GSTP A HISTORIC EVENT FOR SOUTH, AND SOUTH-NORTH RELATIONS

Apr 13, 1988

GSTP A HISTORIC EVENT FOR SOUTH, AND SOUTH-NORTH RELATIONS

BELGRADE APRIL 11 (IFDA/CHAKRAVARTHI RAGHAVAN) – Four keynote speakers at the inauguration of the GSTP Ministerial meeting here Monday viewed the conclusion of agreement an a Global System of Trade Preferences (GSTP) as a historic event in the third world's struggle for development based on equity and justice.

The third ministerial session of the GSTP Negotiating Committee began at the Sawa Centre here this morning, with an inaugural ceremony addressed by Lazar Mojsov, the President of Yugoslavia, Joao Batista de Abreu, Brazil’s Minister for Planning, Priya Ranjan Dash Munshi, India’s Minister of State far Commerce, and Kenneth Dadzie, Secretary General of the UN Conference an Trade and Development.

The Indian and Brazilian Ministers spoke in their capacities as chairpersons of the earlier Ministerial sessions of the GSTP Negotiating Committee - the first at New Delhi in 1985, when the political impetus for the negotiations was given, and the second at Brasilia in 1986 when the framework agreement was concluded.

Over 20 Ministers and persons of equivalent rank, and senior officials and other representatives from about 55 third world "group of 77" (G77) countries, and China as a special guest, are attending this third Ministerial session.

After the inaugural ceremony, the GSTP Negotiating Committee began its formal Ministerial session, unanimously electing Yugoslavia’s Abrahim Tabakovic, member of the Federal Executive Council, to the chair.

After a general debate over the next two days, the session is due to end Wednesday with the adoption of the "Belgrade Declaration" and the signing of the GSTP agreement by the 45 countries that have exchanged concessions and thus became eligible to sign the agreement.

All four speakers at the inaugural ceremony viewed the conclusion of the agreement as an important third world achievement in terms of its potential for increasing south-south trade and, even more, as a new instrument of the south for enchancing its collective self-reliance, for contributing to systemic changes and for restructuring international economic relations for the New International Economic Order (NIEO).

Mojsav viewed the Belgrade session as part of the process that began at the Belgrade non-aligned summit in 1961 and its formulation of alternative policy and philosophy of world relations and development problems.

Dadzie saw the outcome as a historical opportunity "for a 'leap forward' in the construction of economic ties among developing countries."

Das Munshi viewed the GSTP as a "systemic contribution" of third world countries for a strengthened multilateral trading system, while Batista de Abreu saw it as an "historical landmark" in the third world struggle for NIEO.

After years of efforts, Mojsov noted, third world attempts to fashion GSTP are nearing success.

In their efforts so far, their ambitions had frequently gone beyond the possibilities dictated by the reality of their unfavourable position in the world economy - a reality which third world countries were in no position to alter significantly.

But despite all the crisis, the non-aligned movement and the G77 had shown "extraordinary vitality" in successfully withstanding "attempts to disunite" them, Mojsav noted.

The GSTP, he said, was not only the first concrete global agreement of a contractual nature, but had "the significant cohesive power to strengthen political unity and solidarity of the Group of 77 countries, and their position in global relations and dialogue with the developed world."

The GSTP would also have direct positive effects on mutual trade and be an incentive to other forms of economic cooperation.

In this context, Mojsov, as well as the other three speakers at the inauguration, stressed the importance of early ratification of the agreement and launching of the second round of negotiations both to extend the coverage to other G77 countries and products, and deepen the trade preferences in all its components.

"Greater self-reliance" through GSTP and other instruments, Mojsav pointed out, "will put the developing countries in a position where they will not just wait for charity or help, with various conditions attached to them (by) the rich industrialised countries, but where they will be able to become a serious economic partner of the developed world."

Economic cooperation among developing countries, he declared, was neither isolation nor autarchy, but "a ticket to development", and a recommendation that "economic inter twinement of north and south through cooperation on a footing of equality provides the strongest impetus to the world economy."

"If we consistently apply, expand and promote the present agreement,' ' Mojsov declared, "we shall certainly derive tangible benefits in new export possibilities, increased production, employment, investments and general development."

"Can a better recommendation be made than for us to take, after the first step, the second and further steps as well, to finally became the protagonists of our own development and equal partners in the progress made by international community," the Yugoslav president asked.

Batista de Abreu placed the GSTP in the context of the crisis in international economic cooperation and multilateralism, and the crisis in the world economy, where structural changes were taking place, foreshadowing the birth of a new age.

"In the face of such changes, the third world countries must try to change their form of participation in the international economy to avoid their being marginalised, and continue their struggle for a NIEO," de Abreu declared.

"The developing countries must participate actively in the elaboration of new rules of international economic relations, insisting on a systemic approach as a substitute for the present order in crisis."

