Ladies and Gentlemen,
It is a pleasure for me to be here, and to brief you on the forthcoming twelfth Ministerial Conference of UNCTAD, to be held in Ghana from 20 to 25 April next year. I will be briefing you on this in my capacity as Special Representative of UNCTAD in New York. Indeed, this is one of my first activities in this function, and I am very pleased to work closely with Dr. Supachai Panitchpakdi, the Secretary-General of UNCTAD, who unfortunately cannot be here today, in representing UNCTAD in New York.
As you know, the United Nations Conference on Trade and Development is the UN’s focal point for the integrated treatment of trade and development issues, including the interrelated issues of finance, investment, technology and sustainable development. Ever since its establishment in 1964, the organization has played a lead role in highlighting the asymmetries in the world economy in its intergovernmental process, proposing innovative and “ahead of the curve” policy-solutions to development problems in its research and analysis, and promoting the development-friendly integration of developing countries into the world economy through technical cooperation. Its quadrennial Ministerial Conferences have often been important landmarks in development cooperation. Just consider UNCTAD I and II, with the broad recognition of the structural disadvantages of developing countries and the creation of the Generalized System of Preferences, or UNCTAD X and its contribution to the “healing process” after the Seattle Ministerial of WTO.
The theme that member States have chosen for the forthcoming UNCTAD XII Conference is “Addressing the Challenges and Opportunities of Globalization for Development”. This conference will thus be a timely occasion to take stock of the globalization process, and what it has and has not done for developing countries. As you know, the world economic environment of these past years has been extraordinarily propitious. Indeed, developing economies as a group have performed significantly well in the last five years, achieving on average 5–6 per cent growth. More countries than ever before have been able to benefit from the favourable environment. Even the least developed countries and other African countries, which experienced erratic growth patterns in the past, have been growing at an average annual growth rate of more than 5 per cent, representing significant progress over the late 1990s. Nevertheless, there are considerable downside risks, which will need to be addressed if this environment is to be sustained. More importantly, not all countries or all segments of the population are beneficiaries of this growth, and many regions continue to be left out. In this context, I am very glad that this Conference will be held in Africa, a continent that has clearly benefited far too little from globalization, and whose development must be a key priority.
UNCTAD XII thus provides us with an opportunity to deliberate in detail about the broad scope of the international economic environment and the challenges we are facing, and identify policy responses. In the light of this, the Conference will also give a new mandate to UNCTAD, the primary UN organization working on trade and development issues. Let me now say a few words about some of the key issues that will be taken up in Ghana.
The first challenge facing policy-makers in the context of a beneficial economic environment such as the one we have been experiencing, is to address downside risks, and ensure its sustainability. One of these downside risks is the build-up of global imbalances, whose unmanaged unravelling could have disastrous consequences for the world economy, and thus for developing countries and the achievement of the MDGs. The recent instability in global financial markets including the fall of the dollar are a clear reminder that all is not well in international financial markets, and already several leading economies have had to correct their growth projections downward as a consequence. UNCTAD has long highlighted the risks associated with persistent global imbalances, and has identified global policy options, such as greater multilateral oversight over exchange-rates. Indeed, it is somewhat puzzling that the international community has established a strong, rules-based system governing the conduct of trade policy to avoid beggar-thy-neighbour policies and its global ramifications, while in the realm of financial flows – which can have even more rapid and more devastating effects on economies – no such system exists. I think it is time that the international community gives greater consideration to this issue.
Of course, the issue of trade will also feature prominently at UNCTAD XII. Given the worrying lack of progress thus far in the Doha Round, the Conference can serve to highlight the crucial importance that a successful outcome can have for developing countries. Of course, the Round must live up to its name and focus on development issues, and UNCTAD XII will be a crucial forum for identifying the key elements of importance to developing countries. It is to be hoped that in doing so, UNCTAD XII can serve as a reminder of what is at stake in the Round.
Furthermore, the lack of progress in the Doha Round has brought about renewed interest and activism in the pursuit of regional trade agreements (RTAs), both of a North-South and a South-South nature. Recent research by the UNCTAD secretariat has revealed that many of the North-South RTAs are a reason for concern, as they often include commitments going beyond the WTO-commitments and do not always bring the market access benefits expected. In contrast, there is significant scope for increasing South-South RTAs, which have the potential to bring greater benefit to developing countries. Indeed, South-South cooperation, be it through RTAs or through other cooperation, can contribute to further boosting the rise of the South in the international economy. Already, the share of South–South trade is increasing in the world economy, making inter-South trade a veritable locomotive of growth. Besides merchandise trade, many developing countries are increasingly exporters of manufactures, skill-intensive services and capital. UNCTAD XII will deliberate on how best to turn this emergence of the South into a force for development, and explore the role that regional and interregional cooperation can play in this. The ongoing negotiations on the Global System of Trade Preferences among developing countries (GSTP), being negotiated under UNCTAD auspices, can be one tool in this context.
The current economic environment is further characterized by a boom in commodity prices, brought about largely by the demand from rapidly growing countries in Asia, and reversing a decade-long trend of falling prices. This has brought renewed attention to the problematique of commodity-dependence, which still haunts many of the poor countries. Out of 144 developing countries 86 depend on commodities for more than half of their export earnings. Half of the total export income of 38 countries derives from a single commodity, while another 48 countries depend on only two commodities. The challenge facing policy-makers is to use the current windfall profits to support efforts to diversify economies, while also making crucial investments in much-needed infrastructure, so as to meet the new demand. As demonstrated by the first pre-event for the UNCTAD XII in Brasilia in May, the Conference will include the issue of commodities as one of its priority concerns.
Let me highlight one final substantive issue, namely that of investment. As you know, foreign direct investment flows offer many potential benefits for development, such as capital inflow, employment gains, public revenue through taxation, transfer of technology, and access to global production networks, to name but a few. Achieving these, however, requires a carefully designed regulatory framework, which creates an environment to attract investment while at the same time ensuring that FDI contributes to national development objectives. UNCTAD has been supporting the efforts of developing countries to achieve such a regulatory framework for many years. At the recent G8 summit in Heiligendamm, UNCTAD has been asked by the Heads of State of the G8 to work closely with the OECD in jointly engaging industrialized countries, emerging economies and developing countries in the development of best practices for creating an institutional environment conducive to increased foreign investment and sustainable development. This issue will also feature prominently in UNCTAD XII.
Finally, I would like to highlight that – in addition to these crucial substantive issues – UNCTAD XII will also deal with institutional questions. Sub-theme four of the Conference is entitled: “Strengthening UNCTAD; enhancing its development role, impact, and institutional effectiveness”. Under this item, member States will discuss ways of strengthening UNCTAD’s research and analysis, its intergovernmental machinery, and improving the delivery of its technical cooperation activities.
I am therefore confident that the UNCTAD XII conference will result in crucial policy recommendations to address the development challenges posed by globalization, and will not only rejuvenate and strengthen UNCTAD as an organization, but will also strengthen and enhance the developmental role of the United Nations as well.
Thank you very much.