WORLD ECONOMY DID NOT LIVE UP TO EXPECTATIONS, DESAI SAYS AS SECOND COMMITTEE STARTS GENERAL DEBATE

30 September 2002
GA/EF/2995

WORLD ECONOMY DID NOT LIVE UP TO EXPECTATIONS, DESAI SAYS AS SECOND COMMITTEE STARTS GENERAL DEBATE

30/09/2002
Press ReleaseGA/EF/2995

Fifty-seventh General Assembly

Second Committee

2nd Meeting (AM)

WORLD ECONOMY DID NOT LIVE UP TO EXPECTATIONS, DESAI SAYS

AS SECOND COMMITTEE STARTS GENERAL DEBATE

However, Under-Secretary-General Notes Emergence of New Multilateralism

The global economy had performed worse than had been expected a year ago, although a revival was forecast for 2003, said Nitin Desai, Under Secretary-General for Economic and Social Affairs, as he opened the general debate of the Second Committee (Economic and Financial) this morning.

Noting a serious deficiency in domestic demand in such countries as Japan and the United States, he said asset prices had fallen, which could have a severe effect on consumer spending in general.  Other countries were facing large trade imbalances, issues of corporate governance, huge debts and the adverse effects of several natural disasters.

He said many had felt at the time of the 11 September terrorist attacks on the United States that the world would focus more on fighting terrorism over the past year than on economic development.  However, international events devoted to economic development had been held and a new multilateralism had emerged.

Denmark’s representative, speaking on behalf of the European Union, said the Millennium Declaration was the overarching policy framework for economic and social work in the United Nations.  The Millennium Development Goals and other internationally agreed development goals, including those most recently adopted in Johannesburg, provided concrete economic, social and environmental targets.  Their implementation could not wait, she added.

The Second Committee, she stressed, must see that its efforts –- in macroeconomics, sustainable development, operational activities or conference follow-up –- focused on achieving policy coherence and supporting implementation at the country level on the basis of nationally owned development frameworks.

Venezuela’s representative, speaking on behalf of the “Group of 77” developing countries and China, said that in the present time of economic difficulty, imaginative new approaches should be sought to channel development efforts.  Developed countries should enact timely and appropriate macroeconomic policies to ensure stability and economic growth.

Barriers against development intensified the immense difficulties faced by the least developed countries (LDCs) and middle-income countries, he said.  An

international spirit of resolve was needed for the adoption of measures that would allow LDCs to achieve sustainable growth, which should recognize the fundamental role of national governments.

Malaysia’s representative said that the lopsided economic relationship between North and South must be corrected and anchored on the bedrock of a genuine and mutually reinforcing partnership.  Achieving sustainable development meant harmonizing the entire relationship between developing and developed countries, not merely good governance.  Trade was a vital component to achieving sustainable development, he added, noting that developing countries were disenchanted with the current multilateral trade system, which operated to their disadvantage.  Structural policies should lead to reduced trade barriers and an end to subsidies in the North, which caused trade distortions in the South, he said.

Also speaking this morning were the representatives of Mexico, South Africa, Samoa (on behalf of the Association of Small Island States), Egypt, India and Guatemala.

The Committee will meet again at 3 p.m. today, when it will continue its general debate.

Background

The Second Committee (Economic and Financial) met this morning to begin its general exchange of views.

Statements

NITIN DESAI, Under Secretary-General for Economic and Social Affairs, noting that world economies had not progressed as well as had been expected a year ago, said that a certain degree of recovery had occurred in industrial economies, but was still prone to destabilizing events.  There was a serious deficiency in domestic demand in countries like Japan and the United States.  Most economic assessments had been revised downward from a year ago, although some revival was forecast for next year.

The world had probably not seen the consequences of the fall in asset prices, which could have a severe effect on consumer spending, he continued.  The international community was also facing various other economic problems, such as large trade imbalances, issues of corporate governance, debt and the adverse economic effects of a large number of natural disasters.  It was important for the United Nations to keep in mind the substantial economic uncertainty in the world.  Many had felt at the time of the 11 September terrorist attacks that the world would focus more on fighting terrorism than on economic development, he continued.  However, economic activities and events had been held and had accomplished much of what they were meant to achieve.

Also, through the course of various conferences over the past year, a new multilateralism had been set in motion, he said.  Noting that a certain distinction had been drawn in the past between multilateralism and economic and development cooperation, he said the multilateral system operated according to a set of rules, negotiating and managing projects outside the United Nations proper.  Economic and development cooperation, on the other hand, was an instrument to handle a substantive agenda -- a framework for development of goals, policies and overseas development assistance.  The distinction between the rule-oriented multilateral system and so-called economic and development cooperation was fuzzy.  Economic and development cooperation had moved beyond its initial voluntary framework, and many of its programmes were now viewed as the only legitimate basis for international and national cooperation.

