Working document of the European Commission - Guidelines for the participation to the 10th United Nations Conference on Trade and Development
Date: 1999-09-15
Institutions: European Commission
Subjects: UN Conference on Trade and Development, development policy, international trade, investment policy, liberalisation of trade

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 15.09.1999
COM(1999) 451 final

WORKING DOCUMENT OF THE EUROPEAN COMMISSION

Guidelines for the participation to
the 10th United Nations Conference on Trade and Development

1.

2.

I.

3.

4.

5.

WORKING DOCUMENT OF THE EUROPEAN COMMISSION

Guidelines for the participation to
the 10th United Nations Conference on Trade and Development

is to help prepare the position of
The purpose of this Working Document
on Trade
the European Union
and Development (UNCTAD X),
from 12
to 19 February 2000 as well as at the Preparatory Committee for UNCTAD X, which
will take place in Geneva in December 1999.

10th United Nation Conference

to be held in Bangkok, Thailand,

the

at

Taking into account articles 133, 177, 178, 179, 180 and 181 of the EC Treaty, the
Commission transmits this Working Document to the Council for discussion and to
prepare the way for Council conclusions in order to serve as guidelines for the
participation of the Community and its Member States in UNCTAD X. According to
the established practice the Commission and the Member States will further
coordinate their positions in meetings on the spot at the Conference.

INTRODUCTION

UNCTAD X will be devoted to the issue of “Globalisation as an instrument for the
development of all countries and all people.” Globalisation indeed offers new
perspectives for integrating developing countries into the world economy, including,
but also going beyond those offered by trade, for which UNCTAD was established
originally. By focussing its work on globalisation, UNCTAD will be able to preserve
its important role in the international debate of today’s most relevant trade related
issues in the context of sustainable development.

The proceedings of the Conference have to be based on a clear and shared
understanding of the relationship between sustainable development and globalisation,
for which trade and investment liberalisation are fundamental instruments. In order
for developing countries to reap the benefits and take up the challenges of
globalisation, there is a need for them as well as for donors and the international
community to rethink development strategies and policies accordingly.

In rethinking these strategies, the European Union will ensure, through the debate
at UNCTAD X, as well as through the work of UNCTAD in the next four years, that
parallel progress is made both at improving development strategies and domestic
policies in the developing countries and at
improving and strengthening the
international environment in which development must take place.

The strategies and policies that the Union will support at national, at regional and at
international level shall be consistent with the objectives of the European Union
development cooperation policy. Therefore, they will have to foster the smooth and
gradual integration of developing countries into the world economy. They shall aim
at their economic, social and environmentally sound development and involve an
integrated approach to poverty reduction.

Development strategies and policies should also take into account the impact of
globalisation on the
in
the Resolution 1999/59 of the UN Commission on Human Rights.

enjoyment of human rights,

called for

full

as

2

Moreover, these strategies and policies should be formulated with a view to greater
coherence between the structural, macroeconomic, trade, financial and development
aspects of economic policy so as to increase the effectiveness of these policies, and
help secure an open and stable economic policy framework conducive for developing
countries’ integration into world trade, their economic and social development and
poverty reduction.

UNCTAD X will take place shortly after the Seattle Ministerial Conference, which is
expected to launch a new round of trade negotiations in the WTO. The Commission
has already forwarded to the Council and to the European Parliament a
Communication on the EU approach to
the WTO Millennium Round
(COM (1999) 331) which includes a substantial development agenda for the New
Round. UNCTAD X will also coincide with an important stage of the Post-Lomé
process while other
regional negotiations with the Mediterranean Countries,
Mercosur, Chile and Mexico are under way. These simultaneous developments offer
a possibility to achieve more comprehensive results through a global approach. This
requires, however, a high degree of coherence and consistency between all initiatives
taken in each of those negotiation frameworks at the regional and at the multilateral
level.

Consistency requires a strong analytical basis. Part II contains a brief analysis of the
relationship between globalisation and development as a way to enhance a global
development strategy.

6.

7.

above

Coherence is a prerequisite in order to make the European Union’s efforts in each of
the
proposals
for UNCTAD’s future work programme that has to be decided at the Conference,
and aims to maximise such coherence.

negotiations mutually supportive. Part

contains

III

the Annex contains elements of text reflecting the political approach
These elements of text could be used in negotiating

Lastly,
developed in Part II.
a Conference Declaration

II. GLOBALISATION AND DEVELOPMENT

8.

9.

