Officials in Round Table Debate Propose Targeted Policies to Boost South-South

Trade as Means of Amplifying Benefits to Poorest Countries

 

(Received from a UN Information Officer.)

ACCRA, GHANA, 23 April -- Well-targeted policies could further boost the burgeoning South-South trade, amplifying its benefits to the poorest countries, according to officials speaking this afternoon during the fourth thematic round table of the Twelfth Ministerial Meeting of the United Nations Conference on Trade and Development (UNCTAD XII) taking place this week in Accra, Ghana.

“The engine of global economic growth seems to have shifted to the South,” said Christopher Sinckler, Minister for Foreign Affairs, Foreign Trade and International Business of Barbados, as he introduced the theme, “Emergence of a new South and South-South trade as a vehicle for regional and interregional integration for development”.

He pointed to reports of the United Nations Conference on Trade and Development (UNCTAD) indicating that South-South trade had surpassed $2 trillion in 2006, with the volume of exports showing a three-fold increase in 1995-2006, which accounted for 17 per cent of world trade and 46 per cent of the total merchandise trade of developing countries.  That, accompanied by the growth of intra- and interregional trade networks with such countries as China, India and Brazil, provided much of the dynamism.

Innovative ideas were needed to strengthen South-South trade in such a way as to spread sustained and sustainable development through the economically emerging world, he said.  In that vein, strengthening regional commodity markets, trade facilitation, inter- and intraregional connections and other arrangements should all be considered.

Supachai Panitchpakdi, UNCTAD Secretary-General, said economic cooperation among UNCTAD members was a significant factor in the organization’s considerations, and would shape much of its work in the next few years.  The growing power of developing countries and the trade between them had led him to describe the near-future era as the “second wave of globalization”.

But, as in other areas, all that activity must be shaped to produce different, more equitable results, he stressed.  There must be “more hubs and more spokes” outside the industrialized world and the fast-growing regions; market access must be expanded; and poorer countries must diversify their roles beyond the extractive industries that had helped fuel growth in the fastest-growing countries.

Consolidating power in the South could bring that about, said Rahul Khullar, India’s chief negotiator at the World Trade Organization, as he opened the round table discussion.  “We are now talking about a more vocal South, a more vibrant South and a South that cannot be ignored both economically and politically.”

It must be remembered, however, that the South was not monolithic and the differences between developing countries were significant and the least developed countries had to be helped much further, he cautioned, proposing duty-free preference relationships among developing countries as part of the answer.  South Asia had moved from individual agreements to a South Asian free-trade zone.  Those arrangements would develop into interregional zones between developing regions.  “This is the way of the future.  This is where the path lies,” he concluded.

Other panellists joining Mr. Khullar were Ramzy Ezzeldin Ramzy, Deputy Foreign Minister for Economic Affairs of Egypt; Mohammed B. Daram, Commissioner of Trade, Customs and Free Movement of the Economic Community of West African States (ECOWAS); and Robert Davies, Deputy Minister for Trade and Industry of South Africa.

This afternoon’s discussants were Noppadon Pattama, Minister of Foreign Affairs of Thailand; Keitaro Sato, Ambassador in Charge of Africa for the upcoming Fourth Tokyo International Conference on African Development (TICAD 4); Ahmed bin Hassan al Dheeb, Under-Secretary for Commerce and Industry of Oman; Marcin Korolec, Undersecretary of State at Poland’s Ministry of Economy; Zainul Abidin Rasheed, Senior Minister of State for Foreign Affairs of Singapore; Osvaldo Rosales, Director of the International Trade Division with the Economic Commission for Latin American and the Caribbean (ECLAC), on behalf of all United Nations Regional Commissions); Siphana Sok, Director of Resources and Partnership of the International Trade Centre UNCTAD/WTO; and Thierno Bocar Tall, Project Manager of the Global Network of Import-Export Development Banks (G-NEXID).

Mr. Ramzy said foreign direct investment was no longer confined to the North, as large countries of the South were now investing in their own regions or other emerging economies.  Furthermore, industrial growth in several fast-growing developing countries, coupled with the information explosion of the past two decades, was also spurring South-South trade.  Egypt was an active participant in the Common Market for Eastern and Southern Africa (COMESA) and the two-year-old Pan-African Free Trade Area.

He said his country’s foreign direct investment focused on infrastructure, including water management initiatives, energy production concerns and hydro-culture facilities for food processing, among other areas.  Egypt had also established a fund for technical cooperation in Africa, and set up a similar mechanism with the Commonwealth of Independent States (CIS) in the 1990s.  To better integrate itself and its African and Arab neighbours into the global economy, Egypt focused investment, trade and partnership initiatives on sectors in which it had a comparative and competitive advantage, including energy trade, telecommunications and technology transfer.

South-South dynamism could be maintained by enhancing productive capacities and strengthening institutions in the South, and expanding interregional trade arrangements, among other measures, he said.  Developing countries, especially in Africa, must assume greater responsibility for global economic governance.  To that end, they should be afforded greater participation in the work of global finance and trade institutions.

