AGRICULTURE MUST BE INTEGRATED INTO FREE TRADE RULES AFTER YEARS OF DISCRIMINATION EXCLUSION, URUGUAY’S DELEGATE TELLS SECOND COMMITTEE

Fifty-eighth General Assembly

Second Committee

25^th & 26^th Meetings (AM & PM)

AGRICULTURE MUST BE INTEGRATED INTO FREE TRADE RULES AFTER YEARS OF DISCRIMINATION

EXCLUSION, URUGUAY’S DELEGATE TELLS SECOND COMMITTEE

African State Sponsors of ‘Cotton Initiative’ Underline Plight

Of Farmers Devastated by Export Subsidies Paid to Producers in Developed Countries

Agriculture had been discriminated against and excluded from free trade rules for the past 50 years, and must now be fully integrated, Uruguay’s delegate told the Second Committee (Economic and Financial) today, as it continued its debate on trade and development.

Speaking for the Common Market of the Southern (MERCOSUR), he noted that more than 60 per cent of developing-country populations lived in rural areas and depended on agriculture for their livelihoods.  Their efforts to overcome poverty were seriously hampered by practices that distorted trade and kept their agricultural products out of global markets.

The World Trade Organization’s (WTO) Doha Declaration had laid down a timetable for agricultural negotiations aimed at making meaningful progress in securing market access and reducing export subsidies.  While the Doha mandate had not been implemented, it was vital to take advantage of opportunities offered by multilateral negotiations in the WTO.

Benin’s representative underlined the importance of cotton in the struggle to reduce poverty in Western and Central Africa, where more than 2 million people depended on the crop.  African cotton was 30 per cent less expensive than that of competitors in developed countries, but subsidies in those nations pushed down demand for it, as well as its price.

He said that the sponsors of the so-called cotton initiative -– Benin, Burkina Faso, Mali and Chad -- had suggested that developed countries adjust their cotton subsidies for a three-year period from 2004 to 2006, which would allow cotton-producing countries to become more competitive.  They had also recommended that compensation -– limited to the period of adjustment -- be awarded to cotton producers who had suffered losses due to subsidies.

Burkina Faso’s representative, emphasizing that sustained agricultural growth was vital for African economies, said the continent’s cotton sales were completely offset by similar exports from Asia, America and Europe, where subsidies had artificially increased supply and lowered export prices.  Cotton was an essential source of income and government revenues in African countries, and key to the balance of trade.

Similarly, Mali’s representative noted that cotton, once a source of wealth in his country, had now caused impoverishment.  International cotton prices had fallen to their lowest level in 30 years, causing a 1.7 per cent drop in Mali’s gross domestic product and an 8 per cent drop in export revenues in 2001.  The livelihoods of 2 million of Mali’s 15 million people depended totally on cotton.

Other speakers emphasized the need to push the Doha agenda forward during the upcoming United Nations Conference on Trade and Development (UNCTAD) meeting to create a more open and equitable trading system.  They also emphasized the importance of technical assistance, capacity-building and official development assistance (ODA) in spurring export diversification and economic growth, and urged developed countries to implement proposed tariff reductions on textiles and clothing. 

In other business today, Morocco’s representatives, speaking on behalf of the “Group of 77” developing countries and China, as well as Mexico, introduced two draft resolutions, the first on public administration and development; and the second on economic and technical cooperation among developing countries.

Also speaking today were the representatives of Croatia, Thailand, Mozambique, Congo, Libya, Guyana (on behalf of Caribbean Community (CARICOM)), Belarus, United States, Singapore (on behalf of the Association of South-East Asian Nations), Belize and Indonesia.

The Observer for the Holy See also made a statement.

When the Second Committee meets at 10 a.m. tomorrow, Thursday, 6 November, it is expected to conclude its debate on international trade and development.  It is also expected to take up implementation of the United Nations Conference on Human Settlements (Habitat II).

Background

The Second Committee (Economic and Financial) met this morning to continue its discussion of trade and development.  (For background information, see Press Release GA/EF/3057 of 3 November.)

Statements

FERNANDE HOUNGBEDJI (Benin) stressed the importance of cotton for the reduction of poverty in West and Central Africa, where more than 2 million people depended on the crop.  In 2001, cotton represented 5 to 10 per cent of gross national product for Benin, Burkina Faso, Mali and Chad.  African cotton was 30 per cent less expensive than that of competitors in developed countries, but subsidies in those nations negatively affected the demand for, and price of, the region’s output.

