SECOND COMMITTEE CONCLUDES DISCUSSION OF TRADE AND DEVELOPMENT, COMMODITIES AND EXTERNAL DEBT CRISIS AND DEVELOPMENT

Press Release
GA/EF/2935

SECOND COMMITTEE CONCLUDES DISCUSSION OF TRADE AND DEVELOPMENT, COMMODITIES AND EXTERNAL DEBT CRISIS AND DEVELOPMENT

The “Seattle fiasco” demonstrated the need for serious reform of the present world trade system, which was inequitable, unsustainable and tended to favour large transnational corporations, the representative of Thailand told the Second Committee (Economic and Financial) this morning, as it concluded its discussion of trade and development, commodities, and external debt crisis and development.

He added that a new, well-prepared round of trade negotiations should be launched at the earliest, whose agenda should reflect the interest of all World Trade Organization (WTO) members, particularly developing and least-developed countries.

It was important, said Peru's representative, to work in favour of a multilateral trading system that was rule-based and transparent. The rules of international trade had to more strongly reflect the dimensions of development, and the equitable participation of all members had to be guaranteed. A new round of trade negotiations was particularly necessary for the free entry of textiles and the creation of fair competition.

Kenya's representative said that it was clear that developing countries had not achieved any meaningful gains from the new international trading system. The ability of those countries to effectively participate in the WTO would be an important determinant of their further integration into the international system. Of particular concern were the growing protectionist tendencies in the industrialized countries to the exports from developing countries.

The representative of Ukraine, a member of the GUUAM Group of countries -- Georgia, Ukraine, Uzbekistan, Azerbaijan and the Republic of Moldova -- said that the liberalization of trade and financial flows had brought the developing countries and economies in transition closer to the markets and capital they required. However, the WTO on its own could not solve all development problems. In order to amplify positive changes, the WTO should work in cooperation with other organizations, such as the International Monetary Fund, the World Bank and the United Nations Conference on Trade and Development (UNCTAD).

Also this morning, under other matters, the representative of Japan raised questions regarding the Secretary-General's report on debt crisis and development (document A/55/422).

Second Committee - 1a - Press Release GA/EF/2935 28th Meeting (AM) 27 October 2000

Statements were also made by the representatives of the United States, Saint Lucia, Pakistan, Georgia (also on behalf of Uzbekistan, Azerbaijan, Republic of Moldova and Ukraine), Egypt, The former Yugoslav Republic of Macedonia, Norway, Swaziland, China, Brazil, Cameroon, Nigeria (on behalf of the “Group of 77” developing countries and China), Costa Rica and Sweden.

The Committee will meet again at 5 p.m. today to discuss the Third United Nations Conference on the Least Developed Countries.

Second Committee - 3 - Press Release GA/EF/2935 28th Meeting (AM) 27 October 2000

Committee Work Programme

The Second Committee (Economic and Financial) met this morning to conclude its consideration of trade and development, commodities, and the external debt crisis and development. (For background, please see Press Release GA/EF/2933 issued on Thursday, October 26.)

The Committee was also expected to hear the introduction of a draft resolution on the report of the sixth special session of the Governing Council of the United Nations Environment Programme, sponsored by Nigeria, on behalf of the “Group of 77” developing countries and China (document A/C.2/55/L.17). The text would have the Assembly request the Secretary-General to provide the necessary resources from the regular budget of the United Nations to the United Nations Environment Programme (UNEP) for the biennium 2002-2003 and to consider other ways to support the strengthening of the Programme in view of the 10-year review of the United Nations Conference on Environment and Development (UNCED).

Also, the Assembly would underscore the need for sufficient financial resources, on a stable and predictable basis, to ensure the full implementation of the UNEP’s mandate with the necessary resources for its strong involvement in the preparatory process for the 10-year review, and in the implementation of the outcome of the review.

