FACETS OF GLOBALIZATION AND CHALLENGES TO DEVELOPED AND DEVELOPING COUNTRIES DISCUSSED AT UNCTAD IX

Press Release
TAD/1824

FACETS OF GLOBALIZATION AND CHALLENGES TO DEVELOPED AND DEVELOPING COUNTRIES DISCUSSED AT UNCTAD IX

MIDRAND, South Africa, 1 May -- The many facets of globalization and its challenges to both developed and developing countries were addressed by speakers this morning, as the ninth session of the United Nations Conference on Trade and Development (UNCTAD IX) continued its general debate.

The capacity of developed countries to cope with globalization was diminishing, the representative of Singapore said. High budget deficits, huge public debt, low savings and unemployment were among the problems they were facing. Thus, developed countries had little option but to take austerity measures. At the institutional level, they affected the availability of resources to UNCTAD for development assistance.

The representative of Malaysia stressed that developing countries needed to be assured that transnational corporations, while exploiting to the full the potential of globalization and liberalization, would continue to be good corporate citizens, contributing towards growth and development and transfer of technology to the host countries, and avoiding business practices which were detrimental to the interests of developing countries.

The representative of Kenya called for a review of restrictions imposed on the movement of labour from developing to developed countries. Those restrictions should be ultimately removed in the spirit of global liberalization. Africa, and particularly Kenya, was faced with growing unemployment, especially after the liberalization and subsequent restructuring of its economy, he said.

The challenge before the international community was to develop policy recommendations to ensure that globalization would be a "positive-sum game" for both developed and developing countries, the representative of the Organization for Economic Cooperation and Development (OECD) said. He stressed that the OECD was firmly committed to the goals and approaches "at the centre of this watershed UNCTAD" session.

Statements were also made by the Minister for Industry and Primary Resources of Brunei Darussalam, Abdul Rahman Taib; the Minister for Mining

and Energy of Indonesia, Ida Bagus Sudjana; the Commerce Minister of Côte d'Ivoire, Ferdinand Kacou Angora; the Commerce Minister of Romania, Romulus Ioan Popescu; and the Minister for Foreign Economic Relations of Poland, Jacek Buchacz.

Also making statements were the representatives of Tunisia, Turkey, United Arab Emirates and Mexico and the observer for Palestine, as well as the Executive Director of the UNCTAD/World Trade Organization (WTO) International Trade Centre.

Statements

The first speaker this morning, the second day of the general debate at the ninth session of the United Nations Conference on Trade and Development (UNCTAD IX), was MOHAMED ENNACEUR (Tunisia): The UNCTAD has always worked for development and fairer trade relations. In the new international environment, the need for UNCTAD has never been more vital. Globalization is a matter for concern but it also gives reason for hope. Tunisia has embarked on a broad programme of reform aimed at creating an enabling environment for trade. Tunisia was the first country of the Mediterranean region to sign an agreement with the European Union aimed at creating a zone of free trade there. That zone will lead to redressing social imbalances.

Development is a national responsibility. However, the support of the international community is essential, particularly in the area of national trade. The UNCTAD can play a vital role in that regard, including in the area of commodities. The foreign debt of developing countries must remain at the centre of UNCTAD's concerns. Foreign direct investment is important to complement development assistance, and UNCTAD must also provide an input in that area. The Cartagena Commitment inaugurated a new era of responsible dialogue among trade partners. That partnership must continue for international trade relations to become increasingly balanced. The organization must live because "UNCTAD is us". The UNCTAD is a common will to create a better world.

ABDUL RAHMAN TAIB, Minister for Industry and Primary Resources of Brunei Darussalam: The UNCTAD must re-examine and redefine its priorities. Among them is international trade, an essential tool for development. The organization can provide a better understanding of the new issues currently being explored vis-à-vis the possible and deeper encroachment on domestic policies. Human resources and enterprise development, with particular emphasis on the small and medium-size enterprises, should feature prominently in UNCTAD's work. Brunei Darussalam, in its efforts to diversify its economy away from oil and gas, attaches great importance to the development of small and medium-size enterprises.