The international community must reduce subsidies and eventually eliminate them completely, she said.  The sponsors of the so-called cotton initiative -– Benin, Burkina Faso, Mali and Chad -- had suggested that necessary adjustments in developed countries be spread over a three-year period from 2004-2006.  The elimination of subsidies would affect world cotton prices and African cotton production would benefit, allowing cotton-producing countries to become more competitive.  In addition, compensation -- limited to the period during which subsidies were being eliminated -– should be awarded to cotton producers who had suffered losses due to subsidies.

IRENA ZUBCEVIC (Croatia) said that economies in transition were particularly challenged in achieving sustained economic growth.  Their industries that were ill-equipped to compete in a market economy were forced to lay off scores of employees and faced major recessions.  As those economies implemented the mass privatization of state-run industries, great pressure was put on the private sector to spur economic growth.  Croatia was meeting that challenge through the creation of an enabling investment regime, export financing and risk insurance for businesses, regional free-trade agreements and accession to the World Trade Organization (WTO). 

Similar efforts were needed at the international level, she said, calling for improved coordination, cooperation and policy coherence of existing United Nations mechanisms, particularly among the Organization’s main agencies and funds.  Closer links were needed between development financing and the Millennium Development Goals, in order to improve the international community’s effectiveness in combating hunger, illiteracy, poverty and disease.

CELESTINO MIGLIORE (Holy See) said trade policy must be organized to foster sustainable economic development.  The least developed countries must also take the necessary steps to stem corruption and unethical practices that had in the past, hindered development and the well-being of their populations.  The recent WTO ministerial meeting at Cancun had jeopardized the promises that rich nations made at Doha to slash trade-distorting farm support, tariffs on farm goods and agricultural export subsidies, he noted, adding that Cancun’s failure had also left pending the issues of tariff-reduction for textiles and special and differential treatment for exports from developing countries. 

Calling upon all nations to demonstrate a great degree of international solidarity, and to abandon special interests for the future common good, he expressed the hope that the failure at Cancun would not jeopardize the building of a strong and more equitable multilateral trade and development system. 

ITTIPORN BOONPRACONG (Thailand) said international trade had long been an engine of sustained economic growth and development in his country, often helping to pull it out of economic difficulty.  Free and open international trade had allowed Thailand to export its products with a competitive advantage and to acquire needed imports.  To derive the most benefit from trade, however, the country needed to strengthen national production, as well as liberalization and policy reform.  In that respect, it must diversify its exports, acquire increased market access, tackle fluctuating and low commodity prices and gain access to finance and technology.

He urged States to support the United Nations Conference on Trade and Development (UNCTAD), as the principal body of the United Nations for trade, investment and development.  The UNCTAD provided a forum for countries to promote policy convergence on important global issues and allow the development-friendly integration of developing countries into the world economy, through its numerous analytical studies, capacity-building and technical assistance.

JUVENAL MONJANE (Mozambique) said that the 2003 Trade and Development Report revealed that global trade and economic growth prospects were gloomy, impeding the ability of developing countries to achieve the Millennium Development Goals.  Two years after the Doha trade round had set forth an ambitious development agenda, little progress had been made.  Many negotiation deadlines had been missed, particularly on agriculture, textiles and clothing, and non-agricultural products.  The issue of trade subsidies must be addressed urgently, as 70 per cent of Africans depended on agriculture for their livelihoods.  Resolving the agriculture issue was not merely a political issue, but a moral one as well.

Describing the New Partnership for Africa’s Development (NEPAD) as the driving force for sustainable development and poverty eradication throughout Africa, he said it would help the region’s countries to explore comparative advantages and enhance competitiveness.  Still, the international community must ensure an increase in official development aid and greater market access for exports from developing countries in order to push the NEPAD agenda forward.

JEAN BAPTISTE NATAMA (Burkina Faso) said that the weak performance of African agricultural products on world markets had largely resulted from external factors.  In view of growing market integration due to liberalization and globalization, the trading environment had become increasingly competitive and the least developed countries, in particular, had been left on the margin of world markets.  Emphasizing that sustained growth in agriculture was the key to economic development and the elimination of poverty in many African countries; he said that agricultural agreements that had emerged from the WTO Uruguay round had not been realized.  Among other barriers, African countries still faced tariffs and lacked market access for their exports.  Hopefully, future negotiations would improve market access, especially for such vital crops as cotton, which were completely offset by exports from Asia, America and Europe, where the crop was subsidized in violation of WTO rules.  Cotton subsidies had artificially increased supply and lowered export prices.  Cotton was an essential source of income and government revenues in African countries, and was key to the balance of trade. 

