SECOND COMMITTEE UNANIMOUSLY APPROVES RESOLUTION DECLARING 2003 THE YEAR OF KYRGYZ STATEHOOD, TAKES UP GLOBALIZATION AND INTERDEPENDENCE

Fifty-seventh General Assembly

Second Committee

23^rd Meeting (PM)

SECOND COMMITTEE UNANIMOUSLY APPROVES RESOLUTION DECLARING 2003 THE YEAR

OF KYRGYZ STATEHOOD, TAKES UP GLOBALIZATION AND INTERDEPENDENCE

The General Assembly would welcome Kyrgyzstan’s decision to declare 2003 the Year of Kyrgyz Statehood and organize activities to celebrate it, by the terms of a resolution approved by the Second Committee (Economic and Financial) this afternoon.

By that text, which was approved without a vote, the Assembly would invite the United Nations and its agencies, as well as regional and non-governmental organizations and foundations, to take part in the events to celebrate the Year.

In other business this afternoon, the Committee took up the topic of globalization and interdependence.

Introducing the report on that agenda item, a senior official of the Department of Economic and Social Affairs said the document was the Secretary-General’s first attempt to expand from a broad debate to a deeper, more detailed analysis of specific aspects of globalization, enabling the process to move forward.  The report took into account the outcome of the Monterrey Conference on Financing for Development and included all the basic proposals, initiatives and ideas on globalization that had been on the table in the last few years.

Also referring to the Secretary-General’s report, the representative of Pakistan said the document addressed four pertinent areas for globalization: enhancing global coherence and consistency of the international monetary, financial and trading system to support development; participation of developing countries in global decision-making and norm-setting; the role of non-State actors, especially civil society, in the intergovernmental process; and international cooperation to stem corruption and transnational crime.

The representative of Brazil noted that a small number of developed countries wielded huge influence in formulating international economic policies and said that must be changed.  Calling for concrete measures to grant greater legitimacy to international decision-making, she said such measures included revising the International Monetary Fund (IMF) quota formula to eliminate the existing bias in favour of developed nations.

China's representative said that globalization should foster interdependence and solidarity, and warned that those who practised a beggar-thy-neighbour policy

or were indifferent to the troubles of others would eventually be in danger themselves.  That truth had been profoundly borne out in the Asian financial crisis.  He noted that developed countries spent $300 billion each year on agricultural subsidies, six times the amount they spent on development aid.  That not only had a negative impact on the trade of developing countries, but also cancelled out the effect of foreign assistance, he added.

Also this afternoon, Venezuela's representative, speaking on behalf of the Group of 77 and China, introduced a draft resolution on implementation of the First United Nations Decade for the Eradication of Poverty (1997-2006) and another on establishment of the World Solidarity Fund.

Other speakers this afternoon were the representatives of Denmark (on behalf of the European Union and associated States), Russian Federation, Malaysia, Croatia, Saint Lucia (on behalf of the Caribbean Community), Israel, Philippines, Indonesia, Thailand, Zambia, Nepal and Nigeria.

A representative of the International Labour Organization (ILO) also made a statement.

The Committee will meet again at 10 a.m. on Monday, 4 November, to hear the introduction of draft resolutions on implementation of the First United Nations Decade for the Eradication of Poverty (1997-2006).  It will also begin discussion of the implementation of the outcome of the United Nations Conference on Human Settlements (Habitat II), and of the twenty-fifth special session of the General Assembly.

Background

The Second Committee (Economic and Financial) met this afternoon to consider globalization and interdependence.  Before it was a report of the Secretary-General on the role of the United Nations in promoting development in the context of globalization and interdependence (document A/57/287) which addresses economic governance at the global, regional and national levels.

Global Economic Governance

According to the report, markets have rapidly globalized, but economic governance has failed to adapt to changing realities.  It focuses on four vital aspects of governance:  coherence and consistency in the international monetary, financial and trading systems; participation in global decision-making and

norm-setting; the role of civil society; and cooperation to deal with corruption and international crime.

