Ms. Shamshad Akhtar Assistant Secretary-General for Economic and Development of DESA, Secretary General’s Special Advisor of Economic and Finance to the Second Committee of the General Assembly
Ladies and gentlemen,
The present report is prepared pursuant to General Assembly resolution 65/167, entitled “Towards a New International Economic Order”.
The report concludes that persistent imbalances and inequities in the areas of international trade, technology transfer and international finance require urgent policy attention if the goal of equitable and inclusive economic growth and sustainable development is to be achieved in the coming decades.
I will give some further detail to these findings. But let me make two preliminary remarks for consideration in today’s discussion.
First, these findings are of utmost importance to the follow up to the Rio+20 Outcome and the preparations for post-2015 global development agenda. International trade, technology transfer and finance should be critical enablers for sustainable global development, but on many dimensions they are not at present.
Second, as general findings, the conclusions of this report are not new and not surprising. In fact, in 1974, the Declaration on the Establishment of the New International Economic Order, adopted by the General Assembly at its sixth special session, called for shared and differentiated responsibility for equitable development. This was largely because of the perception that the benefits from the international trading and financial systems are unequally shared and even hampering development in parts of the world. So, the question we may ask ourselves is whether this time is different and whether the establishment of a New International Economic Order will be possible this time round in reality rather than staying a mere “Declaration.”
As elaborated in the report. Things are different. The global economy has changed dramatically. It has become much more deeply integrated and interdependent. Yet, even though many developing countries have gained from expanding trade and finance, in broad terms, the outcomes are less than desirable. Globalization remains unbalanced and international income inequality has increased further. At the same time, however, the recent food, fuel and financial crises have been felt globally. This is a manifestation of the growing globalization and the degree of interdependence. But there simultaneous occurrence has also made us aware that the factors driving these crises have been closely interconnected.
Today, more than ever before there is a recognition that the rapid pace of global economic development is taking its toll on the Earth’s natural environment. Trade and finance have been vehicles of expanding human activity, but unfortunately lack of concern for sustainable development has indirectly resulted in environmental degradation. These complexities clearly are more pronounced and hence different from 40 years ago. They also underscore getting to a NIEO not only the more urgent, but also the more challenging.
Let me highlight very briefly a few of those challenges and some of the report’s recommendations in those regards.
First, global trade has expanded dramatically, due to a reduction in trade barriers and changing production patterns. While some developing countries – most notably China and East Asian countries – benefited from a gradual exposure to world markets, the more recent emphasis on non-discrimination in the global trade regime has narrowed the policy space for developing countries to conduct industrial policies. This has emerged as a real concern as industrial policies have been critical to success in economic development around the world.
Hence, report offers two recommendations. One, the multilateral trade regime has to treat developing countries in a differentiated way providing them with market access, more space to use efficient and well designed subsidies and other mechanisms in support of export industries. Two in order to address environmental challenges more consistently, multilateral trading rules should be aligned with climate policies and other multilateral environmental agreements.
Second, technology is a critical input to development yet strengthened intellectual property rights have raised the costs of acquiring technology in recent decades. Reforms are needed to facilitate technology transfer, in particular to allow developing countries to incorporate green technological development into their national development strategies. In this regard, technology transfer should become much easier and existing flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) need to be looked into and enhanced.
Third, financial liberalization and deregulation has been associated with greater capital flow and exchange rate volatility as well as with rising inequalities which have made macroeconomic policy making more challenging for developing countries. In this regard, the report suggests there is a need for strengthening capital account regulation and macro-prudential risk management at the national level. This may not be sufficient in the absence of deeper reforms in internationally established financial regulatory frameworks which would be critical to stem volatility originating in major financial markets in developed countries. The kind of reforms to consider includes establishing a framework for sovereign debt restructuring, an independent multilateral financial oversight and regulatory mechanism. At the same time, new and more stable mechanisms for development financing, including for addressing climate change, are needed.
Fourth, in addition to these gaps and shortcomings in the rules and mechanisms governing trade, technology transfer and finance, the report signals several other problems with the existing mechanism of global economic governance. It signals many areas of overlapping and conflicting mandates, as well as important gaps such as the lack of a framework guiding international migration.
In this regard, the report suggests that the United Nations could play a coordinating role in global governance. To fulfil this function, the UN, and ECOSOC in particular, will have to be provided with the faculties needed to effectively exercise global coordination in economic, financial, social and environmental issues.
To conclude, let me get back to my opening remarks and the importance of this discussion for the post-2015 development agenda and the Rio+20 follow up. These deliberations will provide a further opportunity to strengthen the global partnership for development and substantially improve coherence in the multilateral systems for trade, finance, technology transfer and climate finance, such that they will indeed enable securing a shared and sustainable future for all and, thereby, realize the aspirations of the New International Economic Order.
I thank you.