LIBERALISATION AND REFORM IN SOUTH, PROTECTION IN NORTH

Mar 9, 1989

LIBERALISATION AND REFORM IN SOUTH, PROTECTION IN NORTH

GENEVA, MARCH 7 (IFDA/CHAKRAVARTHI RAGHAVAN)— A sharply contrasting picture of growing protectionism in the north, often directed against third world exports, and movement towards trade-policy oriented reform in the third world was presented Tuesday by UNCTAD Secretary-General Kenneth Dadzie.

Addressing the trade and development board, Dadzie said: "to press for policy reform in developing countries, while holding back on finance and technology and maintaining trade protection, is in contradiction both with logic and with these goals".

In a reference to the impasse in the Uruguay round, Dadzie said that the divergences at the Montreal mid-term review meeting suggested "the need for a better recognition both of the importance of the development dimension in the negotiations and of the key role therein of developing countries".

"It also shows," Dadzie added, "that progress is possible, as in the case of tropical products and services, when there is acceptance that the legitimate interests of developing countries would have to be accommodated."

Dadzie said that trade was the raison d’être of UNCTAD and "the backbone" of its mandate, and its purview encompassed all trade flows, classified by product, by direction, and in relation to different national systems of economic and social organisation.

Within this universal vision, however, "the focus of UNCTAD was not on international trade as an end in itself but on its promotion as an instrument of accelerated development."

Hence UNCTAD sought to contribute to the creation of a policy instrument which favoured expansion of trade of third world countries in particular and enhance international cooperation to improve the systems, structures and arrangements conditioning that trade.

This development focus obliged UNCTAD to get to grips with the hard realities of international market place.

While conventional trade theory held out the comforting prospect of gains for all in the long run, "the market in fact producers winners and losers".

"The odds are that the winners in any transaction are those who start from a position of strength. The efforts of such weaker parties need stronger support if they are to make headway".

"In this context, the main tasks of UNCTAD are to open opportunities for weaker trading parties to secure footholds in international markets and to maintain a spotlight on the development dimension of international trade policy".

Documentation before the board, based on extensive secretariat work, showed that neither sustained economic growth nor the commitments renewed in launching the Uruguay round had broken the back of protectionism in the industrialised countries.

Non-Tariff Measures (NTMS) had been renewed and new ones introduced. Export subsidies, "voluntary" export restraints and surveillance measures were on the increase and so were uses of anti-dumping laws for protectionism purposes.

These measures were often directed specifically against imports from the third world and in any case had an adverse impact on them.

Also, the generalised system of preferences had suffered further erosion.

This picture contrasted with the widespread, though varied movement, in the third world towards trade-oriented policy reform.

But these efforts, whether voluntary or imposed by financial stringency, could not succeed without a supportive combination of financial and technological inflows and export expansion.

"If there are to be gains from trade as theory indicates, there must be positive structural adjustments in the major markets for developing countries, induced by government policies as well as market forces".

Such adjustments were essential if interdependence in international economic relations was to be so managed as to transmit positive impulses, in contrast to past experiences, and if underlying realties were to move towards greater symmetry and equity.

"But to press for policy reform in developing countries, while holding back on finance and technology and maintaining trade protection is in contradiction both with logic and these goals".

Dadzie noted in this regard that the board review last year on protectionism and structural adjustment had led to some convergence of views. He hoped this year these convergences could be converted into agreed conclusions.

On trade in services, Dadzie said that the strategic issues for the third world countries involved identification of the best mix of national policies, including selective liberalisation of service imports, which would maximise the contribution of service sectors to the achievement of their national development objectives.

Also, they had to negotiate an international policy framework for the expansion of their service exports.

For third world service export strategies to succeed, they would need to improve both access to information and data networks and access of their nationals to foreign markets for purposes of delivering services.

Third world countries would also need to develop and upgrade their service infrastructures.

"Any multilateral contractual framework on trade in services should accommodate these legitimate interests", Dadzie added.

In their general statement to the board, the G77 expressed their deep concern over "the deteriorating trading environment, particularly against the developing countries".

Terms of trade of third world countries had worsened in the 1980’s. Commodity prices continued to decline and had reached a historical low, showing a high degree of instability and unpredictability, while prices of manufactures imported from industrialised countries continued to rise.

Access for third world exports in industrial countries markets were being further hampered by tariff and non-tariff measures as well as protectionist measures and new restrictions.

Industrialised countries, the G77 spokesman, Jose Luis Chea-Urruela of Guatemala declared, had to sincerely strive to redress and eliminate in real terms protectionism measures, and effectively fulfil their standstill and rollback commitments.

"It is deplorable that almost all NTMS that were to disappear after the adoption of the Punta del Este declaration have been renewed, and new trade distorting measures have been introduced".

Underscoring the importance of UNCTAD closely following developments in the Uruguay round, and in the post-Montreal phase, the G77 spokesman said that the multilateral rules and principles sought to be evolved, particularly in new areas, should not result in retarding the trade and development prospects of the third world.

Trade liberalisation through the Uruguay round should not be negative through inaction and neglect of issues having a major impact on trade: transfer of technology, control of restrictive business practices, and improvement of the international monetary and financial system.

In addition to the protectionist measures directed against their exports, third world countries also faced acute debt problems.

All this made it essential to reactivate the dialogue between industrial and third world countries, and adopt an integrated approach to money, finance and external debt, and trade and development.

For such a dialogue to be effective and meaningful, it must be comprehensive and take due account of the preoccupations and concerns of the third world.

On the issue of environment and sustainable development, the G77 spokesman underscored the primary responsibility of the UN environment programme on these issues.

Any activity in UNCTAD on this issue could only be considered "if additional resources can be made available".

Also, he said, the responsibility for preservation and improvement of the environment fell primarily on countries that, in the process of their development, industrialisation and technological advancement had contributed in greater measure to the degradation of the world environment.

The environment problems in the third world were usually the result of the economic difficulties they faced, such as lack of equity in terms of exchange, falling prices for their exports, foreign debt and unfavourable international economic environment.

Third world countries were being used as dumping sites for nuclear, chemical, toxic and other wastes, without respect for safety or environmental considerations.

Environmental protection was being increasingly used to place new obstacles in the way of third world development and invoked to justify regulations which were obstacles to international trade.

The G77 also rejected the utilisation of environmental considerations as new forms of conditionally.

The different forms of destruction and contamination of the environment were the consequences of activities and operations originating often outside the third world, which faced the risk, cost and effects of such actions.

Hence the third world stress on reactivation of the development process, by removing external constraints to such reactivation, and a supportive external economic environment, as the appropriate way of ensuring environmental protection.