Reports on UNCTAD's Annual Board (TDB) Session: Report 1 on the Opening

The UN Trade and Development Board's annual session started today with UNCTAD Secretary-General Dr Supachai Panitchpakdi giving his opening statement as scheduled.

This fact in itself was the most significant event in an eventful first day of the TDB's 53rd session, as there had been speculation in the mainstream media in the past two days that Supachai had been offered the post of interim Prime Minister of Thailand.

Several ambassadors came up to congratulate him, assuming that he had been offered and had accepted the job of interim PM.

However, Supachai laughingly brushed aside the offered congratulations, saying that he was "still here".

Supachai made an opening address, and also made a statement at the first substantive session, which was on the current WTO situation, and which was also addressed by WTO Director-General Pascal Lamy. In the general debate of the opening session, the G77 and China and the regional developing-country groupings commended UNCTAD for its recent work, including on policy space, and asked that its mandate be strengthened and not weakened through the UN reform process.

However, the US, Japan and the European Union indicated their displeasure with parts of UNCTAD's latest Trade and Development Report, the focus of which is on policy space.

In his opening statement to the TDB, Supachai said UNCTAD must keep the development perspective foremost so as to make its work useful for developing countries. "We must stay ahead of the curve, tackle difficult issues in a fresh and clear-headed manner and do so by pushing beyond current boundaries."

He then highlighted how UNCTAD's recent analytical work contributes to development policy dialogue. On interdependence and global economic issues, the Trade and Development Report 2006 looks at how to strike a balance between national policy autonomy and effective global governance, given the needs of different developing countries.

"Such a balance may require not only a strong development dimension in the multilateral trading system but also an improvement in the global governance of international monetary and financial relations."

UNCTAD's LDC Report 2006 suggests that LDCs must develop their productive capacities if growth and poverty reduction are to be addressed. The report calls for a paradigm shift from a consumption-oriented and exchange-oriented approach to poverty reduction towards a production-oriented and employment-oriented approach.

In UNCTAD's latest report on Economic Development in Africa, some bold proposals are made, said Supachai. "The report finds that the current aid system lacks coherence and is uncoordinated, costly to manage and often based more on donors' preferences than on the requirements and priorities of the recipients.

"It then proposes a new architecture for international aid, drawing lessons from the positive elements of the Marshall Plan and other success stories but adding a much greater multilateral element. This would be based on programmes presented by aid recipients, and would assure greater predictability through multi-year financing."

Supachai added that the report also suggests establishing a UN-related fund for Africa's economic development, with resources provided mostly in grants, and provide budget support to recipient countries. The fund would reduce the cost of aid delivery, be less prone to donor preferences and pressures and "make recipient countries responsible to their people and electorate rather than to international financial institutions and donors."

The Group of 77 and China, represented by Pakistan, said UNCTAD's future as the principal UN organization for trade and development and other related areas has come under recent scrutiny. The TDB must send a clear signal that UNCTAD must and intends to play a central role in the UN development machinery, and the mandate of UNCTAD "must not be diluted, supplanted or subsumed during the UN reform process."

"It need not be reinvented but must be revitalized to act as the world's development conscience. Only by using the development lens in the work of all three pillars can UNCTAD retain its relevance and enjoy the developing countries' confidence."

The G77 said that development optimism has been marred by the suspension of the WTO negotiations. UNCTAD has an important role in situations like this. UNCTAD's normative role as a catalyst of multilateral action from a development perspective could advance consensus building in other international institutions.

The regional group of Latin America and the Caribbean (GRULAC), represented by Argentina, said the Doha negotiations' suspension was of concern. Though there was goodwill, it has not borne fruit so far. The group called for a balance result. The suspension can jeopardize the Round but if the talks resume, development must be the main thrust.

GRULAC said the Doha Round cannot produce the same type of outcome as the Uruguay Round where developing countries had to endure high adjustment cost and reduction of policy space, with no benefit to developing countries. The trade distortions by developed countries continue. Results like these cannot be accepted by developing countries.

The group said that in agriculture, if there is no result in terms of true commercial value it would be very difficult to conclude the Round. The agreement on export subsidy elimination must be complied with. On industrial products, countries in the region had undertaken unilateral liberalization. The region had also liberalized considerably in services but the offers of developed countries did not satisfy the region. The Round hinges on the will of developed countries and whether it can cater to the legitimate aspirations of developing countries.

On the Trade and Development Report, Argentina said that it rightly focused on the policy space issue. The present financial system does not have enough room for developing countries to manoeuver. The same rules are applied to all countries but this may restrict development in developing countries. It also approved of the report's references to the need for developing countries to select their exchange rate system, and also that there should not be pro-cyclical bias in macro-economic policies as in the IMF programmes.

The Africa Group, represented by Angola, regretted the suspension of the Doha negotiations. Key African concerns include reductions in trade barriers, elimination of agricultural export subsidies and domestic support, and enhancement of domestic policy space and greater discretion in the use of a range of policy measures for building and strengthening supply capacity.

The Group also highlighted the commodity problem and asked UNCTAD to play a more active role, especially that resources are provided to it so that its task force on commodities can become operational.

The Asian Group, represented by Afghanistan, said that market access conditions in developed countries continue to be biased against developing countries and this issue must be boldly addressed. The globalization process has been so far unbalanced and needs to be redirected and better managed to facilitate development.

UNCTAD's role and mandate needs to be reinvigorated in the UN reform process. "This is especially necessary in light of the suspension of the WTO negotiations which is due in large part to the intransigence of major trading nations and blocs."

The European Union, represented by Finland, said UNCTAD has an important role in regional integration and South-South cooperation and helping developing countries out of commodity dependence. It also has a natural role in integration of trade, growth and investment into national development plans and poverty reduction strategies. UNCTAD can work stronger in these areas.

The EU said the Trade and Development Report covers a wide range of issues which also tries to offer solutions and practical policy prescriptions. It has been able to pinpoint some specific problems and its suggestions will spark a lively debate.

The EU said it would not agree with the report's implied finding that multilateral rules are inimical to development. "Some parts of the report seem to suggest that the sole remedy to many problems is increased policy flexibility per se. We dispute this. The problem facing us as a global economy are far more complicated than the report suggests."

The EU said the UNCTAD report on Africa (focusing on aid) is useful as it raises in frank terms fundamental questions on the way aid is distributed and its quality. It also welcomed the LDC 2006 report of UNCTAD.

The United States said it had "serious concerns" about the Trade and Development Report. Japan spoke in the same lines, saying the report took an imbalanced position, and should have been more balanced.

Representing civil society, the Uganda Consumers' Protection Association said that UNCTAD's partnership with civil society organizations must be upgraded to a more proactive, strategic and consistent level so that grass-roots views can be channeled into global processes.

"So far trade liberalization has in many cases led to job destruction, uneven income distribution and weakening of workers' bargaining power. UNCTAD should work to promote more policy space for developing countries including the possibility to use tariffs and ensure proper assessment of trade policy measures before implementation."

Later, the Board discussed the agenda item on the WTO's current situation. Both Supachai and the WTO Director-General Pascal Lamy addressed this issue, and several regional groupings and countries spoke on the issue.