Upon sharing with all of you the message of the Secretary-General of the United Nations, I am honoured to complement it with some of my own observations on South-South cooperation in trade and finance.
The economic and social backdrop to the South Summit in 2000 was far more favorable than that faced by the South today. After experiencing lackluster growth since 2000, particularly after 2001, the world economy is expected to enjoy more robust growth in 2004. Current United Nations estimates indicate that the growth of developing countries is likely to accelerate from 3.8% in 2003 to 4.7 % in 2004. Still, three years of poor performance of the world economy have affected the possibility of achieving the first millennium development goal of cutting by half the proportion of people below the poverty line by 2015.
Economic performance and prospects vary greatly between the regions of the South. South and East Asia have fared particularly well, whereas Africa and Latin America and the Caribbean have tended to fall behind. Furthermore, growth is unevenly distributed within each region and within countries.
For this growth to be shared by all countries of the South and by all people in our countries, great efforts must be made, first of all, to reform the global trading system, by effectively implementing the Doha Round of multilateral trade negotiations, so that more developing countries can gain access to global markets, particularly in those areas where they have strong comparative advantage, such as agriculture and standardized manufactures. Moreover, success in this area requires that the “Development Round” be recognized not as just another round of mutual concessions but rather as a universal effort to ensure that the opportunities for development are greatly increased and the international trading system is made more equitable.
Significant efforts must also be undertaken to reverse the negative financial transfer that has affected the developing world for every single year since the start of the Asian crisis. Incomplete data indicates that in 2003 such negative transfer was similar to that of 2002, when it reached $192 billion. This requires a thorough transformation of the international financial architecture, as called for in the Monterrey Consensus, to guarantee that it becomes development friendly.
Despite the limitations of the global architecture, South-South cooperation, through trade agreements and regional financial cooperation, can help speed up growth and promote equity. South-South regional trade agreements such as ASEAN, the South African Development Community (SADC), MERCOSUR, the Andean Community and CARICOM have expanded considerably in the past decade. Globally, as of December 2002, some 255 regional trading had been notified to the WTO.
Similarly, the financial crises of the 1990s have re-energized South-South efforts to promote regional cooperation aimed at greater financial stability. Regional initiatives, some of which are long-standing, such as the Latin American Reserve Fund and the Arab Monetary Fund, are important complements to the global cooperative framework.
For example, in May 2000, 10 ASEAN members plus China, the Republic of Korea and Japan adopted the Chiang Mai Initiative. The ASEAN+3 countries proposed to strengthen regional cooperation through an expanded network of swap facilities among their central banks, a strengthened regional policy dialogue and cooperation in the monitoring of key financial variables, including short-term capital flows, through early warning systems. Similarly, in the Latin America and Caribbean Region, efforts are being made in different subregional arrangements to define common goals for macroeconomic coordination.
The possibilities of South-South cooperation are evident in initiatives such as the Andean Development Corporation, the most dynamic multilateral development bank in the Latin American and Caribbean region, and the Arab Fund for Economic and Social Development. These examples, as well as existing cooperation in the monetary area, indicate that international financial institutions entirely owned by developing countries can make a significant contribution to the international financial architecture.
In coming years, South-South cooperation should encourage efforts to supplement global financial institutions with regional arrangements. These arrangements offer significant opportunities for macroeconomic consultation and coordination, monitoring financial vulnerabilities, better fine-tuning of policy approaches to regional realities, and for providing development financing and financial support to participating countries in times of crisis. The international community, for its part, has to find ways for global and regional economic cooperation frameworks to interact, both through the support of global institutions to the development of regional arrangements as well as through partnerships.