Since 1951, world production has more than quadrupled while global trade has
grown seventeen-fold. World GDP share traded on international markets has
increased from 7 % in 1950 to 17 % in 1996 and to 20 % if services are included.
FDI has grown from $ 60 billion in 1982-85 to $ 440 billion in 1998. Intra-firm trade
is estimated to 55 % of world trade. Daily foreign exchange transactions reached
$ 1.5 trillion in 1998.

In the meantime world population has grown from 3.4 billion to 5.8 billion. Most of
the increase has taken place in the developing countries whose population has risen
from 2.7 billion to 4.8 billion. Real world GDP has tripled over the period 1965-
1996. Yet over the same period the ratio of developing countries’ to industrialised
countries’ GDP per capita has remained more or less at the level of 1 to 20 in dollar
terms and 1 to 7 in PPP.

10.

Developing countries' performances in terms of GDP per head growth rates have
considerably varied from one region to the other. While South East Asia and China
have recorded an annual increase of GDP per head of more than 5 % over the

3

11.

12.

13.

14.

15.

period 1965-1996, the Mediterranean region and Sub-Saharan Africa have suffered a
deterioration of their living standards. Poverty in Developing countries (below 1 $
a day) has gone down, in 1993, to 29.4 % of the population of those countries, but
the absolute number of poor has increased from 1.2 billion in 1987 to 1.3 billion
in 1993 and could reach 1.5 billion today1.

Moreover, over the long term, world economic growth has been slowing down.
Growth in developing countries, which has been subsiding over the last decade, has
not offset the growth rate decrease in developed countries from an average of 4 % in
the Sixties to 2 % in the Nineties.

Through an unprecedented wave of technology innovations and a more efficient
international division of labour, globalisation has been one of the main factors
contributing to world growth over the last decades. However, freer trade and
increased FDI as well as short term capital flows have only had a limited impact on
global development. Whereas a handful of emerging economies provided evidence
that there is a way out of underdevelopment thanks to export-led and FDI-absorption
strategies, most developing countries have not achieved any significant nor
continuous increase of their GDP per capita over the last three decades.

There has been indeed no worldwide real convergence, and despite conspicuous
progress in terms of food availability, literacy and life expectancy in most developing
countries, poverty remains more than ever an unmet challenge. Moreover, the global
is deteriorating because of unsustainable production and
and local environment
consumption patterns linked either to extreme poverty in developing countries or to
the lack of internalising environmental costs in market prices in developed countries
and emerging economies.

The missing link between globalisation and development
is the existence of
“adequate domestic policies”. The lack of such policies helps explain the persistent 1
to 20 ratio of GDP/capita ratio in dollar terms between developing countries and
developed countries. Development depends indeed first and foremost on domestic
policies whereas these must be supported by international economic cooperation.
Free trade in particular has played a positive role only for countries that have been
carrying out effective development strategies; the range of such policies extends far
beyond the impact of exports and imports as well as of FDI on a country’s economic
growth.

Globalisation through free trade and open investment regimes can improve the
overall performance of developing countries’ economies provided domestic policies
are enhanced by strengthening competition on domestic markets, by opening up new
market opportunities abroad for developing countries’ exports and by increasing the
financial resources available for investment in physical capital and intangible assets,
including indispensable public goods. The promotion of multilateral rules and
principles integrating sustainable development requirements is a unique way to
ensure consistency of effective development strategies at home and globalisation
opportunities through free trade and higher FDI flows.

1 Recently, the situation has further deteriorated as a result of the financial crisis in East Asia. The World Bank
estimates that the number of poor could double in Indonesia, and increase by 35 to 50 percent in the
Philippines, Thailand and Malaysia over the period 1998-2000 whereas GDP per head has receded in Russia in
North Korea, Ex-Yugoslavia and with growing unemployment, in some regions of China.

4

16.

In order to reap those benefits, five conditions have to be met:

A.
B.

Efficient institutions and domestic policies
Attention for the specific economic and social constraints of developing
countries in the multilateral trading system
Adequate external resources

C.
D. Multilateral harmonisation of rules and principles
E.

Consistency.

A.

17.

18.

19.

20.

21.

Efficient institutions and domestic policies

organisation with

In order to “take off”, developing countries must reach a certain level of political and
a well
economic
functioning State. In LDCs and in many developing countries these conditions must
be drastically enhanced in order to attract FDI and to make free trade become a
source of welfare gains fairly distributed across the economy.

efficient markets

reasonably

and

Development strategies can only succeed when implemented in a stable political
environment by governments determined to make sustainable development a
priority. Without genuine will to develop, no development is possible. Accountable
democratic governments and the rule of law secure more surely development through
the stability of political systems and the priority for development. These appear
therefore, along with the respect of Human Rights, as prerequisites for sustainable
development strategies.

