ECONOMIC COMMITTEE IS TOLD LIBERAL TRADE THEORIES FOR INDUSTRIAL GOODS SHOULD ALSO APPLY TO AGRICULTURAL PRODUCTS

Press Release
GA/EF/2896

ECONOMIC COMMITTEE IS TOLD LIBERAL TRADE THEORIES FOR INDUSTRIAL GOODS SHOULD ALSO APPLY TO AGRICULTURAL PRODUCTS

Issue to be Raised at WTO Meeting; In Continuing Debate on Trade And Development, Special Problems of Land-locked Countries Reviewed

There was no reason why the liberalization theories preached by industrialized countries with respect to other goods should not also apply to agricultural products, the representative of Uruguay told the Second Committee (Economic and Financial) this afternoon, as it continued its consideration of trade and development.

Speaking on behalf of the Southern Common Market (MERCOSUR) countries, he said that those countries intended to wholly integrate the issue of agriculture in the agenda of the upcoming ministerial meeting of the World Trade Organization (WTO) in Seattle. They had hopes of finally doing away with the unjust discrimination in the agricultural sector, which had existed in international negotiations for more than fifty years.

Rich countries must practise in agriculture what they preached for other sectors, Australia’s representative said, on speaking for the 15 agricultural fair trading countries of the “Cairns Group”, as well as Bolivia, Costa Rica and Guatemala. Despite the progress achieved in the Uruguay Round, international trade in food and other agricultural products remained subject to profound and costly distortions, he said.

The representative of South Africa, speaking as vice-chairman of the fourth meeting of governmental experts from land-locked and transit developing countries, and for representatives of donor countries and financial and development institutions, presented the report of that meeting. He said measures to deal with the transit problems of land- locked developing countries required, first and foremost, closer and even more effective cooperation and collaboration between those countries and their transit neighbours.

Speaking on behalf of the Group of the Land-Locked Developing Countries, the representative of Lao People’s Democratic Republic said the export competitiveness of those countries was undermined by long and unpredictable transit times. Reducing the high transport costs faced by those countries not only required action within their own

Second Committee - 1a - Press Release GA/EF/2896 40th Meeting (PM) 12 November 1999

frontiers, but also depended heavily on improvements in the transport policy and facilities of neighbouring transit countries.

Statements were also made by the representatives of Cuba, Ecuador, Uganda, Colombia, Pakistan, Belarus, Romania, Ukraine, China, Mongolia, Japan, Kazakhstan, Trinidad and Tobago, and Haiti. In addition, the representative of the United Nations Development Fund for Women (UNIFEM) and the observer for the Organization of the Islamic Conference (OIC) addressed the Committee.

The Committee will meet again at 10 a.m. on Monday, 15 November, to conclude its consideration of trade and development, and to consider the financing of development, including the net transfer of resources between developing and developed countries.

Committee Work Programme

The Second Committee (Economical and Financial) met this afternoon to continue its consideration of trade and development. For background information, see Press Release GA/EF/2895, issued this morning.

Introduction of Report

DUMISANA SHADRACK KUMALO (South Africa) introduced the report of the Fourth Meeting of Governmental Experts from Landlocked and Transit Developing Countries and Representatives of Donor Countries and Financial and Development Institutions. That meeting took place at United Nations Headquarters from 24 to 26 August. Ambassador Kumalo, Vice Chairman of the meeting, said that measures to deal with the transit problems of landlocked developing countries first and foremost required closer and even more effective cooperation and collaboration between those countries and their transit neighbours.

Given the poor state of roads and railways in both landlocked and transit developing countries, he said, there was a need to increase public capital investment. However, as landlocked developing countries and most of their transit neighbours had serious economic problems, the need for greater financial support from the international community was pressing.

The role of transit procedures and documentation was now recognized, he said. Harmonization, simplification and standardization of procedures and documentation were necessary. A reduction of costs had been realized where such measures were taken. However, the implementation of such programmes required policy reforms and new legislation, as well as the necessary financial and human resources. Such steps required commitment from landlocked countries and their transit developing neighbours as well as support from the international community. The UNCTAD’s Automated System for Customs Data and the Advance Cargo Information System had made important contributions to the improvement of transit transport and should get due priority, particularly in the regions that had not yet benefited from such programmes. The Advanced Cargo Information System should also receive priority.