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The UNCTAD should bear in mind that it is just one of the many international organizations that deal directly with the issues of development. As such, UNCTAD should focus its efforts on areas where it has proven expertise and a clear competitive advantage. The working relation between UNCTAD and the World Trade Organization (WTO) should include areas such as the implications of the Uruguay Round Agreements; trade in services; trade and environment; new and emerging issues on the international agenda; and the impact of regionalism on the multilateral trading system. The UNCTAD should also study closely the experiences of countries that benefited from the use of appropriate trade policies. As a matter of urgency, the Conference must review its internal structure and working mechanisms to maximize its effectiveness.

KERK CHOO TING, Deputy Minister for International Trade and Industry of Malaysia: The mandate entrusted to UNCTAD more than 30 years ago remains valid. The organization can effectively complement the WTO, especially in enhancing developing countries' ability to meet their commitments, prepare for negotiations, meet new challenges, and integrate into the multilateral trading system. Recent pronouncements and intended actions by some developed trading nations, including the continuing use of unilateral discriminatory trade measures, do not augur well for the credibility of the multilateral trading system. A more realistic and objective analytical work is needed before a global consensus on new multilateral trade issues, such as labour standards and environmental protection, could be secured.

Developing countries are continuously subjected to conditionalities, such as environmental conditionalities. The way to fully engage developing countries in the issue of trade and environment is through promoting economic growth and sustainable development. This is vital. The need to protect the environment should be viewed as an integral part of the development process, which would include eradication of poverty, meeting basic needs and enhancing the quality of life. Developing countries need to be assured that transnational corporations, while exploiting to the full the potentials of globalization and liberation, will continue to be good corporate citizens, contributing towards growth and development and transfer of technology to the host countries. At the same time, transnational corporations should also assure those countries that they will avoid business practices which are detrimental to the interests of developing countries and to free trade based on the rules of the multilateral trading system.

TEMEL ISKIT (Turkey): No single aspect of the economy can be treated in isolation in the new world environment in which challenges and pitfalls are greater than before. Poverty, hunger and illiteracy afflict more than a fifth of the world's population. The new issues, such as trade and competition, investment and environment, have to favour trade rather than present barriers. It remains to be seen which would favour development. There are more questions than clear answers to the problems. Investment in human resources and education is a first priority necessity. Investment in small and medium- size enterprises is also a necessity. What are the social costs of "orthodox" policies, what is needed to ensure that those costs are not borne by the poorest members of society, and how can it be ensured that the overall policy of industrial countries support development aims?

Turkey has followed outward-looking liberal export-oriented policies for more than 15 years. It has passed liberal competition and consumer protection

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laws entailing a painful structural adjustment regime. It is also engaged in various regional cooperation schemes, arrangements in which it shares experiences with developing partners and tries to find the answers to the fundamental questions of development. The UNCTAD has a special role to play in promoting development. With appropriate reform of its machinery to adapt to changing conditions while preserving its universal character, UNCTAD has to continue its mission, building on its cooperative advantages. Other institutions should be seen as complementary actors trying to achieve the same objectives. The organization's analytical function has to be complemented by increased technical assistance activities.

IDA BAGUS SUDJANA, Minister for Mining and Energy of Indonesia: International policy measures and cooperation that should be undertaken to promote growth and development include securing market access opened up by the Uruguay Round for developing countries' exports. The positive results achieved through the Uruguay Round in the agricultural sector will remain incomplete unless and until the interests of the net food importing developing countries are taken into account. We should not lose sight of those developing countries which are highly dependent on some commodities or a single commodity. It is urgent to reactivate international cooperation on commodities. Moreover, special treatment should be accorded to the least developed countries in general.

Concrete measures are needed to alleviate the unsustainable debt service burdens shouldered by the low income countries, including those emanating from multilateral debt. More serious efforts should be made by the developed countries to attain the target of 0.7 per cent of gross national product (GNP) for official development assistance (ODA). Considering the difficulty of many developing countries in attracting foreign direct investment, international assistance is critical to help them tap these resources while strengthening their national economies through real transfer of technology.

