Fifty-seventh General Assembly

Second Committee

31^st Meeting (AM)

GLOBAL TRADE SYSTEM KEEPS DEVELOPING WORLD FROM BENEFITING, DELEGATE

TELLS SECOND COMMITTEE AS TRADE AND DEVELOPMENT DEBATE CONCLUDES

Developing countries were not equal players in the competitive trade game and had been weakened by discriminatory international trading policies that kept commodity prices low and excluded their two most competitive economic sectors -– agriculture and textiles -– from the fair trade discipline of the General Agreement on Tariffs and Trade (GATT), the representative of Pakistan told the Second Committee (Economic and Financial) this morning as it concluded its general debate on the item on trade and development.

The rejection of a commodity price stabilization mechanism at the creation of the Bretton Woods institutions 55 years ago, he said, as well as the subsequent decline in international commodity prices were the primary reasons for the fall in the trade and export earnings of most developing countries.  Despite tariff cuts on industrial goods, the exports of developing countries had been steadily subjected to discriminatory tariff peaks and escalations, shutting them out of the largest markets and relegating those nations to producers of raw materials and commodities.

He said that the declaration emerging from last year's World Trade Organization (WTO) negotiations at Doha reflected mostly the objectives of major trading partners relating to industrial tariffs, investment, competition policy, environmental issues and trade facilitation.  Until the priorities of developing countries -– implementation, agriculture, tariff peaks and escalation and anti-dumping measures -– were satisfactorily resolved, developing countries should not be expected to accept further obligations that were of interest to the developed world.

Australia's representative, speaking on behalf of the Cairns Group of agricultural fair trading countries, said that fundamental reform of the world agricultural trade would promote growth, sustainable development and poverty alleviation, strengthening the economies of even the major subsidizing countries.  Reform must include the complete phasing out of export subsidies, reductions in trade-distorting domestic support and improvements in market access for all agricultural products, particularly alternatives to illicit narcotic crops in developing countries.

Emphasizing the need for reform to take into account the concerns of developing countries, including food security and rural employment, she said the Cairns Group had presented specific and workable proposals, including provisions

for special and differential treatment for developing countries during negotiations.  However, resistance from some developed partners was thwarting progress.  Failure to live up to the crucial 31 March 2003 deadline for establishing modalities for further commitments in agricultural negotiations would have serious consequences, she warned.

Malaysia's representative called for a full review of the structural imbalances in subsidies, agriculture and intellectual property that had dissipated the euphoria that followed the conclusion of the Uruguay Trade Round.  Calling for a full review of those imbalances in order to level the playing field, she said that despite repeated calls for tariff cuts, many developed nations had yet to lower agricultural duties, some as high as 200 to 300 per cent, and were slow to implement textile and clothing tariff cuts agreed upon under the WTO.

Guyana's representative, speaking on behalf of the Caribbean Community (CARICOM), pointed out that the standards that developed countries applied to exports from the developing world were a major trade barrier.  Moreover, small open economies were no match for economies of scale in governance, business infrastructure and transportation and should be given the time and resources to develop the means to integrate into the global economy.

In other business this morning, Venezuela’s representative, on behalf of the Group of 77 and China introduced a draft resolution on the United Nations Institute for Training and Research (UNITAR).  Egypt's representative presented a text 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; and Italy’s representative, on behalf of the European Union, introduced a draft entitled the World Food Summit: five years later.

Also speaking during this morning's meeting were the representatives of Ecuador, India, Philippines, Brazil (on behalf of MERCOSUR), Fiji, China, Japan, Uganda, Iran, Viet Nam, Ethiopia and Ukraine.

The Committee will meet again today at 3 p.m. to consider the report of the Economic and Social Council.

      Background

The Second Committee (Economic and Financial) met this morning to conclude its general debate on international trade and development (for background information see Press Release GA/EF/3020).  It was also expected to begin consideration of the report of the Economic and Social Council (ECOSOC).

