EXPANDED ACCESS TO MARKETS COULD ELIMINATE NEED FOR MOST AID, INDONESIA SAYS AS SECOND COMMITTEE RESUMES GENERAL DEBATE

Press Release
GA/EF/2860

EXPANDED ACCESS TO MARKETS COULD ELIMINATE NEED FOR MOST AID, INDONESIA SAYS AS SECOND COMMITTEE RESUMES GENERAL DEBATE

Speakers Reiterate Need For External Financing, Deplore Increasing Inequities in Global Financial and Trading System

If market access were expanded, giving developing countries greater markets for their exports, development could largely be financed from external earnings, the representative of Indonesia said this morning as the Second Committee continued its general debate.

Yet that was not happening, he said. The potential benefits of the Uruguay Round -- such as the establishment of a rule-based, secure and predictable multilateral trading system -- had failed to materialize. Obstacles abounded, not the least being denial of the comparative advantage enjoyed by the products of developing countries, as well as disguised protectionist measures. Under those conditions, it was almost impossible for crisis-torn countries to stage a rapid recovery.

The most crucial issue for developing countries, the representative of Mongolia said, was how to finance their development. Although an appropriate level of domestic savings could generate some economic growth, most developing countries also needed external sources of financing. The burden of debt, the decline of commodity prices and the deterioration of foreign trade terms had all negatively affected the capacity of those countries to finance their development.

The representative of Thailand said that investment flows had become as important, if not more important, than the flow of goods and services in fueling global growth. The rapid liberalization of the financial market, however, had brought greater instability to the developing and emerging economies through the fluctuation of exchange rates and uncontrolled capital flows. The enhanced cooperation between the International Monetary Fund (IMF) and the private sector in monitoring short-capital movements, and particularly through the curbing of activities of the hedge funds, was a positive step in coping with financial disorder.

The representative of Myanmar said that the effects of the recent financial crisis made it clear that a major fault-line existed in the

Second Committee - 1a - Press Release GA/EF/2860 5th Meeting (AM) 7 October 1999

global financial terrain. The lack of a proper institutional framework to regulate international finance stuck out like a sore thumb. No one could deny that there was an enormous discrepancy between an increasingly sophisticated and dynamic international financial world, complete with rapid globalization of financial portfolios, and a world economy that needed safeguarding from financial crises of high intensity and frequency and devastating real effects.

The benefits of globalization tended to be distributed in inverse proportion to development levels, the representative of Guatemala said. Until recently, he continued, the conventional wisdom was that a “level playing field” was necessary for all countries to benefit from the effects of economic globalization. Now, the proverbial field was not enough, since the more disadvantaged countries still needed a degree of differential treatment to help them leapfrog stages in their quest for greater international competitiveness.

Statements were also made this morning by the representatives of the former Yugoslav Republic of Macedonia, Botswana, Costa Rica, Libya, South Africa, San Marino, Turkey, Nepal, Bhutan, Mali and Haiti.

The Committee will meet again at 3 p.m. to continue its general exchange of views.

Committee Work Programme

The Second Committee (Economic and Financial) met this morning to continue its general debate.

Statements

ASDA JAYANAMA (Thailand) said that now, as in the past, the development gap between developed and developing countries continued to widen. The world could not expect the United States economy to continue to be the single engine of economic growth for the global economy. Other key centers of economic growth such as the European Union and Japan should play their appropriate roles in helping revitalize the world economy. That could be achieved through the boosting of their domestic demand and greater market access for the developing economies. Investment flows had become as important, if not more important than the flow of goods and services in fueling global growth. Rapid liberalization of the financial market, however, with its attendant exchange-rate fluctuations and uncontrolled capital flows, had brought greater instability to the developing and emerging economies. The enhanced cooperation between the International Monetary Fund (IMF) and the private sector in monitoring short-capital movements, and particularly through curbing the activities of hedge funds, was a positive step toward scoping with financial disorder.

To compensate for the negative consequences of globalization, its positive effects needed to be harvested and put to optimal use for developing economies. The increasingly widespread dissemination of knowledge and technology was an important development that could greatly benefit developing countries. International as well as national efforts to deal with the effects of globalization were required. He, therefore, invited every government to send its highest level delegation to participate in the tenth session of the United Nations Conference on Trade and Development (UNCTAD), to be held in Bangkok. Migration was an extremely complex issue to which Thailand -- as a sending, transit and receiving country -- attached great importance. International awareness of issue such as of migration, or development as an instrument to foster political will among countries in the Asia and Pacific region, should be actively promoted.

