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SOUTH SUMMIT: REFORM WTO & FINANCIAL ARCHITECTURE, SAYS ACTION PLAN

by Martin Khor


Havana 15 April 2000 -- An action programme, adopted by the South Summit here on April 14, has set out the positions and proposals for future action in five major areas: globalisation, knowledge and technology, South-South cooperation, North-South relations and institutional follow-up.

The Havana Programme of Action, together with a separate Declaration was adopted at the close of the Summit meeting of the Group of 77 plus China. According to official count, there 69 countries present at level of Heads of State or Government or Vice-Presidents or Deputy Premiers. On the world trading system, the Programme of Action (POA) calls for intensified efforts to "review and reform the WTO regime", acknowledges the need to achieve "common positions" on aspects of the review of the TRIPS Agreement, and advocates agriculture negotiations taking fully into account the special needs of developing countries for food security and rural employment.

The political leaders also pledged to work towards reform of the international financial architecture and pursue efforts to harmonise the South's position on monetary and financial matters.

(The following in two parts gives details of the Action Plan)

Globalisation

On Globalisation, the POA says the North-South income gap has widened and even those countries which seemed to have adapted well to globalization were the most seriously affected by the Asian financial crisis. There is no automatic process by which income levels of developing countries will converge towards those of developed nations. The challenge is to ensure that globalization takes into account the development dimension.

"We are concerned over the increased marginalization of a large number of developing countries, especially Least Developed Countries, owing to the globalization process, particularly in the finance, trade and technology sectors.

"In addition, globalization has increased the vulnerability of those countries of the South, which are in the process of being integrated into the world economy. As the recent financial crisis has illustrated, financial liberalization including speculative and volatile financial flows... has generated significant instability in the international economy, with specially disastrous results for the developing countries. Therefore, there is an increasing need for the reform of the international financial architecture.

"In this context, we should seek to ensure a more democratic and fair ordering of any mechanism which emerges from these discussions in order to increase the effective participation of developing countries in the management of the international economy. It will also be important to ensure that the reform of the international financial architecture addresses financing for development as well as issues of financial stability including the need for the regulation of hedge funds and highly leveraged institutions and strengthening of the early warning system to provide for improved response capabilities to help countries deal with the emergencies and spread of financial crises."

The POA said that UNCTAD should contribute to the debate on issues related to the strengthening and reforming of the international financial architecture by continuing to provide relevant analysis from a development perspective. The focus should be to achieve the objective of financing for development.

As a number of underlying principles governing globalization and trade liberalization have been formalized in the Uruguay Round agreements, "there is a need to address those aspects which have clearly operated to the disadvantage of developing countries and immediately implement fully the provisions for special and differential treatment in favour of developing countries."

"We are distressed that since the Ministerial Meeting in Marrakech in 1994 establishing the WTO, little has been done to develop an effective program of concrete measures to assist the integration of these countries into the multilateral trading system. Of concern also is the volatility of international markets which have witnessed the deterioration of prices of commodities and terms of trade, which have imperiled the ability of developing countries in the global economy.

"In this respect, it is necessary to adopt measures that improve access, for all products of export interest to developing countries, to the markets of developed countries, by reducing or eliminating tariff and non-tariff barriers, and by introducing measures that support capacity-building for production and export in our countries, as well as other measures that help to guarantee the stability of the prices of these products in the international markets."

The Programme calls for promoting, within the framework of the WTO, the idea of the creation of a fund for development.

The POA also has two paragraphs on the right of self-determination and on human rights that had been a major bone of contention at the Summit. The approved paragraphs state:

"We reaffirm the right to self-determination of all peoples, in particular of peoples under colonial or other forms of alien domination or foreign occupation, and the importance or the effective realization of this right, as enunciated, inter alia, in the Vienna declaration and Programme of Action adopted at the World Conference on Human Rights. We decide to continue working for removing the obstacles to the realization of the right of peoples to self-determination.

"We stress that democracy, respect for all internationally recognized human rights and fundamental freedoms, including the right to development, transparent and accountable public administration and governance, responsive to the needs of peoples, in all sectors of society, as well as effective participation by our citizens and their organizations are an essential part of the necessary foundations for the realization of people-centred sustainable development. We also stress that every State has the inalienable right to choose political, economic, social and cultural systems of its own, without interference in any form by another State."

