Nov 11, 1989

FAVOURABLE INTERNATIONAL TRADING ENVIRONMENT A MIRAGE?

GENEVA, NOVEMBER 9 (BY CHAKRAVARTHI RAGHAVAN)— Market access is "the single most important factor" for expansion and diversification of third world manufactured exports, and here the picture is grim and prospects of achieving of favourable trading environment is "increasingly becoming a mirage", according to the Group of 77.

The group’s view was presented in the UNCTAD Committee on manufactures Thursday by Mrs. Lakshmi Puri of India.

Earlier in introducing the secretariat documents, the Director of UNCTAD’s International Trade programmes, Mr. B. L. Das, found both encouraging and discouraging elements in recent trends.

On the positive side, growth in third world exports of manufactures and semi-manufactures had been encouraging, with a 14 percent volume growth between 1985 and 1988. The importance of manufactures in third world exports had also grown.

But less encouraging was the fact that 160 third world countries, with 52 percent of world population, accounted only for 15 percent of world trade in manufactures.

Also, only a small number of these countries had achieved fast growth, with others making little headway because of a number of factors, including scarcity of investible resources and lack of technology.

Price developments in world markets had not also been favourable to the third world, perhaps because some of these countries had been able to compete only by lowering their prices.

While multiple factors affected third world exports, with each one of them interacting with others in shaping export performance and trade flows, some factors provided cause for concern, Das said.

There was anxiety among third world countries over mounting market access barriers in industrial countries, the most serious being proliferation of non-tariff barriers in sectors of particular export interest to third world.

Newcomers in the international markets now faced "a considerably more managed world trading system" than the established exporters of two decades ago.

If a significant number of new exporters were to join the small group of major third world exporters, the international community would need to give urgent attention to ways in which protectionist trends can be arrested and reversed, the UNCTAD official declared.

"Greater coherence in trade policies of developed and developing countries will have to play its role in this context", Das added.

The possibilities of third world countries enhancing their export performance through domestic policies should be viewed in a "realistic fashion", the UNCTAD official suggested.

"The economic policies of the developed countries crucially influence the vagaries of international trade. The leverage of policies of developing economies in improving their trade performance is bound to remain weak, unless these policies are supported by an effective and development-oriented multilateral trading system and by adequate flows of external resources to enable countries to step up investment and technological development.

"Needless to say, the negative net transfer of foreign resources experienced by many indebted countries during the 80’s has considerably diminished the effectiveness of domestic policy changes undertaken by many of them".

Speaking for the G77, Mrs. Puri said the picture was "grim" on the market access side, and the achievement of an international trading environment conducive to substantial expansion and diversification of manufactured exports by the third world was "increasingly become a mirage".

Even as the Uruguay Round was entering its final phase, prospects of an open and liberal multilateral trading system was being seriously jeopardised.

There had been no forward movement in areas of crucial export interest to the third world, while pressure was being exerted to move decisively in areas of interest only to the industrial world.

Among these negative trends to be reversed were the non-fulfilment of standstill and rollback commitments, the unilateral and arbitrary actions (as under the U.S. omnibus trade and competitivess act) and attempts to coerce third world countries to make concessions and undertake international obligations – contrary to their trade, development and financial needs – in services, TRIPs and TRIMs.

There was also little movement on a comprehensive safeguards agreement, while there had been an alarming increase in use of anti-dumping and countervailing duty actions, ostensibly legal instruments and intended against "unfair" trade practices but now increasingly being used for "selective safeguard" actions.

Market access, the G77 coordinator said, should be primarily seen in the context of enhancing the export earnings of the third world countries, stimulating their industrialisation, and accelerating their economic development to eradicate poverty.

But all these also had some beneficial "fission effects", since enhanced earnings by third world countries resulted in the increase of their imports from industrial countries.

"It is thus in the direct interest of developed countries to provide market access to manufactured exports of developing countries, contribute towards their higher export earnings and purchasing power and in turn enabling these countries to by more from developed countries", Mrs. Puri declared.

Mrs. Puri also expressed her group’s concern over the potential adverse impact of regional integration arrangements, like the EEC single market, the U.S.-Canada free trade agreement.