Jul 30, 1987

UNCTAD-VII: "ACTION NOW" CALL FROM NORWAY.

GENEVA, JULY 28 (IFDA/CHAKRAVARTHI RAGHAVAN) – The revival of north-south dialogue to ensure sustainable development, and strengthening of multilateralism and multilateral institutions like UNCTAD and the UN were strongly advocated Tuesday by the Norwegian Foreign Minister, Thorvold Stoltenberg.

Others who intervened in the debate included GATT Director-General Arthur Dunkel and UNICEF’s Deputy Executive Director Richard Jolly.

Stoltenberg noted that if it was true, as was being said, that the North-South dialogue now was a dialogue among the deaf, ""our common future certainly looks bleak".

Multilateral cooperation in past years, he said, had suffered serious setbacks, even as they were witnessing "increased economic interdependence between north and south".

"The fundamental task of UNCTAD-VII must be to correct this incredible paradox", the Norwegian Minister declared.

"I will therefore join all those who have called for renewed efforts and concrete action now. A revival of the dialogue is not only in the enlightened interest of all, it is not only economically development. We simply cannot afford to fail".

For the revival of the dialogue "we need tools, and these tools must be multilateralism, and strengthening of multilateral institutions – the United Nations and UNCTAD".

"The issues we debate and raise are all of essential importance to every single one of the member nations. To deal with these issues, we need the constant strengthening of global organisations and global institutions ... if we do that it will be to the benefit of individuals all over the world, and not only in some parts of the world".

"What is needed can be summed in two words: ‘action now’".

Earlier Stoltenberg said the political statements of the last two weeks from the rostrum had demonstrated a clear awareness of the development crisis, and the increasing interdependence between countries and regions, and inter-relationship of issues of finance, trade and commodities.

While countries faced different sets of obstacles in pursuing the common goals of development, growth and employment, there were common concerns, which had to be solved through strengthened multilateral cooperation.

And when negotiators got bogged down in technical discussions on finances, commodities and trade, they had to remind themselves "we are ultimately dealing with matters that directly affect living conditions of individual human beings".

Outlining some of the measures that should form part of the outcome at the Conference, Stoltenberg said there was a need to reverse the decline in resource flows and augment the net flows. There could be no "credible debt strategy" without increased transfer of resources to the third world countries.

The logical response to the development crisis was "a marshal plan for developing countries", Stoltenberg declared, and welcomed in this connection Japan’s proposal for an independent group of eminent persons to consider the issue of resource flows.

On debt, Stoltenberg called for an improvement and strengthening of the international debt strategy.

The elements of such a strategy, he said, must involve "a political dialogue" on parallel and coordinated actions to lower interest rates, ease liquidity shortage, raise commodity prices, achieve exchange rate stability, and increase access to industrial markets for third world exports.

There was also need to increase contributions form private banks through "new and innovative methods", substantial capital increase for the World Bank, new allocation of SDRS by the IMF and upward revision of IMF quotas, and radical measures for debt relief for least developed and other low-income countries especially in Sub-Sahara Africa.

Stoltenberg welcomed the likelihood of the common fund becoming operational soon, and renewed Norway’s pledge of 25 million dollars to the fund made at UNCTAD-IV, and five million dollars to cover the cash part of capital subscription of ten third world countries, made at UNCTAD-VI.

He also supported on behalf Norway a new round of intergovernmental consultations on individual commodities for producer-consumer cooperation, further work on commodity-related facility for compensating commodity export earnings shortfalls, and initiating diversification programmes for commodity-based third world economies.

In the area of international trade, the Norwegian Minister underscored the complementary roles of UNCTAD and GATT, and said while emphasis in GATT was on trade liberalisation, UNCTAD’s focus was on broader issues of trade and development, and this was valid for trade in services too.

"This work of UNCTAD, not only of the secretariat, but also of intergovernmental bodies, should be maintained and strengthened", he said.

"NEGLECT HAS LASTED TOO LONG" – UNICEF.

The Deputy Executive Director of UNICEF, Dr. Richard Jolly, welcomed the frequent references in the debate to the high social costs of recession and adjustment in the third world in the 1980’s and the need for more attention to human factors and poverty in national and international policy-making.

