REGIONAL INTEGRATION AND THE GLOBAL ECONOMY

TD//47/12 United Nations Conference trade Development REGIONAL INTEGRATION AND THE GLOBAL ECONOMY High-level segment forty-seventh session Trade Development Board 16 October 2000 Prepared UNCTAD Intergovernmental Support Services UNITED NATIONS York Geneva, 2001 ii Note statements book edited versions transcripts speeches High-level Segment Trade Development Board 16 October 2000. Responsibility presentation statements lies solely UNCTAD secretariat. designation employed presentation material imply expression opinion whatsoever part Secretariat United Nations legal status country, territory, city area authorities, delimitation frontiers boundaries. Acknowledgements text edited Praveen Bhalla desktop-published Mary Chehab. cover designed Diego Oyarzú-Reyes. TD//47/12 iii Contents Introduction ............................................................. 1 Part 1: regionalism contributed development globalized economy............................................. 3 Part 2: Regional monetary issues................................ 70 Part 3: Investment provisions regional integration: feature regional integration agreements ............................................................... 96 INTRODUCTION United Nations Conference Trade Development (UNCTAD), tenth session, held Bangkok, Thailand, 12 19 February 2000, adopted Bangkok Declaration, emphasized role regional integration helping ensure multilateral trading system fulfils potential terms promoting integration countries, developed countries, global economy. Paragraph 137 Bangkok Plan Action, adopted UNCTAD , calls UNCTAD analyze identify options economic groupings study “ effects regional trade agreements development developing countries trade flows, account relationship regional arrangements groupings multilateral trading system.” , theme selected high-level segment forty-seventh session Trade Development Board, held Geneva 9 20 October 2000, “Regional Integration Global Economy”. -day session, place 16 October 2000, divided parts. morning session focused question, “ regionalism contributed development globalized world” panellists addressed question special reference experiences regional groupings involving developing countries developed developing countries, highlighted lessons learned successes failures. special focus trade-related issues. afternoon session parts. part focused regional monetary issues. modest scope pace reforms international financial architecture, attention turning increasingly possibly greater role regional initiatives tackle growing frequency currency financial crises confronting developing countries economies transition. panellists presented policy institutional issues involved. afternoon session discussed theme 2 “Investment provisions regional integration: feature regional integration agreements”. panellists discussed successful regional integration agreements attracting foreign direct investment, factors policy measures influence FDI inflows region, positive negative effects FDI regions. sessions, panellists’ presentations general discussions representatives number countries participated. Chairman High-level Segment, Dr. Supachai Panitchpakdi (Thailand), presented summary main points panellists participants. 3 Part regionalism contributed development globalized economy High-level Segment forty-seventh session Trade Development Board opened .. Ambassador Camilo Reyes Rodriguez (Colombia), President Trade Development Board. . Rodriguez welcomed President UNCTAD , Dr. Supachai Panitchpakdi, Deputy Prime Minister Thailand Minister Commerce. thanked enormous contribution UNCTAD agreeing preside high-level segment. DR. SUPACHAI PANITCHPAKDI Deputy Prime Minister Thailand, Minister Commerce, Chairman High-level Segment foremost, express deep appreciation honour bestowed chair High-level Segment forty-seventh session Trade Development Board. tradition annual high-level segment evidence continuity vitality UNCTAD demonstrated Bangkok Conference. capacity President UNCTAD , reiterate Government’ deep continued commitment UNCTAD. , Conference committed making presidency proactive , contribute maximum extent work Organization. tenth session UNCTAD timely opportunity reflect contemporary issues great importance process development. Bangkok, sought national international responses main challenges development process era. respect, Bangkok Conference 4 deliberations place development partners ideal preparatory process key issues addressing year fora. UNCTAD helped highlight growing convergence opinions ideas development impact globalization. view, widely shared developing countries, concerns difficulties managing process development rapidly globalizing changing international economic environment. countries benefited twin processes liberalization globalization, processes increased uncertainty world economy, , process, undermining social cohesion, traditional values cultural diversity. emerging consensus , globalization managed future, global order needed correct effects market failures minimize dangers marginalization weaker economies. , consensus global system function reached balancing competing interests, imposing ideological agenda. Bangkok Conference helped highlight convergence views development partners future multilateral trade negotiations. general view demand growth world economy precondition expanding trade development. connection, increasingly clear major international policy issue millennium global governance. UNCTAD , evident global partnership peace prosperity emerge concerns members community nations listened respected. North-South issue; regional -regional issue. 5 , Bangkok Plan Action, decided UNCTAD continue focus implications globalization sustained economic growth sustainable development. tasks assigned UNCTAD part engagement Bangkok Plan Action examine role regional integration - developing countries developing developed countries - ensuring increased economic stability mitigating impact adverse external shocks. include analysis experiences regional integration. UNCTAD provide forum exchange experiences developing developed countries regional -regional integration. leads subject addressing morning broad title, “Regional Integration Global Economy”. morning, address question: regionalism contributed development globalized economy cooperation coordination regional level long acknowledged, single unified approach fit regions types countries. Attempts balancing positive negative aspects regional integration agreements resulted variety approaches regional economic integration. common approach conclude arrangements customs unions free trade areas. cases, informal approaches, secretariats, emphasize voluntarism, trade investment facilitation cooperation adopted. large variety -called regional integration agreements RIAs. wave regional integration efforts characterized -oriented integration similar countries focused predominantly tariff -tariff measures. , , trend moving outward-oriented mixed agreements developed countries signing RIAs developing countries. significant development RIAs trend deep integration issues border measures. Increasingly, include measures investment, competition policy services. expansion -border measures included, cases, areas domestic law standards. 6 session focus identifying issues related trade aspects RIAs impact development. outstanding speakers range institutional geographic perspectives understand development impact RIAs. call distinguished panellists presentations, give floor friend distinguished Secretary-General UNCTAD, . Rubens Ricupero. MR. RUBENS RICUPERO Secretary-General UNCTAD convening High-level Segment Trade Development Board topic regional integration timely, developments global economy. , focus regional integration context trade investment issues. , financial crisis brought regional monetary issues sharply focus case Asia. hand, post-Seattle atmosphere, witnessing renewal comments heard moments Uruguay reflect real supposed tendency perceive regionalism longer complement , alternative , multilateral trading system. refer editorials important economic newspapers commenting issue. long , Geneva scene, sort cycle depending fortunes multilateral negotiations. doubt renewal interest central issue, , extent regional integration building block multilateral trading system cherish reinforced. 7 Today’ meeting opportunity reflect role regional integration effort current context. Developing countries considered economic integration key element strategy development stepping stone progressive integration world economy. regional -regional pact possibly practical pact developing countries, , integrate world economy. mechanisms insert global economy pace competitive. greater logic starting -regional regional approach, attempting total liberalization productive sectors exposed unprepared intense competition. Conventional wisdom economic circles learn compete competing, largely true. competition, development, learning process, learn, conditions required including countries firms prepare competition incrementally. precisely main role regionalism -regionalism. learn compete requires competing, prepare competition firms - small medium-sized firms - compete firms equal. , equality exists arithmetical terms, eminent sense initial competition neighbouring States understand weaker. process countries gradually achieve conditions required compete larger multilateral arena. Regional integration, conditions, conducive attracting foreign direct investment developing countries. Transnational corporations establish regional integrated production networks access markets intermediate final goods , cases, domestic firms develop independent productive capacity. , depends incremental approach developing countries flexibility 8 design implement policies development friendly. regard, stress fact cases - significant cases - regional integration schemes, investment decisions transnational corporations , , root integration schemes place; , investment, cases, led trade integration, . clear case North American Free Trade Agreement (NAFTA) automobile industry. point, order avoid misunderstanding, explain personally stand UNCTAD. , doubt developing countries badly rules-based multilateral trading system. , countries, precisely vulnerable. , firmly view international trade potential powerful tools development. , longer suggest developing countries set parallel rival trading system - sort utopian alternative trading system. alternative global trading system , . , , developing countries passively accept system , terms imbalances accumulated years liberalization process . instance, kinds sectors covered multilateral rules field norms, relate subsidies, anti-dumping, trade-related investment measures, . difficulties encountered international trade, increased frequency international currency financial market crises - including countries record good governance macroeconomic discipline - suggests financial stability systemic nature global reach. , short-term financial flows centre crises developing 9 countries, trade imbalances external shocks undoubtedly added difficulties managing open capital accounts. main reason growing vulnerability developing countries external shocks dismantling institutional checks balances national level, , failure redefine government interventions controls economies integrated global economy. , examine regional mechanisms reduce likelihood crises, manage occur. links trade finance, existing regional integration agreements serve platform address number concerns identified wider debate reform international financial architecture. information gathering, standard setting surveillance national policies stressed wake Asian financial crisis. , greater familiarity , sensitivity , local conditions complement global efforts , , expected regional institutions. , regional monetary arrangements pool significant national reserves act effective crisis lenders global modalities provision liquidity, adequacy, conditions attached lending funding, large gaps. proposed features controversial, remains approach feasible. International economic integration complex process, solve problems faced developing countries. , properly managed, regional multilateral economic integration significant contribution enhance position developing countries world economy. designing High-level Segment, mind convey clear practical message international economic community, daily involved trade negotiations negotiations correlated issues. , 10 discussion concentrate - general aspects problem. instance, fact regionalism, properly dealt , element multilateral system, alternative lead reinforce process building strong multilateral system. , , translate concrete reality suggest , debate - questions coming floor - pointed questions specific cases present difficulties dealing subject general statements position. instance, variety regional agreements, variety, identify lessons. , instance, agreements deal problems anti-dumping agreement Zealand Australia, , totally abolished resort anti-dumping. practical experience initiative agreements dealt problems related subsidies countervailing duties Rules origin perceived agreements obstacle open regionalism tariff preferences. experience rules origin agreements experiences exhaustive – mentioning examples. conclude shows , reality, contradiction regionalism multilateralism, field dispute settlement. impressive , member countries strong regional agreements, free trade area agreements customs unions, increasingly resorting WTO dispute settlement procedures solve problems . case, , NAFTA Southern Common Market (MERCOSUR). interesting problems play real life. suggestions conclude, expressing hope , day, Dr. Supachai summarize points dealing issues. 11 CHAIRMAN , usual, thought-provoking remarks. Today, privileged distinguished panellists, introduce start session. , . Mike Moore, Director-General WTO; . Long Yongtu, Vice-Minister Trade China; . Iddi Simba, Minister Industry Trade United Republic Tanzania; . Carlo Trojan, Permanent Representative European Commission; Dr. Luis Abugáttas Majluf Andean Community. lead discussions questions regionalism contribute development globalized economy, regionalism building block multilaterism, address issue . Mike Moore. MR. MIKE MOORE Director-General WTO -reading work Karl Popper writing country. : imperfect knowledge. single party holds ultimate truth, , work hard today, closer coalition truthful positions. WTO bound Ministers . time Ministers meeting concluded Singapore, , reaffirmed primacy multilateral trading system. recognized global economy calls, , global system trade rules. , global forum continuing negotiation, , global platform building trade agenda. recognized fundamental principle - discrimination WTO operates obligations generalized -favoured-nation (MFN) national treatment. Multilateral liberalization WTO ultimately working ways. , encouraging Governments 12 trade barriers discriminate domestic foreign products; , insisting , country lowers trade barriers country, WTO members, foreign producers compete level playing field. record 50 years impressive. eliminating discrimination trade. 50 years, trade barriers slashed successive multilateral agreements. WTO’ negotiations resulted agreement dismantle Multi-Fibre Arrangement, , 30 years, severely handicapped developing countries’ exports textiles clothing. strengthened WTO rules disciplines agriculture developed framework rules services. , expansion WTO� membership 139 countries, agreements cover vast majority world’ economy. main exceptions core principle - discrimination case regional trade agreements (RTAs). aim GATT/WTO rules regional trade agreements minimize risks trade diversion distortion ensure multilateral regional liberalization hand--hand aim objectives. conditions trade restrictions eliminated substantially trade parties free trade agreement. true , decade, huge increase number regional cross-regional trade agreements, varying widely scope coverage. 170 regional agreements force world, force 1990. 70 discussion, negotiation due force 2005. country, Japan Republic Korea, party , countries conclude preferential deals . Africa , 13 trade agreements, 2005, virtually Euro-Mediterranean area Americas involved regional integration. cent Canada’ 13 Mexico’ trade takes place NAFTA. world trade takes place regional trade agreements -fifths conducted preferential -favoured-nation basis. extent RTAs developing countries contribute process multilateral liberalization, welcomed. Regional trade agreements, working parallel general liberalization, countries - developing countries - build comparative advantages, sharpen efficiency industries act springboard integration world economy. addition, focus strengthen political commitment open economies trade regimes, essential maintain. served important context trade policy innovation (.. EU competition policy, APEC’ work information technology trade facilitation). regionalism accelerate pace regional multilateral initiatives, positive impact EU’ telecommunications policy WTO telecommunications negotiations. Regional agreements provide channels designing managing global system. striking developments lead- Singapore Governments respective regional arrangements - EU, Latin American Integration Association (ALADI) APEC - develop common objectives multilateral agenda. Singapore Conference , regional groupings - formal informal - played pivotal role streamlining process forge consensus. , contribution RTAs promoting dialogue, cooperation peace underestimated. RTAs political economic, experience European Union case point. regionalism provide important complement multilateral system. grave mistake 14 easy substitute. burdensome - serving impede integration distort trade - jeopardize multilateral efforts liberalize trade, undermine huge achievements 50 years. forgotten regional agreements allowed nations region bounce Asian crisis - open Europe, open United States open Japan. Regional deals divert trade create. instance, tea-producing country signs preferential trade agreement coffee-producing country, import , consumers necessarily benefit , price tea coffee set world markets; trade simply diverted. risk , trade barriers lowered neighbours high , create vested interests block multilateral liberalization. Import substitution failed deliver prosperity developing developed economies . fail regional groups developing countries . essential, , pace direction regional general liberalization matched, small developing countries. multiplication preferential trade agreements 15 strain limited negotiating capacity. TO’ 139 members offices Geneva. possibly hope negotiate effectively regional forums WTO Free trade agreements countries - substitute free trade . disappear. clear vision, backed -negotiated rules, acceptable beneficial. ensure multilateral goals remain ambitious regional efforts. crucial developing countries push hard WTO takes account . , tangled web preferential agreements creates huge administrative burdens problems developing countries cope rules--origin requirements differing industrial health regulations. mention burdens diverse complex rules regulations impose business operations, possibilities complicated regimes create malpractice, corruption. present trends continue, preferential arrangements cover wider share world trade, point MFN national treatment exceptions international trade relations rule. Multilateral liberalization WTO opens access markets, . dispute settlement mechanism, WTO binds domestic liberalization access markets effectively means. inevitable contradiction regionalism multilateralism - fight . contradiction free trade protectionism. hope seminar misunderstood, give clear signal , multilateral system hope option, , broad deep offer maximum comfort hope common membership, important step , regionalism offer progress effective important 16 stepping stone. Finally, understand political imperatives. minister watch trade negotiations drag year year. Ministers officials sense achievement blame working hard regionalism option happening city. , repeat final fact, regionalism important political component economic contradiction work work road. . CHAIRMAN issues raised Director-General WTO discussed - opportunity panellists presentations - conditions regionalism conducive advancing multilateral arena. focus issue elaborate . invite Vice-Minister Trade China, . Long Yongtu, presentation. MR. LONG YONGTU Vice-Minister Trade, China holding meeting UNCTAD theme regionalism global economy important today. China actively participated regional economic organizations APEC, years experience, APEC played important role development global economy. reasons mind. , , paradoxically, APEC regional organization raditional sense - forum. forum, plays important role enhancing dialogue coordinating macroeconomic policies member States. , explore situations issues concern members. , feel 11 years, APEC created 17 mode cooperation. mode cooperation prominent characteristics based voluntarism consensus. recognizes economic, social cultural diversities exist members APEC. , insists process liberalization trade investment, flexibility, work based mutual benefit respect purpose objectives liberalization trade investment realized gradual manner. principle voluntarism traditional mode cooperation trade. Thirdly, APEC promotes enhancement economic technical cooperation members. members include developed countries, United States America Japan, developing countries. , feel , enhancing economic technical cooperation , realize common objectives promote continued development APEC. experience shown interest development region closed kind regionalism. open regional grouping, works market forces promote trade investment liberalization region , linking region rest world, contribute liberalization global economy. Regionalism replace globalization, mechanism enhance strengthen global economy. , China’ negotiations accession WTO faced obstacles wondered participate organization, 80 cent trade investment relations 20 members APEC. , economic globalization 18 emphasize global multilateral trading system, insist negotiating WTO accession. question merits attention , support development developing countries Globalization pay attention important issue increasing gap developing developed countries, ignore problem. global level, formulate comprehensive framework support development developing countries - technical development, trade investment liberalization. lot good organizations including WTO, UNCTAD, UNDP, institutions World Bank financial economic institutions support programmes interests developing countries. developing countries working regions regional organization support playing greater role multilateral trading system. feel discussions UNCTAD regionalism global economy significance, hope UNCTAD plan provide countries support. WTO play major role supporting developing countries, upcoming negotiations, focusing questions relevant countries countries important address. CHAIRMAN issues raised Minister Yongtu deserve elaboration , emphasis unique characteristics regional arrangement APEC alignment directions regionalism directions world trade order mutually supportive. MR. IDDI SIMBA Minister Industry Trade, United Republic Tanzania 19 pleased invitation participate session capacity Chairman Industry Trade Committee Ministers Southern African Development Community (SADC). happy opportunity UNCTAD forum exchanging views experienced policy makers matters international trade current complexities globalization. Tanzania, leadership UNCTAD technical guidance support attempts cope numerous challenges facing trading partner regional global markets. complex disparity obligations, hand, open national markets countries exports , hand, sell external markets, remains real challenge Tanzania, African economies. succumbed quickly pressure fulfilling obligation open markets efforts domestic production. proceed , reason countries decided give greater importance regionalism, - possibly, years - build internal capacities produce sell. world today, impress - agree - importance liberalizing economies opening markets countries’ exports. world positioned give assistance building internal capacity, , produce play effective role world market. weak economies, find practical method apply pull regional resources building capacity. confirm august gathering opposed multilateralism. deliberately decided member WTO follow, extent , WTO rules. simply 20 reliable members multilateral body produce sell. regionalism step multilateralism, , absolutely conflict . SADC higher level cooperation enable countries region address effectively problems national development, cope challenges posed changing, increasingly complex, regional global business environment. “Regional Integration Global Economy” theme relevant regional integration efforts SADC. Increased regional trade cross-border investment yield significant benefits. importantly, restructuring productive sectors, basis -sustaining development growth, part response increasingly globalized world economy, feasible - feasible - regional, national basis. , countries region collectively address disparities economic performance individual member States viable basis fulfilling, long-term, principles balance, equity mutual benefit form foundation regional integration. admit difficult objectives achieve, experience cumbersome complex negotiations SADC Protocol Trade concluded 1996. WTO Ministerial Conference held Singapore years , announced conclusion SADC Trade Protocol, gradual establishment SADC Free Trade Area period years. , member States preoccupied intensive negotiations tariff liberalization agreeing principles special arrangement observed ensure beneficial participation member State. recollection, 20 rounds cumbersome negotiations place time. August 2000, agreed set tariff 21 liberalization schedules committing member States liberalized trade 85 cent year 2008 100 cent years , 2012. , easy task disparities economies. demonstrated member States negotiating special arrangements cautious approach complement trade liberalization programme agreed . special arrangements include setting dispute settlement mechanism negotiated set rules conferring originating status apply products traded enjoy preferential treatment. special arrangement trade sugar, aims coping distortions caused world sugar market, trade textiles clothing. addition, member States agreed institutional mechanisms implementation SADC Trade Protocol manage free trade area. mechanisms include establishment trade implementation unit -committees customs cooperation trade facilitation; coordination committees sanitary phyto-sanitary technical barriers trade, standards quality assurance accreditation metrology. processes face continued pressure open borders wider international trade committed. session supposed address key issues: regionalism contributed development globalized economy regionalism, complex conflicting interactions, helped hindered development. theory, regional economic blocs aim creating larger markets objective accelerating economic development growth member States. Similarly, regionalism expected encourage foreign direct investment seeking advantage larger markets. Regionalism supposed enhance competitiveness member States. Assuming theory correct, regionalism contribute development. Sadly, , region, hypothesis proved. proved happening global economy meet, , internal difficulties implementing goals set international agreements. point , 22 , increasing globalization world economy, regional economic blocs assuming greater significance, simply countries option. respect overlaps, complex conflicting nature regionalism, phenomenon avoided. important economic blocs work rationalize individual systems benefit member States. individual level, member States reserve rationalize memberships regional groupings. underlying factor invariably capability bear costs membership benefits perceive derive . basis kind analysis country, Tanzania, decided pull Common Market Eastern Southern Africa (COMESA), effective September year. cope problems East African Community SADC strengthen regional groupings step globalization. enter international arena today’ rules steps regional level. , SADC region, realize integration fast global trend. Countries regions globe organizing closer economic political entities. movements stronger regional blocs transform world economically politically. Firms economic blocs benefit economies scale larger markets. continental level, efforts continue, principally auspices Organization African Unity, promote closer economic relations. Lagos Plan Action 1980 Treaty establishing African Economic Community signed OAU Heads State Government June 1991, regional economic communities building blocks continental community. view efforts regional integration Southern Africa part continental 23 effort. primary objective SADC Free Trade Area, notified WTO, mobilize resources facilitate development regional capacities enable member States participate effectively beneficially regional multilateral trade. recognize SADC countries continue play marginal role world economy general underdevelopment. SADC believes economic integration region precondition enhancing member States’ capacity check marginalization. acknowledging growing importance global interdependence, SADC believes existence special synergistic attributes regional economic blocs meaningful, beneficial sustainable member States. , SADC, growing interest global regional integration Europe, Americas Asia. view coordination interdependence regional economic blocs important issue addressed. , speaking SADC national, desire supportive participatory international community, supportive process transforming SADC viable economic partner. Encouraging free flow trade ; support terms increased investment critical. SADC Free Trade Area provide basis attracting investment region. part strategy encourage investments, SADC member States put greater emphasis maintain realistic economic policies, accountability transparency. priority agenda development region promotion peace, security conflict resolution, democratization good governance. Drawing experiences, SADC private sector mutual partners development. reason, SADC introduced system 24 interaction Governments SADC business leaders. addition, memorandum understanding signed SADC SADC Chambers Commerce Industry. part process promote dialogue cooperation matters common interest government business. launching free trade area, industry trade sector SADC facing demanding challenges. relate closely learn experiences economic integration blocs NAFTA, European Union, Association South-East Asian Nations (ASEAN), Economic Community West African States (ECOWAS), . assist member States articulating global trade issues WTO benefit members. SADC Industry Trade Coordination Division (SITCD), located country, strengthened play role. point, cooperating partners started providing technical financial assistance support, notably UNCTAD United States Agency International Development (USAID). continuing support assistance build SITCD capacity serve member States effectively. conclusion, , fully committed , role , WTO multilateral mechanisms promotion global trade. faithful members global community, trade international rules. sustain reliable players. Mechanisms established enable young economies build international capacities produce. liberalized . markets, growth liberalization, full goods sell developed markets. Sugar mentioned earlier; receiving 25 lot subsidized sugar Europe , produce sugar told open markets, . international arena strengthen regional groupings order precisely build national regional capacity produce sell. CHAIRMAN Minister Simba. raised interesting points regional groupings precondition developing countries Tanzania advance arena multilateral trading system. interesting issue regional groupings set-ups. groupings APEC, mentioned . Long, composition advanced advanced countries grouping, model, sort, world trading system . SADC characteristics, interesting hear economies Africa affected ongoing liberalization process, issue address. MR. CARLO TROJAN Permanent Representative, European Commission ( Secretary- General European Commission) pleased subject regional integration discussed UNCTAD congratulate UNCTAD secretariat circulated interesting issue paper. aware, EC historically staunch supporter regional integration, partners. support contradiction main notion governs EU’ trade policy, , multilateralism. WTO repeated, regionalism multilateralism complementary notions reinforce long 26 regionalism open. agree Director- General Mike Moore earlier, understand concerns voiced Minister Iddi Simba, . Evidently, EU integration special case deep integration. encompasses customs union single market, economic monetary union broad set accompanying policies. degree political economic integration achieved member States Union 40 years unique history. European integration secured peace stability member States Union continent. basis sustained increases economic welfare reduction regional disparities. point important models regional integration. pursuing integration, Europe lock policy advances develop strategies cope transition costs. difficult absence regional integration process. convinced draw inspiration experience. , advocating European integration blueprint world. time, liberalization world trading system advanced significantly, European Union proud forefront multilateral initiatives reduce barriers trade. contradiction greater regional integration full participation global trade liberalization. , accompanying measures extremely important process deeper economic integration. strains caused economic groupings dealt effectively wide range instruments order facilitate cohesion 27 economic groupings. Examples measures include harmonizing legal frameworks technical standards, economic monetary cooperation, structural funds social cohesion funds. decade, developments world boost process regional integration. present, countries members regional grouping pursuing objective closer economic integration, Director-General WTO gave interesting figures earlier. reasons development intimately linked process commonly referred globalization. barriers trade economic exchanges fall, entire populations sections society confronted adjustments, , , carry short-term costs addressed Governments. Regional integration provide mechanisms assist managing process change. , learning process involved regionalism sense , developing countries, involvement economic integration regional level real experience contractually based trade liberalization. , experience regional level manageable introduction rules-based multilateral system. European Union, member States institutions, forefront providing encouragement assistance endeavours. mention pioneering work supported Union Lomé Convention. European Development Fund assistance regional bodies Africa specific regional programmes. aims assistance promote greater economic integration. , West Africa, EU support ECOWAS West African Economic Monetary Union. refer progress achieved Cross-Border Initiative East Southern Africa. Latin America support regional integration roots continues manifested trade policy Central America Andean Community. support clear commitment establish closer trade political links MERCOSUR. 28 Mediterranean, EU begun implementing free trade agreements (FTAs) countries, finishing negotiations FTAs remainder . EU’ main objective provide anchor economic reforms countries undertake incentive lowering mutual trade barriers. EC encouraging establish FTAs final objective arriving Euro-Mediterranean economic space future. emphasized support EU regional integration bodies accompanied support ACP participation WTO. support European Union regional bodies closely linked objectives pursued framework development strategy. fundamental element objectives assist partners pursuit greater integration world economy. , , . integration, countries create potential raising standards living attaining objective sustainable development. developing countries, economic progress constrained small size lack diversification economies. alternative seek closer collaboration greater coherence. EU ready support facilitate process. EU committed supporting integration programmes aim eliminate constraints cross- border trade, investment payments. stand ready support process change private public sectors order maximize benefits opportunities created integration. European Union committed supporting efforts developing countries confronting challenges globalization. Specific attention paid States participate actively multilateral trade negotiations. Attention special developing countries regard implementation results negotiations. 29 Earlier, Minister Iddi Simba mentioned paramount importance capacity building technical assistance concur . concur special differential treatment important principle, matter fact, issues moment top WTO agenda discuss implementation issues Marrakech Agreements. guiding principles, incorporated trade cooperation agreements concluded partners countries Mediterranean region , , Republic South Africa. examples preferential trading arrangements compatible WTO rules. , European Union concluded negotiations ACP partners successor agreement Lomé Convention - Cotonou Convention. essential objective parties identified smooth gradual integration ACP States world economy. setting, attention promoting greater regional integration ACP countries. agreement gradually moving reciprocal trading relations economic groupings EU form economic partnership agreements. provisions, aim enhancing trade relations countries ACP group European Union, illustrate emphasis regional integration. EU-ACP partnership aims providing comprehensive framework trade development emphasis stable predictable trade environment. result environment positive incentives economic operators potential investors. negotiation economic partnership agreements start 2002. agreement takes account specific Developed Countries (LDCs). guarantees stable market access EU. economic partnership agreements asymmetric nature. 