Development requires higher savings and investments rates and better
education. High savings are directly connected to sound macro-economic policies
aimed at avoiding both domestic inflation and exchange rate depreciation. Moreover,
the efficiency and the solidity of the domestic financial sector are decisive for
ensuring fair access to credit, higher productivity of investment and therefore higher
savings through better remuneration.

Free trade and environmental protection can and must be mutually supportive.
Free trade provides the framework for a more efficient use of environmental
resources through the better use of natural competitive advantages and through
technological innovations allowed by economies of scale and competition on world
markets. At the same time, environmental requirements can provide an incentive for
technological
the environmental
benefits of free trade are not automatic – i.e. they will only materialise if effective
environmental policies are implemented both at national and multilateral levels.

innovation and economic efficiency. However,

Social policies encompassing health, primary and technical education, especially for
girls, as well as social safety nets, yield a high return on public expenditures in
terms of growth. Education is one of the key public goods a State must secure for
ensuring technology absorption and, thereby, along with investment
in physical
capital, higher productivity. The recent financial crisis in Asia has highlighted the
fact that countries that have effective social safety nets in place during a financial or
economic crisis are more resilient and better equipped to mitigate negative effects.

22.

Private sector operating in efficient and competitive markets is the engine of
economic growth and the main source of employment in most developing countries.

5

23.

B.

24.

25.

26.

27.

28.

It enhances developing countries’ competitiveness thus contributing to their
integration into the world economy.

therefore requires above all

Development
the smooth functioning of fair and
competitive markets for products, services and other resources including credit,
land and genetic resources. In this respect, it is essential to contain arbitrary action of
governments against business, to combat corruption and to prevent the collusion
between public authorities and rent-seeking oligopolists or monopolists by
determined competition policies.

Attention for the specific economic and social constraints of developing countries
in the multilateral trading system

The progressive integration of developing countries into the multilateral trading
system will depend not only on the success of their domestic reforms and on the
competitiveness of their economies, but also on the capacity of this system to
the specific economic and social
appropriately address and take into account
capacities and constraints of these countries and, in particular, of the least developed
among them.

Multilateral rules taking into account these capacities and constraints must play
a positive role in supporting governments’ strategies aiming at
sustainable
development.

In this context, strengthening SDT (special and differential treatment) measures is
important in order to facilitate the integration of developing countries, in particular
the least developed among them, in the multilateral trading system, taking account of
their different levels of development.

Developing countries should continue to receive from industrialised countries as well
as from more advanced developing countries, effective preferential treatment
related to market access. While pursuing the objective of comprehensive trade
liberalisation, any unacceptable reduction in the margins of preference in key sectors
for the development of developing countries should by avoided. Where necessary
the environmental and social
current GSP preferences,
incentive arrangements, should be increased. The adoption of positive incentives
under GSP linked to sustainable development policies and multilateral norms should
be promoted.

including those under

Developing countries should
-
commit to liberalisation consistent with their development needs,
-
be ready to engage, through regional integration schemes among developing
towards establishing free trade areas fully consistent with WTO
countries,
provisions, as a way to enhance competition and to reap economies of scale,
preparing thereby progress towards multilateral liberalisation.

North-South regional arrangements through reciprocity in the trade relations that
would take fully into account the degree of asymmetry prevailing in economic
structures and competitiveness between industrialised and developing countries,
according to their level of development, will consolidate regional integration and will
ease the industrialisation of developing countries through new investment and trade
dynamics.

6

C.

29.

30.

31.

32.

D.

33.

Adequate external resources

Globalisation of financial markets has enhanced the possibilities for transfers of
funds from the North to the South, through Foreign Direct Investment, as well as
through portfolio investments and bank loans.

