Journal Issue
Share
Article

View & comments: William Clark reports on UNCTAD IV

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1976
Share
  • ShareShare
Show Summary Details

UNCTAD IV

The fourth quadrennial session of the United Nations Conference on Trade and Development (UNCTAD) was held at Nairobi, Kenya from May 3 to May 31.1976. The conference was addressed by more than 170 representatives of member states, specialized agencies, and other intergovernmental and private organizations. The World Bank attended the conference as an observer. Here is a comment on the session by William Clark, Vice President. External Relations, who led the Bank delegation.

The issues discussed at Nairobi have been on the agenda of various international and regional forums for the last several years. They came into sharper focus at the Sixth and Seventh Special Sessions of the UN General Assembly following the oil price rise. Monetary instability, world-wide recession and inflation, the increasing balance of payments gap of the non-oil developing countries, the sharp decline in many commodity prices, and the uncertainty that the minimum development needs in many Third World countries would be met, had given UNCTAD IV and its preparatory phases a greater sense of urgency. UNCTAD IV provided an opportunity for the developing countries (Group of 77) to take stock of progress in various forums, such as the Paris Conference on International Economic Cooperation (CIEC), the General Agreement on Tariffs and Trade (GATT), and the Development Committee.

Nairobi was also an opportunity for the Group of 77 to demonstrate to the industrialized world (and to Eastern bloc countries) the deficiencies of a piecemeal approach to development, and to seek structural changes in international economic relationships in trade and aid matters. Considerable preparatory work at the political level had been done by the Group of 77 (which now in fact has 112 members) to reach a common stand on major economic issues. Regional meetings of the Group of 77 in Indonesia, Algeria, and Venezuela, before the Ministerial meeting of the Group in Manila early this year provided sufficient opportunities to formulate positions. The demands of the Group of 77 are enunciated in the Manila Declaration, on the basis of which the Group negotiates with the industrialized as well as with the socialist countries.

The demands in the Declaration include the integrated program for commodities and the common fund for buffer stock financing; improved market access for the developing countries’ manufactured and semimanufactured products through improvements of existing generalized systems of preference schemes and preferential treatment to the developing countries; targets of official development assistance (ODA); aid flows, and debt relief; a binding code of conduct on the transfer of technology; increased cooperation based on collective self-reliance among developing countries; and the strengthening of UNCTAD as a forum for international negotiations on economic issues.

The major decisions

The major decisions taken by UNCTAD IV reflect a desire by its members to influence the restructuring of the world economy as well as the economies of the developing countries. Not all the decisions can be implemented in the near future, and most of them would require considerable preparatory work. Nairobi will no doubt help in providing a better focus on issues of great concern to the developing countries in the international debate on finance and development at UNCTAD and at other forums. The final acceptance of the need for structural changes in trade, aid, and technology will depend on the political will of the rich and the poor countries.

Here, in brief, are some of the major results that emerged from the Nairobi meeting:

• agreement was reached on convening a negotiating conference under UNCTAD no later than March 1977 on a common fund for buffer stock financing; preparatory meetings on objectives, financing, and sources of financing of the common fund will begin immediately; negotiating conferences on specific commodities, preceded by preparatory meetings on each commodity, should finalize commodity agreements by the end of 1978;

• the integrated commodity program should ensure among other things stable conditions for commodity trade and development of export products from developing countries;

• a draft resolution on an international resources bank, submitted by Group B (members of the Organization for Economic Cooperation and Development), was not adopted;

• existing international forums were asked to study the debt problems of the developing countries with a view to providing guidelines for future action on individual cases; the Trade and Development Board of UNCTAD is to review progress on this subject in 1977;

• the issue of finance and transfer of real resources was not resolved; the Trade and Development Board will review them in October 1976; no agreement was reached on the period during which 0.7 per cent official development assistance target would be achieved;

• the generalized system of preferences should be improved and its term extended beyond the originally envisaged ten years;

• it was recommended to participants at the Multilateral Trade Negotiations in Geneva that barriers to the improvement of export trade from developing countries should be lifted or reduced;

• the World Bank and regional development institutions were invited to consider facilities which would provide export credit refinancing for developing countries;

• on the question of transfer of technology, a draft code should be completed by the middle of 1977, and an advisory service should be set up in UNCTAD, for helping develop technology in the less developed countries;

• the least developed, land-locked, and island developing countries should receive high priority for and a greater share of ODA; aid agencies should adopt suitable criteria for such assistance to these countries;

• the strengthening of UNCTAD was essential to the creation of improved conditions for international trade and related issues of international economic cooperation.

