TWN Info Service on WTO Issues (June04/10)

17 June 2004

Third World Network


The UNCTAD XI opened on 14 June in Sao Paulo with an inaugural ceremony and a special session on The New Trade Geography:  The Role of South-South Trade and Cooperation.

Brazil’s President Lula and the UN Secretary General Kofi Annan both talked about a “new trade geography” in which South-South trade would play a growing role.

Below please find a report on the first day of UNCTAD XI

With best wishes

Martin Khor





TWN Report by Martin Khor, Sao Paulo, 14 June 2004


UNCTAD XI opened today with a call by leaders of developing countries to build a “new geography of trade” which stressed the role of South-South trade and cooperation in a globalising world.

Making the call, Brazilian President Luiz Lula da Silva said a 50 percent reduction in tariff in the trade among developing countries could generate an increase of US$18 billion of trade for them.

There was thus a new move, he said, to reactivate the GSTP, which was formed in the 1980s to make it possible for developing countries to extend trade preferences to one another without  extending these to the developed countries.

“To the 44 countries that have signed the GSTP, we could add another 40, and thus draw up a new trade geography of trade.”

Lula was speaking at the inaugural ceremony of UNCTAD XI as well as a high-level plenary session immediately after on the New Geography of Trade. 

The Brazilian President said UNCTAD had helped developing countries identify the external constraints limiting the developing countries.  He quoted statistics showing the deterioration in growth in many developing countries and the widening income gap between North and South.

The world needed to change, he said, but all change needs choices to be made.  We need political courage, he said, adding that the negotiations by the Group of 20 in Cancun was a fundamental move, and “we will seek convergence with the needs of developing countries.”

Thai Prime Minster Thaksin Shinawatra, whose country had hosted UNCTAD XI in Bangkok in 2000, took up the same theme.  Four years after the Bangkok meeting, he said, the world had changed with optimism eclipsed by September 11 and the WTO Cancun ministerial collapse.

Thaksin said we are yet to see globalisation with a human face and the Washington Consensus turned out to be irrational.    Globalisation is seen to fail to deliver.   The idea of multilateralism itself is eroding.

“Since the cold war ended, there was a drop in aid and the developed countries’ trade policies became less accommodating to the needs of developing countries. They have been slow to accommodate the requests of developing countries even in the most obvious areas such as reduction of agriculture subsidies.”

Thus, he said, South-South cooperation has never been more necessary. It was tempting to only blame the North but this cannot get results.  “For many of our countries, poverty reduction and sustainable development cannot be solved by having market access to the North.  We need other options.

Thaksin advocated the principles of self-help (or reliance on domestic economy) and partnership as a response to reduced expectations from the North.   “We should expect less from them, and we need to partner more with other countries of the South” he said.

“We should reduce our overwhelming dependence on markets of developed countries and diversify our risks through South-South trade.  Critics note the diversity of the South and say it is an obstacle to South-South trade but I say let us celebrate the diversity of the South and try things that have not been done.”

Thaksin admitted there is no guarantee that South-South cooperation will work better than North-South relations.  But in North-South relations, the South has been facing the problem of the North moving the goalposts “whenever we are about to score.”

The North is not yet so convinced they should not do that, so we should start another game we can win, he said.  Thailand had already created new frameworks to strengthen trade relations with other developing countries and he looked to UNCTAD XI to practical alternative solutions, with the South to become stronger and the North to be more understanding and accommodating.

UN Secretary General Kofi Annan stressed there was a lack of coherence in the international and domestic economies.  African farmers wanted market access to the North but find this blocked by manipulative systems, whilst indigenous people with knowledge of medicinal herbs do not know if they would be recognized and rewarded.

Referring to double standards in Northern policies, he said:  “We usually call it the lack of coherence, but we can also call it discrimination.  We look to UNCTAD XI to change it.”

Kofi Annan said we needed a development-friendly trade regime. A successful conclusion to the Doha agenda is also needed and this can be achieved only if the South is granted full access to the Northern markets and if agricultural subsidies are reduced or eliminated.

We must take advantage of South-South trade opportunities and cooperation, he added.  “A new round of talks to expand the GSTP holds promises.  If developing countries can reduce tariff margins to one another by 50%, this will generate an extra USD15.5 billion in trade.

“It could be a new global trade geography, which would help give the South a rightful place in international relations.”

Kofi Annan also paid tribute to Rubens Ricupero who he said would soon complete his term as Secretary General of UNCTAD after nine years.

“His impact on global policy making has been significant, and he has spoken up against hypocricy and injustice.  Thank you for being a strong advocate for people in need.”

President of the UN General Assembly, Julian Hunte, the Foreign Minister of Saint Lucia, said there was a clear distinction between the promise and the reality of globalisation.  The promise was that all would gain, the reality is that many developing countries are yet to do so.  Many developing countries are clutching at straws for survival while the rich countries are afloat in an ocean of prosperity.

There was a growing sense of uncertainty in the world, and the lak of progress in the Doha round and the setback in Cancun raised the question if there is common ground for the world trading system.

Another matter of uncertainty, he said, was the influence of transnational companies which could be unduly powerful on the governments of developing countries.  Thus, we must stand by our decision, to hold TNCs to their responsibility and accountability.

He said the key issues before UNCTAD XI include making developing countries benefit from trade that is free from discriminatory standards and technical requirements.    Equitable trade rules are needed, with special and differential treatment to remove asymmetries and providing space, especially for small and vulnerable economies.  The commodity problem should have

A more prominent place in the trade and cooperation agenda as 50 developing countries depend on only 2 or 3 commodities whilst 39 countries depend on a single commodity for their exports.

Bolivia’s President, Carlos Diego Gisbert, said that the neo-liberal logic of the 1980s new approach broke with the 1960s philosophy and logic of UNCTAD, of world trade being based on developing countries having preferences and non-reciprocal advantages.  

If the policies based on that neo-liberal worked, then the institution today does not need to exist.  But the neo-liberal philosophy does not work.  It was not reciprocal and did not generate conditions for growth.  The bargain was that the South would open its markets and have structural reform in exchange for insertion in the global economy leading to growth, but the growth has not materialized.

It was thus important to look at the option of South-South trade, as Lula has advocated.  However with South-South relations there are also asymmetries, as developing countries have different levels of development.  We need South-South relations which would not repeat the problems in North-South relations.  UNCTAD should be an interlocutor in the international and South-South relations to assist developing countries.

The inaugural ceremony also included a tribute paid to Brazilian economist Celso Furtado.  

It also saw an emotional response by Ricupero to Kofi Annan’s praise of him for his performance as UNCTAD secretary general.