UNCTAD-VII: FRG’S COMPLACENCY AND U.S. CONTEMPT.

Jul 31, 1987

UNCTAD-VII: FRG’S COMPLACENCY AND U.S. CONTEMPT.

GENEVA, JULY 29 (IFDA/CHAKRAVARTHI RAGHAVAN) – On the penultimate day of its general debate, the Seventh Session of the UN Conference on Trade and Development was treated wednesday to a dose of complacency form West Germany and contempt from the United States.

West Germany’s Federal Minister of Economics, Martin Bangemann questioned the general view of a world economy in crisis, and said, "a crisis scenario would block governments and investors form opportunities, progress, and opportunities for action".

The U.S. Deputy Assistant Secretary of State, Denis Goodman told delegates not to waste their time and energy by negotiating texts Wednesday night, but spend the evening "by walking along the shore of Lac Leman" in Geneva.

In other speeches Wednesday, Brazil’s Foreign Minister, Roberto de Abreu Sodre (who spoke after west Germany and United States) reminded the industrial countries that "the leading economies have a stake in the increased prosperity of the less affluent nations", and failure to take actions at the session "would not be UNCTAD’s failure ... (but) ours".

Bangemann trotted out the now familiar Group B thesis of the differences among the third world countries – the "advanced" third world countries who could hardly be distinguished from industrial countries, the middle-income ones, and the poorest and least developed – to wonder whether the assessment of the Group of 77 at its Havana Conference really took account of "this highly differentiated picture".

He then spoke complacently of the positive aspects in the world economy – stable prices in the north, lower interest rates, and trade flows – but acknowledged the fact of lower commodity prices causing serious problems to third world raw material producers, to suggest that overall the crisis scenario being presented was not justified.

Rejecting the growing view that Germany should reflate its domestic demand and recycle its structural trade surpluses to third world, Bangemann said: "let me point out in passing that our surpluses which, by the way, are starting to decline and which do not represent a factor of international disturbances have not been accumulated through trade with developing countries.

"Our exchange of goods and services with developing countries is traditionally in deficit. During the past three years it amounted to about three billion dollars annually".

The third world countries, Bangemann added, must examine on their own the extent to which they could improve their domestic investment conditions (to attract recycling of West German surpluses through private investment).

On debt, he talked of the case-by-case approach for debtor countries with medium-sized incomes and for consensus decision by mid-year within competent institutions on more extensive measures for poorest third world countries.

He expressed himself against commodity agreements and in favour of "market-oriented support measures" such as research, training, substitution and improvement of marketing infrastructures.

U.S.: DON’T NEGOTIATE, TAKE A WALK ALONG LAC LEMAN.

Denis Goodman, in a speech oozing with contempt for the UN multilateral process, focussed much of his attention on UNCTAD’s "flawed process".

"Unless we take steps to alter that process", he said, "we shall see the continuation of what Minister Ul Haq of Pakistan referred to here as the fading twilight of the very existence of UNCTAD".

Goodman praised the UNCTAD secretariat and its documentation for the Conference, and complained that delegates had not paid much attention to it but more to the documents and proposals of groups of countries.

But his own speech gave little evidence of his having paid any attention to the UNCTAD documentation or its warnings of the crisis in the world economy due to deflationary pressures, or the warning of the UNCTAD secretary-general in the trade and development report: "the longer governments hesitate and the more they debate, the greater will be the eventual disruption and the more complete will be the abandonment of today’s orthodoxy".

The U.S. delegate felt that useful work had been done at the UNCTAD session in the first two weeks when there had been general debate and exchange of views in Committees, but all that had come to an end when the Conference turned to "drafting" or "negotiating".

Delegates, he said, don’t come to UNCTAD or such conferences to agree to fundamental changes in national policies reached through elaborate processes (domestically), and there was no use of attempting (through negotiating skills) to come up with language that changed no one’s policies but appeared to show broad agreement on the state of the world and what to do about it.

In a reference to the fact that the negotiating groups were at work to try to reach agreements, Goodman said: "I have been told that tonight is likely to be a very late one for U.S. delegates at UNCTAD. I should like to suggest that if that is the case, we might consider spending the evening not locked in the Palais debating "shalls" and "shoulds" ... but rather waking along the shore of Lac Leman. Surely it would be better for both our mental and our physical well-being".

