GLOBAL FINANCIAL CRISIS MUST GENERATE STRONGER REGULATION TO CONTAIN SPECULATION, INSTABILITY, PRESIDENT OF TRADE AND DEVELOPMENT BOARD TELLS SECOND COMMITTEE

5 November 2008
GA/EF/3228

GLOBAL FINANCIAL CRISIS MUST GENERATE STRONGER REGULATION TO CONTAIN SPECULATION, INSTABILITY, PRESIDENT OF TRADE AND DEVELOPMENT BOARD TELLS SECOND COMMITTEE

5 November 2008
General Assembly
GA/EF/3228
Department of Public Information • News and Media Division • New York

Sixty-third General Assembly

Second Committee

25th & 26th Meetings (AM & PM)

GLOBAL FINANCIAL CRISIS MUST GENERATE STRONGER REGULATION TO CONTAIN SPECULATION,

INSTABILITY, PRESIDENT OF TRADE AND DEVELOPMENT BOARD TELLS SECOND COMMITTEE

The current financial crisis must lead to strengthened financial supervision and regulation in order to contain speculation and financial instability, Debapriya Bhattacharya, President of the Trade and Development Board, told the Second Committee (Economic and Financial) today.

As the Committee took up international trade and development, he said there was also a need for an effective multilateral framework for exchange-rate management and an internationally coordinated macroeconomic policy response to prevent a global recession.

Introducing the Board’s report for the Committee’s consideration, he stressed that while specific measures were needed, they must fit into an overall vision.  Refashioning the global financial system must be a global effort, with the participation of all countries under United Nations auspices.  There was a need to ask what a “Bretton Woods II” would mean, and whether that was what was required.  It was also necessary to take advantage of the upcoming International Conference on Financing for Development to Review Implementation of the Monterrey Consensus in addressing the impact of the financial crisis on development financing.

The Board encouraged a loosening of monetary policies, and countries with current account surpluses should seek to boost domestic demand to compensate for falling demand in the United States, he said.  Banking system reform was required in many developing countries, particularly poor ones, and should aim to raise the volume of credit for productive investments, especially for small- and medium-sized firms and the agricultural sector.

Introducing another report of the Secretary-General, Lakshmi Puri, Acting Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), said trade had become a major source of development finance and, in many developing countries, accounted for more than 50 per cent of gross domestic product.  Against that positive background, however, the global food, fuel and financial crises threatened to reverse hard-won development gains, and had the potential to affect negatively the productive and infrastructure capacities of developing countries in particular, as well as attainment of the Millennium Development Goals.

As the global financial system was experiencing a meltdown, finance –- the lifeblood of economic transactions and global trade and investment -– was being squeezed, with negative repercussions for economic growth, she said.  The recent crises had underlined what UNCTAD had been advocating for many years -– the need for effective global governance and rules in the financial and monetary systems.  The governing structures and processes in the financial and monitoring areas should be informed by the full participation of developing countries in agenda-setting, decision-making and rule-making, and the United Nations had an important role in facilitating that.

In the ensuing debate, the representative of Bangladesh, speaking on behalf of the Least Developed Countries, called for urgent action to avoid the unravelling consequences of the current global challenges on the socio-economic progress of the past decade.  Since development was at the heart of the Doha Round of World Trade Organization negotiations, the interests and difficulties of the least developed countries, as the world’s most vulnerable group, should be considered in efforts to integrate those countries into the multilateral trading system.  Developed countries that had not already done so should provide immediate, predictable, duty- and quota-free market access on a lasting basis to all products originating from all least developed countries, even before the conclusion of the Doha Round.

Calling for a successful conclusion to the Doha Round, Jamaica’s representative, speaking on behalf of the Caribbean Community (CARICOM), urged major negotiating parties to show flexibility, engage constructively and mobilize the political will to facilitate a successful conclusion while renewing their commitment to a well-functioning, rules-based, open, equitable, predictable and non-discriminatory multilateral trading system that would promote development and recognize the diversity in levels of development and sizes of economies.  CARICOM remained concerned that the continuing failure to conclude the Round would further fragment the international trading system, given the increasing proliferation of bilateral and regional trade arrangements.

In other business, the Committee took action on several draft decisions relating to the forthcoming Doha Review Conference, specifically arrangements and organization of work; the provisional rules of procedure; the provisional agenda; and accreditation of intergovernmental and non-governmental organizations.

The representative of Antigua and Barbuda introduced, on behalf of the “Group of 77” developing countries and China, a draft resolution on international trade and development.

In addition, the Committee decided to revert to the agenda item on revitalization of the General Assembly’s work before the Committee concluded its work on 26 November.  It also decided to keep the agenda item on programme planning open until that date.

Other delegates speaking today were representatives of Antigua and Barbuda (on behalf of the Group of 77 and China), United States, China, Sudan, Colombia, Russian Federation, India, Myanmar, Morocco, Belarus, Brazil, Ecuador, Botswana, Thailand, Pakistan, Libya, Venezuela and Kuwait.

Representatives of the European Commission (on behalf of the European Union), United Nations Industrial Development Organization, and the Food and Agriculture Organization also made statements.

The Second Committee will meet again at 10 a.m. on Tuesday, 18 November, to take action on pending draft resolutions.

Background

The Second Committee (Economic and Financial) met to consider macroeconomic policy questions, including international trade and development; the international financial system and development; external debt and development:  towards a durable solution to the debt problems of developing countries; commodities; revitalization of the work of the General Assembly; and programme planning.