In the action proposals, the Heads of State and Government, committed themselves, among others:

(1). To respond to globalization with a view to making it beneficial for all countries and peoples, and to actively promote effective participation of developing countries in the international economic policy decision making in the context of the globalizing world economy

* Convene a High Level Advisory Group of eminent personalities and intellectuals to prepare a report on globalization and its impact on developing countries, and report to the annual Ministerial Meeting in the year 2001.

* Intensify efforts to review and reform the WTO regime with a view to promoting a multilateral trading system that is fair, equitable and rules-based, and that operates in a non-discriminatory, inclusive and transparent manner, and in a way that provides benefits for all countries, especially developing countries. This will involve among other things, improving market access for goods and services of particular interest to developing countries, resolving issues relating to the implementation of WTO agreements, fully implementing special and differential treatment, facilitating accession to the WTO, and providing technical assistance. Invite member States to consult and make efforts as necessary for coordination of the position of developing countries prior to UNCTAD and WTO meetings, including through Ministerial Meetings

* Work to ensure that countries whose economies depend heavily on trade preferences be accorded the necessary transition period by the WTO to adjust to the new liberalized regime.

* Ensure the establishment of a work programme for small economies to enhance their capacity to participate more effectively in the international trading system.

* Work towards reform of the international financial architecture that addresses issues of financing for development and stability of the international financial system including the need for regulation of hedge funds and highly leveraged institutions and strengthening of the early warning system to provide for improved response capabilities to help countries deal with the emergencies and spread of financial crises.

* Oppose application of all disguised protectionist measures such as labour-standards and the attempts to further widen the environmental windows currently existing under the rules. We pledge to work together to ensure that linkages which act to curb the comparative advantage of developing countries are eschewed in WTO.

* Press for the freer movement of natural persons, in which developing countries have comparative advantage in the global economy, thus matching the arrangements applied in other areas such as finance and services. While the capital markets have been opened, including in developing countries, there has hardly been any movement in opening of the labour market in developed nations, particularly within the context of forthcoming negotiations on trade in services

* Call on the relevant institutions to work towards the early completion of a vulnerability index.

* Urge UNCTAD with Common Fund for Commodities to assist developing countries in handling commodities in an integrated manner with attention on improving their prices, developing their processing, transportation and availability of capital and technology for production.

* Pursue efforts to harmonize the South's position on monetary and financial matters and in this context welcomes the decision to convene annual coordinating meetings between the Chairmen of the G-77 and G-24 prior to the IMF/World bank spring and autumn sessions.

(2) To revitalize and strengthen the role of the UN system in promoting development and international cooperation in the context of globalization

* Work for decisions on critical economic issues in institutions such as IMF, World Bank and the WTO... through effective and full participation of all and on the basis of sovereign equality, and by asserting the key role of the UN in this sphere.

* Continue to pursue the complementarity and coordination among the UN agencies, especially UNCTAD and other relevant international organizations including the IMF, the World Bank and the WTO with the view to promoting the development of developing countries while avoiding the imposition on governments of cross-conditionalities and other conditions which would operate to restrict their policy options further.

(3) To preserve and promote cultural diversity especially in the context of globalization

* Invite South's governments and institutions to preserve and promote diversity in traditions, culture and identity of the people, as well as indigenous and local traditional knowledge, practices, and technology for achieving local development and request the Chairman of G77 to examine organizing a Southern Cultural Assembly, Art Festival of the South on a biennial basis, and to promote and intensify cultural exchanges and tolerance among the developing countries.

(4) To utilize institutions in the South in meeting the challenges of globalization

* Invite G77 Chairman to coordinate networking of research institutions from the South to research on globalisation to strengthen the G77's negotiating capacities. Intensify efforts at institutional capacity building, including through the exchange of expertise, experiences, information, and documentation between the institutions of the South.

Knowledge and Technology

In a section on Knowledge and Technology, the POA notes that the North-South technology gap is contributing to the increasing income gap and that technological advances carry risks and have potentially destructive implications particularly on the environment. It is deeply concerned that the role of the UN has been progressively marginalised over the years. "Moreover, the provisions under TRIPs agreement relating to the transfer of technology should work to the mutual advantage of producers and users of technical knowledge and should facilitate transfer of all required technologies to developing countries. Faced with the threat of increasing technological marginalization of the South, we have decided to make science and technology a priority item...