The Manila document stated maximum demands on most issues, partly to take account of the diversity of the large membership in the Group and partly to leave room for compromise. The industrialized countries (Group B) followed the preparatory phases of the Group of 77 with interest, and held their own meetings under various auspices—such as the Organization for Economic Cooperation and Development (and its Development Assistance Committee) and the European Economic Community. However, several major Group B countries neither believed that any structural changes in the economic relationship between the rich and poor were needed, nor felt that the demands of the Group of 77 were anything more than the rhetoric of the past. This, added to recessionary pressures and preoccupation with elections in three major donor countries, did little to help the industrialized countries as a group or as subgroups to prepare considered responses to the demands of the Group of 77, or to formulate a reasoned common position rejecting them.

At the special session of UNCTAD’s Trade and Development Board held at Geneva in March this year the position of the Group of 77, who were demanding structural changes in trade, increased resource transfers, debt rescheduling, etc., was in sharp contrast to the position of major industrialized countries who insisted that the problems were mainly caused by the increase in oil prices and economic recession, and that solutions would be found as recessionary pressures eased. The purpose of this Geneva session was to start the negotiating process with a view to reaching agreement on as many UNCTAD IV agenda issues as possible, leaving Nairobi to tackle more controversial issues such as commodities and debt. Geneva did not achieve this. The Group of 77 were disappointed by what they regarded as the inflexible position of the industrialized and the socialist countries.

In March the outlook for progress at Nairobi, and thus at Paris in CIEC, looked gloomy. However, moderates on both sides hoped that the lack of progress at Geneva might help to lead the industrialized countries to reconsider more favorably the demands of the Group of 77 and to arrive in Nairobi with a political mandate to negotiate concessions, and that such a response might enable the Group of 77 to seek a compromise in turn.

In spite of considerable effort on the part of a number of countries, the Netherlands and the Nordic group in particular, the EEC and indeed Group B as a whole did not have an agreed position nor a clear mandate within which they could negotiate on important issues at Nairobi. More than two weeks of the Conference period were spent in repeating known positions.

The process of negotiation through group and subgroup spokesmen, and the interrelationship among aid, monetary, and trade issues, made it extremely difficult to achieve overall progress on even specific issues until the last few days. Even now that the Conference has ended, it is difficult to assess the immediate accomplishment and longer-term implications of decisions at Nairobi. Some dozen resolutions were adopted by consensus (on commodities, debt, trade, transfer of technology, and institutional issues concerning UNCTAD). In spite of prolonged and frank debate, little or no understanding was reached on other important issues such as the overall ODA target, resource flows, payment deficits of the less developed countries, access to capital markets, and monetary matters. They will be included on the agenda of the Trade and Development Board and of other forums, such as CIEC, for further consideration.

The main achievements of the Conference were in the fields of commodities and debt. It seems clear that a common fund will be established, but the precise nature of such a fund, its product coverage, and the extent to which producer and consumer countries will participate and contribute remains to be negotiated. In this respect UNCTAD has a very important role to play. It also seems clear that some guidelines will be established for dealing with the debt problems of developing countries, particularly the poorest among them. To begin with this is likely to be taken up at CIEC.

In his remarks after the consensus resolution on commodities was adopted. Ambassador Walker of Jamaica, speaking for the Group of 77, said although the resolution “was feeble in many points,” it was an expression of the determination of most of mankind to forge ahead and to bring the world together. He emphasized the importance of a common fund to facilitate reform and strengthen commodity markets. Without this, the Ambassador said, the poor would remain poor, as they were incapable of influencing the price mechanism because of the inequitable relationship between the ever-rising cost of imported manufactured goods and the price of primary products exported by the developing countries.

So when the plenary session ended at 4 a.m. on May 31, national delegations left Nairobi with a considerable degree of relief, realizing that hard bargaining lay ahead. The joint statement by 16 European countries (Austria, Belgium, Canada, Denmark, Finland, Greece, Ireland, Italy, Luxembourg, Norway, the Netherlands, Portugal, Spain, Sweden, Switzerland, and Turkey), read by Minister Pronk of the Netherlands, recognized that there was a basis for a more equitable structure for the world economy and that these countries would work toward a new order. This gave encouragement to the Group of 77 that a number of industrialized countries were willing to lend support to their legitimate demands now and in the future.

Books from the Fund

Instruments of Monetary Policy in the United States: The Role of the Federal Reserve System. Ralph A. Young. 1973. US$1.25.

Membership and Nonmembership in the International Monetary Fund:

A Study in International Law and Organization. Joseph Gold. 1974. US$10.00.

Voting and Decisions in the International Monetary Fund: An Essay on the Law and Practice of the Fund. Joseph Gold. 1972. US$6.50.

The Stand-By Arrangements of the International Monetary Fund: A

Commentary on Their Formal, Legal, and Financial Aspects. Joseph Gold. 1970. US$4.00

International Reserves: Needs and Availability. Proceedings, IMF Seminar. 1970. US$6.00.

Central Banking Legislation: A Collection of Central Bank, Monetary and Banking Laws. Hans Aufricht. Vol. II, Europe,1967. US$10.00. (Vol. I is out of print.)