NASTE CALOVSKI (Former Yugoslav Republic of Macedonia) said that many developing- and developed-country economies were now performing better than in previous years. Yet many were negatively affected by regional conflicts and natural disasters. The prudent policy would be to ensure that all economies benefited from the forward momentum of the global economy. Currently, each economy was preoccupied with the positive or negative effects of globalization, with regional integration and various economic reforms. The main aims of those efforts were to achieve sustained growth and sustainable development; to gain access to markets, capital and technology; to enhance integration; and ensure employment. Each country had its own priorities. The economic disparities from country to country were a major cause of instability and unsatisfactory social development.

His country, he said, was presently preoccupied with its integration into the European Union (EU), with the problem of unemployment, with managing the negative effects of the Kosovo crisis, with solving the problem of lost markets, with attracting foreign investment and continuing reform of its transition economy. It was unable to solve its problems alone because most of them were of an external nature. That was why it was stressing the importance of EU integration, stability, reconstruction and regional development. He suggested that a global undertaking for development and enhanced international cooperation might include: enhanced regional and global integration; reduced unemployment; wider access to markets, particularly those of the developed countries; and a solution of the debt problem.

EMOLEMO MORAKE (Botswana) said that the hopelessness developing countries faced today was a challenge that had to be addressed soberly, both now and into the next millennium. Efforts to consolidate a culture of peace, democracy and good governance, and opportunities to enhance trade and to tap into information and ideas made possible by technological advances, offered some prospects for economic growth and prosperity. Some of Africa’s problems could rightly be attributed to mismanagement and the poor orientation of policies adopted in the past. Post-Uruguay Round arrangement were expected to bring about a more rapid integration of African countries into world trade movements, but small economies should still be allowed preferential treatment until they were able to compete.

Poverty remained a rural phenomenon, Ms. Morake said, and Botswana pursued rural development within a broad cross-sectoral framework, giving particular emphasis to economic empowerment for those pursuing commercial ventures in rural areas, particularly for women entrepreneurs. Those initiatives could be sustained only if sufficient growth was generated in the export-oriented industrial sector. The continuing decline in the level of resources provided to the United Nations Development Programme (UNDP) and the United Nations Population Fund (UNFPA) was of great concern to the developing world. Their excellent technical expertise and project support, so urgently required, were at a risk of termination.

GERT ROSENTHAL (Guatemala) said the benefits of globalization tended to be distributed in inverse proportion to development levels. Until recently, the conventional wisdom was that a “level playing field” was necessary for all countries to benefit from the effects of economic globalization. Now, the proverbial field was not enough, since the more disadvantaged countries still needed a degree of differential treatment to help them leapfrog stages in their quest for greater international competitiveness. The United Nations (especially through its normative and analytical work) was well equipped to work towards creation of an international enabling environment conducive to reduction of the developmental gap.

It was also well equipped for improving national enabling environments for the same purpose, especially through its operational activities aimed at strengthening economic, institutional and organizational capacities. If one of the great challenges facing humanity at the dawn of the next millennium was promoting development for the benefit of all the Earth’s inhabitants, a substantial part of the Organization’s efforts should go into dealing with that challenge. It would be difficult to have peace –- between and within nations -– if extreme poverty, marginalization and social injustice, all associated with economic backwardness, persisted.

With regard to financing for development, he said that responses to that question would help to better define the future economic role that States wanted the United Nations to play. It was hard to conceive of tackling financing development without some sort of partnership with the World Bank.

MAKARIM WIBISONO (Indonesia) said that the lessons were clear -– open markets and competition did not automatically foster growth and development, nor did they automatically reduce inequality. The problem of harassing the tremendous power of globalization and liberalization, particularly for promotion of development, was, therefore, one of the major challenges now facing the international community. It was important that limited signs of recovery not be allowed to obscure the need to address the problems and the volatility of the global financial system. Capital markets, especially short-term private capital flows, should be subject to surveillance and regulation. Domestic, regional and international financial institutions should likewise be further strengthened, and capital flows made supportive of growth and development.

