Fifty-sixth General Assembly

Second Committee

31^st Meeting (AM)

INDEPENDENT ASSESSMENT OF AFRICAN DEBT SUSTAINABILITY URGED AS SECOND COMMITTEE

HEARS REPORTS ON TRADE, GLOBALIZATION, DEVELOPMENT

Committee Also Hears Introduction of Draft Text

On Natural Resources of Palestinian Territory, Syrian Golan

There was a need to establish an independent body designated by both creditors and debtors to assess the debt sustainability of African countries, with an undertaking by donors to write off debt deemed unpayable, the Second Committee (Economic and Financial) was told this morning as it discussed trade and development.

Continuing, Kamran Kousari, United Nations Conference on Trade and Development (UNCTAD) Special Coordinator for Africa, said a major factor affecting the growth prospects of African countries was the high level of indebtedness.  The Heavily Indebted Poor Countries (HIPC) Debt Initiative had not so far succeeded in removing the debt overhang from a large majority of such countries in sub-Saharan Africa.  Additional financing and debt reduction needed to be complemented by policies to increase Africa’s share in world trade.  If Africa was to be placed on the path to sustainable growth and development, major policy shifts both at the national and international levels were required.

Also speaking on trade and development issues, Ali Said Mchumo, President of the forty-eighth session of the Trade and Development Board, said that if globalization was to benefit all countries and people, markets must operate within rules and regulations that emerged from consensus among all countries concerned, including the developing countries.  In the area of trade, the influence of developing countries had been much smaller than it should have been, considering their share in world trade.  It was, therefore, considered essential that future trade negotiations should provide greater scope for the development dimension of rules governing the international trading system.

Speaking on the topic of globalization and interdependence, Sarbuland Khan, Director, Division for ECOSOC Support and Coordination, Department of Economic and Social Affairs (DESA), said that the recommendations contained in the Secretary-General’s report on the topic focused on enhancing the role of the United Nations in promoting strategies to reduce the risks and take advantage of the opportunities emerging from globalization.  Development should not be seen as a by-product of globalization.  Rather, it should be placed at the heart of

globalization, which implied greater policy coherence and making the international trade, finance and technology regimes much more responsive than they were today.

Also this morning, Susan Brandwayn, Officer-in-Charge, Liaison Office of UNCTAD, New York Office, introduced the Secretary-General’s reports on international trade and development and landlocked developing countries.  Alex Trepelkov, Senior Officer, Division for Public Economics and Public Administration, DESA, introduced a report of the Secretary-General on unilateral economic measures.

Hazem Fahmy (Egypt), Rapporteur for the Preparatory Committee for the International Conference on Financing for Development, introduced the report of that Committee.

In addition, the representative of Egypt introduced a draft resolution on the permanent sovereignty of the Palestinian people in the Occupied Palestinian Territory, including Jerusalem, and of the Arab population in the occupied Syrian Golan over their natural resources.

On the topic of landlocked developing countries, statements were made by the representatives of the Lao People’s Democratic Republic and Nepal.

The Committee will meet again on Wednesday, 28 November, to discuss protection of the global climate for present and future generations of mankind.

Background

The Second Committee (Economic and Financial) met this morning to consider trade and development, globalization and interdependence, and high-level international intergovernmental consideration of financing for development.

Also before the Committee is a report of the Secretary-General on the role of the United Nations in promoting development in the context of globalization and interdependence (A/56/445).  In it, the Secretary-General says the key challenge that must be met by the international community is to place development at the centre in considering how globalization is managed, and not to view it as a by-product of globalization.  Development goals should shape the framework of globalization rather than allowing the blind forces of globalization to define development outcome.  This implies not only ensuring greater policy coherence at the global and national levels, but also making the international trade, finance and technology regimes much more responsive to development.

At the international level, the report states, the United Nations, given its universality and broad mandate, has an important role to play in promoting policy coherence, with the explicit goal of placing development and poverty eradication at the centre of policies and processes related to global integration.  Also, coordination needs to be strengthened so as to ensure that the most efficient and effective use is made of international assistance, both financial and technical.