Statements

MATS KARLSSON, Vice-President of the World Bank, said that the goal in the Millennium Declaration of halving poverty by 2015 was a paramount one, which the Bank also shared. The goals adopted by the international community in the United Nations conferences provided a way to focus peoples’ minds on what the United Nations was all about. He then highlighted several points made by the President of the Bank during its annual meeting in Prague. First, many developed countries had fallen far below their aid commitments. Second, debt relief must be faster and deeper. Third, developed countries must dismantle their trade barriers. Fourth, the international community must explore innovative instruments, such as grants, in addressing problems such as AIDS. Also, it must recognize that there were more and more issues whose resolution required cooperation at the international level.

As World Bank President James Wolfensohn had made clear, the Bank was committed to working with its United Nations partners for the Third Conference on Least Developed Countries and the Financing for Development Conference, he said. The Least Developed Countries Conference could be a useful step and should raise the issues of particular concern to those countries and take decisions, which could benefit them and other low-income countries. It was worth noting that most of the world’s poor lived in countries outside of that group. The financing for development event should ensure not only that the means required to reach the 2015 goal were mobilized, but also properly allocated. Official and private foreign flows could only complement domestic resources. The growth of private capital flows had dramatically changed the vulnerability of many countries. Among the questions to be addressed was how donors could reduce transaction costs of aid. Also, how could additional resources be mobilized for development assistance?

Major efforts were being made to implement the enhanced Heavily Indebted Poor Countries (HIPC) Debt Initiative, he said. The international community should determine what other measures could be implemented to help the poorest countries. Most developing countries had limited access to private capital. What further action was needed to facilitate private investment flows into those countries? he asked. A dynamic export sector could help mobilize domestic resources and attract foreign capital.

SERHII YAMPOLSKY (Ukraine), speaking also on behalf of Georgia, Uzbekistan, Azerbaijan and the Republic of Moldova, said those countries considered accession to the World Trade Organization (WTO) a priority of their foreign trade policy. They were taking consistent steps towards making their economies more open, transparent and integrated into the world economic space. Liberalization of trade and financial flows had brought the developing countries and economies in transition closer to the markets and capital they required. However, the WTO on its own could not solve all development problems. In order to amplify positive changes and ensure the successful management of globalization, the WTO should work in cooperation with other organizations such as the International Monetary Fund (IMF), the World Bank and the United Nations Conference on Trade and Development (UNCTAD).

Bearing in mind the Bangkok plan of action, which underlined the need to address the imbalances in the WTO agreements and the international economy as a whole, he believed that UNCTAD should continue to enhance its activities in supporting the efforts of all interested countries aimed at their full integration into the multilateral trading system. The UNCTAD could provide necessary assistance in order to equip those countries with better understanding of the issues included in the agenda of the WTO negotiations, with a view to enable them to participate more actively in that process. He supported UNCTAD’s activities on capacity-building in developing countries and economies in transition on issues relating to international investment agreements, as well as its overall policy- oriented research and technical assistance in the area of foreign direct investment.

At the same time, he added, more should be done to expand the export opportunities of those countries through modernizing special and differential treatment incorporated in trade agreements, to support efforts by developing countries and economies in transition in attracting foreign direct investment, and to assist interested countries in the process of WTO accession.

MARCO BALAREZO (Peru) said it was important to work in favour of a multilateral trading system that was rule-based and transparent. Developing countries had taken on serious commitments in the context of the WTO in an effort to incorporate themselves into the world economy. Commitments had been taken on important areas of development, such as intellectual property rights and trade. The main points of interest for developing countries were market access and the true liberalization of the clothing sector.

The rules of international trade had to more strongly reflect the dimensions of development. The equitable participation of all members had to be guaranteed. Peru had carried that out thorough structural reforms that were based on open regionalism. It had also removed obstacles to trade such as quotas. This trade policy had been accompanied by the adoption of a floating exchange system. A new round of trade negotiations was necessary for the free entry of textiles and the creation of fair competition.

GEORGIA T. WRIGHT (United States) said that external debt could be a significant burden to many of the world’s poorest countries, and a major stumbling block to their efforts to effectively deliver growth and poverty reduction to their populations. When considering the issue of external debt, the United States believed that attention should remain focused on the pressing problems of the heavily indebted poor countries.