Statements Made

RAFAEL DAUSA CESPEDES (Cuba) acknowledged that globalization had offered benefits and opportunities for developing countries. But how could developing countries benefit from trade liberalization when industrialized countries controlled over 70 per cent of the global market? Behind the liberalization rhetoric lay a multilateral trade system dominated by rules set -- and violated on a daily basis -- by the industrialized countries. The decrease in commodity prices, among other things, had caused losses to Third World countries. Developing countries had directly suffered from the ill effects of the narrowing of international markets. It was necessary to stabilize commodity prices. Also, the international community must support the efforts of developing countries to diversify their activities in order to increase export earnings. The multilateral trade system could not continue increasing disparities between the rich and poor countries: it must encourage growth. The international community must also help developing countries integrate themselves into the global economy.

Five years had passed since the Uruguay Rounds, but developed countries had not honoured their commitments to open their markets to developing countries on a preferential basis, he said. Future trade negotiations should take into consideration the needs and interests of developing countries. Cuba was greatly concerned at efforts by developed countries to impose new conditions on trade. How could there be talk of a world of liberalized trade, when the world was witnessing growth in the use of sanctions and coercive measures? The Helms-Burton Act was a lamentable example of the violation of World Trade Organization agreements. The policy of the United States towards Cuba for the past 40 years had earned broad rejection from the international community, with yet another resolution, adopted just a few days ago by the General Assembly, calling for the lifting of that embargo. Despite the difficulties Cuba faced due to the embargo, it had striven to integrate itself into the global economy, especially in the Latin American and Caribbean region. Neo-liberal globalization had created great uncertainties for developing countries. Unless those uncertainties were addressed, current problems would only continue to worsen.

FERNANDO YEPES LASSO (Ecuador) said that the Seattle Ministerial Conference and the tenth meeting of the United Nations Conference on Trade and Development (UNCTAD X) would be a chance to reflect on the need to strengthen the multilateral system and to allow all countries to participate on an equitable basis. Ecuador, as one of the first countries to enter the WTO, believed strongly in free trade and rejected protectionism. The new round of negotiations, which should include the agricultural sector, must move closer to full implementation of the Uruguay Round agreements, taking into account the degree of development of all countries, especially the least developed countries. The WTO’s mechanism for dispute settlement should also be strengthened.

Ecuador had consolidated a regional process of cooperation among Andean countries, he said, which had produced outstanding results. It had also participated in the process leading to the free trading agreements of the Americas. The UNCTAD was the primary forum within the United Nations system for integral studies of issues related to trade, finance, investment and technological developments. He hoped that the debate in the General Assembly would contribute to the strengthening of a multilateral trading system that gave free access to international markets, based on equality for all.

BORIS E. SVETOGORSKY MARINO (Uruguay), speaking on behalf of the Southern Common Market (MERCOSUR) countries, said that all efforts to liberalize trade, particularly those stemming from the Uruguay Round agreements, would be inadequate to achieve their goals if protectionist measures continued. Protectionist policies implemented by industrialized countries not only shut the door to products from developing countries, but also created an unfair market environment. The MERCOSUR countries intended to wholly integrate the issue of agriculture in the agenda of the upcoming Seattle Round, in the hope of finally doing away with the unjust discrimination in the agricultural sector which had existed in international negotiations for more than fifty years.

There was no reason why agricultural producers, such as the MERCOSUR countries, whose growth and development was clearly related to the agricultural sector, should continue to face all types of barriers, distortions and discriminations in attempting to find market access in developed countries. All that took place while tariffs and non-tariff measures for industrial products, capital goods and high technology products were reduced to a minimum or completely eliminated. Nor was there any reason why, despite their productive efficiency and comparative advantages, their participation in the global export of agricultural products should continue to decline as a result of trade distortions, internal support policies and export subsidies practiced by industrialized countries whose own agricultural production was inefficient. Further, there was no reason why the liberalization theories preached by industrialized countries with respect to other goods should not be applicable to agriculture.