Highlighting efforts by ECOWAS to bolster South-South trade, Mr. Daram said the regional blocbelieved in learning from examples set by other regional development cooperatives.  The European Union was its largest trading partner, and ECOWAS had been working hard to ensure that its trade interactions with that body were fair and equitable.  It looked for trade arrangements that would ensure that West African countries were able to meet the globally agreed Millennium Development Goals and promote regional integration.

As for the ongoing negotiations with the European Union on an interim economic partnership agreement, he said that when common ground was eventually reached, hopefully by 2009, ECOWAS would be prepared to meet reasonable conditions.  At the same time, European partners must be prepared to live up to their own commitments.  “Let us get our own house in order, and when we do, we will be ready to trade with you.”  No matter how important market access was, it did not automatically confer development. ECOWAS would always uphold its obligations to ensure better livelihoods for the citizens of its member countries.

Mr. Davies said the rapid growth of China, India, Brazil and others, as well as and the rising fortunes of the new South, meant that the old adage “when the United States catches a cold, the rest of us get double pneumonia” was no longer true.  At the same time, developing countries needed to carry on with their reforms and other efforts to boost trade capacities and diversify markets.  They must continue strengthening interregional integration, and the more rapidly industrializing countries must look to expand development-cooperation initiatives with their less-developed neighbours.  Such cooperation was a “strategic imperative” in the current globalized economic environment.

Mr. Pattama said South-South cooperation was about common security and prosperity, adding that Thailand had participated in a number of trade schemes throughout the South Asian region, with the assistance of international financial institutions, in areas such as tourism, energy and the environment, and transportation and communications networks.  UNCTAD and other relevant international organizations could play an important role in helping developing countries deepen their cooperation for socio-economic development and ensure the creation of mutually beneficial policies targeted to their respective specificities and reflecting current global economic trends.

Mr. Rasheed said it was necessary to be sure what kind of progress had actually been made, ask what must be changed so that new growth did not exhaust itself, and prevent crises like the current one arising from spiralling food costs.  It was also important to focus on capacity-building and ensure trade liberalization, because tariff barriers between developing countries were still relatively high.  In fact, 70 per cent of such barriers were those between developing countries.  Non-exclusionary regional trade agreements promoting equitable development and trade liberalization could help integrate lesser-developed countries into global trade.  The economic community of the Association of Southeast Asian Nations (ASEAN) could be a model in that way, as it encompassed investment, skilled labour and many other aspects of intra-regional exchange.

Mr. Sato said the elimination of tariff and non-tariff barriers could have benefits beyond increased trade and influence the social development of lesser-developed countries, adding that aid-for-trade initiatives were particularly important in that regard.  TICAD promoted infrastructure improvements to benefit trade and development in African countries, and Japan was hosting many events aimed at building on the results of UNCTAD XII.

Agreeing that regional and bilateral trade agreements involving developing countries were crucial for mutual development, Mr. Al Dheeb said the lack of good transportation infrastructure was often an obstacle to trade with poorer countries.  The elimination of such obstacles, as well as tariff barriers would ensure greater South-South trade.

The important thing in that regard was investing in poorer countries, said Mr. Korolec, agreeing that eliminating non-tariff barriers was also important.  Trade in services was another important consideration, particularly services that could help those countries build up their communications, finance and transport infrastructure.  The European Union could provide a good model for competition and anti-dumping policies.

Mr. Rosales said that, in the future, the dominance of South-South trade would require new approaches to developing countries.  While there were only minimal economic ties linking Latin American and African countries, both regions had extensive ties with the Asian giants, which wielded similarly extensive power with the industrialized nations.  However, Latin America, the Caribbean and Africa must integrate better with the Asia Pacific region.  UNCTAD could assist in increasing and improving relations among those regions.

Mr. Sok said the International Trade Centre was engaged in a host of “matchmaking” ventures across the developing world.  Its South-South Trade Promotion Programme aimed to generate new trade and investment transactions between enterprises in developing countries and those in transition economies.  It also sought to generate new trade flows and trade-related business arrangements.

He said the International Trade Centre aimed to support and promote intra-Africa trading opportunities and help African enterprises take advantage of them.  On the margins of UNCTAD XII, the Centre had just launched a programme that brought together African women designers from across the continent to share their expertise and map out partnerships or plans to raise awareness about and expand trade in their designs.

Mr. Tall said that G-NEXID’s support for rapidly increasing trade between developing countries by providing expanded financial services to spur and stabilize economic growth had been growing spectacularly over the past decade.  In 2006, South-South trade had accounted for some 17 per cent of world trade, and, if current trends held, nearly half of all developing-country trade would be carried out between Southern partners by the end of the decade.

With that in mind, G-NEXID would aim to boost bilateral and multilateral agreements of all kinds among export-import banks and development-finance institutions based in developing countries, he said.  Such cooperation was expected to reduce the costs of trade between the world’s poorer nations, spurring investment across borders and making finance more readily available to new and innovative businesses, thus enabling the growth of “niche markets”.  The newly established network would also allow developing countries to learn from each other and share effective practices for entering new markets, financing non-traditional goods and services, and establishing risk-sharing investment methods.

UNCTAD XII will continue at 10 a.m. tomorrow with an interactive panel discussion on “Harnessing knowledge and technology for development”.

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For information media • not an official record