into international commodity cooperation. Also importance were diversification, promotion and development of resource-based industries, improved marketing practices and availability of adequate compensatory financing by developed countries for ensuring contribution of commodity markets to development.

The Amman Declaration called for implementation of the Uruguay Round agreements in letter and spirit and for further trade liberalization in products and sectors of interest to developing countries, including textiles and agriculture. The Uruguay Round results will subject all WTO members to similar conditions of competition in international trade. Although there were provisions for differential, favourable and flexible treatment of developing countries, these related mainly to longer time-frames for implementation of general obligations, with some transitional costs for developing countries.

The new multilateral rules of the trading system on agriculture, subsidies, sanitary and phyto-sanitary, technical barriers to trade, TRIPs, TRIMs and services, the Ministers said, should not constrain policy options of developing for achieving developmental goals in agricultural, industrial and service sectors and for increasing competitiveness of their exports.

The Ministers were concerned that the use of trade remedies and other measures, as well as resort to unilateral and extra-territorial measures could, in effect, limit the trading opportunities of developing countries.

They requested UNCTAD to provide technical assistance and recommend appropriate measures for countries adversely affected by the implementation of the Uruguay Round to enable them to overcome the negative effects.

They expressed their deep concern over the continuing use of coercive economic measures against developing countries, inter alia through unilateral economic and trade sanctions which were in clear contradiction of international law, and objected to new attempts at extra-territorial application of domestic law, which was a flagrant violation of the principles of the UN Charter and the WTO rules.

The multilateralization and liberalization of the world economy promised by the successful conclusion of the Uruguay Round, they complained, was taking place at a slow pace in areas of interest to the developing countries. Protectionist tendencies were increasing in the developed countries through linking trade to non-trade issues such as concern for human welfare and environment. And the economic troubles of the developed countries were being blamed on developing countries on the unfounded pretext of cheap imports. The Ministers were also concerned over the slow opening up of markets in developed countries in sectors where developing countries have comparative advantage.

Referring to the built-in agenda for future trade negotiations -- agriculture, trade in services, parallel negotiations on investment and competition policy in TRIMs -- the Asian Ministers said UNCTAD-IX should provide a forum for a better understanding of these inter-related issues in order to clarify the interests of developing countries and policies and measures needed to protect them.

The inclusion of movement of natural persons as a mode of supply of services in the Uruguay Round General Agreement on Trade in Services (GATS) was a major step forward. But the limited character of commitments on this was a matter of concern for some developing countries and this must be addressed. The Ministers called for renewed steps to bring about progress in these areas, taking into account the principles of transparency and non-discrimination.

"A balanced approach is needed which will liberalize movement of labour services in tandem with further liberalization of investment, so as to enable developing countries to benefit from globalization."

Also, since the services sector of most developing countries is at an early stage of development, developed countries should assist them in fostering development of this sector.

Calling for early steps to achieve universality of the WTO, the Asian Ministers said developing countries seeking accession and which are in early stages of integration into the international trading system should be given every opportunity to achieve accession on balanced terms consistent with their levels of economic development, their trade, financial and development needs.

"In particular, WTO members should refrain from placing excessive demands on these countries which are onerous and could retard their development or which are not covered by the provisions of the WTO agreements," the Amman Declaration added.

The ability of developing countries to participate effectively, exercise their rights and meet their obligations in the WTO will be an important determinant of their further integration into the international trading system. In this regard there was a need to strengthen capacity of developing countries in the areas of trade development, policy formulation and negotiation and institutional adaptation. The international community should extend appropriate technical cooperation to WTO members and non-members.

The Ministers emphasized the continued validity of the Generalized System of Preferences (GSP) in the post-Uruguay Round period and urged donor countries to avoid policies and measures that would render GSP less effective. They were also concerned over graduation mechanisms in certain schemes excluding from the purview many developing countries yet to achieve a significant level of industrialization and development. They also opposed inclusion of conditionalities, positive and negative, in GSP schemes and urged strengthening of such schemes through simplification of procedures, particularly in rules of origin. UNCTAD was also requested to study possible extension of GSP concepts into new areas including services and investment.

On debt, the Asian Ministers expressed concern over the slow implementation by the Paris Clubs of the Naples terms and urged the creditors to revise their eligibility criteria to include all low-income countries with debt servicing difficulties to the list of countries to benefit from largest debt reduction.

In view of the interlinkages between trade and debt, UNCTAD should hold consultations on a regular basis with other international organizations, in particular the WTO and the Bretton Woods institutions to study comprehensively the interaction between trade and debt.

UNCTAD-IX they added provided an appropriate forum to examine the debt problem facing developing countries in order to make effective, equitable, development-oriented and durable solutions and help them exit from the rescheduling process.

The Asian Ministers noted with concern the continuing volatility in international money markets, particularly of short-term capital flows and exchange rates and felt that increased vulnerability of developing countries after liberalization and globalization called for appropriate measures to mitigate the adverse effects of volatility.

To benefit from increased mobility of capital, developing countries must have adequate technological infrastructure including energy, telecommunications, transport, water and skilled personnel. They were concerned that the technological gap between developed and developing countries was widening and the changes in patterns of international competitiveness being brought about by the new technological revolution and globalization process were placing developing countries at a further disadvantage.

The Amman declaration called on developed countries to support efforts of developing countries to build up their research and development, including through unhindered access of developing countries to new and emerging technologies. Restrictions on transfer of technologies, material and equipments needed by developing countries in their development process should be removed without any selectivity and discrimination.

On Environment issues, the Asian Ministers expressed concern at increasing use of environment conditions as a disguised form of protectionism in the developed countries. The priority of developing countries was development, including issues such as poverty alleviation, investment in the social sector and preservation of their natural resource base. Externally imposed environmental concerns would adversely affect the development process and in turn defeat the objective of promoting environmental protection.

Environmental problems with cross-border effect should be addressed through the framework of multilateral environmental agreements which take into account special needs of developing countries. Environmental standards in sectors of interest to developing countries should be arrived at in consultation with the producing countries. Environmental standards for developing countries should be promoted through positive measures, not trade-restrictive environmental measures.

Any actions at national and international levels, as well as in evolution of international environmental law and economic and regulatory tools should take into account special needs and concerns of developing countries. International cooperation in this ensure should ensure that the burden of any negative effects on growth or threat from measures to address global problems should not be disproportionately borne by developing countries.

The Ministers in other parts of the declaration:

* noted the open and flexible nature of recent efforts in economic cooperation among developing countries tended to be supportive of the global economy, and the increased openness of cooperation among developing countries and with developed countries create more viable economic space in the global economic economy;

* reaffirmed the great importance of monetary and financial cooperation among developing countries and with developed countries, need to encourage cooperation in trade-financing and to underpin further expansion of South-South trade, and stressed the need to make more effective the Global System of Trade Preferences (GSTP) among developing countries;

* need for regional trading arrangements to be outward oriented and avoiding the risks of trade and investment diversion detrimental to interests of developing countries; and WTO rules and regulations on regional trading arrangements should address the economic effects of such agreements in a comprehensive manner and UNCTAD-IX should identify conditions necessary to ensure regional agreements become more open and outward-looking and see how they might enhance development of developing countries,

* agreed on need to address risks of marginalization through international cooperation, increased ODA flows which were showing a downward trend; and with special focus on actions to support the LDCs through aid and an intensified policy commitment.