May 27, 1987

UNCTAD-VII: NORWAY UNVEILS SOME IDEAS FOR CONFERENCE.

GENEVA, MAY 26 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The Government of Norway is planning to explore at UNCTAD-VII possibilities for bringing the second account of the common fund into as an interim arrangement, as well as measures for a "managed write-down" of the foreign debt of the poorest and sub-Saharan African countries.

These and other ideas of the Government of Norway were unveiled last week at Oslo at a meeting with non-governmental organisations (NGOís) and the media.

The meeting in the Norwegian Foreign Office was addressed by the Norwegian Foreign Minister, Thorvold Stoltenberg and the UNCTAD secretary-general, Kenneth Dadzie.

Outlining some of Norwegian ideas, Stoltenberg underlined that there was no alternative to international cooperation if further deterioration to the development prospects and the environment, on which all life depends, was to be avoided.

"The upcoming UNCTAD-VII will be a major international event and we hope that the most important message which will come out of the Conference is that multilateral cooperation is vital, and that it serves the enlightened interest of all", he declared.

Dadzie underscored the importance of revival of the world economy in the interests of the development in the south and employment in the north, and said that NGOís could bring their influence to bear in their countries on their governments in favour of collective efforts towards these objectives.

Stoltenberg said Norway had always regarded UNCTAD as a vital organisation where all UN members could come together "to analyse, discuss and negotiate matters of international economic cooperation".

The World Bank, IMF and GATT were all important institutions in their respective spheres. But there was also the need for an organisation like UNCTAD that could take an overal1 view, assessing the interlinkages of issues in trade, commodities, technology transfers, debt, money and finance, etc.

UNCTAD had a deliberative role in the area of inter-linkages between these issues, and was in a unique position to make recommendations to other organisations and act as a catalyst for changes and improvements in development, trade, money and finance.

"But UNCTAD is also a negotiating forum for working out concrete legal instruments and frameworks in certain sectors, in particular areas like commodities".

"The problems we are facing make it more vital than ever to ensure that UNCTAD continues as a relevant and viable institution ... the challenges facing U.S. on the agenda for growth and development are such that we cannot afford to fail".

UNCTAD-VII could not solve all problems, but could make an important contribution in areas of crucial importance to the functioning of the world economy, and "it now depends on the political will of governments".

"We must work together across group systems and old alliances and formulate concrete policy actions, both on the national and international level", Stoltenberg declared.

On the issues before the Conference, Stoltenberg said that the debt crisis had to be made more manageable. It was not "a manageable situation" when debt servicing took such drastic proportions as to literally drain capital away from development.

The Huge debt burden of the middle-income countries was a threat to the international financial and trading systems and with unforeseeable political consequences, and it was essential "to achieve a better and more coordinated management of the global economy in order to stimulate the necessary dynamic growth".

UNCTAD-VII should discuss the need for a political dialogue, and the requirements to achieve a parallel and coordinated action to lower interest rates, ease liquidity shortage, raise commodity prices, achieve exchange rate stability, and increase the access to industrialised country markets for the exports of third world countries.

Economic policy decisions affecting these areas were being discussed at length among OECD countries and at western economic summits, and "UNCTAD-VII is an opportunity, which should not be lost to include the developing countries in these discussions".

The debt of the poorest and sub-Saharan African countries posed no danger to the international system, but coupled with the development crisis in Africa, the situation of these countries was more hopeless than for anyone else.

"Much of the debt outstanding of these countries", Stoltenberg pointed out, "will not be paid back in any real sense. To maintain such demand will entail political disturbances in many countries of such magnitudes that they would be completely unacceptable".

A strategy must be developed for a "managed write-down of the mountain of debt", through a flexible approach - extension of new credits with lengthened maturities, rescheduling old loans by extended grace periods and lowering of interest rates, and increased ODA flows so that all donor countries would attain the 0.70 percent of GNP ODA target.

The Nordic countries had brought up these ideas at the last meeting of the interim and development committees, and "we intend to develop our proposals further for discussion at UNCTAD-VII, so that both clarification and political weight can be added when decisions are taken at the Paris Club, World Bank and IMF", Stoltenberg declared.

On the commodity issues before the Conference, Stoltenberg said that realistically it did not seem possible, "in the foreseeable future", to include price stabilisation agreements for a large number of commodities envisaged in the integrated programme for commodities (IPC).

But the problems for which the IPC was initiated had not disappeared, and everyone should work actively to consolidate and improve existing commodity agreements, including by mobilizing funds for development measures in agreements like those for jute and tropical timber.