Given its system-wide coordination functions and its growing role as a central global forum, the Economic and Social Council (ECOSOC) could be encouraged to deepen its dialogue with the Bretton Woods institutions and the World Trade Organization (WTO) according to the report.  The Council could encourage the United Nations system to develop integrated policy responses and a set of mutually reinforcing actions to address globalization, with a view to strengthening efforts to achieve the outcome of the major United Nations conferences and the goals set during the Millennium Assembly.

The report adds that governments need to foster an environment that enables the private sector of developing countries and economies in transition to be integrated more effectively into the globalization of economic activities.  To this end, the key impediments in many developing countries need to be addressed, such as insufficient physical and legal infrastructure, an inadequate human resource base, weak financial systems and lack of access to technology.  In this regard, the provision of technical and financial assistance by the international community and the active participation of the private sector are crucial in addressing structural deficiencies that hinder the ability of the developing countries to participate in the knowledge-based global economy.

The globalization of production by multinational corporations, the globalization of international finance, the globalization of information and the large-scale movements of people have not been matched by a corresponding reshaping of relevant institutions, the report states.  The challenge the international community faces is that institutional arrangements for economic governance have fallen far behind the realities of the growth and interdependence that are known as globalization.  Global institutional structures could be usefully adapted and evolved in the functioning of financial markets, international capital flows, and regulation and supervision of banks and financial institutions.

Also before the Committee is a note by the Secretariat transmitting the report of the United Nations Conference on Trade and Development (UNCTAD) secretariat on specific actions related to the particular needs and problems of landlocked and transit developing countries (document A/56/427).  Also contained in the note are the agreed conclusions and recommendations of the fifth Meeting of Governmental Experts from Landlocked and Transit Developing Countries and Representatives of Donor Countries and Financial and Development Institutions, held at Headquarters from 30 July to 3 August.

Among other things, that Meeting recommended that an International Ministerial Meeting of Landlocked and Transit Developing Countries and Donor Countries and Representatives of International Financial and Development Institutions on Transit Transport Cooperation be convened in 2003 to give emphasis to the development of efficient transit transport systems.

Despite some positive developments in transit transport systems, lack of territorial access to the sea, aggravated by remoteness and isolation from world markets and high transit costs and risks, continue to impose serious constraints on the overall socio-economic development of landlocked developing countries.  They have not been able to take full benefit of the new trade and investment opportunities offered by liberalization and globalization.  They need greater assistance to enable them to integrate effectively and beneficially into the global economy.

There is a need to reverse the decline in external finance, especially official development assistance (ODA), states the report.  Because purely private financing schemes may not be feasible in many landlocked and transit developing countries, the international community in invited to support new modalities of financing, such as regional venture funds, equity participation in local financial institutions, co-financing and bank-to-bank loans. 

The UNCTAD, states the report, should continue to provide technical assistance to support landlocked and transit developing countries in their efforts to improve transit systems.  This assistance includes accumulating, evaluating and disseminating information on transit matters, and drawing lessons from experiences in different regions and subregions with regard to the design and improvement of transit systems.  It also includes monitoring progress in the implementation of measures by the international community related to the transit needs and problems of landlocked developing countries. 

Also before the Committee is a report of the Secretary-General on international trade and development (A/56/376).  Among other topics, the report discusses the work undertaken by the WTO over the last year.  It includes the negotiations of the WTO on agriculture, the first phase of which was completed in March 2001.  A total of 45 proposals were submitted during that phase, covering all aspects of the WTO's Agreement on Agriculture –- a 1994 agreement arising from the Uruguay Round of Multilateral Trade Negotiations.  Also discussed were new issues arising in those proposals, including possible rules or guidelines on State trading enterprises and consumer concerns on food safety.