The international trading system, coupled with financial resources for development, was the most powerful engine for economic growth and development. In fact, if market access were expanded, giving developing countries greater markets for their exports, development could largely be financed from external earnings. Yet that was not happening. The potential benefits of the Uruguay Round -- such as the establishment of a rule-based, secure and predictable multilateral trading system -- had failed to materialize. Obstacles abounded, not the least being denial of the comparative advantage enjoyed by the products of developing countries, often on environmental, labour and human-rights grounds, as well as disguised protectionist measures such as anti-dumping and subsidies. As a result, marginalized countries were unable to build capacities strong enough to achieve effective integration into world markets. Given such conditions, it was now almost impossible for crisis-torn countries to stage a rapid recovery.

To reverse those trends, the international community must seek new ways to strengthen the multilateral trading system incorporated in the World Trade Organization (WTO) in order to ensure a more equitable, transparent and rule-based system. That was the key to promoting international trade and investment. He hoped that preparations for the forthcoming Seattle WTO Ministerial Meeting would promote full implementation of the Uruguay Round agreements of the General Agreement on Tariffs and Trade (GATT) and avoid the introduction of issues outside the WTO’s mandate. The South Summit to be held in Havana next April would help developing countries to promote growth and development and to make full use of the opportunities generated by globalization.

NURY VARGAS (Costa Rica) said that eradicating poverty and promoting sustainable development were priorities for the United Nations and all Member States. Better economic and social conditions were the most important goals for Governments, which had to provide the best possible living conditions for their people. That goal was far from being achieved. “Can we be respecting human dignity when 830 million people, mostly children, are malnourished?” she asked. The challenge of poverty was multidimensional. To meet it, a multidisciplinary approach was required, including job training and job creation, enhanced competitiveness and access to markets. Lack of capital, restriction of access to markets and natural disasters were among the obstacles.

Given the enormity of the task, the only possible strategy for the eradication of poverty was aggressive social investment. The first step was to reduce military spending and reallocate the liberated resources to the economic and social sectors. Costa Rica had done both. Despite its financial limitations, its national health and education indicators were akin to those of developed countries. Its people had a high standard of living. Poverty could not be fought without resources, however, and efforts to eradicate poverty must go hand in hand with sustainable development.

Open trading patterns were necessary so that trade could be a driving force for growth, she said. Equally necessary was an international financial system that would protect developing countries from financial crises. Countries must also work to preserve natural resources, which were necessary for national and global development. Costa Rica had taken major steps to protect its rich bio-diversity.

ALI SULEIMAN AUJALI (Libya) said that the United Nations had, to its achievements in establishing foundations for peace, that the world’s economic problems had not received the attention they deserved. Therein lay the causes of many conflicts, and the developing world looked to the United Nations for action to redress the situation.

He noted with dismay that some developed countries were putting pressure on the development bodies of the United Nations in an attempt to compromise the Organization’s neutrality. Worse still, financial grants to developing countries were tied to programmes intended to impose human rights and democracy, instead of being allocated for practical projects that would support sustainable development. He also noted an increasing range of coercive measures, such as embargoes. Those embargoes impeded trade between developed and developing countries. He called not only for their termination, but also for compensation for the suffering caused by such measures.

DUMISANA S. KUMALO (South Africa) said that the primary responsibility for the development of Africa lay with the Africans themselves. Africa accounted for only five per cent of the total international financial flows to developing countries. Combined with the sharp recent decline in official development assistance (ODA), and Africa’s alarming levels of indebtedness, the problem had dimmed prospects for development. Subsidies -- particularly in the agricultural sectors of developed countries -- must be removed in order to foster free and fair competition.

Greater attention, he said, must be paid to questions of conservation and the sustainable use of biological diversity, as well as to the equitable distribution of benefits derived from biological resources. South Africa was continuing to work for conclusion of a balanced Biosafety Protocol to help protect developing countries against harmful exports of genetically modified products. He added that implementation of the United Nations Convention to Combat Desertification continued to be hampered by a severe lack of financial resources. Developed country partners must honor their voluntary contributions to the Global Mechanism in order to facilitate the effective implementation of the Convention.

