UNCTAD-VII: PLENARY DEBATES, AS DEADLOCKED COMMITTEES WINDUP.

Jul 29, 1987

UNCTAD-VII: PLENARY DEBATES, AS DEADLOCKED COMMITTEES WINDUP.

GENEVA, JULY 27 (IFDA/CHAKRAVARTHI RAGHAVAN) – Over 20 speakers took the floor Monday in the General Debate in the Plenary of UNCTAD-VII, even as Committees ended their work, without any agreement major or minor, and handed over all negotiations to the contact group of the President.

Among those who spoke in the General debate were Japan, Italy, Sweden, Iran, Belgium, Kuwait, Democratic Yemen, Tanzania, and Indonesia, and the IMF, ILO and the Commonwealth Secretariat.

JAPAN WANTS HIGH-LEVEL GROUP ON RESOURCE FLOWS TO SOUTH.

Japan’s Foreign Minister Todashi Kuranari proposed the establishment of an independent high-level Wisemen’s group, with the support of interested countries and relevant international organisations, to examine ways and means of encouraging flow of financial resources to third world countries.

He also proposed the establishment in UNCTAD of "a round table", to enhance commodity processing activities in the highly dependent third world countries. The round table, he suggested, should carry out "sample country case programming", and make recommendations on what the sampled countries, industrialised countries and international organisations could do.

The last proposal was aired by Japan last week in the Commodities Committee. G77 sources later said that it was not clear what the round tables would do that was not already being done. Also, they said it contained no proposals or commitments on the basic issues involved – resources, technology and market access.

Kuranari devoted a large part of his speech to outline its plans to recycle 30 billion dollars of its surpluses, as united funds, over the next three years, and other special measures Japan was planning to take.

Over and above these measures for direct recycling of funds to third world countries Japan had also decided to implement some positive support measures, including 500 million dollars over next three years of non-project grant assistance to least developed countries, as well as possible debt relief.

Japan would advance its target for doubling ODA by two years, and continue efforts to improve the ratio of ODA to GNP.

But Kuranari gave any indication as to when Japan would achieve the UN target of 0.7 percent of GNP as ODA.

The 30 billion recycling and the 500 million dollar grant assistance to LDCS, Kuranari said, were part of Japan’s actions to support international efforts to address the debt problem. Japan was also complementing faithfully measures on debt agreed earlier at UNCTAD, and had a positive position on extension of deferment of maturates of rescheduled government loans being discussed in the Paris Club.

GREATER RESPONSIBILITY WITH MAJOR COUNTRIES – SWEDEN.

Sweden’s Foreign Trade Minister, Mrs. Antia Gradin said like interdependence, "assessment had become a ‘catch-phrase’ at the Conference".

Now that the Conference was entering its crucial final negotiations "we should be careful not to let disagreements on descriptive nuances hinder progress in discussions of possible remedies and joint actions".

And sluggish growth in world economy was the main obstacle to a long-term solution of the debt crisis, and all countries must assume the responsibility to adjust their economies and provide appropriate conditions for accelerated economic growth.

"But it is equally clear", Mrs. Gradin said, "that a major responsibility for more effective cooperation and coordination of economic policies must be assumed by the major industrialised countries. This is the only way in which the large external imbalances now threatening sustained growth and stability and an open trading system can be reduced successfully".

Referring to some of the Conference issues, Mrs. Gradin called for resumption of flows of new financial resources to the third world, as part of an overall development effort.

This would require not only joint efforts to increase transfer of private funds, but also concrete measures to achieve the 0.7 percent ODA target reiterated at Venice summit. Countries lagging behind, and the strongest and most important of the industrialised countries must take concrete measures towards this end.

In the commodity sector, the Swedish Minister said there was still a need to improve facilities for export earnings stabilisation, and future UNCTAD work should narrow down and clarify options, not as an alternative but as a supplement to broader development finance support.

She also called for support to diversification efforts in third world countries, and measures to increase transparency and strengthening of long-term competitiveness of commodities.

On international trade, the main thrust of her speech was on the Uruguay round, and UNCTAD assisting third world countries to get maximum benefit, and play a supportive role. She also called for maintenance of the multilaterally agreed principles of the GSP, and ensuring stability in the system.