30 , transition period enable reinforcement deepening regional economic groupings. principles asymmetry flexibility account levels development EU ACP, approach advocated EU consistent objective poverty alleviation. distinguished commentators expressed concern growth regional economic agreements. regional groupings obstacles progress multilateral trade liberalization, stepping stones. European Union share fears, fundamental principle open regionalism heart economic integration initiatives. contrary; experience contractual trade relations neighbouring countries, detailed trade negotiations, strengthening political ties exchanges civil society factors potential bolster multilateral process reinforce political stability. addition political benefits, including confidence building conflict reduction, regional economic integration tool facilitating economic development. , true long integration excuse protecting inefficient sectors insulating economies rest world. Regionalism open - lowering tariffs members accompanied progressive opening rest world. Equally important, regional initiatives open members, assist countries developing regional cooperation agreements. MR. LUIS ABUGÁTTAS MAJLUF Andean Community question regionalism contributed 31 development raises complex issues. , define success indicators integration agreement basis objectives. , discussion regionalism development tended integration provide. development general achieved, managed ensure major progress. , integration components broader strategy. Integration national policies multilateral strategies. , economic integration trade, discussions creation trade possibilities types indicators measures impact integration agreements development. methodological problem isolate impact integration variables. element - presented secretariat document - happened integration patterns, complex group differences systems situation . point, important, question expect results integration. , time period scheme integration produce results. , specific case Andean Community patterns economic integration Latin America general, true agreements signed years , integration phenomenon. Latin American, paralysis call lost decade 1980s, affected integration. , considerable discussion integration, , 1990s, stage economic integration embarked greater solidity. question expect results efforts terms development, future. discussions regional integration multilateralism, advent - regional integration occurring greater dynamism. agreements entered greater depth, 32 response address aspects central analysis. , clear idea variables regionalism - exist Latin America - basis analysis, design mechanisms regionalism effective contribution economic development, welfare national majorities. context, type assistance regionalism produce goods expected countries involved. Andean integration significantly benefited technical cooperation EU opportunity express special recognition . fields integration derive real benefits. Countries benefit technical cooperation, bilateral UNCTAD. terms integration schemes, simply point major features implications multilateralism. element highlighted literature current integration component strategy national development. Part impetus regional integration countries unilaterally introducing economic reforms produce harmonization policies. generates areas work terms standard setting restructuring. earlier rules designed support development policies based import substitution. regulatory reformulation adapt policies national development. problem creating tensions address speeds reform context integration. countries progress economic reform speed generating problems implementation. time, threatened survival Andean Community, thankfully, overcome. analysis raises question model, Latin American countries 1990s, producing expected results. 33 illusion harboured 10 years regard reform, privatization market deregulation begun give rise discordant voices, economic approach yielded expected benefits countries. question arises problem integration , underlying development problem model changed integration produce results. characteristic integration, today, profound extensive effects, covers areas policy, investment competition services. case Andean Community, interesting developments biodiversity working community rules facilitate electronic commerce rules protection indigenous knowledge. Integration covers virtually areas policy, , fact, superseding conceptual set-ups defined integration, free trade, customs union . Today, find elements common market perfected customs union. reconceptualizing understand implications type integration, wider integration. , trade measured true dimension. characteristic, essential, simultaneous participation integration agreements. Today, Latin America, country part , , integration agreements, ambitious goals. generates area developed consistently multilateral regional frameworks. consistency needed levels commitments . specific case Peru, takes part Free Trade Area Americas (FTAA), ALADI Andean Community. , negotiating agreements countries addition existing bilateral agreements. generated complex panorama produces strong pressures institutional capacity nations States secretariats manage type 34 situation. element highlighted respect simultaneous participation agreements sense. agreement introduce . words FTAA sense WTO , Andean Community MERCOSUR sense long FTAA , Andean Community sense introduces additional . Similarly, bilateral agreements add . arrive compromise balance pluses , interesting work . regard consistency, mention problems arising, safeguards. countries participate agreements incorporated emergency safeguard clauses agreements safeguard clauses considered. situations country depend partners partner agreement signed incorporation safeguard measures. Rules origin generating complicated problem, virtually impossible company navigate safeguard clauses market company exporting. Secretary-General mentioned problem settlement disputes. Agreements provide dispute settlement mechanisms strong resistance accepting mechanisms, , multiplication dispute settlement mechanisms, situation complex. fourth trend apparent progressive convergence integration agreements. South American level, initiated convergence MERCOSUR, presidential mandate negotiations designed create common MERCOSUR trading area. Andean Community negotiating El Salvador, Honduras Guatemala creation free trade area. experience negotiate bloc--bloc shows lack capability - negotiators accustomed bilateral negotiations lot problems address interregional negotiations, explain failure Andean Community-MERCOSUR attempt. area work 35 order rules regulations compatible set-ups. important trend , formation North- South regional blocs. Latin America, FTAA, , ambitious process bilateral agreement Canada. important assess implications type integration agreement involving participation developing developed countries region. hand, , , period unilateral concessions, agreements introduce concept reciprocity. leads renewed debate distribution benefits integration - subject fallen wayside years. finally, characteristic integration, demands approaches, earlier, top--bottom schemes integration set trend . words, integration demand driven, structure configure mechanisms participation integration schemes strong pressures Andean case, , succeeded structuring true participation civil society integration, devising mechanisms respond interests. problems generated clauses special differentiated treatment [] North- South agreements. agreements affect special preferential treatment multilateral context important problems terms distribution benefits, countries national sectors countries. conclusion, elements perceive, , results integration. regard trade, results significant. Suffice review interest interregional trade Andean Community MERCOSUR. important structure trade Andean Community: exports world, comprise 70 cent 36 commodities 30 cent manufactures intraregional trade - 70 cent manufactures 30 cent commodities. enabled diversify exports export goods aggregate . analysis impact trade 1998-1999 crisis enables contributed reducing vulnerability exports. intraregional aggregate goods impact fall commodity exports. effect, positive, regionalism translates collective action . significantly strengthened capability participating countries exercise vis-à-vis multilateral framework managing globalization. strengthen idea [regional groupings] partners managing globalization, decisions result equitable distribution benefits. area important results regional agreements contributed implementation multilateral agreements. , Andean Community adopted decision intellectual property require adapt rules countries. dual effect, participation multilateral framework contributed harmonizing national legislation. cross- fertilization. referred regionalism enabled alleviate impact external forces, Andean community, financial mechanisms alleviated impact commercial financial area. element emphasize - direct link regionalism multilateralism - context countries negotiate agreements changed. longer traditional market - units units. current trend Latin America loose access markets country preferences country. Finally, point 86 cent hemisphere trade free tariffs 2004 thinking MERCOSUR-Andean Agreement FTAA. context, 37 liberalize, greatest contribution regionalism multilateralism. 38 GENERAL DISCUSSION CHAIRMAN panellists statements, open discussion general participation. issues general terms touched eloquent clear presentations, hope repeat statements. request France intervene behalf EU. REPRESENTATIVE OF FRANCE . Chairman. honour speak behalf European Union countries EU - Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia Slovenia, Cyprus, Malta Turkey ( countries) statement. context globalization trade means problems development addressed framework contiguous geographical spaces exceeding linking national dimension narrow. dynamics regional integration . origins European building traced period World War progressive opening process regional integration, complete . South-East Asia, ASEAN set 1967, today, gathered 10 countries join efforts create free trade area year 2002. 1970s, substantial development regional integration, decade witnessed renewal interest process result growing globalization, liberalization trade, capital movements movement persons; MERCOSUR created 1991 NAFTA 1994. phenomenon concerns advanced industrialized developed countries, developing 39 countries. Encouraging initiatives Africa 1991, meeting Ministers Conference Free Area Ouagadougou creation Economic Monetary Community Central Africa West African Economic Monetary Union. groupings appeared response risks marginalization African economies, , , account small part flow world exchanges - trade financial. result growing awareness African leaders areas interdependence national economies. European Union convinced benefits regional integration. great potential represents surest ways progressive integration economies world exchanges conformity WTO rules. enables emergence institutional capacities. finally, setting decision-making processes democratic, locally culturally sensitive, neutral reversible. EU resolved work regional integration context multilateral commercial system. Regional integration, complementary process integration world exchanges, constitutes sine qua , apprenticeship designed prepare developing countries entry world economy strengthening competitiveness. development harmonized framework appears essential stimulate cooperation trade-related areas strengthen competitiveness economies international market, reducing constraints traditionally affect supply trade. existence common rules enables companies region enjoy economies scale access wider markets. regional integration projects productive, relative homogeneity States , proper administrative structures, proper national accounting, 40 management regulations governing trade credit, investment code budgetary fiscal laws. Areas water supply, combatting desertification construction infrastructure important aspects regional sense. Specific problems confronting developing countries require attention. , Central Africa, internal problems States poses difficulties regional integration. countries experience uncertain political situations gain regional cooperation institutional area. international community provide unanimous support efforts countries confronted political internal external troubles overcome difficulties. Developing countries - poorest - decided grasp opportunities regional integration progress peace, stability security, democracy rule law, encouraged efforts. Regional integration powerful vector improvement dialogue neighbouring countries prevention conflict establishment peace. tenth Ministerial Conference held Bangkok, 12 19 February 2000, presided, EU expressed concern ensuring promotion cooperation regional integration important place; continue . , UNCTAD important role play supporting efforts developing countries, LDCs, actively pursuing developing regional integration processes. Bangkok Plan Action, paragraphs 119, 137 164, mandate UNCTAD base technical cooperation promotion cooperation developing countries, -regionally, regionally interregionally. context, EU encourages UNCTAD develop technical assistance activities respond demands developing countries - , developed - assist drawing regional free trade agreements. result unique experience area, EU supported regional integration processes, Ambassador Carlo Trojan pointed earlier. 41 context contractual policies partnership, agreement ACP EU countries Cotonou, impetus trade cooperation . Barcelona process evidence EU efforts improve economic integration regions world establish Euro-Mediterranean free trade zone. EU priority strengthening regional partnerships. Council Europe meeting Feira June 2000, EU resolved consolidate Euro-Mediterranean partnership created Barcelona Declaration. Commitments strengthen good neighbourly links, increase prosperity, eliminate poverty, promote respect human rights fundamental freedom, democracy, proper management public affairs rule law, encourage cultural religious tolerance, develop cooperation civil society, including NGOs. EU attaches importance current regional integration efforts aim commercial economic financial fields cover cultural environmental aspects. economic fallout linked consolidation stable regional framework good neighbourly relations negligible, , relations encouraged. REPRESENTATIVE OF INDIA India open, equitable, -discriminatory trading system. accepts efforts create regional economic spaces contradictory creation unified economic space multilateral level. fact, regional spaces building blocks bigger effort. years, noticing , proliferation RTAs, intraregional trade gradually replacing interregional trade. Geneva Ministerial Meeting 1998, India, countries, focus attention issue. basic principle facilitate trade parties, long regional groupings create trade . divert trade 42 raise barriers trade parties problem. Reduction external barriers MFN basis, conjunction preferential liberalization, key requirement accepted building block strategy implemented successfully. Article XXIV GATT allowed RTAs, exception, rule. Article checks balances, Article GATS services side. terminology vague. , experience, reviewing consistency RTAs provisions Article XXIV GATT Article GATS, mixed. inability reach conclusion regard largely lack clarity systemic issues, meant “substantially trade” “ regulations commerce”. context, questions: , intraregional trade result increasing RTAs, trade cost multilateral trading system, cost developing countries WTO intend question , WTO clarify systemic issues Director-General WTO systemic debate unfolding months MR. MIKE MOORE give update . moment negotiation important issue implementation. Implementation issue brought knees Seattle Seattle give praise Indian Ambassador WTO work preparing negotiation. time agenda Ministers Marrakech, work agriculture services . Work areas proceeding varying degrees intensity, technical level, competition, investment trade facilitation. spent considerable time, 43 Chairman Norway, studying improve efficiency work plan internally, move study externally. core manage . bluntly, progress year managing ; full open informal meetings . report special seminar LDC officials, major conference Africa. assistance officials week previous 10 years. matters designed attacking basic problem - resolved resolved - , weak consensus, difficult part operation. tackling methodically. contact developing developed countries, -resident representatives, , reshape modest resources effective benefit find difficult participate work. implementation areas important, Seattle, worked . pretends work achieve climate coalition year, . developed countries , movement market access year . lopsided, show appreciation leadership demonstrated, United States Africa Caribbean Bill. Multilaterally solid steps 27 countries planning market access offers. pointed working cooperation UNCTAD UNLDC III Conference held Brussels year. fundamentally important conference audit create integrated framework partners work market access. CHAIRMAN issues raised Indian delegate important - 44 , weak terminology Article XXIV leaves room interpretation. regional arrangements follow multilateral framework crucial issue, weak regulations, carry checks building blocks trading blocks. issue intraregional trade created regional arrangements develop cost international trade, developed developed countries. . Trojan respond question. MR. CARLO TROJAN European Commission question interregional trade, experience - acknowledge experience developed countries - win-win situation. doubt single market created European Union enhanced enormously imports Western Europe, country standards - import country, import group. experience developed countries equally true LDCs. create free trade area, , consequence, start talking standards, ., effect increasing trade member country, increasing imports area. fact regional trade arrangements, win-win situation effect increasing exports. REPRESENTATIVE OF BELARUS clear regionalization globalization world trade flows conflicting, , complementary trend contemporary world development. sense, virtual consensus issue risks related globalization overcome agreed policies global level 45 participation interested parties - national Governments international, economic financial organizations. strengthening regional cooperation development regional approaches manage global processes opens possibilities develop balanced approach current global problems. hand, regionalization called reduce effects instability global market, hand, compensate shortcomings multilateral trade economic system formed framework WTO. Multilevel integration , view, formation risk management connected globalization principle sustainable development countries regions world. success UNCTAD balanced approach interests groups countries reflected final document Conference. approach apply negotiations topical problems. reform world financial trade system aimed preventing marginalization greater balance rich poor countries, prevention crises. basic principles reform based unique economic historical development experiences developing countries countries economies transition. balanced approach similar interests collective responsibility Governments international organizations decisions. World Bank, IMF WTO recognize principles phased liberalization developing countries countries economies transition. inalienable elements future trade financial negotiations, State entitled principle reciprocity targets tasks cooperation development. 