Report of Economic and Social Council

Before the Committee was the report of the Economic and Social Council

for 2002 (document A/57/3 (Part I)), which lists ECOSOC’s resolutions and decisions on various development issues requiring action by the General Assembly.  Among them are human resources development; strengthening emergency humanitarian and disaster relief aid; international cooperation in support of the International Conference on Financing for Development; and the economic and social repercussions on the Israeli occupation on the living conditions of Palestinians in the occupied Palestinian territory and Arabs in the occupied Syrian Golan.

It describes ECOSOC special high-level meeting with the Bretton Woods institutions and the World Trade Organization (WTO) and outlines current issues of development and the global economic situation, the financing for development process and implementation of the Monterrey Consensus.  Also listed are the high-level segments on the contribution of advances in human resources to the development process, and policy dialogue with heads of international financial and trade institutions on the world economy and international economic cooperation.  It goes on to list conclusions of the preparatory round tables in education, health and human resources for the Millennium Development Goals, as well as synergies between health and education.

The report mentions the high-level round tables on progress towards achieving the Millennium goals for human resources development in Africa, partnerships for human resources development, the strengthening of institutional capabilities for sustainable development, and policy coherence and financing for human resources development.  Lastly, it cites Council action, including the Ministerial Declaration of the high-level segment on the contribution of human resources development in health and education to the development process.

Also before the Committee was the report of the Economic and Social Council for 2002 (document A/57/3 (Part II)), which contains segments of the full report relating to the operational activities, coordination, humanitarian affairs, elections, appointments, nominations and confirmations and organizational matters.

Financial and economic issues are highlighted in sections on regional cooperation; economic and social repercussions of the Israeli occupation on the living conditions of the Palestinian people in the occupied Palestinian territory, including Jerusalem, and the Arab population in the occupied Syrian Golan; sustainable development; science and technology for development; international cooperation in tax matters; and crime prevention and criminal justice.

Introduction of Draft Resolutions

LUIS JOSÉ CARPIO GOVEA (Venezuela), speaking on behalf of the Group of 77 and China, introduced a draft resolution on the United Nations Institute for Training and Research (UNITAR) (document A/C.2/57/L.35).  He said the draft observed the increased participation of developing countries in the Institute, although contributions to its general fund had not changed.  The draft also commended the Institute for establishing alliances with other organizations, including the United Nations University.

IHAB GAMALELDIN (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 (document A/C.2/57/L.34).  He said the draft expressed concern over Israel’s extensive destruction of agricultural land and orchards as well as its confiscation of land and diversion of water resources, and stressed the need for a resumption of the peace process.

ANTONIO BERNARDINI (Italy), on behalf of the European Union, introduced a draft resolution on the World Food Summit:  five years later (document A/C.2/57/L.33).  He noted that investments in rural poverty reduction were a top priority in international efforts to meet the Millennium goals and called for action to reinforce the efforts of all nations in achieving the objective of the Millennium Declaration to reduce hunger by 2015.

Statements

SHARIFAH ZARAH (Malaysia), noting that trade was the key to success in achieving the Millennium goals, said that developing countries had yet to receive the anticipated benefits of freer trade and to participate in the global trade decision-making process.  Structural imbalances in subsidies, agriculture and intellectual property had replaced the euphoria that had followed the conclusion of the Uruguay Round and a full review of those imbalances was required in order to level the playing field.

Industrialized nations must also grant preferential market access for textile and agricultural exports from developing countries, she said.  Despite repeated calls for a reduction in tariffs, many developed nations had yet to lower agricultural tariffs that were as high as 200 to 300 per cent, and were slow to implement textile and clothing tariff cuts agreed to under the WTO.  She said that improving market access for the exports of least developed countries (LDCs) and should be at the top of the agenda of the Doha work programme.  Applauding initiatives by the United Nations Conference on Trade and Development (UNCTAD) to promote institutional capacity and technical know-how in developing countries, she urged WTO members to make good on promises to provide those nations with technical assistance and resources to boost textile capacity.

