CONCERN OVER DELAY IN SETTLING UNCTAD-VII ISSUES.

Sep 5, 1986

CONCERN OVER DELAY IN SETTLING UNCTAD-VII ISSUES.

GENEVA SEP. 3 (IFDA/CHAKRAVARTH RAGHAVAN) -- The need for an early agreement on the Agenda, venue and organisation of the seventh session of the UN Conference on Trade and Development has been a recurring theme in the General Debate at the UNCTAD Trade and Development Board this week.

Spokesmen for the Group of 77, Socialists, and China, as well as individual delegations, who have spoken in the General Debate on Wednesday and Thursday all expressed their concern at the failure to reach agreement, despite prolonged consultations over this issue for the last several months.

Delegates privately say that the main difficulty is over the efforts of the OECD Group to secure agreement on a "value-loaded" Agenda, and secure the agreement of others on what exactly could be raised and discussed at UNCTAD-VII, and control the Secretariat documentation as well.

The aim, particularly from the US and its supporters, has been essentially to turn around the focus and outcome, from the actions needed to change the international environment and make it supportive of development, to one of changing the domestic policies of third world countries, and privatising their economies and opening them up to transnational corporations.

The UNCTAD Secretary-General, Kenneth Dadzie has been trying to pull the different viewpoints together and formulate wordings on the overall theme and the four main areas to be addressed in a way that would meet the viewpoints of both sides.

But the OECD countries have been going back and forth so much that it has been difficult to pin them down and reach conclusions. Some within the group privately say that the group in fact is divided, and there is resistance from Nordics and others over the US efforts.

Though the group of 77, supported by the Socialists and China, have been trying to be accommodative, they are finding it increasingly difficult to find a compromise acceptable to the OECD - since in effect it would mean their giving up their viewpoints, and accepting only the OECD, and US viewpoints, about UNCTAD-VII.

Some of them say that there have also been hints that at least some within the OECD group, specially the USA and its supporters, are trying to use the efforts to agree on an Agenda for UNCTAD-VII, to secure concessions in GATT at Punta del Este to meet the US viewpoints on the outcome there.

This has been creating a backlash.

The Board is due to adjourn on Sep. 10, and it has to decide by then on the venue, dates and Agenda, in order to enable the UN General Assembly to act upon it at its forthcoming session.

Meanwhile, in the General debate on the state of the world economy, under the board's agenda items of interdependence and debt, the UNCTAD Secretariat's more pessimistic projections and warnings found support from all except the OECD group of countries.

The latter, while praising the technical quality and analysis in the UNCTAD's 1986 trade and development report (TDR/6), nevertheless have questioned its conclusions, and without advancing any factual basis for this, have sought to project a more optimistic outlook, in an effort to deny the need for any concerted and coherent set of international actions along the wide front of trade, money and finance, debt, and commodities, mainly because of differences between the OECD group of countries on the one side and the other regional groups and China on the other.

Speaking for the OECD group of countries, Alan Oxley of Australia, praised the technical standards and analytical quality of the TDR/6, but disagreed with the policy conclusions. In his group's view there should also have been a better balance between internal and external factors.

Oxley also sought to project a more optimistic view of the prospects for the world economy, and for the third world countries, but based more on expectations than on any facts.

The OECD spokesman also differed with UNCTAD on the deflationary bias in the world economy. He viewed the overall stance of OECD macro-economic policy as "roughly neutral", and contributing to sustainable growth.

Oxley suggested that improvement in the current account imbalance had already begun, and would continue, due to exchange rate changes. While unemployment remained high, it was mainly due to "structural problems" of individual countries whose solutions could not be found in cyclical measures and reflationary policies.

But due to fall in oil prices and low commodity prices, as well as adjustment policies in non-OECD countries, OECD exports to non-OECD countries had been falling at an annual rate of 10-20 percent in real terms in first half of 1986, and would shave off OECD GNP growth by half to one percentage points.

On the debt issue, the OECD spokesman noted that in 1985 there had been a deceleration in third world debt build-up - with only 33 billion of the 88 billion increase in nominal debt due to new-borrowing, while the balance was due to exchange rate effects

But he underlined the need for dealing with the debt problem within the objective of growth and development, and commended the year-old baker initiative towards this end, to reiterate the need for case-by-case approach.

It was not clear from the OECD statement whether the group saw the reduced new loans to third world, and the deceleration of debt accumulation, as a positive or negative sign, nor did he deal with the view in the TDR/6 that the baker initiative was still in "embryonic" stage, almost a year after its being unveiled, and the resource flows contemplated far below the needs of the situation.

The ICFTU representative, E. Laurijssen, who spoke later however pointed out that "adjustment" had become synonymous with "austerity", and while it could have some logic on a country-by-country basis, on a global level it only led to contradictions with larger number of countries trying to increase their share of a stagnant or slowly growing world market.

The weight of the debt burden on the third world was threatening the stability of international financial system, and the social and political structure of indebted nations.

Behind the talk of the debt crisis lay a poverty crisis of tragic proportions, and trade unions were deeply concerned "at lack of social concern displayed by many governments and international agencies, particularly over the last five years" such an approach was politically and economically dangerous.