Committee members had before them an advance version of the Report of the Trade and Development Board on its forty-third executive session (document A/63/15 (Part I)) -- held at the United Nations Office at Geneva on 3 March 2008 -- which includes the Secretary-General’s special address on that day.  Also before members was the Report of the Trade and Development Board on its twenty-fourth special session (document A/63/15 (Part II)), held in Geneva from 17 to 20 March 2008.

The Committee also had before it the Report of the Trade and Development Board on its forty-fourth executive session (document A/63/15 (Part III)), which discusses activities undertaken by the United Nations Conference on Trade and Development (UNCTAD) in favour of Africa.

According to the report, UNCTAD’s Secretary-General said that in the next four years the work of the Conference would be oriented towards growth and trade integration.  He identifies the following areas as key to African development strategies:  investment, particularly in light of Africa’s extremely limited share of global foreign direct investment; productive capacity; infrastructure; agriculture; inclusive growth; and harnessing knowledge, particularly in science and technology.

Also before the Committee was the Report of the Trade and Development Board on its fifty-fifth session (document A/63/15 (Part IV) -- held in Geneva from 15 to 26 September 2008 -- which reviews progress in implementing the Brussels Programme of Action for the Least Developed Countries for the Decade 2001-2010, as well as UNCTAD’s technical cooperation activities and their financing.  It also discusses economic development in Africa, with an emphasis on trade liberalization and export performance.

Committee members also had before them a note by the Secretary-General transmitting to the General Assembly the Report of the United Nations Conference on Trade and Development on its twelfth session (document A/63/168), held in Accra, Ghana, from 20 to 25 April 2008.

Also before Committee members was a report by the Secretary-General on International trade and development (document A/63/324), which reviews recent developments in international trade and the trading system, especially negotiations under the Doha Round of World Trade Organization negotiations and their implications for developing countries.

The report states that the Doha Round and the multilateral trading system stand at a critical juncture as the recent informal “mini-ministerial” meeting of the World Trade Organization failed to set the basis for concluding the Round this year.  Particular attention is paid to the links of trade and the trading system with the achievement of internationally agreed development targets, particularly the Millennium Development Goals, and to persistent and emerging global economic challenges.

According to the report, halfway to the 2015 target year for meeting the Millennium Goals, current global economic realities -– the financial, food, fuel and energy crises, as well as climate change and migration -– pose challenges for the development prospects of developing countries.  The international trading system can make an important contribution by addressing global challenges affecting real economies and human needs, although it cannot solve the problems on its own.  The multilateral trading system continues to be the cornerstone of global trade governance, but it must operate within a broader system of global economic governance.  Greater coherence across different layers and systems of global economic governance is therefore essential.

Also before the Committee was a Letter dated 6 October 2008 from the Permanent Representative of Namibia to the United Nations addressed to the Secretary-General (document A/C.2/63/3), which transmits the Windhoek Ministerial Declaration on Development Cooperation with Middle-Income Countries, adopted at the Third International Conference on Development Cooperation with Middle-Income Countries, held in Windhoek from 4 to 6 August 2008.

Introduction of Reports

LAKSHMI PURI, Acting Secretary-General, United Nations Conference on Trade and Development (UNCTAD), introduced the Secretary-General’s report on international trade and development (document A/63/324), saying that since it was prepared in August, the world economy and the developing countries had had to weather a number of crises.  The world was now on the threshold of what might be a prolonged slowdown, if not a recession.  That had major implications for international trade and development, for the development prospects of developing countries -– particularly the least developed ones -– and for the timely attainment of internationally agreed development targets.

The trade and development crisis and reversals encountered in 2008 had come after a sustained period of buoyant growth in world output, led by developing countries in Asia, Africa and Latin America, she said.  Trade had become a major source of development finance and, in many developing countries, accounted for more than 50 per cent of gross domestic product.  Against that positive background, the food, fuel and financial crises threatened to reverse hard-won development gains from trade, and had the potential to have a negative impact on the productive and infrastructure capacities of developing countries in particular, as well as the attainment of the Millennium Goals.  The perverse interaction among the food, fuel and financial crises, and the resulting adverse impact on trade and development in developing countries was a matter of particular concern.

As the global financial system was experiencing a meltdown, finance –- the lifeblood of economic transactions and global trade and investment -– was being squeezed, with negative repercussions for economic growth, she continued.  Anecdotal evidence and trends monitored by UNCTAD indicated falling consumption and demand in developing countries and in the “regional and global dynamos of the South”.  That would have an effect on the production and export of the commodities, manufactured goods and services of most developing countries.  It had also become very clear that there could be no real decoupling of developing countries from the crisis in the developed-world financial markets.  However, it was apparent that developing countries would be affected in different ways, depending on the degree of their exposure to the financial markets, their international trade and investment linkages, their current account positions, their economic structures and their institutional solidity.

A number of lessons could be distilled from those experiences in looking ahead at strategic trade and development policies, she said.  The multilateral trading system must be maintained and strengthened.  Although it could not solve all developmental challenges on its own, it did make an important, necessary contribution in the medium- to long-term to addressing such challenges.  The Doha setback should be seen as temporary, and every effort must be deployed by World Trade Organization members to re-engage in the negotiations and deliver the Round’s development promise.

She said the recent crises had underlined what UNCTAD had been advocating for many years -– the need for effective global governance and rules in the financial and monetary systems.  The governing structures and processes in the financial and monitoring areas should be informed by the full participation of developing countries in agenda setting, decision-making and rule-making.  The United Nations had an important role in facilitating that.

DEBAPRIYA BHATTACHARYA ( Bangladesh), President, Trade and Development Board, then introduced that body’s report (document A/63/15, Parts I through IV), saying there was broad agreement that the current financial crisis must lead to strengthened financial supervision and regulation in order to contain speculation and financial instability.  It also required an effective multilateral framework for exchange-rate management and an internationally coordinated macroeconomic policy response to prevent global recession.