He said that United Nations conferences over the last decade had not just been trying to flesh out economic and development cooperation, but were also trying to reorient the multilateral system, he said.  The international community was moving towards a point where economic goals could not be termed only within the rules of multilateral action.  The obligations of a country could not be defined simply in terms of economic conformity, but must also be seen in terms of the impact of market-based finance.  Over the past year, the international community had come closer to that type of convergence between the multilateral system and economic and development cooperation.

A single characteristic of the Monterrey International Conference on Financing for Development was that it had sought to change the way the world looked at international financial system, he went on.  As recently as four years ago, macroeconomic policy coordination had been seen as a remit of institutions outside the United Nations, such as the International Monetary Fund (IMF) and the World Bank.  Few had thought it would be possible to hold a major conference on financial development under the auspices of the United Nations.  However, the Monterrey Conference had taken place and it had now been recognized that the Organization could take part in issues of macroeconomic policy coordination.

New issues had recently come up in the area of macroeconomics, he said.  For example, there was a growing interest in clarifying the relationship between trade and investment.  The world was painfully aware of the consequences of financial instability, corporate governance issues and accounting.  There were technical fora to deal with those issues, but the General Assembly had an important role to play from the point of view of ensuring policy coherence, he stressed.

VICENTE VALLENILLA (Venezuela), speaking on behalf of the “Group of 77” developing countries and China, said that the United Nations had inaugurated the century and millennium with a lofty commitment to combat poverty around the world.  In this time of economic difficulty, imaginative new approaches should be sought to channel development efforts.  Within the developing world, as in the world as a whole, efforts should be made to prevent terrorism and conflict, the alienation of civil society and the undermining of institutions and movement towards counter-development.

Acknowledging that the current worldwide economic situation was unfavourable to all, he pointed out that barriers against development intensified the immense difficulties faced by the least developed countries (LDCs) and middle-income countries.  Those must be overcome so that the present disparities did not become permanent.  In that regard, developed countries should enact timely and appropriate macroeconomic policies to ensure stability and economic growth.  There was a need for a spirit of resolve in international partnership and for the adoption of measures designed to allow the LDCs to achieve sustainable growth.  In that, the fundamental role of national governments in economic development should be recognized.

The continued inequitable distribution of the benefits of globalization would perpetuate problems, he said.  Measures were needed to ensure the full and effective participation of developing countries in all the benefits of globalization, including access to the decision-making process in resolving world economic problems.  It was fundamentally important to place the needs and interests of developing countries on the agenda of the World Trade Organization (WTO) and to facilitate their entry on a fair and reasonable basis.  The process of reform and liberalization of trading policies must be maintained in order to encourage development and economic growth.  It was also important to improve market access through reductions in tariffs and to eliminate tariff peaks and escalation, as well as protectionist barriers to trade.

ELLEN MARGRETHE LOJ, (Denmark), speaking on behalf of the European Union, said the Millennium Declaration constituted the overarching policy framework for the economic and social work of the United Nations.  The Millennium Development Goals and other internationally agreed goals, including those most recently adopted in Johannesburg, provided the concrete, measurable targets in the economic, social and environmental areas, and their implementation could not wait.  Leadership must come from the United Nations in concert with other stakeholders, including the Bretton Woods institutions and the WTO.

The agenda of the Second Committee should be consolidated to reflect the positive impetus from the Millenium Declaration and the United Nations conferences in Monterrey and Johannesburg, she continued.  The Committee should bring together several resolutions in a concise and focused manner and rethink its working methods in order to strengthen the implementation of conference outcomes, help avoid overlap and enhance coherence in its policies.  The macroeconomic area would be the obvious area to begin those efforts, since the Committee would be preparing the substance for next spring’s meeting of the Economic and Social Council and the General Assembly High-Level Dialogue on Financing for Development.

She said the Committee must see that its efforts –- be they in macroeconomics, sustainable development, operational activities or conference follow up –- focused on achieving policy coherence and support implementation efforts at the country level on the basis of nationally owned development frameworks.  It should also reiterate its strong support for the New Partnership for Africa’s Development (NEPAD) as an overarching integrated policy framework for African efforts towards the realization of its goals.  A second, complementary, task was to secure a coordinated and integrated conference follow-up.