The Swedish Minister agreed that UNCTAD was a forum for negotiations, and it was up to each country or group to decide how they wanted to participate in these negotiations.

But too often the thought negotiations were started "on the basis of rigid group positions", without free discussions on the substance of the matter.

Mrs. Gradin also called for global solidarity for least developed countries by implementing commitments for aid to support domestic adjustment, increased trading opportunities, and efforts to alleviate the debt burden of these countries.

FUND REVIEWING ADJUSTMENT PROGRAMMES – CAMDESSUS.

The managing Director of the IMF, Michel Camdessus said revitalising growth was a mater of urgency, and all obstacles, beginning with unavoidable problem of foreign debt, must be eased.

Each country must have growth-oriented structural adjustment, supported by finances appropriate to the situation of over-indebtedness.

Referring to the criticisms of the fund efforts so far, Camdessus claimed that but for the IMF support, imports, investment, output and employment in the indebted countries would not have reached the levels attained, "to low though these levels have clearly been".

The growth attained by countries under fund-supported programmes, he conceded, had not always matched expectations, in some cases because of slippage in policy implementation and in others because external conditions had not developed as foreseen.

The fund’s executive board was now engaged in a thorough review of adjustment programmes to ensure they remained appropriate in current circumstances, and took account of the "widest suggestions" that might be put to us.

Camdessus referred in this connection both to the suggestions of the G-24 deputies and the UNCTAD Secretary-general’s report for more emphasis on growth and investment targets as major objectives in fund programmes.

"We are studying various suggestions thoroughly by taking into account what the most successful experiences of recent years have taught us about growth", the IMF executive head added.

G77 diplomats contrasted Camdessus’s speech with that of his predecessor, Jacques de Larosiere, who addressed UNCTAD-VI without once mentioning UNCTAD by name.

Camdessus spoke on the other hand of the important contributions of UNCTAD in late 70’s and early 80’s, just prior to eruption of the debt crisis, to discussions concerning operations of two creditor clubs. At that time, Camdessus had chaired the Paris Club on official debts, and exchanged letters with UNCTAD secretary-general Corea enabling UNCTAD’s participation in the Paris Club meets.

FATE OF UNCTAD PROCESS OF IMPORTANCE TO ALL – RAMPHAL.

Commonwealth secretary-general, Shridath Ramphal said that there were times in international affairs when what one said was less important than "the fact of standing up to say it", and he was doing so to ensure that "the commonwealth secretariat is counted in support of UNCTAD and the UNCTAD process".

The fate of the UNCTAD process would be decided by the outcome of UNCTAD-VII, and success of the Conference was a matter of some importance to all.

In what was seen as a reply to the attack on the secretariat by the Pakistan Trade Minister, Mahbub Ul Haq on July 10, Ramphal said: "UNCTAD’s sensitiveness to the problems and interests of the third world has been a necessary and wholly legitimate factor in adding balance to international economic concerns, and must be seen in the context of early organisational weakness of the group of 77. Against this background, the charge that UNCTAD’s work has been partisan is unfortunate".

Ramphal welcomed the break in the logjam over the common fund, which he said would soon be added to economic instruments available to the international community.

He wanted maximum use made of the second account to achieve wider range of objectives, while at the same time building on the basic conception of the first account and ensuring early success in its operation.

For many third world countries only satisfactory long-term option was diversification into processing and manufacturing for export. But would industrialised countries who advocated this allow freer market access for such exports, Ramphal asked.

The contradictions of the stand of industrialised countries, he noted, went further.

Even as Aristotle’s ethics adumbrated in philosophy, in daily life too "as between unequal, equity itself demands non-reciprocity", Ramphal pointed out.

If this basic trough was understood and respected "we could remove quite a number of square brackets (in conference negotiating documents) in due course", Ramphal added.

He noted in this connection the proposals of U.S. and other major agricultural exporting countries for more market discipline in agricultural trade, and asked: "But how much at odds with this impulse are the protectionist measures now emerging from U.S. Congress".

Ramphal also called for special efforts to increase financial flows to the third world countries, including through multilateral financial institutions, and said the failure of the Baker initiative had made this even more urgent than before.

The problem of financial flows, he said, was also linked to the debt problems.

