unctad.org | Meeting of Ministers of Trade of Least Developed Countries
Statement by Mr. Rubens Ricupero, Secretary-General of UNCTAD
Meeting of Ministers of Trade of Least Developed Countries
Seattle
29 Nov 1999

Mr. Chairman,
Distinguished Ministers,
Your Excellencies,
Ladies and Gentlemen,

At UNCTAD VIII, the Cartagena Commitment urged that exports from least developed countries should be guaranteed duty-free access to major markets.

This proposal was simple, entirely practical, and morally unarguable.

In the bigger picture, the costs to importing countries would have been minuscule, and the benefits to the 600 million inhabitants of the 48 LDCs potentially enormous. But too many vested interests in particular sectors - most of them "sunset" industries in Western countries -- would have been hurt. So the idea was stillborn.

Instead, LDCs had to settle for second-best: A high-level meeting in Geneva that would focus instead on providing at least some LDCs - those whom the international community pronounced ready - with a dose of trade-related technical assistance. The six multilateral agencies involved in this initiative conducted a needs assessment which confirmed what was already well known. The supply-side problems faced by most LDCs are enormous. They receive only a trickle of foreign direct investment, despite strenuous efforts to make themselves "investor-friendly". And their human and institutional capacity to cope with the demands posed by rules-based multilateral trading system is on the verge of being overwhelmed.

If new trade negotiations commence in the coming weeks, their - perhaps I should say your - need for further technical assistance will shoot up. We in the international agencies must be ready to respond. But first we have to get the numbers right.

The World Bank estimates that the average cost to each developing country of implementing just three of the agreements in the Uruguay Round was US$150 million. Putting that figure into perspective, this was as much as the entire FDI received by Bangladesh and Tanzania, two of the larger members of your group. For some of the smaller and weaker members, it was four or five times the value of their annual foreign investment.

On the eve of the third WTO Ministerial Conference, let us therefore adopt a clear and unambiguous position. Before LDCs are asked to implement any new international norms in trade or trade-related areas, the cost of doing so must be quantified; the sources of funding identified; and further technical assistance approved. This is a sine qua non.

Mr. Chairman,

Let us now turn to the heart of the matter. The main concern of LDCs at present is to stem, and hopefully reverse, their marginalization, and to ensure their meaningful and beneficial integration into the multilateral trading system.

To have a chance of overcoming the heavy odds stacked against these countries - ranging from frequent natural disasters to civil war or AIDS - I would urge you to keep in mind five central objectives:

Ways need to be found to obtain improved, and unencumbered, market access for your exports. "Best endeavours" are not good enough: Only binding commitments will do this time around.

Supply capacity needs to be strengthened, perhaps starting with the more familiar and often less demanding markets in your own region. Subregional trade zones are a promising means for a country to be able to learn to stand on its own feet.

Transport infrastructure needs to be upgraded, so as not to dissipate the comparative price advantage which could be lost through high transport costs and long delays in getting goods to market. It is no coincidence that over half of the LDCs are either small island or landlocked countries, where this problem is particularly acute.

It is important to retain flexibility in the use of appropriate policy instruments, at least for the time being, in order to strengthen the international competitiveness of those sectors you deem to be of strategic importance.

Collective bargaining brings greater muscle to the negotiating table, but is only effective if it is used to support precise, realistic and clearly articulated objectives. The meeting of senior LDC officials at Sun City in South Africa, which we in UNCTAD organized, endorsed this approach, and set out clear objectives for future negotiations. And in this context it is with great pleasure that I take this opportunity officially to present to you our Handbook for Trade Negotiators from Least Developed Countries. This should be seen as part as UNCTAD´s effort to assist LDCs and other developing countries in developing a positive trade agenda in multilateral Trade Negotiations.

You will be well aware that there might be attempts to divide the LDCs. Some may indeed wish to see splits in the developing world. These moves should be resisted. Whatever the rationale or justification given, the hard-won recognition of such key concepts as preferential market access, adequate transitional periods, and special and differential treatment (S&D) in a range of trade policy areas should be firmly defended.

