TWN Info Service on WTO Issues (June04/14)

22 June 2004

Third World Network


The eleventh session of the United Nations Conference on Trade and Development (UNCTAD XI) ended on 18 June with a closing session in a rather good spirit with some useful results for developing countries.

The conference adopted a declaration called the Sao Paulo Consensus, which contains analyses of globalisation, trade and development issues, proposes policy responses and spells out the role of UNCTAD.   Also adopted was a declaration, the Spirit of Sao Paulo.

Besides the official events, there were also significant non-official events during the UNCTAD XI week, in particular the launching of the third round of the GSTP negotiations for developing countries.

Below is a report with an overall analysis of UNCTAD XI.    In a separate report are details of the closing session with a statement by the G77 and China.

With best wishes

Martin Khor





UNCTAD XI ends in a rather good spirit

TWN Report by Martin Khor, Sao Paulo, 19 June 2004

The eleventh session of the United Nations Conference on Trade and Development (UNCTAD XI) ended on 18 June with a closing session in a rather good spirit with some useful results for developing countries.

The conference adopted a declaration called the Sao Paulo Consensus, which contains analyses of globalisation, trade and development issues, proposes policy responses and spells out the role of UNCTAD.   Also adopted was a declaration, the Spirit of Sao Paulo.

Some prominent leaders, including Brazilian President Luiz Lula da Silva, Thai Premier Thaksin, and UN Seceratary-General Kofi Annan, who spoke at the first part of the conference called on developing countries to rely more on themselves through South-South trade.

Significant events on the sidelines of  UNCTAD XI included the launching of a new round of South-South trade talks (under the GSTP scheme), the Ministerial meeting of the Group of 20 developing countries on agriculture issues and a special Ministerial meeting of the Group of 77 and China on the 40th anniversary of its founding.

The highlight at the closing session was a long and emotional farewell speech by the outgoing UNCTAD secretary-general, Rubens Ricupero, which ended with a standing ovation.   

UN Secretary General Kofi Annan, at the inaugural session, had announced that Ricupero would soon complete his term and paid tribute to his impact on global policy-making and advocacy against hypocricy and people in need.

Another highlight of the closing session was an attempt by the United States to have its closing statement to be part of the record of the Conference.  Jamaica, for the G77 and China, asked for clarification if statements could be so recorded.  After the UNCTAD legal officer clarified that only statements of position and reservations (and not general statements) could be reflected in the Conference report, Jamaica requested that the G77 statement also be included in the report.

The US had referred to some contentious issues in the Sao Paulo Consensus and the G77 and China made a detailed statement expressing disappointment that its views on some specified issues had been not fully accepted.

UNCTAD XI’s most important achievement was the inclusion in the declaration of a section on need for developing countries to have “policy space”, which has been increasingly eroded by trade agreements and loan conditions.  

It was the first time a multilateral conference involving North and South had recognized this idea and it will be useful to developing countries’ negotiators when they argue their case in the World Trade Organisation, at the International Monetary Fund and in regional and bilateral trade agreements.  

There was much heated debate over eight months on this issue, which the developing countries were pushing as their biggest issue, and which the developed countries had been resisting and eventually trying to dilute the language.

As a compromise, the Sao Paulo Consensus (para 8) now states: “The increasing interdependence of national economies in a globalizing world and the emergence of rule-based regimes for international economic relations have meant that the space for national economic policy, i.e. the scope for domestic policies,  especially in the areas of trade, investment and industrial development, is now often framed by international disciplines, commitments and global market considerations.

“It is for each Government to evaluate the trade-off between the benefits of accepting international rules and commitments and the constraints posed by the loss of policy space. It is particularly important for developing countries, bearing in mind their development goals and objectives, that all countries take into account the need for appropriate balance between national policy space and international disciplines and commitments.”

Developing country diplomats were also able to ward off attempts by the major developed countries to constrain UNCTAD’s future activities through the on-going UN reform process, by placing some of UNCTAD’s future work into the framework of other organizations and processes.  The final language in the Sao Paulo Consensus retains UNCTAD’s present independence.

Another “hot issue”, governance, was resolved by reference in the final text (para 21) to both national and international aspects.  

But the issue of corporate responsibility and accountability, pushed by developing countries, was much watered down to only a recognition that  existing voluntary international instruments could be improved, and that UNCTAD should carry out analytical work to enhance  corporate contributions to development in  host developing countries, and draw lessons as far as the trade and development dimension is concerned.