Focussing in this connection on the unmanageable burdens of many low-income countries, and the proposal of the IMF managing director for trebling the fund’s structural adjustment facility, Ramphal noted that some industrialised countries were reluctant because of the precedent that would be set for middle-income debtors.

As a measure of solidarity, Ramphal said, major debtors should explicitly state that they recognised the need for separate treatment for indebtedness of low-income countries. In this regard, the added, they should emulate the example of India and China who surrendered any claims on the saf in order to give priority to crisis-hit African countries.

Earlier, Ramphal said that the world’s economic establishment was returning to its earlier awareness of the value, and the essentiality of UNCTAD’s holistic, integrated approach, needed now, more than before, in an interdependent world economy.

But while the tide of professional and political opinion might be turning, "we re still in danger of moving away from multilateralism on the momentum of the ebb tide", he warned, in underscoring the need for continuance of the UNCTAD process.

While in particular areas, such as money and finance and multilateral trade, the main detailed negotiations must be undertaken elsewhere, "such important issues simply have to be handled now in a less piecemeal and more coordinated way. And it is to the UNCTAD process that we must look for the evolution of an integrated policy framework".

It was extremely important that UNCTAD-VII should pave the way for revival of international development cooperation, Ramphal said.

It was not too late to seek to add some specificity and substance to such areas as aid flows, compensatory financing, low-income indebtedness, commodity trade, and protectionism.

"In some cases complete unanimity will not be possible, but that should not be allowed to prevent attainable action", he added.

WITH BEST OF INTENTIONS DIFFICULT TO MEET DEBT OBLIGATIONS.

In other speeches, Tanzania’s Industry and Trade Minister, Duadi Mwakawago, said that his country was "a small, poor but hard-working developing country", which over the years had undertaken a broad-ranging economic recovery programme to increase production of its commodities.

But over the last eight years, Tanzania had seen "the results of our hard work being continuously eroded by the collapse of the commodity prices and the rising debt burden".

"With the best of intentions, it has become impossible under these circumstances to meet both the legitimate needs of our people for their day-to-day requirements and international debt obligations".

Tanzania’s experience was not unique but shared by other third world countries. But the attitude of the industrialised countries till now had not given much encouragement.

The third world countries continued under pressure to undertake adjustment measures, but without adequate external resources.

The crucial questions of commodity prices was supposed to be resolved by "market forces", while the policies that led to the depressed demand for third world exports – misaligned currencies, volatile exchange rates, high interest rates and curtailment of concessionary flows – continued to be entrenched.

There was also the increasing tendency towards abandonment of multilateral solution of international economic problems in favour of unilateral and bilateral actions.

Meaningful and sustained development could be guaranteed only through peace and prosperity for all, and such a process required commitment from industrial countries to policies more supportive of third world development needs and efforts.

UNCTAD-VII SHOULD END WITH RENEWED CONSENSUS – INDONESIA.

Dr. Ali Wardhana, Indonesia’s Coordinating Minister for Economy and Finance, hoped UNCTAD-VII would be distinguished for its progress in forging a renewed consensus on need for multilateral cooperation for development, revitalisation of development, economic growth, and expansion of international trade.

The collapse in commodity prices and earnings underscored the need for concrete steps to reverse this situation in a comprehensive and integrated manner, and towards this end the implementation of the integrated programme for commodities and the common fund should be accelerated, he said.

On the debt crisis, the Indonesian Minister said: "when debt burdens reach the point where they are forcing nations to excessive adjustment burdens, then there is apparently something wrong with the system ... it is not too late to take positive steps towards the establishment of joint responsibility in management of international debt".

"All parties – debtor and creditor countries, commercial banks and international financial institutions – must work together to see that a comprehensive growth-oriented debt strategy will evolve".

The representative of the Palestine Liberation Organisation, Ahmed Suleiman Abu-Alaa thanked UNCTAD for its assistance to the Palestinian people through its special economic unit.

The PLO representative also welcomed the EEC decision to give Palestinian goods and products preferential access to the EEC markets on the basis of a Palestinian certificate of origin.

The implementation of this decision, he complained, was being blocked by the Israeli authorities who claimed that "Palestinian goods and products would compete with Israeli ones in those markets".