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Geneva, Switzerland, 11 October 1999

"Our purpose is to come up with new ideas on specific items that should be reflected in actual negotiations, in other international fora, particularly in the World Trade Organisation (WTO). Our analytical work is not an academic exercise; it has an impact on reality." That statement was made by Secretary-General Rubens Ricupero in an address today to UNCTAD member States which began a one-week meeting on trade in the areas of commodities and services.

The current session of the UNCTAD Commission on Trade takes place at the confluence of preparations for the Third WTO Ministerial Conference in Seattle (USA) from 30 November to 3 December 1999 and for the tenth session of UNCTAD’s quadrienial Ministerial Conference to be held in Bangkok (Thailand) from 12 to 19 February 2000. The Commission meeting is chaired by Mr. Federico Cuello Camilo (Dominican Republic)

Some of the ideas UNCTAD had come up with recently were already being implemented. Mr. Ricupero cited, as an example, the "positive agenda" through which UNCTAD is assisting developing countries to identify trade issues of specific interest to them, to formulate trade negotiating objectives and to pursue these objectives effectively in multilateral and regional trade negotiations. He was pleased to note that about half of the proposals on the table now came from developing countries. That, he thought, would certainly have an impact on future negotiations. Another example was UNCTAD’s commercial diplomacy initiative, by which UNCTAD is training developing country negotiators. That initiative had been strongly supported by the UN General Assembly and was now being implemented in different regions.

But Mr. Ricupero stressed the need to further strengthen the link between UNCTAD’s analytical work and actual negotiations. One way of doing so was through concrete action by UNCTAD’s intergovernmental bodies on recommendations that had resulted from expert meetings and findings by the Secretariat. Those considerations applied to the two major agenda items of the Commission’s meeting: trade in commodities and in services.

The Commission will analyze factors affecting the commodity sector, particularly in developing countries, with a focus on those elements which appear to have increased in importance in recent years. This will include the impact of changing distribution and market structures, and the dynamics of price movements in the light of financial crises. A background document (TD/B/COM.1/24) on those topics, and including possible areas for international cooperation, has been prepared for the Commission by the UNCTAD Secretariat.

"More than ever we need to resume sound analytical work on commodities, as the general panorama is one of concern", Mr. Ricupero stressed in his opening address. He pointed out that four fifths of commodity trade was in agricultural products. He added that whatever would happen in Seattle about the scope of negotiations, agriculture would be part of the actual negotiations.

Mr. Ricupero noted that the few exceptions (such as oil) to the sharp fall in commodity prices over the past two years were attributable to supply management, ie. production cuts. Many attempts at solving commodity problems had failed, and a feeling of disarray now prevailed. A balanced and serious reflection on commodities was badly needed. Mr. Ricupero suggested that the Commission consider three major issues in that regard. What were the reasons behind the declining share of developing countries in recent years while the share of the industrialized countries had increased in the same field of commodity trade? Some problems stemmed from the market structure, others from supply capacity.

A second question related to the value-added chain. How could the share of developing countries in valued-added products be increased? Was it just a matter of linking production and marketing & distribution chains? Was it related to know-how and technological processes? To what extent was the small share of developing countries in value-added products due to OECD support policies and subsidies? What were the remedies?

A third avenue to be further explored was that of market instruments that could correct some of the problems in commodity trade. In this regard, Mr. Ricupero mentioned the extremely important work undertaken by UNCTAD in the area of risk management. UNCTAD had been a pioneer in this area and would continue to work with the World Bank which was about to launch a major initiative in the same area. Mr. Ricupero suggested that the use of market-based instruments, and the role of investment in enhancing commodity diversification be explored.

Under its second agenda item, the Commission will examine successful experiences in services strategies, both in strengthening the domestic services sector and in increasing exports of services, as well as the development implications of electronic commerce. Examples of the issues at stake can be found in a report prepared by the UNCTAD Secretariat (TD/B/COM.1/28). The latter also prepared an "Assessment of the impact on developing countries of liberalization under GATS" (UNCTAD/ITCD/TSB/7), and a "List of economic needs tests in the GATS schedules of specific commitments" (UNCTAD/ITCD/TSB/8).

More analytical work was also needed, according to Mr. Ricupero, on the contribution of the services sector to the development of developing countries. There were some encouraging signs, e.g. the increase by 6 per cent of the share of developing countries in services’ exports. For some small developing countries, with a domestic market that is too small to go through all traditional steps of industrialization, services could provide a way of modernizing their economy. Examples were the success stories of the Dominican Republic in data processing exports to US companies and of Jamaica in the entertainment/music industry. UNCTAD should aim at identifying new potential services of interest to developing countries. In this respect, the Commission should follow up on the recommendations made by experts at recent UNCTAD meetings on health-related services, tourism, air transport (see TD/B/COM.1/25), and environmental services.