UNCTAD-VIII: NORTH-SOUTH GAP – IN PERCEPTIONS, PRIORITIES.

Feb 19, 1992

UNCTAD-VIII: NORTH-SOUTH GAP – IN PERCEPTIONS, PRIORITIES.

CARTEGENA DE INDIAS, FEBRUARY 17 (CHAKRAVARTHI RAGHAVAN) -- As the eighth session of the UN Conference on Trade and Development (UNCTAD) moved into its second week, the statements in the plenary has highlighted a widening North-South gap, in perceptions and priorities, on the international development agenda, a gap that would make any North-South dialogue even more difficult than so far.

The first working group of the Conference was meanwhile discussing in detail the draft text on institutional questions, while the second working group had before it "chairman's texts" on the various issues drawn up in the light of the discussions here last week on the Geneva texts before it.

Some 70 speakers, representing countries, international and intergovernmental organisations and non-government organisations went to the podium to share their preoccupations and their view of the world as is and ought to be and what UNCTAD should be doing.

There were repeated references to the need for UNCTAD adapting itself to the new realities with several ICs placing the changes to be made in UNCTAD in the overall context of the restructuring exercise in New York.

But while most developing countries seem concerned over Secretary-General Boutros Ghali's radical changes in secretariat and downgrading of economic and social sectors - which one of them privately described as a coup d'etat against the General Assembly's parliamentary authority - the only reference came from India.

Indian Commerce Minister, P. Chidambaram in an indirect criticism of Boutros Ghali's actions, said: "UNCTAD is able to present an integrated and comprehensive policy analysis and advice in the context of global interdependence. Its importance has increased after the recent decision of the new Secretary-General of the UN to disband many special bodies created in UN headquarters to deal with specific aspects".

Earlier he had said that the institutional strengthening and revival of UNCTAD was certainly one of the key objectives before the Conference, but the adjustments were just "the means to fulfil the agenda of UNCTAD-VIII and beyond, and they will not alter the fundamental mandate of UNCTAD".For the Industrial Countries, apart from the so-called institutional issue to which they gave precedence (with the U.S. making it virtually the sole issue), the agenda is all about "good governance" - privatisation and withdrawal of the State from economic activities, plural democracy and human rights (meaning political and civil rights).

Few in the Third World quarrelled with these - even if they did not agree on all the details or the emphasis or their mix or felt that other things (resources, technology, and access to markets, solutions to the Third World's indebtedness and to the commodity problems) too were important.

And in accepting its own responsibility for "good governance", the countries of the South also underscored the imperatives of international "good governance" - a subject on which there was little acknowledgement or awareness from the North.

The Dutch were one of the few that acknowledged the North's own responsibility in terms of good governance and environment.

Good government, Dutch Minister Foreign Trade minister said, is also a responsibility of ICs which had a particular responsibility for ensuring sustained recovery of the global economy, for increasing market access for Third World exports and for ensuring that their environmental problems are simply not transferred to the South.

Environment is a global problem, and the ICs have the main responsibility for damage done to environment and should hence set an example by adopting environmentally protective, but not protectionist, standards.

The Norwegians were another and spoke of good governance applying not only to developing countries but developed countries too which had special responsibility to create a global economic environment conducive to growth and social advancement in the South. Though good governance in the North could not be a substitute for good policies in the South.

There were references from the North to the global problems of drugs and money-laundering, and the need for governments in the South, as part of good governance, to deal with these.

But there was no corresponding weight for "good governance" in the North on these or acceptance of the fact that the "demand" for drugs that the "suppliers" in the South are meeting comes from the North or that the drug money laundering by the drug runners from the South is facilitated and made possible by the transnational banking system and its capacity to electronically move money across borders several times a day to escape national supervision or control, a capacity that will be augmented by the liberalisation of trade in services that is being pushed in the Uruguay Round.

The advice from the North on good governance and fighting corruption also came in some cases with a scarcely concealed arrogance, all the more striking since in the very same countries not a week passes without front-page media reports of the corruption and influence peddling in the public and private sectors, made possible by miss-governance.

Greece and Norway were two, which focussed on the problems of the commodity sector. Several others who did refer suggested improving transparency in the markets and use of market instruments for hedging as a solution to the problems - when in fact the experiences in the past of some countries who had tried this route (Brazil in coffee, Malaysia in tin) had been that the rules of the game in the markets are quickly changed when the instruments work against the North and its operators on the markets.

Greece called for resumption of activities in UNCTAD (being more qualified than any other international forum) to improve producer-consumer dialogue and transparency to promote an equitable solution to the commodity problem, underscoring the "important central role" UNCTAD had played in the past, and should continue in the future.

Norway pointed out that world market prices for commodities had long fluctuated around historical lows and the problem could not be overcome without increased diversification, local processing and market access. International commodity cooperation had to be strengthened while existing mechanisms for compensatory financing should be reviewed and strengthened.

