Jul 31, 1987

UNCTAD-VII: CONFERENCE PRESIDENT TAKES OVER NEGOTIATIONS.

GENEVA, JULY 30 (IFDA/CHAKRAVARTHI RAGHAVAN) – Conference President Bernard Chidzero began Thursday morning a round of consultations, beginning with the chairmen and vice-chairmen of the two groups of the President’s Contact Group, and was due later to take a direct hand in the negotiations and involve Ministers present at the Conference.

The various groups and subgroups, who have been trying over the last 48 hours to tackle all the proposals and documents, in an effort to prepare cleaner and more manageable negotiating texts, wound up their work early Thursday, and transmitted to Chidzero documents with a number of square brackets, indicating the areas of disagreement and/or alternative formulations.

As one of the G77 delegates involved in this exercise put it, "if the texts are finally cleaned up by removing the square brackets, instead of removing the texts within the square brackets, the Conference would have achieved something and started a new forward move".

"Otherwise, we would be left with a lot of useless pieces of paper", he said.

In the resource area, participants said that a number of key issues remained unresolved.

In the area of debt for example, Group B countries are unwilling to agree to a recommendation that governments examine their regulatory measures to enable banks to deal with the third world debt more flexibly.

They are also unwilling to accept even as a proposition the idea that debt servicing, and particularly interest rates on old debts, should be dealt with on the basis of the capacity of the debtor country, keeping in view such indicators like export earnings, GNP, growth, etc.

As far as the group B is concerned the only debt relief or write-off they could consider would be for the most heavily indebted among the least developed, and that too only for official credits.

In the area of resources, the Europeans and other Group B countries are said to be resisting even a reference to the plans of Japan to recycle part of its structural surpluses to third world countries, and particularly debtor countries.

On the one hand, countries like the FRG, oozing, what one third world delegate after the Bangeman speech Wednesday described as complacency born out of "beer-sausage-politics", does not want anything that would generate pressures on them to recycle or relate demand.

Also, the EEC and others note that Japan is still providing by way of ODA much below the OECD average, while many Europeans (whether structurally surplus like the FRG or deficit like Italy) have moved far ahead.

They also see the Japanese "recycling" move as a way for Japanese capital to move into areas like Latin America and Africa, which the Americans and Europeans consider to be their spheres of influence and backyard.

On the issue of monetary questions, the Group B countries are reportedly resisting even the Conference merely taking note of the proposal of the G-24 for a Ministerial Committee in the IMF/World Bank to look at some of the reform issues.

In the negotiations, the Group B delegates reportedly said that they could not even take note of the communique since their capitals could not even trace any reference to the G-24 communiques.

In the Committee on Trade, intense round of consultations showed that there were both conceptual and policy issues that could not be solved or papered over through drafting exercises.

Among these were the question of economic sanctions for non-economic purposes, non-linkage between trade in goods and negotiations on such matters with other issues like services, investments, etc., and the question of further work in UNCTAD on the services issues.

For the Group B, the entire focus and emphasis should be on the Uruguay round and GATT, with UNCTAD functioning purely as a technical assistance agency to help third world countries and ensure successful conclusion of the round.

Other issues like further work in UNCTAD on an international trading system were "non-negotiable" issues.

In commodities, there were a number of key areas of disagreement.

Both the Group B and Group D (socialist countries), want a formulation that would imply that the 1976 Nairobi integrated programme for commodities had been modified by the decision of the 1986 special session of the Commodities Committee introducing what they consider to be "new elements" in respect of international commodity agreements.

There are also disagreements over the mandate to the UNCTAD Secretary-General to carry out a new process of consultations and preparatory meetings among producers and consumers of individual commodities with a view to reaching international commodity agreements or arrangements with economic, development, market transparency provisions, or a variation or combination of them.

The G77 want this process to be started and completed as far as possible by 1990, while the Group B countries want to exercise greater control and veto even over the process of consultations and preparatory meetings.

There are also differences on the issues of diversification – further processing, marketing and distribution (PMD) of primary commodities exported by the third world – and the connected issues of market access and removal of tariff and non-tariff barriers inhibiting such PMD activities in the producing countries.

On the question of compensatory financing for commodity export earnings shortfalls, the issue of what the UNCTAD intergovernmental group of experts should further do, and whether it should be a "balance-of-payments" approach or "commodity-related" approach.