Globalization should be used to eradicate the diseases of poverty, UK Secretary of State for International Development Clare Short said in an address to UNCTAD´s Trade and Development Board in Geneva last week. "Either we look after the globe, or we´re all in trouble", she warned, observing that damage to the ozone layer, and the proliferation of those diseases, threatened all of humanity. "To protect themselves and their children, the privileged need to ensure that the neediest are reached."
The "key obstacle" to eradicating the burden of communicable disease in developing countries, where close to 3 million people die each year from malaria and tuberculosis, had not been cost, she contended, "but the failure of Governments and health systems to make them available and accessible to the poor". There were also "too many" initiatives, which were poorly coordinated and organized around "one-off" efforts. What was needed in particular was a greater commitment from the global pharmaceutical industry to transparency on pricing and the costs of drug development, and more research focused on diseases targeting the poorest. But "without Governments in developing countries focusing on poverty reduction and putting in place necessary reform, there cannot be progress", she warned.
Ms. Short called for the introduction of equity pricing to enable companies to sell innovative drugs at near cost in poor countries while preventing their import to the industrialized world where prices would be higher. She also advocated voluntary licensing of patented products to local manufacturers in developing countries in order to produce cheap quality drugs, and the establishment of a global vaccine purchase fund based on a legally binding pledge by donors and Governments to purchase a vaccine at a guaranteed price. Other options would be drug donation programmes, the provision of tax rebates for innovative drug development, extending the life of intellectual property rights for new drugs and vaccines, and increased public-private sector research partnerships. At the same time, developing countries should remove trade barriers, customs restrictions and delays that raised the costs of essential drugs to consumers or rendered local manufacture of vital technology unaffordable. They should further consider innovative mechanisms for delivering products to the poor, such as social marketing.
High-level segment debates merits of regional integration
In another discussion held during the Board´s forty-seventh session (9-20 October), panelists said that regional trade arrangements could serve as a "stepping stone" towards multilateralism.
"Ever since Seattle, there has been an increased trend to view regionalism as an alternative, and no longer as a complement, to the multilateral trading system", said UNCTAD Secretary-General Rubens Ricupero in an opening statement to the high-level segment. "But regionalism is the only path available for many developing countries to integrate into the world economy", he added, urging that "the best way to learn to compete is by competing. Initially competition should be between neighbouring States that understand the needs of weaker States".
Inadequate national capacity to produce and sell on world markets was the "real reason" for the increasing importance of regionalism, said Tanzania´s Minister for Industry and Trade Iddi Simba. Tanzania, like other African countries, had "succumbed too quickly" to pressures for opening their markets without making the corresponding adjustments to domestic production, he said. For weak economies, the pooling of regional resources such as land, livestock and agricultural products and development of intraregional trade was the only practical method for building the required capacity.
"We are not opposed to multilateralism, and we follow the WTO rules to the extent that we can", Mr. Simba went on, "but we cannot be reliable members" of the organization "if we are unable to produce and sell". Speaking on behalf of the Southern African Development Community (SADC), whose Trade Committee he chairs, he said that a higher level of cooperation would enable countries in the region to cope with development problems and with a complex business environment. The restructuring of productive sectors would be more feasible on a regional than on a national basis. At the same time, however, countries needed to address disparities in the performance of individual States as the only way of fulfilling the principle of equity, which was the basis for regionalism.
WTO Director-General Mike Moore took a more cautious approach to regionalism, observing that, while it had "much to contribute", it was "not an easy substitute for multilateralism". In some instances, regional trading arrangements could even "impede or divert, rather than promote, trade", he warned. Drawbacks included the heavy administrative burdens of membership in several regional forums and the potential for malpractice and corruption.
Regional forums could enhance dialogue and coordination on macroeconomic policy by working with market forces to promote regional trade and investment liberalization, argued China´s Vice Minister of Trade Long Yongtu. In China´s case, there were many obstacles to accession to the WTO, and 80% of its trade and investment activities were conducted with the other members of the Asia-Pacific Economic Cooperation forum (APEC). China nonetheless valued WTO accession because "economic globalization must emphasize the multilateral trading system" and because "in this global economy, we need just one set of rules", he said. Present WTO rules were, however, incomplete and "more beneficial" to the developed world. "It is high time" for that organization "to provide rules offering preferential treatment for trade and investment to developing countries", he concluded.
