7:05 AM Jan 14, 1994


Geneva 14 Jan (Chakravarthi Raghavan) -- Developing nations are facing a hostile international environment and a loss of economic and political standing in the socalled new world order, and need to articulate a global strategy and a firm political platform, according to the outgoing Chairman of the Group of 77.

Amb. Luis Fernando Jaramillo of Colombia in making this assessment in a statement at the Group of 77, while formally handing over the Chair to Ambassador Ramtane Lamamra of Algeria, said the issue could not be put off but should be discussed urgently in a Ministerial Summit of the Group.

In contrast to the euphoria of end of cold war, changes in eastern Europe, economic liberalization, new concepts of sustainable development and the end of the Uruguay Round, Jaramillo said developing nations at the dawn of the 21st century, faced "a hostile international environment and a loss of economic and political standing in the so-called new world order".

"Instead of the so-called new world order, we are witnessing the emergence of sources of profound economic, political and social disorder" with an ostensible worsening of the situation of the developing world in the new balance of power.

"Any dissent of our countries from the position of the countries of the North is now labelled as confrontational, even by ourselves. In practice, we have less political influence and less priority in the international agenda."

For years the Group of 77 has been involved in intense and complicated negotiations with the developed countries which have varied from the most minute issues, many a times of little consequence, to the definition of grand strategies and global development programmes. In truth, many of these have ended up as simple reference literature or have served to enlarge the archives of the United Nations.

In the meanwhile, the strategy of the North continued to be clearly directed at strengthening more and more the economic institutions and agencies operating outside the UN system, with many subjects vital for the international community and the Third World being kept out of the UN system and taken to closed decision-making circles -- such as the Group of 7 industrialized countries where the interests of the developing countries have either been taken into account marginally or been completely ignored, and with G-7 only concerned with promoting a North-North dialogue.

At the same the Bretton Woods institutions continued to be made the centre of gravity for the principal economic decisions affecting the developing countries -- with.

These institutions function with their conditionalities, undemocratic and non-transparent decision-making, their dogmatic principles and lack of pluralism in the debate of ideas, and their impotence to influence the policies of the industrialized countries.

They impose structural changes and formulate projects, and when these fail, their authors disappeared from the Fund/Bank and "nobody is then accountable for anything".

This situation, Jaramillo said, would also be applicable to the new World Trade Organization, whose terms of creation suggest that it would be dominated by the industrialized countries and would align itself with the World Bank and the IMF.

"We could announce in advance the birth of a New Institutional Trinity which would have as its specific function to control and dominate the economic relations that commit the developing world," Jaramillo said.

The last minute decision to call the new institution as the WTO, and the seemingly nominal change (from calling it the Multilateral Trade Organization because of the US rejection of the name 'multilateral'), concealed a different intention.

"The institutional reform of GATT is directed at bringing about, in the area of trade, a further weakening of the United Nations, the only multilateral mechanism in which the developing countries can have some say.

"There is an evident trend to systematically limit the role of the UN as an economic forum. Its capacity continues to be eclipsed and eroded by the aforementioned institutions."

There was not only an imbalance between the UN and these institutions, but continuous demand for the UN to devote greater efforts to peacekeeping operations and security to the detriment of its functions and responsibilities in the area of economic and social development.

As a result, there had been a progressive reduction in the effective capacity of the Group of 77 to exert influence on the international centres of economic decision making and to deal with the unilateral practices of the developed countries.

There was no institutional economic forum where decisions are adopted on the basis of discussions and negotiations incorporating the aspirations and interests of the developing countries or where the industrialized countries make effective commitments in the area of coordination and stabilization of their macroeconomic policies.

The way the Uruguay Round negotiations were conducted was a clear example of the weakness of the developing world. The negotiating process was fragmentary and lacking in transparency. The industrialized countries concentrated on making their own deals in negotiations that took place outside normal channels. Their strategy was to arrive a few hours before the deadline for the completion of negotiations with an agreement that was presented as a fait accompli with developing countries having no choice but accept it without any change.

The developing countries also had lacked any organization, and individual countries showed "the clear inclination to resolve their own individual problems first and even the emergence of contradictory positions among them."