He said the Board encouraged a loosening of monetary policies, and countries with current account surpluses should seek to boost domestic demand in order to compensate for falling demand in the United States.  Higher investment did not necessarily require a prior increase in household savings.  It could be financed through corporate savings and bank credit.  Banking system reform was required in many developing countries, particularly poor ones.  The aim should be to raise the volume of credit for productive investments, especially for small- and medium-sized firms and the agricultural sector.

Lending by development banks, Government guarantees for strategic investment projects and public-private co-financing could help improve access to investment finance and reduce its costs, he said.  During consultations on 6 October, the Board had warned that the widening financial crisis was complex.  It would impact trade, currencies and the investment prospects of the world’s less advanced nations.  The impact on developing countries could be much deeper than anticipated, and it was necessary to act quickly, but not hastily.

Specific measures were needed, but they must fit into an overall vision, he stressed.  There was a need to ask what a Bretton Woods II meant and if that was what was needed.  Refashioning the global financial system must be a global effort, with the participation of all countries under United Nations auspices.  There was a need to take advantage of the Doha Review Conference in addressing the impact of the financial crisis on development financing.  The Board would hold an executive session on 13 November to see how it could assist developing countries more effectively in the light of the financial crisis.

The food crisis should not be approached as a short-term emergency problem, but as a long-term development failure, he warned.  The Board had concluded that developing countries should be helped to enhance food production capacity and the needs of small farmers, with a focus on sustainable agricultural production.  Official development assistance for agriculture should be increased to address emergency and long-term agricultural production constraints.  That was particularly important since assistance to support agriculture had fallen from an annual average of about $7.5 billion in the 1980s to about half that amount in the period of 1995 to 2005.  A rapid-response facility should also be set up to help the worst-affected developing countries.  Renewed efforts were needed to mitigate commodity and fuel price volatility, especially diversification and industrialization through higher investment in economic infrastructure and productive capacities.

He said the Board had also concluded that the Doha Round must be concluded with a significant development package; that Governments would continue to be major investors in infrastructure; that development in least developed countries remained a key priority; and that the adoption and implementation in Africa of national development strategies that included supply-side sectoral measures such as incentive packages, productivity promotion and institution reform was very important.

He said Board members had expressed alarm over the cycle of “de-development” in Palestine, calling for a correction of occupation-related economic distortions, the rebuilding of productive capacity and increased donor support, as well as the empowerment of Palestinian policymakers with more policy space and tools to implement the fiscal, monetary, trade and exchange-rate policies needed to revive the Palestinian economy.

Discussion

The representative of Bangladesh asked about the current status of the World Trade Organization negotiations and the reasons for the collapse of the July meeting.  Was there any indication of a quick return to the negotiating table?

Ms. PURI responded by saying that the issues involved in the Doha negotiations spanned a number of areas, but immediate causes of the collapse in terms of disagreement were the special safeguard mechanism, for example, and the related policy space.  However, there were a number of other unresolved issues, some of which had not even been discussed at the meeting, and which might not have found resolution.  Therefore, it was difficult to say whether the special safeguard mechanism issue had been the main cause.  Issues were still open in a number of areas.

Mr. BHATTACHARYA said he had been engaged very extensively in the negotiations, and only on the third or fourth day had it become evident that the special safeguard measures would become a divisive issue.  However, other substantive and divisive issues had been present as well, but they had never even been discussed.  The concentric negotiation process did not deliver, the Group of 7 (G-7) did not agree, and that was the sad part of the process.  It was now necessary to try to consolidate what had been achieved at the ministerial meetings, and to seek an adequate process to move forward.

JANIL GREENAWAY (Antigua and Barbuda), speaking on behalf of the Group of 77 and China, said export trade was vital to growth and development in developing countries, in particular the least developed ones, those emerging from conflict and those in Africa.  The combined effects of the food, energy and financial crises had made a significant slowdown in the global economy a certainty in 2008 and recession a real possibility in 2009.  Growth in export trade, particularly the share of developing countries in the export trade, had occurred in spite of, rather than as a result of, global international trade rules.

The international trading system remained unbalanced and trade rules continued to pose significant challenges to efforts by the majority of developing countries to pursue trade-led growth.  The Doha Development Round had stalled, unbalanced rules allowed developed countries to continue paying trade-distorting subsidies, especially in agriculture, and continued to significantly deter developing countries from growing agricultural exports.  Non-tariff barriers and tariff peaks were also a factor.  The Development Round should have ended in 2003 with a strong development focus, as envisaged in the 2002 Monterrey Consensus.

She said the Group of 77 and China, anticipating a major focus and strong recommendations on trade, and in particular the re-start of the Doha Round and schedule for the delivery of development benefits, had agreed to a procedural resolution in the Committee under the agenda item on trade and development.  It was essential to consider and agree on how and where the primary trade-related development objectives of developing countries were best realized.  Without a sound development dimension and a strong development focus on trade, the inequities of the international trading system would continue to stunt achievement of the internationally agreed development goals.

FERNANDO M. VALENZUELA, head of the delegation of the European Commission to the United Nations, spoke on behalf of the European Union noting the timeliness of the discussion on trade and development against the backdrop of severe financial crisis throughout the global economy.  However, the crisis was not an argument against open economies, nor had trade triggered the present crisis.  There were no examples of a thriving closed economy.  Trade and a global trade deal were, in fact, crucial elements in the world’s policy responses to the current situation.