LUIS GALLEGOS CHIRIBOGA (Ecuador) said that integration in his region had been given strong impetus and free trade zones were being rapidly set up.  The Andean Community had been set up as a free trade zone in 1992, and since then goods had flowed freely across the region.  The level of exchange had increased substantially as a growing variety of goods were transferred and as destinations and supplier markets opened up.

He noted that transactions in the transfer of goods had shown high rates of growth, trade had diversified in a sustained and progressive manner, and efforts had been made towards the next stage -- the Andean Customs Union.  Further commitments had been made with other countries of the region, which had resulted in the establishment of broad tariff-preference zones.  The liberalization of trade had produced significant quantitative as well as qualitative results, he added.

ABID HUSSAIN (India) said that a solid commitment had been made at Doha to place the interests of developing countries at the heart of the WTO's work.  A broad programme focusing on development had been agreed upon, but, a year later, developing countries were disappointed with the lack of progress.  Specific actions should have been taken by July and December this year, but all the July deadlines had been missed and indications were that the December timeline would also be missed. 

It would take political will and affirmative action to address the concerns of developing countries and to correct existing imbalances in the multilateral trading system, he said.  Instead, an anomalous situation had arisen since Doha.  Those who called on developing countries to liberalize trade were retreating into a shell of protectionism.  Hopefully, progress could be made by the mid-term review of Doha in September 2003, he said.

Market access was critical for developing countries, he stressed, noting that developing countries faced higher barriers to their exports than industrialized countries.  High tariffs remained on products in which developing countries were competitive and they rose as the level of processing increased.  The escalation prevented developing countries from moving beyond dependence on a few commodities, keeping them from entering the market at higher levels of the international production chain.

Non-tariff barriers such as technical standards also limited market access, he said, pointing out that they cost the developing countries an estimated

$100 billion a year, twice as much as the level of official development assistance (ODA).  Tariff and non-tariff barriers must be addressed, especially with regard to the services sector and agriculture which was a way of life in developing countries.

MEYNARDO MONTEALEGRE (Philippines) said trade must be placed at the forefront of the agenda to achieve economic growth and sustainable development.  He called for increased market access for the exports of developing nations, greater technical assistance for those countries and implementation of Uruguay Round commitments.  The Doha, Monterrey and Johannesburg meetings had provided the international community with road maps for addressing trade and development.

Now was the time to follow through on those commitments with a fair, transparent, rule-based and non-discriminatory global trading system, he said. Strong political will was needed for trade to promote economic growth and sustainable development.  The UNCTAD, the WTO and international financial institutions could also play a key role in follow-up of major United Nations development summits in terms of trade, finance, investment and technical assistance, he added. 

LAURIE BRERETON (Australia), speaking on behalf of the Cairns Group of agricultural fair trading countries, said that fundamental reform of the world agricultural trade was key to achieving the development objectives set out at Doha.  It was a prerequisite for adjusting deep imbalances in the international trading system and would promote growth, sustainable development and poverty alleviation, strengthening the economies of even the major subsidizing countries.

To achieve that reform, she said, negotiations must proceed on three closely linked pillars:  market access, domestic support and export competition.  Reform must occur on all fronts and comprise the phasing out of all forms of export subsidies, substantial reductions in trade-distorting domestic support and substantial improvements in market access for all agricultural products.  Reform must include the fullest liberalization of market access for products promoted as alternatives to illicit narcotic crops in developing countries.  It should also include tropical products produced by developing countries and take into account their concerns, including food security and rural employment, as laid out at Doha.

She said the Cairns Group had put forward specific and workable proposals based on the Doha mandate and that leaders at the Johannesburg World Summit on Sustainable Development earlier this year had underlined the fundamental importance of agricultural reform to economic development.  They had underlined the necessity of including provisions for special and differential treatment for developing countries in negotiations.  The Cairns Group was willing to negotiate, but proposals from some developed countries had indicated a limited willingness to make fundamental reform and they would entail the retention of many of the present imbalances.  The crucial date of 31 March 2003 had been set for establishing modalities for further commitments within agricultural negotiations and failure to live up to that deadline would have serious consequences. 