In Geneva developing countries negotiated individually, without a holistic vision, and in such a scheme the most adversely affected were the weakest countries.

"Unquestionably, the developing countries are the losers both individually and collectively.

"The Uruguay Round is proof again that the developing world continues to be sidelined and rejected when it comes to defining areas of vital importance for their survival...(though) developing countries were are the overwhelming majority in GATT, they limited themselves to wait and observe.

"Despite insisting that the negotiations were global in character, the countries of the North refused in the end to accept any discussions, even bilaterally, with the countries of the Third World...The lack of negotiating leadership on the part of the countries of the South, their disunity and their fear of generating antagonistic positions against the industrialized countries were taken advantage of by the latter which led the Third World to confine itself to a role of passive spectator of the decisions adopted. It seems that the developing countries have forgotten that in a negotiation process only those who have negotiating leadership count, those who defend with courage their principles and their positions..."

This was reflected, Jaramillo said, in several areas of decisions.

The bilateral market access negotiations for developing countries was left unresolved. "And Third World countries have been put in a situation where they have already paid the price of accepting the new terms in different areas of interest for the industrialized countries, without obtaining in exchange satisfactory conditions of market access. It will be difficult to expect that the developed countries will be ready to enter into a substantive negotiation by the agreed deadline of 15 February 1994 to allow for the introduction of necessary adjustments and correctives, since there is no incentive nor interest for doing so."

In agriculture, the reduction of subsidies and the tariffication of market access will take place in a proportion and at a rate well below expectations, and their impact on prices would be reflected in the year 2000.

The developing countries would continue to be subject to the effects of the huge agricultural subsidies applied by the industrialized countries and to quantitative restrictions that prevent them from capitalizing on their markets.

In some cases, the only result achieved was a marginal increase in the import quotas which was offered in exchange for exporting countries giving up on their demands against those restrictions which violated GATT. As for the termination of the Multi-Fibres Agreement, projected for the year 2005, the commitment made at Punta del Este was for a termination without reciprocity -- a minimum compensation to exporting countries following thirty years of discriminatory measures in that sector. But in fact the developing countries have had to absorb a high price in other areas of negotiation.

According to the agreed terms, it may be expected that the industrialized countries will maintain restrictions on textiles and apparel until at least the seventh year of the decade foreseen for the termination of the MFA and in the case of sensitive products which are of most interest to developing countries those restrictions will be maintained until the last year and "it is not unlikely that new attempts will be made to perpetuate them."

In antidumping, despite the improvements introduced, the objective of achieving a multilateral trading system based on clear and transparent rules which would give security to export countries, has faded for the most part, and the market economy in which the most efficient, the best quality and the best prices prevail, was soundly defeated.

The special and differential treatment to developing countries mandated by the Punta del Este Declaration was object of "permanent distortion" during the Uruguay Round. The evaluation -- to verify the application of such treatment and to introduce, if necessary, the pertinent correctives -- was carried out on the basis of a "weak and anachronistic" GATT secretariat document, based on the Draft Final Act of December 1991 and did not take into account two years of subsequent negotiations.

While purporting to be illustrative of econometric projections on the effect of the Uruguay Round on the trade and income of developing countries, the document was "dispersed and confusing" in the assessment of the commitments made at Punta del Este.

"In the end, the developed countries have been the ones to benefit from special and differential treatment. They have been allowed to keep subsidies, such as in the agricultural sector, and quantitative restrictions, such as in textile and apparel trade. Developing countries have received little or nothing as far as special and differential treatment is concerned."

The tariff reductions which developing countries could take advantage of, apart from being inferior to the ones initially foreseen, were proportionally less deep than the tariff reductions that will benefit trade among developed countries. According to some estimates, the industrialized countries, which make up only 20% of the membership of GATT, will appropriate 70% of the additional income that will be generated by the implementation of the Uruguay Round.

This quick overview, Jaramillo said, did not allow one to conclude that the Uruguay Round would translate into a positive balance to developing countries.

"While the results were insufficient in several crucial areas of interest to our countries, and in some cases those results remain to be clarified," Jaramillo said, "the concessions granted to the countries of the North -- to cite but one example, the concessions granted in areas such as intellectual property, investment and services -- are notorious."