46 , developing countries countries economies transition granting greater access companies industrialized developed countries, true. , solve problems, essential participation national Governments, United Nations organizations, Bretton Woods institutions, institutions. regard lack consensus respect long-term consequences globalization, increasingly important coordinate multilevel economic integration basis concepts economic security sovereignty, bearing mind principles transparency democracy. consensus achieved Bangkok, UNCTAD international forum develop policy. undisputed success UNCTAD proves member States UNCTAD organization forum formulate paradigm sustainable economic social development aiming fair distribution advantages globalization. stress Belarus consistently supporting, continue support, activities UNCTAD . 47 REPRESENTATIVE OF THE PHILIPPINES , APEC ASEAN region, Chairman Committee Regional Trading Agreements (CRTA) WTO. capture “sound bites” key issues discussions regionalism multilateralism. heard , option set WTO trade negotiations extend deepen rules. perception distinguished friend, Vice-Minister Yongtu, voluntarism flexibility regional cooperation fact substitute focus assisting developing countries. presentation Ambassador Trojan dwelling experience European Community development, deep integration members achieved. grouping’ approach partly rules-based, partly gradual liberalization development perspectives. Minister Simba pointed integrate immediately WTO multilateral trade system improving supply- side capability. means products investments produce goods bring external market provide growth development economies. synthesis , hybrid ASEAN APEC. ASEM - relationship Asian countries Europe - developing, alternative, premature liberalization. records WTO, 50 cent 240 agreements identified carried actively European Community significant factor regionalism concerned. Ambassador Trojan EC considers support regionalism complementary multilateral trading system. EC recipe ACP agreement, development agreement. , market-access aspect worked , MFN deviation, debated WTO suitable conclusions. , , WTO 48 tensions coming negotiations rules vivid, fact developing countries developed countries partially agreed Uruguay , imbalances, precisely mirror image difficulties. negotiations put rules liberalization developing countries LDCs improving capability produce understand rules, WTO difficult situation. point WTO substituted regional trading agreements. , experience ASEAN, , . Chairman, leader ASEAN. flexible ASEAN country -pace integration important sector, automotive sector. recollection, renegotiation ASEAN rules, ASEAN ministers, wisdom, formulate side agreement renegotiation situation impact financial development trade ASEAN country. , flexibility action, flexibility ASEAN APEC. ASEM voluntarism, committed type, good satisfactory achieving common objectives. Coming issue internal trade external trade, 1998 statistics show intra-ASEAN trade 20 cent compared external trade 80 cent. hand, intra-EC trade 60 cent compared 40 cent external trade. NAFTA 50-50 cent MERCOSUR coming externally oriented trade. indications market diversion, EC diverted market, EC opening markets developing countries. APEC programme, supposed open differentiated process 2010 developed countries 2020 developing countries. represents flexibility accommodation difficulties 49 encountered developing countries. , WTO forgotten purpose development, negotiating table negotiate , equal. negotiating table powerful country, inequality. impression , option WTO, endless negotiations, tempered considerations nature. Lastly, CRTA programme, true examination consistency WTO agreements successful years. simply ambiguity provisions. Singapore Ministerial Declaration 1996 raised , lead- Seattle concrete proposals address provide clarity Article GATS, Article XXIV GATT enabling clause. , concrete proposals, carry examination process. task CRTA resolve systemic issues, Committee agreed initially deal issues liberalization including rules origin, denial benefits, scope exclusions, product coverage . REPRESENTATIVE OF SENEGAL dealing question regional integration contributed advancement world economy, African Group prepared document circulated, points. foremost, clear theoretical studies influence regional arrangements world economy, Africa, indicators lead influence. population Africa living extreme poverty share African trade world trade . Africa benefits investment, portfolio investment private direct investment. shows regional integration lead Africa contribution world economy Africa overcome problems. connection, comments. 50 , regard capacity building, refer implementation WTO agreements. , regard, globalization option - reality, clear African countries signed Marrakech Agreement acceding firmly success multilateral system. time, note asymmetries imbalances hampered achieving achieve, context implementation WTO agreements. address issue access markets products products developing countries. issue development capacity increasing trade African countries. structural weakness overcome. weakness terms capacity building domestic growth. , free total guaranteed access quota products exported developing countries. sufficient access, technical political level capacity building carried order ensure regionalization achieved produce benefits. context, WTO environment favourable interregional agreements. point concerns attitude developed countries regional integration. number EU agreements initiatives countries United States launched initiative. steps context enlarging involvement developing countries world trade. , regional integration ambivalent - bilateral multilateral level - regard multilateral trade. , developing countries increase share market, , time, increase tariff - tariff barriers. 51 represents brake, access developing countries markets, context agreements signed EU order strengthen regional integration. appeal developed countries ensure ambivalence transformed decisive commitment realize hopes regional integration. point concerns technical assistance. regional integration response deficiencies individual countries, , agreements programmes technical assistance tend meet insufficiencies. avoid situation UNCTAD, WTO international institutions develop approach address structural deficiencies individual level. hiatus break individual efforts efforts regional integration. comment systemic level relationship trade poverty. earlier, Africa living absolute poverty - dollar year. theories contribution trade poverty reduction, theoretical approach translated practice ensure dealt context full development. final remark , prospects Africa successes terms regional integration. thinking SADC southern Africa West African Economic Community. needed , prepare Africa construct successful regional economic integration arrangements. political demonstrated Lomé Summit, clear signal desire Africa move objective. recall African Community Initiative, obstacles individual, bilateral multilateral level. build African economic community regional arrangements. options . option establish -regional blocs groups major economic powers, South Africa Nigeria, 52 arrangements cooperation developing countries developed countries enable fulfil mandate integration. regionalization. sort specialization capacities country, agreements concluded international level account comparative advantages African country capacity building investment promotion. REPRESENTATIVE OF AUSTRIA link views expressed Director-General WTO Minister Industry Trade United Republic Tanzania, . Simba. important common ground field productive capacity development, eloquently pointed . Simba. , understood correctly, , liberalization place, sell. true Africa, 80 cent exports primary products. Regional arrangements stepping stone direction. view WTO subscribe MR. CARLO TROJAN wanted react interesting presentation distinguished delegate Philippines. suggest processes odds . disagree . process liberalization globalization global level, necessarily , consequence, minimum degree rule making. true form regionalization. , process liberalization - globalization, accompanies , side coin - progressive introduction minimum degree rule making. processes odds; , reinforce . , true liberalization rule making present challenges countries degrees 53 development. reason principle special differentiated treatment developing countries, , LDCs. . panellists , capacity building, LDCs. Support context development cooperation includes financial technical assistance, heart development cooperation policies countries groupings countries developed world. , heart EU development policy. , question multilateralism regionalism, , debate, include development cooperation play role tool. gave, distinguished delegate Senegal alluded , ACP Convention, focus regional integration part development cooperation policy. part process, market access. view, parallel processes reinforce , sufficiently, draw lessons. drawing number lessons, , talk implementation existing multilateral agreements, Director-General WTO alluded discussions week, crucial phase. order progress processes complex world, account developing countries, LDCs developed world, constituency profit, objective WTO, organization. CHAIRMAN . Trojan, point Ambassador Philippines raised multiple trading arrangements EU engaged parts world. wondered sort diversion MFN leads types arrangements. MR. CARLO TROJAN 54 . helpful global governance. MINISTER IDDI SIMBA react . dilemma - , talking Tanzania - number African countries kinds problems. liberalized years result international pressure, liberalized simply result common sense. thought countries trade opened borders. happened . country producing sufficient textile products , large tyre factory, , good units producing edible oil, sugar, sisal bags batteries. , liberalized, items coming market large quantities - good, bad, smuggled dumped - factories progressively producing capacity forced close . culprits received -standard goods number middle-income countries subsidized sugar Europe America, result implement investment programmes sector. , liberalization sense good bad theory good, practice bad close factories producing capacity. expect international community international institutions, World Bank financial institutions commercial banks give kind assistance require rules apply matters international finance good borrow commercially productive capacity produce order play role partner global trading system bordering countries - members East African Community SADC - trade naturally, war peace. problems similar . individually face international 55 market develop intraregional trade , importantly, pool natural resources, plenty Tanzania, , rich minerals, plenty good agricultural land potential develop livestock fisheries, potential produce world class tourism industry modernize transit trade. approach world system today - individually Tanzania - mobilize technological, technical, managerial financial resources exploit partnership countries neighbourhood years , told international community regional, individual meant interested . regional result international pressure. , tendency told soft pedal bit, regionalism coming kind conflict multilateralism. setting rules , problem. told responsible member international community, follow rules. , part system set rules. , set , capacity understand . thirdly, 56 applying rules hurting . Finally, world organized respond demands communities . confusion . national problems, listen , sympathize business . REPRESENTATIVE OF THE UNITED STATES OF AMERICA United States experience shown countries open trade investment world , regional neighbours , generally create growth, competition, broadly based prosperity home countries. United States sees regional trade groups contributing positively process trade liberalization growth, extent adhere WTO rules commitments. Notable examples Europe, South-East Asia, Latin America, discussed today, shown regional integration potentially raise living standards strengthen peaceful relations regional partners. United States view, North American Free Trade Agreement, implementation 1994, win-win-win arrangement, stimulating higher economic growth member countries. generally favourable view regional integration, United States Government assisting developing countries number regions enhance trade cooperation. part support trade liberalization Caribbean Community (CARICOM) instance, United States helped establish Trade Information Network, “virtual secretariat”. information communications system links CARICOM’ regional trade institutions trade ministries member countries network, officials ministries share wide range information relating interregional trade liberalization WTO matters. year, SADC-US Forum held 57 Mozambique. topics, Forum discussed multilateral trading system, Africa Growth Opportunity Act, negotiation US-SADC Trade Investment Framework Agreement, role private sector, Minister Iddi Simba reviewed . Forum reaffirmed important role regional integration play attracting investment improving economic development. follow- Forum, United States Department State sponsored programme United States July year North American Free Trade Agreement representatives 11 SADC signatories -signatory African countries. Topics included rules origin, textiles, agriculture, customs facilitation, dispute-resolution mechanisms, handling sensitive products. programme included -day consultation Mexico view NAFTA process results. United States Agency International Development (USAID) developed multi-year programme, begins 2001, assisting West African countries efforts develop closer regional ties. area economic integration, United States helping West African countries reduce intraregional barriers trade, enhance regional compatibility monetary fiscal priorities promote discussion resolution trade investment policy differences. USAID supporting regional trade development eastern southern Africa Regional Trade Analytic Agenda. programme began 1994 carries trade policy analysis directions interest African stakeholders, , , COMESA. delegation welcomes today’ discussion important topic. Greater regional integration, effectively implemented, offers possibility faster trade investment growth rules commitments multilateral trading system. 58 highly desirable outcome industrialized developing countries alike. discussions, considerable mention, Minister Simba comments floor, increases productive capacity, African countries. comments, distinguished representative Andean Community, interested panellists, topic noted interest Andean Community representative’ comment dramatic difference composition trade Community’ trade globally regionally. delegate Andean Community feel , sense, regional integration regional cooperation initiative helped produce greater diversity composition trade, , enhance capacity trade experiences potentially applicable experiences expectations newer trading groups discussed today REPRESENTATIVE OF VENEZUELA interesting hear reactions Minister Simba Tanzania consequences multilateralism market access effects developing countries. comments kind contribute important event UNCTAD organized. Venezuela’ perspective, focus initial question, regionalism contributed global economic activity. raise number points view process open regionalism connection multilateral trading system. contradiction countries pursuing regional economic trade contributing regional market activity. case Venezuela, benefits participating preferential schemes Andean Community Group (Venezuela, Colombia Mexico) CARICOM. Negotiations create free trade area Andean community MERCOSUR, Free 59 Trade Area Americas referred participants. view step consolidation full participation multilateral trading system. contradiction strengthening multilateral system consolidation regional system. Thirdly, regional system fundamental vehicle strengthen world stage. Open regionalism means future integration multilateral system secure fairer trading system, developing countries. view regional agreements integration , , means development economies. , agree points . Trojan presentation EU regionalism mechanism relation multilateral trade system. pace multilateral mechanisms slower individual machinery. view free trade system pursuit, liberalization , guarantee ensure result equitable trading system. hear panellists proliferation dispute settlement systems regional arrangements strengthening weakening dispute settlement mechanism WTO. understand risk weakening WTO mechanism. REPRESENTATIVE OF JAMAICA Dr. Abugáttas mentioned, decade extraordinary dynamism regional initiatives Latin America Caribbean regions. Today, told important elements common agreements. element greater willingness RTAs account levels development. Jamaica wonders important reason 60 attractiveness regional -regional agreements important lesson multilateral trading system . issue touch concerns Article XXIV exception multilateral rules - regard systemic issues structural aspects. Article XXIV conceived 50 years , structure global economy fundamentally . - provocative - Article XXIV conceived exception conceived era globalization. Thirdly, issue intraregional extraregional trade, , , trade data regional level Latin America Caribbean, find intraregional trade growing faster extraregional trade. Exports region grew decade 16 cent average year, faster region’ global trade grew 11 cent. , intraregional trade proportion trade rising steadily. conclusion countries region increasingly important trading partners absolute relative terms. strengthening economic relations countries region contribute building competitiveness enhancing economic performance, , judgement, contribute growth trade, regionally globally . point raised representative United States composition trade. studies Organization American States commodity composition exports integration schemes Latin America Caribbean tend differ composition exports rest world. conclusion suggested integration schemes contributing export diversification countries, , move exports primary commodities exports Latin American Caribbean countries. important developments respect role functioning important regional arrangements. 