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Will Poor Countries Benefit From It?

By Odeen Ishmael PhD

Caracas, 22 June 2004 – The UN Conference on Trade and Development (UNCTAD) has just concluded its eleventh summit meeting in the Brazilian financial centre of Sao Paulo. The one-week forum, which began on June 14, was attended by representatives of 180 countries, and was aimed at finding solutions to easing poverty worldwide.
This quadrennial meeting discussed a wide-ranging agenda but, more specifically, it addressed major issues on how to improve access by developing countries to existing markets, and the need to correct the imbalances in the world trading system. It also examined various ways to develop the link between the national and international levels of trade and development.

Taking off from the WTO and also the FTAA negotiations, both of which collapsed last year in Mexico, the developing countries renewed their attacks on the existing barriers in world trade. Thailand’s Prime Minister Thaksin Shinawatra, who led his country’s delegation, warned that the developing countries might have to decide to focus on trade among themselves, rather than with their richer counterparts, if developed countries did not follow through on promises to dismantle trade barriers. He also urged the poorer countries to make efforts to reduce their dependence on markets in developed countries.

UN Secretary-General Kofi Annan, in his address to the Conference, pleaded for compromise on crucial trade concerns, and called for true partnerships between developed and developing countries. He demanded action to create a “critical mass of new resources to deal with a wide spectrum of human hardship”. New resources, he said, would help countries to rely on themselves and would be an investment in the future well-being and security of the world.

While Ministers were delivering their statements in the plenary sessions, leading trade negotiators were also meeting to find ways to reduce or remove global trade barriers, but very little progress was made. Similarly, discussions aimed at establishing a free trade zone involving the four Mercosur countries and the European Union showed very little forward movement in the process. However, it is expected that an agreement should be reached by October, even though both sides differ widely on the important issues of agricultural subsidies, services and government procurement.
There were concerted demands by poor countries for the rich nations to remove agricultural subsidies to ensure a fair trade environment enabling third world farmers to compete in a fair-trade environment. This would certainly help to raise living standards, they argued.

It will be recalled that the refusal by developed countries to remove agricultural subsidies led to the break down of negotiations in the WTO and also in the FTAA negotiations. No doubt, this was a matter of concern at the UNCTAD meeting. In an effort to break the stalemate, US Trade Representative Robert Zoellick held separate discussions with the Brazilian Foreign Minister, the Australian Trade Minister, the Indian Commerce and Industry Minister, and the Trade Commissioner of the European Union.

All of them declared that the discussions showed some progress. But they also agreed that many technical details have yet to be resolved ahead of a July deadline in the stalled Doha round of WTO talks aimed at drastically reducing subsidies, tariffs and other barriers to global commerce.

Indeed, there now seems to be a shift in the direction of eliminating subsidies. The EU in May agreed to remove export subsidies on farm produce which affect producers in poor countries. The United States has also indicated that it was ready to remove its much smaller export subsidies. However, the EU and the United States made it clear that only if poorer countries agree to open their own markets would they be ready to grant these concessions.
But the conference was not all about agricultural subsidies. Participants in numerous interactive sessions, seminars and other associated events explored links between trade and development. They brain-stormed on how to develop the capacity and competitiveness of developing countries; and they examined ways to strengthen UNCTAD as a forum to advance South-South cooperation, to foster greater understanding between North and South, and to reach mutually agreed solutions in addressing impediments to trade and development. These sessions also discussed the new challenges and opportunities presented by modern information and communication technologies, including the use of e-commerce and access to the Internet for the developing world.

Major economic concerns affecting developing countries were also expressed, in particular the problems of export commodity prices and the heavy debt burden that plague so many developing countries. During the plenary session, by Guyana’s Minister of Foreign Trade and International Cooperation, Clement Rohee, drew a link between these two problems. He urged UNCTAD to give priority attention to the serious problems of commodity dependence and long term declines and sharp fluctuations of export commodity prices. He added: “These problems seriously impede development and poverty eradication efforts of many developing countries. They also seriously limit their ability to service and repay their foreign debts.”

Among other initiatives launched in Sao Paulo was UNCTAD’s Virtual Institute on Trade and Development – a global academic network designed to prepare future generations for active participation in the global economy, by gaining access to the latest UNCTAD analytical work and resources and exchange of information. Also announced were new partnerships in support of bio-trade in Brazil, Ecuador and the Amazon region, which are expected to promote trade and private sector investment to sustainable use and conservation of the environment.

Will developing countries see any benefits from this conference? It may be argued from the negative perspective that the UNCTAD meeting was just one more international conference which has rehashed issues of poverty discussed in the numerous regional and international forums. The growing masses of poor people in developing countries cannot afford the patience to endure the long period action plans take to materialize. On the other hand, if there is an immediate follow up in exploiting the positive shift by the developed countries on the question of agricultural subsidies in the international trade negotiations, tangible trade benefits will be passed down to the poorer countries.

Countries like Guyana and others in the Caribbean region will also have to re-think their trade strategies when the Mercosur-EU free trade arrangement finally materializes, hopefully before the end of the year. It will be even better of they begin this re-examination now. The time is opportune for the Caricom countries to develop a more formal relationship with Mercosur in order to obtain trade benefits from this developing process. Guyana already has a trade agreement with Brazil, the largest Mercosur partner, and surely this link can be practicably developed into the long-talked-about economic bridge between Caricom and the rest of South America. This South-South arrangement must be nurtured and built up to match the existing North-South arrangement that Caricom has with the countries of North America and the European Union.

Dr. Odeen Ishmael is Guyana’s Ambassador to Venezuela.
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