ECONOMIC AND SOCIAL COUNCIL PLEDGES TO ENHANCE MARKET ACCESS FOR EXPORTS OF LEAST DEVELOPED COUNTRIES

8 July 1998

Press Release
ECOSOC/5767

ECONOMIC AND SOCIAL COUNCIL PLEDGES TO ENHANCE MARKET ACCESS FOR EXPORTS OF LEAST DEVELOPED COUNTRIES

19980708 Three-Day Ministerial Debate on Market Access Closes with Adoption Of Communique also Calling for Implementation of Uruguay Round Agreements

The Economic and Social Council pledged to further enhance market access for the exports of the least developed countries, by this afternoon adopting, without a vote, a ministerial communique on market access.

The communique -- the outgrowth of a three-day high-level discussion on developments since the close of the Uruguay Round of General Agreement on Tariffs and Trade (GATT) -- stressed the importance of the application of all Uruguay Round agreements by the entire membership of the World Trade Organization (WTO).

Calling on WTO members to take into account the specific interests of developing countries, the Council emphasized the importance of assisting those countries in capacity-building and service infrastructure development. The United Nations Conference on Trade and Development (UNCTAD), the WTO and other relevant organizations were invited to provide enhanced technical assistance to help strengthen the supply capacity of the least developed countries.

In adopting the communique, the Council said that future trade negotiations should address the degrees of market access in order to secure broad-based trade liberalization for the benefit all countries. The Council cited the needed for improved measures to address the negative effects of volatile capital flows on the international trading system and the development prospects of developing countries.

Council President Juan Somavia (Chile) said it was important to make the work of the United Nations, the Bretton Woods institutions and the WTO converge, as none of those institutions could singlehandedly contribute to stabilizing the international economic situation. Sectoral approaches would not be enough. The challenge now was to integrate a shared vision that looked at monetary affairs, trade, the environment and other economic issues.

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The Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), Rubens Ricupero, said UNCTAD and the WTO had worked together to support trade as an instrument for development without compromising their individual identities and approaches. Hopefully, the results of their collective effort could lead to an integrated approach to problems of developing countries.

Under-Secretary-General for Economic and Social Affairs, Nitin Desai, said the Council gave a louder and clear voice to many weak and marginalized countries than they might have in other forums. The mandate of the Council put it in a position to address a variety of areas and the capacity to integrate such issues into the fray.

During the conclusion of the Council debate, statements were made by the representatives of Kazakhstan, Ecuador, Nigeria, Singapore, Zambia, Ukraine, Saint Lucia, Iraq, Swaziland and the United Republic of Tanzania.

The Council will meet again at 10 a.m. on Thursday, 9 July, to begin a high-level meeting as part of its operational activities segment.

Council Work Programme

The Economic and Social Council this afternoon was scheduled to end the three-day high-level segment of its 1998 substantive session, with the conclusion of a ministerial-level debate on market access. During the discussion, the Council has considered 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 of 7 July.)

At the close of the high-level segment, the Council was expected to adopt a draft ministerial communique (document E/1998/L.13) by which the Council would pledge to work towards further enhanced market access for the exports of the least developed countries, within the context of supporting their own efforts at capacity-building. The Council would welcome the initiatives taken by the World Trade Organization (WTO) to implement the Plan of Action for the Least Developed Countries, which required further progress towards duty-free imports from least developed countries. The WTO, the United Nations Conference on Trade and Development (UNCTAD), and other relevant organizations would be invited to provide enhanced technical assistance to help strengthen the supply capacity of the least developed countries.

By the terms of the draft submitted by Juan Somavia (Chile), Council Chairman, the Council would call for future trade negotiations to address the varying degrees of market access with a view to securing further broad-based trade liberalization. Also under its terms, contingency measures, such as anti-dumping duties and countervailing duties, and unilateral actions should be subject to increased multilateral surveillance. They should respect and be consistent with multilateral rules and obligations. In addition, regional trade agreements should be outward-oriented and supportive of the multilateral trading system.