U THANE MYINT (Myanmar) said that inordinate flights of capital had thrown Governments into jeopardy. The effects of the recent financial crisis made it clear that a major fault-line existed in the global financial terrain. The lack of a proper institutional framework to regulate international finance stuck out like a sore thumb. No one could deny that there was an enormous discrepancy between an increasingly sophisticated and dynamic international financial world, complete with rapid globalization of financial portfolios, and a world economy that needed safeguarding from financial crises of high intensity and frequency and devastating real effects.

While the crisis was in full swing, he said, there had been motivation to build a new international financial architecture. Now that the storm had passed -- as some tended to think -- the momentum had waned. There was no denying that existing institutions were inadequate to deal with globalization. At the international level, inconsistent macroeconomic policies and inefficient management of international liquidity, financial supervision and regulation had all borne witness to the fact. The process of creating a new international financial structure should not be allowed to lose steam.

Agreement by the world’s rich countries to relieve the debt burden of the poor countries was a step forward, he said. But the resulting programme endorsed by the Group of Eight industrialized countries fell very short of expectations. Relieving the debt burden of poor countries, where 60 per cent of a country’s spending went to debt servicing, was a moral obligation no creditor would ignore. A more effective concept, aimed at the total eradication of their debts, would be very welcome for indebted countries.

DAMBA GANKHUYAG (Mongolia) said that the most crucial issue for developing countries was how to finance their development. Although an appropriate level of domestic savings could generate some economic growth, most developing countries also needed external sources of financing. The burden of debt, the decline of commodity prices and the deterioration of foreign trade terms had all negatively affected the capacity of those countries to finance their development. Mongolia therefore attached great importance to the forthcoming high-level United Nations Conference on Trade and Development United Nations Conference on Trade and Development meeting on financing for development to be held in 2001.

Lack of access to the sea was universally recognized as a particularly serious handicap to development. Already labouring under that disadvantage, land-locked developing countries were now in danger of further marginalization as a result of growing globalization. Prohibitive transportation costs were a grave impediment to trade and development. He therefore attached great importance to timely and effective implementation of the Global Transit Transportation Framework and the decisions of the trilateral meetings on the issue. As one of the world's 29 land-locked developing countries, Mongolia had made it a priority to cooperate actively with its foreign partners in different fields, including development and improvement of transit transport infrastructure. Efforts were underway to conclude a sub-regional agreement, which would create a legal framework for facilitating transit transportation.

ENRICA TADDEI (San Marino) noted that the United Nations had explored the possibilities of private-sector partnership on various development issues. One outstanding example of such a partnership was the successful campaign to eliminate polio in many parts of the world, undertaken by United Nations Children's Fund (UNICEF) and private-sector partners. However, poverty eradication remained one of the most urgent challenges, and United Nations initiatives to raise awareness on the subject were welcomed. Poverty did not simply mean lack of access to consumer goods. It also meant cultural poverty, inability to make choices -- in substance, lack of freedom.

She said that San Marino would co-sponsor a resolution designed to offer a durable solution of the debt problem. But finding a solution -– such as the recent initiative to mobilize funds needed to implement the Cologne Agreement by the eight industrialized countries -- was just the first step. More needed to be done to achieve development. The close link existing among democracy, the rule of law, respect for human rights and sustainable development should never be overlooked. One could not be fully implemented without the other. Another area that deserved priority attention from the United Nations was the development of young people, she said. Focus on that goal could benefit both human development and human rights.

BURAK OZUGERGIN (Turkey) said that the World Bank, in its recent World Development Report, had identified two forces that would alter the development landscape in the early decades of the next century -– globalization and localization. Localization involved the demands of local communities for an increased say in their own development processes. Three central implications of the forces of globalization and localization could be identified. First, those forces underscored growing global interdependence that bypassed space, time and local issues. Second, there was now a more crowded development scene, which meant that nations would enjoy less and less control over the process of development. Third, the rewards for successful development strategies, and the penalties for failure, were likely to be greater and swifter-acting than in the past.

The work of the Second Committee should therefore focus on two important objectives. It should continue providing the necessary political support for reinforcement of the international financial system, including its adaptation, as appropriate, to current global needs. In doing so, it should maintain the issue of worldwide poverty as a constant and overarching theme. While the United Nations was not the proper forum for discussing the highly sensitive issues surrounding international financial architecture, the Organization still had to generate the moral drive required to bring about change. The United Nations was, in many cases, still the only forum where the voices of millions of the world’s silent poor could be heard.