LUIZ TUPY CALDAS DE MOURA (Brazil), speaking on behalf of MERCOSUR (Argentina, Brazil, Paraguay, Uruguay and associate members Bolivia and Chile), said that since the group's inception in 1991, regional trade and investment had grown exponentially.  Between 1995 and 2001, foreign direct investment totalled more than $230 billion dollars.  In the spirit of economic openness, the regional trade group did not discriminate against third countries and had forged free-trade agreements with other Latin American countries and with the European Union. 

However, the imbalances and contradictions in the current international trading system jeopardized its credibility, he said.  Discriminatory practices, particularly in agriculture, had dramatically hindered efforts by developing countries to raise living standards.  Farming subsidies in nations of the Organisation for Economic Cooperation and Development (OECD) exceeded $1 billion daily, seven times higher than present levels of ODA.

He said that unwillingness to slash subsidies and give greater market access for agricultural products from developing nations had stalled the WTO agricultural negotiations.  He called on industrialized nations to eliminate tariff peaks and anti-dumping measures, and to adopt preferential trade policies in favour of developing nations. 

`      AMRAIYA NAIDU (Fiji) said that the twin forces of trade liberalization and globalization had speeded up development and widened the gaps between the haves and have-nots at an alarming rate.  That trend could force developing countries into a continuing downward spiral in the immediate future, unless global measures recognizing the fundamental problems of those nations were put in place.  While Fiji attached great importance to trade liberalization and structural reforms, and was committed to the WTO Doha Work Programme, like other developing countries, it was concerned about the slow progress of post-Doha negotiations on key elements, including special and differential treatment, implementation and agriculture.

At Doha, he recalled, the international community had agreed to place development at the heart of the multilateral trading system.  It must ensure, therefore, that the instruments adopted were flexible enough to accommodate the specificities and diversities of small island developing States, which should be allowed to use the appropriate means to ensure that agriculture continued to play its multifaceted and vital role.  Specific trade arrangements that such States had developed over the years, allowing them to pursue agricultural policy objectives, should be protected, and their competitiveness improved.  The creation of rules designed to regulate world trade, particularly trade in small economies, should take into account the specific developing country needs of small island States, he added.

MASASHI MIZUKAMI (Japan) said his country offered quota-free access to almost all industrial exports from the LDCs and planned to offer duty-free and quota-free access to all LDC exports beginning in April 2003.  Japan also placed importance on the effective implementation of trade-related capacity-building and special and differential treatment.

Welcoming WTO’s creation of the Doha Development Agenda Global Trust Fund, to which Japan had contributed 1.5 million Swiss francs, he said the country was poised also to contribute financially to intensive training courses by the WTO and UNCTAD for Asia and the Pacific later this year.  Japan supported close and secure collaboration between UNCTAD, the WTO and other international institutions, he said, adding that UNCTAD should make available to all nations its superior expertise in investment and competition issues in developing countries.

MUNIR AKRAM (Pakistan) pointed out that trade was a competitive game and developing countries, by definition, were not equal players.  To benefit from external trade, those weaker players must be provided a “handicap” in relation to developed countries.  Instead, however, the international trading system discriminated against developing countries in several ways.  At the creation of the Bretton Woods institutions, the proposal by Lord Keynes for a commodity price stabilization mechanism had not been accepted and, over the past 55 years, commodity prices had registered a secular and significant decline in absolute terms as well as relative to industrial goods.  That was the single most important reason for the decline in the terms of trade and export earnings of most developing countries.

In addition, he said, the two sectors in which developing countries were most -- agriculture and textiles -- had been excluded for 50 years from the fair trade discipline of the General Agreement of Tariffs and Trade (GATT).  Even as tariffs on industrial goods were slashed, exports from developing countries faced, and continued to face, discriminatory tariff peaks and tariff escalations that shut them out of the largest markets, perpetuating their role as producers of raw material and commodity producers.  The way in which the Uruguay Round agreements had been implemented, or rather, not implemented, had further stressed the asymmetrical nature of trade liberalization benefits for developed and developing countries, he said.