International measures to promote capacity building in developing countries in the services sector are essential. International cooperation to promote enterprise development and entrepreneurship becomes urgent to help create a favourable environment for entrepreneurial initiatives in which small and medium-size enterprises can compete better internationally. International cooperation in trade facilitation, such as that in standard and conformance, customs procedures and information networking, will expand the benefit of trade liberalization. With its developmental orientation, universal

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composition and substantive experience, UNCTAD can inject a sense of direction into the globalization and liberalization process towards a world economy that will be more vibrant, efficient, just and equitable.

FERDINAND KACOU ANGORA, Commerce Minister of Côte d'Ivoire: The speed of globalization and liberalization has strengthened the possibility for growth and development. However, many developing countries, particularly African countries, run the risks of exclusion from the benefits of those processes. That situation must be confronted on a urgent basis by several measures, particularly in the area of commodities. A new system is required to stabilize commodity prices. Attempts by UNCTAD in that regard have not been successful. New forms of international economic cooperation are required to promote the industrialization of developing countries, to assist in the area of capacity-building, among others, to bring them into line with developed countries.

Several measures also must be implemented to improve the access of developing countries to developed countries' markets. One of the consequences of the Uruguay Round is the rise in the prices of basic food products and that will entail problems for preferential trade agreements. Measures to help countries importing food products are required, to prevent them from being doomed to permanent aid and assistance. The uncertainties in monetary and financial issues are pervasive. The UNCTAD should strengthen its role as a forum for dialogue and consultations, as no region or country in the world today can pursue its trade policies in isolation. Côte d'Ivoire implemented several measures to create an enabling environment for investment. A partnership between the private and public sector has been established. The role of private sector in the economy has been part of the country's development strategy for a long time. KOO TSAI KEE (Singapore): Developing countries are not the only ones which have to cope with the effects of globalization. The capacity of the developed countries has been diminishing in recent times. Hugh budget deficits, high public debt and low savings are among the problems they are having to encounter. The growing number of unemployed is yet another issue of concern to those countries. Those problems mean that developed countries have little option but to take austerity measures. At the institutional level, they affected the resources available to UNCTAD for development assistance.

The UNCTAD should continue to be the forum for the sharing and dissemination of international practical experiences in development and to provide developmental dimension to global policy-making. That is necessary because the lack of coherence in economic policies, leading to misalignments and fluctuations in exchange rates, interest rates and commodity prices, often adversely affects developing countries. That is one way in which UNCTAD could bolster existing working arrangements with the WTO and other Bretton Woods institutions and further ensure that developing countries' interests are safeguarded in global economic policy-making.

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ABDULRAOUF AL-MUBARAK (United Arab Emirates): The UNCTAD is an important forum for constructive dialogue to establish a basis for justice and equity in the international economic order. A fair economic order requires multilateral cooperation by which developing countries should reform their economic policies, remove all structural distortion, and adjust their relevant procedures and legislations. This would be combined with the efforts of developed countries and international financial institutions to assist and support reforms. They will participate in providing a suitable international environment by adopting financial and monetary policies aimed at stabilizing commodity prices and exchange rates, as well as improving the access of developing countries exports to international markets. The United Arab Emirates has adopted a liberalized policy to secure proper living standards, safeguard human dignity, and keep pace with international developments. It supports projects in many developing countries and has generously contributed to programmes aimed at improving human conditions in general.

The United Arab Emirates confirms the importance of promoting international trade through the development of Trade Points within the trade efficiency programme, which is a practical instrument to enhance the role of private institutions. The UNCTAD must support the interests of developing countries and defend their views in the WTO, and ensure that the latter will not become a tool serving the interests of the developed countries. For example, the agreement on trade-related aspects of intellectual property rights should not become a pretext to deprive developing countries from acquiring the necessary technology for management, production and communication for the optimal allocation of their national resources. Also, the General Agreement on Tariffs and Trade (GATT) should not be used to force developing countries into opening their markets to international trade in services and into granting concessions without taking into consideration either their right to provide a minimum level of protection to this sector, or the variation in the development levels of their management structure and technical skills.