PROSPERITY OF NORTH DEPENDS ON THAT OF SOUTH – BRAZIL.

Brazil’s Abreu Sodre noted the acute crisis enveloping the third world and said, "the imbalances and distortions which characterise current international economic relations do not affect only developing countries, although they are certainly those that suffer most. The factors of instability which gave rise to UNCTAD are still present and include imbalances of all types (fiscal, monetary, financial, commercial) which undermine the capacity for growth of national economies and of world trade as a whole".

For the first time since second world war, he said, the 80’s witnessed a regression in growth trends of practically all third world countries, and "a large number of developing countries have been converted into net exporters of financial resources, and untenable situation from both an economic and moral standpoint".

The lack of a positive response to the PLEA for political treatment to the issues of external debt had resulted in the persistence of the heavy debt burden on third world countries and on the international economy.

At the same time, he said, a new international division of labour was being created, and instead of the old divide between producers of primary commodities and industrialised countries, "the present division (is) between those which produce and own information and new technologies, and consumer countries depended on the former".

Referring to the commodity trade and collapse in prices, Sodre expressed concern at efforts to discredit international cooperation.

"It is essential", he said, "to steer clear of a falsely realistic approach of the situation whose sole aim is to provide an excuse to shirk the responsibilities which are jointly shared by exporting and importing countries in their quest for a more stable and more equitable trading system".

"The integrated programme for commodities, within which the common fund plays a key role, is a tangible demonstration of what can be done in this area. Its implementation at the earliest possible date possible should impose itself as one of the major goals ... at this Conference".

Interdependence in the world economy, the Brazilian Minister said, had not led to a more harmonious and equitable international system because the previous forms of dependence had not been eliminated.

The emergence of UNCTAD and the Group of 77 were inspired by the need for change and the commitment to reorganise international economic relations.

"We can say in all sureness that the basic principles of the 77 are still valid, and that our group has lost none of its historical validity. On the contrary, our deals continue to point to the future".

Underlining the links between prosperity in the north with prosperity in the south, Sodre added: "the central fact remains that the emergence of new markets for goods of developed countries is necessarily based on the improved economic capacity of the developing countries. In other words, the leading economies have a stake in the increased prosperity of the less affluent nations".

Sodre placed the G77 Havana proposals for a new international trading system in this context and said it was hence "not as radical as it sounds", and reflected the need to replace the present system which no longer served development requirements with a new system allowing for market expansion and economic growth in the third world.

The Brazilian Minister also underscored the G77 proposals for strengthening of the general system of preferences (GSP), and said, "the hampering of the basic principles of the GSP with a view to converting in into an instrument of economic pressure, should be staunchly rejected".

Deploring the U.S. and other western efforts to question UNCTAD’s role or the "very concept of north-south cooperation", the Brazilian Minister warned that any effort to alter UNCTAD’s original goals would mean change of the substance of international cooperation.

"If we think in terms of reducing the role of UNCTAD, we shall also be putting the whole of the programme of cooperation with developing countries in jeopardy".

The Havana proposals of the group of 77, he said, reflected the enormous difficulties experienced by the third world, and were constructive proposals aimed at solutions benefiting all nations.

UNCTAD-VII offered both the industrial third world countries "an opportunity to agree on a set of policies and measures to face the problems of trade and development".

"This agreement is crucial if we are to make a fresh effort to change international economic relations in favour of development and peace: we must not miss this opportunity. If we fail, it would not be UNCTAD’s failure. It would be ours".

The Cuban Foreign Trade Minister, Ricardo Cabrisas Ruiz, said the UN system, and UNCTAD in particular, were the result of the "dramatic experiences of the war and the spirit of respect, cooperation and peace that rose from the ashes of a devastated Europe and the cadavers of dozens of millions".

"Whoever acts against these principles is attacking the interests of humanity and their own people", he declared.

"Far from diminishing UNCTAD’s mandate, it should be fortified and its contribution directed to decisive efforts at negotiations, coming out of its objectives of strengthening development in the third world and invigorating international trade".

On the debt issue, Cabrisas said "each day more institutions, governments and personalities are that the debt is unplayable and uncollectable".

"The solution to Foreign debt has to be based on an approach in which the creditors accept their responsibility and guarantee development", the Cuban Minister added.