Aug 1, 1987

UNCTAD-VII: MINISTERS MAKE SOME PROGRESS, WILL IT STICK?

GENEVA, JULY 31 (IFDA/CHAKRAVARTHI RAGHAVAN) – Key Ministers named to tackle various outstanding issues worked in small groups through the night of July 30, and put forward on Friday morning texts on commodities, international trade, debt and least developed countries (LDCS), which suggests some progress in unblocking disagreements.

Texts from others on resources and monetary and related questions and one or two other issues were also expected in the course of the morning.

The Conference is due to adjourn Friday, but it could well spill over into Saturday.

With the its and bits of papers floating, and the final outcome depending on a kind of package, key negotiators were unwilling to hazard any guess Friday morning on a possible scenario of the outcome, but appeared optimistic that there would be no break-up.

But whether there would be a net gain -. For the third world and the world economy, and UNCTAD – it would be too difficult to say until the end, or even for a while.

In the case of the paper on LDCS, produced by the Swedish and Dutch Ministers, there are still a number of paragraphs of differences between Group B and LDCS.

In this area at least there is a slight reversal of roles. The Group B delegations want to go back home with a paper that will prevent a headline, as one LDC delegate put it, "the wretched and the rich differ".

Issues of domestic policy, market orientation, IMF and other conditionalities, are areas where the LDCS feel they have had enough of advice on what they should do, and the only thing of interest to them is what the north is willing to commit itself and do.

The position of the U.S. was also not quite clear.

Despite the sneering tone and posture adopted by the U.S. delegate in the plenary on Wednesday, and his advice to negotiators not to spend the nights at the Palais Des Nations, negotiating "shalls" and "shoulds", but take a walk along Lac Leman in Geneva, U.S. delegates were very much around, and taking an active role within the Group B meetings, western diplomats said.

On debt and an evolving debt strategy, Argentina’s Planning Minister Bernardo Grinspung, held a series of bilateral consultations thursday night, and presented a paper Friday morning, which in his view could command general acceptance.

Couched in places in non-specific general terms, the paper presents some conclusions and recommendations for actions by various fora and parties to the debt crisis, and much would depend on how they would be interpreted and acted upon.

However, since no one from the beginning expected any specific agreements, the indebted countries were considering it Friday from the viewpoint of whether it moves forward the international debate and strategy along desirable lines.

The paper, for example, talks of need for a debt strategy based on development, continuous dialogue, and shared responsibility, and implemented with flexibility in an environment of strengthened international cooperation.

It calls for judicious combinations of some of the "options" to reduce the debt burden, and debt-equity swaps and other non-debt-creating flows as having "a role to play".

But it also talks of need to explore and develop a further widening of range of options "in terms of realistic and effective instruments including those devised by banks and debtors to take advantage of discounts prevailing in secondary markets".

Industrialised creditor countries are also asked to encourage their banks to apply flexibility in rescheduling interest payments on debt contracted before 1987, in providing new loans to indebted nations, and taking debt-relief measures according to individual circumstances.

But the call on the creditor governments to formulate on relax regulatory measures towards this end is not there.

But a realistic assessment of debt-servicing capacities of individual countries in treatment of interest in rescheduling official and officially-guaranteed debt is suggested, and with significant concessionality, in particular for LDCS, Sub-Saharan Africans, and small hard-hit third world countries.

The need for full implementation of UNCTAD resolutions on ODA debt, and for special treatment for uniquely difficult problems of poorer Sub-Saharan Africa is underscored, and need for concrete measures by industrialised countries to implement their agreement to increase ODA in terms of UN Africa programme.

In the area of commodities, Swiss secretary of state, Franz Blankart, put forward a text that appeared to go some way to address the concerns of the G77. But there were still some points in the text that is troublesome to the G77.

However the efforts of some within the Group B to weaken the UNCTAD role in commodities, and confine it to policy analysis, leaving all other things to market forces, ahs not been mentioned.

Earlier Thursday, the British – who were pretty much isolated inside the EEC and even the Group B – consulted London, including reportedly Prime Minister Thatcher – and removed some of their objections and reservations about the Nairobi integrated programme for commodities (IPC) and the common fund.

The Blankart paper seeks to reaffirm the validity of the IPC, but calls for implementation of policies and measures identified by it – which could mean a modification of the IPC.

It calls for initiation of consultations on individual commodities of IPC not covered by existing agreements or arrangements, for the Secretary-General to draw up an appropriate meeting schedule (something less than the 1990 deadline sought by the G77), and need for improving operation and functioning of existing commodity agreements and negotiation f new ones with, as appropriate, economic provisions, developmental measures or measures to improve market transparency.