Expressing "greatest disappointment" that the common fund had not been brought into force, Stoltenberg said at UNCTAD-VII Norway would propose the activation of the second account of the common fund "as an interim arrangement, until the whole fund becomes operative" so that funds would be available for financing development, marketing and diversification measures in commodities.

Strategies should also be developed to further third world share of processing, marketing and distribution (PMD), and for supplementary or improved mechanisms for compensatory financing of export earnings shortfalls for commodity-dependent countries.

Another important task for UNCTAD-VII "will be to map out a strategy for future international cooperation in commodity issues within the context of the objectives of the IPC'.

"For our part, vie see a role both for price stabilisation agreements and for measures to address structural problems in commodity dependent developing countries".

As regards trade, despite number declarations and resolutions on standstill and rollback, there had been "a spread of bilateral arrangements and understandings for managed trade", and these posed serious threats to the multilateral system.

The new GATT round offered hope for improvement, and a primary task of UNCTAD-VII would be to agree on how and in which fields UNCTAD could further negotiations in the trade field.

UNCTAD-VII should also explore the possibility of granting further preferences to the least developed countries.

Stoltenberg suggested in this regard differentiation among the Group 77 countries - treating as three separate categories the 40 LDCS, the 70-80 "middle-class" countries, and the less than dozen newly industrialising countries (NICS).

In the light of the very strong competitivity of the NICS it was often difficult for industrialised countries to grant special concessions for the poorer countries if these concessions at the same time shall be extended to all third world countries.

"Therefore it can be asked whether more differentiation as among developing countries is not needed and should be accepted. This should then not take the form of an individual, uncontrolled differentiation but rather be collective preferences for a whole group of countries viz. The least developed ... we hope we can discuss this issue further at UNCTAD-VII".

Referring to the "services" issue, Stoltenberg said because of the role of services in the new GATT round, there was "a tendency to distinguish between the 'GATT aspect' and the 'development aspect' of services".

While this might be a useful distinction, and UNCTAD could be primarily concerned with the "development aspect", there was also a link between the two, and UNCTADís experience and knowledge in this field should be actively employed in providing assistance to third world countries, both in the context of the GATT round and in the internal development of the third world countries.

"While negotiations to establish a multilateral framework for principles and rules for trade in services take place in GATT, UNCTAD should continue its useful work in clarifying and defining the relationship between trade in services and the development process, and UNCTAD-VII should give guidance for this work".

On the environment issue and the report of the World Environment Commission, Stoltenberg said economy and ecology had to merge and environmental considerations should become an integral part of decision-making at all levels.

Sustainable development should become the goal and objective of the UN and its specialised agencies and UNCTAD should have a role in the follow-up in this field.

Dadzie said the Bruntland Commission report was a timely reminder of the linkage between promoting healthy economies and within balanced ecological systems.

While the 70's saw concerns on the risks of unplanned and unfettered use of resources, the focus in the 80's was on the risks to the world "by the persistence of poverty as a source of environmental degradation of soils, forests, pollution from urban slums, etc".

From the UNCTAD point of view the message was "the need for growth, but growth that is socially and ecologically sustainable".

Earlier, analysing some of the manifestations of the "development disarray", said participants in the world economy had to recognise that the world community comprised "not only of economies, but of peoples, the bulk of whom lived outside the frontiers of the major economies, and in the third world".

"To marginalise these people will be not only economically counter-productive but politically illusory, not to say fraught with risks for world peace and security".

Whatever the differing viewpoints of countries, there was no room for complacency, and if efforts were not made to promote the mutually reinforcing goals of development in the south and enhancing employment in the north, there was a serious risk of an "international economic apartheid".

Asked whether UNCTAD-VII would see any "confrontational issues", and what would be the future of UNCTAD if the U.S. refused to agree to any concrete measures, Dadzie said there would be a significant number of issues on which views of countries would be divergent.

But the Conference would seek to explore areas of convergence and promote consensus as a basis for solving problems.

It was no secret that at the moment the U.S. was the country with the greatest difficulty over the proposals of the Group of 77 (formulated at Havana), Dadzie said.

"But we are not at the Conference yet, and we have just begun the process of assessment ... as a prelude to actions on policies and measures".

This process had just begun, and it was possible that by the time the Conference met "enough common perspectives" might have been achieved to make the kinds of actions and policies that the G77 would like to see in place "less controversial than they may now appear to some other country".

The G77, Dadzie underlined, had gone to considerable lengths to encourage the larger economies in the industrial world to engage in good faith in the process of consultations and negotiations.

And while some major economies appeared to have difficulties over some specific proposals of the G77, Dadzie was not aware of any desire on the part of these countries "to break out or refrain from participation".

"Things are still fluid and we have to wait until we are nearer the Conference", he added.