Some proposals, the report states, suggest actual modalities for further liberalizing agricultural trade in terms of the three pillars of the Agreement on Agriculture, namely, market access, domestic support and export competition policies.  Other proposals focus more on the general scope of the future reform programme.  An interesting feature of the first phase of negotiations has been the active and substantive participation of developing countries.  A common area of interest for developing countries is the need for a meaningful liberalization in the agricultural sector in developed countries.  While there has been an increase in South-South agricultural trade, developed countries continue to be the major destination of agricultural exports from developing countries.

Various proposals by developing countries call for substantive liberalization by developed countries in terms of tariff reductions, setting of limits to all types of domestic support measures and immediate elimination of export subsidies, the report states.  Developing countries believe that this sector in developed countries remains highly distorted and protected.  They refer specifically to export subsidies and domestic support measures where imbalances are prevalent.  Some proposals by developing countries, like the one on the creation of a development box”, suggest that developing countries should be allowed flexibility in implementing rules.  Those rules should include ones on import controls, tariff barriers and domestic support if they are to have an effect on their pursuit of development objectives such as food security and poverty alleviation.

The report of the Secretary-General on unilateral economic measures as a means of political and economic coercion against developing countries (A/56/473) is also before the Committee.  The report states that General Assembly resolution 54/200 of 22 December 1999 urged the international community to adopt urgent measures to eliminate the use of unilateral coercive economic measures against developing countries that were not authorized by relevant organs of the United Nations, or were inconsistent with the basic principles of the multilateral trading system.

To monitor the imposition of measures of that nature and to study the impact of such measures on the affected countries, the Secretary-General invited the governments of all States to provide their views on the issue.  As of 1 October 2001, replies had been received from the following 13 States:  Belarus, Cuba, Gambia, Iran, Iraq, Libya, Malaysia, Mali, Myanmar, San Marino, Saudi Arabia, Senegal and Yemen.  The text of the replies is included in the report.

The Committee also has before the report of the Trade and Development Board on its twenty-sixth executive session (Geneva, 10 April 2001) (A/56/15 Parts I-IV).  During that session the Board considered the reports on the most recent sessions of: the Commission on Trade in Goods and Services, and Commodities; the Commission on Investment, Technology and Related Financial Issues; and the Commission on Enterprise, Business Facilitation and Development. 

According to the report, the Board also took up the review of experience in the implementation of the recommendations on improving the functions and structure of the intergovernmental machinery of UNCTAD.  The progress report on the preparatory process for the Third United Nations Conference on the Least Developed Countries (LDCs) was also considered.

Also before the Committee is the report of the Preparatory Committee for the International Conference on Financing for Development on its resumed third session (A/56/28).  During that session, which took place from 15 to 19 October 2001, the Preparatory Committee took up the accreditation of intergovernmental organizations, non-governmental organizations (NGOs), business entities/organizations.  It also discussed the format and draft rules of procedure for the Conference.

Draft resolution

The Committee also planned to hear the introduction of a draft resolution on the permanent sovereignty of the Palestinian people in the occupied Palestinian territory, including Jerusalem, and of the Arab population in the occupied Syrian Golan over their natural resources (A/C.2/56/L.29).

By the draft, the General Assembly would call upon Israel not to exploit, to cause loss or depletion of or to endanger the natural resources in the occupied Palestinian territory, including Jerusalem, and in the occupied Syrian Golan.  It would also recognize the right of the Palestinian people to claim restitution as a result of any exploitation, loss or depletion of, or danger to their natural resources, and expresses the hope that this issue will be dealt with in the framework of the final status negotiations between the Palestinian and Israeli sides.

Also by the draft, the Assembly would request the Secretary-General to report to it at its fifty-seventh session on the implementation of the present resolution, and would decide to include this item in the agenda of its fifty-seventh session.

The draft resolution is sponsored by the following countries:  Afghanistan, Algeria, Bahrain, Bangladesh, Brunei Darussalam, Comoros, Cuba, Denmark, Egypt, Indonesia, Jordan, Kuwait, Lebanon, Malaysia, Malta, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Somalia, South Africa, Sudan, Tunisia, United Arab Emirates, Yemen and the observer of Palestine.