Opening up the investment regime should remain a priority for developing
countries. In that respect, for the particular case of direct investment, a multilaterally
agreed framework of rules negotiated in a wider forum such as the WTO would
enhance stable investment flows by creating a more transparent and predictable
investment climate worldwide.

their

Whereas some emerging economies have fully taken advantage of the possibility to
attract foreign capital, most LDCs were unable to do so due to the instability of their
macro-economic environment and to the structural weakness of their institutional and
legal framework and in particular of their financial sector as well as to the risks
resulting from the volatility of financial markets. Capital flows liberalisation in
addition to the liberalisation of
regimes, expose emerging
economies to severe blows that may degenerate into a global systemic risk, unless
prudential rules and supervision consistent with agreed multilateral standards are
implemented at
flows is ensured at
international
level. Moreover, when insufficiently monitored, short-term capital
liberalisation can ease money laundering, tax evasion and transfers of corruption
proceeds. Therefore, progress should be made on the one hand in order to strengthen
the solidity of domestic financial sectors and on the other hand in order to improve
the international financial system, with regard to transparency of flows, prevention of
financial crisis and fight against corruption, money laundering and tax evasion as
well as to stabilise financial markets.

level and transparency of

the national

investment

Official Development Aid (ODA) should remain a critical resource for LDCs. Its
volume should be brought into line with the UN agreed target 0.7 % of IC’s GDP.
ODA should inter alia contribute to physical infrastructure, social policies and
capacity building, including in particular trade related capacity building to enhance
the ability to trade and to help those countries integrate in the world trade system,
and should accompany policy reforms geared towards sustainable development.
Coordination among donors and full participation by the recipient country itself is
necessary conditions for effective and well-targeted assistance.

Multilateral harmonisation of rules and principles

The pressure from global financial markets on governments to ensure that their
returns on investment,
fundamentals are right and on enterprises for higher
contributes to a “competition among rules” between tax, social, environmental and
regulatory national systems, which can turn into a race to the bottom. It is therefore
important
that developing countries, when implementing economic reforms,
increasing export competitiveness and building a favourable investment climate, are
placed in a position that allows them to carry out such tax, social, environmental and
regulatory policies, which are critical in terms of sustainable development.

34.

Agreed efforts by developing and industrialised countries to adopt and implement
such policy call for a multilateral harmonisation of sustainable development
rules and principles, namely

7

in the social sector,
the effective implementation of ILO core conventions (the right to organise
-
in unions; the right to collective bargaining; ban on exploitative use of child labour;
ban on forced labour; ban on discrimination in a work situation),
in the environmental sector,
-
the implementation of Multilateral Environmental Agreements - such as
the Montreal Protocol, the UN Framework Convention on Climate Change (FCCC),
the UN Convention on Biological Diversity (CBD) -in a manner consistent with the
principle of common but differentiated responsibilities as they are being concluded,
signed and ratified,
taking into account core environmental principles like the
precautionary principle,
in the financial sector,
the promotion of prudential norms and their effective supervision as well
-
as the promotion of norms on capital flows transparency so as to consolidate
domestic financial sectors in developing countries and to prevent global
systemic crises,
the fight against corruption, money laundering and tax evasion,
-
-
the gradual elimination of tax havens, and the multilateral negotiation of
minimum rates of taxation on the returns from mobile factors (savings and
corporate profits) so as to contribute to more fiscal equity within developing
countries while ensuring a sound and fair financing of the basic public goods such as
the functioning of the state, infrastructure, health and education.

The development dimension will have also to be addressed in negotiating multilateral
rules on Foreign Direct Investment and competition as well as on trade
facilitation.

Consistency

Consistency between domestic strategies, trade and international investment policy,
and multilateral harmonisation of tax, social and environmental rules implies more
effective coordination among donor countries and countries that grant
trade
preferences as well as full participation and ownership by recipient countries.

35.

E.

36.

III. UNCTAD CONTRIBUTION TO THE ELABORATION OF

STRATEGIES FOR SUSTAINABLE DEVELOPMENT

III.1 The work programme of the Organisation for the next four years

III.1.1

Introduction

37.

UNCTAD’s work programme for the four years following the 10th Conference
should contribute to promote development strategies along the lines set out above
while respecting the specificity of other international fora. This would require
adjusting the work programme agreed upon at the 9th Conference accordingly, based
on an updated definition of UNCTAD’s role and on a set of priorities reflecting
present needs and circumstances.

38.

In framing the work programme of the Organisation for the next four years, account
will need to be taken of the role of UNCTAD, which is threefold:

8

39.

40.

41.

42.

43.

44.

carry out research, data collection and analysis activities that provide

-
act as a forum for intergovernmental discussions and deliberations as well
as experts' debates. These activities cover the pre- and post-negotiation phase and
are aimed at consensus building;
-
pointers for the discussions of the experts and government representatives;
-
provide, in cooperation and coordination with other organisations and donors,
technical cooperation activities, closely connected and intertwined with the research
and analysis activities.