ADOLFO AGUILAR ZINSER (Mexico) said that the international community’s fundamental task should be to implement the sustainable development agenda that had emerged from the Millennium Summit, the Doha round, the Monterrey Conference and the Johannesburg Summit.  In that context, transparent indicators of compliance were needed that would clearly show whatever progress or backward movement had been made.  Also, the goals set at those conferences, and the means provided for achieving them, should be commensurate.

Recalling that the international community had agreed at Monterrey to handle key development issues jointly, he said that the Monterrey Consensus provided a guide for the kind of global economic governance required to ensure that globalization worked for all.  The first step had been taken in forging a global partnership in financing for development.  The United Nations would have to play an important role, with the fight against poverty having the Organization’s priority attention in partnership with the Bretton Woods institutions, the WTO and regional organizations.

He said the United Nations required more modern and flexible mechanisms to translate commitment into action.  One key priority of the Second Committee should be activating the follow-up mechanism to the Monterrey Conference.  That required relaunching the General Assembly High-Level dialogue, whose strategic partnership of efforts had provided the added value of Monterrey.  The broadest possible mobilization of leadership was required for that relaunch and appropriate roles for civil society and the private sector should also be envisaged.

The need to improve the working methods of the Second Committee was also of priority, he said.  The possibility of consolidating resolutions into single, more political, substantive resolutions should be explored.  That would ensure that the United Nations message was consistent with those of Monterrey and the other conferences and assist in the revitalization of the General Assembly.

JEANETTE NDHLOVU (South Africa) said 2002 had been an interesting year, especially in the context of the development agenda, with the holding of the Monterrey Conference and the Johannesburg World Summit.  The commitments that had emerged from those events built on the goals and targets that the international community had agreed on in international conferences held during the 1990s and at the Millennium Summit.  It was crucial to ensure their timely implementation and that the momentum was maintained.

In Johannesburg, she said, the international community had reaffirmed the importance of providing the means of implementation.  There was a realization that sustainable development could not be a reality without capacity-building, technology transfer, financial resources and changes in the terms of international trade.  The true test would be in implementing the outcomes that had been agreed.  The Summit also showed the importance of collaboration between governments and major groups in the implementation of sustainable development.

She said the past year had also witnessed new developments in Africa, namely the inauguration of the African Union and the adoption of NEPAD.  The South African delegation’s engagement in the work of the Second Committee would largely be guided by the priorities and objectives of NEPAD.  Poverty and underdevelopment were not unique to Africa but affected the developing world at large.  Thus, South Africa was determined to show solidarity with and the requisite support for the needs of other developing countries.

TUILOMA NERONI SLADE (Samoa), speaking on behalf of the Alliance of Small Island States (AOSIS), said that despite international recognition of the special situation of small islands and their responsibilities as custodians of vast ocean spaces, the past decade had shown that the approach to date had not been working to the scale necessary for sustainable development.  Achievements had been neither sustained nor directed to the areas of greatest need.  That was why small island developing States had focused on concrete actions and specific initiatives for the “next steps”.

With regard to the Johannesburg Plan of Action, he said the specific Chapter VII on the sustainable development on small island developing States was especially welcomed by all the AOSIS countries as it underscored the importance of the Barbados Programme of Action that was so critical for the sustainable development of the small island States.  Of particular importance was the agreement on a full and comprehensive review of the implementation of the Programme in 2004 and the recommendation that the General Assembly consider at its fifty-seventh session the convening of an international meeting for the sustainable development of small island developing States.

He said that global environmental degradation was a principal driving force, exacerbated by urbanization, population, poverty, shortcomings in policies and governance and the other pressures that small island States shared with all developing countries.  Describing the problem as “more urgent”, he said the evidence from studies by the United Nations Environment Programme (UNEP) and others pointed to a steady, sometimes serious, decline in environmental quality for all small-island regions.

On climate change, he said that most formidably for small-island countries, that was an additional problem that went directly to the roots of their sustainability.  The problem for small-island communities was understated and seriously underestimated by the international community.  Small-island countries looked to the international community for urgent and meaningful action as the problem was not one of their making.  “It is not right that we bear the greatest burden.  We need serious and intensified efforts on adaptation measures to minimize the vulnerabilities of our communities and to assist the small and low-lying island countries that are already in danger,” he added.

IHAB GAMALELDIN (Egypt) said that eradication of poverty and sustainable development were joint responsibilities to be shouldered by both northern and southern countries.  International efforts in that respect must be based on the fact that globalization was leading to challenges arising from worsening levels of income and grave fluctuations in trade and investment.  Current imbalances in wealth were exacerbated by the absence of democracy in several countries, as well as the preservation of coercive trade and monetary policies giving rise to recurrent financial crises, which at times led to the collapse of economies in many developing countries.