UNICEF strongly supported these concerns, and welcomed their inclusion in the UNCTAD debate, he said.

As a result of the neglect of human factors in the adjustment process in the 1980’s social progress had been reversed in the 1980’s in half of the third world countries, and "the 1980’s have become a lost decade for development".

"This neglect has lasted too long", Jolly said.

"What we observe today is nothing short of a man-made disaster being inflicted upon the poor by both the recession and an inadequate or inefficient process of adjustment. And the most galling aspect of this situation is that human suffering on this scale is not necessary. It can be avoided".

Outlining what UNICEF calls "adjustment with a human face", Jolly said the objectives, policies and modalities of implementing adjustment and development policies had to be broadened to incorporate explicitly concerns of human nutrition, provision of key basic services, skill acquisition, and other basic human needs.

Adjustment with a human face, he said, was not an abstract formulation, but had been implemented in a number of third world countries – South Korea, Zimbabwe, to a growing extent in Ghana, and to some extent in Peru, and more recently even in some of the poorest African countries such as Burkina-Faso.

Such an adjustment policy needed to be supported by specific international actions in the areas of primary commodity prices and volumes, protectionism in industrialised countries, international debt, commercial capital flows and aid flows.

Action in each of these areas was vital if many third world countries, particularly of Sub-Saharan Africa and Latin America "are to implement fully the measures needed to protect their vulnerable groups, raise living standards and restore dynamism and economic opportunity to their populations".

Three concrete actions that should receive priority at UNCTAD-VII were:

--Debt relief, in particular for the poorer African countries or debt relief for child survival,

--Developing or strengthening international buffering mechanisms in ways linked to protection of the vulnerable – enlargement and strengthening and enlargement of existing compensatory financing facility and stabbed to reduce their conditionality, and

--Increased technical cooperation among developing countries (TCDC), especially on restructuring available budgetary and human resources in favour of the most vulnerable groups.

GATT wants more integrated international economic actions.

GATT Director-General Arthur Dunkel outlined the efforts under way to deal with trade problems through the Uruguay round, but warned of the negative impact on such efforts of increasing uncertainty caused by trade policies like self-restraint agreements, market sharing and all sorts of trade-distorting government interventions.

But there were also other extraneous factors that impacted on the trade front – problems related to inflation, slow economic growth and excessive current account imbalances, exchange rate uncertainties, and debt problem and its future management.

Between 1981-85, while the dollar value of world trade had increased by 7.5 percent, imports of the 16 most heavily indebted countries had declined by about one-quarter.

This import contraction had affected the residents of those countries – lower living standards, and declines in capital goods imports and investment affecting future growth. But it had also spread the effects to the trading partners of the indebted countries.

The Trade Ministers at Punta del Este, Dunkel said, had seen the link between healthy trading environment and solution to the problems, and "they have signalled clearly to the rest of the world that trade policies cannot, by themselves alone, solve the present imbalances in the world economy".

"Given its specific mandate", the GATT Director-General added, "UNCTAD, and in particular the present Conference, offer another much needed opportunity to carry forward the collective consensus in favour of more integrated international action in the economic field".

ARGENTINA: INSOLUBLE DILEMMA OF DEBTOR COUNTRIES.

Argentina’s Bernardo Grinspung, Secretary of State for Planning, said the long-standing external strangulation of economies, as a result of combined effect of instability and decline in commodity prices, had become more acute in recent years and constituted a central factor in economic and social regression.

The most striking effect, Grinspung said, had been the tremendous fall in commodity prices, accompanied by displacement of efficient third world producers by subsidised production and exports, and the high nominal and real interest rates.

It was because of this restrictive external constraint that third world economies had been unable to sustain the kind of rates of capital accumulation prevalent in the past, nor achieve the rates of economic growth that would enable them to have access to modern technology.

In this situation, the "insoluble dilemma" faced by the debtor third world countries was that of achieving an investment rate compatible with a growth rate suited to their political and social needs.

On international trade, Grinspung hoped that parallel to the Uruguay round, work would be undertaken to design a general system of international trade that was non-discriminatory and universal, and oriented to growth and development. The first step towards this was strict adherence to the standstill and rollback commitments undertaken at Punta del Este.