As stressed at the Monterrey Conference on Financing for Development, domestic coherence is crucial for international coherence, as is coherence among the economic, social, trade and environmental agendas, the report says.  A glaring example of insufficient coherence between domestic and development policies is  the $300 billion per year gap between agricultural subsidies -– which are detrimental to developing countries -- and total spending on official development assistance (ODA), which amounts to only one sixth of that figure.

The report calls for greater cooperation among existing institutions for increased coherence between international financial and trade policies, development aims and commitments.  It observes that nations agreed in the Monterrey Consensus to build bridges linking development with finance and trade organizations.

Turning to participation in global decision-making, the report observes that international policy-making now has deeper effects -- on individual economies or entire regions -– due to increased integration of economies worldwide.  However, support favouring increased input from developing nations in those decisions has only recently emerged.  Steps have been taken to encourage economic input from the developing world at the Millennium Summit, the Monterrey Conference and World Trade Organization (WTO) meetings, but more concrete efforts are needed to ensure that international bodies hear from all countries when economic decisions are taken.

Efforts have also been made to include non-governmental organizations (NGOs) and the private sector in global conferences and other gatherings, the report says.  The informal regional network of NGOs initiative, for example, aims to draw NGOs into the work of the Economic and Social Council, its subsidiary bodies and the United Nations system.  Recent United Nations conferences, especially Monterrey and Johannesburg, have been vital in making innovative arrangements to include civil society, the report adds.  The Economic and Social Council has begun building some of these into the special high-level spring meeting with the Bretton Woods institutions and the WTO, as well as the high-level segment of its own substantive session.

Corruption and organized crime, as well as money-laundering, drug trafficking, trafficking in persons, computer-related crime and terrorism destabilize State institutions, weaken governments and undermine democracy and the rule of law, the report says.  Quoting the Monterrey Consensus, it stresses that corruption is particularly adept at diverting funds from poverty eradication activities and sustainable development.  Such crimes threaten resources in general.  Fighting transnational organized crime means amending national laws, as stipulated in the Convention against Transnational Organized Crime and its Protocols; and overcoming obstacles to cross-border criminal justice cooperation against transnational criminal groups.  It also entails developing, as well as implementing, measures balancing the need to counter supranational criminal threats with State sovereignty.

The report recommends that crime and related concerns be taken into consideration in formulation of policies on globalization management.  Tackling the challenges posed by the links between transnational and other offences requires coordination of activities within the United Nations and enhanced cooperation with other international bodies.

Regional Economic Governance

According to the report, regional economic bodies have proliferated over the last 50 years, and have begun developing common policies on monetary, financial and trade issues.  Such efforts have often been spurred by a desire to build larger economic spaces, increase economies of scale and expand trade markets.  More recently, interest in economic and financial cooperation among regional and other groups of countries has re-emerged in such areas as international trade, investment, monetary issues and financial sector oversight, it states.  This momentum grew in the wake of the 1997 financial crises, responding partly to a perceived lack of effective global governance.  As a result, regional monetary institutions have been considered as a supplement to the International Monetary Fund (IMF).

The report recommends that the General Assembly, in following up the Monterrey Conference, should consider how regional cooperation could be better harnessed to enhance global economic governance.  The Assembly could also focus on ways of implementing related recommendations in the Monterrey Consensus.

National Economic Governance

According to the report, national governments are vital in creating a fruitful beneficial environment for promoting domestic and foreign investment, leading to growth, poverty eradication and sustainable development.  The Monterrey Consensus recognized that sound, coherent, nationally owned policies and development strategies can only succeed under economic governance entailing efficient regulation, enforcement of contracts, respect for property rights and good infrastructure.  However, developing robust institutions is a long-term process needing sustained effort and international support.  The Monterrey Consensus stressed the need for international support for developing countries and transition economies in setting up effective economic governance, particularly for institution-building.

The need for effective regulation, strong enforcement and incentives suggests that coordination between governments and agencies is vital for good corporate governance, the report states.  Noting that significant gaps still remain in rules and standards, it suggests that more open and effective institutional arrangements be set up in all nations to promote transparent and accountable corporate governance.

The Social Dimension of Globalization

According to the report, developing countries face acute financial constraints in balancing fiscal discipline, market-opening and trade liberalization with social protection and employment-generation.  Moreover, borrowing for such purposes creates new public debt and no revenue to service it. 