The ministerial draft also stresses the importance of effective application by all WTO members of all provisions of the Uruguay Round, taking into account the specific interests of developing countries. The special provisions in the multilateral trade agreements and related ministerial decisions in favour of developing country members, in particular the least developed among them, should be effectively implemented. It also stresses the importance of assisting developing countries in capacity-building and the development of their services infrastructure, in order to enable them to maximize the benefits they could derive from electronic commerce. The UNCTAD, in collaboration with other organizations, would be called on to provide analytical support and technical assistance to developing countries in that area.

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The draft notes the great importance of the diversification of African economies and increased market access for their export products. The draft communique also cites the needed for improved measures to address the negative effects of volatile capital flows on the international trading system and the development prospects of developing countries. It calls for increased momentum towards trade liberalization and greater coherence between the development objectives agreed to by the international community and the functioning of the international trading and financial system.

By the draft, the Economic and Social Council would emphasize the importance of achieving universality in the multilateral trading system. The WTO members and relevant international organizations would be called on to provide assistance to non-members to facilitate their efforts to accede in an expeditious and transparent manner. The WTO and UNCTAD would be invited to provide the necessary technical assistance to those countries in that regard.

Statements

AKMARAL ARYSTANBEKOVA (Kazakhstan) said there should be further multilateral efforts, under the auspices of the United Nations, to ensure the further liberalization of international trade. By virtue of the specific characteristic of their development, the countries with economies in transition continued to experience considerable economic and social difficulties that prevented their full and effective integration into the world economy. The United Nations system should continue to cooperate in the provision of advisory services and technical assistance to those countries. That assistance would help them to speed up market reforms and to ease the terms of access to the world market.

Kazakhstan was committed to a free and competitive market economy, she said. Since it attained independence in 1991, it had implemented a series of broad reforms aimed at an effective transition from a centralized to a market economy. A great deal of work had been done to create a favourable climate for investment and Kazakhstan was actively preparing to join the WTO. Greater access to the world market for its goods on fair terms, the establishment of mutually advantageous trade relations and the creation of favourable conditions for the development of trade with all countries would help Kazakhstan make a contribution to the world economy.

Regional economic organizations had an important role to play in creating a favourable trade regime, she said. The states of the Economic Cooperation Organization, of which Kazakhstan was a member, had been able to open up promising areas of cooperation and interaction, including the creation of fair trading conditions among its country members. Recent agreements of the Economic Cooperation Organization created sound prerequisites for the

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further intensification of cooperation and the creation of a favourable trading climate.

LUIS VALENCIA RODRIGUEZ (Ecuador) said that the agreements reached during the Uruguay Round had to be fully implemented. The barriers against exports from the developing countries must be eliminated. The WTO had to promote an open system of international trade that was transparent, just, non- discriminatory and predictable. They also had to take the needs of the developing countries into consideration.

Regional economic integration also had to be open-ended, he continued. It should strengthen the multilateral economic system through regional and global agreements that were mutually implemented. The Andean Community -- Bolivia, Colombia, Peru, Venezuela and Ecuador -- had agreed to move from the free-trade agreement of 1995 to a common market by the year 2005. Similarly, the Community and the Southern Common Market -- Argentina, Brazil, Paraguay and Uruguay -- had devised a timetable to bring about a free-trade agreement by the year 2000.

He said the efforts of the developing countries to adjust to globalization had to receive the support of the international community. External debt continued to be a grave problem for many of those developing countries. It adversely affected their capital flows, since servicing the debt impeded any progress towards liberalization and modernization.

GABRIEL SAM AKUNWAFOR (Nigeria) said the Uruguay Round had brought about significant improvements in both the condition and security of market access. Improved security of market access was achieved through the speed of tariff bindings, especially by developing countries, and the multilateral trade agreement which effectively prohibited non-tariff barriers. However, the international community must remedy the situation where non-tariff measures continued to affect the exports of developing countries. Nigeria fully supported all anti-dumping measures, but not their abuse in that regard.

He said the market access problems of the least developed countries would not disappear, due to the continued tariffs on some of their most vital export products in all major markets. Those countries had great difficulty in meeting health and sanitary import requirements. Nigeria urged both developed and developing countries to explore the possibilities of granting preferential, duty-free access to the exports of the least developed countries, as part of a long-term solution.