Textiles quotas had not yet been lifted, and the $300 billion in trade earnings that should have accrued to exporting countries had remained a chimera, he noted, expressing fears that when quotas were eliminated in 2005, other means would be found by restraining countries to halt the exports of the developing world.  The Dispute Settlement System, the “jewel in the crown” of the WTO, could not compensate for the damage that developing countries had suffered due to the frequently high-handed and illegal means used by their developed trade partners to arrest or disrupt their exports.

The provisions of the Doha Declaration, he continued, mostly reflected the objectives of major trading partners regarding industrial tariffs, investment, competition policy, environment and trade facilitation.  Priority areas for developing countries -- implementation, agriculture, tariff peaks and escalation and anti-dumping -- were not satisfactorily addressed, much less resolved. References, at the conclusion of the Conference to the “Doha Development Agenda” were somewhat ironical and until satisfactory progress was made in fulfilling that Agenda, developing countries should not be expected to accept further and new obligations in areas of interest to industrialized countries.

He said that the Doha negotiations must reverse the threat from the “new protectionism” -- the use of environment and social conditionalities, including labour standards -- to restrain the exports of developing countries.  Such protectionism, which was being practised informally and at times officially, was contrary to WTO agreements and obligations.  It must be eliminated, and all attempts to legitimize such conditionalities by inserting them into WTO agreements and decisions should be vigorously opposed, he stressed.

FRANCIS MUMBEY-WAFULA (Uganda), noting that his country relied on trade to generate resources for development, said that as with most LDCs, commodities dominated its share of trade.  Uganda's participation was limited by demand and supply constraints, as well as unfavourable market access conditions affecting those products that were of the highest interest to LDCs, such as coffee.  It was not surprising that LDCs had accumulated unsustainable debts as primary commodity prices had plunged, he added.

Expressing concern about the slow progress in negotiating key elements of the Doha process, particularly in areas like special and differential treatment, implementation, agriculture, services and market access, he said that developments in the multilateral trading system must be carefully tracked because of the link between the inability to sustain growth due to the debt situation and the poor performance of the commodity trade.  The inputs of the secretariats and intergovernmental bodies dealing with trade should be encouraged in all development forums, he said, adding that UNCTAD's capacity to provide critical services should be strengthened in such areas as provision of technical support and investment promotion.

KAZEMI KAMYAB (Iran) said serious challenges remained in resolving global development imbalances.  The Doha Development Agenda focused on subjects of concern to developing countries, but one fourth of the world’s countries were still isolated from the mainstream of international trading systems, not due to their unwillingness or lack of preparedness, but rather to their inability thus far to join the WTO.  Such was the case of Iran, which had been denied WTO membership. 

Noting that the major trading Powers had expressed willingness to grant special trade treatment to a select group of countries, he called for the elimination of discriminatory trade policies and practices in industrialized countries, particularly those relating to agriculture imports from developing countries.  Iran also wished to see the creation and implementation of a more open, equitable, fair and transparent international trading system.

NINH THI BINH (Viet Nam) said that developing countries must have the appropriate macroeconomic policies for trade, which must be promoted and placed high in the development strategy.  An increasing share of exports from developing countries in the international trading system was vital.  Viet Nam was concerned about the slow recovery of international trade, the imbalance in liberalization commitments and low trade capacity as well as high tariffs for products from developing country.  Those obstacles had caused many negative impacts and hindered the implementation of development goals, she said.

The international community should show more political will to find concrete ways to solve the trade problems of developing countries, she said.  The UNCTAD should be strengthened in order to play a central role in providing technical assistance to enhance trade for developing countries.  The Doha meeting had provided a framework that should focus more on matters of importance to developing countries.  To accommodate development, the WTO regime should be readjusted in a fair manner and developed countries should eliminate high tariff barriers and protectionist measures.

AZANAW ABREHA (Ethiopia) said his country had welcomed announcements before and after the Doha conference that LDCs and African countries would receive preferential and expanded market access for their exports and accelerated negotiations for WTO accession.  However, Ethiopia was concerned about the continuation of historically low international prices for most commodities, particularly coffee, and called on the international trading system to address the issue fairly.  Ethiopia also called for trade-related technical assistance and capacity-building initiatives to reduce supply-side constraints in developing countries.

