SUSTAINABLE MARKET ACCESS NEEDED FOR POOR COUNTRIES TO FOSTER GENUINE SOCIAL DEVELOPMENT AND POVERTY ERADICATION, SAYS HOLY SEE

Press Release
ECOSOC/5766

SUSTAINABLE MARKET ACCESS NEEDED FOR POOR COUNTRIES TO FOSTER GENUINE SOCIAL DEVELOPMENT AND POVERTY ERADICATION, SAYS HOLY SEE

1998 Substantive Session of ECOSOC Continues with High-Level Discussions on Developments in Market Access since Uruguay Round of GATT

The human being must be at the centre of future trade negotiations and debates on worker protection, the Secretary of the Council for Justice and Peace of the Holy See told the Economic and Social Council this morning as it continued its ministerial-level debate on market access.

To be sustainable, liberalization and market development in poor countries must bring with it security for people, Monsignor Diarmuid Martin continued. Sustainable market access was needed to foster genuine social development and poverty reduction. He noted that, in addition to trade liberalization, the international community must achieve a new consensus on official development assistance (ODA).

Future World Trade Organization (WTO) negotiations on services and agriculture should include the participation of as many countries as possible, the Director of the Political Department of the Foreign Ministry of Iceland, Hjalmar Hannesson, said. The work programme for the negotiations, to be held by the year 2000, should examine all trade issues relating to global electronic commerce, taking into account the economic, financial and development needs of the developing countries. The WTO should also pursue a more ambitious agenda in the area of trade and the environment.

The gradual erosion of the capabilities of the United Nations in macroeconomic policy-making was an area of great concern, said the Deputy Foreign Minister for Legal and International Affairs of Iran, Mohammad Javad Zarif. The consequences of globalization made the Organization's active involvement all the more imperative. By collaborating closely with the United Nations Conference on Trade and Development (UNCTAD) and the WTO, the Council could make a valuable contribution to the further advancement of the multilateral trading system and to world economic progress.

The representative of the Czech Republic noted that demand capacity was often disregarded in trade discussions and deserved the attention of international institutions. If the point of saturation was reached, better market access would be of little help.

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Statements were also made by representatives of Viet Nam, Bolivia, Latvia, Republic of Korea, Malaysia, Jamaica, Botswana, Poland, Lesotho, Honduras, New Zealand, Togo, Australia and Thailand.

A representative of the International Labour Organization (ILO) also addressed the Council this morning.

The Council will meet again today at 3 p.m. to conclude its high-level ministerial debate.

Council Work Programme

The Economic and Social Council this morning began the third day of its four-week 1998 substantive session by continuing a ministerial-level debate on market access. During the debate, the Council would consider developments since the conclusion of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) within the context of globalization and liberalization. (For further background information, see Press Release ECOSOC/5764, issued on 7 July.)

Statements

NGUYEN DY NIEN, Deputy Minister for Foreign Affairs of Viet Nam, said the challenges faced by developing countries included rising unemployment, marginalization of the poor and widespread bankruptcy of medium- and small- sized industries. To overcome such challenges, developing countries must improve their management skills so as to tap endogenous strength, maximize international cooperation for economic growth, and address social and environmental issues.

To assist the least developed countries (LDCs), the international community must adopt measures to improve the production capacity of developing States and incorporate the application of agreed preferences for the developing and less-developed countries into the regulatory framework of the multilateral trading system. The international community must work to create favourable conditions for developing countries to join the World Trade Organization (WTO) and establish effective mechanisms and measures to cope with potential shocks in the global economy and international trade.

Viet Nam had gradually opened its doors and integrated itself into the regional and global economy, he said. But challenges remained and Viet Nam hoped that it would enjoyb the support and favourable terms suited to its development.

Viet Nam also hoped that, in due course, it could join international trade institutions, including WTO.

MOHAMMAD JAVAD ZARIF, Deputy Foreign Minister for Legal and International Affairs of Iran, said the current international trading system left much to be desired. While trade liberalization since the Uruguay Round had been substantial, those positive results needed to be guarded, secured and further strengthened. That required, first and foremost, the faithful implementation of all the commitments undertaken in the Uruguay Round. Identifying the existing barriers to the market access for the goods and services of developing countries was an integral part of that exercise. While finding the ways and means to remove those barriers, the international

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community must endeavour to define a common goal in constructing a durable and growth-stimulating international trading system.

