10:38 AM Jun 19, 1996

EQUITY ISSUE RAISES ITS HEAD AT WTO/CTD

Geneva 18 June (Chakravarthi Raghavan) -- Third World countries, as importers and exporters, now play an important role in world trade and world economy and should be able to have an important role in decision-making too, the World Trade Organization's Committee on Trade and Development (CTD) was told Tuesday.

UNCTAD Secretary-General Rubens Ricupero, WTO Director-General Renato Ruggiero and the Executive Director of the International Trade Centre (ITC), Mr. Denis Belisle, were addressing the CTD to explain their joint technical assistance programmes and their plans for the future, and the joint programme as a tangible demonstration of the cooperation among the three organizations in favour of development through trade.

Developing countries, the UNCTAD head noted, had played an active role in the Uruguay Round negotiations. They were now important in the world economy, as importers and exporters, and should have an equally important role in decision-making processes. They were not only 'rising' actors but 'have arisen'.

But not all developing countries, Ricupero said, have been equally successful and there were many divergencies in performance and marginalisation of economies. And something had to be done to remedy this.

And while the World Bank has said that this marginalisation was due to internal problems of the developing countries, "it has also to do with the continuing unfavourable environment," Ricupero added. He also cited OECD reports to the effect that only three OECD countries had overall a more liberal regime now (after the Uruguay Round) whereas many more developing countries had liberalised regimes.

Singapore's Amb. Kesavapani is reported to have welcomed the participation of the three heads before the CTD and saw it as a demonstration of synergies. He raised the issue of equity.

The WTO head, at a round-table of heads of agencies at UNCTAD-IX, had differentiated between the role of mobilising resources efficiently at a global level and addressing the issues of their equitable distribution among and within nations. The WTO's role, he had said at Midrand, was to reward the most efficient producers and enable them to maximise benefits and thus mobilise resources. The issue of distribution should be addressed by other international organizations and governments, he had added.

Kesavapani however told the CTD that Development involved the concept of equity and this must be reflected in the WTO whose rules must promote balanced development. The World Bank and the IMF should also be involved in such efforts to promote equity and balanced development.

The Indian ambassador, Mr. S. Narayanan, in a later intervention, supported Singapore's point about equity and its being reflected in the WTO system and rules. Like Ricupero earlier, he also cited the OECD reports to stress that developing countries had now liberalised more than the industrial countries, but that the external environment facing many developing countries continued to be unfavourable in addition to their domestic problems. He supported Singapore's view that the WTO system and rules should reflect and promote equity.

The WTO head, according to participants, sought to use the occasion to plug his line in favour of an accord at the Singapore Ministerial meeting to take up the issue of a Multilateral Investment Agreement (MIA), arguing that investments would then move from a 'power-based' to a 'rule-based' system where powerful governments or corporations would not be able to dominate. Such a multilateral agreement would be an international guarantee for developing countries and the LDCs among them, and they would get more investments.

In a reference to this argument about an MIA, Narayanan reportedly said that the issue was being considered in another body (informal heads of delegations meetings preparing for Singapore) and he would not therefore deal with the issue at the CTD. However it was extremely difficult to accept the Director-General's observations. The power-based system (of international economic relations) should not be legitimised by getting translated into a rule-based system (of an MIA).

Egypt's Dr. Magda Shahin noted that the same governments who were members of the WTO had agreed at Midrand, UNCTAD-IX, that UNCTAD should undertake a study of this whole issue of investment, and she saw no reason why the WTO should rush ahead or duplicate this.

Later, speaking on a background basis, some Third World delegations, were also cautious about any blind and advance endorsement of UNCTAD secretariat work in this area, noting that UNCTAD's Division on TNCs and Investment (DTCI) has so far been pushing and promoting the EU Commission viewpoint on a multilateral investment agreement.

The sources said that the Ruggiero argument about an MIA -- as a rule-based system that would bring investments to developing countries and LDCs -- is also being advanced by UNCTAD's DTCI and they expect this to be reflected in its forthcoming World Investment Report (WIR), and the approach so far has been one of TNCs 'contesting' markets through trade or investments, but not the development implications.

However, after Midrand, the DTCI, convened a small expert group meeting for consultations on its draft chapter, though the 'experts' were all from the neo-liberal viewpoints in the North, and only one who has done some academic work on development aspects. The WIR due to be published soon would be watched to see whether the draft chapter will be changed to reflect this development aspect.

Third World sources also said the DTCI, as a leadup to the Singapore meeting and its endorsement of an MIA, is canvassing developing countries to support the idea of a high-level segment at the October Trade and Development Board to be devoted to this issue, with the WIR as the principal document.

The French delegation has objected to the WIR or any other publication that is not available in French version as a document for the meeting.

The issue of investment, development and an MIA, Third World delegation sources said, need much deeper technical studies and objective analysis on a range of issues including obligations of home governments for technology transfers by TNCs, their RBPs and other issues including issues of finance and financial flows for development before the need for an MIA and content can be discussed at by UNCTAD bodies.