The international community is in an absurd situation where poor countries are sustaining rich country economies, thanks to debt-related capital flows from poor to rich countries, several speakers told UNCTAD´s Trade & Development Board, which concluded the work of its 51st session on 15 October. " Africa might just as well be in prison ", said Ann Pettifor, Senior Associate of the New Economics Foundation (UK) during a debate on African debt.
During its two-week meeting (Geneva, 4-15 October), the 148-member Board considered recent UNCTAD reports on economic development in Africa, the least developed countries (LDCs), new developments in international economic relations and UNCTAD´s assistance to the Palestinian people. It defined its programme of work for the coming months in keeping with the priorities set for the secretariat at UNCTAD XI (São Paulo, June 2004). The Board also held consultations with representatives of civil society and discussed interdependence and global economic issues from a trade and development perspective, based on the Trade and Development Report 2004 (for background, see press releases UNCTAD/PRESS/PR/2004/033 of 8 October and UNCTAD/PRESS/PR/2004/034 of 12 October).
Carlos Fortin, Officer-in-Charge of UNCTAD, identified four key elements for defining the parameters of the work ahead: the importance of building productive capacities in developing countries and ensuring development gains from trade ; the notion that trade is not an end in itself but a means to growth and development ; the need for developing countries to enjoy some flexibility in the choice of policies, so that their developmental efforts are not hindered by international obligations unsuited to their development and income levels ; and the identification of specific areas of activities in which UNCTAD could enhance its role in promoting the beneficial integration of developing countries into the international economic system. These areas are outlined in the São Paulo Consensus, one of the two main documents adopted during UNCTAD XI.
Developments in the post-Doha work programme of particular concern to developing countries; the sustainability of African debt; ways to achieve the Millennium Development Goals (MDGs), in particular for the world´s poorest countries; and follow-up to UNCTAD XI, including a review of the multi-stakeholder partnerships launched there, were also discussed.
Economic development in Africa : Issues relating to Africa´s debt sustainability
For the first time, the Board considered the issue of the total cancellation of Africa´s debt. In its conclusions, it stressed that debt sustainability depended on a wide range of variables and that debt sustainability analyses should therefore incorporate a comprehensive set of variables, including country-specific factors and vulnerabilities. To that end, the Board stressed the need for an assessment of debt sustainability by an independent panel of experts.
It encouraged further efforts to address multilateral and bilateral debt and underscored the shared responsibility of both creditors and debtors in preventing and resolving unsustainable debt situations.
Indifference towards the African debt question appeared to be a thing of the past, as suggested by the recent statements of Tony Blair. The international community was demonstrating greater political will, having realized that without economic growth, Africa´s poverty levels would not diminish. The UNCTAD report on African debt pointed out that many African nations were still suffering from a heavy debt burden, including even those countries that had benefited from the Heavily Indebted Poor Countries (HIPC) Initiative. The African continent was the only one where poverty was actually increasing. The debt burden was a major obstacle to these countries making it difficult to attract the productive investments needed for them to escape the poverty trap.
The political movement emerging in favour of cancelling this unsustainable debt was very encouraging, speakers said. But it should be accompanied by measures on behalf of African development that would guarantee better access to international markets, by an end to agricultural subsidies and by accelerated capacity-building. More capital flows should be directed to Africa, as current levels were insufficient and unreliable. In this area, specific development programmes should be set up. Equally important is the third negotiating round on the Global System of Trade Preferences among Developing countries (GSTP), launched at São Paulo, which holds great potential for expanding South-South trade.
Participants in an informal panel discussion on Africa stressed that debt cancellation should be considered in the context of the continent´s development. However, cancelling the debt was no panacea. It should be accompanied by special and differential treatment and by sufficient policy space. The commodities problem should be tackled as well. It is worth noting that accruing debt per se is not a sin; in fact, it has an economic value. The question is: what kind of debt, at what level and for what purpose? These are important issues that UNCTAD could work on, as well as the issue of the effectiveness of the credits granted to developing countries.
Least Developed Countries Report 2004
UNCTAD´s LDC Report 2004, which served as the background document for the session on least developed countries (LDCs), put the development of trade and poverty reduction in the LDCs into perspective. In reviewing the report, the Board stressed the urgency to adopt development strategies that responded to the development needs of the LDCs. Increased international trade flows could potentially enable economic development in these countries, it said, but such flows should also be combined with other factors, including the effective development and use of productive capacities to transform the vicious circle of the poverty trap into a virtuous circle leading to the promotion of economic and human development in the world´s 50 poorest countries.
The majority of speakers agreed that concerted action was required by the international community. Since the creation by the United Nations of the LDC category in 1971, the number had grown from the original 25 to 50 in 2004. If current economic trends continued, only 11 of them would achieve the MDG of reducing poverty by half by 2015. The international community had both a moral and an ethical responsibility to reverse those trends and redress existing imperfections in the world economic order, as the LDCs were still marginal players in the world economic system.