Developing countries also faced difficulties in meeting some national and international product standards, he said. That led to reduced export opportunities for many developing countries. Iran supported the Secretary- General's proposal to encourage more active participation by developing countries in setting new international standards, and in efforts to promote greater transparency and notification of such standards. Preference-giving countries also needed to improve their preferential schemes, and concrete action was necessary to offset the erosion of preferences.

His Government was concerned about the gradual erosion of the capabilities of the United Nations in the economic field, particularly in the area of macroeconomic policy-making, he said. Globalization made the Organization's active involvement imperative. The Economic and Social Council should continue to play a paramount coordinating role in the macroeconomic field. By collaborating closely with UNCTAD and WTO, the Council could make a valuable contribution to the further advancement of the multilateral trading system and to world economic progress.

MONSIGNOR DIARMUID MARTIN, Secretary of the Pontifical Council for Justice and Peace of the Holy See, said that many developing economies still remained in positions of great vulnerability. To foster genuine social development and poverty reduction, the poorest countries needed sustainable market access. Currently, however, such access was volatile. In many cases, that volatility was due to external sources, such as developed countries slow compliance with obligations under multilateral accords.

Globalization had introduced new forms of indirect protectionism on the part of wealthier countries. Sustainable LDCs in the world economy would require the creation of a strongly-felt sense of solidarity and a clearer focus on the centrality of people in the process. For market access to be sustainable, it must bring security to people. Trade negotiations and debates on worker protection could take place at different venues, but the centrality of the human being must always emerge as the common language of both. A new consensus on official development assistance (ODA) was essential.

ANA MARIA SOLARES, Vice-Minister for International Economic Affairs of Bolivia, said international trade was an important factor in the global economy. While strides had been made in liberalizing markets, progress had not fostered equitable economic growth and development.

The impact of liberalization on developed countries and developing countries were quite different, she said. Tariff barriers, technical norms and a variety of non-tariff barriers stood in the way of developing countries' full participation in an open international trading system.

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While some protectionist measures had been removed, other private and temporary monopolies had arisen under the guise of so-called temporary arrangements, she said. Those allowed countries to continue protectionist measures even in open markets. The international community must begin new negotiations including all countries. Bolivia was determined to support the consolidation of multilateral trading system within in the WTO. That process must reduce the asymmetries in the global market as far as the level of development of member countries.

Bolivia had undertaken a policy of open of markets in line with its commitments under the WTO, she said. That effort had led to countless political, economic and social costs which had gone unmatched by an equal level of participation in world markets. Bolivia needed to generate new normative instruments and to establish an infrastructure that would support its efforts to take advantage of the opportunities that liberalization should provide. The international community must take steps to reach greater equity for participation by developing countries in international trade. Only then would international trade be able to support sustainable development and work to alleviate poverty.

JANIS PRIEDKALNS (Latvia) said the transition of economies of Central and Eastern Europe from centrally planned to free market economies had proved to be more complex and prolonged than initially anticipated. Latvia today aspired to integrate itself into the world economy. Membership in WTO, with its privileges and responsibilities, was an urgent goal. Latvia's notable progress towards macroeconomic stabilization had been enabled by structural reforms and active investment policies.

Market access for Latvia's exports was being achieved through regional trading agreements and tariff concessions, he said. Regional integration of the economies of the Baltic States would benefit the entire region. Latvia had achieved the prerequisite conditions for sustainable economic growth. Its exchange and trade systems had been liberalized and price reforms would align domestic prices with productions costs and world prices. Privatization of large concerns had not been completed as more inflow of capital and technology was required.

LEE SEE-YOUNG (Republic of Korea) said trade liberalization and the promotion of an open and rule-based multilateral trading system were necessary elements for the economic development of developing countries. As the process of market-driven globalization intensified, it was increasingly important to help developing countries increase their capacity to participate in the multilateral trading system.

Developing countries continued to face significant obstacles to market access for their exports, he said. Tariff peaks and tariff escalation were still present. Some national and international standards were too difficult

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to meet due to the differences in technological sophistication. In addition, many countries still resorted to trade remedies in the form of contingency measures, such as anti-dumping duties and countervailing duties. All countries should continue to open their markets to the exports of developing countries and implement their commitments under the WTO agreements.

His Government believed in the open and rule-based trading system, he said. Through that process, trade had played a key role in driving economic growth in the Republic of Korea. Market access alone was not enough. It must be matched with adequate export capacity and competitiveness.

Marginalization of the least developed countries required the urgent attention of the international community, he said. African countries, in their efforts to effectively participate in the international trade system, needed technical assistance and improved market access for their exports. His Government hoped that a balance of interests among countries, as well as the pressing needs of developing countries, would be adequately reflected in the agenda of the future round of trade negotiations.