Last year, she said, the United States had joined other industrialized countries in enhancing the HIPC Initiative to provide faster, deeper and broader debt relief for the poorest developing countries that were committed to poverty reduction and growth. The United States believed that the Initiative was a vital part of the international community’s broader effort to effectively support poverty reduction and economic growth efforts by the poorest countries.

The United States, she added, supported rapid implementation of the enhanced HIPC Initiative for eligible countries, which enacted sound economic reforms including implementation of a credible poverty-reduction strategy. Debt relief without economic reforms and effective use of savings would achieve little long- term impact on poverty.

ADAM ADAWA (Kenya) said it was clear that developing countries had not achieved any meaningful gains from the new international trading system. The ability of those countries to effectively participate in the WTO would be an important determinant of their further integration into the international system. Kenya was particularly concerned by the growing protectionist tendencies in the industrialized countries to the exports from developing countries.

Kenya was also concerned by the introduction of new issues in the multilateral trading system, such as labour standards, environment and government procurement, among others. The introduction of these items was one of the reasons for the collapse of the WTO Conference in Seattle. External debt had been an obstacle to the developing countries’ desire to achieve any progress in poverty reduction. His delegation called on developed countries to honour their pledges of debt relief and increase the balance of payments for developing countries.

SONIA R. LEONCE (Saint Lucia) said that developing countries were tired of empty promises and words without action. They stood at the crossroads of deciding whether to continue the fight. The stakes were too high for developing countries to accept defeat now. Development was a basic human right. The developing countries could not enter another round of negotiations in the WTO without receiving assurances that their interests would be taken into consideration.

Partnership connoted mutual benefit, she said. Developing countries continued to be exploited and impoverished. She insisted on special and differential treatment in order to allow developing countries room to develop. The Caribbean’s experience with trade liberalization showed that those economies which had liberalized too rapidly had suffered, while those that had taken a gradual approach were more stable. Since liberalizing its trade, Saint Lucia had become a low-income country.

Concerted international action was required to tackle those issues, she said. If equity was demanded collectively, then it would be granted. Africa needed more than market access, it needed solidarity. If there was a genuine concern for Africa and the developing countries in general, that would have been reflected in the levels of official development assistance (ODA) and foreign direct investment. Developing countries wanted partnership and effective participation in the next round of trade negotiations. Reality must be given to the promise of development to the millions in the developing world.

SHAMSHAD AHMAD (Pakistan) said that there had been two major events which had taken place since the Second Committee’s last session: the failure of the WTO negotiations in Seattle and the successful conclusion of the tenth session of UNCTAD. It was evident that the process of the restoration of faith was a difficult one. In their final declaration, the leaders of the South Summit had advocated the restoration of confidence in the multilateral trading system and called on the developed countries to meet their commitments in development. It was evident that the current system was not favourable to developing countries, and that the imbalance of the trading system had only been further exasperated. The developed countries had continued to protect the key areas of export. Those protectionist measures denied market access to developing countries, which was unsustainable. Equity should be the cornerstone of any system. In order to revive confidence, efforts must be made to gear the whole system towards development.

Access to the WTO had become increasingly difficult for developing countries, he said. He called for the acceleration of accession to the WTO without placing excessive demands on developing countries. Pakistan emphasized that future negotiations should primarily focus on development. The central question was how the world trading system could address development.

The external debt crisis of developing countries was a serious threat to their resources. While the launching of the HIPC Initiative was supported by Pakistan, it was clear that progress in providing genuine debt relief had been slow. The decrease in ODA was another area of concern. In order to provide genuine debt relief, sufficient resources should be allocated in order to finance it. The only solution for the crippling debt burden was the outright cancellation of debt. There was a need for concerted action to find a solution to the debt crisis.

G. VOLSKI (Georgia), also spoke on behalf of the GUUAM Group –- Georgia, Ukraine, Uzbekistan, Azerbaijan and the Republic of Moldova. He said that global economic cooperation had the potential to address social issues and to be an indispensable tool in exerting peace and stability. It was in that context that coordination between the States of Central Asia gained particular importance. The restoration of the Silk Road was one of the aspects of that coordination. It was clear that countries with economies in transition would benefit from the development of a Euro-Asian transit system. It would also open access to new, emerging markets for the developing countries.