Since the Uruguay Round, the underlying reality behind the provision of S&D measures has not altered. If anything, the case has been strengthened. Far from being an exercise in generosity, S&D should be treated as a corrective step that has two purposes in mind: first, to deal with the structural weaknesses of LDC economies; second, to ensure a better balance in the distribution of the benefits of the system for sustainable development.

These measures should be made an integral part of the rules and disciplines governing the multilateral trading system.

The negotiations on agriculture could take initial moves, where the special needs of LDCs must be recognized both in the area of food security and also in upgrading the productivity of their agricultural sectors and protecting the livelihood of subsistence farmers.

Mr. Chairman,

As should be clear to anyone who has listened to UNCTAD in recent years, we do not favour an approach whereby developing countries turn their backs on the WTO. We must therefore work harder to ensure that the existing system delivers in favour of the majority of its members, especially the weakest and poorest among them.

In order to reach that position, the first step surely is to ensure the universality of the system, as quickly as possible. At present, 19 of the 48 LDCs are not WTO members. Several of these are still distracted by conflicts; but those seven countries which are in the accession pipeline today have rightly been complaining about the snail´s pace at which their applications have been handled and the complicated nature of the process.

We must not compromise the transparency and integrity of the WTO multilateral rules and disciplines. But the present process should be reviewed so as to reduce the exceptionally heavy burden it places on LDCs, in administrative and human terms.

There has been an unfortunate tendency on the part of existing members, especially the most powerful among the, to "raise the ante" for new applicants to the club. This may be a justified tactic for an exclusive social club anxious to hang on to its elite status. It is definitely not for an avowedly universal association of nations that are at very different stages of economic development, but all of which have to operate in the same global economic space.

Improved and clearly defined accession procedures for LDCs should therefore be a priority. In this regard, consideration could be given to a "fast track" approach. Those 13 LDCs that have not yet applied to become members cannot expect to remain unaffected by the processes and evolution of the trading system. The train is moving along and gathering speed. But in order to join on terms that are consistent with their trade, financial and overall development needs, they need first to formulate their major negotiating objectives on the basis of their conformity with the obligations of WTO membership and their national economic strategies.

Again, UNCTAD stands ready to help - provided that it, in turn, is given adequate resources to do so.

Another area where we are already providing concrete assistance to LDCs is that of attracting FDI. Investment policy reviews are being undertaken and investment guides produced for a number of LDCs, in projects that emphasize the process as much as the final products. In addition, a recent symposium was organized for LDC negotiators on the important subject of international investment agreements, including the need for dual agreements to leave sufficient space for national development policies. LDCs have a particular interest in attracting FDI, as they need to strengthen their supply capacity. But efforts cannot end with attracting FDI - they need to seek to ensure that the contributions that FDI can make to development are maximized. National policies are central in this respect. While FDI is expected to play an important role, the harsh realities facing your countries are such that ODA will continue to be critical for sustainable development, and for financing critical public investments without which FDI might not be forthcoming. Equally critical is for LDCs to get broader, deeper and faster debt relief. The challenge facing your countries is to overcome the cynicism that has come to surround ODA by demonstrating its effectiveness in building productive capacity. The challenge facing your development partners is to honour the UN target of 0.15% of GNP, presently met by a handful of donors.

On behalf of the United Nations as a whole, UNCTAD has been asked to organize the Third UN Conference on the Least Developed Countries. This important event will take place in about 18 months´ time, in Brussels, as the European Union has kindly offered to act as the host.

Preparations for the Conference are under way, focusing on country-level needs assessments and aiming at identifying concrete measures to help your countries overcome supply-side constraints.

UNCTAD X will provide an opportunity to discuss many of the issues and will be a first step on the road to Brussels, to LDC III. I look forward to welcoming you all there, to what promises to be a valuable occasion to take stock of development strategies and forge a new broader consensus among developed and developing countries.

Thank you for your attention.



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