The European Union (EU) also believed that "regionalism and multilateralism are complementary notions that reinforce each other as long as regionalism is open", according to Carlo Trojan of the European Commission. He said that "there is no contradiction between greater regional integration and fully taking part in global trade liberalization" and disagreed with concerns that regional groupings were obstacles to progress in multilateral trade liberalization. Contractual trade relations between neighbouring countries, strengthened political ties and exchanges between civil society could all bolster the multilateral process and reinforce political stability. However, in order for regional economic integration to be a useful tool in economic development, it must not be used as an "excuse" for protectionism.
Tenth anniversary of World Investment Reports celebrated
The importance of trade in delivering goods and services to foreign markets has been overshadowed in recent years by the growth in FDI, observed speakers in a related event held during the meeting of the Trade and Development Board. The panel discussion on key future issues in the area of FDI and transnational corporations (TNCs) of special importance to developing countries was held as part of a tenth anniversary commemoration of UNCTAD´s World Investment Reports.
The motives for foreign investment have changed, especially with regard to investment by developed countries in developing countries, said John Dunning, Emeritus Professor of International Business at the University of Reading (UK) and Rutgers University (US). The main purpose was now to gain access to new competitive advantages and the knowledge-based economy.
Investment had an unequal impact on development, and that should be explored along with the future role for government, according to Mike Waghorne of the International Confederation of Free Trade Unions (ICFTU). It was a "tragedy" that workers in some countries were being deprived of their rights and that that fact was being advertised to attract investment. Guidelines proposed by the OECD would put many TNCs "under the microscope", but it was unclear whether they would make a difference. Workers´ fears of the impact of globalization, in terms of lost jobs and even lost homes, had to be addressed; otherwise, the organized labour movement would be unable to keep up with the process, he warned.
Abraham Katz, President Emeritus of the US Council for International Business, said the OECD guidelines were drawing fire from the business community for the same reason as had the now-abandoned draft UN Code of Conduct on Transnational Corporations: because of the introduction of implementation clauses which would be used to "pillory" individual companies. Instead, the business community should be guided by investment agreements based on the principle of neutrality.
Panelists debated the social dimension of the "backlash against globalization". They addressed the need for balance between the rights and obligations of FDI host and recipient countries as well as the need to attract FDI while maintaining development-oriented policies. "Labour standards are not necessarily lower" in developing countries, but "different", said Pradeep Mehta, Director of India´s Consumer Unity and Trust Society. UNCTAD Secretary-General Ricupero summed up the concerns of developing countries as twofold: that the benefits of investment were unequally distributed, and that national autonomy could be lost with decision-making centres located outside the country. Several speakers said their countries were involved in a "beauty contest" or even a "race to the bottom" for FDI. The consensus was that foreign investment both solved and created problems and that partnership was required with the domestic side of the coin in order for investment to become a catalyst for national development.
Least developed countries, UN agenda for Africa
Also at its forty-seventh session, UNCTAD´s Trade and Development Board reviewed progress in the implementation of the 1990s Programme of Action for the Least Developed Countries (LDCs). It recognized that the implementation of commitments contained in that programme had "fallen short of expectations" and that socio-economic conditions in those countries had continued to decline. The Board emphasized the importance of accelerating growth and sustainable development, promoting poverty eradication in LDCs, and strengthening their productive and human capacities. In preparing for the Third UN Conference on the LDCs, to be held in Brussels next May, it emphasized the importance of formulating quantifiable and implementable targets and called for the full participation and ownership of all stakeholders in a transparent preparatory process.
Regarding UNCTAD´s contribution to the implementation of the United Nations New Agenda for the Development of Africa in the 1990s (UN-NADAF), the Board urged closer international cooperation to ensure sufficient investment in human capital and social and physical infrastructure. FDI should be encouraged, as should the provision of increased official development assistance (ODA). Over the longer term, however, private capital flows and domestic savings should replace official financing, which should be incorporated into a comprehensive development approach including debt reduction and relief. Such an approach, the Board concluded, would be significantly assisted by greater market access for African exports and by the transfer of technology. For African countries to take full advantage of market access opportunities, productive capacities must be enhanced and supply constraints reduced.
The Trade and Development Board, UNCTAD´s 145-member governing body, meets annually in Geneva to review the organization´s work and to examine global economic trends from a trade and development perspective. At the session just ended, the Board:
- Commended the secretariat for the delivery of UNCTAD´s technical cooperation at its "highest-ever level in quantitative terms" in 1999, and called on donors to enhance their trust fund contributions for that cooperation;
- Supported the establishment of a non-profit entity, an international trade point federation, to which UNCTAD´s electronic trading opportunity (ETO) system would be transferred;
- Urged steps to finance the participation of experts from developing countries and economies in transition in UNCTAD expert meetings; and
- Elected Camilo Reyes Rodriguez of Colombia as President, replacing outgoing President Philippe Petit of France.