While the passage of time would confirm which countries will really benefit, "for the time being, it can be affirmed that the conclusion of the Uruguay Round will not lead by itself to the abolition of managed trade, unilateral and bilateral restrictive measures and all types of protectionist practices which were supposed to fade away", Jaramillo declared.

The outgoing G77 chair said that he had referred to the GATT negotiations not only because of the current nature of the subject and its lessons on the treatment received by the Third World countries, but because of the transcendence that trade exchange had for the South. Neither ODA, nor technical assistance, nor credit resource flows, nor any other aspect of international cooperation matched the paramount importance and determinant nature that trade had for the developing world.

The lessons learned from the UNCTAD-VIII in Cartagena, the Rio Summit, the last meetings of the General Assembly, the conclusion of the Uruguay Round and other recent negotiations, showed "the critical importance for developing countries of having a collective strategy available to them."

"We must recognize that the Group of 77 lacks an elaborated and comprehensive position which responds both to the specific issues as well as to the more general problems of the international agenda. On many occasions the position of our countries comes about as a reaction to the initiatives and unilateral moves of the industrialized countries and of the institutions that are at their service.

"We are fragile to pressures and weak to the appeal of particular interests and aspirations. Many a time we fall in the temptation of rhetorical discourse as a pretext for not harming resource flows from the North or bilateral preferential treatments.

"The industrialized countries and their institutions know this vulnerability and this ambivalence very well. They are used to establish new conditionalities, to interfere in the domestic affairs and to transfer the international responsibility over to the national policies of the developing countries. In the meantime, the developed countries elude their own responsibilities. Their policies, despite the profound impact they have, remain outside the influence of the rest of the countries which make up the international community.

"The Group should articulate a global strategy that may enable it to respond adequately to changes that take place in the world scene and which may translate into true negotiating capacity. Otherwise we will progressively continue to be marginalized from the real world and our influence on the latter will continue to be virtually nonexistent. A key component of this strategy should be the review of the functioning of the Chapters of the Group of 77. Up to now the latter have acted in a dislocated manner and without clear goals, which is reflected in the weakness of their positions and in their lack of continuity and dynamism.

"The disadvantage of the developing countries ultimately resides in the lack of a firm political platform. This is an issue which should be discussed in depth urgently in a Ministerial Summit of the Group. This cannot be put off.

"International economic relations are most definitely power relations. It is not easy that the countries which exert control in the prevailing international system accept reforms aimed at correcting the prevailing economic and institutional inequalities.

"Only the determined joint action by the countries of the South, based on clear development policies, a better utilization of their resources and capabilities and a solid strategy of economic cooperation, may offer possibilities for changing the current system of relations.

"In its thirty years of existence, the Group of 77 has strived to defend the interests of its member countries. Yet the voids are noticeable. There is still a long way to go. Our main duty is to build and preserve the unity of the developing countries and to accommodate its different concerns and aspirations without jeopardizing the basic objectives of the Group.

"The strength of the Group must rest on the clarity of its objectives, the effectiveness of its mechanisms, its unity and its internal cohesion. Only in that way will it be more real and less formal. "The Group of 77 has an enormous potential for making use of its influence. Therefore, our duty is to persevere in the efforts to achieve its effective consolidation.

"The celebration (in 1994) of the thirtieth anniversary of the creation of the Group of 77 represents a particularly valuable opportunity for an in-depth review of its role and the formulation of concrete institutional proposals to give it new legitimacy and energy.

"The remainder of the present decade will be decisive for the Third World. The Agenda for Development and other related issues dealing with cooperation, growth and the development of our countries will define, in one way or another, the course of relations with the developed countries and our participation or nonparticipation in the benefits of the world economy.

"We must be cognizant that if the Group of 77 does not respond adequately to these challenges, the consequences will be a source of new frustrations and despair. We should not spare any effort to make the Group a united and strong front around basic principles and a different strategy... strengthen it and to work with the necessary creativity and commitment to move from the abstract discussions to specific achievements. Otherwise we would have failed history, and worse yet, we would have failed those numerous peoples and billions of beings who place their hopes in the construction of a more just, equitable, democratic and free world."