Experience shows that only countries with effective public administrations, solid institutions, adequate social policies, and a committed leadership can ensure that society benefits from foreign direct investment (FDI), trade and access to information technology.  Enhanced international cooperation is vital in promoting the integration of globalization's economic and social aspects.

The contrast between high mobility of capital and goods and limited international labour mobility, especially that of low-skilled workers, is another challenge, according to the report, since most State regulations for moving labour across borders are narrow and short-term.  Administrations often fail to consider powerful market forces driving migration, or the long-term economic consequences of social policies.  Growing migration pressures highlight the urgent need to develop an international migration regime fostering more orderly movements. Current trends support free labour movement, such as that within the European Union, but they often fail to consider larger areas of migration flows, leaving much non-legal and irregular movements.

Introduction of Draft Resolutions

VICENTE VALLENILLA (Venezuela) introduced two draft resolutions on implementation of the First United Nations Decade for the Eradication of Poverty (1997-2006).

On the first draft, relating to implementation of the First United Nations Decade for the Eradication of Poverty (1997-2006), (document A/C.2/57/L.23), he said the “Group of 77” developing countries had made poverty eradication a priority for some time, by including in their draft resolutions actions the United Nations needed to take in dealing directly with poverty.  Because it was a matter of great concern to the governments of developing countries, several paragraphs listed all measures that the international community should take action on.

Introducing the second draft, on establishment of the World Solidarity Fund (document A/C.2/57/L.24), he said the text was an additional step to be taken by the United Nations in eradicating poverty.  It was the result of a request from developing countries that had begun in the General Assembly in 2000 and had culminated at the Johannesburg Summit.  He requested that the Secretariat cooperate with Member States involved in establishing the Fund. 

Action on Draft

The Committee adopted by consensus a draft resolution on Year of Kyrgyz Statehood (document A/C.2/57/L.11).

Introducing the agenda item on globalization and interdependence, SARBULAND KHAN, Director of the Division for Economic and Social Council Support and Coordination in the Department of Economic and Social Affairs, said globalization first came to the forefront during the Council’s first high-level dialogue in 1998, followed by a broad and general report on the subject.  Discussion of globalization had been general until Monterrey and Johannesburg. 

The third report, he said, was the first attempt by the Secretary-General to expand from a broad debate to focus also on specific aspects of globalization in a deeper, more detailed manner, moving the debate forward.  It took into account the outcome of the Monterrey Conference and highlighted the interdependence of global economic governance and national economic governance.  The report also included all the basic proposals, initiatives and ideas on globalization that had been on the table in the last few years.  It covered all dimensions of globalization including trade and finance, institutional dimensions, corruption and money- laundering.

Mr. VALLENILLA (Venezuela), speaking on behalf of the Group of 77 and China, said globalization was a historic manifestation with both positive and negative sides.  He questioned whether developing countries would be able to achieve sustainable development in the current climate of globalization, and whether they would be able to develop mechanisms for handling it.  It would be a big step if the United Nations could reach agreement on measures ensuring that developing countries would benefit from globalization.  Efforts required in order to take advantage of globalization included individual management and transparent international management of the phenomenon.

ELLEN MARGRETHE LOJ (Denmark), speaking on behalf of the European Union and associated States, stressed the need for better policy coherence among the United Nations, the International Labour Organization (ILO) and the WTO.  Calling for more stability and transparency in the international financial system, including enhanced crisis prevention and resolution mechanisms, greater financial mechanisms to end terrorism, corruption and money-laundering, and a more inclusive and equitable global economic system involving all countries as well as civil society.

The European Union was committed to leading the development agenda agreed by all WTO members in Doha, he said.  It had set the direction with the “everything but arms initiative” granting duty-free and quota-free market access for exports from least developed countries to the European Union.  It would also continue to increase its assistance to strengthen long-term trade capacity and production capacity and to reduce supply-side constraints, as well as help least developed countries to participate in WTO negotiations.  