As far as global rule making is concerned, UNCTAD is not the appropriate forum for
the negotiation of multilateral rules. WTO’s almost universal membership and active
participation of developing countries puts indeed an end to any claims that UNCTAD
could act as an alternative forum for rule making.

UNCTAD in its debates at intergovernmental and at expert level, in its analytical
activities as well as in technical cooperation, should continue to focus on the four
fields of activities set out in paragraphs 86 to 94 of the Midrand document: trade in
goods and services and commodity issues; investment, enterprise development and
technology; services infrastructure for development and trade efficiency, as well as
the more general topic of globalisation and development.

However, like UNCTAD IX, the 10th UNCTAD Conference will have to identify
priorities in these four fields. These priorities should reflect UNCTAD comparative
advantages as well as the specificity of its general mandate lying in a combined
analysis of both the trade and the development dimensions of each theme. The
selection of priorities should also take account of the changes that have occurred
since Midrand as well as of the international community's agenda in the months
ahead.

The Union's proposals for priority topics should be consistent with its negotiating
positions in other fora.

internal

institutional reforms and capacity building,

In particular,
the
involvement of the different actors of civil society in the development process and
regional integration, owing to their growing relevance in the Union’s development
cooperation policy, could be suggested as priority topics in the various fields
of UNCTAD activities.

The increasing risk of marginalisation of Least Developed Countries in the global
economy argues in favour of continuing to put LDCs’ specific problems at the
centre of UNCTAD’s activities and assistance programmes.

The themes relating to human rights, to the centrality of social and human
development and to poverty alleviation should not be included into UNCTAD
programme of work, as the Organisation has no genuine comparative advantage in
these fields. These themes should however inform UNCTAD analytical work and
technical cooperation activities, taking into account the work carried out by other
international institutions, such as UNDP, UNESCO and the World Bank.

9

a)

45.

b)

46.

III.1.2 The programme of work in the four fields of activities of the

Organisation

Globalisation and Development

UNCTAD should continue to focus on the implications of globalisation for
sustainable development. More specifically, there should be analytical work on:

in the

light of

the role and responsibilities of the different actors of the civil society

the impact of macroeconomic reforms, structural adjustment, and second
increasing global

(a)
generation reforms on development,
interdependence;
(b)
how to offset the negative effects of globalisation. Given its trend to favour
stronger economies and to marginalise the weaker ones, ways and means should be
sought to reduce gaps by distributing the benefits more equally and by creating the
conditions to reap such benefits. Activities in this respect should contribute to the
definition of a global strategy for development, along the lines set out in Part II
above;
(c)
the importance of institutional reforms and capacity building, focussing in
particular on issues such as good governance, including the prevention of and the
fight against corruption as well as the establishment of a regulatory framework
favourable to the development of a market economy;
(d)
contributing to the integration of developing countries in the world economy;
the role of regional integration processes, both between developing countries
(e)
and between developing and developed countries, in ensuring increased economic
stability and mitigating the impact of adverse external shocks. This should include
integration that facilitated the
the analysis of positive experiences of regional
economic growth of member countries. In this context, UNCTAD should continue to
provide and increase technical cooperation to developing countries with regard to
establishing the institutional framework and implementing the policies, necessary for
regional integration, and to ensuring that such schemes are in accordance with, and
thereby supportive of, the multilateral trading system;
the specific problems of LDCs in their efforts to integrate into the global
(f)
in the Commission’s
economy. These have been identified,
Communication on the EU approach to the Millennium Round. In this context, the
results and experiences from the implementation of the Programme of Action for the
Least Developed Countries, as well as the High Level Initiative in Favour of Least
Developed Countries (1997) should be taken into due consideration.

inter alia,

Investment, Enterprise Development and Technology

UNCTAD should continue and develop its activities of collection and analysis of
data on foreign direct investment, in order to get a better understanding of the
relations between investment, trade and development, and to study the contribution
of investment flows to the development process, especially through the strengthening
of local industrial clusters and the flow of information and know-how to which they
give place.

In this context, UNCTAD should carry on analytical activities:
(a)
factors able to mobilise and maintain FDI in developing countries;

on the institutional and macroeconomic framework and the different location

10

47.

48.

49.

50.

(b)
in support of negotiations of multilateral rules on investment, giving particular
attention to the specific needs and conditions of developing countries in this context.