At the same time, the Board stressed the need for sufficient national policy space in which LDCs could implement the structural changes needed to integrate further into the international trading system and ensure development gains. Within that context it was also important to find a solution to the question of commodity prices and implications for debt servicing.
Most participants agreed that the financial and human resources available for UNCTAD´s Special Programme on LDCs should be increased if it is to contribute effectively to the implementation of the LDC Programme of Action adopted in Brussels in 2001 and help the LDCs meet the Millennium Development Goals, particularly the poverty reduction target. More emphasis needs also to be placed on trade between LDCs and other developing countries, given the growing importance of South-South trade.
A number of success stories were cited during an informal panel discussion. Among the conclusions on how best to replicate these successes was the need for cooperation between public and private sectors on building sufficient production capacity to meet clearly identified sources of demand in international markets.
Report on UNCTAD XI multi-stakeholder partnerships
UNCTAD Officer-in-Charge Carlos Fortin summed up progress on the partnerships launched at UNCTAD XI in the areas of information and communication technologies (ICT) for development; commodities; investment; and capacity-building and training, including through training institutions and universities. The partnerships reflected a set of development issues on which UNCTAD was well placed to act.
The partnership on ICTs for development focused particularly on e-tourism. Since UNCTAD XI, consultations had taken place with key actors in the sector to identify the technical specifications required to build an e-tourism platform. A prototype was currently being tested. If that system met the specifications, it could eventually be complemented by specific functions. A trust fund had been created to implement the e-tourism initiative.
With regard to ICT training activities, a meeting of donors would be held in Geneva on 18 October to raise awareness of the need for technical assistance activities aimed at helping poor countries collect statistics on the information society. An international meeting on ICT statistics would be organized in early 2005 to identify key ICT indicators that could be collected by all countries. The meeting´s results would be presented at the second phase of the World Summit on the Information Society, to be held in Tunis in November 2005.
Mr. Fortin said that several cooperation agreements had already been formalized on the investment for development partnership. Initial funding would enable the start-up or reinforcement of some projects, such as the business linkages programme in Brazil and the capacity-building programme for gathering statistics on foreign direct investment (FDI) in Africa. There was no time limit on the partnership. Its flexible structure enabled it to mobilize partners and resources based on changing demand in its developing-country members.
UNCTAD´s Virtual Institute partnership had been launched to create a database to enable systematic long-term cooperation with universities. It was open to academic institutions that could benefit from enhanced teaching and research capacity in the fields of trade, investment and development. The Virtual Institute had started with four founding members: the University of Campinas (Brazil), the University of Réduit (Mauritius), Jawaharlal Nehru University (India) and the University of Dar-es-Salaam (Tanzania). Two other universities had joined since UNCTAD XI : the University of Jordan and the Pierre Mendès France University of Grenoble (France). The goal was to have some 15 to 20 partners within the next two or three years.
The International Task Force on Commodities had been launched at UNCTAD XI to come up with innovative ways to make the commodity sector a key element for achieving the MDGs, particularly poverty reduction. The Task Force would eventually comprise 30 to 40 eminent persons representing a cross-section of all stakeholders: Member States, international organizations, corporations engaged in commodity-related activities, NGOs, the private sector and academia. The list of members was currently being drawn up, and possible means of financing were under consideration. The Task Force would hold its first meeting in the first quarter of 2005, funding permitting.
President´s report on the high-level ECOSOC meeting with the Bretton Woods institutions and the WTO
This year marked the first time that the President of the TDB had been invited to participate in the high-level ECOSOC meeting, held in Washington, DC, on 26 April. The outgoing President, Zukang Sha (China), who was succeeded this month by Mary Whelan (Ireland), presented the major points raised at the round tables on inter-institutional partnerships, as defined in the Monterrey Consensus. The key role of the private sector was stressed, particularly in the area of investment, in promoting economic growth and poverty reduction. As to the role of multilateral institutions in meeting the MDGs, the lack of coordination and clarity in the division of labour was regretted. Efforts to update national statistical systems should close the gaps in available information. The need was also expressed to continue adjusting the poverty reduction strategy papers (PRSPs) to the conditions prevailing in each country and to incorporate them into the national budget while at the same time linking them more closely to realizing the MDGs. Ambassador Sha underlined the need for greater neutrality among the various fora dealing with debt rescheduling. He also emphasized that these fora should not be dominated by the creditors.
Members of the Board called for the institutionalization of the TDB President´s participation in the high-level joint meeting of ECOSOC and other international bodies.
Consideration of technical cooperation activities
The Board considered and adopted a report which reflected the new work areas arising from UNCTAD XI in the current programme budget. While there was a general agreement that the poorest countries should continue to benefit from UNCTAD´s technical cooperation, it was stressed that the secretariat should ensure equal access to its technical support by all developing countries.
The fifty-second session of the Trade and Development Board will be held from 3 to 14 October in the Palais des Nations, Geneva.
