unctad.org | Economic Development in Africa - Trade and Development Board
Statement by Mr. Rubens Ricupero, Secretary-General of UNCTAD
Economic Development in Africa - Trade and Development Board
Geneva
12 Oct 2003

Mr. President,
Distinguished delegates,
Ladies and gentlemen:

In introducing the Board´s item on Africa, I would like us all to keep two things in mind: that this year we chose to concentrate on Africa´s trade performance, and that as we move towards UNCTAD XI, this debate on trade performance should result in some practical suggestions on a strategy to help African countries deal with their problems in trade.

Having put forward those central concerns, allow me to make some preliminary observations. The first is that although much remains to be done to raise awareness of African trade problems, in recent years - and particularly over the past six to seven years - African countries have demonstrated a growing awareness and determination to address the problems. This has taken many forms, including the revival of African regional initiatives that had been more or less dormant; the interest aroused by some industrial countries´ initiatives to provide African countries with preferential market access; and the more active role played by African delegations in multilateral trade negotiations. As we saw the other day during our debate about Cancún, many explanations are being offered for what happened there, including some superficial explanations in the media, which focused exclusively on the problems surrounding the so-called Singapore issues - issues on which the stand adopted by African and other countries played an important role in the decisions ultimately taken. I am choosing my words very carefully, because I do not agree with placing too much importance on these particular issues; I think the situation was much more complex. Nonetheless, as I said, on this occasion the African countries put up a united front, which could also be linked to their active participation in a number of areas in the process leading up to Cancún - and here I would highlight the question of easy, free access to cheap medicines, and the fortunate solution that was reached in late August on making the Doha decisions on TRIPS, parallel imports and related issues operational.

There is another issue that African countries tried to pursue in the trade negotiations and that is very much alive and deserving of attention, due to its importance in shaping strategies: preferential arrangements, which is linked to, but should not be confused with, the erosion of preferential margins.

The other day we had an extremely interesting debate here on the LDCs in which we again saw how difficult, if not artificial, it can be to try to separate LDC matters from subjects of concern to sub-Saharan African countries, because to a large extent they overlap. In that debate, we heard William Cline from Washington present some thought-provoking observations - and more than that, practical suggestions; this was one of the richest contributions I have heard in terms of practical ideas on how to make the most of existing preferential arrangements. We also heard the Minister of Industry and Trade of Lesotho, who explained how his country had succeeded in increasing the number of jobs created as a result of its participation in the African Growth and Opportunity Act (AGOA) of the United States, uncertainties over the extension of that initiative, and how to diversify the national economy. That is exactly the kind of concrete, practical subject we should be placing at the centre of our discussions and concerns on the road to UNCTAD XI.

In addition to those two major issues - preferential arrangements and their future, and the erosion of preferential margins - there is a third issue that is of central concern, not just to African countries but primarily to them, and that is the overall policies that should be adopted regarding commodities. I will not dwell on this matter, because on Friday we will discuss the report of the Group of Eminent Persons organized by UNCTAD under a General Assembly resolution. I found their recommendations useful and practical, and they should be pursued both here and in the Assembly, but we will have the opportunity to debate those issues shortly. My intention today was twofold: first, to present by way of example the major issues of interest to African countries in trade negotiations: public health and its relationship to intellectual property, preferential arrangements, the erosion of preferential margins and commodities. Second, I wanted to show that to a considerable extent, these issues are outside the current agenda of trade negotiations. This is why I believe that a contribution from UNCTAD is crucial, not only here but at UNCTAD XI as well, because as you know, commodities are very much a central subject for UNCTAD, and UNCTAD is the organization in the United Nations system with a legal and political mandate on commodities. We thus have to address this matter, and we also have much to contribute to dealing with the problems of preferential arrangements and the erosion of preferential margins.

As I said, some of the practical ideas that were presented - and I would highlight those put forward by William Cline and the Minister of Lesotho - should be the object of deeper reflection, to see to what extent we can extract from those ideas some elements for an overall strategy for the African countries. Such a strategy would encompass not only commodities but also the use of preferential arrangements to industrialize - as in the case of Lesotho - with some predictability; to diversify, using their comparative advantage; and to upgrade the level of value added in their production chains.