She said the social dimension of global governance required strengthening through greater information flows, technology transfer and the universal application of internationally agreed minimum standards and for the promotion of good social policies.  In that regard, she called for the full implementation of core labour standards set forth in the ILO Declaration on Principles and Fundamental Rights at Work adopted in 1998.

ZANG YISHAN (China) said global democratization must go hand in hand with global integration, which would require reform of the global financial, monetary and trading systems to make them more equitable and democratic.  It would also mean increasing the participation of developing countries in global decision-making and norm-setting.  Globalization should also respect diversity and ownership.  In view of existing differences in social systems, development levels and cultural traditions, nations must have the right to choose independently their own way to develop.  Globalization must promote increased exchanges between cultures on the basis of mutual respect, tolerance and harmonious coexistence.

He said developed countries spent $300 billion each year on agricultural subsidies, six times the amount of their development aid.  That not only had a negative impact on the trade of developing countries, but also cancelled out the effect of foreign assistance.  Globalization should foster interdependence and solidarity, he said, adding that those who practised a beggar-thy-neighbour policy or were indifferent to the troubles of others would eventually be in danger themselves, a truth profoundly borne out in the Asian financial crisis.

MUHAMMAD HASSAN (Pakistan) said there was a general consensus that globalization offered both opportunities and challenges and that developing nations faced special difficulties in responding to those challenges.  Globalization had impoverished many people, widened the income and technology gap, further exacerbating poverty and social disintegration.  Globalization continued to widen income disparities and the digital divide while increasing the economic power of a few through mega-mergers, he said, adding that weak and small economies were being further marginalized.

He said the Secretary-General’s report addressed four interesting areas: enhancing global coherence and consistency of the international monetary, financial and trading system in support of development; participation of developing countries in global decision-making and norm-setting; the role of non-State actors, especially civil society, in intergovernmental process; and international cooperation against corruption and transnational crime.  The Monterrey Consensus provided the basic framework to address those issues and what remained was follow-up and implementation.

VICTOR ZAGREKOV (Russian Federation) said that transforming the negative effects of globalization into positive elements was only possible through a concerted international approach.  The United Nations had a key role to play in that approach, which had been laid down at the Monterrey and Johannesburg conferences.  Achieving the goals of those meetings would help eliminate the world’s most striking inequities and contribute to the eradication of poverty.  Dialogues between various institutions involved in development should aim at implementing the decisions reached at Monterrey and Johannesburg.  The adoption of the Monterrey Consensus and Johannesburg Plan of Implementation had updated the work of the United Nations, the Bretton Woods institutions and regional organizations.

Turning to the issue of organized crime, he said that corruption, money-laundering and other crimes furthered international terrorism.  Crime could only be effectively combated by the international community, with the United Nations playing a central role.  He called for a study of the international legal basis for the repatriation of funds gained from corruption and illicitly transferred out of their countries of origin.

MARIA LUIZA RIBEIRO VIOTTI (Brazil) said that turning globalization problems into opportunities required increased coherence in many areas of international economic relations.  Noting that the Secretary-General's report acknowledged the huge influence of a small number of developed countries in formulating international economic policies, she said that despite the adoption by developing countries in the 1990s of democratic values and good governance at the national level, few such concepts had been put into practice in the international realm. 

She called for concrete measures to grant greater legitimacy to international decision-making, allowing the concerns and interests of all countries to be duly noted.  That included the revision of the IMF quota formula to eliminate the existing bias in favour of developed nations.  In tackling the democratic deficit, each country should assess its own national development strategies, enabling it to benefit from globalization and avoid its downside.  Moreover, she called for increased coherence in international macroeconomic and development policies as illustrated at the Monterrey Conference.

CHEAH SAM KIP (Malaysia) said the current form of globalization was negatively affecting developing countries.  Various asymmetries in the international system and global financial instability were making it more difficult for developing countries, particularly the least developed, to benefit from globalization.  Malaysia’s experience with “unfettered” globalization and liberalization had shown that the risk of globalization was as real as its potential.

Unless developing countries could build up their fundamentals, she continued, they would not be able to participate meaningfully in global free trade, least of all compete with the developed world.  In that situation, globalized free trade would be patently unfair, with the odds stacked against developing countries. 