Developing countries also faced the problem of primary commodities, which were their only source of foreign exchange earning, he said. Those commodities were denied market access before and after the Uruguay Round. In that context, the official development assistance (ODA) obligations

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voluntarily assumed by the developed countries should be remembered. The issue of ODA commitments should be revived, partly to restore the decreasing export earning of the developing countries.

KAREN TAN (Singapore) said the share of world trade for developing countries had grown in the past decade from 20 to 25 per cent. Those countries's share of trade in manufactured goods had also doubled over the same period, using from 10 to 20 per cent. That increase had been achieved through the multilateral trading system, which provided for non-discriminatory rules governing international trade. The Uruguay Round brought service, agriculture, textiles and tropical products under the multilateral system for the first time. Yet, much remained to be done.

Problems have arisen in the implementation of the Uruguay Round commitments, she said. Developing countries needed to enhance market access in areas of their export interest. That was particularly true where tariffs in developed markets remained high, such as in processed goods, tropical products and textiles. The international community must also guard against protectionist pressures that threatened to impede the momentum of trade liberalization. The Asian financial crisis had led to questions about the impact of liberalization on trade and investment flows. It was important that developed countries kept their markets open to Asian exports, otherwise Asia's recovery would be smothered.

While the multilateral trading system had paved the way for unprecedented global post-war growth, she said it would undergo severe tests and challenges in the future. There must be a continued strong commitment to multilateral trade liberalization in order to sustain economic growth and security. That would require governments to establish domestic regulatory frameworks and infrastructures to maximize the benefits for trade liberalization. The capacity-building needs of developing countries must be recognized to ensure they would receive their fair share of growth.

HUMPHREY B. KUNDA (Zambia) expressed deep concern about the continued marginalization of the least developed countries. The World Economic and Social Survey 1998 indicated that least developed countries' exports had grown far more slowly than world trade over the past two years, and their collective share of the world merchandise exports had consequently declined from 0.8 per cent in 1980 to 0.4 per cent in 1995. He called on the international community to address the marginalization of the least developed countries and to ensure their integration into the world economy.

His delegation welcomed initiatives taken by the WTO in cooperation with other organizations, to implement the Plan of Action for the least developed countries, he said. The debt problem was yet another market access related issue which impinged negatively on development in many developing countries.

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Strategies or initiatives to address that issue should aim at permanent solutions.

He said it was important that the momentum towards increased trade liberalization on products of export interest to developing countries be maintained and given priority in the work leading up to the forthcoming WTO ministerial conference. In that regard, his delegation called for cooperation among the United Nations, multilateral trade and the Bretton Woods institutions. While countries could not be forced to join the WTO, members of the organization and relevant international institutions could provide assistance to non-members who genuinely wished to join. It was the wish of all developing countries to export manufactured high-value goods instead of raw materials. The international community should continue its efforts to enhance market access for products of export interest to Africa and to support their efforts in diversification and building supply capacity.

YURIY BOHAIEVS'KY (Ukraine) said the establishment of an open, law- based, fair, predictable and transparent multilateral trade system must constitute an integral part of the new partnership for development. That was the only way real progress could be achieved both globally and in each individual country. The positive culmination of the Uruguay Round constituted an incentive for a fruitful partnership in the interests of stability, global development and further liberalization of international trade.

The 1996 WTO ministerial conference in Singapore had allowed countries to evaluate the latest developments in international trade, he said. It also allowed for the evaluation of the implementation of multilateral commitments within the framework of the world trade system.

SONIA LEONCE-CARRYL (Saint Lucia) said the small banana producing countries of the Caribbean Community (CARICOM) just recently received a particularly crushing blow when the appeals board of the WTO upheld an earlier finding. The WTO decision upheld the preferential treatment accorded in the European market. The WTO ruling on the "European banana regime" was nothing short of a capitulation to the machinations of those who were blinkered by free trade and sheer greed. The WTO, and the complainants to the European banana regime, completely and steadfastly ignored the fact that the ruling meant the economic and social destruction of a number of small Member States of the United Nations, which collectively enjoyed a minuscule 2.5 per cent of the world trade in bananas and only 5 per cent of the European market.