Welcoming the WTO’s creation of a working group on trade and technology transfer, he supported the Doha proposal to create a working group on trade, debt and finance.  A thorough analysis of the links between trade, finance and external debt of commodity-dependent countries would better enable decision makers to develop debt sustainability criteria for the Heavily Indebted Poor Countries (HIPC) initiative.  Such links would also give decision-makers a comprehensive view of external sources of development financing for countries in which foreign direct investment was not a major source of development funding.

SERHII SAVCHUK (Ukraine) noted his country’s recent progress in snagging a share of the global trade pie, but emphasized that much work remained, including its accession to the WTO, in order to integrate Ukraine fully into the international trading system.  The country’s integration into the European Union, and the development of strategic partnerships and bilateral trade with the European Union were top priorities.

Commending the outcomes of the WTO Ministerial Conference at Doha, he called for the inclusion, in the next round of negotiations, of issues of special concern to developing countries and economies in transition, including technical cooperation programmes for development.  Ukraine was also pleased with the progress in implementing the four-year Bangkok Plan of Action and said that UNCTAD should play a greater role as the United Nations focal point for the integration of trade and development.

GEORGE TALBOT (Guyana), speaking on behalf of the Caribbean Community (CARICOM), said trade had long been the most significant source of economic growth and livelihood for countries in the region.  Due to size and production structure, CARICOM members were highly dependent on external trade, and regional policy makers had been taking significant steps over the past few decades to liberalize the export sector.  However, the relatively narrow range of CARICOM exports posed significant challenges for the region.  In addition, the erosion of preferential regimes under the Uruguay Round and the WTO, coupled with the increased propensity

of developed countries to support agriculture through domestic policies and export competition, bore serious implications for the region.

Limited market openings for developing countries and increased market penetration by products from developed countries further complicated trade liberalization, he went on.  An increasing number of studies had pointed out that standards applied by developed countries on exports from developing countries constituted a major trade barrier.  The CARICOM advocated special consideration for small open economies in trade negotiation.  Stressing the inability of small economies to match economies of scale in such areas as governance, business infrastructure and transportation, he said the trade negotiation process should provide small economies with the time, opportunities and resources to undertake the necessary structural transformation, and develop the requisite economic and business infrastructure to support their participation in the global economy.

The CARICOM also remained deeply concerned about the declining terms of trade for commodities, particularly for commodity-dependent developing countries, he said.  That was one of the most significant trade and development problems facing many developing countries, who had consequently suffered major income losses.  Those conditions had been compounded by the increasing loss of market share in world commodity export markets.  Real prices of internationally traded commodities were on average about 45 per cent below the 1980s level and

10 per cent below that of the lowest level of the Great Depression.  The commodity problem had not been effectively addressed at Doha, Monterrey or Johannesburg, he said.

HUANG XUEQI (China) said that developing countries and LDCs had high hopes for the Doha development programme focus, which called for the first round of multilateral talks to be completed by 1 January 2005.  Implementing the outcome of those talks as soon as possible would serve the interests of both developing and developed countries.  It would also help to narrow the gap in economic development among States and would be a catalyst for world economic development.  For progress to occur, the concerns of developing countries must be addressed alongside those of the developed world in order to achieve a balance in meeting the interests of both.

In the new round of WTO talks, he said, the establishment of a new multilateral trading system should be conducive to the establishment of a new world economic order that was fair, just and equitable for world economic development, trade and investment.  Addressing the needs of developing countries, especially those of the least developed, would contribute to the recovery and development of the world economy and build confidence in the multilateral trading system.  It would also promote sound economic globalization.

Issues associated with trade-related intellectual property rights should be addressed, as should textile and anti-dumping questions, he said.  As a new WTO member, China was actively participating in the talks and called for technical assistance for developing countries.  China would work to ensure a good investment climate for foreign businesses, including by improving policy and the legal environment for foreign investment.

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