ECONOMY-UNCTAD: Fiddling While Rome Burns?

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Sep 28 1998 (IPS) - Latin American and Caribbean nations have taken the UN Conference on Trade and Development (UNCTAD) to task for paying too little attention to the impact of the global financial crisis on the economies of developing countries.

Latin American and Caribbean nations “believe it crucial at this time, when the effectiveness of the multilateral financial system is being called into question, for UNCTAD to be present,” the Group of Latin American and Caribbean nations (GRULAC) said in a declaration.

GRULAC Coordinator Carlos Perez del Castillo, who is Uruguay’s ambassador to the UN, criticised the UNCTAD Commission on Trade in Goods, Services and Commodities, meeting in its third round of sessions this week. The commission, he charged, has been losing its clout and credibility.

The commission has focussed on issues and aspects “that are marginal if we look at them against today’s major trade-related problems, which a forum like UNCTAD cannot ignore,” he argued.

The key points on the UNCTAD commission’s working programme this week are improving the developing world’s use of trade preferences and the possibility of increasing developing countries’ exports in several areas of the services sector.

But the body should be discussing the financial crisis directly or indirectly affecting all countries worldwide, hurting their chances of growth and development, Perez del Castillo maintained.

In particular, it is the commission’s duty to analyse the effects of the crisis on the flows and reorientation of global trade, the consequences for the level of competitiveness among regions and countries and impact on macroeconomic equilibrium.

With respect to the reforms demanded of the Bretton Woods entities – the World Bank and International Monetary Fund – the Uruguayan diplomat said UNCTAD should have provided a substantial contribution on the interdependence between financial and commercial matters.

That aspect, “which requires urgent attention, does not even figure in this week’s debates” in the UNCTAD commission.

The question concerns Latin America because the region, one of the engines of global economic growth in the past few years, “is currently upset, infected and destabilised by measures and actions beyond our control,” added the GRULAC coordinator.

Most Latin American and Caribbean nations have major trade deficits that have had a significant influence on the expansion of global trade, said Perez del Castillo. Those imbalances will be exacerbated as a result of the current turmoil, but that is not being discussed or analysed by any forum, he stressed.

UNCTAD and the Commission on Trade in Goods, Services and Commodities are the best scenario for a collective, calm evaluation of the situation, he asserted.

He also lamented the omission of commodities from the commission’s agenda since they remain the main foreign exchange earner of developing countries, and the growth of the latter’s economies is inextricably linked to the strengthening, expansion, diversification and modernisation of that sector.

Commodity prices crashed this year to the lowest levels seen in two decades, which meant the loss of tens of billions of dollars in export revenues for developing nations. GRULAC declared that it would have liked an analysis by the UNCTAD Secretariat on how deeply the drop in prices had affected economies.

Perez del Castillo said the group also hoped for an UNCTAD study on the capacity of developing countries “to absorb the various manifestations of the financial crisis coming from different parts of the world.”

“We are truly concerned about the scarce attention commodities have received in international fora, in UNCTAD – the standard- bearer in that area in the past – as well as other fora,” the Latin American spokesman remarked.

Perez del Castillo acknowledged that the mandate given the Secretariat of UNCTAD at its last conference, held in Midrand, South Africa in 1997, was not as broad as it had been in the past.

But, he said, the mandate “did foresee the need to conduct studies for promoting the transparency of commodity markets and identifying the trends affecting that sector from a development perspective.”

Today there are fewer sources of strategic information on commodity markets than a few years ago, Perez del Castillo added.

Nor were the important studies conducted by UNCTAD in the 1970s on systems of marketing and distribution of the chief export products of developing countries ever updated, “in spite of the profound changes.”

The declaration released by the regional bloc also states that UNCTAD must not remain passive in the face of the new international scenario taking shape through the increasing number of mergers between multinationals in practically all strategic sectors of the global economy.

This new phenomenon, “to which we are only silent witnesses,” will have consequences in the near future on a number of aspects of the economy, the regional bloc warned.

Latin America and the Caribbean “must not remain indifferent to the new reality we perceive in the new world order, because it has an impact on and can affect or reverse the enormous development efforts successfully made in the region since the start of the decade.”