That developing countries did not make the necessary use of globalization was mainly due to sources of structural imbalance in the international economic system, he said.  Recent experience had shown that integration in the world economy was not a magic solution conducive to development.  Local and national measures must be adopted to bolster the effectiveness of international institutions as well as governance at the national level.  Those measures should be given priority on the international agenda.  Joint international action should achieve harmony and integration between United Nations policies and those of the Bretton Woods institutions and the WTO.  Without that harmony, the international community's efforts would continue in a vicious cycle divorced from the goals of international conferences and the United Nations Charter.

He said the time would come when it became evident that recurrent United Nations resolutions in the economic field were not actually being implemented.  Those resolutions should not remain mere moral commitments that may be adopted or more often ignored and circumvented, threatening the credibility of multilateral cooperation.  The sharp fall in resources for operational activities at the United Nations was a case in point.  Developed countries should transfer technology and extend technical assistance to the countries of the South, he stressed.

V.K. NAMBIAR (India) said the international community had yet to commit sufficient funds to meet the Millennium Development Goals of poverty eradication and sustainable development set forth during the recent Johannesburg World Summit and the Monterrey Conference.  Those goals, including the halving of world hunger by 2015, required $24 billion annually.  India was including sustainable development as a top priority in development strategies and goals.  Other developing nations should do the same, and developed nations should support those efforts.  However, at last month’s World Summit, developed nations had pledged a mere $235 million for development programmes and environmentally sound technology transfer.

He said the global economic slowdown had significantly impeded the growth of exports from and the flow of foreign direct investment into developing countries last year.  Multilateral trade, as well as monetary and financial institutions must work to reverse that trend.  For example, future WTO negotiations must include pending issues of great concern to developing nations -- sufficient market access for agriculture, textile and clothing exports; and the removal of subsidies, tariffs and other protectionist measures used by developed nations.  Labour and environmental issues should be included in trade liberalization agendas, he added.

JOSE ALBERTO BRIZ-GUTIERREZ (Guatemala), associating himself with the “Group of 77” developing countries and China, said the significance of Monterrey and Johannesburg lay in the respective agreements and in their preparatory processes, whose novel arrangements for participation among all the interested parties should be kept in mind.  From Guatemala’s perspective, it was the beginning of a process that should be characterized by a high degree of coordination and coherence at the

intergovernmental, governmental and inter-institutional levels.  The most important task in coming months would be to assist in effectively implementing and following up the commitments made at both conferences.

He welcomed every effort to rationalize the work of the Second Committee, including the simplification and improvement of its methods of work, and the achievement of greater flexibility in its organization of work.  Certain interrelated items of the agenda should be consolidated, especially those addressed in the Monterrey Consensus.  That would do much to retain the holistic spirit of that document.  The volume and low quality of reports was also of concern; it seemed that attempts to deal specifically with various items kept the reports from being as condensed and yet as comprehensive as they should be, he noted.

DATUK WIRA ABU SEMAN YUSOP (Malaysia) said that financing for development and achieving sustainable development had been discussed extensively in the last two years, but concern remained about follow-up actions and the fulfillment of the promises and pledges made during international meetings.  The international community must look critically at what was required for implementation and muster the necessary political will to translate ideas and proposals into actions.  Having addressed the priority issues of poverty, inequality and environmental degradation, now was the time for the international community’s vigorous implementation of the Monterrey and Johannesburg summits.

Emphasizing the importance of the central role of the United Nations in the deliberations and decisions of the global development agenda, he said it should serve as a forum and mechanism for attaining the common good of all Member States, not just the rich and powerful.  It should be involved more deeply in development efforts, with an efficient operational and delivery capacity, and demonstrate an ability to coordinate at the macroeconomic level.  In an interdependent world, the development and environmental crisis should be addressed collectively, comprehensively and with a sense of urgency.  The lopsided relationship between North and South must be corrected and anchored on the bedrock of a genuine and mutually reinforcing partnership.  Achieving sustainable development required the harmonization of the entire pattern of relationships between developing and developed countries, not merely good governance, he added.

Pointing out that trade was a vital component in achieving sustainable development, he said the developing countries were disenchanted with the current multilateral trade system, which operated to their disadvantage.  Market access for the products of developing countries must be facilitated, while tariff peaks and escalations should be reduced.  Structural policies should lead to a reduction in trade barriers and an end to subsidies in the North, which caused distortions of trade in the South.  To give full effect to the implementation of the Monterrey Consensus, the Johannesburg Plan of Action and other outcomes of United Nations summits, a renewed spirit of international cooperation was needed.  The North and South needed to break out of the divide that had polarized their relationship.

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For information media. Not an official record.