61 REPRESENTATIVE OF THE ISLAMIC REPUBLIC OF IRAN remarks distinguished panellists document prepared secretariat aptly addressed aspects regionalism vis-à-vis global economy. question regionalism contributed globalized economy important . UNCTAD document failures multilateral level solve issues require international cooperation reason identifying regional responses account developing countries. means deficiencies globalization result regional arrangements developing countries address problems international community fails solve. expected regional arrangements contribute globalized economy, , contribution globalized economy regionalism Regionalism considered ownership problems regional level deny responsibility international community addressing challenges globalization presents developing countries. Islamic Republic Iran member regional arrangements Economic Cooperation Organization (ECO), Organization Islamic Countries Framework Agreement Trade Preferential System Organization Islamic Conference (OIC). trade activities regional arrangements reached expected level. 62 weaker performance regional arrangements developing countries - including region - ascribed factors political issues, lack efficient mechanisms functioning, uncertainty lack confidence members benefits advantages partners, similarity products terms comparative advantage, lack complementaries predominance bilateral trading economic ties developed industrial countries regional arrangements. mentioned, regional arrangements considered substitute multilateral mechanisms. , question addressed . Moore, absence, hope colleagues answer . countries experience successful regional trade arrangements members multilateral trading system country’ bid accession WTO, politically blocked --- years, affecting adversely efforts regional arrangements. emphasized global economy regional integration arrangements mutually reinforcing. main question effectively reinforce regional integration agreements serve channel benefits globalization directed disadvantaged countries, benefited globalization participate arrangements cooperative sense, assist regions areas market access, transfer technology, - foreign direct investment role responsibility developed world withheld. globalized economy contribute regional integration arrangements securing share countries multilateral trading system. context, accession countries WTO facilitated. Finally, question mind , extent 63 regional arrangements promote economic development membership consists developing developed countries REPRESENTATIVE OF BENIN note satisfaction convergence views regionalization development, partnerships regional integration arrangements. importance -regional arrangements developing countries strengthen regional productive capacity enhance competitiveness international trade. integration countries regional level, countries resources finance productive capacity. sources financing productive capacity foreign direct investment (FDI) respect, share concern. FDI, multinationals set developing countries means competing developing countries frustrating development developing countries set operations hear responses panellists regard . FDI, investments sources, multinationals, developing countries arenas competition multinationals, development countries means assured. REPRESENTATIVE OF THE RUSSIAN FEDERATION words perception integration processes occurring world development international production. intensification trade related areas cooperation countries active multilateral cooperation. integration processes increasingly relegating processes place. generated export policies context economic globalization, 64 , coordinated. , negotiations multilateral rules number areas achieve targets set, results fully satisfy countries, drag . conditions, developing countries, dynamically developing - economically speaking - wishing place, set regional integration processes. point country, Russia, virtually integral part world economic system. proven, , successful implementation agreements partnership cooperation EU, latest decision Government Russia step negotiating process country’ accession WTO, , , result complete integration Russia world economic community. , post-Soviet space, forms integration associations - bilateral economic agreements multilateral agreements limited scope, customs unions. addition, trade agreement countries Commonwealth Independent States (CIS), , agreement treaty signed Kazakhstan creation Eurasian economic community. logic moving States fulfil treaties signed - completion formation customs union creation single economic space - require mechanisms. field trade, regime free trade envisaged single customs tariff, single system customs tariff regulations agreed system preferences. , interaction countries trade economic development reached stage eliminated tariffs mutual trade. formed common trade regime begun creation single customs territory. time, member countries customs union perceive greater harmonization national legislation measures designed increase economic potential agreed restructuring economies. expect develop agreed position State members community respect WTO economic organizations, unified system currency regulations 65 controls, ensuring economic safety, fighting contraband customs violations . measures contemplated treaties, , treaties enter legal force ratification Parliament, , doubtless, submitted international organizations, including WTO UNCTAD, closer study. stress creation signature treaty shows interesting integration processes post-Soviet space leading deepening economic cooperation countries. , hinder countries joining WTO individually independently; agree activities joining cooperate context organization. , hinder countries integration world economic community. conclusion, point treaty designed trade economic cooperation, harmonizing bringing closer national legislation synchronizing activities member States. Examples include resolving humanitarian problems, harmonization national education systems, development science culture, harmonization national systems ensure minimum social standards granting citizens member State community equal rights education medical care territory. , extent redressing situation created post-Soviet space, fragmentation cultural, humanitarian social spheres members Soviet Union. 66 Panellists’ responses questions raised debate MINISTER LONG YONGTU years negotiations WTO, WTO rules-based organization, support , global economy set rules. create sets rules regional groups, rules world. persistent accession negotiations. find rules set WTO complete rules, extent, benefit developed world. time rules served benefit developing world. China stood firmly developing countries accede WTO, find preferential treatment developing world membership symbolic status. , sets rules, set regional groups. set global rules providing preferential treatment trade investment developing world. lacking developed. time WTO set rules real preferential treatment trade investment developing world, priorities negotiations order correct imbalance set rules. respect rules, important rules complete fair. DR. LUIS ABUGÁTTAS MAJLUF Briefly, reply direct question addressed representative United States. Andean Community, opening regional level resulted industrial dynamic totally unexpected, public private sector. 67 process industrial conversion capital flows formation joint ventures. considerable positive impact negative impact. stress undesired consequences regard foreign investment. countries decision switch - abandon - markets cover region productive apparatus. result race provide incentives investment addressed regional level. Andean region, Peru effective, Venezuela Colombia, servicing Peruvian market. , pros cons, future addressed . MR. CARLO TROJAN number issues raised interest forthcoming LDC Conference year, enhancing productive capacity foreign direct investment. , matter principle, FDI beneficial developing countries, matter multinational , long invest bring capital managerial skills benefit industries clusters receiving countries. MINISTER IDDI SIMBA question FDI raised distinguished delegate Benin, -Saharan Africa competition Eastern European Asian countries, Egypt North Africa South Africa south. criteria world community applying determining FDI countries . supposed establish legal regulatory framework attractive invest, democratize system democratic establish good governance, privatization liberalization. told programmes control 68 HIV/AIDS, protect environment, engage anti- terrorist activities. sort criteria apply attracting foreign direct investment. people invest countries people Africa. depend good offices Governments bilateral relations. , , -Saharan Africa work harder apply criteria order attract FDI, private sector, Governments bilateral relations deal private sector. 69 Part 2 Regional monetary issues CHAIRMAN segment, address regional monetary issues context regional integration global economy. greater frequency international currency financial market crises, including countries record good governance macroeconomic discipline, suggests financial instability systemic nature global reach, mentioned earlier Secretary-General, . Ricupero. slow pace, modest goals absence decisive action multilateral reforms international financial system, increasingly important Governments work regional arrangements, protect future speculative attacks financial crises. European Union significant contemporary arrangement, arrangements involving developing countries, designed facilitate mutual international payments provide mutual support external financing. view arrangements conflicting pursuit multilateral reforms, essential complement process creating integrated balanced global economic system. number concerns identified wider debate reform international financial architecture lend regional arrangements. include information gathering, standard setting surveillance national policies greater familiarity sensitivity local conditions expected regional institutions. regional arrangements 70 pool significant national reserves, assure timely provision international liquidity preempt large currency swings. act effective crisis lenders absence global arrangement, ensure management exchange rates, close regional trading ties integral part growth dynamics. respects, strength regional institutional arrangements, phasing scope membership require careful examination. , successful experiences regional integration trade, production financial flows positive negative effects financial stability growth, prospects success arrangements area enhanced careful examination existing features adapted regions. pleased give floor distinguished panellists - . Heiner Flassbeck Deputy Minister Finance Germany, Professor Charles Wyplosz, Professor Economics Graduate Institute International Studies Geneva, Dr. Luis Abugáttas Majluf Andean Community. MR. HEINER FLASSBECK Deputy Minister Finance, Germany talk bit European experience regional monetary integration. easy task presentation -read Mike Moore’ statement morning replace reference free trade words, stable monetary relationships. state global economy calls global monetary arrangements. critical question , globalized economy monetary arrangements, regional level, global level experience global monetary arrangement, Bretton Woods system decades World War, important respects, details. mention , Europe, 30 years, , 71 , characterized flexible exchange rates, shown solution globalized economy. Economic theory maintains choose corner solutions - solution absolutely fixed rate absolutely flexible rate. European experience shows , transitional phase development. crucial countries, transitional phase process catching industrialized world, concepts transitional phase. flexible exchange rates proved solution Asian crisis, observers position problem solved keeping exchange rate flexible. , flexible exchange rates offer countries Flexible exchange rates offer kind freedom long big shocks disturbances world. , Asian crisis , disturbances occur, flexible exchange rates overreact worse. big argument flexible exchange rates smaller countries simple , opinion, small countries small huge global capital flows. Small countries cope capital flows world, industrialized countries, power speculate currencies. kind critical mass countries, degree regional cooperation, bring counterweight huge capital flows world. experience proved disastrous 72 huge swings real exchange rate, , competitiveness countries. skewed flexible exchange rates tend overshoot, overshoot directions, resulting huge disturbances distortions competitive position countries. opinion, adversely affect efficient allocation resources contradict sought achieved liberalization trade opening borders goods. free flow goods undermined huge swings real exchange rate affect competitive position countries. experiences Europe, South America, Asia, , moment time, big experience Euro. broad agreement world Euro undervalued dollar overvalued, years, resulting huge imbalances lead short-term negative repercussions world . , Euro shows, large closed economies European Union autonomous. people flexible exchange rate autonomy, Europe shows autonomy - European Central Bank react fall Euro, intervenes, raises interest rates. needed big blocs cooperation keeping exchange rate reasonable band. simple solution , problems, move world monetary union , simple - world monetary union target distant future achievable short 73 term. , regional collaboration monetary affairs. . Regional collaboration monetary affairs small countries avoid huge swings capital account huge repercussions exchange rate competitiveness. achieve sound sustainable economic development, , external money stable . learned 20 30 years, unexpected internal money - , inflation - dangerous distort allocation resources. , acknowledge sharp fluctuations exchange rate equally dangerous, small open economies. participants earlier quantitative relations trade extremely important, regional collaboration, huge amount trade neighbours collaborate. monetary affairs, important; important initially avoid huge swings exchange rate. question relations rest world dealt , phase. regional collaboration place phase, , phases, efforts world monetary order, . Europe, beginning, liberalization trade flows extremely important, hand, Europe, time - collapse Bretton Woods system - recognized unfeasible fluctuating exchange rates. beginning, small group countries collaborated, countries pegged exchange rates German currency. liberalization trade flows opening market capital account, Europe adhered system flexible exchange rates. , managed 74 achieve high degree import export penetration , high growth rates. shows reasonable system. hand, Europe shown prerequisite system, stabilize system time, difficult achieve, monetary convergence. finally achieved Europe, 30 years converge nominal terms - started process beginning 1970s, collapse Bretton Woods system, ended monetary union century. , medium term - transitional phase monetary union - countries reasonable exchange rate relations. , exceptions, Italy United Kingdom. early 1990s exchange rates stable labour market regimes work anchor country, Germany. unit labour costs high lost competitiveness fixed rate, devalue currencies order adjust level competitiveness. , case Italy, eventually brought convergence - including convergence labour market regime - full member Monetary Union. conclude, opinion, conflict regionalization real globalization. , Mike Moore morning, stable monetary conditions regions stable monetary conditions world. absolutely true, stable monetary conditions worldwide achieved quickly. intermediate solutions decades. recommend thinks started find corner solution monetary union system fixed exchange rate. 75 , agenda UNCTAD international organizations question coordinate efforts increase trade flows efforts bring stable conditions monetary side. opinion, . , , working approaches achieving stable conditions monetary side trade side, demonstrated European experience proved successful. DR. LUIS ABUGÁTTAS MAJLUF Andean Community deal monetary issues point view Andean Community. , give piece news - aware Andean Community single currency, Andean Anda peso, approved beginning 1970s part efforts integration Andean region. romantic period integration. Today commemorative currency. prove Andean region concerned impact monetary issues regional integration. beginning, Cartagena Agreement, original version, contained safeguard clause correct effects devaluations Andean commerce. words, Andean region, country considered affected devaluation carried Andean country, authorized safeguard steps. set tariffs compensate losses competitivity country� gains competitivity. , devaluations, clause applied. , members . 76 important development Andean level, establishment regional financial institutions. Andean Community Andafund, reserve fund, converted Latin American Reserve Fund. purpose Fund intervene lend resources countries confronted balance payment problems. words regional mechanism countries face problems external accounts. addition, Andean Corporation created objective providing development loans public- private-sector projects. , extent regional level, attempts reproduce functions International Monetary Fund World Bank regional institutions. operation entities , , greatest successes Andean level. crisis 1980s, Fund supported Andean countries levels higher international financial institutions. , case Peru, support Andean Reserve Fund, enabled recover difficulties. Support Fund enabled country stay afloat reach agreement international institutions. addition, volume loans development Andean countries increasing constantly, advantage conditions attached loans. , talk greater lengths examples, successful examples regional level. regard monetary trade policies, studies shown intraregional commerce depends exchange rates, real competitivity economies. dealing question, initially, decided talk harmonization policies. consultative council, comprising finance ministers banks, established clear mandate deal macroeconomic stability. idea maintain stability establishing system exchange information relevant agencies country. 