Fifty-sixth General Assembly

Second Committee

3^rd Meeting (AM)

UNCERTAIN IMPACT OF 11 SEPTEMBER EVENTS, SLOWING GLOBAL ECONOMY

EXAMINED AS SECOND COMMITTEE OPENS GENERAL DEBATE

Representative of Belgium Stresses

Committee’s Potential Contribution to Restoration of Freedom, Tolerance

Opening the general debate of the Second Committee (Economic and Financial) this morning, Nitin Desai, Under-Secretary-General for Economic and Social Affairs, said it was still premature to assess the impact of the 11 September terrorist attacks on the global economy.  However, there were already indications that the global economic slowdown was much deeper than expected.

Before 11 September, he said, industrial production was already falling and there had been a substantial downward movement in equity prices as well as a decrease in foreign direct investment (FDI).  The further impact of the attacks would depend on its effects on consumer confidence and capital flows between countries.

The representative of Belgium, speaking on behalf of the European Union and associated States, noted that the Committee could make a useful contribution in response to the challenges posed by the attacks on the United States.  Chronic underdevelopment and poverty were sometimes a breeding ground for extremism.  Persistent poverty, a deficient educational system and an oppressive political climate could all give rise to fanaticism.  By pursuing its work on sustainable development, the Committee would contribute indirectly to restoring the values of freedom and tolerance, which were intrinsic to globalization with a human face. 

Trade, noted Iran's representative, was critical to development via its impact on growth, which was fundamental in overcoming poverty and vulnerability.  Speaking on behalf of the Group of 77 developing countries and China, he said that trade liberalization under World Trade Organization (WTO) rules was a powerful and dynamic force for accelerating growth and development.  However, the benefits of the current multilateral trading system eluded most developing countries.

Progress in full trade liberalization, he added, was lagging behind, and significant imbalances between rights and obligations existed in multilateral trade agreements as well as in market access.  The persistence of such imbalances could erode the confidence of developing countries in the multilateral trading system, and strengthen the hand of those who wished to retreat into misguided protectionist policies and approaches.

Highlighting the role of international trade as one of the main sources of funds for sustainable development, the representative of the Russian Federation stressed the need to further strengthen the principle of universality of the multilateral trade system through the expansion of membership in the WTO.  However, the terms of admission of new States, he noted, should not exceed the level of obligations of existing members.

At the outset of the meeting, the Committee elected, by acclamation, Dharmansjah Djumala (Indonesia), Garfield Barnwell (Guyana) and Felix Mbayu (Cameroon) as its Vice-Chairmen.  Jana Simonova (Czech Republic) was elected as Rapporteur.

Also addressing the Committee this morning were the President of the Economic and Social Council, Martin Belinga-Eboutou (Cameroon), and the representatives of Algeria, Pakistan, United States, Egypt and Japan. 

The Committee will meet again at 3 p.m. to continue its general debate.

Background

The Second Committee (Economic and Financial) met this morning to begin its general exchange of views. 

Statements

NITIN DESAI, Under-Secretary-General for Economic and Social Affairs, said that the Committee was beginning its work in the shadow of the terrible events of 11 September.  The best response to those events was to "get on with our work", which was precisely what the Committee was doing.

He said that the Committee would be provided with an update on the state of the world economy during its session.  He highlighted two upcoming talks -- the first, on 11 October, on the current state of the world economy, and the second, on 23 October, on the issues before the World Trade Organization (WTO) Ministerial Meeting, to be held in Qatar in November.  The update, he noted, had tried to take into account the assessments made in late August and early September, which had suggested that the economic slowdown was much deeper than had been expected at the beginning of the year.

Before 11 September, he said, industrial production was already falling and there had been a substantial downward movement in equity prices and decrease in foreign direct investment (FDI).  The further impact of the events of 11 September would depend on its effects on consumer confidence and the flow of capital between countries.  It was still premature to assess the additional impacts.   

Among the issues he wanted to bring to the Committee's attention was globalization.  During the first half of the 1990s, the assumption was that globalization was a powerful tool for accelerating growth in the global economy.  The first doubts arose during the financial crisis of 1997-98.  While the impact on countries directly affected by the crisis was substantial, the world economy came out of that reasonably well precisely because of globalization.  Now the world was seeing a slowdown of the large economies.  Preliminary estimates showed that a one per cent decline in the United States economy could lead up to a four per cent decline in developing countries.

Concerns about globalization, he said, had also focused on the vulnerability of countries, which was essentially structural in nature.  Among the vulnerabilities were those arising from finance and investment, private capital flows, international liquidity, international trade and natural disasters.

He went on to highlight several items on the Committee's agenda, including preparations for the International Conference on Financing for Development and the World Summit for Sustainable Development, as well as discussions on operational activities for development.    

MARTIN BELINGA-EBOUTOU (Cameroon), President of the Economic and Social Council, said the General Assembly and the Second Committee were called upon to turn the Millennium Declaration into a reality.  The Declaration would be the main guide for international relations and international development in the future.  In that regard, the Economic and Social Council was also working to implement the Declaration and to guarantee consistency in economic and social cooperation.  The high-level segment of the Council, held in Geneva earlier this year, was dedicated to examining international development in Africa.  It was the first time the United Nations had taken up the New African Initiative, adopted in Lusaka by the Organization of African Unity.  The Council had played an important part in this major African initiative.

Another aspect of the Council’s work in Geneva was consideration of the question of communications technologies, he said.  The Council found there was need for a partnership between the United Nations and the private sector in making such technologies available for all nations.  The Council also sought to ensure that United Nations leadership in the two areas of African development and information technology cooperation would be strengthened.

On operational activities of the United Nations, the Economic and Social Council had stressed the need for increasing United Nations resources for development, he added.  The Council sought to coordinate the activities of the United Nations system in order to give priority to development efforts.  The Council ensured that all actors and stakeholders were encouraged to contribute to implementing development policies in an integrated manner.  The Assembly and Second Committee would continue to work for the advent of a better world.

BAGHER ASADI (Iran), speaking on behalf of the Group of 77 developing countries and China, said that external debt was a challenge for almost all developing countries in their