For this, he said, "it is essential to strengthen the group of 77 as the instrument of our collective will, and UNCTAD as the concrete expression of our quest for transformation of international economic relations."

The conclusion of the first round and signing of the GSTP was ' 'a historical hallmark' ' of the third world struggle for a NIEO, and showed that the G77 platform combined conceptual formulations to guide north-south and south-south relations, with actions conducive to change and creation of new realities, Batista de Abreu added.

With the increased impetus of GSTP, the G77 countries should intensify mutual coordination in other areas of particular interest, and overcome the obstacles and divergences within the group so as to preserve its unity, where in the final analysis lay its strength.

South-south trade, the Brazilian Minister noted, had reached 148 billion dollars in 1981, but because of the economic crisis fell to 107 billion in 1986.

This was a "worrisome challenge", and the negative trend should be reversed through the GSTP mechanism.

Indian Minister Das Munshi said that while the journey to the current stage of concluding the GSTP had not been easy, and there had been many years of painstaking effort, in historical perspective, the progress had been "smooth and remarkably rapid."

The emergence of GATT, he pointed out, had been preceded by long periods of trade conflicts and disruptions and the great depression.

"It is a sign of the political maturity of the G77 that GSTP is being established after but a few years of cooperative effort and intensive negotiations which were sometimes difficult but always constructive."

Underscoring this success in the context of the adverse external economic environment, Das Munshi pointed to the fragmentation of the trading system by the major trading nations, their use of trade strength to impose unacceptable linkages to compromise the third world's autonomous development policies, and their repudiation of the very principle of equity in international economic relations.

Against this background, he said, GSTP was a concrete manifestation of the third world's response to the challenge.

The uniqueness and significance of GSTP lay in the principles embodied - a global system embracing all G77 members, from different regions and with different social and economic systems, and based on mutuality of advantage and benefits to all participants.

The special provisions for, and additional measures favouring the least developed countries as an integral part of the GSTP, ensured that equity would be inherent in the system.

The clearer enunciation of "safeguard" principles in the GSTP, a task that had so far eluded the General Agreement on Tariffs and Trade (GATT), also ensured predictability in trade relations within the framework of GSTP.

"The real significance of GSTP is thus not so much in the arithmetic of preference exchange or the trade covered in the first round. Rather it should be seen as a systemic contribution by developing countries. It constitutes a major contribution towards preserving and strengthening the multilateral trading system."

The adoption of GSTP at Belgrade would be a concrete expression of the third world conviction that "economic relations need not be based on power alone, that principled reordering of economic relation is possible on a just and equitable basis, and that trade should be used as a means to promote self-reliant development of developing countries."

While taking 'justifiable pride' in this collective achievement, they should also be conscious of the tasks ahead in order to fully realise the promise of GSTP, Das Munshi declared.

All G77 members should be brought within its fold, and future negotiations should enhance trade coverage and use all the "innovative and novel modalities" for trade expansion provided in the GSTP.

"We should also give thought to providing a regular institutional support to GSTP to maintain its dynamism. Consideration is also required for devising a clearing and payments system to further enhance GSTP's role in increasing trade flows among ourselves."

In his speech, Dadzie saw the birth of GSTP' as a historical event for the third world.

As a centre-piece of the immediate agenda for south-south cooperation, the GSTP could be seen as an acid test of third world capacity to chart a new course of collective action for mutual benefit.

The political dimension of establishment of GSTP was of great significance, since it had strengthened the concept of collective self-reliance and improved prospects for cooperation in other areas. But the significance of GSTP went well beyond this political dimension, and should be judged as a response to the third world's economic experience of the 1980’s - with its deep crisis in development and continuing marginalisation of the Third World in the management of the world economy.

The GSTP, and in a wider sense ECDC, should form an essential element of a strategy for reactivation of growth and development in the developing countries," Dadzie suggested.

"The launching of the GSTP could act as a catalyst for the creation of a growing and dynamic preferential market among countries of the third world," Dadzie said.

"To the extent it leads to higher growth in developing countries, it would also stimulate their demand for imports from all sources and thus make a favourable impact an the world economy as a whole over the longer term." "Moreover," Dadzie added, "this process will enhance the capacity of developing countries to participate more effectively in international trade negotiations."

The immediate tasks ahead, the UNCTAD chief said, included completion of the ratification process, and actions to improve the effectiveness of agreed trade preferences by extending their scope and coverage.

Only with increased participation and wider product coverage could the economic benefits of an expanding collective market, and opportunities for specialisation and of comparative advantage, be obtained. Dadzie also hoped that the initial participants in GSTP would encourage and facilitate the accession of those who had not been able to participate in the first round and exchange concessions.

Also, with the GSTP as a cornerstone, a comprehensive system of south-south cooperation to expand trade should be formulated and implemented, encompassing in particular cooperation in areas of money and finance related to preferential trade under the GSTP. The effective functioning of GSTP, he noted, would be greatly enhanced if supported by complementary interregional measures in the monetary and financial spheres.