The process of implementation of the Silk Road project must be utilized for strengthening the economic security, economic borders and sovereign rights of the States, he said. The segment of the report of the Secretary-General on the obstacles hampering effective cooperation deserved particular attention from donor-States and relevant international organizations. In that respect, there was a need to enhance the process of preparing technical assistance. The GUUAM States were committed to the intensification and expansion of economic cooperation and the liberalization of trade laws.

ASDA JAYANAMA (Thailand) said that the Seattle fiasco demonstrated the need for serious reform of the present WTO system, which was inequitable, unsustainable and tended to favour large transnational corporations. Therefore, he supported the idea that a new, well prepared round of trade negotiations should be launched at the earliest. The agenda of the new “development round” should reflect the interest of all WTO members, particularly those of the developing and least developed countries.

On trade in agriculture, he said that the WTO Agriculture Agreement was supposed to result in import liberalization and reduction of domestic support and export subsidies for agricultural products, especially in the rich countries. That was expected to improve the market access of those countries of the South which exported agricultural products. As it turned out, the protection and subsidies had been allowed to remain very high in developed countries. Tariffs had also remained high, making it virtually impossible for developing countries’ exports to gain access. Strict compliance to tariff reductions and elimination of market access restrictions, subsidies and distortions was, therefore, needed to truly bring about a fair and market-oriented agricultural trading system.

On dumping and anti-dumping duties, he said he was concerned about the adequacy and fair implementation of rules governing anti-dumping measures, since easy access to, and increased dependence on, anti-dumping measures would nullify the benefits of tariff reductions.

IHAB GAMALELDIN (Egypt) said that multilateral trading action was undergoing a critical period. It was clear that there existed the international solidarity to have it benefit all people. The peoples of the world were waiting to see if the multilateral trading system could regain its credibility. There was no hope of achieving the eradication of poverty without the liberalization of international trade.

The fulfilment of the commitments made by the developing countries during the Uruguay Round had assumed the utmost importance, he said. The report of the Secretary-General indicated that the support provided by the industrial countries in agriculture was insufficient. There needed to be good governance at the international level with the full participation of the developing countries. This process needed to be characterized by transparency, which was clearly lacking today.

The Declarations of the South Summit and the Cairo Meeting had revealed the pulse of the people of the third world and should be a wake up call to the international community. Egypt applauded the role played by UNCTAD and called for the international community to provide it with significant resources. His delegation again stressed the need for the multilateral trading system to be just and not based on protectionist principles. Egypt felt that the WTO negotiations in Seattle had been the failure of the developed countries to fulfil their obligations from the Uruguay Round.

SASKO TASULOV (The former Yugoslav Republic of Macedonia) said that his country’s move towards development depended on several factors, one of which was the debt problem. The Republic was not a least developed country and was not part of the HIPC Initiative. Its case was one in which a country was asked to repay its debts and was not able to do so. It was not reasonable to ask a country to pay its debts if it was understood that it was not able to. Also, when money borrowed in the past had been spent on uneconomical projects, which were not successful, was it fair then to ask the country to pay those debts, which were a result of past mistakes? It was difficult to ask the present or the future generations to pay for the mistakes of the former generation. Also, developments in his region had negatively impacted his country’s development efforts.

He hoped that such issues would be discussed at the upcoming financing for development event, and that the event would adopt forward-looking recommendations which would benefit all indebted countries. In doing so, the event would make a huge contribution to preventing the marginalization of small and vulnerable economies and integrating them into the world economy.

Other Matters

KENJI HIRATA (Japan) asked whether the report of the Secretary-General on the debt crisis (document A/55/422) had been introduced to the Committee, because he had some questions he wanted to raise with regard to it.

The Acting Chairman of the Committee, ANNE BARINGTON (Ireland) informed him that the report had been introduced by the Secretary-General of UNCTAD yesterday in his remarks.