HASMY AGAM (Malaysia) said the continued challenges faced by the multilateral trading system included the integration and participation of all developing States, including the LDCs. Unilateral measures with extra- territorial effects were incompatible with the multilateral trading system. His country urged its trading partners to reject protectionist measures, including anti-dumping and countervailing duty actions, and technical standards and environment related measures.

The work relating to the built-in-agenda of the WTO agreements should be accorded high priority, he said. Those negotiations should not lead to more obligations, particularly for developing countries. While Malaysia supported liberalization, unfettered liberalization could lead to disruption and dislocation of domestic industries. To avoid negative consequences, policies should be sequenced properly and phased progressively. The financial turmoil in Asia underscored the importance of developing sound macroeconomic policies, he said. The pace of recovery of the affected Asian economies would depend on how effectively the problems were managed by the countries concerned and on the policy responses of the developed countries and international financial institutions.

PATRICIA DURRANT (Jamaica) said trade was a major contributor to development. For a country to increase the volume of trade and export earnings, it must attract investment into the productive sectors, modernize productive processes fund research and development. Technical and legal expertise and institutional and physical infrastructure were necessary for investment and market access to be achieved and maintained.

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While the Uruguay Round expanded trading and market access opportunities, constraints remained, she said. Interpretation allowed for the introduction of protectionist measures. That was evident in both the agricultural and industrial sectors in industrialized countries. The application of unilateral and bilateral measures outside the scope of the WTO agreements have also acted to lessen the possible benefits of liberalization. In addition, post-Uruguay Round tariffs on developing country exports by some countries have acted to undercut some of the potential benefits for developing countries.

Small developing economies needed to build their export and institutional capacities to allow them to become effective participants in the global economy, she said. The international community must recognize that those countries needed adequate transitional support to compete effectively and grasp the opportunities presented in the WTO agreements. Countries must realize that meeting the objectives set out in the preamble of the General Agreement on Tariffs and Trade was predicated on the achievement of a sustainable level of growth by all countries.

LEGWAILA JOSEPH LEGWAILA (Botswana) said globalization could help to build more stable relationships between nations. Botswana was aware of the opportunities and challenges presented by opening up its economy to fair competition. Some of the problems it faced in accessing market opportunities stemmed from inadequate production for export, poor infrastructure, non-competitiveness, and the shortage of a skilled and educated workforce.

Many developing countries were opening their economies to competition at a time when most of them were either undergoing structural adjustments or facing low levels of labour productivity. The developing countries had an important responsibility to provide a sound policy environment and prudent management practices. In addition, they must sacrifice some of their sovereignty to multilateral decision-making institutions, such as the WTO, in order to benefit from the new international trading system. It was imperative to ensure flexibility in the definition and implementation of WTO rules and obligations vis-a-vis developing countries and least developed countries.

VLADIMIR GALUSKA (Czech Republic) said his Government learned that moving from a centrally planned to a market economy meant increased competition. In addition to the quality of a product and its price, competitiveness now comprised many inter-linked factors, from good production practices to export financing.

Sound government policies, the effective interaction among enterprises, trade and finance institutions and the government were needed to foster competitiveness. Institution-building had to focus on the creation of institutions and their proper functioning. Competitiveness was a more crucial

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and complex issue than ever before. Access to information on norms, standards and other requirements applicable to the movements of goods was critical.

Demand capacity was a topic often disregarded in trade discussions, he said. But, if the point of saturation was reached, better market access would be of little help. Countries needed to establish active incentives to overcome deficiencies on the demand side, including psychological barriers, uncertainties, and limited expectations. That was an issue that deserved the attention of international institutions and the Economic and Social Council.

EUGENIUSZ WYZNER (Poland) said remarkable progress had been achieved in Poland in creating a stable and transparent legal system which facilitated establishing commercial relations with new trading partners. The liberalization of international economic relations also offered Poland a new chance to modernize its economy and generate new jobs. Adjustment of its domestic legislation through the creation of a favourable legal network for foreign investment encouraged foreign capital to come to Poland. That contributed to a rapid rate of growth and moderated unemployment, which had been so high during the first period of transition. European integration, the most challenging goal for Poland, continued to be the key issue of its foreign policy.

He said Poland had launched a strategy of development assistance to developing and less advanced economies in transition. It applied a general system of preferences and the beneficiaries were all developing countries whose gross per capita domestic product was lower than that of Poland. Goods originating from the least developed countries usually enjoyed the zero tariff rate.

