Nov 30, 1989

EXPERTS MEET ON ENHANCING EAST/WEST AND EAST/SOUTH TRADE.

GENEVA, NOVEMBER 28 (BY CHAKRAVARTHI RAGHAVAN)— A group of intergovernmental experts (IGE) from various regions have been meeting here to formulate proposals for further expansion of economic cooperation and trade among countries with different economic and social systems - the so-called "inter-systems" trade.

Under a mandate arising out of the final act of UNCTAD-VII and decisions of the trade and development board, the IGE under UNCTAD auspices runs till December 1, but could resume in 1990.

The IGE is chaired by Egypt’s Hani Khallaf and with Yuri Isakov of the USSR as vice-chairman-cum rapporter.

The IGE has been asked to analyse and evaluate trends in east/west and east/south trades in order to identify constraints and opportunities for further expansion.

The IGE is due to consider in this behalf various preferences schemes, financing and payments arrangements, and joint ventures.

The group is also to elaborate a draft programme for further promotion of such trade, in particular the east/south trade, and make recommendations on the future orientation of UNCTAD activities in this area - in research, technical cooperation and treatment of specific issues to be included as elements of the programme.

A preliminary report by the secretary-general of UNCTAD on the consultations he was mandated to hold said the consultations had revealed that there was no need for elaboration of a programme of new regulations and rules, since inter-systems trade was increasingly becoming an integral part of world trade to be governed by basic principles.

This was specially so at a time when a process of economic reforms was under way in socialist countries leading to decentralised management of foreign trade and greater autonomy at enterprise level.

The consultations however suggested the need for a work programme for UNCTAD, the need for close review by UNCTAD of the process of economic reforms in the east and its implications for foreign trade, and intensification of technical assistance by UNCTAD to third world countries to enable them to benefit from the process of economic reforms in socialist countries.

In opening the meeting Monday on behalf of the secretary-general of UNCTAD, the director of the inter-systems trade programme, Guennadi Krasnov, noted that the meeting was taking place at a time of profound changes both in the socialist countries and in the environment in which the inter-systems trade was carried out.

The atmosphere of confrontation in political and economic relations, particularly east/west relations was rapidly changing into understanding and cooperation and the changes seemed to open "new visions" for development of inter-systems trade.

"But during the transition period, which might become longer than envisaged, the socialist countries themselves, and other participants in inter-systems trade-, are encountering many kinds of problems, most of which are not easy to solve", Krasnov noted.

The IGE meeting was hence timely, both to assess the situation and take a preliminary view of problems and opportunities, and consider what role UNCTAD could play to help member-countries understand and cope with the changes and overcome the difficulties.

Inter-systems trade, he noted, had grown in value both in 1988 and 1989, but its share of world trade was stagnating. The share of the east both in exports and imports of the third world was falling.

The aggregate deficit in the balance of trade of the third world with socialist countries of Easter Europe had grown from $10.5 billion in 1987 to approximately $11.6 billion in 1988. This was mainly attributable to the surplus achieved by the USSR.

While soviet aid to third world had grown in 1988, Krasnov felt that due to the economic difficulties in Eastern Europe further growth of aid might be limited.

As for east/west trade, while the eastern exports grew in 1988 and first half of 1989, imports had grown faster, affecting the already strained external balance situation of these countries.

As for future prospects, this would depend on three factors, the UNCTAD official said: the success of restructuring process in socialist countries, the overall developments in the world economy and particularly world trade, and measures already being taken and might be taken in future for support and normalisation of the inter-systems trade.

Krasnov suggested that a "pragmatic", rather than "a very ambitious" approach would be more constructive. The programme, he said, should be designed to guarantee an expansion of inter-systems trade, and particularly east/south trade, by removing existing obstacles by a wider geographical distribution, by improved market access, by developing new forms of cooperation.

Such a programme, he added, could incorporate a list of measures of specific and practical nature that could be carried out within the framework of UNCTAD.