Mar 8, 1990


GENEVA, MARCH 7 (BY CHAKRAVARTHI RAGHAVAN) -- The restructuring process in the socialist countries of Eastern Europe has now reached "the point of no return", but without massive external support "a setback cannot be excluded", according to the UN Conference on Trade and Development (UNCTAD).

In a report to the Trade and Development Board on trends and policies in trade and economic cooperation among countries having different economic and social systems, UNCTAD says that prospects for inter-systems trade would depend above all on three main groups of factors: success of the restructuring process in the socialist countries, overall developments in the world economy, and measures already being taken or may be taken in future for support and promotion of inter-systems trade and in particular East-South trade.

The restructuring process, UNCTAD says, has reached the point of no return:

"It can either be successful, and the way to success will be long and painful, or lead to unpredictable results. The achievement of success depends on the efforts of the Eastern countries themselves. But the reforms are meeting such difficulties now, that without massive external support, a setback cannot be excluded".

The necessary support might have various forms, and some might not even be costly but effective, such as training of national managers.

But others might need large investments.

But the first thing that must be done would be to abandon discriminatory restrictions in trade with these countries and support their efforts to be gradually integrated into the international trading system, the report adds.

All these developments and trends might eventually widen the scope for East-South trade and economic exchanges and stimulate their faster diversification - both conventional trade flows and new forms and channels of trade and economic inter-action.

In this context, UNCTAD suggests that the traditional pattern of East-South trade exchanges would be increasingly supported and supplemented by a wider and more intensive application of those forms of trade and economic cooperation which could strengthen the material base for this trade and also reinforce trade-supportive factors as complementarily and compatibility of East-South trade.

The potential in this regard could be found through the development of joint ventures, co-production schemes, enterprise-to-enterprise cooperation, and more involvement in trade of small and medium-size enterprises.

There might also be potential for East-South trade in setting up economic and free-trade zones in East European countries with participation of their partners from the Third World, in particular the major exporters of manufactures among them.

All these initiatives and innovations would not only enlarge the dimension of East-South trade and economic exchanges but also help to make them more coherent and self-supportive.

In this regard, the report says, Third World countries, especially the more advanced among them, should make additional efforts to narrow the existing gap (as compared to the practices of OECD countries) in utilising new forms of economic cooperation with their East European partners.

New possibilities of such trade could also be opened up through faster expansion of trade and economic cooperation between the enterprises of east European countries and those of the private sector in the Third World, through closer links between the cooperative organisations of both sides, and through the broadening of mutual trade in services.