Draft Resolutions

MOHAMMED ARROUCHI (Morocco), speaking on behalf of the “Group of 77” and China, as well as Mexico, introduced a draft resolution on public administration and development (document A/C.2/58/L.23), expressing satisfaction over its call for greater capacity-building aimed at institution-building, human resources development, the strengthening of financial management and the harnessing of information and technology. 

ABDELLAH BENMELLOUK (Morocco) introduced a draft resolution on economic and technical cooperation among developing countries (document A/C.2/58/24), noting the importance of South-South efforts in that regard.

Statements

JEAN MARIE BOSSINA (Congo) said the international community had made many commitments at major conferences to promote multilateral trade, a driving force behind development in all nations.  In that respect, it was vital to give developing countries the technical assistance to develop their exports.  The WTO meeting at Cancun had been a step backward in trade negotiations, particularly penalizing the least developed countries, which were highly dependent on commodities.  There had also been no progress on the elimination of domestic subsidies, which could lead to a $400 billion increase in developing-country incomes between now and 2015.  The WTO should rapidly resume negotiations so that trade rules that would help greatly in eradicating poverty could be laid down. 

JABER RAMADAN (Libya) called on the international community, particularly international financial and trade institutions, to implement the commitments made at recent major global United Nations conferences.  The recent failure of trade talks at Cancun was regrettable and the developed nations should show flexibility on trade issues, during the forthcoming round of talks in Geneva.

Developed nations must provide increased development assistance, private capital and better market access for developing countries, he said.  The UNCTAD played an important role through capacity-building and consulting services to help developing countries cope with the effects of globalization.  The least developed countries, particularly in Africa, depended on a few commodities for their income.  Libya attached great importance to the work of the Panel of Eminent Persons to study the price fluctuations and instability of commodity markets, and offer ways to improve the lot of commodity-dependent countries.

GEORGE TALBOT (Guyana), speaking on behalf of the Caribbean Community (CARICOM), stressed that international trade was the most significant source of economic growth for CARICOM countries.  However, they were impeded from taking full advantage of multilateral trade, due to such constraints as their small size, vulnerability and ability to adjust to the external environment.  The situation was compounded by volatility in national incomes, due to the high concentration of exports for a few primary products, which negatively affected investment, resource allocation, social spending, productivity and economic growth.

The CARICOM countries had taken significant steps over the past decade to become more resilient and to strengthen their economic competitiveness, he said.  They had also tried to reposition themselves in the global economy, by pursuing prudent macroeconomic policies and regional integration.  However, the trend towards reducing or eliminating preferential trading had posed a major challenge.  The WTO must move quickly to propose and adopt specific recommendations to ensure the meaningful participation of the Caribbean countries in the multilateral trading system.  For example, they should be allowed to make commitments depending on their capacity to adjust, level of development, financial and trade needs, and administrative capacities.  Given the small size of their companies, their export sectors should also be given a longer period to adjust, than the more developed economies.

CHEICK SIDI DIARRA (Mali) said the economies of more than 50 countries depended directly on commodities, which represented half of their total revenue.  Cotton, once a source of wealth in Mali, now caused impoverishment.  International cotton prices had fallen to their lowest level in 30 years, causing a 1.7 per cent drop in Mali’s gross domestic product and an 8 per cent drop in export revenues in 2001.  The livelihoods of 2 million of Mali’s 15 million people depended totally on cotton.

According to a recent study of the International Cotton Advisory Board, he said the end of United States subsidies for cotton farmers would result in a 31 per cent income increase ($560 annually) for Malian producers.  Substantial subsidies led to overproduction, surplus stock and a fall in cotton prices, dealing a sharp blow to Mali, Benin, Burkina Faso and Chad, and penalizing 40 to 80 per cent, of their total cotton exports.  At the recent trade round at Cancun, those nations had called for the creation of a transitional compensation fund for least-developed cotton-producing countries to cover losses, as of January 2004.  Cancun’s failure showed the reticence of developed countries to take into account the aspirations of the South.  Mali welcomed the French President’s proposal to create a strategy that did not lead to price distortions, and hoped that countries would follow through with the Doha agenda during the June 2004 meeting of UNCTAD.

ULADZIMIR GERUS (Belarus) said his country was one of many in Eastern Europe and the Commonwealth of Independent States for which full integration into the world economy and multilateral trading system remained a pressing issue.  Those conditions were part of the sustainable development strategy of Belarus, and a priority of its foreign policy.  Membership in the World Trade Organization was an important way of proving to investors and traders worldwide, how credible was its foreign trade regime.  Domestic economic reform would progress much faster, if Belarus quickly acceded to the WTO, but it was still outside the organization, like 24 other acceding countries that had been negotiating entry for several years.