"We are aware that a number of barriers have prevented the developing countries from seizing opportunities to exploit science and technology including lack of resources to generate and exploit traditional knowledge, particularly those of indigenous communities, the non-recognition of traditional knowledge - in technological development and patenting, lack of infrastructure, prohibitive costs of acquiring knowledge and technology and small size of their economies, including the challenges resulting from the changing role of the State, the emergence of such patenting which promotes corporate monopoly and the progressively decreasing importance assigned to science and technology on the international development agenda."

In terms of action proposals, the POA agreed on

(1) Promotion and development of knowledge and technology in the South

* Work towards eradicating illiteracy and to promoting the concept of Education for All Throughout Life, towards addressing basic and other infrastructural impediments to the spread of knowledge, publish national reports with data on national scientific and technology capacities

* Work together as countries of the South to exchange experiences and cooperate with others among us who have a competitive advantage in various areas; establish a G-77 science and technology award for individuals from the South who have distinguished themselves in the area of science and technology; promote the establishment of venture capital funds to promote science and knowledge based industries.

(2) To encourage the institutions of the South to launch further initiatives to promote knowledge and technology in developing countries

* Establish a trust fund for the promotion of knowledge and technology in the South; establish a consortium on knowledge and technology to promote joint ventures in the South in the field of science and technology; encourage South-South scientific organizations to further expand their South-South fellowships and training programmes.

* Exploit the potential of communications and information technology through measures that should narrow the North-South information gap; establish a South-South network, linking R&D institutions on the development of vaccines, drugs and diagnostics for the prevention and cure of major communicable diseases in the South, such as malaria, tuberculosis and HIV.

* Consider convening a South-South high level conference on science and technology, with a view to formulating global strategies and clear policies within the South for the promotion of science and technology.

(3) To harness expatriates, from the South for the benefit of developing countries and to address the brain drain

* Create conducive conditions in our countries in order to attract and retain our important human resources; encourage South-South transfer of skills through the UN Volunteers Programme; encourage scientific organizations from the South to open their chapters in developed countries and Expatriate scientists from the South to run these chapters;

* Invite the Chairman of the Group of 77 to promote with relevant organizations of the UN system, Associate Schemes to provide opportunities for scientists and professionals in the South to have interaction with the scientists in the North without permanently leaving their own countries.

(4) To create enduring international environment to ensure South's access to knowledge and technology and promote the UN's central role in removing barriers faced by the South in the acquisition of knowledge and technology

* Invite the G77 Chairman to work towards strengthening the UN Commission on Science and Technology for Development, and promote annual consideration of science and technology within the relevant UN committees; Call for a better coordination within the UN system in the field of science and technology to enable the South developing to participate in the knowledge based global economy;

* Increase public investment in technologies for development and work towards ensuring transfer of technologies to developing countries on preferential terms and invite developed countries and international organizations to adopt policies and programme with a view to ensuring that developing countries can measurably benefit from the advances in technologies owned by both public and private sectors;

* Work towards operationalising the provisions of the TRIPS agreement, Articles 7 and 8 thereof, which facilitates the access to dissemination and transfer of technologies and to explore benefits that could accrue to developing countries and particularly least developed countries. In this context, invite developing countries to hold consultations, prior to international meetings related to the review of the TRIPS agreement with a view to achieving common positions in this field. In addition, efforts should be made to ensure that future TRIPS-related agreements extend the provisions for transfer of technology from developed to all developing countries on concessional and preferential terms.

* Invite the G77 Chairman to explore the possibility of formulating proposals to ensure that the TRIPS agreement promote the development of developing countries, including the possibility for a code of conduct for all countries which facilitate the access to, dissemination and transfer of technologies on concessional and preferential terms from developed to developing countries.

* Work towards full implementation of provisions of various conventions and agreements in order to ensure that proprietary patents based on traditional knowledge in all aspects including those of indigenous communities are developed only after obtaining the prior informed consent of the developing countries concerned and after reaching agreement on benefit sharing with these developing countries, which are storehouses of such bio-diversity and traditional knowledge. Work towards fulfilling the clear and pressing need to extend and render effective protection to indigenous biotechnology, developed over the millennia, to ensure a flowback of benefits from patentees to original developers.

* Make universally accessible, proven appropriate technologies and safe and affordable, essential medicines to prevent and mitigate HIV/AIDS pandemic and other communicable diseases.(SUNS4653)

Martin Khor is the Director of Third World Network.

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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