The ICs all called for the conclusion of the Uruguay Round - pointing both to the adverse consequences of failure and the purported benefits in terms of market access for the Third World - but ignored or glossed over the reasons for the deadlock and possible failure: the stances of the ICs and major trading nations among them and the unwillingness to undertake adjustments that they so freely preach to the South.

Most of the interventions from the North also emphasised the role of UNCTAD in substantive research and analysis, but essentially in terms of national experiences and domestic policies of the countries of the South.

Third World countries in their interventions agreed on the need for changes in UNCTAD's functioning and focus, but placed more emphasis on the substantive problems and issues: resources for development, the continuing and debilitating debt crisis and need for more effective solutions, the issues of trade and market access and rules, the role of services, technology and commodities. They sought to place the changes in UNCTAD's work or new orientations in this broader context.

India's Commerce Minister in making this point strongly, said "We should not believe that institutional adaptation of UNCTAD is the sole aim of our endeavours here at Cartegena. It is only a means to the end, which is a more effective and sustainable dialogue between North and South. We are required to show concrete progress in the substantial areas in terms of intergovernmental commitments by the developing and developed countries. Without these commitments, made here and now, we would have simply gathered, talked and diapered. The message that must go is that the nations of the world assembled here, made commitments to each other and renewed the mandate of UNCTAD".

The South Korean Minister for foreign affairs, Lee Sang-ock, said the new challenges of the post-cold-war required UNCTAD to adopt a new approach and avoid being a divisive forum between North and South. On the forthcoming UNCED summit, Lee said the threat of global environmental degradation needed a full and practical, not rhetorical, partnership between developed and developing nations. UNCED would be a test of that partnership and should become a forum for innovative funding and technology transfer mechanisms.

Algeria felt that given its mandate and universal membership, UNCTAD was a privileged forum for questions of trade and development and seeking agreed solutions to world problems. It should not be marginalised or weakened; rather its capacities should be strengthened.

Kuwait felt that UNCTAD which was part of the economic arm of the UN, had to play a more positive role in particular to protect the interests of the developing countries in the ongoing multilateral negotiations especially the Uruguay Round where developing countries lacked necessary negotiating power vis-à-vis the existing large economic actors. This, the Kuwait delegate said, was evidenced by the fact that developing countries are being asked to open their markets for trade in services when their own merchandise exports to developed countries were still facing numerous barriers. This would negatively affect already weak economies. So for the time being liberalisation of trade in services should be limited to developed countries and interested developing countries according to the degree of their economic development.

OECD Secretary-General Jean-Claude Paye said that the definition and enforcement of a new world order would not be easy. Aspirations to identity - national, ethnic, cultural, religious - which had been repressed for far too long were expressing themselves strongly and even violently. Care must be taken that affirmation of distinct identities did not develop into nationalistic confrontations. For the OECD classification of countries as "developing", "in transition" or "developed" had lost its meaning.The IMF Managing Director, Michel Camdessus, said that while the momentous changes in the political an economic framework had brought new opportunities (which would take time and effort to bring them to fruition) there were also many risks, which were immediate and were sufficiently serious that they could prevent reaping the potentially rich harvest of efforts.

While the spread of democracy, virtually worldwide, was welcome, they should always remain conscious how vulnerable democracy was: to stay stable it needed the firm foundations of a sound economy showing progress.

The ending of the Cold War had opened up the prospect of a more secure and peaceful future, but simultaneously one saw everywhere "a resurgence of anachronistic forms of nationalism, creating in many quarters of the world the danger of intense regional or local conflicts".

And while the widespread improvement in economic policies in many developing countries, and their growth-oriented adjustment programmes were good and would bring benefits, there was always an initial period of sacrifice and carried a risk that the will might fail - due to political setback or "adjustment fatigue".

There were also the opportunities and risks connected with the process of globalisation. The more open and more integrated the global economy, in which by definition countries are more inter-dependent, also carried some serious risks: risks of instability, risks of marginalisation about which concerns were being expressed in many developing countries, the widespread worries because of difficulties in completing the Uruguay Round and in the area of foreign financing where many developing countries felt threatened.

Warning too of the risks of transition, Camdessus added:

"If the countries undertaking structural adjustment for growth, or are in transition to a market economy, do not persevere with sound policies or if the rest of world fails to extend sufficient assistance, then they will fail .... because they will not be able to deliver to their people the progress they expect in terms of higher growth and better living standards ... a failure that will entail the danger of losing benefits of globalisation, undermining democracy itself, and ultimately endangering the prospects for a more peaceful cooperative world order".

"We should not lose sight of these risks, particularly as present circumstances are not very propitious. We cannot expect the world economic environment to be very buoyant in the years ahead: the growth rates of major industrial countries are projected to continue to be modest for several years. Slow growth at best in the industrial countries will inevitably constrain also the scope for expansion in the develop world; and it would threaten to intensify the pressures in favour of protectionism, particularly if the Uruguay Round were to fail".