He said globalization would be a continuing form of exploitation of the weak and poor by the powerful and rich.  Many developing countries viewed the prospect of further liberalizing their economies with great caution and trepidation.  The continued decline in equity markets and fragility of investor confidence in international capital markets had tightened financing conditions in emerging economies. Unless appropriate responses were made by both individual countries and the international community, the asymmetries implicit in globalization were bound to intensify uneven development.

IRENA ZUBCEVIC (Croatia) said the existing international and economic financial architecture must be adapted to the new global reality.  The conferences in Monterrey and Johannesburg, together with the Millennium Summit and the Doha Conference, provided a broad framework for coherence among country policies and programmes, and multilateral institutions.  The United Nations system must also do its part through better coordination, cooperation and policy coherence of existing mechanisms, especially among the Organization’s main bodies, agencies, funds and programmes. 

Key institutions in international economic policy-making must be more inclusive and participatory in key decision-making.  Developing countries must design national development strategies and good governance policies in order to create a friendly investment climate, thus stimulating economic growth, poverty eradication and sustainable development.  At the same time, they should participate in globalization by combating crime, corruption, money-laundering, drug trafficking, trafficking of persons, and "cybercrime". 

EARL HUNTLEY (Saint Lucia), speaking for member countries of the Caribbean Community (CARICOM), said globalization had created grand opportunities for those able to take advantage of it, but had brought serious development challenges for the majority.  The gap between rich and poor had continued to widen.  Poverty and unemployment had increased.  Financial crises had continued.  Terms of trade had declined.  All of those factors suggested that certain imperatives must be in place before globalization could bring benefits to the majority.  Paramount among those was the need for strong nation States supported by strong regional and international systems, all premised on full and effective participation, transparency, equity and accountability.

He noted that trade constituted one of the major vehicles for generating resources for development and stimulating growth.  Today, trade liberalization was a major thrust of globalization.  However, as currently conducted, selectively and unequally, trade liberalization was the most significant barrier to development for developing countries.  It had resulted in economic crises throughout the developing world, increasing unemployment and poverty.  That was a direct result of the governing structure and decision-making processes of the multilateral trading system -– a system that allowed for the predominance of influence of the few major trading countries and their transnational corporations.

The WTO was the only multilateral institution with enforcement and retaliation capabilities.  That right could be legitimate only if there was democracy in decision-making, with full, equal and only effective participation of all Member States.

ALI YAHYA (Israel) said a key to maximizing the benefits of globalization, while minimizing its costs, was striking a balance between competing concerns.  The international community needed to balance economic growth with environmental sustainability; the prosperity of advanced nations with the aspirations of the developing world, and the emerging global culture with the need to protect cultural diversity and individuality.

He said Israel welcomed the report of the Secretary-General on the need to establish patterns on national and international good governance, mechanisms of accountability and transparent economic policies.  Democratization and participatory government, which offered citizens a stake in the system and was responsive to the needs of the majority, were crucial to making globalization an inclusive process.  He added that Israel was committed to enhancing its cooperation with developing countries and helping them benefit from globalization.

JAIME LOPEZ (Philippines) said that national development was primarily the responsibility of each country, but the unilateral pursuits of developing countries were never enough, particularly in the era of globalization.  Developing countries needed adequate and appropriate mechanisms to cushion themselves against fallouts from sudden and adverse fluctuations in international commerce and finance.  Efforts to reform the international financial architecture and strengthen the development dimension of the global trade and investment regime must be sustained, otherwise the crises that had devastated lives of millions would recur again and again.

Capital was what developing countries lacked most in their pursuit of sustainable growth and development, he said.  They needed more FDI flows, particularly in areas that would promote sustainable use of the environment as well as sustained growth and improved well-being, especially for the poor.  They also needed improved access to foreign markets, increased ODA flows, enhanced and more effective debt relief.

DJAUHARI ORATMANGUN (Indonesia) lauded the Secretary-General’s report, which highlighted governance areas critical to maximizing the benefits of globalization while minimizing its costs.  The report pointed to four major areas whose promotion was crucial to closing the gap between the rapid globalization of markets and the slow adaptation of necessary governance structures and processes. They included enhanced coherence of the international monetary, financial and trading systems in support of development; participation in global decision-making; the increased role of civil society in intergovernmental processes; and cooperation to stem corruption and international crime.

