PRESS BRIEFING ON UNCTAD IX

22 April 1996

Press Briefing

PRESS BRIEFING ON UNCTAD IX

19960422 FOR INFORMATION OF UNITED NATIONS SECRETARIAT ONLY

Georg Kell, Officer-in-Charge of the New York office of the United Nations Conference on Trade and Development (UNCTAD), this morning briefed correspondents on the ninth session of the United Nations Conference on Trade and Development (UNCTAD IX), to be held in Midrand, South Africa, from 27 April to 11 May.

In introductory remarks, Mr. Kell gave an overview of the Geneva-based organization. He said UNCTAD was the principal United Nations body dealing with trade and development issues and was devoted to the cause of economic development. Much had changed since UNCTAD's heyday during the 1970s, when it promoted a new international economic order. Today UNCTAD was promoting trade and investment and was committed to an open economy.

Mr. Kell said the forthcoming conference would be a major event, as at UNCTAD IX the United Nations would try to reclaim the high ground on development issues.

He recalled that the new Secretary-General of UNCTAD, Rubens Ricupero, a former Finance Minister of Brazil, had stated that the United Nations must once again give priority to the promotion of equitable economic development. After focusing heavily in recent years on peace-keeping, social issues and human rights, there was a need to address one of today's most pressing problems, namely, the exclusion of over 2 billion people from the emerging global economy. Economic development was the most basic precondition for overcoming poverty and for attaining higher social standards. As the former President of the United Republic of Tanzania, Julius Nyerere, once said, "human rights starts with breakfast". Not recognizing the pressing problem of economic exclusion would be short-sighted and self-damaging for the global community. That was particularly true today when no country could go its own way in isolation.

About 2,500 participants from UNCTAD's 188 member countries were expected to attend the Conference, Mr. Kell continued. Most delegations would be headed by ministers of finance or industry. Several heads of State were also expected to attend. Secretary-General Boutros Boutros-Ghali, President Nelson Mandela of South Africa, the heads of the International Monetary Fund (IMF) and the World Trade Organization (WTO), as well as heads of other multilateral organizations would be active participants.

Several hundred business executives would gather in two parallel events, Mr. Kell went on. The first, called "Africa Connect", was designed to boost investment and networking in Africa, particularly in South Africa. The other event would be the launching of UNCTAD's Global Trade Point Network (GTPNet)

in South Africa, which was being sponsored by IBM and Portnet. That Network had been officially launched at the United Nations International Symposium on Trade Efficiency, held in October 1994 in Columbus, Ohio. It now had over 90 participating States, including 17 least developed countries.

Trade and financial liberalization were the hallmarks of the world economy today, resulting in the globalization of economic activity, Mr. Kell stated. Technological advances, coupled with liberalization, were moving the world toward a globalized market place which offered new opportunities. However, the promise of growth and development co-existed with the continued deprivation and backwardness faced by 2 billion people. The challenge before the Conference was to reduce the risk of economic exclusion.

Four round tables would be held during the Conference, he continued. The topics to be dealt with were the following: "Globalization: development, instability and marginalization"; "International trade as an instrument for development in the post-Uruguay Round world"; "Enterprise development: national strategies and international support"; and "Future work of UNCTAD in accordance with its mandate; institutional implications".

"It would be foolish to predict the outcome of a ministerial meeting involving 188 countries", he said. There was, however, some consensus emerging, including agreement on the notion that enterprise development at the micro-level, and especially of small- and medium-size enterprises, was probably the most useful response to tackle the problem of economic exclusion. The promotion of trade and investment as well as increased focus on least developed countries, were likely to emerge as cornerstones of UNCTAD's future work.

Reform of UNCTAD itself would be very high on the Conference's agenda, Mr. Kell said, adding that UNCTAD's mission had been called into question just a year ago, before President Mandela had offered to host the Conference and before Mr. Ricupero's appointment. The final communiqué of the meeting of the "Group of Seven" industrialized countries, held in Halifax, Canada last year, had devoted a whole paragraph to the role of UNCTAD. The next Group of Seven meeting, to be held in Lyon, France, would take place four weeks after UNCTAD IX.