On the issue of services, Argentina believed that the principal objective of negotiations on services should be promotion of economic growth and autonomous development of third world countries, while at the same time respecting the objectives of domestic policy and legislation of those countries.

MEXICO: DEBT AND RESOURCE PROBLEMS NEED NEW MECHANISM.

Mexico’s Secretary of Commerce and Industrial Development, Hector Hernandez, said the need for a new mechanism to solve debt and resources problem was becoming increasingly evident.

Of great importance was the lack of stabilisation of raw material prices in the world market.

UNCTAD, in his view, could help solve this, as well as the problem of services.

JORDAN: RENEWS PLEA FOR INTERNATIONAL LABOUR FACILITY.

The Crown Prince of Jordan, who spoke on Monday, said the rise of myopic and self-centered interests was dampening international cooperation, and adversely affecting international institutions.

Some of them were dubbed as "pro-south" and some as "pro-north", and agencies judged and supported or denied support accordingly.

But if all agreed that international cooperation could not survive without institutional vehicles, then the international community must act decisively in support of established initiatives.

The Crown Prince wanted a Commission of eminent persons to reassess the performance of the international economic system, and suggest formulate and alternative approaches to rehabilitate the world economic order and its institutions.

He also recalled his PLEA at the ILO conference a decade ago for an international labour compensatory facility to help labour-surplus countries to absorb their excess labour at home, and felt the idea deserved a fresh chance as a rationale for continuation of international resource flows on more equitable grounds.

ITALY: UNCTAD AT CROSS-ROADS.

Italy’s under-secretary of State for Foreign Affairs, Francesco Cattanei, said UNCTAD was at the crossroads of cooperation on such major subjects as world economic interdependence, world economic recovery and consolidation of its institutional role.

The most critical sectors at this time were questions of debt and financial resources, and the problem of negative transfer of resources arising out of the heavy debt servicing needs of third world countries.

In this connection, Cattanei said Italy’s ODA had increased by 67 percent in 1986 compared with 1985, placing the country in fifth place among donor countries.

On commodities, the Italian delegate said that action was needed to stabilise prices through existing agreements, and to improve the working of multilateral compensatory mechanisms, and reduce dependence of some countries on just one or two commodities.

Supporting efforts to strengthen multilateral trading system through the Uruguay round, Cattanei said Italy favoured cooperation between UNCTAD and GATT.

GHANA: BUT GATT ALONE CAN’T RESOLVE BASIC PROBLEMS.

Ghana’s Secretary for Trade and Tourism, Kofi Djin, said he could not agree that GATT, limited both in its membership and coverage, could alone resolve the basic problems of the international trading system.

While GATT and the Uruguay round MTNS, had an important role to play, the universality and mandate of UNCTAD enjoined it to assume a major and dynamic role in a fundamental review of the international trading system, from the perspective of its contribution to development.

Earlier, Djin expressed his country’s serious concern over developments in the biotechnology industry, where substitutes and synthetics for such products as cocoa butter, vanilla and palm oil were growing at a vast pace and posing a threat to the already fragile economies of commodity-dependent third world countries.

Uncontrolled use of technological innovation would further aggravate the already difficult situation of third world countries, and international action was urgently required to ensure that research in commodity sector was coordinated and disciplines to benefit both industry and third world countries was in place.

KUWAIT: HOPES PROBLEMS WOULD BE SOLVED BEFORE IT IS TOO LATE.

Kuwait’s Salem Jaber Al-Ahmad Al-Sabah hoped the economic problems of the world would be solved before the crisis became too serious and it was too late.

Third world countries, he says, faced a crisis that affected their development process, and the macroeconomic policies of industrialised countries had not helped.

The deterioration of the situation of the third world countries posed dangerous problems for the development of the world economy.

Industrialised countries, Al-Sabah said, should step up their efforts to provide increased ODA for the third world countries, and in particular the least developed countries.

Also, the role of international financial institutions should be strengthened, and the international monetary system made more stables.

Third world countries, he noted, faced severe problems because of the sharp fall in commodity prices, including that of oil.

Such a decline should be arrested, and commodity prices should be set at a fair level.