She said the WTO had dismally failed to live up to the commendable goals which inspired its creation. The implementation of the ruling would bring about the generalized reduction in the living standards of the people of CARICOM and an acceleration of poverty. It also left a lingering suspicion that "might" would still always be "right" and that the strong and powerful

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would always be able to use the system to achieve their own ends, regardless of the human dislocation and suffering that resulted. If the WTO was to be of any value to the developing countries, there had to be fundamental reform of its system of dispute settlement. That was essential because the implications of the scope of the ruling on bananas was not confined to that product alone.

She said the ruling on bananas raised questions about other import arrangements for agricultural goods as well as the future of trade and development cooperation agreements between rich and poor countries. Trade and development, must, in the final analysis, be about the development of people. It was also the moral responsibility of those who were strong to protect the weak and vulnerable. The international community, through the United Nations, must establish and maintain mechanisms to do just that.

NIZAR HAMDOON (Iraq) said the globalization of the world economy had eliminated certain hurdles and constraints which affected the flow of goods, service and technology. But globalization and liberalization had created many concerns. The international community should place priority on the economies of the developing countries. It should also address the growing gap between the North and South. Governments should take steps which were conducive to preventing the marginalization of developing countries so they could participate in the world economy. That would make it possible to usher in a new era between developed and developing countries.

The international community must take collective steps to remove the obstacles and constraints that prevented developing countries from benefitting from the liberalization of international trade, he said. Poverty and the slow rate of development, as well as aggravation of the foreign debt problem, were the main obstacles faced by a large number of countries in the world. Democracy must be introduced into international organizations and institutions that dealt with trade. Those institutions must also shrug off the domination and control of certain wealthy countries. The United Nations should reinvigorate multilateral trade negotiations in order to promote development, implementing its special mandate in the economic and social sphere to assure more balance and more justice.

It was also important to emphasize the dangers of the excessive recourse to economic sanctions which were imposed on developing countries, he said. Economic sanctions had resulted in the total paralysis in all aspects of economic and social life in Iraq. Those destructive sanctions had affected the lives of 20 million Iraqis, and Iraqi children had become victims of a political game which had gone beyond all moral and human limits. It was high time for the Security Council to assume its true responsibility and put an end to the game which had hurt the Iraqi people. The Security Council should not be held hostage by certain countries that could not see beyond the end of

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their noses and who had contempt for the logic of rights and equity as spelled out in the United Nations Charter.

MOSES M. DLAMINI (Swaziland) said that an interdependent world required continued and intensified collective efforts in addressing economic and social concerns. There was also a need to focus more closely on developing countries, particularly in Africa. The continued drop in ODA was a hindrance that must change in view of the challenges faced. Developing countries needed far more than foreign aid or technical assistance to develop strong, competitive and sustainable economies. ODA had to remain a way forward to achieve that goal. It was imperative that developed countries, in cooperation with developing countries, enforce a liberal market-oriented global economic perspective. The worldwide flow of goods, services, technology and labour should be unimpeded. It was also his delegation's understanding that in a liberal economy, all parties must benefit. While those benefits could be slightly unequally distributed, both parties to the transaction must gain.

He said liberalization of the world economy had so far proceeded in a lopsided way. If biased patterns of liberalization and globalization continued to prejudice market access by developing countries and their economic growth by discriminating against sectors where they could establish a comparative advantage, then the international community was still faced with a major challenge to ensure a balance and thus remove all existing biases. The Uruguay Round did not establish a specific target for tariff harmonization. It was, therefore, imperative for the international community to hold further negotiations to address the problems faced by the developing and least developed countries in improving market access. Those negotiations should address high peak tariffs which continued to be applied to some of the most important products of the developing countries in all major markets.