77 Consultations held country considers interests undermined policy country. attempt harmonization . effects devaluation Venezuelan currency started felt, council held meetings objective set parameters based European experience, indicating trade deficit exceed amount, . , thinking single currency. conclusion, talk interesting development Ecuador’ decision weeks abandon national currency dollar . Today, Andean community, sovereign decision Ecuador, totally policy countries, affect future integration Andean region. development, studies conducted projects planned , premature evaluate meaning decision Andean integration. experience pressure felt MERCOSUR result convertibility plan Argentina. PROFESSOR CHARLES WYPLOSZ Professor Economics, Graduate Institute International Studies, Geneva draw lessons waves currency financial crises decade years, focusing link regionalism. draw main lessons crises, implication regionalism. lesson learned countries healthy face speculative attack, lot wisdom fact show unhealthy. , truth countries criteria susceptible attacks. brings observation, , phenomenon contagion full swing, contagion countries considered healthy 78 facing extremely strong speculative financial crises. drives contagion processes fully resolved , , aspects matter regionalism. , country, reason, speculative attack forced exchange rate depreciate devaluate deeply, affects trading partners competitiveness. immediately leads question happen trading partners. trade links, desirable, channel weakness time currency turmoil. , linked , increasing evidence show contagion spreads countries deemed characteristics, regional similarities eyes international investors. Trade links channel, regional links - idea regions share number economic features - immediately trigger attention countries necessarily attract attention. Asian crisis clear. lesson drawn, IMF interventions years tainted political considerations openly . raised criticism circles, implications regional level. Finally, times confirmed, , capital movements liberalized, fixed exchange rate arrangements threat. led consensus call “Jackson Hole consensus”. , exchange rate regimes, extremes work - countries float currencies freely, extreme arrangements currency boards, monetary unions dollarization, “eurolization” cases . lessons carry number implications regionalism. , IMF intervention advice, IMF rely increasingly regional funding large-scale operations, regional friendly-network connection . , call “Washington bias”, 79 view roots crisis solutions necessarily match understanding people area crisis. voiced Japanese authorities Asian crisis, leading , , propose creation Asian monetary fund. , put -burner. regional monetary funds problematic institutions set require extremely careful appraisal direction, suggestive growing trend paying attention regional characteristics. implication link exchange rate regimes trade integration. Multilateralism, , objective international community, complicated operation, senses, regionalism thought step multilateralism. mention reasons . , GATT/WTO trade negotiations tend dominated developed country issues, concerns developing countries, world importance, tend overlooked. , distance strongly affects trade, trade regional place worldwide place. natural tendency build trade links regional level. , trade agreements lead contentious negotiations, reasons easier solve negotiations regional level. agree trade tendency develop regional level - examples , prime European Common Market, discussions MERCOSUR regional arrangements - start thinking proper exchange rate arrangements match trade arrangements. draw attention successful experience Europe, started build trade links Common Market, moved exchange rate arrangements European Monetary System, finally reached stage currency union, meets “Jackson Hole Consensus”. , road long careful , flaws. features, considered 80 worldwide, happened European level. view European Monetary System, arrangements full monetary union, providing features IMF procures. European Monetary System mutual surveillance members - partly supplementing IMF. short-term financial assistance members - partly fulfills functions IMF. develop local regional monetary fund. , regional institutions cooperation developed key features incorporate. direction, realize choice integration globalization road form regional development. , , assumed full capital liberalization quickly, situation intermediate fixed exchange rate regimes danger removed quickly extreme. extreme means full exchange rate flexibility, raise exchange rate tensions regional arrangements level regions. heard Andean Pact difficulties dealing exchange rate arrangements coordinated. logic, favour trade arrangements regional level, associate exchange rate agreements trade arrangements full integration, delay capital liberalization integration cooperation set regional level. conclusion, argue current thinking international monetary system based implicit view full multilateralism . view, doubt multilateralism overriding aim, realistic set years . , , choice -- choice. 81 approaches, regionalism interesting route . reading European experience successful full integration stopping develop local institutions local arrangements. 82 GENERAL DISCUSSION REPRESENTATIVE OF ITALY Italy fully endorses statement French delegate, speaking behalf European Union. importance assistance programmes regional integration underlined interventions debate, speak number Italian initiatives framework cooperation development. feel important elements promotion regional integration contribute creating stable economic financial environment, successful governance attractive conditions regional overseas investors, technologies. regional integration represent, instances, instrument expedite integration developing countries global economy. promotion regional integration , mentioned earlier, stable financial flows stable financial markets. ways stepping efforts encourage private direct financial flows. fostering participation private sector direct foreign investments represents fundamental element development emerging economy step integration regional level global system. Italy devotes considerable attention assisting developing countries adopting institutional legal framework - kinds regional integration arrangements, financial, commercial - encourage setting- businesses, special reference small medium-sized enterprises. 83 commitment regional integration participation, donors, programme carried UNCTAD SADC area, establishment free trade area. results programme positive encouraging interested countries committed endeavours reach target. concrete cooperation activities initiative started UNCTAD year called “Mediterranean 2000". programme, opinion, good features pilot programme focusing regions - Mediterranean Basin Horn Africa - interest raised 10 beneficiary countries. programme aims contribute economic social development countries spurring growth competitiveness small medium-sized enterprises. financial implications process integration, LDCs involved regional integration initiatives, , adequate financial resources combat poverty improve social economic conditions prepared participate actively integration process. purpose, enhanced Heavily Indebted Poor Countries (HIPC) Initiative important instrument. context, point , Italian contribution US$70 million HIPC Trust Fund, Italian Parliament approved legislation allowing cancellation outstanding credits vis-à-vis IDA-eligible countries $6 billion years. feel kinds programmes LDCs, , additional resources direct regional integration efforts. stated earlier, regional integration benefit great opportunities revolutionary qualities technologies. enormous potential reduce poverty, foster sustainable development, empower people, build capacities skills, facilitate transparent government mechanisms reinforce popular participation informed decision-making levels. essential elements countries participate effectively kinds regional integration processes. 84 field technologies governance, Italy organizing Conference Global Forum Reinventing Governments 15-17 March 2001 Naples. subject important event focused actual future role - government fostering democracy development, formidable potential rethinking transforming public administrations perform deliver favour economic social growth. Training sessions high-ranking officials developing countries held Conference. REPRESENTATIVE OF INDONESIA Indonesia, , considers issues discussed critically important sustained economic recovery. Asian financial crisis sparked worldwide interest review international financial architecture. devastating effects crisis, learned , developing countries, existing international financial system serve objectives originally intended. note , global level, efforts reforming financial architecture initiated areas, including development internationally accepted standards, regulations supervision, transparency decision-making process, management capital accounts, surveillance national policies. support IMF, countries region affected crisis recovered faster expected. highly appreciative important role played IMF regard, , extent, concerned developments slow efforts reforming international financial architecture. recovery, deter IMF continuing work reforming international financial architecture create sound financial system responsive challenges facing developing countries. context, reforms undertaken respond demands arising Asian crisis. growing awareness international community pursuing regional cooperation money finance. 85 share view importance regional cooperation complementary effort reform international financial architecture. context, proposal establish regional financial architecture deserves consideration. geared developing mechanism prevent recurrence economic turmoil gripped economies function lender resort. endeavours hand hand development effective regulation international money markets open transparent. establishing mechanism monitor carry surveillance capital markets international financial operations mitigate unpredictability dire effects globalization. context, hoped capacity international financial institutions prevent, manage resolve crises timely effective manner improved. addition, concrete efforts create early warning capacities modalities prevent financial crises, timely action address threat crises. , initiatives public sphere, measures regard private sector important, involvement private sector prevention resolution financial crises enhanced. context, equitable distribution costs adjustment public private sectors debtors, creditors investors deserves consideration. Finally, comment involvement private sector ongoing efforts reform international financial system. workable current discussions issue , , hear comments panellists regard. 86 REPRESENTATIVE OF THE INTERNATIONAL MONETARY FUND happy speak previous speaker raised number issues discuss, important debate. discussion called reform international financial architecture - strengthening architecture, terminology - perceived bit slow comprehensive. membership perceives expressed communiqué discussions annual meeting International Monetary Financial Committee (IMFC) Prague. emphasis number concrete steps strengthen international financial system, , , . perception membership lot concrete work , terms comprehensive reinventing redrafting international monetary system, building blocks. Work elements system light lessons drawn Asian crisis, order achieve , paramount, , participants system, system , resilient crises. ingredients considered important light Asian experience singled Interim Committee meeting. emphasizing strengthening financial sector banking sector adoption standards, practices areas monitoring. important domestic financial sector resilient. , emphasize IMFC communiqué mentioned surveillance include regional dimension. difference drawn multilateral regional opposing controversial, complementary. efforts EU common currency build monetary union, EU cooperating multilateral system Bretton Woods system, good examples regional multilateral efforts work hand 87 hand supporting complementary. examples panellists areas world worked . main emphasis crisis, discussion strengthening architecture, preventive measures members avoid crises. measures area surveillance. Consistent advice needed area surveillance, important, area financing, , support financing countries crisis situations preventing crisis important. , IMFC Interim Committee put emphasis aspect, including development codes standards, advanced, beef work area. issue monitoring implementation, includes issues mentioned, debt reserve management practices, important light experiences crisis. areas detection, vulnerability indicators, referred early warning systems, deserve analysis, lot progress . difficult technical issues lot practical work, assure work . analysis, , area exchange rate regimes, aspects mentioned previous speakers . proper sequencing capital account liberalization, , relationship strengthening financial sector individual countries. important understand exchange rate regimes responsive situation member countries. important draw analysis pros cons adoption regime respect circumstances member, trade flows, openness 88 markets, exposure capital flows, regional integration, . mention work monitoring analysis capital markets aspects mentioned previous speaker. Important progress involvement private sector general attempt strike balance clear guidance circumstances private sector involved flexible approach involvement individual cases. main emphasis voluntary participation, recognizing, , cases structured involvement private sector needed. wanted emphasize , depending issues, feeling progress aspects attributed work IMF. CHAIRMAN questions put IMF’ thinking question financial liberalization, basic financial crisis Asia rapid financial liberalization process. crisis Asia, countries disenchanted opportunities liberalize financial sector. question emergence Asian Monetary Fund - compete International Monetary Fund - objected . view IMF regard renewed effort Asia create fund REPRESENTATIVE OF THE INTERNATIONAL MONETARY FUND long discussion issue IMF crisis. reiterate crucial stability 89 domestic financial sector countries concerned, recognition proper sequencing - capital account liberalized domestic financial sector resilient . comment specifically issue Asian monetary fund aware details discussions forums. , , main aspects issues, , complementarity consistency advice financing context multilateral system. MR. FLASSBECK underline Charles Wyplosz Asian Monetary Fund. agree intermediate solutions. fully replace International Monetary Fund, , , systems assistance monetary currency arrangement, efficient assisting countries attack, fundamentally healthy. , European experience crucial. 1992, France heavy attack United Kingdom, mechanisms European Monetary System differentiate France United Kingdom. decision. , United Kingdom’ rate sustainable, France’ rate , France competitive position. hard kind approach IMF, assist stand countries day day. , opinion, regional system, IMF responsible 100 countries. Regionalism important, talking heading financial architecture realized systems. Early warning systems assistance critical cases shocks realized small 90 transparent system IMF, anonymous. PROFESSOR WYPLOSZ Discussions early warning systems, suggest suddenly good idea improve warning systems job. realistic - difference. unexpected crises, crises, find wave foreseen. means trigger wave. early warning systems solution - . question private-sector involvement, reading , widespread agreement . 1996 1997, extensive report -10 details worked private sector involvement, work. , process stalling, largely widespread misunderstanding, private sector, problems involvement. private sector concerned measures orderly negotiations debt lead rise price debt. evidence shows , cases, contrary. fact, easier deal debt crisis erupted, cheaper debt crisis issued, exception poorer reliable countries, , find costly. international financial institutions . regard capital liberalization, addressed repeatedly, fully concur IMF statement proceed caution careful assessment state development domestic financial sector liberalizing capital fully. step - clear link financial liberalization choice exchange rate regime. 91 countries move full capital liberalization, close option fixed exchange rate. pushed extreme, necessarily interest country, small open countries, integrated economically region. countries float currency, dangerous trade agreements, extreme solutions case Ecuador - , raising questions region steps difficult. concern raised Argentina considered dollarization. link exchange rate regimes capital mobility regimes single decision. 92 Finally, regional monetary fund, funds good sense provide competition terms policy solutions. Policy solutions face crisis arrived options, narrow margin, groups people aiming conclusions. fact monetary fund means debate fund. , funds create healthy competition. downside, sceptical, competition providing funds dangerous lead deterioration standard quality. , minds good bad idea. CHAIRMAN related question, Professor Wyplosz, taught theories , country adopts flexible exchange rate regime, country supposed accumulate substantial level international reserves, moment float currency, accumulating reserves. , moment countries Asia floating currencies time accumulating reserves. explain phenomenon PROFESSOR WYPLOSZ explanation economist called fear floating. , countries claim exchange rate floating, fact, leave floating freely. , , countries officially letting currencies float, accumulate reserves completely give option. symptoms fact extreme solutions work developing countries. , 93 rethink emerging consensus, extremes solution, step, capital mobility regime. MR. FLASSBECK disagree Charles Wyplosz - , countries, inflow capital time countries offering high interest rates high inflation rate. Italy late 1980s , transition countries Ukraine, Russia Kazkhstan Asian countries. , market anticipate depreciation years . market demand risk premium rational market demand today depreciation tomorrow day tomorrow. aspect shows market function ; shows foresight sufficient anticipation solution give countries freedom set interest rates . Countries interest rate stop inflow capital, domestic reasons, rate , inflation rate. contradiction solved market short term, 10 20 years late. DR. ABUGATTAS MAJLUF aspect interesting analyse opening capital account. recommendation careful - years , recommendation multilateral financing agencies complete opening . problems arisen, tune 94 changed. important analyse capital opening time monetary liberalization. led problems, developing countries open service sector, foreign banks reservations work credit lines base, national bank work money raise market. specific case Peru, , leading virtual disappearance national banks, compete conditions. impact international financial crisis efforts liberalize services regional level, case Andean region, intraregional liberalization financial services froze result international financial crisis. element, pretty important, assess role risk assessment firms. answerable , , country’ rating, considerable impact economy. happened Peru slightly late debt payment legal problems sorted . firms lowered Peru’ debt rating immediately pushed cost money interest rate, affecting economy. regulated, risk- assessment firms operate. accountable considerable short-term damage. CHAIRMAN Panellists interventions. move segment, segment today, short break videolink Harvard Business School Boston. 