MATIA SEMAKULA KIWANUKA (Uganda), speaking on behalf of the States of East African Cooperation (Kenya, Uganda, United Republic of Tanzania), said that the trade agenda should increasingly address the need to keep a broad development orientation. The formulation of trade policies, at all levels, should be complementary and coordinated with similar actions in the realms of finance, investment and development cooperation. Trade and finance were particularly important areas, where coherence and complimentarity in the formulation of different policies were essential for equitable and stable global growth and development. The need for cooperation and coordination among the multilateral institutions dealing with those issues and the United Nations could not be overemphasized.

East Africa was reactivating its age-old cooperation, in the firm belief that its economic future was brighter as an economic bloc, a unified market and a single investment destination, he said. That cooperation would also address problems related to the negative impact of high transport costs, fragmented resource base and inadequately developed infrastructure. He called upon the participants in the Third Ministerial meeting of the WTO to come up with concrete solutions that would ensure the effective participation of developing countries as equal partners and beneficiaries in the multilateral trading system.

ANDRES FRANCO (Colombia) said that trade had been one of the main elements in defining Colombia’s economic policies. Despite the considerable efforts made by his Government to adjust its economy to new trends, external and internal problems had affected both the export sector and overall economic and social development. The Committee’s deliberations must include a clear political message to be sent to the WTO Meeting in Seattle and to UNCTAD X, since those meetings would set the agenda for the following years in international trade. One of the main points of that message must be the need for a favourable and conducive international economic and financial environment. It was essential for the functioning of the international trade system to rely on a healthy and foreseeable environment. Another point would be the full implementation of international commitments and obligations.

In addition, he continued, protection barriers like tariff peaks and subsidies, especially on primary goods, and the use of anti-dumping rights and non-tariff barriers, should be corrected and abolished to facilitate market access. Among the other main points were special and preferential treatment, transfer of technology, electronic commerce, and the role of UNCTAD. Cooperation and collaboration between UNCTAD, the Bretton Woods institutions and other specialized agencies of the United Nations system should be strengthened, so that all human, economic and financial resources could be used more effectively in favour of international trade and sustainable development.

NAVID HANIF (Pakistan) said it was an indisputable fact that no country could achieve economic growth or prosperity without trade. International trade had become the mainstay of economic growth. Owing to the multilateral trade system, fortunately, most countries had maintained liberal trade regimes. However, that could be questioned if the system failed to achieve the ultimate aim of development. Globalization had turned out to be a double-edged sword for developing countries. While in principle developing countries would have benefited from the rules-based system, the reality was very different. The expectations of the Uruguay Round had remained largely unfulfilled.

It was hypocritical to expect that developing countries should be called to liberalize while developed countries continued to protect the sectors in which they dominated. Equity, and not efficiency, should be the cornerstone of any system that dealt with unequal players. All kinds of barriers in the developed countries had contributed to the trade difficulties faced by developing countries. Future negotiations in the WTO should primarily focus on development issues. Trade liberalization was not an end in itself but a means for development. The ultimate objective of trade liberalization was to remove barriers at a pace conducive to each country’s development. Uniform rules must not be applied to unequal players. The continuing marginalization of developing countries must be reversed through a development-oriented WTO.

ALYAKSEI MASHUKHOU (Belarus) said that full integration into the world economy and the international trading system, including through accession to the WTO agreements, was one of the aims of the sustainable development strategy of his country. Unfortunately, the activities of the WTO and the system of multilateral trade agreements did not fully respond at present to the specific interests and justified concerns of many developing countries and countries with economies in transition, some of which belonged to the founders of the Organization.

The true universality of the multilateral trading system, including universal membership in the WTO, should become one of the most important systematic goals in the political dialogue within the United Nations and UNCTAD, as well as negotiations within the WTO. Liberalization of access to internal markets for countries acceding to the WTO must be accomplished in good order, step by step, in thoroughly determined sequence, parallel to the increase in levels of internal demand. The process should also involve strengthening the competitiveness of the goods and services of those countries on external markets and increasing the volume of their export earnings.

ALOUNKEO KITTIKHOUN (Lao People’s Democratic Republic), speaking on behalf of the land-locked developing countries (LLDCs), said that those countries were in an unfavourable position because of their very high transport costs and poor trade facilitation environment, which greatly eroded their competitive edge. The export competitiveness of the LLDCs was further undermined by long and unpredictable transit times. In today’s international market, suppliers needed to offer speed, reliability and flexibility in order to be competitive.