DAUDI MWAKAWAGO (United Republic of Tanzania) said trade accounted for only a small share of economic activity in most developing countries, in particular the least developed. Official statistics indicated that on average exports and imports accounted for 24 and 26 per cent, respectively, of those countries' gross domestic product (GDP). The situation was even worse among the least developed countries whose share of exports and imports accounted, respectively, for only about 9 and 16 per cent of GDP. The situation called for an urgent reassessment in order to avoid the further marginalization of developing countries. An equitable, secure, non-discriminatory and predictable multilateral trading system was required to enhance the trade and development possibilities of those countries. Such a system would also facilitate the increase in their share of international trade.

The international community should extend technical assistance to developing countries, he said. That would enable them to build the capacities required for them to benefit from their participation in the international

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trading system. There was also a need for support for South-South cooperation arrangements initiated by developing countries in trade and other areas. The international community should also support developing countries in adapting themselves to the new technology of electronic commerce. The United Nations, as a development-oriented entity, should strengthen its programmes of assistance to developing countries, paying particular attention to the needs of the least developed.

DAUL MATUTE (Peru) said a small country such as his based its growth on its integration into the world economy. Peru's activity in the global arena made it necessary to maintain a stable environment that encouraged local and foreign investments. To achieve that, attention had to be paid to managing fiscal and monetary policies, macroeconomic indicators, and reforming its trade practices. Since 1990, Peru had implemented a programme of stabilization in conjunction with various structural reforms aimed at re-establishing macroeconomic balance, controlling inflation and liberalizing trade.

He said Peru's economy had so far shown real growth. That had been firmly propelled by increased exports and investments. In real terms, exports had grown by 14 per cent and investment accounted for a sizeable share of the country's GDP. In 1997, inflation had dropped to its lowest level in 25 years. Peru had also set in motion all appropriate measures to facilitate and achieve integration into regional markets. In the subregional area, it worked with the Andean Community to find a common external agenda. All those subregional efforts to establish an Andean common market were also being duplicated in the context of the Southern Common Market (MERCOSUR) and the European Union.

Peru also planned to participate actively in the negotiation process to establish the Free Trade Association of America. Certain countries had felt the repercussions of global crises such as the South-East Asia crisis. In Latin America, "El Niño" had caused severe economic impact on certain countries, including Peru. He wanted to know what the United Nations was doing to address situations like that.

ABDALLA KHALID ABDALLA (Libya) said industrialized countries were the only ones that had derived the maximum benefit from globalization and liberalization. Only a limited number of developing countries had benefited from those processes. Some speakers had said that if developing countries wished to derive benefit from the world economy, they needed to accept the severe prerequisites laid down by the International Monetary Fund (IMF) and swallow the bitter bill it prescribed for them. The pill included restructuring, opening markets, privatizing all economic areas, reforming their executive and legal structuring and reforming financial institutions. The Executive Director of the IMF said poor countries could derive great profit from a globalized economy if they were integrated into its activities.

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If those countries went outside the globalized economy, they would be subject to marginalization.

The bitter pill of opening financial markets in developing countries was problematic because the private sector in many countries was extremely small, he said. It would increase the gap between wealthy and poor, and States would be deprived of revenue from enterprises which had helped to finance sustainable human development in those countries, particularly in the fields of education, health, training and housing. The increase in commodity prices would lead to destabilization of those countries.

Libya was not against trend towards globalization and market access, he said. Yet, several developing countries had not been able to improve market access after liberalizing their markets. There must be a real commitment by developed countries to support the effort of poorer countries throughout the world by transferring resources, including technological and long-term investments and development projects. That would also require assistance in the field of trade, including credit and access to markets.

Regarding sanctions imposed against Libya, he said that despite recent development the sanctions had been automatically renewed. Many States had called for the immediate termination of the sanctions. They had also expressed disapproval for the attitude of two States, which had vetoed the lifting of the sanctions. The General Assembly had called on the international community to take urgent steps to put an end to the punitive and unilateral economic measures, thus unambiguously and unequivocally expressing its profound disquiet about those measures that had been passed as laws by one State. Those laws were essentially of an extraterritorial nature and contravened the norms of international law, as well as the principles of the United Nations Charter.