He said it was expedient to keep commitments sought from acceding countries, at a level commensurate with their economic situations and the obligations of WTO members.  Absence of flexibility, in that regard, had in some cases, left new members with a commercially viable package of commitments that did not add commercial attraction to the country, and also strengthened WTO scepticism.

BENJAMIN GLIMAN (United States) said that decisions to restrict relations of a sovereign State with other States should not be taken lightly.  Nevertheless, situations often arose that allowed no other course.  Earlier this year, the Burmese military had imprisoned Aung San Suu Kyi, head of the National League for Democracy -- who had, in fact, won the 1991 Burmese elections -- and murdered many of her followers.

The United States, among other States, had enacted sanctions in protest, he said.  Similar situations lay behind cases, in which the United States applied sanctions.  Terrorist threats and acts, expropriations and gross human rights violations demanded a response, and sanctions should be seen, in that light.

TAN YORK CHOR (Singapore), speaking on behalf of the Association of South-East Asian Nations (ASEAN), said that as a first step towards creating the ASEAN Economic Community, member States would remove all non-tariff barriers to trade by 2005 and create an advisory mechanism to resolve trade and investment issues.  The move would enable businesses to cut red tape and clarify trade discrepancies in 30 days.

The ASEAN attached great importance to the role of the multilateral trading system in promoting economic development and facilitating developing countries’ integration into the global economy, he said.  Developing countries would benefit most from a more open and equitable trading system.  According to the World Bank, a good international agreement could generate $520 billion in income by 2015 and lift 144 million people out of poverty.  Singapore hoped that the upcoming Doha trade round would produce an agreement that addressed these concerns. 

FELIPPE PAOLILLO (Uruguay), speaking on behalf of the Common Market of the Southern Cone (MERCOSUR) and associated States, noted that more than 60 per cent of developing-country populations lived in rural areas, depending on agriculture for their livelihoods.  Their efforts to eradicate poverty, especially in the rural areas, were seriously impeded by practices that distorted international trade in agricultural products and prevented their access to markets, which led to surplus production and limited possibilities to expand food production.  As a result, there had been an alarming increase in the number of people emigrating from the countryside to city slums, which negatively affected food and nutrition, as well as education, health, and the environment.

The MERCOSUR countries did not need international charity, but open markets and equitable rules, he emphasized.  Over the past 50 years, agriculture had been discriminated against and excluded from free trade, and must be fully integrated into those rules.  The Uruguay Round had begun the liberalization of agricultural trade, but had retained imbalances and distortions that impeded fair trade in agricultural products.  The Doha Declaration had established a timetable for agricultural negotiations aimed at achieving meaningful progress in access to markets and reductions in export subsidies, with a view to their gradual removal, as well as substantial reductions in domestic aid that distorted trade.  While the Doha mandate had not been implemented, it was vital to make every effort to take advantage of opportunities offered by multilateral negotiations in the WTO.

STUART LESLIE (Belize) said trade was good, but must be development-focused.  Open economies and increased trade could go a long way towards achieving the Millennium Development Goals, particularly poverty eradication.  During the recent High-level Dialogue on Financing for Development, there had been much talk of the link between the millennium targets and implementation.

Unbridled free trade had the power to marginalize the poorest of the poor, he said.  In recent years, trade liberalization had led to shrinking markets and growing poverty.  The international community should not abandon trade, but it must first create conditions to make the developing countries equal trading partners.  Belize urged all parties to focus on trade, as a means to bring justice and betterment to the world’s poor.

REZLAN ISHAR JENIE (Indonesia) said capacity-building in developing countries must be a top priority of the Doha agenda, as it pursued development-related policies in implementation, special and differential treatment, agriculture and market access for non-agricultural products.  However, at the recent ministerial trade talks at Cancun that agenda had not been advanced.  The developed countries had pressed for the Singapore agenda to take centre stage, pushing aside issues that required urgent attention, particularly commodities and other agro-industries.

The lessons of Cancun were quite clear, he said.  If the developed countries were not sensitive and responsive to the needs and interests of the developing world, the Millennium Development Goals would remain elusive.  A more enlightened approach on the part of the developed nations and strong leadership from the United Nations was needed to ensure that the Doha Round became a genuine development round.  That should be the goal during the upcoming UNCTAD meeting in June. 

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