For developing countries, he said, trade was growing faster than the global average, thus bringing the Millennium Development Goals closer to actualization, even in the areas of food and energy which were affected by rapid rises in import costs.  The Monterrey Consensus supported a strategy whereby equitable multilateral trade, combined with trade liberalization, could stimulate development, especially when there were coherent national policies and actions on the part of individual countries.

In preparing for the Doha Review Conference, all Members States were encouraged to recognize the vital role of trade in supporting sustainable development, he said.  “Not all developing countries have been able to benefit equally from trade; and within countries, the benefits of trade have not always been equally shared.  The challenge we face is therefore to work to ensure that these benefits are spread more broadly both between and within countries.”  Achieving the Doha Development Agenda, a top priority for the European Union, offered numerous benefits, including wider duty- and quota-free access for the exports of least developed countries, stronger trade rules in trade defence and trade facilitation, and a strengthening of Aid for Trade to build export and trade capacities.

The European Union was committed to putting trade and the potential of trade at the service of development, he said.  That was clear from its long-standing regional trade agreements and bilateral relationships with developing countries, which aimed to keep enhancing two-way trade flows, while offering support for regional integration and trade expansion.  The bloc would also continue to provide significant non-reciprocal trade preferences on an autonomous basis to developing countries, notably through the generalized system of preferences, and had just adopted a new legal instrument to govern that scheme.  In 2007 the scheme had enabled developing countries to export €57 billion worth of products to the European Union on preferential terms.  With an enhancement of Aid for Trade, developing countries would be able to build an effective supply-side capacity to complete in global markets.

MUHAMMAD ALI SORCAR (Bangladesh), speaking on behalf of the Least Developed Countries, said urgent action was needed in order to avoid the unravelling consequences of the current global challenges on the socio-economic progress of the past decade.  Appropriate policy responses were crucial to overcoming the global crises, and international trade could play a catalytic role in that regard.  The Monterrey Consensus reaffirmed the commitment to undertake meaningful trade liberalization and ensure that trade played its full part in promoting economic growth, employment and development.  Since development was at the heart of the Doha Round, the interests and difficulties of the least developed countries, as the world’s most vulnerable group, should be taken on board in order to integrate those countries into the multilateral trading system.

He said market access conditions for least developed countries should be further improved and made more predictable and sustainable through the elimination of remaining tariff and non-tariff barriers, relaxation of rules of origin, expansion of product coverage, and simplification of administrative procedures in relation to the generalized system of preferences and other market-access arrangements.  Developed countries that had not already done so should provide immediate, predictable, duty- and quota-free market access on a lasting basis to all products originating from all least developed countries, even before the conclusion of the Doha Round.  There should be a clearly defined time frame and procedure for achieving 100 per cent market access for least developed countries, as well as a concrete mechanism to review and monitor implementation of the commitments on market access, including rules of origin.

The elimination of trade barriers was not, on its own, enough for least developed countries because they faced daunting export challenges, often with low tariff barriers, he continued.  Without focused assistance in building trade capacity, other attempts to do so through trade might not yield fruit.  Least developed countries also needed full access to affordable modern technology and know-how.  They called for a binding mechanism to fast-track their accession to the World Trade Organization.  Completion of the Doha Round was critically important, and there was a need for strong political leadership, firm commitment, continued engagement and flexibility on the part of key stakeholders.

RAYMOND WOLFE (Jamaica), speaking on behalf of the Caribbean Community (CARICOM), said the confluence of crises confronting the global economy had generated and exacerbated a heightened level of uncertainty that threatened to further marginalize small island developing States from effectively integrating into the global economy.  Effective participation in the global trading system could significantly bolster efforts by CARICOM members in wealth- and job-creation, poverty alleviation, rural development, and agricultural production and diversification in the overall achievement of internationally agreed development targets, including diversification of the economic base and entry into the value-added component of the production and supply chain.  However, CARICOM members were significantly challenged by such difficulties as subsidies and other trade-distorting measures, non-tariff and technical barriers, as well as scant regard for the principle of special and differential treatment for developing countries.

Concerned about the collapse of the July World Trade Organization talks, he called for a successful conclusion to the Doha Round and urged major negotiating parties to show flexibility, engage constructively and mobilize the political will to facilitate a successful conclusion while renewing their commitment to a well-functioning, rules-based, open, equitable, predictable and non-discriminatory multilateral trading system that would promote development and recognize the diversity in levels of development and sizes of economies.  CARICOM remained concerned that the continued failure to conclude the Round would further fragment the international trading system, given the increasing proliferation of bilateral and regional trade arrangements.

He said the Doha Round should increase effective market access in areas of export interest to the CARICOM region; truly recognize the asymmetries between developed and developing countries that were determined by economic size and supply capacity, as well as by institutional and regulatory capacities; be sensitive to the adjustment concerns resulting from trade reforms and liberalization; and fully support and adopt proposals tabled by the group of small, vulnerable economies.  CARICOM also called for improving multilateral trading rules to enhance fairness and bring equity to the system by reducing and removing trade-distorting agricultural subsidies, and for institutional and regulatory reform.

T. VANCE MCMAHAN ( United States), describing international trade and investment as the most powerful engines of economic growth and development, said it was only through robust economic growth that the Committee could expect to both achieve and sustain the goals set forth in the Millennium Declaration.  The World Bank had estimated that global free trade could lift tens of millions out of poverty.  It was imperative that the Committee maintain its commitment to eliminating barriers to trade in order to expand global economic growth and development.

He said a successful conclusion to the Doha Round negotiations offered the best opportunity to expand the rules-based, open and non-discriminatory multilateral trading system, and facilitate the creation of the meaningful new economic opportunities required to advance development and help alleviate poverty.  Amid the current uncertainty in the financial markets, the world should send a clear signal that it remained committed to open markets and development by reducing barriers to trade across the globe.  For its own part, the United States remained committed to a successful conclusion, and believed a deal could be achieved if all parties wanted it in good faith.  The United States urged every nation to embrace the opportunity to lift up economies around the world and reach a successful Doha agreement as soon as possible.