It notes prospects for energy into force of common fund have improved with additional signatures and ratifications, and acknowledges that trendy into force of common fund might further conclusion of ICAS with economic provisions, and through second account possible financing of development programmes already approved.

It urges countries who have not yet done so, to sign and ratify or accept or approve the agreement. It also calls for actions by the contracting parties, as soon as entry-into-force conditions are met, to make the fund "operational as soon as possible".

There are also provisions for continuance of ongoing work on diversification – processing, marketing and distribution including transportation (PMD) – and need for financial and other resources to further such programmes.

The strengthening and improving of existing compensatory schemes, and for UNCTAD intergovernmental group to continue its work and make recommendations – taking account of implications of such shortfalls, institutional options for a facility, and the BOP and/or commodity-related approaches.

In the area of international trade, west German Economics Minister, Martin Bangemann, presented Friday morning a paper of his own, and this was being considered by various groups, with some bilateral and other consultations to continue.

Trade has been one area where there had been the greatest difficulties, since there had never been any real negotiations on any of the issues, with the Group B countries merely calling for UNCTAD to do a technical assistance programme to the third world vis-à-vis the Uruguay round, and leaving everything to GATT and Uruguay round.

At the President’s Contact Group meeting on Thursday, Singapore’s Chak Mun See (who had earlier chaired the Trade Committee, and presented a paper of his own), in effect seemed to move away from his own text by saying that the difficulties in trade area (like textiles and clothing, services, etc.) that the Uruguay round would need three years to solve, were being sought to be tackled in three weeks at UNCTAD-VII, that this would be impossible, and perhaps UNCTAD should leave out all these things altogether.

But this view did not find favour with others, and even President Bernard Chidzero is reported to have reacted sharply, underscoring the continuing mandate and relevance of "trade and development issues" in UNCTAD.

Ultimately, the West German Economics Minister, Martin Bangemann was asked to tackle the issues, and he produced a text Friday morning with two issues there clearly delineated as points of disagreement.

According to some participants in the Committee, this paper too had been-made possible because of the efforts of a key group of negotiators form the EEC and the G77 who sat through the night to tackle some of the issues, to evolve possible agreements that they could live with.

Both were conscious that failure or deadlock here would set the GATT MTNS back.

In the new text, there are two areas of disagreement, in square brackets.

On relates to the question of economic and trade measures against third world countries for non-economic reasons.

The second relates to the agriculture trade policy issues – where the major differences are within the Group B countries themselves.

In other areas it reaffirms and calls for continued implementation of UNCTAD decisions and mandates in respect of – standstill and rollback, structural adjustment, annual review of protectionism and structural adjustment, including annual review of principal elements and trade policies and options.

It also suggests setting up by governments of transparent national mechanisms to evaluate protectionist measures sought by firms or sectors.

The paper also calls for improvement of GSP schemes, through expanded product coverage and "strict compliance with multilaterally agreed principles relating to its generalised, non-discriminatory and non-reciprocal character".

There are also formulations relating to need for improved access to markets, particularly for products of exports interest to the third world, including manufactures and semi-manufactures, fullest liberalisation of trade in tropical products and natural resource-based products, elimination of escalation of tariff and non-tariff barriers, and the significant contribution that the Uruguay round MTNS could play in this regard.

The liberalisation of textiles and clothing trade, and its eventual integration into the GATT is also called for.

The text also has formulations on need for supportive international economic environment for the Uruguay round MTNS – through mutually reinforcing linkages between trade, money, finance and development.

Another provision calls for observance of the multilaterally agreed commitments not to link trade in goods with concessions in other areas.

The continuance of strengthening of UNCTAD work on restrictive business practices is also provided for.

On services, the Bangemann text calls for continuance of UNCTAD’s useful role in the field of services under its existing mandates. The Secretary-General is asked specifically to analyse form the viewpoint of the third world and in the context of overall development objectives, the implications of issues raised in the context of trade in services, including any framework governing trade in services.

The Secretary-General is also asked to work out appropriate framework for trade in services, keeping in view technological changes in this field.

UNCTAD is also asked to continue to review the international trading system with the objective of evolving elements for improving and strengthening it.

Universality, contractual commitments, non-discrimination, comprehensiveness, stability and predictability, as well as orientation towards development and growth, are recognised as important features of the international trading system.

The improved system should also be seen as part of a new paradigm of harmonious and equitable international economic relationship founded on objectives of development and employment.

The need for policies in areas of monetary and financial matters, technology and other relevant areas being compatible and consonant with the international trading system is also underscored.