Reducing the high transport costs faced by the LLDCs not only required action within their own frontiers, but also depended heavily on improvements in the transport policy and facilities of neighbouring transit countries. Effective cooperation between land-locked countries and their transit neighbours in the field of transit trade raised many complex economic, trade and legal issues. Close cooperation and understanding between land-locked and transit developing countries were necessary, not only for devising harmonized transit procedures and documentation but also for coordinating international support for development of a more efficient transit transport infrastructure.

He emphasized UNCTAD’s role in mobilizing and coordinating international support for the alleviation of specific problems confronting LLDCs. The Office of the Special Coordinator should be further strengthened with the necessary resources, both financial and human, to allow it to continue carrying out its mandate. Also, financial assistance and foreign investment in the transport sector by members of the Organization for Economic Cooperation and Development (OECD) was on average 9 per cent of the total official development assistance of those countries. It was imperative that such financial assistance be extended on the most concessional terms possible, and that the flow of financial and technical assistance be prioritized and substantially increased to adequately address the problems faced by the LLDCs.

ALEXANDRU NICULESCU (Romania) said that the new round of trade negotiations should address the interests of all participants and permit a balance between their rights and duties. The round should be concluded within a three-year time frame, and should aim for further liberalization and expansion of international trade for the benefit of all WTO members. At the same time, it should take into consideration the needs and interests of the developing countries and countries with economies in transition. It should also aim to enhance the WTO’s capacity to respond to the challenges of a rapidly changing global economic environment and consolidate its cooperation with other international organizations, with a view to improving coherence in global trade, monetary and financial policies.

He said that the negotiation should be based on the following principles. First, the final outcome should take the form of a “single undertaking”, implying that all participants should adopt the results as a whole. The second principle was the effective implementation of the special and preferential treatment of developing countries. The outcome of the round should also preserve the synergy among trade liberalization, environmental protection and economic development, while paying due heed to the principle of transparency. Among the subjects to be included could be agriculture, liberalization of trade with non- agricultural products, and improving the provisions of existing WTO agreements on safeguards, technical barriers and trade-related intellectual property rights.

OLEKSII HOLUBOV (Ukraine) said that given the endemic payment problems facing many developing countries and economies in transition, and their limited benefits from the Uruguay Round, the focus at the Seattle meeting should be on market access in areas where those countries already have, or could quickly establish, a competitive advantage. The general rules of the global market should be directed towards promoting development, not restraining it. It was intolerable to use pressure on countries seeking WTO membership: they should be given obligations and terms different from those imposed on current members at the time they joined the organization. Improved market access was only part of the solution. Competition required fair rules and an impartial arbiter.

He emphasized the need for the successful integration into the international multilateral trade system of all countries on their way to WTO membership. Ukraine considered its accession a priority of its foreign trade policy. It was fully aware of the difficulties that lay on the path to accession, difficulties related to bringing national legislation into line with the relevant requirements of the WTO. Nevertheless, Ukraine was taking consistent steps towards making its economy more open, transparent and integrated into the global economy. It continued to reinforce its economic potential by expanding trade relations with the Central European States, and was working to reinstate the presence of Ukraine’s products on the markets of Latin America and Africa. Also important was the development of trade cooperation with the European Union, with the possible formation of a free-trade area.

TECKIE GHEBRE-MEDHIN, representative of the United Nations Development Fund for Women (UNIFEM), said that as globalization changed markets and economic opportunities worldwide, the feminization of poverty remained a global phenomenon. The impoverishment of women had been exacerbated by the transformations taking place in the world through trade liberalization, rapid technological changes and environmental degradation. With regard to UNIFEM’s work at the macro- level, policy interventions with individual countries and government agencies, and concurrently with regional and international bodies, would help minimize threats and maximize opportunities for women’s sustainable livelihoods. The processes of engendering trade policy were long-term in nature, involving a number of interrelated activities over a period of years. The main activities in that regard included research, awareness raising and capacity-building.

The Fund’s second strategy, he said, was the support it provided at the meso- (or institutional) level to intermediary institutions, so that policy statements of benefit to women were translated into action. At that level, UNIFEM started by documenting and disseminating information on the constraints faced by women in gaining access to economic and natural resources. In particular, it aimed to show that a gender bias existed in delivery mechanisms and intermediary institutions, and to build the capacity of women’s organizations to enable them to seize opportunities arising from globalization and trade liberalization.