LIU ZHENMIN (China), associating himself with the Group of 77 and China, said 2008 had seen unprecedented challenges with the financial crisis, drastic commodity-price fluctuations and slowing economic growth, all of which presented formidable hurdles to sustainable development in developing countries.  Against that backdrop, the participation of those countries in global trade would become uncertain, and States should work harder to foster a trade system conducive to development.

Indeed, free trade was a requisite to promoting sustainable development in developing countries, he said, explaining that energizing the Doha Round would both cushion the impact of the financial crisis, and boost business confidence.  At the same time, the Round should remain firmly focused on development, giving real expression to developing-country needs.  China would play a constructive role in facilitating the early resumption of the talks.

He called on all parties to make concerted efforts to implement the Accra Accord reached at UNCTAD XII, strengthen the body’s three pillars, and make its work more effective on the global, regional and national levels.  For its own part, China had, since becoming a World Trade Organization member, honoured its commitments by lowering its average tariff rate to 9.8 per cent and standardizing its foreign trade system, among other measures.  In the future, the Chinese Government would enhance cooperation with other countries to help build a world of common prosperity.

AMAR AHMED IBRAHIM ( Sudan), associating himself with the Group of 77 and China, said globalization had brought the world together into a single entity.  International trade was interdependent in a unified economic system, and all parties must turn globalization into a positive and beneficial factor through policies involving development initiatives aimed at including developing States in the international system in order to achieve their goals while taking into account the continuing evolution of the world economy.  All parties must shoulder their joint responsibility, having passed the midterm point to the 2015 deadline year for meeting the Millennium Development Goals.  Many countries, especially those in Africa, faced major hurdles in their attempts to stay on course.

The global crises exacerbated the challenges facing developing countries, he continued.  The international trade system must produce effective solutions in order to tackle those challenges.  Sudan was genuinely concerned by the failure of the formal ministerial meeting convened by the World Trade Organization in July.  Moreover, agricultural subsidies were a destabilizing factor affecting international trade.  The Secretary-General’s report indicated that global economic development was well below the levels of previous years, and that might hamper efforts for development and the eradication of poverty.  That would undoubtedly mean more obstacles to the attainment of the Millennium Goals.

CLAUDIA BLUM (Colombia), associating herself with the Group of 77 and China, agreed with the Secretary-General’s report, which stressed the crucial role of trade in consolidating the global partnership that would help achieve the Millennium Development Goals.  Trade was as important for development as assistance, financing, investment and technology.

She said that, as an active member of the World Trade Organization, her country was concerned with the stagnating trade talks and remained committed to the search for a prompt and balanced outcome that could translate into improved access for export goods and services from developing countries.  The critical global economic situation indicated the importance of facing the imbalances in the multilateral trading system.  The world food problem indicated the urgency of reducing the protectionist measures and agricultural subsidies of developed countries.  Those distortions had notably discouraged investment and growth in developing-world agriculture sectors.

Ensuring improved access for products from developing countries was a fundamental part of international strategies to mitigate the impact of the financial crisis, she said.  Trade pacts, including interregional agreements, could play a key role in that regard.  Columbia underscored the relevance of the Doha Review Conference as an occasion to reaffirm the commitments made in Monterrey and an opportunity to ratify the importance of trade liberalization as a key element of national developing strategies, economic growth and job creation.

TATIANA ZVEREVA ( Russian Federation) called for urgent remedial action in order for international financial institutions to work towards alleviating the current global financial crisis.  The financial, food and energy crises had led to global upheaval and uncertainty about the prospects for international trade and development.  More attention must be given to a successful completion of multilateral trade negotiations.  Until now the negotiating parties had not yet managed to lay the foundation needed to reach agreement.  There was a need for compromise to overcome differences.  The Russian Federation was committed to setting up a predictable and comprehensive international trade system and economic isolation was not an option.  The country was keen on working towards accession to the World Trade Organization.

She pointed to hurdles that had adverse impacts on developing and least developed countries, thwarting their ability to meet the Millennium Development Goals.  UNCTAD had an important role to play in supporting developing countries on development, trade, investment, finance and technology transfer.  It was important to preserve UNCTAD’s existing mandate and to adapt its work to modern realities.  There was a need to uphold a leading role for UNCTAD and to establish dialogue between developed and developing countries.  UNCTAD could contribute to the creation of a more global economic order and enhance the participation of developing countries in international governance and decision-making.

SUDARSANA NATCHIAPPAN (India), associating himself with the Group of 77 and China, said developing countries could only benefit from trade if the international trading regime was more equitable and oriented towards development.  India was committed to moving the Doha Development Round towards an early and successful conclusion, with the development dimension at its core.  The Doha Round was about the Doha Development Agenda and not about the perpetuation of structural flaws in global trade, especially in agriculture.  It was not about developing countries opening their markets for subsidized agricultural produce from developed countries or for negotiating the livelihood security and subsistence of hundreds of millions of farmers.

Instead, the Doha Round was about opening new markets for developing countries, especially in developed nations, and creating economic growth for those poorer nations in all sectors, including industries and services, he said.  The Round was about extricating all vulnerable economies from the stranglehold of poverty and progress in agriculture negotiations remained a key issue.  India agreed with the Secretariat’s report that the massive agricultural subsidies paid to developed-world farmers distorted international markets and weakened production in developing countries.  Such policies had severely impacted food security in developing countries and played a significant part in the global food crisis.