MR. HIRATA (Japan) said he wanted to raise a few issues concerning the adequacy of the report. First, the Secretariat had exceeded its mandate in preparing the report. Second, the substance was too partial and unbalanced. Third, its recommendations did not meet any minimal level of quality expected by Member States from a report of the Secretary-General.

He said that the report had been prepared in response to General Assembly resolution 54/202. He emphasized that what the Assembly had requested was a report on the implementation of last year’s resolution -- not recommendations. The Secretariat had exceeded the mandate given to it by the resolution. In the section on policy recommendations, many of the recommendations stated that certain countries should do something. When and how had the Secretary-General been given the mandate to dictate to Member States what to do or not to do? The report clearly exceeded the mandate given to it by the United Nations Charter.

With regard to the partiality of the recommendations, he believed that in order to resolve the debt crisis, it was necessary for creditors and debtors to cooperate together. It seemed that the Secretary-General did not share that view. One example was the independent panel of experts that the report proposed. In characterizing that panel, the Secretary-General gave the impression that he did not want to have the representation of creditors on that panel. Many of the recommendations only addressed creditors, which was not the way to resolve the problem. Turning to the quality of the report, he believed the recommendations were not realistic and could damage the credibility of the Secretariat. If the Secretary-General was serious about his recommendations, he should have given some thought to issues such as moral hazard, the impact of the recommendations on the international financial market or the credibility of debtor countries in that market. The Secretary-General had given no consideration to such fundamental questions. Hence, the recommendations did not deserve any consideration by the Committee. He requested an explanation on the mandate issue and wanted to know who had actually approved the report.

The Chairman said that the Committee had taken note of the issues raised and it would revert back to it at a later date.

MR. HIRATA (Japan) said that the Committee should not consider the debt issue any further as based on the report. He requested a comprehensive explanation before the Committee entered any further discussion of the item.

OLA STORBERG (Norway) said that his delegation would like to join as a co- sponsor to the draft resolution on El Niño and on the text on enhancing complementarities among international instruments related to sustainable development.

NAVID HANIF (Pakistan) said that Japan had raised an important issue, which was of particular concern to developing countries. The Chairman of the Group of 77 reserved the right to respond to the queries posed, before the Secretariat responded to them.

JOEL M. NHLEKO (Swaziland) said that he was particularly concerned with the delay in the issuing of the report on a subject that was so important to developing countries. Documents were often not issued on time and when they were issued were lacking in quality. He hoped the Committee would adequately respond to the queries raised.

ADAM ADAWA (Kenya) said that Japan had every right to raise whatever it thought was in its interest. At the same time, other States had an equal right to respond. He supported the interventions by Pakistan with regard to the right of the representative of the Group of 77 to defend the position of the developing countries.

LIU JINGTAO (China) said that he took note of Japan’s queries. Regrettably, since the report had not been issued on time, he had not had a chance to analyse it in-depth. He reserved the right to come back and state his response at a later time.

BARBARA TAVORA-JAINCHILL (Brazil) said that she supported what had been said by Pakistan, Kenya and China, and respected the right of any country to have reservations on any report. She urged the Committee to wait on taking a decision until after the representative of the Group of 77 had a chance to be heard.

MBAYU FELIX (Cameroon) said that it was his understanding that the reports of the Secretary-General were not meant to satisfy the views of any one delegation. In which case, whether or not one agreed with the report, one could not try to deny the right of the Committee to discuss it. He reserved the right to respond to the issues raised once the representative of Group of 77 had a chance to respond.

AUSTIN PETER ETANOMARE OSIO (Nigeria) said that the consideration of reports had not been subject to the preferences of one delegation or another. He knew that Japan could rethink its position in light of the special relationship it enjoyed with developing countries.

NURY VARGAS (Costa Rica) said that nothing had been done in a unilateral fashion within the United Nations, but that should not limit the Committee. The Secretary-General’s reports did not constrain or bind Member States’ interests. Developing countries formed blocks so that they could increase the negotiating power of individual countries.

ULF OTTOSSON (Sweden), speaking on behalf of the European Union, said that the representative of the Union was not in the room. He therefore reserved the right to comment on the issues raised by the representative of Japan at a later time.

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