      Introduction of reports

ALI SAID MCHUMO, President of the 48^th Session of the Trade and Development Board, introduced the report of the Board on its last session.  He said that during the session there was agreement that, if globalization was to benefit all countries and people, markets must operate within rules and regulations that emerge from consensus among all countries concerned, including the developing countries.  Many delegations believed that in the area of trade, the influence of developing countries had been much smaller than it should have been, considering their share in world trade.  It was therefore considered essential that future trade negotiations should provide greater scope for the development dimension of rules governing the international trading system.

There was also extensive discussion on a number of complex issues relating to the reform of the international financial architecture, he said.  There was general agreement on the need to advance international efforts to involve the private sector in the prevention and resolution of financial crises.  At present, too much of the burden of adjustment tended to fall on the governments of countries affected, which were often forced to assume responsibility for private as well as public debt.  Adjustment was also very costly in terms of lost income, as support provided by the international financial institutions was linked to strict conditionality on fiscal and exchange-rate policies that usually produced recessions and an increase in poverty.  It was emphasized that greater importance should be given in the debate over the international financial architecture to the reform of the exchange-rate system.

Many delegations pointed to reforms undertaken to strengthen domestic financial and banking systems, he added.  Codes and standards for financial sectors, as well as reforms in the area of macroeconomic policies and disclosure, were considered important in themselves.  But they would not eliminate the risk of financial crises, which in most cases had been driven by developments in countries which were the source of lending and investment.  However, there was also a consensus that fundamental reform of the international financial architecture was unlikely to be achieved in the near future, and developing countries therefore had to see second-best solutions at the national and regional levels for the prevention and management of financial crises.

KAMRAN KOUSARI, UNCTAD Special Coordinator for Africa, introduced the report of the Secretary-General on measures taken to initiate the preparatory process for the final review and appraisal of the implementation of the United Nations New Agenda for the Development of Africa in the 1990s (NADAF) (document A/56/435).  He said that the objective of the New Agenda was to reduce the vulnerability of African countries, internalize the process of development and enhance self-reliance.  It considered an average annual growth rate of six per cent necessary for sustainable economic development across the continent, including for increasing income and eradicating poverty. 

Economic performance in Africa over the past 10 years, however, had fallen far short of the target set by the General Assembly and despite some recent upturn, real per capita incomes were today 10 per cent below the levels reached in 1980.  Projections for African growth in the next decade did not seem to point to a dramatic reversal of the situation.  In fact, it was projected that Africa would grow just above three per cent per annum, which was slightly above the rate of population growth. 

A major problem facing the African countries, he said, remained that of inadequate resources for accumulation and growth.  That situation had been further aggravated by the adverse terms of trade movements in the past two decades.  A major factor affecting the growth prospects of African countries was the high level of indebtedness.  The Heavily Indebted Poor Countries (HIPC) Debt Initiative had not so far succeeded in removing the debt overhang from a large majority of such countries in sub-Saharan Africa. 

That was why, he continued, UNCTAD had been suggesting the establishment of an independent body designated by both creditors and debtors to assess the debt sustainability of African countries, with an undertaking by donors to write off debt deemed as unpayable.  At the same time, total official flows had fallen sharply, in per capita terms, real official flows at the end of the past decade were less than half of those of the early 1980s.  Additional financing and debt reduction needed to be complemented by policies to increase Africa’s share in world trade.  Further, 20 years of structural adjustment programmes in Africa had not been successful in establishing conditions for sustained growth. 

He said that if Africa was to be placed on the path to sustainable growth and development, major policy shifts both at the national and international levels were required.  That entailed a dramatic increase in aid and trade and a critical review of adjustment policies for raising growth and bettering income distribution.