Mr. Kell said that Mr. Ricupero had already taken action by announcing, four days ago, sweeping changes in UNCTAD's secretariat, including measures to cut overhead costs, reduce bureaucracy and streamline functions. He had referred to those changes as the most far-reaching undertaken by a United Nations body in recent history. The UNCTAD's ability to renew itself and to deliver concrete results was being keenly watched. Indeed, reform at UNCTAD IX would be a test case for international institutions to renew themselves.

UNCTAD IX Briefing - 3 - 22 April 1996

A theme that would probably be addressed for the first time was the relationship between the United Nations and the business sector, Mr. Kell said. The integration of the private sector in the work of UNCTAD was high on the Conference's agenda. There was an innovative proposal to establish a "development senate", which would be the first of its kind, where business could truly interact with the United Nations.

Mr. Kell said the United Nations needed partnership with the business community. How else could the Organization tackle today's most pressing problems? he asked. Trade and investment were the only viable answers to achieve long-term growth. Both large and small private companies were particularly well-equipped to seize and geographically multiply the opportunities offered by the globalizing economy. One problem faced by the United Nations in that context was its image. Many business executives still held the view that the United Nations was promoting unwanted regulations, such as the code of conduct on transnational corporations -- which had been officially buried by the General Assembly more than four years ago.

Much had changed since the 1970s and 1980s, he continued. The United Nations was no longer a playground of the cold war where delegates held endless debates about the merits of competing ideologies. Today, the United Nations was very much involved in the promotion of trade and investment and in seeking a full partnership with the business community.

Giving other reasons why the business community should support the United Nations, he cited the Organization's work in the area of peace, security and human rights, which helped to make the world safer, freer and more predictable, thus reducing risks and helping the business community, which acts globally, and helping to open new markets. Also, the United Nations was setting standards that were globally adopted, including harmonizing statistics, standards for telecommunications, postal service, maritime transport and intellectual property, among many others.

That current trend of the United Nations work was not widely known outside the circle of technical experts involved in those activities, he went on. Nevertheless, it was a significant component of the technical infrastructure of the globalizing economy and business made use of it without really knowing of the contribution that had been made by United Nations to that network. Recognizing that business already benefitted from the Organization and that today's United Nations was promoting business activities would be a first step. More needed to be done to forge a true partnership. It was hoped that UNCTAD IX would be a turning point in that regard.

Asked whether UNCTAD could do something to help Africa face the problems of backwardness, Mr. Kell replied in the positive. He drew attention to the focus on Africa in the two parallel events to UNCTAD IX, adding that there was great hope that they would give a major boost to change that picture. Foreign

UNCTAD IX Briefing - 4 - 22 April 1996

direct investment (FDI) to Africa was very small; that continent had about 19 per cent of the global population but only 2 per cent of the global share of FDI, although it held the prospect of great opportunities. A recent UNCTAD study had showed that return on investment in Africa could be much higher than in other regions. There was a need for promotional activities it was hoped that UNCTAD IX would contribute to that effort.

Was there any money for UNCTAD in the draft budget of the United States? a correspondent asked. Mr. Kell said UNCTAD was financed through the regular United Nations budget, which was financed by the assessed contributions of all Members States. So, UNCTAD depended on the United Nations and was suffering greatly with the financial crisis. Many of the organization's technical assistance projects, however, were financed through extrabudgetary resources which came from countries and, increasingly, from companies that were also interested in promoting their products. For instance, IBM was a major sponsor of the Global Trade Point initiative in Africa.

Asked to be more specific on the reform of UNCTAD, Mr. Kell said that was a crucial issue. Mr. Ricupero had said in his announcement four days ago that the number of divisions would be cut from nine to four -- a radical reduction in terms of United Nations budgeting. Streamlining would also be radical, concentrating on more focused and less diversified activities. On the budgetary side, it was too early to say how many jobs would be cut, although the number would be significant. There was a great danger that those measures could seriously impacting in the organization's capacity to deliver programmes.