Industrial development was also a key component of the development agenda, as was the services sector, he said.  Technology could also play a crucial role in development efforts and there was a need for a fairer intellectual property rights regime that could help transfer technology to developing countries at concessionary and preferential rates.  That was particularly relevant for such sectors as public health and climate change technologies.  The international community must actively help developing countries, particularly the most vulnerable economies, to eliminate supply-side constraints so they could benefit from international trade opportunities.

KYAW MOE TUN (Myanmar), associating himself with the Group of 77 and the Least Developed Countries, noted the challenges facing developing countries in meeting the Millennium Goals, especially the eradication of poverty and hunger resulting from the financial crisis in developed countries and the spike in food and fuel prices.  Myanmar was concerned that the failure to successfully complete the Doha Round might lead to the resurgence of protectionist measures, thus jeopardizing the emergence of an equitable and fair international trading system.  A rules-based, open, equitable, predictable and non-discriminatory trading system would only be possible through the political will of World Trade Organization members to deliver the development promises of the Doha Round.

He went on to say that a safeguard mechanism was needed to enable developing countries to cope with external shocks.  In that regard, the World Trade Organization urgently needed to address trade-distorting subsidies and agricultural tariffs in developed countries.  Key development deliverables, such as duty- and quota-free market access for least developed countries, should be made operational even before the conclusion of the Doha Round.  The Integrated Framework for Trade-related Technical Assistance needed adequate funding in order for developing countries to benefit from it.  Domestically, Myanmar’s market-oriented policies were being implemented to promote economic growth.  Encouragement of the private sector, border trade and South-South trade had grown the country’s export volume.  Meeting the Millennium Development Goals required a holistic approach to development.

TARIK IZIRAREN (Morocco), associating himself with the Group of 77 and China, said that, as an engine of growth, international trade could help developing countries improve their economic performance by encouraging investment and opportunities.  Multilateral negotiations had not made much progress, and much more remained to be done.  States should attempt to reach well-balanced results that would take into account the interests of all countries, developing ones in particular.  The Doha negotiations were the only means for developing countries to participate in international trade discussions in order to develop their trade capacity.  Any outcome must also take into account the capacity of developing countries to implement new trade agreements.

Developing countries were also very vulnerable to environmental and climate changes, he said.  Global warming and low rainfall levels had led to the deterioration of local crops in the poorest countries, which were consequently being forced to import food.  The present food crisis, which would result in millions of poor people becoming even poorer, would have a great impact on developing countries.  It was necessary to guarantee market access for those countries and not to deny trade opportunities to the poorest ones.  It was also necessary to help them improve their productive capacities.  Moreover, additional financial resources must be allocated to the Aid for Trade initiative.

ANDREI METELITSA ( Belarus) noted that while Member States had made a collective commitment to achieve the Millennium Development Goals, not all countries had the same potential.  Belarus commended the proposal made at the twelfth conference of UNCTAD, known as UNCTAD 12, to remove trade barriers.  It was necessary to continue to provide assistance to middle-income countries and to examine their real needs in trying to expand their economies.  The Bretton Woods institutions and the World Trade Organization must provide them with fairer conditions for entry, taking into account each country’s trade and financial requirements.  Any reform of the international financial system must secure a more appropriate role for middle-income countries in decision-making.

The Committee then resumed its general discussion on follow-up to, and implementation of, the outcome of the 2002 International Conference on Financing for Development and preparations for the 2008 Review Conference.

The Committee took note of the Secretary-General’s note on the proposed organization of work for the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus (document A/63/345), as orally amended, and the report of the Secretary-General on the latest developments related to the review process on financing for development and the implementation of the Monterrey Consensus (document A/63/179).

Action on Draft Resolutions

The Committee then approved, by consensus, draft decisions on Arrangements and organization of work of the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus (document A/C.2/63/L.19); Provisional rules of procedure for the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus (document A/C.2/63/L.20); Provisional agenda for the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus (document A/C.2/63/L.21); Accreditation of intergovernmental organizations to the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus (document A/C.2/63/L.22); and Accreditation of non-governmental organizations to the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus.

The Committee then resumed consideration of international trade and development.

Statements

GUILHERME DE AGUIAR PATRIOTA (Brazil), associating himself with the Group of 77 and China, said fair and adequately balanced trade liberalization, sensitive to the export interests of developing countries, could contribute significantly to the advancement of national productive capacities and the diversification of industrial bases, providing a major contribution to national development strategies.  Under the present global circumstances, resorting to protectionism might seem the expedient thing to do in order to preserve industry and protect national markets.  Such a temptation must be resisted, especially by the bigger economies that were the engines of the international economy.

He said the best response to the global turmoil was more regional and global integration, not less; more trade, not protectionism; more market access and opportunities for development countries; and, above all, less market distortions.  Concluding the Doha Round with a result that truly delivered on the development outcome to which all members had agreed would be, in the current troubled times, a major positive contribution.  Agriculture should remain at the heart of the Doha Development Round, as it was central to the full accomplishment of the negotiating mandate’s development dimension.  It was also important to promote substantial market access in agriculture, while safeguarding the legitimate livelihood concerns of developing countries.  Further, there was a need for an enabling international environment based on a trading system that was truly responsive to the legitimate export interests of developing countries, and sensitive to their social and economic realities.

MARIA FERNANDA ESPINOSA ( Ecuador) said present patterns of international trade had caused a deepening of poverty worldwide, particularly in developing countries.  Farmers, craftsman and small producers in particular had been directly affected by the agricultural subsidies maintained in developed countries, and by growing and discriminatory trade barriers.  Proof of that was the lack of political will showed by developed countries during the Doha negotiations, whereby those nations had created insurmountable barriers to the main export products of developing countries.  As Professor Joseph Stiglitz had told the Committee last week, free trade was a fallacy; what really existed was regulated trade.  Several studies pointed to the fact that subsidies in the developed countries amounted to $300 billion annually.  That did not contribute to balanced trade.

