Nov 26, 1982



Geneva Nov 24 (IPS/Chakravarthi Raghavan) -- The GATT Ministerial conference should reverse the downward spiral in the world economy, and arrest the drift in the multilateral trading system towards "discrimination, bilateralism, conditionality and harassment, now in increasing evidence", UNCTAD Secretary-General Gamani Corea said Wednesday.


Earlier, the IMF Managing Director, Mr J de Larosiere, and the World Bank President, A W Clausen, made a strong plea for resistance and reversal of protectionist trends. Both emphasised the inter-relations between the ability of the Third World to export and earn, and their capacity to service their debts and impart capital and other investment goods.


But while the two heads of the Bretton Woods institutions took the traditional market theory views and supported the talk of need for the Third World to 'liberalise' its imports and accept increasing GATT obligations, Corea questioned some of the new theories and ideas being advanced, without any proper appraisal or agreed assessments of their validity.


Interestingly, the juxtaposition of Corea, immediately after Clausen and de Larosiere, came about at the insistence of the Third World countries.


The USA, and other industrialised countries who dominate GATT, as the Bretton Woods, play down UNCTAD, and the preparatory committee and GATT secretariat had put down Corea to speak only on the second day along with the UN Director-General for economic cooperation, while giving the IMF and IBRD chiefs places an the opening day. However the Third World group took it up with the secretariat, and the speakers list was apparently altered thereafter.


The IMF chief warned that return to protectionism would endanger the entire international economic and financial system, compound the BOP problems of the Third World, obstruct the adjustment process and have long term consequences apart from endangering prospects of medium-term recovery of the world economy.


Clausen himself suggested that 'free trade' was no panacea for the low-income countries, but all Third World countries had an interest in the liberal trade. Between 1970 and 1980, he noted, the export earnings of all the Third World countries increased by 140 percent in real terms. But 93 percent of this went to some 60 middle income countries while only seven percent went to 33 low-income countries that had half the world's population.


Clausen also questioned what he called recent exaggerations of concern over debt problems of the Third World, and the view put forward that it was all due to mismanagement by them. There had been instances of mismanagement but many had adopted prudent policies only to find their plans undermined by severe and protracted worldwide recession.



UNCTAD Secretary-General Corea, on the other hand, specifically rejected the concepts of graduation and selectivity, being proposed for the trading system, without any thoroughgoing appraisal of their relevance and rationale, and without any agreed assessment of their validity.


The current situation required not relaxation of the trade rules, but their improvement and enforcement, he said.


Corea also questioned the litany of industrialised countries for 'liberalisation' of imports by the Third World, and said 'extracting trade concessions from them would not increase exports to them, but would have contrary effects'.


Third world countries, he noted, were avid importers for their investments for development process, whatever the character of their trade regimes. The limiting factor inhibiting their imports, he underlined, was lack of finance.