These analytical activities should complement the debate at intergovernmental and at
expert level and should be accompanied by technical cooperation activities aiming at
assisting developing countries in their efforts to attract investment.

the complementarity and interdependence of private sector development at

UNCTAD should do analytical work and provide a forum for debate at
intergovernmental and at expert level on the formulation of policies favourable to the
development of the private sector.
In particular, the following issues could be
examined:
(a)
local, national and regional levels;
(b)
the conditions for the promotion of local development, looking at the existing
differences between the territories, the competitive factors they express and the local
actors to associate in the definition of interventions;
(c)
(d)
(e) mechanisms increasing the level of foreign and domestic investment
accordance with WTO rules;
(f)
(g)
development of private sector and its contribution to poverty alleviation.

the interrelations between decentralisation and regional integration processes;
new forms of partnerships and dialogue between the private and public sectors;
in

the role and specific needs of SMEs;
the role of microfinance, as an integral part of financial institutions, in the

UNCTAD should support, through the appropriate analytical activities, the efforts
made by developing countries in order to define and implement policies and
knowledge strategies for the participation in the Information Society and for the
promotion of a learning society.
It should also provide a forum for debate at
intergovernmental and at expert level on these issues, without duplicating existing
negotiations and debate within WTO, CSTD and ITU amongst other.

the establishment of a legal and regulatory framework conducive to the

In this field of activities, UNCTAD should deal with issues related to institutional
reforms and capacity building and to the role of the different actors of civil
society. Analytical work should be carried out on:
(a)
development of the private sector and favourable to FDI;
(b)
(c)
actor in the globalisation process;
(d)
development process.

the development of local expertise as well as local and regional networks;
the identification of the role and responsibilities of the private sector as an

the increase of the capacity of the private sector to play its role in the

Referring to regional integration, UNCTAD could examine:
(a)
the positive impact of regional integration in the development of competitive
capacities of enterprises in member countries and in particular, in developing and
strengthening competitive chains for the production of goods and services, as well as
the identification and strengthening of flanking support measures to these chains;
regional
(b)
flows;
(c)
integration processes in the development and the
acceptance of harmonised investment rules.

the
impact
the role of

of
the
regional

integration

processes

on FDI

11

c)

51.

52.

53.

54.

Trade in goods and services and Commodity issues

UNCTAD should continue and enhance its activities in order to support the efforts of
Developing countries to integrate into the multilateral trading system. In particular,
UNCTAD should provide a forum for debate at intergovernmental and at expert
level, in which to analyse, from the perspective of development, the subjects of the
forthcoming WTO negotiations in order to allow developing countries to better
understand the issues at stake and to enable them to participate more actively in those
negotiations. Special attention should be paid to:
(a)
the opportunities offered to developing countries by opening the economic
environment through strengthening the discipline in the service sector and in new
fields of trade-related matters such as Foreign Direct Investment and competition;
in relation with the
(b)
increasing differentiation in the levels of development and competitive capacity
among developing countries;
the identification of other issues on which developing countries can have
(c)
special interest as well as of ways and means to overcome problems hampering
developing countries integration into the multilateral trading system.
UNCTAD should as well discuss ways and means to accommodate trade policies
with other policies, guiding the debate away from fears over unilateralism and
protectionism.

the concept of Special and Differential Treatment

technical cooperation activities

UNCTAD should also continue
supporting
developing countries and in particular the LDCs, in their accession to the WTO, in
the preparation of the future WTO negotiations and the implementation of the
commitments deriving from present and future negotiations. Moreover, UNCTAD
could offer technical cooperation to developing countries in the development of
coherent negotiating strategies through the different
level and context of trade
negotiations.

UNCTAD should reactivate its initiatives in the field of trade preferences and
related rules of origin issues. It should in particular examine how developing
countries and especially LDCs can take better advantage of existing preferences and
how more advanced developing countries can offer LDCs preferential access to their
markets. A discussion of the Enabling Clause, taking into account the changing
economic conditions and policies of developing countries, could also be useful
in UNCTAD. The Organisation should also continue its technical cooperation to
economic operators in the use of preferences.

UNCTAD should continue its analytical activities as well as favour the exchange of
experiences in the field of commodities and particularly on:
(a)
commodities and stabilising export earnings;
(b)

diversification, as the appropriate strategy for breaking dependence on

risk management instruments.

UNCTAD could also undertake a reflection on the purposes and functioning of
present international commodity agreements.

UNCTAD should continue to conduct analytical activities and to provide a forum for
debate at intergovernmental and at expert level on competition policies and rules, in
order to raise developing countries’ awareness and to allow them to share their
experience. UNCTAD could in particular analyse the importance of State-owned and

12

the types of

private monopolies in emerging markets, the relations between investment and
levels of market
competition,
development. UNCTAD could also undertake analysis in support of the negotiations
of multilateral rules on competition, giving particular attention to the specific needs
and conditions of developing countries in this context.

regulation adapted to different

55.