MAKOTO TANAGUCHI, of the Organization for Economic Cooperation and Development (OECD): The OECD recently examined its economic linkages with 15 major developing countries in the areas of trade, investment, capital flows and technology exchanges. It also explored environmental issues and international migration. Many of these countries are pursuing so-called "linkage-intensive" development strategies that integrate them into the global economy mainly through trade and capital liberalization. The study argued that the gains for OECD countries from the rapid growth of these economies far outweigh the pain of the adjustment required. The OECD is now undertaking a follow-up study. The challenge will be to develop policy recommendations that aim to ensure that globalization will be a "positive-sum game", for both developed and developed countries.

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Activities of the OECD with the economics in the Asia-Pacific region have expanded dramatically. It has launched a policy dialogue with six dynamic Asian economies based on workshops with participants coming from governmental, academic and private sectors. It has also launched its "Emerging Market Economy Forum" to undertake policy dialogue with a wider range of non-member economies undertaking policy reform. Since 1990, the OECD has contributed to the reform in transition economies of Europe and Asia, through the Centre for Cooperation with Economies in Transition. It continues to give great attention to the problems of developing countries through its Development Assistance Committee, the Development Centre and the Club du Sahel. The OECD is firmly committed to the goals and approaches at the centre of this "watershed UNCTAD" session.

ROMULUS IOAN POPESCU, Commerce Minister of Romania: Globalization and liberalization are interdependent processes fostering one another. Globalization implies liberalization while the latter facilitates globalization. In order to benefit from the advantages of the positive relationship between globalization and liberalization and to avoid the incumbent risks, there should be concerted international efforts for coherent global policies and a stronger discipline in macroeconomic management.

A fundamental change is represented by the evolution towards a unique world economic system based on the principles of market economy. Countries from central Europe, as well as those from the former Soviet Union, are fully engaged in the process of transition to market economy; several of them are approaching the end of that process. Romania, a country in transition and a developing country, is steadily promoting economic reform, as well as development on a modern economic base. It is firmly engaged in the process of integration in the world and European cooperation structures, and in the processes of globalization and liberalization of the economic life. There is a need for increasing the efficiency and pragmatism of UNCTAD activities and for adaptation to economic and political realities in a rapidly changing environment. Such an approach requires a re-evaluation of UNCTAD's working programmes and at the institutional level.

SERGIO GONZALEZ GALVEZ (Mexico): Consultations between Mexico and South Africa will include not only economic issues, but also other areas, including various aspects of disarmament. The existence of a institution such as UNCTAD to give impetus to the development of trade is still valid. It gives irreplaceable support to developing countries in their efforts to achieve a better standard of living. The opportunities and challenges of globalization and liberalization cannot be ignored. It is necessary to strengthen international cooperation. Multilateral institutions should be subjected to constant adjustment to meet changing realities. Most of the developing countries have maintained their commitment to continuing reforms. Mexican efforts with international support have begun to yield positive results, providing convincing proof of benefits of the process of adjustment. Short- term debt decreased from $29 million to virtually zero. That and other positive figures are a sizable breakthrough on a still lengthy path.

The Mexican experience stresses that internal reforms also depended on international initiatives. The efforts of developing countries should be counteracted and corresponded to by developed countries. The promotion of an international agenda for development based on respect for its internal

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priorities constitutes a fundamental objective of Mexico's foreign policy. Mexico supports the efforts for restructuring of UNCTAD. The organization should constitute a forum to analyse the consequences of inclusion for developing countries and the subsequent problems that could occur in their adjustment. It has an important role in international trade negotiations and to increase the ability of developing countries to trade. The universality of the Conference will be crucial. Mexico is committed to the principle that gave birth to UNCTAD.

JACEK BUCHACZ, Minister for Foreign Economic Relations of Poland: There can be no success in UNCTAD's activities without clear and definite priorities. The organization should concentrate on analytical and advisory activities, setting examples for developing countries, basing its information on the experiences of other member States. The inclusion of activities relating to countries in transition among UNCTAD's priorities was a positive trend, and the experience of Poland could be the object of the organization's analysis and investigation.