It was necessary to establish new economic rules that addressed the needs of the people and were consistent with respect for human rights, she said.  There was a need for a new moral covenant, guided by the principles of justice and complementarity.  The United Nations had a key role to play in advancing such a discussion.  Ecuador’s new political constitution aimed to establish a balanced socio-economic relationship among society, State and the market.  The principles of free trade based on just wages, decent working conditions without child exploitation or slavery, gender equality and respect for the environment should not be the exception, but the rule.  Conditions established for international markets had failed and a new international order was necessary.  The Doha Review Conference would be the ideal to set up a more just economic system that allowed for the full development of all countries.

CHARLES NTWAAGAE ( Botswana), associating himself with the Group of 77 and China, said the relationship between trade and development had become more important than ever, particularly in the context of declining aid levels.  Although globalization presented opportunities and challenges for economic growth and development, most developing and least developed countries remained on the margins of the process.  For trade to benefit developing countries, imbalances in industrialization and development levels must be considered.  An enabling environment for trade and development could be cultivated and facilitated through enabling policies and institutional mechanisms.

He said that in his country, such constraints, such its status as a landlocked country and its mineral-dominated economic base, limited its ability to access secure markets.  Consequently, Botswana was trying to diversify its economy and invest privately in all sectors.  Those investments entailed the removal of regulatory and administrative barriers to enable the expeditious establishment of business.  In particular, Botswana was actively engaged in developing “hubs” in the areas of transport, medicine, education, minerals, research and innovation in response to the needs of the economy.

At the international level, he said, Botswana continued to call for the immediate resumption and successful and timely conclusion to the Doha Development Round.  At the regional level, the country had worked towards the establishment of the Southern African Development Community Free Trade Area.  Botswana would benefit from Aid for Trade, an initiative that would help to address supply-side constraints and other trade-related challenges.

VOWPAILIN CHOVICHIEN ( Thailand) said that although the interrelation between international trade and development had been addressed for many years, denoting the prosperity of economic growth, and growth itself, the relationship between the two was not necessarily a healthy one.  The international community should offer assistance collectively to those who had not benefited from the socio-economic wealth brought about by trade and those in poverty, which persisted in many parts of the developing world.  There was a need for an increased focus on attaining the Millennium Development Goals, the prospects of which had been severely compromised and put severely at risk, as had the “promising” economies of the developing world, because of the current financial crisis.

She said her country intended to play a constructive role in the food crisis by not putting restrictive food-export policies in place and by fostering tangible cooperation with other Association of Southeast Asian Nations (ASEAN) members through strategic plans and initiatives on food and security.  It was to be hoped that such intentions would inspire other countries to make like-minded contributions to development goals, and that developed countries would not further subsidize their agriculture sectors, which would worsen the food crisis.

On the collapse of the Doha Round negotiations, which had resulted in continued trade barriers and restrictions to developed-country markets, she said her country advocated its urgent completion, along with fair, equitable rules.  To that end, trade-related development needs and the concerns of developing countries must be addressed fully.  Thailand called for cooperation at all levels and in all areas, since regulatory reform of the international financial architecture was necessary, as was structural reform on the national level.

ASAD M. KHAN (Pakistan), aligning himself with the Group of 77 and China, said the unfolding development emergency, triggered by multiple crises of finance, food and energy, had created a new sense of urgency to the need for a successful conclusion to the Doha Trade Round on a priority basis.  The continuing impasse in the negotiations had contributed to distortion of the multilateral trading system’s capacity to deliver on its much-trumpeted development potential.  Ironically, the evolving global environment was not very helpful.  It was undermining the possibility of international trade acting as a vehicle for stimulating consumption and production, and promoting employment.

The development dimension of the Doha Round meant that prosperity resulting from international trade should not be the domain of a select few, he said.  Some should not have greater say in the process than others.  All States had an abiding interest in promoting a well-functioning, rules-based, open, equitable, predictable and non-discriminatory multilateral trading system, as well as an inclusive and participatory negotiation process that promoted development.  The inability exhibited by the major trading nations to break the impasse thus far had not only weakened the multilateral trading system, but also marginalized the poor countries.  It had undermined the capacity and endeavours of the developing countries to achieve internationally agreed development goals, including the Millennium Development Goals.

GRAHAM CLOUGH, United Nations Industrial Development Organization (UNIDO), said international trade was an indispensable growth engine and manufactured exports often provided stronger growth stimuli than other types of exports.  The recent sharp increase in the industrial production of developing countries had occurred mostly in a small number of fast-growing Asian countries, and was creating a growing industrial divide and widening disparities among developing countries.  All developing countries needed help in building capacity to engage in world trade.  That help included the development of competitive supply capacities for products to be sold; ensuring that those products conformed to the requirements of more competitive and newer markets; and connecting to world markets.

He said UNIDO projects in the East African Community were building trade capacity for agro-industry; and in Egypt they were working to enable the food industry to comply with European Union food safety and circulation standards.  Further, the agency was helping Bangladesh improve its national quality-management systems; competitiveness of textile and garments exports; and the fish inspection and traceability abilities of its Department of Fisheries and private sector.  In addition UNIDO was formulating programmes to upgrade and modernize priority industries in six African, Caribbean and Pacific (ACP) regions for an envisaged European Union-ACP free-trade area.  Working through the cluster on Trade and the Productive Sector, a common United Nations system effort to bring its collective expertise to bear on building trade capacity was a high priority.