UNCTAD could carry on technical cooperation activities aiming at assisting
developing countries in the definition and implementation of competition rules and
policies.

role

UNCTAD should continue to play an important
in addressing the
trade/environment/development continuum within the context of sustainable
in improving policy coherence and supporting
development and in particular
progress on the issue of trade and environment
in the coming years. Particular
attention should be paid to ensuring the mutual supportiveness and complementary of
work between the UNCTAD, WTO and other international organisations like UNEP,
UNDP and the Bretton Woods institutions, to effectively help developing countries
to address trade and environment challenges and to maximise positive synergies
between trade liberalisation and environmental protection while at the same time
ensuring that trade rules do not reduce the ability of countries to pursue effective
environmental policies, domestically and internationally.

UNCTAD work should aim at overcoming developing countries’ partly defensive
into any trade and
position towards integrating environment considerations
development agenda as well as their concerns over unilateralism and eco-
protectionism. In addition, UNCTAD should raise awareness on the reinforcement of
environmental standards at the national level, which could promote economic growth
and attract foreign investment in developing countries, as well as on their specific
interest in enforcing environmental disciplines at the international level, inter alia, to
protect their own environment, to avoid export of pollution and environmentally
damaging products from industrialised countries and thereby prevent some trade-
related environmental risks.

In particular, UNCTAD should further explore inter-linkages between the various
trade liberalisation and environment issues and developing country demands for
differentiated, preferential treatment. In this context, increased win-win research to
the potential to yield both direct economic benefits as well as positive environmental
results for developing countries would be of specific importance. It would be
important to continue looking for positive mechanisms for improved market access
and to facilitate trade in environmentally preferable goods and services.

its

focus

on multilateral

environmental
attention
UNCTAD should
agreements (MEA) as the best way of tackling international environmental problems,
stressing the fact that any trade measures MEAs may contain when agreed upon in a
multilateral context would be a guarantee against unilateralism and eco-
protectionism and stressing the synergy between high environmental protection
based upon the Rio Principles and economic performance, which will over the
medium to long-term allow for sustainable development.

As Task Manager for Chapter 2 of Agenda 21 UNCTAD can also play a useful role
in the discussions on trade due to take place at the 8th session of the UN Commission
on Sustainable Development in April 2000 and in the subsequent preparation of

13

56.

d)

57.

the Earth Summit 2002, which will review the implementation of Agenda 21 and
the Rio Principles.

the establishment of regional disciplines in trade related matters such as

the effects of the removal of barriers to trade between developing countries

Referring to institutional reforms and capacity building, in this field of activities,
UNCTAD could do analysis as well as technical cooperation on the regulatory
frameworks favourable to trade development. In this field of activities, UNCTAD
should also deal with the following issues related to regional integration:
(a)
that are members of regional economic organisations;
(b)
competition, IPRs, SPS and TBT;
(c)
(d)
developing countries and developed ones.
These analytical activities should feed into the debate at intergovernmental and at
expert level and should be accompanied by technical cooperation aiming at helping
developing countries in their regional integration processes. In particular, UNCTAD
should assist Developing countries and especially LDCs in implementing regional
free trade agreements. It should also continue to offer technical cooperation to
regional organisations in the negotiations of free trade agreements with developed
countries as well as in the WTO framework.

the existing interactions between multilateral and regional trade negotiations;
the development perspective of reciprocity between regional groupings of

Service infrastructure for Development and Trade Efficiency

Based on the expertise it has developed in this field, UNCTAD should continue to
assist Developing countries in building up a service infrastructure in the areas of
transportation, banking and insurance, and telecommunications.
customs,
While rule making should definitely remain under the realm of WTO, UNCTAD has
a comparative advantage in terms of providing technical assistance in this field.

trade facilitation, the use of information technology in trade-related activities

institutional reforms, capacity building and training activities supporting the

The following areas should be at the centre of UNCTAD's work programme, both
with regard to its analytical activities, as well as technical cooperation:
(a)
and, in particular, the development-related dimension of electronic commerce;
(b)
build-up of an efficient services infrastructure for trade;
(c)
trade at regional level.
(d)
LDCs specific problems, such as access to information technology and build-
up of human resource capacity to utilise information technology and thereby
participate in the information society.

the possible gains in efficiency in the build-up of services infrastructure for

III.2 Ways and means to improve the effectiveness of UNCTAD work

58.