Poland has benefited from its cooperation with UNCTAD. The promotion of enterprise development and competitiveness must be stressed; significant progress has been achieved in Poland due to the implementation of that policy. The UNCTAD should retain its position as a forum for building consensus in trade and development issues. What should be avoided is competition with the WTO and involvement in its tasks and duties. Complementarity is the answer to that problem.

DENIS BELISLE, Executive Director, UNCTAD/WTO International Trade Centre (ITC): The Centre, a joint undertaking of UNCTAD and WTO, was created for trade promotion, export development and technical cooperation at the operational and enterprise level. A new entrepreneurial culture for trade and development must be created. Product development and market diversification to broaden the export portfolios of low income countries is essential and feasible. Tangible reductions can be achieved in the import bills of least developed countries through better international purchasing and supply management. Access to international business information must be provided to all enterprises in developing countries and economies in transition. Trade support services must be enhanced, particularly in areas of trade, finance, packaging and quality control. In addition, substantially improved human resources development capacities for trade development need to be built up.

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In order to reach these targets, the ITC has defined six areas of specialization with distinct tools: needs assessment and programme design; integrated export product and market development programmes; a programme for strengthening international purchasing and supply management; a range of tools in the area of trade information, adapted to the specific needs of low-income countries and small and medium-size enterprises; a team of specialists in a variety of trade support services; and a human resource development core service which extends assistance to trade related training institutions. Better coordination and more efficient use of the estimated $1 billion being spent annually by the international community on trade-related technical cooperation are likely to raise their impact substantially. Creative formulas have to be found to involve the business sectors of both developing and industrialized countries more directly. There should be some financial participation of recipients in order to ensure a greater level of commitment on the part of all involved.

JUSTUS MUDAVADI, Assistant Minister for Commerce and Industry of Kenya: It is a fact that today Africa, and particularly Kenya, is faced with growing unemployment, especially after the liberalization and subsequent restructuring of its economy. There is abundant supply of skilled and semi-skilled labour that can be utilized in both developing and developed countries. While the movement of labour in most developing countries is relatively easy, movement to developed countries is hampered by restrictions and strict visa conditions imposed on the nationals from African countries. Kenya looked forward to UNCTAD and the other agencies in the United Nations system to ease the flow of labour movement by having those restrictions positively reviewed and ultimately removed, in the spirit of global liberalization.

Trade and development cannot be sustained without industrialization. In the 1970s Africa's share of international trade was around 4 per cent. In 1994, it was estimated to be a mere 2.4 per cent. That share is expected to drop further with the liberalization and globalization of world trade, and the erosion of trade preferences offered to developing countries through the generalized systems of preferences schemes and the Lome Convention. The decrease of its share in world trade has led the continent into heavy multilateral and bilateral indebtedness. Thus, in 1994 Africa's debt reached $313 billion, equivalent to 234 per cent of Africa's total export income. "We in Kenya are striving to attain newly industrialized country status by the year 2020 and are calling upon UNCTAD to give us the necessary support in the realization of this noble but very challenging goal."

HAZEM KAWAMI, observer for Palestine: An unemployment rate of 50 per cent, a damaged or destroyed infrastructure and a dependent economy have been inherited. The chief responsibility to improve the economic situation falls on the Palestinian Authority and despite economic difficulty, it has achieved reforms and is taking the necessary measures. It could have achieved better results if not for the recent embargo.

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The Palestinian private sector has always been a special part of the development process. Experts under the aegis of UNCTAD have contributed effectively to establishing the water supply to Gaza and easing restrictions to external trade. A prime objective of the Palestinian Authority is the establishment of a free trade zone to facilitate integration into international trade. Experience has shown the importance of integration with the South. Bilateral South-South arrangements do not contradict relations with the international markets. The political support given by the international community to the Palestine Liberation Organization (PLO) was decisive in bringing peace.

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