A last-minute attempt by developing countries to include that national and international “innovative financial mechanisms” to supportive of  developing countries should be supported in the end yielded a very much diluted text that “voluntary financial mechanisms” should be “explored.” (para 20).

A significant development at UNCTAD XI was the political impetus from leaders of the South for South-South trade and cooperation to build solidarity among developing countries and reduce their dependence on the North.

This had been the main theme in the inaugural session’s keynote speeches of Brazil’s  President Lula da Silva and Thai Prime Minster Thaksin Shinawatra, and supported by UN Secretary General Kofi Annan who said that “a new round of talks to expand the GSTP holds promises, and it could be a new global trade geography, which would help give the South a rightful place in international relations.”

As a concrete initiative to promote South-South trade, on 16 June at a well-attended side event, Ministers of the 44-member Global System of Trade Preferences among Developing Countries (GSTP) on 16 June launched a new round of negotiations which will start in November and is scheduled to take two years to complete.

All members of the G77 and China were invited to join the scheme, which provides trade  preferences to developing countries without extending them to developed countries, and thus is a potentially significant instrument for South-South trade promotion.  

The reactivation of the GSTP is seen by its main proponents as a concrete manifestation of South-South cooperation as well as a reply to the pressures put by major developed countries (especially US and EU) on the developing countries to agree to drastically lower their industrial tariffs in the WTO on the ground that the developing countries themselves would most benefit as this would increase South-South trade.

Another interesting decision at UNCTAD XI was the establishment of an international task force on commodities.  The commodities crisis was one of the main themes at UNCTAD XI, being highlighted by the President of the UN General Assembly (Saint Lucia Foreign Minister Julian Hunte), other leaders and a well-attended UNCTAD-Common Fund for Commodities side event on commodities.

The decision is contained in an Annex to the Sao Paulo Consensus, entitled UNCTAD XI Multi-Stakeholder Partnerships.  The section on Commodities states that there is at present no comprehensive and systematic consultative framework to share information and use expertise among key actors in reviewing the commodity situation, and efforts of all interested stakeholders should thus be put together and focus on breaking the cycle of poverty in which commodity producers are now locked.

“An independent task force on commodities will be established in consultation with interested stakeholders to address the above set of issues,” says the Annex.  “The task force will function in an informal and flexible manner, with partners cooperating in a spirit of voluntary enterprise.”

Partners will include member States, international organizations (FAO, IMF, ITC, UNDP, the Common Fund for Commodities, World Bank), commodity-specific bodies (international commodity organizations and study groups), the private sector (in particular major corporations engaged in production, marketing and distribution of commodities), NGOs promoting action on commodity issues and the academic community researching into commodity problems and solutions.

The issues mentioned for the Task Force to address include:  facilitating collaboration among stakeholders and achieving greater coherence in integrating commodity issues in development portfolios;  collecting and sharing best practices and lessons learnt and maximizing the mobilization of resource flows; commodity sector vulnerability and risks;  facilitating participation of developing country farmers in international markets;  distribution of value added in the commodity value chain;  promotion of economically, socially and environmentally sustainable approaches to production and trade of individual commodities of interest to developing countries; mining and sustainable economic development;  promoting business networks; and commodity information and knowledge management.

The establishment of the task force and the cautious list of issues it is to cover is a far cry from the first two decades of UNCTAD, when initiatives to attain fair prices for commodities and negotiations for  establishing and maintaining commodity agreements were the bread and butter of UNCTAD’s work.

Nevertheless, despite its mild and limited agenda, the decision for setting up of the task force on commodities at UNCTAD XI is a positive step forward, given the severity of the commodities crisis and the absence of a venue or mechanism in the international system to discuss the crisis or let alone address it.    

At the closing session, UNCTAD secretary-general Rubens Ricupero urged the international community to prioritise actions to help the least developed countries.

The dark side of globalisation is the lack of supply capacity, or the inability of developing countries to produce competitively, he said.

“Many developing countries fear trade negotiations as in their hearts they know they are not competitive, and they depend on only two or three commodities, so how can we expect them to be enthusiastic about negotiations?”  he said.  “UNCTAD has to help them in their supply problems and in negotiations.”