"Leadership is about responsibility," WTO Director-General says of upcoming G20 meeting; head of UNCTAD says "recovery" so far not affecting developing world; Ecuadorian official laments "growing gaps between rich and poor"
Geneva, 16 September 2009 - The struggling global economy needs a new trade agreement with a suitable emphasis on development, but the Doha Round of talks, while making progress, still needs "tangible negotiating moves" to reach the finish line at a time when the world recession is hitting poor countries hard, speakers told the UNCTAD´s Trade and Development Board this morning.
The topic of the meeting was "evolution of the international trading system and of international trade from a development perspective: impact of the crisis." The two-week Trade and Development Board session, which guides the organization´s activities in response to international events and trends, began Monday and concludes 25 September.
As he has for several years, World Trade Organization Director-General Pascal Lamy attended the Board´s annual discussion on the state of global trade. And as he has for several years, Mr. Lamy said he was hopeful for a conclusion to the long-running Doha trade negotiations, which are often referred to as the "development round." But he added wryly, "At least year´s session, I began my remarks by noting that I had hoped to report to you that we had successfully concluded negotiations on agriculture and industrial modalities to move on to the final phase of the Doha negotiations. Unfortunately, that was not the case."
There has been progress of late, he said, including a "successful gathering" of trade ministers in India at the beginning of September. He went on, "What is outstanding in the Doha round is doable and a deal is within reach, but to get there, we still need a translation of the current global political support into tangible negotiating moves.
"Leaders of the G20 meeting in Pittsburgh will have the opportunity to throw their weight behind a Doha development deal," he added. "Leadership is about responsibility. Failure to act will be hard felt by the entire international community." The G20 session will take place on 24 and 25 September.
Mr. Lamy said the global recession "is being felt all over the place; the impact has been devastating; but it is developing countries that have suffered the worst, since they have the fewest resources for coping." He described WTO efforts to free up additional financing for trade -- saying such credit "oils" the process -- and said steps have been taken to advance the massive Aid for Trade programme and to limit any trade protectionism put into effect by governments trying to cope with the fallout from the crisis. Developing countries, he said, "cannot afford multibillion dollar stimulus packages, and therefore are at the mercy of the global economic system for their recovery."
Recent comments that a recovery -- frequently referred to by the term "green shoots" -- is under way were treated with caution by UNCTAD Secretary-General Supachai Panitchpakdi, who opened the meeting.
"While we are seeing ´green shoots´ at the moment, the issue of unemployment and trade contraction remains a serious concern" for developing countries, he said.
Over the past decade, trade has become an extremely important vehicle for economic growth for these nations, Mr. Supachai pointed out: between 1995 and 2007, trade expanded to account for more than 50% of developing countries´ domestic output. Then the crisis hit, and it "has been quite devastating -- a deep and sudden contraction," and one that was especially damaging for developing countries that had done what they were advised to do and had opened their economies effectively to international markets.
The internationalization of production processes ensured that the crisis, once it began in industrialized countries, spread rapidly around the world, he said. When there was a fall in demand, there was a fall not only for exports, but for raw materials and intermediate products -- all of this significantly affecting the world´s less-wealthy nations. Difficulties in obtaining financing for trade had compounded the problem, as had sharp falls in prices for many of the commodities that are major exports of developing nations.
Recently there has been an upturn in exports for some of these countries, but "we cannot really be saying that we are now seeing a recovery," Mr. Supachai said.
"Countries should not walk away from trade," he cautioned, "but some rethinking seems to be necessary. One matter is how to reduce export dependencies by being more diversified, not only in terms of major products but in terms of new products and new areas, and this is why growing ´South-South´ trade is so important." South-South is the term used for rapidly growing exchanges of goods and services between developing nations. Possibilities worth exploring include environmental products, Mr. Supachai said. And governments "will have to be mindful of guiding investment and trade flows into these new and promising areas."
Pedro Páez Pérez, Chairman of the Ecuadorian Presidential Technical Commission for a New Regional Financial Architecture and Bank of the South, termed the world financial and economic crisis "a colossal process of destruction" in which "gaps between the rich and poor are growing. About one-sixth of the world´s population is now at risk of suffering from hunger this year.
"We are living through an acute process of centralization and concentration of capital," he said. "This has accelerated in recent decades. There is an enormous polarization" with concentration of power and decision-making now reduced to a small group, Mr. Páez said. He contended the crisis is really "about the way society is organized," and said that so far the response has been driven by "the need to find profits based on globalized capitalism that is keeping people´s living conditions from going back to normalcy."
"No one has gone back to the roots of the crisis," he said. "There are ever-greater distortions and disruptions in the basic mechanisms used to adjust markets. There is ever-greater uncertainty." He called for steps to reduce speculation in exchange markets and interest rates. "And we have seen massive speculation in commodities, including food, that has exacerbated in an acute way the danger of food crises. This is a very serious problem."Speakers from the floor repeatedly emphasized the impact of the global downturn on developing countries, calling for a "fairer playing field" in international trade. They emphasized the role of regional arrangements -- including loans and trade credit -- in helping poor countries weather the crisis, and said repeatedly that substantial reforms are needed to the "international financial architecture." It was stressed that lessons should be learned from the crisis so that it does not recur, and several developing country representatives remarked that governments should be more involved in managing and channeling their economies in directions that can lead to stable, sustained growth, as opposed to the liberalized economic mantra of previous decades, when governments were directed by international institutions to avoid interfering in free markets.