Thirdly, UNIFEM’s strategy at the micro-level focused on design and implementation of pilot livelihood projects designed to provide data and information which could be used to advocate changes at the macro- and meso-levels; and models which could be up-scaled and replicated by other donors and agencies. That type of pilot activity included instruction in how women could increase their negotiating skills through collective bargaining and other techniques.

HUANG XUEQI (China) said two steps were needed if the process of globalization and liberalization was to develop in such a way that all countries would enjoy equal benefits. The world required a sound and effective international financial system, and an equitable, secure, non- discriminatory and predictable multilateral trading system. The process of globalization and liberalization could not be pushed forward smoothly without the active and full participation of the developing countries.

Adjustment of existing international economic relations was also necessary, he said. The developed countries, as the initiators and biggest beneficiaries of the process of globalization, must shoulder greater international responsibility in paving the way for developing countries to participate in the process and fully integrate into the global economy. He appealed to the developed countries to fulfill in earnest their commitments under the Uruguay Round agreements.

In its efforts to join the WTO and to take part in the multilateral trading system, China adhered to two principles: firstly, to join WTO as a developing country; secondly, to join with a sound balance between its interests and obligations. He hoped that certain members of the WTO could withdraw their exorbitant demands on China. That would enable China to become a member of the Organization by undertaking obligations compatible with its own economic development level, and similar to those undertaken by other developing members within the system. China’s entry into the WTO would make the multilateral trading system a more complete and balanced one.

NARANGUA PUNTSAGNOROV (Mongolia) said that although technical, health and safety standards and regulations were important tools to which countries might resort, there was a risk that developing-country exports would become increasingly subject to excessive sanitary and phyto-sanitary standards. The use by developing countries of international standards set by developed ones did not always meet the requirements of import markets, thus reducing export opportunities for many developing States.

Land-locked developing countries had not been able to take advantage of the opportunities offered by the emerging liberalized and globalized world economy, she said. Special attention should be given to implementing the measures outlined in the Global Framework for Transit Transport Cooperation between Landlocked and Transit Developing Countries and the donor community. The time had come for all parties concerned to address the difficulties hindering implementation of the Framework and of other recommendations made at the tripartite meetings. She suggested holding regular meetings to review the implementation of such measures, to exchange views on practical aspects of trade and export promotion, and to explore ways and means of strengthening triangular cooperation in that critical area.

TETSUO KONDO (Japan) said that economic growth not only benefited the peoples of developing countries, it enhanced the stability and prosperity of the world as a whole. The UNCTAD had a vital role to play as a forum for comprehensive dialogue on the full range of economic development issues, from trade and investment to debt and finance. As globalization had progressed, business and other activities had begun to expand beyond national and regional borders. And innovations in information technology were providing enormous opportunities to increase economic efficiency.

Unfortunately, he said, not every country was enjoying the benefits of globalization, he said. That concern should be addressed seriously in the WTO, and the full participation of developing countries in the new Round was vital to its success. Means to bridge the gap should include assistance for human capacity-building and for industrial structural reforms. Human capacity-building should be the key issue for institutions, and industrial structural reforms required technology to be transferred through a variety of channels. Small and medium-sized industries could form a sound base for industrial structures, and financing for them should be given special encouragement.

YERZHAN KAZYKHANOV (Kazakhstan) said that the overall socio- economic development efforts of land-locked developing countries and their transit developing neighbours required greater attention and a more active supportive role from the international community. Kazakhstan had continued its efforts to establish an optimal transport network integrated into the world transport system, to modernize existing railways, roads, ports and airports, and to improve the management of transport and communications systems. It had adopted policies to encourage the involvement of the private sector in transit transport operations, which improved the activity of the transit transport sector and the quality of services. It strove to deepen cooperation with the United Nations and its specialized agencies to develop its transit environment.

Kazakhstan, he said, like most land-locked countries, faced serious economic problems, including lack of adequate infrastructure. Those factors impeded its participation in international trade and limited the potential gains from liberalized market access. Greater international support, through technical cooperation with the international community and multilateral organizations, as well as studies on special problems faced by those countries, were needed to enable the harmonious integration of that group into the world economy and their effective participation in global trade.