I will not elaborate today on the current plight of trade in Africa, because that plight is relatively well known, is described in our document and has been increasingly addressed in the past few years. The panorama is one of great preoccupation, although it is important to nuance our diagnosis: in a continent so large and with such an enormous variety of situations, seeking simplified conclusions can be dangerous. But there is no doubt that the overall situation is a negative one, and that we have to propose ideas in this strategy that could fit the different situations prevailing on the continent. Some countries have been making progress in using foreign trade and export-led growth as a basis for their development strategies. This has been the case of Tunisia in the North, and of Mauritius in sub-Saharan Africa, to cite but two examples. Neither is entirely representative, and both possess some unique features, but other countries are following suit; in recent years we have been witnessing the development of some production capacity in garments, including in Lesotho. We have also observed some success, not only in the diversification of commodities, but also in improving the content of exports of natural products. Here, Kenya is a good example, and a on a recent visit there I saw at firsthand the impressive results they have achieved in the export of cut flowers, fresh vegetables and other products. I cannot be exhaustive here, but I know that a group of organizations that includes UNCTAD, ITC and UNIDO is doing its utmost to assist in this area.

Before concluding, I would just like to flag the central role I see in this strategy for regional trade integration. There would be an opportunity now, as the ACP countries negotiate the second phase of the Cotonou Agreement, when they have to come up with new arrangements with the European Union. That Agreement defines the regionalization or subregionalization of countries in Africa as one of the parameters for the negotiations. This - together with the African Union´s enthusiastic support of regional integration, and the NEPAD initiative, which also emphasizes regional integration - augurs well for the progress of regional integration.

We know from experience, however, particularly from the example of Asia, that the best possible condition for fostering regional integration is fast growth in as many countries as possible, with a consequent increase in interdependence among them. It is interesting to compare the three or four decades of development history in Asia and Latin America: whereas Latin America was much more advanced in institutional arrangements aimed at increasing integration - the first Montevideo treaty dates back to 1960, immediately following the Rome treaty, by which it was inspired - Asia, which had far fewer instruments for institutionalization or legal and juridical use, made far more impressive advances in interregional trade for the simple reason that they grew very fast. This they did by allowing industries to migrate to countries that were lagging behind, as the more advanced countries became increasingly sophisticated, which led to increased hourly wages and so forth. Now we are witnessing the launching of free-trade initiatives in APEC and the major powerhouses of Asia - Japan, China, South-East Asia. They are all coming together now with new initiatives towards South Asia, India, Pakistan and others.

We are experiencing a phenomenon of historical importance: the transformation of the structure of trade. In my opening remarks to the Board last week, I reminded you that not long ago, in 1980, the developing countries channelled 69 per cent of their total exports into markets in the North; by 2001, that proportion had decreased to 57 per cent. Not that trade has shrunk - on the contrary, those countries´ exports to the US, Japan and the European Union have boomed - but as trade grows much more rapidly among the Asian countries, the proportion of exports that goes to the industrial countries´ markets has fallen to 57 per cent, a reduction of 12 percentage point over 20 years, and it is no coincidence that this period coincided with China´s external reorientation. China began its export-led growth around 1979, but the lesson here is that it is fast growth that will really boost regional integration. Political will is important, good legal documents are important, but in the absence of growth, they are not sufficient. We have to keep all those aspects in mind in identifying UNCTAD´s contribution.

You will notice that my presentation has not covered issues that are already under negotiation at the WTO or in other fora, as I chose instead to concentrate on those aspects that merit more sustained attention on our part. I hope that some of these reflections will prove useful in the days ahead and after this session of the Board, as we move into the preparatory process for UNCTAD XI, because at that Conference it is our intention to come up with ideas that would link the opportunities in trade with the productive sector, endeavouring to give countries and continents some practical ideas on how to address the problems. I wish you a most profitable debate.



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