SUSAN BRANDWAYN, Officer-in-Charge, Liaison Office of UNCTAD, New York Office, introduced the report of the Secretary-General on international trade and development.  She said that the report was prepared before the Fourth Ministerial Meeting of the WTO, held in Doha, Qatar, earlier this month.  The UNCTAD was currently studying the agreements reached and decisions adopted in Doha, and the results would be made available in due course.  She also introduced the report of the Secretary-General on transit systems of landlocked developing countries.

ALEX TREPELKOV, Senior Economic Affairs Officer, Division for Public Economics and Public Administration, Department of Economic and Social Affairs (DESA), introduced the report of the Secretary-General on unilateral economic measures as a means of political and economic coercion against developing countries.  The Secretary-General, he said, had invited all States to provide their views or any other relevant information on the issue.  As at 1 October, replies had been received from 13 States.  Substantive features of those replies were reproduced in the report. 

He added that following the preparation of the report, a communication was received from Panama.  Any further replies would be issued as an addendum to the present report.

SARBULAND KHAN, Director, Division for ECOSOC Support and Coordination, DESA, introduced the report on globalization and interdependence.  He said the report did not address the issue of globalization as such in a comprehensive way.  Rather, it sought to analyze the increasing linkages among the major components of globalization, such as trade, finance, knowledge and technology as well as possible policy responses.

The recommendations contained in the report focused on enhancing  the role of the United Nations in promoting strategies to reduce the risks and take advantage of the opportunities emerging from globalization, he said.  The key task was to place development at the heart of globalization.  Development should not be seen as a by-product of globalization.  That implied greater policy coherence, as well as making the international trade, finance and technology regimes much more responsive than they were today. 

There were two central challenges to be tackled, he said.  The first was the lack of institutional capacity to achieve coherence at the national and international levels.  The second was the “dysjunction” in the pace of globalization in various sectors of the world economy.  In some areas, globalization had moved too fast for governments to cope.  In other areas, it had moved too slow for governments to take advantage of the process. 

HAZEM FAHMY (Egypt), Rapporteur of the Preparatory Committee for the International Conference on Financing for Development, introduced the Committee’s report.  During its recent session, the Committee had reviewed inputs to the process, approved the format and rules of procedure for the Conference, accredited  NGOs and business entities and approved the draft provisional agenda for the Committee’s next session.

ALOUNKEO KITTIKHOUN (Lao People’s Democratic Republic), speaking on behalf of the Group of Landlocked Developing Countries, said that what distinguished those countries from others was their high transport costs.  The efforts of the international community had until now been at the governmental expert level.  The idea now was to elevate that to the ministerial level.  That was why he supported the convening of an International Ministerial Meeting of Landlocked and Transit Developing Countries and the donor community on transit transport cooperation in 2003 in Kazakhstan.

With regard to the statement made by the representative of UNCTAD, he said that whatever mechanism was being created, it should have enough staff for the preparation of the annual report as well as for the proposed Ministerial Meeting.

TAPAS ADHIKARI (Nepal) said that landlocked developing countries had handicaps that had been recognized by the United Nations, which underscored the need for special help for those countries.  The problems of the high costs of transit transport contributed to their economic marginalization.  Much remained to be done to bring down such costs and improve the competitiveness of their goods.  Lack of access to world markets was a serious obstacle to development.  Such access would create employment, ensure food supply, and improve nutrition in those countries. 

He added that landlocked developing countries could not solve that problem by themselves.  It was now up to the global community to provide technical, financial and other types of assistance to meet the specific needs of landlocked developing countries.  The United Nations, and particularly UNCTAD, played a critical role in such efforts. It was vital to provide UNCTAD with resources to meet the needs of land-locked developing countries.

Mr. FAHMY (Egypt) introduced the draft resolution on the permanent sovereignty of the Palestinian people in the occupied Palestinian territory, including Jerusalem, and of the Arab population in the occupied Syrian Golan over their natural resources, as orally revised.  He said that the text followed the format of previous resolutions on the item.

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