95 Part 3 Investment provisions regional integration: feature regional integration agreements CHAIRMAN session focus issues relating provisions international investment regional integration agreements. approaches investment issues agreements - included specific binding investment provisions, national treatment, set - binding investment principles, exclude investment completely. approach regionally concerted attempts investment facilitation. Asian Investment Area newest approach. established facilitate foreign direct investment area area attractive investment countries. interested hear similar experiences regions, interested hear academic experts business people subject. Today, benefit participation representatives business community, policy makers academics address questions. question business community concerns influence regionalization investment decision. , nature membership groupings, , members developing countries include developed countries, influence decision invest words, composition regional grouping influence decision invest answers questions policy makers impact policy frameworks investment environment perceived investors, clear view factors investors consideration. session today provide 96 good opportunity interaction. interesting listen perception policy makers host countries regional groupings. South-South integration agreements beneficial effects host economies groupings view, investment provisions regional integration agreements facilitated FDI flows region FDI investors region special clauses transition periods needed improve intraregional FDI Finally, seek wisdom academics, neutral observers, policy conclusions drawn comparative experiences time RIAs, including investment-driven policy-driven arrangements. performance differ terms export competitiveness, quantity quality foreign investment attracted region, impact investment economies host countries important question related distinction trade-based trade--investment-based RIAs. hope , session, obtain clarifications concerns. invite panellists presentations. Professor Michael Porter, speaking Harvard Business School Boston. PROFESSOR MICHAEL PORTER Harvard Business School, Boston delighted power technology global meeting subject, , times globalization increasing trade, opportunity work borders. perspective, growing interest regional economic integration world. personally participated variety efforts Central America, Middle East Baltic Rim area. extraordinary perception , world multilateral progress difficult achieve quickly, regional approach supplement accelerate trade liberalization agenda. , tend 97 regional economic integration narrowly, dominant focus regional economic initiatives trade - exports, exclusively. regional economic integration powerful tools boost competitiveness national level, trade . purpose regional economic agreements create process economic exchange profound effects ability individual nations compete, provide inextricable menu trade investment - inbound outbound. set create regional economic agreements, view broader perspective. care trade care regional economic integration purpose regional economic integration create exports sake, raise level prosperity countries involved. creates prosperity Prosperity nation function productivity - productivity economy utilize resources. modern global economy, cheap labour, natural resources capital longer competitive advantage. Increasingly, access inputs, ability inputs produce valuable goods services, ability create firms produce high quality goods services trade nations prosperity grow. economy , nations competing, sense, productive location business. productive location business, attract investment place local firms export. distinction foreign domestic firms diminishing - foreign firms domestic firms export boost prosperity nation nation creates productive environment business. productivity national economy learning traditional focus macroeconomic policy , 98 sense, started reach point longer constraint. stable macroeconomic environment, good political process good legal system - important competitiveness prosperity. increasingly, driving force prosperity longer macroeconomic policy, microeconomic policy; microeconomic foundation country supports high level productivity business. microeconomic foundation consists parts. , productivity economy function productivity firms economy. productive economy productive firms produce high quality goods services export nations. , firms ; productive set firms, productive business environment needed firms competing. environment rules regulations assets firms competing. Regional integration important, , dealing macroeconomic agenda, mentioned speakers. focus importance regional economic integration improving microeconomic capacity country, find powerful tool . Regional economic integration world offers fundamental benefits, benefits important understand traditional view region simply free trade zone. 99 important benefit regional economic integration companies accelerate improvement competitive capabilities, broaden export base country traditional exports. fundamental purpose regional economic integration dramatically improve quality business environment advantage externalities spillovers benefits coordination individual country pursue effectively . benefit regional economic integration improve process economic policy formulation. find , countries work regional process, important benefits nationally process policy set, discipline accelerator process. final benefit integration attracting attention investment region. benefits regional economic integration firms, important understand role investment process trade. Traditionally developing economies, trade developing economies advanced economies. reason developing economies closed opportunity regions trade neighbours. opportunity precluded economic policy. companies developing country primarily trading advanced economies, creates important impediment block development process, basically choice, trade based inherited natural advantages, , cheap labour natural resources. means , traditionally, export base developing countries narrow, focusing commodities country inherited comparative advantages. meant companies developing countries limited skill bases. involved assembly natural resource extraction, limited advantages chain, limited capabilities. approach trading advanced countries based inherited competitive advantages 100 developing countries vulnerable exchange rate fluctuations vulnerable macroeconomic shocks, . , broadly speaking, regional trade enormous positive benefit process firms develop advanced competitive capabilities. longer trade natural resources cheap labour. trading neighbours region, developing countries, array additional opportunities firms exchange trade, consumer goods services traditional export products. trade neighbours kinds goods fundamental stepping stone process companies develop capacity internationalize fully. process rapidly developing regions regional approach heart. , historically Latin America, dominant trade, 80 cent exports, advanced nations. happening, regional trade started opening , composition trade changing. advanced economies trade primary products; growing trade manufactured goods involves exclusively cheap labour. trade developing economies moved 51 cent manufactured goods, cheap labour, , Latin American countries cheap labour . Latin America, happening process competitive capabilities firms region growing, trade broader set goods neighbours. 101 Latin America , real explosion regional trade trade neighbours - Latin American trade , trade region represents 25 cent Latin American exports. Regional trade produces logical opportunities exchanging goods services based unique product , efficient logistics production. expands dramatically opportunities trade builds competitive capability firms. intraregional trade exports. Companies starting foreign investments region, important stepping stone firms develop skills, technology, assets logistical systems support higher levels productivity higher levels wealth. role regional trade business environment, realized aspects economic policy affected country’ decisions. countries collaborate, accelerate process improving efficiency business environment. good regional cooperation improve logistics transportation system. case Central America, instance, aggressive regional integration process , sense design logistical system move goods services efficiently region, country--country phenomenon. Efforts create energy network energy efficient region, common customs procedures, time cross border region, process documents. efforts link financial market. regional coordination broadly creating free trade zone, opportunities countries dramatically improve quality business environment firms competing, , support higher levels productivity. , regional economic integration important tool boosting trade, important . powerful tool raising 102 competitiveness entire region countries region. regional process discipline acceleration mechanism national economic policy improvement. creates pressure act left . regional economic integration trade expanding tool, tool expanding outbound investment expanding competitiveness trade investment. role investment find companies invest countries region. important part regional economic integration. find , region economic unit, attracts companies invest region, investment country valuable. , improving business climate business prospects regional process, attract companies attract attention. Latin America, . regional initiative , sudden region exciting place foreign company, traditional export products, primary commodities, broader set goods, advantage expanding integration countries. PROFESSOR DANIEL CHUDNOVSKY Director, Centro de Investigaciones para la Transformació (CENIT), Argentina highlight features characteristics foreign direct investment - portfolio investment - successful regional agreement, MERCOSUR, imperfect customs union. MERCOSUR attracting lot foreign investment flows region. fact safe experiencing foreign investment boom, benefit development process MERCOSUR host countries. share MERCOSUR member countries world foreign investment flows impressive - increased 1 103 cent late 1980s 2.7 cent 1990s 6 cent years. share MERCOSUR world foreign investment higher share international trade. phenomenon began Argentina 1990s, Brazil 1990s. foreign investment playing growing role Argentina Brazil, smaller members MERCOSUR area - Uruguay Paraguay. regional phenomenon. , big difference - Argentina Brazil, foreign investment developed countries region, Paraguay Uruguay FDI inflows intraregional. , intraregional FDI unimportant Argentina Brazil, number multinational regional enterprises emerged. case, glance, figures suggest regional integration key factor attracting foreign investment. enlarged market induces displacement exports foreign investment, leads foreign investment advantage economies scale specialization generally growing intraregional trade. , membership MERCOSUR advantage countries. Macroeconomic stability adoption structural reforms key factors attracting FDI, difficult differentiate important factors. key factor undoubtedly privatization, linked MERCOSUR . Privatization accounted FDI Argentina beginning decade, quarter FDI Brazil late 1990s. foreign investment privatization important factor, main factor. studies MERCOSUR countries show growth internal demand main inducement foreign investment Argentina Brazil, tradables - tradables. , important difference . 104 contrast FDI countries time import substitution, market-seeking, FDI, addition market seeking, efficiency seeking. market-seeking, larger kind, tradables. companies operate open economy, competing imports companies, impressive number newcomers Latin America world addition companies operating region. foreign investment animal import substitution period. operates, efficient import substitution industrialization. role MERCOSUR Foreign firms operating tradables increasingly MERCOSUR enlarged domestic market. played key role organization automobile autoparts industries, attracting foreign investment food chemicals sectors energy-related sectors. fact, MERCOSUR, attracting foreign investment, extremely important existing foreign firms, affiliates TNCs advantage opportunities regional integration domestic enterprises. share foreign firms exports MERCOSUR, Argentina Brazil, lesser extent Uruguay, shows main beneficiaries enlarged market foreign affiliates. Preliminary findings research moment show foreign firms export regional market import largely industrialized countries. interesting division labour imports coming United States Europe exports regional market, resource-based investments, important economy MERCOSUR. foreign firms exporting MERCOSUR importing rest world. important finding import coefficients foreign firms generally greater export coefficients. 105 Higher imports capital goods investment , parts components final goods resale. foreign firms importing exporting, key issue dealing contribution foreign investment MERCOSUR countries 1990s. Foreign investment contributing increasing merchandise trade Argentina Brazil. situation change future, TNCs engaged resource-based investment net exporters. fact main macroeconomic contribution FDI financing balance payments current account deficit. important consideration main reason macroeconomic officials love foreign investment. tremendous contribution financing huge foreign exchange deficit structural transformation economies causing. positive role foreign investment volatility compared portfolio investment. , growing trade deficit, TNCs importing export, growing trend profit remittance, creating considerable debate region sustainability foreign investment form 1990s. long run, foreign investment projects making negative contribution balance payments. issue foreign investment MERCOSUR, balance payments balance trade, important underline, raised . Ricupero morning, question denationalization firms. increasing share foreign firms Argentina Brazil, important feature foreign investment 1990s. leading firms foreign owned domestic firms sold foreign investors. completely voluntary situation - forced Government - basically compete financial technological strength foreign 106 firms. calls review policy, restricting foreign firms, upgrade conditions enable domestic firms compete level playing field vis-à-vis international competitors. competition effect FDI indigenous firms lead positive negative spillovers foreign firms attract demand domestic competitors. important issue research urgently required. , trade liberalization higher import content local production, affiliates TNCs destroyed, created, linkages domestic suppliers. , consideration , extent develop linkages domestic suppliers networks globalized open economy Coming policy issues raised questionnaire workshop seminar. MERCOSUR ideal case deregulation - restrictions operation foreign firms eliminated MERCOSUR member States. extremely liberal provisions, intra-MERCOSUR FDI largely liberalized. worrying development MERCOSUR couple years sort growing war incentives -national governments attract FDI region receiving lot FDI. 107 lot foreign investment region, happened number developed countries regions, -national governments Brazil Argentina fighting attract foreign investors, MERCOSUR, specific locations Brazil Argentina. , giving money large automobile producers protected environment, MERCOSUR automobile regime special case industrial policy. worrying, beginning year, bitter disputes MERCOSUR fears investment diversion. information magnitude, transparency . fact problems municipal regional incentives companies face opposition national Governments. case investment diversion, regions, MERCOSUR . doubt establish investment-related disciplines regional level, limit harmful competition investment redirect competition socially desirable objectives. intention eliminating incentives, , incentives create externalities favouring internalities - favour private profit, enlarge locational advantages. current incentive schemes - characterized - transparence lacking disciplines disregarding sort competition policy - offered national level MERCOSUR European Union regional competition policy. address question regional policy regard incentives MERCOSUR, urgent policy requirement, learn EU experience. 