PERCY METSING MANGOAELA (Lesotho) said developing countries, in particular the least developed countries and economies in transition, must be fully integrated into the world economy. That must be accomplished through improved market access for their exports, while respecting multilateral trading agreements. To that end, a favourable and conducive international economic and financial environment and a positive investment climate were critical.

Lesotho had just completed the first five years of a democratic system of government, he said. His Government was hopeful that as the democratic culture took root, the level of foreign direct investment would increase. As a result of positive macro-economic and social reforms, more countries in Africa had realized satisfactory economic growth rates. The African economies had realized an expansion in GDP, which had surpassed the average population growth rate and, therefore, resulted in modest improvements in income per capita.

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The debt burden also continued to be a stumbling block to the development of developing countries, particularly the least developed, he said. An important factor responsible for that increase in the debt burden was the shock cause by adverse terms of trade. Without a deliberate programme of assistance to the least developed countries, the opportunities provided by the new international trade regime would pass them by. And those countries would continue to be a source of global instability. Lesotho called on the international community to further enhance the capacity of developing countries to deepen their integration into the global economy.

HUGO NOE-PINO (Honduras) said there was ample evidence to show the world-wide benefits of free trade. As a result, his government had made liberalization a priority in its quest for growth and sustainable development. Honduras had progressively eliminated administrative and other obstacles, that in the past, had hampered free trade with other counties. A free-trade zone in Central America had been developed and extended to the Caribbean. Negotiations to establish a free-trade zone with Mexico, Guatemala and El Salvador were taking place and it was hoped that a firm agreement would be reached in the near future.

To move forward and implement the goals of globalization, Honduras and other developing countries needed more international cooperation, he said. Globalization and trade liberalization must be geared towards development. Liberalization should be a means, and not an end, in itself.

MICHAEL JOHN POWLES (New Zealand) said his Government supported the full integration of developing countries into the world economy. By significantly improving market access for developing countries, the multilateral trading system had facilitated the export development necessary for sustained economy growth. Work to improve market access and technical assistance for developing countries must continue. The key for that process lay in the implementation of existing commitments by all WTO members. It also involved launching a further round of broad-based negotiations. Developed countries must continue to take the lead in liberalizing their markets to help facilitate developing countries' export growth.

New Zealand was particularly concerned by the marginalization of the least developed countries and certain small economies, he said. There was an urgent need to address that issue, which had been compounded by the chronic foreign debt problem facing many of them. His Government fully supported the plan of action adopted by the least developed countries and would continue to work to improve market access conditions for products exported by those countries, on as broad and liberal a basis as possible.

Regional trading arrangements had been an important part of the trade liberalization process, he said. Developed and developing countries must ensure that regional trade initiatives were open and outward oriented, thus

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safeguarding the primacy of the multilateral trading system. His Government was also actively engaged in technical assistance and capacity-building to help ensure developing countries were able to maximize the opportunities arising from globalization and liberalization.

ROLAND YAO KPOSTRA (Togo) said while growth had reached record levels in certain countries, only mixed results had occurred in other parts of the world. In Africa, many countries continued to be marginalized.

The developing countries had continued their trade reforms after the conclusion of the Uruguay Round by reducing tariffs and eliminating the main obstacles to trade, he said. Yet, those countries continued to be hampered by agricultural sectors that were not modern, export products that were non- diversified, quasi non-existent industrialization, chronic budget deficits, excessive debt and a continued low rate of capital public and private investment. Since the 1980s, Togo had undertaken far-reaching economic reforms, through structural adjustment and trade liberalization programmes. It had made commitments in services and consolidated its infrastructure. Yet, the country still suffered from a debt burden and liberalization that was not properly mastered.

He said the liberalization of international trade, for southern countries in general and African countries in particular, did not correspond to concessionS those countries had made to ensure the success of Uruguay Round negotiations. Togo welcomed the additional measure being considered to support least developed countries market access. The Council should give proper impetus and direction to the adoption of measures to allow developing countries to participate fully in the multilateral trading system.

JOHN CRIGHTON (Australia) said the Uruguay Round, in addition to tariff liberalization, had brought textiles, clothing and agriculture under the multilateral trade system. It was estimated to have delivered a global tax cut of more than $200 billion a year.

Governments were no longer swayed by the siren song of protection, he said. The countries which had performed best in terms of their economic growth had realized that protection was itself a tax. It raised the price of both imported and domestic products; made domestic industry less competitive; and placed the heaviest burden on the marginalized of society. Protection did not deliver what its proponents promised: secured jobs or increased wages.