At the national level, the challenge for developing countries was to benefit from globalization through productive and effective integration, he said.  As stated in the Secretary-General’s report, those concerns comprised not just macroeconomic policy and human rights protection but had expanded to include microeconomics, sectoral policies and infrastructure.  The rapid pace of globalization had magnified the need for international cooperation.  He agreed that the international community must support developing countries’ efforts to create effective economic governance systems by providing increased technical assistance resources for institution-building.

APIRATH VIENRAVI (Thailand), stressing the urgent need for increased coherence, particularly in areas such as trade, said that coherence should take into account the interests of all parties, not merely certain actors, as was the case in the recent financial crises.  International financial policy-making must be inclusive, as recognized in the Monterrey Consensus.

The governance structure of the Bretton Woods institutions must also be reformed, he said, beginning with an equitable voting mechanism for decision-making.  Managing globalization required political will and collective action at the global level.  He urged the international community to implement fully the Monterrey and Johannesburg commitments.

LUKWESA KAEMBA (Zambia) said his country had faced great challenges in integrating into the world economy due to the rapid pace of globalization.  Production problems in the mining sector, difficulty in maintaining food production quotas due to recent droughts and unsustainable external debt had further weakened Zambia’s trade capabilities.

Zambia actively participated in the multilateral trading system and in various preferential trade agreements in order to boost trade and benefit fully from economic liberalization, he said.  Continued structural reforms, including stepped-up privatization, and greater tariff rationalization were contributing to better resource allocation.  While Zambia had received technical assistance, more was needed.  Trading partners could help by ensuring open market access for Zambian goods, which were increasingly agricultural.

CAROLINE LEWIS, International Labour Organization (ILO), noted that international economic institutions lacked an open, representative, politically legitimate and accountable forum for the discussion of central issues of the global political economy.  Existing institutions were exclusive and unrepresentative, like the IMF and World Bank boards, or insufficiently focused and timely, such as the existing working arrangement of the Economic and Social Council.

Reforming the governance of international financial institutions was being widely proposed, she said, noting that the governance of both the IMF and World Bank was asymmetrical and unequal.  The lenders were the principal shareholders and the borrowers provided the income.  A large proportion of the voting rights were vested in a small number of developed countries.  Also, effective expression of recent decisions arrived at by several United Nations conferences for more equitable representation of developing countries in the governance of financial

institutions suggested that quotas and voting rights for developing countries should be increased.

MURARI RAJ SHARMA (Nepal) said that in the last decade, developing countries had widely liberalized their economies and opened their markets, as required by rich donor nations.  It was time for industrialized nations to practise what they preached by opening their markets, dismantling their huge agricultural subsidies, and remove other tariff and non-tariff barriers to imports from the south.  Developed nations must also display democratic spirit in world economic management, bringing developing nations into the global decision-making process through reforms of the international financial infrastructure and global trade regime.

He urged the United Nations to play a powerful advocacy role and mobilize its own resources to make globalization and interdependence work for all.  It could also put tremendous pressure on rich nations, international financial organizations, and the WTO to be more accommodating of developing nations.  It could use the same leverage to get developing countries to embark on reform and progress.

PAUL LOLO (Nigeria) said the benefits of globalization were most visible in developed countries, where its potential was unquestionably limitless.  A handful of developing countries had also benefited from globalization, but the prevalence of poverty, disease and ignorance in most of them called into serious question the much-vaunted potential and benefits of globalization.

The world’s borders had continued to shrink with almost every technological discovery, advance and innovation, he said.  But sadly, it was a world whose focus had shifted from the essence of being to the expedience and dictates of market forces.  If the international community was to make any progress in implementing international agreements, all sides must keep their commitments.  Within the United Nations system, there must be greater and better coordination, coherence, consistency and efficiency.  The General Assembly must maintain its universality and become more visible in decision-making and providing leadership.  The Economic and Social Council must coordinate the follow-up to international conferences, which should avoid and eliminate duplication as well as provide the yardstick for measuring results.

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