108 important policy area advantage foreign investment improving competitiveness domestic firms. create good suppliers good competitors create level playing field, create multinationals, extremely important MERCOSUR. , MERCOSUR members multinationals FDI liberalization favourable foreign firms. open environment foreign investment, time, enlarge domestic regional capabilities. advantage foreign investment balance payment reasons, increase managerial resources bring latest technologies, domestic entrepreneurs. domestic entrepreneurs employees foreign firms, spillover important source people trained latest techniques, takes time. complete imbalance complementary policies trade liberalization foreign investment liberalization. international level lot good practices, learn implement . requires public policy makers networking private sector. , situation parts developing world considerable lack foreign investment. MR KHAYA NGQULA Chief Executive Officer, Industrial Development Corporation South Africa . , , pleasure share experiences development finance institution southern Africa. Industrial Development Cooperation (IDC) involved 60 years regional development. regard today’ conference honest attempt UNCTAD bridge gap policy practice, happening 109 ground, build bridge gap idealism reality. talk projects implemented region - projects forced Governments promulgate legislation create investor- friendly environment. formation regional arrangement, MERCOSUR, NAFTA EU, reveals history ; compelling reasons formed. region, SADC, called apartheid South Africa, States South Africa formed called frontline States, South African problem resolved States formed called SADC today. progression political trade bloc, investment destination profit assist developing region. touch interrelated issues. , role regional integration, , role policy measures investment decisions. , focus political requirements Organization’ policies. accept economic integration critical importance SADC, carries politically beneficial element cooperation neighbouring countries voice global forums, numerous potential benefits region’ economies. , agree regional integration expands narrow confines trade liberalization include, , regional infrastructure development, liberalization capital labour flows harmonization investment regimes. short, regional integration helps break barriers countries region. SADC regional integration infancy, current primary focus kick-starting trade integration SADC Free Trade Area. economic benefits expect integrated markets remain constrained SADC foreseeable future. rightly , , attraction investing region instance, achieving future economic benefits regional integration call productive investment. region holds enormous talent, potential agriculture, 110 mining primary manufacturing exploited attain objective. IDC fully committed regional integration efforts acts primary catalyst sustainable industrial development southern Africa. progressively increased involvement region establishing special strategic unit work SADC countries, identifying sound investment opportunities, providing consultancy services inputs regional policy formulation. IDC involved, participation, 31 projects SADC region worth US$5.5 billion, partnership Governments development finance institutions region. portfolio diverse aluminium smelting, mining activities, agriculture, manufacturing tourism. month opened biggest aluminium smelters world 20 international banks participating major multilateral bilateral institutions, International Finance Corporation (IFC), German Development Corporation, Compagnie Française ’Assurance du Commerce ’Extérieur (COFACE) France Ministry International Trade Industry (MITI) Japan. finding, crucial regional integration region, projects attract multilateral institutions big companies invest countries. Accepting investments contribute eventual success economic integration requires investments conform criteria. criteria financial viability, sustainability, international competitiveness compliance internationally acceptable standards. front projects involved subsidies; stand compete world. investment measure risk investing region. criteria listed, successful investment hinges ability investor safeguard 111 risks. implies government assistance incentives aim minimize risk viable projects determine initial viability investment. highlight principal risk elements, measures Governments investors address risk context regional investment. , countries experience problems meeting obligations ( sovereign risk), negative impact business operating environment. Typical impacts range unavailability foreign exchange nationalization private efforts political instability. Investor actions include assurance risk institutions Multilateral Investment Guarantee Agency (MIGA) involvement strong multilateral bilateral organizations, World Bank, projects ensure political influence required. , investment protection agreements Governments long protect threat nationalization. Government support measures address risks include, happened Mozambique, guaranteeing availability foreign exchange repayment interest loan capital, allowing holding offshore accounts, debt servicing, guaranteeing repatriation investment proceeds. consistency legal framework applying rule law element significantly reduces risks operating specific country. , alignment business rules, companies’ acts tax laws, acceptable international practices ensure investor-friendly operating environment. risk category highlight, risk productive capacity interrupted destroyed. general, action investors normal insurance assets, , , inefficient addressing risks. , government support plays critical role minimize risks. provision effective domestic security services, , policing 112 services, important ensure protection physical assets, periods labour unrest. Effective protection intellectual property patent rights important ensure long-term sustainability operations. Labour policies flexible sufficient expatriate labour, critical shortages skills exist domestic economy. training local labour requirement, labour laws place unrealistic time frame phasing expatriate labour. Policies ensure suitable infrastructure adequately maintained, play important role minimizing operational risk. Interruption power supplies, harbour facilities, telecommunication services lead total closure production facility. provision adequate safety, health environmental legislation important ensure operating environment conducive safe employees. accept , support measures contribute minimizing operational risk, risk premium investment Africa. typical primary activities present opportunities super profits, vital number investors developing countries , invest, super profits. Implementation effective coordination support measures require strong institutional capacity terms competence understand issues, develop solutions implement speedily . development strengthening institutional capacity, conjunction stakeholders, critical assure continued flow investment funds. Lastly, cross-border investment region requires Government target country committed success project investors shareholders. commitment ensures policy consistency surety consistent operating environment life project. consistency possibly single important factor investment success. Consistency 113 hand--hand predictability. People predict Government ten years policies changed whim decision people government. conclusion, stress fact regional integration process southern Africa immense opportunities investment. risky, cooperation stakeholders basis development profitability mutually exclusive lessen risk provide foundation successful investment. region, committed ensuring create wealth, jobs opportunities peoples. REPRESENTATIVE OF THE UNITED KINGDOM United Kingdom welcomes focus year’ high-level segment question regional integration. attention subject received Action Plan UNCTAD sign subject age trade development context. Professor Porter, thought-provoking introduction session, rightly noted importance productive business environment investment. United Kingdom agree. principle attractions regional integration, creates increased competition integrated market benefits consumers producers alike. , , issue competition address. briefly share delegates conclusions table competition policy chaired Claire Short, UK Secretary State International Development, held July year. Participants table included large number representatives range developing countries. highlight points. , regard role competition policy, globalization highlights importance competition laws, small economies dependent international trade investment. 114 Competition laws ensure private public restrictive business practices, domestic international context, prevent poor gaining full development benefits globalization. Liberalization relied bring competition, competition policy worth pursuing . strong domestic institutions, economies vulnerable global uncompetitive practices. sound domestic framework competition rules principles central role market economy increases equity consumer welfare, promotes transparency, attracting sustained fixed investment benefits captured development. , regard nature competition policy, effective competition policy covers range restrictive business practices. Competition law strengthens underpins efficient working domestic market. size fit ; universally applicable harmonized model. Competition law designed suit stage economic development legal approach country. essential create competitive regulatory framework privatizing State monopolies, , utilities. Similarly, deregulation due regard consumer interest, public health safety. Generic competition law preferable sectoral regulations risk capture existing operators. Turning regional dimension, regional competition laws local agreements solution smaller States, terms administrative cost economic circumstances. Economies scale small economies rely external competition ensure competitive domestic industry. Regional bodies ensure competition fair. Regional integration spur competition, , small States. true markets small economies viable 115 domestic company . trap consumers high prices quality goods. integrated regional market, number speakers noted, barriers lowered, means consumers reap benefits competition companies, providing bigger markets local companies increase competitiveness. fourth point concerns competition culture. competition authorities independent political influence, effective Government’ economic industrial policies driven principles competition. largely matter political diffuse competition advocacy, sustained national culture competition. Consumers role competition ensuring money. International national consumer groups key role play . Business recognize benefits competition, secure --money inputs ensure fair market products. regard international dimension, table general consensus WTO credible forum negotiation multilateral framework agreement competition principles, discussion core elements. finally, key points competition policy law . importance enhanced technical assistance improve capacity developing countries draft, revise implement competition law, experts put lot work aspect. network competition experts coordinate technical assistance, , disseminate share experiences. REPRESENTATIVE OF AUSTRIA . Porter’ view plea full-fledged worldwide multilateralism. question . Porter context define meaningful regions neighbouring countries, logistical corridor SADC region Central America, continent Africa, instance 116 , . Moore , world key success size, sufficient microeconomic foundation, mentioned statement PROFESSOR MICHAEL PORTER heard presentations Professor Chudnovsky . Ngqula strong argument favour broader view regional integration trade agreements. Professor Chudnovsky showed regional economic integration, sufficient progress domestic economic environments individual countries, lead unanticipated results. Foreign companies buy local companies, foreign investment create negative external balance trade, linkage effects foreign companies local companies limited. Regional integration national upgrading happen . fast , important benefits lost. problems MERCOSUR area , rapid progress privatization export opening, , progress domestic microeconomic improvements , , slow. corporate sector slow develop capabilities, surprising, years protection. regional integration national improvement side side. . Ngqula’ presentation integration process southern Africa stimulus improvement policies national level. kind synergistic benefit regional integration , , fundamental approach strategy. encourage foreign investment positive force regional economic improvement offer notion 117 clusters critical concept. foreign investment simply set investments firms disparate industries risk Professor Chudnovsky illustrating presentation. hand, national Government thinks building clusters, unique capability field, develop critical mass automotive, agribusiness, services, , foreign investment promotion strategy focused cluster development - attracting companies. , create stronger linkages foreign companies local companies. improve rapidly business environment fields economy. , mitigate concerns foreign investment strategy developing investment promotion process. agree Professor Chudnovsky careful investment incentives issue. create agreements investment incentives -sum incentives, countries regions simply giving money tax breaks. investment incentives, legitimate, invested competitive capability country. subsidy training, infrastructure, improving electric power availability improving business environment location. simply pass profitability foreign companies. answer Austrian intervention constitutes region, view lot definitions regions, mutually exclusive. areas coordination neighbours powerful tool enhancing competitiveness, illustrated. , , time, pursue kinds integration broader groups neighbours. 118 view countries pursuing multiple forms regional integration simultaneously. thinking -size-fits- approach - team set countries. regional integration tool, groups countries advance competitiveness agenda. regional integration facilitating mechanism multilateral opening, substitute. fundamentally . integration , independent national process policy enhancement improvement capability enhancement private sector, fundamental improving prosperity. improving prosperity; boosting trade. boost trade boost prosperity wrong kind model integration. PROFESSOR DANIEL CHUDNOVSKY fully agree Professor Porter complemented intervention. absolutely true tremendous asymmetry, asymmetry related political economy trade liberalization processes. deregulate privatize, results short term. Building clusters competitiveness policies requires long-term investment results clear. require systematic approach. lesson countries start process. representative United Kingdom , privatize regulatory authority. developing countries . bad results privatization privatization, lack institutional capacity regulate change properties companies. applies competition policy. countries 119 competition policies complement trade foreign investment liberalization. MERCOSUR, Brazil good experience , months , Argentina set competition policy. Argentina experience regulating privatized companies. cases, luck, , cases. considerable asymmetry deregulating. Privatization, easily , brings short-term benefits, politicians , windfall beginning. difficult development task build institutions. fully agree put foreign investment clusters agglomerate foreign investment. investment promotion agencies world progressive approach. successful Irish . extremely important consideration development point view. learn build institutions process. general policy competition policy - area regulation - competitiveness policy advantage foreign investment kind cluster approach . Porter popularize. 120 MR. KHAYA NGQULA agree Professor Porter regionalism substitute multilateralism. , constitutes attempt regions future, depend WTO, World Bank institutions . build capacity eventually deliver citizens expect deliver. support statement regional integration , means . perspective institutions WTO, negotiate 10 regions defined agenda, hoping defined result, negotiate 100 independent individual countries. regional integration attempt facilitate discussions issues anti-dumping, , concern . WTO meeting 18 months years , institutional arrangements carry debate give answers. REPRESENTATIVE OF THE PHILIPPINES agree suggested cluster approach, consistent issue avoiding competitive incentives developing countries. experience country successful exports result investments, investment facilitation issue. role regional groupings underestimated terms providing image stability improving competitiveness countries. investment regulations multilateral level, big attempt WTO trade-related investment measures (TRIMs), focus avoidance local content export performance. countries notified WTO extension TRIMs, , WTO decision process resolved. TRIMs Agreement call , review Agreement, , extension, viewed terms financial, trade 121 development . easy task present review concerned. countries, ASEAN countries hit financial crisis, justification extending TRIMs. , services agreement, possibility support principle establishment. negotiation imperative developing developed countries. issue, flag UNCTAD, examine stage maintain flexibility developing countries facilitation investments, development. CHAIRMAN’ SUMMARY substance discussions morning, discussing pros cons regional economic arrangements develop framework regional arrangement complementary multilateral framework. sake clarity brevity, summarize discussions points present. point concerns remarks negative positive consequences regional economic integration. , emphasis positive aspects prevail negative aspects. kinds reasons regional arrangements, developing countries, shore capacity support , move multilateral arena. countries period time adjustment build capacity, prepare multilateral involvement. arguments favour regional arrangements order attract mobilize intraregional investment investment region. allusion political motive , cases, prime motive moving countries , subsequently evolving economic integration unit. , present globalization framework, room 122 process regional integration. ongoing process, inevitability process. 1990, 82 RIAs, , decades 75 agreements materialize. , , accept reality RIAs stay, proliferate future. , RIAs compatible complementary multilateral process. point concerns process conducting RIAs serve purpose multilateral trading system. remarks application Article XXIV GATT Article GATS. stated Article XXIV clearcut serve guideline RIAs. connection, fact Article XXIV written long , outdated, good idea, suggested, mechanism rules gauge assess consequences regional economic integration. guide RIAs serve purpose multilateral negotiations. lies area WTO UNCTAD jointly produce analysis basis reconsideration Article order multilateral guidelines regional economic integration. point question globalize regional arrangements, RIAs work global economic regime. discussions, learned ongoing efforts link regional groupings. , efforts link EU Latin American groupings, MERCOSUR, Asia, ASEAN China, Japan Korea, NAFTA EU, instance. , dialogue regional groupings, succeed globalizing regional economic integration efforts work world. join regional groupings , global trading system making. Fifthly, remark regional arrangements bit confusing costly multifaceted arrangements tariffs, kinds treatments, 123 discrimination favour groupings. good idea set work systematize kind preferential treatments offered RIAs conform -discriminatory standard WTO. sixth point concerns area financial liberalization. touched regional arrangements restructuring international financial architecture. , spite financial crisis Asia, opening capital account - financial deregulation liberalization - commendable measure. , planned; arrangement sequencing financial liberalization process accompanied strengthening supervisory framework work. process witnessing EU emergence Euro studied model. applied universal basis, looked model financial liberalization serve process trade liberalization. Lastly, agree -called deeper regional integration. Regional integration concerned trade liberalization extended cover areas trade areas, cover investment. , order cover investment, complementary policies needed microeconomic level. , generally, tend macroeconomic framework regional economic integration. explicit competition policy conducive creating competitive atmosphere businesses, predictability investment region mobilized enable transfer technology, enhancement domestic competitiveness. 124 final remark, emphasize , order exercise , lose sight fact , regionalism , great support integration developing economies, LDCs , global framework. regionalism serve purpose - regional groupings members developing economies - direct regional integration agreements direction multilateralism. time effort give support regional groupings developing countries LDCs, , country--country basis build capacity, build capacity region region. save time, effort cost region-wide matching assistance capacity-building process expedited order accelerate process integrating developing countries LDCs global framework . 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