He said Australia believed that countries should endeavour to reduce tariff peaks and tariff escalation and, wherever possible, move away from specific or mixed tariffs. While increasing transparency, such actions would have the effect of eliminating the large difference in duties paid for low- value compared with high-value imports. Further, as tariffs fell, the use of "contingent protection" rose. Countries had to be alert to ensure that

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non-tariff measures did not negate the market access gains provided by tariff liberalization.

While trade liberalization had been impressive, he said there was need for further, comprehensive, multilateral trade negotiations. The WTO mandated negotiations on liberalization in agriculture and services should be expanded to encompass liberalizing negotiations in industrial tariffs.

KATHERINE HAGEN, Deputy Director-General of the International Labour Organization (ILO), said global strategy for economic and social development should create broad-based sustainable development. Access to global markets was a prerequisite for sustainable development, as was allowing workers to receive a fair share of the wealth they had helped to generate. The ILO was committed to working with its members to promote social development for all and adequately remunerated employment.

The ILO was involved in helping countries promote comprehensive employment strategies, she said. Core labour standards were an important priority and the ILO had taken a lead role in moving that process forward. The ILO was dedicated to working with its members to build their capacity to compete in the international marketplace.

The ILO was also dedicated to achieving international social justice, including the elimination of child labour and the establishment of more and better jobs for women, she said.

There was a need for a new global partnership that put people at the centre of development, she said. The ILO had put people at the centre of its strategy and acknowledged that special attention should be given to those with special social needs, including migrant workers. Through its many initiatives, and coordination with the Council, the ILO hoped to make access to global markets a reality and a means to achieve social equity and the eradication of poverty.

APIRATH VIENRAVI, Minister Counsellor of Thailand, said the Uruguay Round had brought about the inception of the most comprehensive and far-reaching multilateral trading system to date. However, while financial market access was literally free in the era of globalization, merchandise market access, which was supposed to have been liberalized under the Round, was still relatively restricted because of the loopholes in the actual application of the agreement. Although progress in improving market access conditions had been impressive, there was still evidence of non-tariff and tariff barriers that affected products and sectors of interest to developing countries, particularly in the areas of textiles and agriculture.

Turning to the agricultural sector, he said that to fully achieve the objectives of the Uruguay Round members had to strictly comply with tariff

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reductions and the elimination of subsidies and distortions, and conform with the agreement on sanitary and related measures. Countries should refrain from using such measures and other non-tariff barriers such as environmental standards, as disguised trade barriers. On anti-dumping measures, Thailand called upon Member States to undertake such measures sparingly and truthfully. It also called upon States to refrain from applying anti-circumvention, as it had not been uniformly agreed upon.

Addressing future challenges, he said the WTO had to maintain and strengthen its role as the main driving force in trade liberalization to ensure sustained economic growth and sustainable development. In that light, regionalism must supplement and reinforce the liberalization process, as part of the solution. The WTO also had to generate coherence in international economic, trade and financial policy.

HJALMAR HANNESSON, Director of the Political Department of the Ministry for Foreign Affairs of Iceland, said globalization and liberalization had not benefited a large part of humankind, which was still excluded from active participation in world markets. The benefits of the multilateral trading system must be extended as widely as possible. The needs and particular trade interests of the developing countries, and in particular the least developed among them, must be considered. The elimination of trade barriers to African products should be placed on the agenda of major industrial countries, with a view to the adoption of a common policy to be implemented on a bilateral basis and through the WTO.

As many countries as possible should participate in the WTO negotiations on services and agriculture that were mandated to begin by the year 2000, he said. The work programme should examine all trade issues relating to global electronic commerce, which took into account the economic, financial and development needs of the developing countries. A more ambitious agenda could be pursued within the WTO and other international forums in the area of trade and the environment. Trade liberalization and environmental conservation policies must develop in harmony through multilateral cooperation.

The interaction between economics and resource management was of paramount importance, he said. His Government has implemented a system of individual transferable fishing quotas in the fishing sector in order to achieve economic objectives and to protect resources. Iceland's experience demonstrated that the fishing industry should operate according to the principles of private enterprise and its products made to compete on the free market. Government subsidies and various obstacles to free trade in marine products should be eliminated, because there was a direct relationship between public subsidies and excess fishing capacity. Those subsidies interfered with fair competition in fisheries to the detriment of those nations which exported marine products.

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