Intervening in the debate Wednesday, China's Li Zhimin was concerned that despite numerous consultations, there was still no full agreement on UNCTAD-VII Agenda. The Chinese delegate appealed to all to display goodwill and arrive at an agreement, on the basis of the informal paper prepared by the UNCTAD Secretary-General, reflecting the viewpoints of the large majority of member-states.

Earlier, the Chines delegate stressed the urgent need for correcting the defects in the international trading system, where there was trade war among industrial countries and surging protectionism against third world countries. He hoped the moves to launch a new round would improve the multilateral trading system, and liberalise trade and improve terms of trade of the third world.

On the third world indebtedness, the Chinese Delegate noted that while the baker initiative was welcome, it had only a limited role since the resources envisages was "disproportionately inadequate, and accompanied by stringent terms".

Speaking for the group of Socialist countries, Gerard Philipp of the German Democratic Republic, also called for early decisions at the board on the place and Agenda of UNCTAD-VII, which through its analysis of the current situation, come up with action-oriented and feasible recommendations.

"The Socialist Group", Philipp said, "shared to a large extent the assessments of the UNCTAD Secretariat in its TDR/6".

Without shutting one's eyes to social, political and ideological contradictions, it was necessary to learn the art of conducing "a result-oriented and matter-of-fact dialogue", and create a system of international economic security.

It should include elimination of discrimination in international practice, joint search for debt problems, and a NIEO guaranteeing all states the same economic security.

In other speeches on behalf of individual countries, Canada's R.G. Wright viewed as largely correct the TDR's assessment that the debt crisis, triggered by the world economy downturn, was the cause of continued economic sluggishness in the third world.

However the report largely ignored the important of domestic policies and management, and the consequences of poor planning, in the third world.

While commending the Baker initiative, and the steps being taken in the World Bank and IMF on the debt crisis, Wright agreed with UNCTAD that its idea of applying some elements of US debt code - cool/off interest moratorium pending reorganisation - to the international debt problems merited serious consideration.

While Canada believed there had been progress over last four years in dealing with the debt crisis, it shared the dismay at the prospect of third world countries receiving few financial inflows than outflows.

Peru's Jose Carlos Mariategui, in a moderate presentation, explained the critical economic conditions that forced his country to limit its repayment to the IMF, which however had not shown the understanding sought by Peru but had taken an inflexible stand and had declared Peru ineligible for further funds.

"We do not wish to believe that because our debt is not so large as to damage the private banking system, the IMF has declared US ineligible in order to teach others a lesson", the Peruvian delegate declared.

India's Jaskaran Teja, pointed out that a more restrictive new MFA had been concluded on the eve of the GATT Ministerial Meeting to decide on a new trade round.

"In this situation", he said, "it would not be far wrong to say that all talk of trade liberalisation in the wider context has a hollow ring about it".

Earlier, Teja noted intensification of protectionism ever since the call for a new round, and the efforts of some to bring issues like services and investment into the new round and apply "a GATT-like approach" to these fields.

"This", Teja underlined, "would only perpetuate the existing international economic order and accentuate its inequity and asymmetry".

Apart from these various threats to the multilateral trading system, the GATT system had also no effective means of dealing with increasing resort to restrictive business practices, particularly by TNCS, or address effectively the commodity issues.

"A new system to effectively tackle these problems was required, and UNCTAD should prepare a blueprint for such a system which would be universal and no discriminatory and took into account the particular needs of the third world", he added.

One of the first casualties of trends towards protectionism, financial and economic instability, and adhocisms on global issues, was the concept of multilateralism itself.

The Indian delegate, like others before him, expressed concern over the "painful and tortuous" course of negotiations over UNCTAD-VII agenda and organisation, and hoped agreement would soon be reached on this, and the Secretariat's traditional role of intellectual independence in preparation of documents would be preserved, and its integrity not circumscribed in any way.

Argentina's Leopoldo Tettamanti underlined the political environment for the meeting, namely a weakening of multilateralism, due to policies of power and unilateral action instead of collective actions.

UNCTAD was one of the institutions most affected, apart from the conditions under which they were all working, with limited translation and interpretation facilities, due to the budget crisis.

In this situation they had still not been able to agree on the agenda, venue and organisation of UNCTAD-VII, and Argentina was seeing with "dismay" these developments which showed "lack of political will, breakdown of dialogue and cumbersome mechanisms of decision-making".

Egypt's Sayed Anwar Abou Ali also underlined the need for early decisions at the board over the UNCTAD-VII issues.

He outlined the positive outcome of the Cairo high level meeting of the Group of 77 on ECDC, coming as it did on the eve of very important meetings - like the Nam Summit, Punta del Este GATT Ministerial Meeting.

Abou Ali was also critical of the retrograde MFA-4 concluded in July, and said AMIDST all the talk of trade liberalisation, they were witnessing an intensification of protectionism against third world countries.

The collapse of commodity prices and earnings, and the sharp fall in oil prices was affecting all groups of countries, and not merely the oil-exporters, and accentuating the debt crisis.

Many international events - the Punta del Este GATT Meeting, IMF/World Bank Meetings later, and the UNCTAD-VII next year - were due to take place against this background, and it was time for governments to seriously examine this and take bold measures to promote development and establish a more equitable world order.