Surveys of African Economies

Vol. 1.Cameroon, Central African Republic, Chad, Congo (Brazzaville), and Gabon.1968.
Vol. 2.Kenya, Tanzania, Uganda, and Somalia.1969.
Vol. 3.Dahomey, Ivory Coast, Mauritania, Niger, Senegal, Togo, and Upper Volta.1970.
Vol. 4.Democratic Republic of Congo (Zaire), Malagasy Republic, Malawi, Mauritius, and Zambia.1971.
Vol. 5.Botswana, Lesotho, Swaziland, Burundi, Equatorial Guinea, and Rwanda.1973.
Vol. 6.The Gambia, Ghana, Liberia, Nigeria, and Sierra Leone.1975.

Vols. 2, 4, 5, and 6 also available in French. US$5.00 a volume (US$2.50 a volume to university libraries, faculty members, and students).

The International Monetary Fund, 1945-1965: Twenty Years of International Monetary Cooperation.(3 vols.). J. Keith Horsefield and others. 1969. US$12.50 a set (US$5.00 a volume).

The Fund Agreement in the Courts. Joseph Gold. 1962. US$3.50.

International Monetary Problems, 1957-1963: Selected Speeches of Per facobsson.1964. US$2.50.

Advice on payment in currencies other than the U.S. dollar will be given upon receipt of order. Airmail subscription rates are available upon request. Address inquiries to The Secretary, International Monetary Fund, Washington, D.C. 20431, U.S.A.

International Monetary Fund publications

Periodicals

Balance of Payments Yearbook. Monthly, loose-leaf, US$7.50 a volume; binder available for US$3.50. Annual, clothbound, US$6.00.

Direction of Trade. Monthly, with annual supplement. US$10.00 a year.

International Financial Statistics. Monthly, with annual supplement. US$20.00 a year.

Staff Papers. Three times a year. US$6.00 a year.

University libraries, faculty members, and students may obtain the four subscription publications listed above at the reduced rates of US$12.00 for the four publications or US$5.00 for International Financial Statistics and US$3.00 each for the other publications.

IMF Survey. 16 pages, twice monthly (once in December). Editions offered in English, French (Bulletin du FMI), and Spanish (Boletin del FMI). Annual rates for delivery: US$5.00 in Canada, Mexico, and United States; US$10.00 in Central and South America; US$12.00 in all other areas.

Tape subscriptions

Series from International Financial Statistics, from Direction of Trade, and from the Balance of Payments Yearbook are available on tape for computer users, at a price of US$1,000.00 a year for each title (US$300.00 to universities). Each subscription includes 12 monthly tapes and the book version.

Advice on payment in currencies other than the U.S. dollar will be given upon receipt of order. Airmail subscription rates are available upon request. Address inquiries to The Secretary, International Monetary Fund, Washington, D.C. 20431, U.S.A.

Recent World Bank publications

World Bank Annual Report, 1976.

A detailed report on the activities of the World Bank and the International Development Association (IDA) during the fiscal year July 1, 1975 to June 30,1976. Surveys the major events of the year in the world economy and their impact on developing countries. Includes statistics on the operations of the Bank and IDA, as well as a statistical annex on selected economic indicators for developing and industrialized countries, world exports by origin and destination, the flow of financial resources, external public debt outstanding and projected debt service of 86 developing countries, and foreign and international bond issues. Will be published about the end of September 1976. (Available in English, French, German, Japanese, Spanish, Arabic.)

Operations Evaluation: World Bank Standards and Procedures. June 1976.

Because the problems of development are interrelated and complex, development programs should provide systematically for learning from each experience. This booklet describes the still evolving operations evaluation effort initiated by the World Bank some six years ago. (Available in English, French, Spanish.)

The World Bank: A Financial Appraisal. By Eugene H. Rotberg, Treasurer, The World Bank. May 1976.

Gives a clear and detailed description of the World Bank’s financial policies (liquidity, the borrowing program, capital structure, and lending policies), discusses the creditworthiness of borrowers and project appraisal methods, and briefly explains the value of IDA in the general financial picture. (Available in English, French, German, Japanese, Spanish, Arabic.)

Questions and Answers: the World Bank. April 1976.

More than one hundred questions with detailed answers on origins, purposes, general background, lending policies and procedures, resources and finances, and involvement in aid coordination of the World Bank and IDA. (Available in English, French, German, Spanish.)

Ethiopia and the World Bank. June 1976.

A booklet outlining the role of the World Bank in supporting the Ethiopian Government’s program for improvement and expansion in the fields of agriculture, transportation, electric power, telecommunications, water supply, development banking, and rehabilitation of drought-stricken areas. (In English.)

Single copies of these publications are available free of charge from the World Bank, Publications Unit, 1818 H Street, N.W., Washington, D.C, 20433, U.S.A.

Other Resources Citing This Publication