KHAGENDRA BHATTARAI (Nepal) said that the inequalities between developing and developed countries had intensified. It was the responsibility of the world community to mount a collective effort aimed at galvanizing new strategies to cope with the problem of poverty in an era of globalized trade and economic development. Unprecedented technological advances promised to facilitate attainment of the world’s development goals. It was therefore ironic that developing countries would probably enter the new century bereft of the needed resources and infrastructure.

He noted that the problem of “aid fatigue” had touched both donors and recipients. The low flow rate of international foreign direct investment, coupled with dwindling ODA, had led to the marginalization of the least developed countries, despite the so-called investment boom of the last decade. The case of land-locked developing countries –- such as Nepal -- was even bleaker. Remote mountainous topography and a sparsely distributed population meant that delivery of services, however basic they might be, was miserably insufficient. However, tripartite high-level meetings between land-locked and transit developing countries and representatives of donor countries and institutions had proved very useful in addressing those problems.

OM PRADHAN (Bhutan) said that the outcome of the proposed conference on financing for development would determine whether the millennium would begin with renewed hope and collective efforts aimed at achieving a common purpose, or with the disenchantment and conflicts that currently plagued the international community. In particular, the outcome of the conference would be critical to pursuit of the goals envisioned and adopted for action by the several international conferences of the last decade. It was therefore imperative that, in considering the recommendations of the Working Group on the forum, scope and agenda of the conference, the Committee should strive to ensure that the final event yielded tangible results.

By 2001, Bhutan would have completed four decades of planned socio- economic development, he said. There had been progress made in every area of development, including communications, health, education, trade and industry. Every effort was being made to pursue a self-reliant, sustainable and people-centred approach to development. Bhutan’s contribution to the global environmental agenda was reflected in its abiding commitment to preserve over 72 per cent of its land under forest cover. However, the level of gross domestic product alone was not a sufficiently accurate index of a people’s happiness and welfare. The preservation of intangible values and qualities of human life, such as culture and environment, were integral elements of sustainable development. However, he continued, that was not an easy path to tread alone. As a least developing country, Bhutan faced resource constraints in financing its development. It needed the continued support of the international community. The imperatives of globalization had only accentuated the problem. It was essential to increase ODA levels in order to enhance the core resources of the multilateral development agencies under the United Nations system. Failing that, their vital programmes -- especially those that struck at the roots of poverty in the developing world -- would continue to falter.

BOCOUM MOHAMADOUN BAREMA (Mali) said that support structures in the international system of aid were not always sufficient. The proliferation of parallel structures sapped the effectiveness of aid, as did the numerous levels of decision-making, not to mention the wide gulf between talk and action. Aid with strings attached had affected the quality of international relationships, and had led to poorly adapted technology resulting in problems of maintenance.

He said that in this changing world there was a need to be more inventive. The true global challenge was the fight against propaganda and political hypocrisies. Poverty, disease, crime and aggression defied the moral structures of civil society. Masses of disadvantaged human beings were living a nightmare. The forces of evil were controlling crime and spreading death. The growing number of those left by the wayside showed us that it was time for a true world coalition for the well-being of mankind.

JEAN MAXIME MURAT (Haiti) noted that humankind had been spared a general economic recession following the recent global financial crises. However, the developing countries, especially the least developed ones, were now suffering the bitter fruit of those crises. Notwithstanding the efforts of the United Nations system, the goal of eradicating poverty was far from attainment. One and a half billion people were getting by on less than one dollar a day. One out of two people in Sub-Saharan Africa was living in abject poverty. Haiti, a small and poor country in the Caribbean, faced serious economic and social problems. At the same time, it was committed to the struggle to achieve economic lift-off. International solidarity was most definitely called for.

Haiti was alarmed at how the budget for international development assistance had dwindled over the years, he said. Official development assistance, an undeniable necessity for developing countries, was in continual decline. National budgetary resources for debt servicing were strangling efforts by Governments to meet the basic needs of their peoples. The current challenges compelled Haiti to examine its development policies. The Government was taking steps to ensure a fuller involvement by civil society in the development of the nation. Haiti had also renewed its support for technical cooperation among developing countries, which was the true pillar for South-South cooperation. He hoped that the South Summit, to be held next year in Cuba, would help to expand such cooperation. New modalities for cooperation, particularly through regional integration, would be welcomed.

* *** *