Right of Reply

H.J. ROSENBAUM (United States) said that Saint Lucia had harshly characterized the United States in its statement. Over the years, his country had paid more attention to the Caribbean than any other country. The United States had also helped CARICOM to access American markets. He did not want to argue the banana case again, but stated that the United States had also lost some cases themselves at the WTO. Winning or losing was based on merits and not on the size or wealth of a country. Rich countries should not be deprived of justice simply because they were rich and another country was poor.

Referring to the statement made by Libya, he said that the resolutions which had been referred to by the representative of that country were not adopted by consensus.

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Concluding Statements

ALAIN FRANK, of the World Trade Organization (WTO), said the present meeting was an important opportunity to hear the statement and positions of delegations over the past few days. He emphasized the productive and efficient relationship between UNCTAD and the WTO.

RUBENS RICUPERO, Secretary-General of UNCTAD, said that three years ago there was considerable fear concerning the possible overlap between the work of UNCTAD and the WTO. Now, the two bodies worked closely together, for the cause of trade as an instrument for development, without compromising their individual identities and approaches. Hopefully, the results of their collective effort could be extended to other economic and social Geneva-based organizations. That could lead to an integrated approach to problems of developing countries, at least in the sphere of their respective competencies.

He said he was encouraged by what was taking place in the Council. It was becoming a forum for important economic subjects that required a dialogue between different independent organizations. He proposed that, in future, the Council should consider choosing other subjects, like investments rules, which were at the centre of attention of governments, civil society and non- governmental organizations worldwide.

Regarding trade, he said the ideas expressed during the ministerial dialogue should be taken up during the preparatory process for the upcoming ministerial meeting, to be held in the United States next year. It would be extremely important if those ideas found some expression in the outcome of the process. It was important that developing and least developed countries had their say. They needed to make concrete proposals and develop a positive agenda that clearly presented their market access concerns.

NITIN DESAI, Under Secretary-General for Economic and Social Affairs, said the Economic and Social Council had launched the process that developed the multilateral system. The question to be asked was what role would the Council play in today's world. In many ways the Council gave a voice that was far clearer and far louder to many countries that were weak and marginalized. Those countries would probably not be well heard in other forums. In the debate, the discussion on market access had not focused on trade negotiations, but also projected it as a development issue. The Council had the breadth of mandate to cover all areas -- social and environment.

Adoption of Draft Ministerial Communique

JUAN SOMAVIA (Chile), Council President, invited the Council to consider the draft ministerial communiqué contained in document E/1998/L.13. He informed the Council that, as agreed, a presidential summary covering the

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high-level policy dialogue and the general debate would be attached to the communiqué.

The Council then adopted the ministerial communiqué without a vote.

MAKARIM WIBISONO (Indonesia), speaking on behalf of the "Group of 77" developing countries and China, said the ministerial communiqué was short and concise, with a clear and focused agenda about pursuing further liberalization, keeping in mind the concerns of developing countries.

ERNST SUCHARIPA (Austria), speaking on behalf of the European Union and the European Commission, said the Council's efforts had resulted in an interesting exchange of views and concise conclusions in the form of a ministerial communiqué.

FELIPE JARAMILLO (Colombia) urged the Secretariat to revise the Spanish version of the communiqué in order to correct the many mistakes contained within it.

Mr. SOMAVIA (Chile) said improving efficiency was an important goal for the Council. Organization and direction made a body more serious and useful. The high-level segment had proven that it was possible for the Council to do things properly and in a timely fashion and produce a useful end product. All segments should be organized accordingly, so the conclusions could be adopted promptly.

It was important to make the work of the United Nations, the Bretton Woods institutions and the WTO converge, because none of those institutions could single-handedly contribute to stabilizing the international situation, he said. The challenge now was how to integrate a shared vision that looked at monetary affairs, trade, the environment and other economic issues. Sectoral approaches would not be enough. If countries could not work together, the international community would not be able to overcome all the problems. The Council should be an attractive forum because it was effective and it allowed for a dialogue where opinion and experiences were exchanged. If that kind of dialogue were possible, benefits could be deprived by all parties.

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