SHARON BRENNEN-HAYLOCK, Officer-in-Charge, Food and Agriculture Organization (FAO) Liaison Office to the United Nations, speaking on behalf of the Chief Executives Board Interagency Cluster on Trade and Productive Capacity, said the Cluster had been set up in April 2007 and was coordinated by UNCTAD.  It aimed to translate into coherent field operations the links between trade, poverty reduction and human development, with a view to helping countries achieve internationally agreed development targets, including the Millennium Development Goals.  The Cluster worked to ensure that issues relating to the trade and productive sectors were adequately taken into account in “Delivering as One” and the United Nations system-wide coherence process.  Joint programmes designed within the cluster were already included in some “Delivering as One” pilot countries, such as Rwanda, Cape Verde, Mozambique, Viet Nam, Albania and Uruguay, while joint initiatives in other countries were being prepared.

He said the Cluster was increasing cooperation and coordination in view of country-level coherence on trade and related issues, including regular joint programming of trade-related country plans, particularly in the forthcoming United Nations Development Assistance Frameworks, she said.  It had also designed and delivered inter-agency training on trade and productive issues for United Nations Resident Coordinators, in cooperation with the United Nations Staff College.  The Cluster ensured complementarities between the trade-related assistance provided by the Enhanced Integrated Framework and the United Nations assistance plans.  It also contributed to strengthening the Organization’s response to the Aid for Trade initiative.  The Resource Guide on Trade-Capacity Building, prepared under UNIDO’s overall supervision, had been used by the Cluster to raise awareness about the key role of trade capacities in development assistance policies.

EMAD BEN-SHABAN ( Libya), associating himself with the African Group and the Group of 77, said developing countries lacked adequate access to world markets and economic competitiveness.  The obstacles and protectionist measures set up by certain developed countries had considerably constrained loyal competition and world markets.  In the area of global export of goods, Africa had declined from 6 per cent to 3 per cent in 2007.  It was therefore essential to find effective solutions to the erosion of the trade privileges of African countries.  It was also necessary to step up efforts so that aid was given to pan-African trade.

States must also promote cooperation and economic integration at the regional and subregional levels, and encourage partnerships between countries of the South and North.  For more than two decades, developing countries had been calling for a just and equitable international financial system, based on transparency and control, so as to guarantee the interests of all and make an effective contribution to development and the elimination of poverty and hunger.  It was legitimate to ask how much time would be needed for those calls to be heeded.  It was to be hoped that the Doha paralysis would be overcome, as a successful conclusion would contribute to meeting the Millennium Goals, while creating job opportunities.

JULIO ESCALONA ( Venezuela) said the false paradigm that free trade should lead to development had failed, and there was a need to create clear rules for setting up more just and equitable terms of trade.  While development was given priority in the ongoing agenda of trade negotiations, there was no true political will to implement that agenda.  Trade liberalization, in and of itself, would not lead to development, which must be the core element of the multilateral trade negotiations.  It was a matter of concern that, in following certain development assumptions, there was an attempt to impose on the world a certain globalized model of extreme trade liberalization.  It was presumed that the playing field was level when if fact there were profound structural differences.  The world needed a just, equitable trading system in which developing countries had special, differential and effective treatment, without diluting the concept into mere declarative proposals.

He said his country had participated actively in the Doha Round since 2001, adding that it was necessary to preserve the negotiating mandate of the Doha Round, which was the Doha Development Agenda, the decision adopted by the general counsel on 1 August 2004, known as the July package, and the Hong Kong Ministerial Declaration of 2005.  Given the failure of the Doha talks in July, the negotiations must take place according to transparent and inclusive formats.  Venezuela called for more direct State participation in food production by simplifying and reducing the number of international intermediaries in order to bring down costs.  Venezuela had subscribed to agreements on food security based on technology transfer, technical cooperation and trade in order to promote the production, distribution, storage and marketing of each country’s priority items, with a view to eradicating poverty and hunger.

YACOUB AHMAD AL NASRALLAH (Kuwait), associating himself with the Group of 77 and China, said his country attached great importance to international trade because it was a strong propeller of growth, development and poverty eradication in all countries, particularly developing ones.  There was a need for regional and international efforts to create a positive atmosphere and enable developing countries to achieve the Millennium Goals.  An international economic system should be characterized by equitable multilateralism, which should take into consideration opening its markets to all products from developing countries, giving due consideration to their circumstances and limited resources.

It was also important to liberalize international trade and enable it to flourish in developing countries, he said.  For its own part, Kuwait had conducted a comprehensive review of its economic and trade regulations, in accordance with the requirements of its incorporation into the world economy.  The country had given incentives to foreign and local investments, and allowed the private sector to play a leading role on the basis of freedom and fair competition, while fostering the State’s role in planning and oversight.  In support of those efforts, the Government had adopted ambitious economic and social plans, including privatization in numerous fields, as well as the launching of pioneer projects across the country.  Kuwait was currently negotiating bilaterally, multilaterally or through the Gulf Cooperation Council to conclude free trade agreements with numerous countries in an effort to liberalize trade.

Introduction of Draft Resolution

Ms. GREENAWAY ( Antigua and Barbuda), speaking on behalf of the Group of 77 and China, introduced a draft on international trade and development (document A/C.2/63/L.8).

The Committee, noting that several pending draft proposals on revitalization of the work of the General Assembly were still under negotiation, decided to revert to that issue before the Committee concluded its work on 26 November.

Noting also that nothing on its agenda item on programme planning required attention, the Committee decided to keep that item open until 26 November.

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For information media • not an official record
For information media. Not an official record.