Replying to a follow-up question, Mr. Kell said UNCTAD had a very modest budget -- $120 million for the 1996-1997 biennium, with only 300 professional staff. The UNCTAD was a small but very political body, and for that reason it was often put on the spot. For it to have an impact, it must be strengthened.

Replying to a correspondent's request that he elaborate on the creation of a "development senate", Mr. Kell said it was an innovative proposal for the creation of an intergovernmental body, the first of its kind. The intention was to allow full participation of the private sector and non-governmental organizations, reaching out more to the real players in the field of development. It was hoped that by having private companies directly involved in the work of the United Nations, better feedback could be gained on what could be done to address the issues at hand. The intention was that the proposed senate should meet at least once a year as a high-level body under the auspices of the UNCTAD's Trade and Development Board. So far, it was only a proposal, he stressed, adding that some member States were very critical of it. He expressed confidence that Mr. Ricupero would exert his best efforts to make that innovative proposal a reality.

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Would business people be able to attend the meetings of UNCTAD IX? a correspondent asked. Mr. Kell said some would be accredited as members of government delegations. Most of them would be attending the parallel events.

In response to a question on the overlapping of mandates between UNCTAD and other organizations, including the IMF and the World Bank, Mr. Kell said the overlapping usually referred to was between UNCTAD and the World Trade Organization (WTO). He read out excerpts from a monthly WTO publication which stressed that the WTO and UNCTAD were distinct but complementary organizations. The UNCTAD had a unique role to play, he said. It was the only international organization that looked at trade from a development perspective. There were many other organizations which dealt with trade issues, but there was none that did so from a development perspective. The UNCTAD-WTO issue had been the first one tackled and settled by Mr. Ricupero, who was a personal friend of the WTO Director-General, Renato Ruggiero.

Asked about the relationship between UNCTAD and the World Bank, Mr. Kell said UNCTAD worked at three levels: policy analysis and research; attempts to forge consensus on issues deserving attention; and technical assistance. In the area of research and policy analysis the organization worked closely with the World Bank. Regarding consensus-building involving governments, UNCTAD had the advantage of being a global forum for debate and discussions, something the World Bank could not offer. That action, thus, took place only at UNCTAD. Often controversial issues were tackled; there was no attempt to hide them. The UNCTAD's annual Trade and Development Report, the main outlet for the organization's analytical thinking, took issue with much of what the World Bank and the IMF were saying, but not in a confrontational manner, rather as a means of advancing the issues.

Did UNCTAD promote the notion of opening up economies in the same manner as the IMF? a correspondent asked. "Very much so", Mr. Kell replied, adding "probably not in the same manner". There was a big debate on the sequencing of opening, on its timing and how to go about it. The UNCTAD had taken issue at some stage with the Fund's and the Bank's recommendation on the implementation of structural adjustment in Africa. That position was well- documented and known.

Overall, however, UNCTAD's philosophy was very clear: "we are all for an open economy", continued Mr. Kell. That was a philosophy shared between UNCTAD and the WTO. To liberalize or not to liberalize was not the question any more. The question now, if there was one, was how to liberalize and how to go about it. The danger now was faced on the other side of the equation; currently, there was a threat of protectionism in the North. So the South was increasingly becoming a proponent of open economies whereas in the North the danger of retreats to bilateralism and protectionism could be seen.

UNCTAD IX Briefing - 6 - 22 April 1996

As economies liberalized, the capital flows had become so great that there were questions about whether the World Bank was really needed any more, and the Bank was going through a sort of identity crisis, a correspondent said. He asked if UNCTAD played any role in that situation. "Yes", replied Mr. Kell, adding that he could not pass judgement on the identity crisis of the World Bank nor on its focus. However, UNCTAD had been looking at the interdependence of finance, investment and trade issues for a long time. Mr. Ricupero was particularly interested in the globalization of finance and had put before the forthcoming Conference a proposal to set up a more effective mechanism for dispute settlements and coordination in response to the potential disruptive effects of global financial flows. What was being argued was that the Fund should have at its disposal the necessary instruments to properly discharge its mandate. Coordination among the Group of Seven was often not very effective and external shocks could be extremely disruptive for developing countries.

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