PENNY WENSLEY (Australia) spoke on behalf of the 15 agricultural fair trading countries of the Cairns Group, as well as Bolivia, Costa Rica and Guatemala. Despite the progress achieved in the Uruguay Round, international trade in food and other agricultural products remained subject to profound and costly distortions. The huge subsidies and towering protection levels, which set agriculture apart from all sectors of trade, must be remedied. Rich countries must practice in agriculture what they preached in other sectors. It was totally unacceptable that the most efficient agricultural producers were penalized, while barriers to non-agricultural trade were eliminated or reduced to a minimum. Multifunctional objectives should not be used by rich countries as a smokescreen for protectionist agricultural policies, which perpetuated poverty, hunger and environmental degradation.

For much of the developing world, agriculture was the foundation of economic development and growth, she continued. However, high levels of protection and subsidies in some industrialized countries blocked the development process and must be stopped. Among other things, agricultural trade liberalization would improve the ability of developing countries to attract foreign investment into their agricultural sectors and expand their opportunities to gain access to new technology. It would also enhance food security by allowing developing countries to produce to their potential. Export restrictions must not be allowed to disrupt the supply of food to world markets, in particular to net food importing developing countries.

AHMAD HAJI HOSSEINI, Observer for the Organization of the Islamic Conference, said that globalization, which theoretically should have created increased opportunities for trade, much larger foreign direct investment flows, technological skills, and market access for developed and developing countries, and countries in transition, was instead leading to further marginalization of developing countries, especially the least developed countries. Weaker human and institutional capacities of developing countries, which included Conference Member States, as well as a lack of financing, had not permitted many developing countries to use the WTO system to pursue their trade interests -- in particular its dispute-settlement mechanism.

He said that the 25th Session of the Islamic Conference of Foreign Ministers (ICFM), held in March 1998 in Doha, Qatar, had stressed that in order for the Conference Member States to be effective partners in the global economic decision-making process and in the WTO, effective coordination among them must be achieved. This would help to reduce and contain losses and increase benefits. It had also agreed on the need for strict control of the implementation of the Uruguay Round Agreements, and had considered the establishment of programmes to assist Member States to gain the necessary strength to face challenges arising from the realities of globalization.

ROSLYN KHAN-CUMMINGS (Trinidad and Tobago) said that the question of special and differential treatment for developing countries in the WTO needed to be revisited. That was especially relevant for small island developing States, which faced peculiar disadvantages arising from the policy actions of the international community. Those States must be provided with a justified degree of flexibility. They should not be expected to meet arbitrary time frames, unrelated to their individual needs or economic performance. The universality of the multilateral trading system should be a major objective of new negotiations, to ensure resolute progress towards an open, free and fair international trading system in which benefits were equitably distributed.

The links between trade, finance and development must continue to receive attention from the international community. Financial assistance remained an important element in developing national capacity and improving trading relationships. The WTO’s rules must be taken into account by international financial institutions when designing macroeconomic programmes for individual countries. Capacity-building to assist small island developing States in trade-related activities was a key issue. It would be critical to develop programmes of capacity- building for trade, to provide technical support to strengthen infrastructure and institutions, to engage in trade negotiations, and to conduct research on trade barriers to developing countries’ exports.

JEAN MAXIME MURAT (Haiti) said that the Asian financial crisis and its effects had clearly brought out the link between the pace of trade and development. In the field of commerce, Haiti had promoted the role of the private sector and encouraged foreign direct investment, among other things. In the past few years, the Government had undertaken a number of economic liberalization measures. The positive effects of those measures, however, had been long in coming due to the financial crisis and the inability of local businesses to face international competition. The Government believed that the abrupt elimination of certain commercial privileges might have irreversible effects on the environment and on efforts to reduce poverty. Implementation of the Uruguay Rounds had not helped to open up the markets of many developed countries.

The Seattle negotiations should serve to strengthen the capacity of developing countries to breathe new life into their economies, he continued. Developing countries would only be competitive provided that developed countries removed certain obstacles. Achieving the objective of development would be one of the major challenges at the beginning of the new millenium. The international community was under the moral obligation to support the efforts of developing countries in the area of trade.

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