UNCTAD underwent a major overhaul during the 8th Conference, which took place
in 1992 in Cartagena. What used to be portrayed as “the spirit of Cartagena”
inspired,
and
the 9th Conference. On the other hand, UNCTAD VIII did not achieve enough in
terms of streamlining those activities.

extent, UNCTAD’s

activities

between

the 8th

large

to

a

UNCTAD IX reduced the number of meetings mainly by trimming down the
institutional framework to three main commissions. However, this implied that each

14

59.

60.

61.

62.

commission had to cover a wide number of subjects. Thus, there is a need to better
focus UNCTAD’s work programme.

UNCTAD X must therefore reiterate the need of ensuring an optimum allocation of
the Organisation’s resources by focusing its activities on issues in which UNCTAD
has a real comparative advantage and by choosing a limited number of priorities
along the lines set out above.

The Conference should also stress the importance of enhancing the consistency
among the three aspects of UNCTAD role - debates at intergovernmental and at
expert
level, analytical activities and technical cooperation - which are closely
intertwined and must always be mutually supportive.

Technical cooperation should be demand driven and based on recipient countries’
needs assessments. The Conference should underline the need of enhancing internal
coordination of technical cooperation activities through, inter alia, the submission to
Member States of an annual indicative plan, drafted under the direct responsibility of
the Secretary General. LDCs’ priority should be ensured.

the
In order to increase the effectiveness of technical cooperation activities,
monitoring and evaluation of each project will have to be properly strengthened. In
particular, the impact of projects on national capacities of recipient countries should
be assessed.

Ways and means should be found in order to introduce and improve mechanisms for
cost-recovery aiming at pursuing the financial autonomy of certain programmes.

Technical cooperation and support for capacity building should be carried out in
coordination with other donors to achieve coherence and complementarity of action
In this regard, the principles governing
and to avoid overlapping of activities.
the Integrated Framework for LDCs
- i.e. coordination among donors and full
participation by developing countries – could be applied to assistance to other
developing countries.

Greater policy coherence is essential to promote an open and stable economic policy
framework and to integrate developing countries in the world economy.
It requires
closer co-operation between international organisations in trade-related areas to
enhance complementarity and mutual supportiveness of policies in support of trade
liberalisation and development. The Conference should stress the need for
cooperation between UNCTAD and other international bodies aiming at achieving
such complementarity and synergies and at avoiding competition among the different
actors and overlapping in their activities. Such cooperation should allow for better
coordination in the definition as well as in the implementation of these activities.

In particular, the Conference should underline complementarity with the WTO. This
complementarity is coupled with a clear distinction of the two bodies' roles
(negotiation of multilateral rules and dispute settlement for the WTO, consensus
activity
building in the pre-
and post-negotiations phases
for UNCTAD, as well as the technical assistance activities that
flank both
Organisations’ chief tasks).

and analytical

15

63.

UNCTAD X should also study ways and means to enhance the involvement of civil
society and private sector of developing as well as of industrialised countries in the
life of the Organisation,
inter alia by ensuring an active participation of their
representatives to the preparation and holding of intergovernmental and experts’
meetings as well as by consulting them in the definition and implementation of
technical cooperation projects and in the preparation of analytical documents.
Relations among the UNCTAD Secretariat and the representatives of the civil society
should be conducted in a transparent manner and in a framework ensuring legal
security. The careful selection of these representatives according to their competence
and capacities is crucial.

UNCTAD should also offer a discussion forum for civil society representatives in
trade and development issues.

64.

When subjects require a long-term reflection, experts meetings could be organised on
a regular, albeit not periodical, basis. This would help to build up confidence and a
better understanding among participants.

16

ANNEX

In negotiating at the 10th Conference an agreed text on Globalisation and Development, the
Union, on the basis of the political approach described in Part II of the present text, can agree
with the following:

1.

2.

3.

4.

The importance of effective institutions and domestic policies

UNCTAD X should recognise that a political environment guaranteeing peace,
security and stability, respect for human rights, democracy, rule of law and
good governance is a prerequisite for equitable and sustainable development.

UNCTAD X should therefore express the need for institutional reforms and
institution building creating and consolidating such an environment, based on
government accountability and transparency, and ensuring the prevention of and the
fight against corruption.

A legal and regulatory framework, favourable to the functioning of a democratic
society and of a market economy, is an essential component of this institutional set-
up.

the Conference should confirm that

Debate at
reducing democratic deficits
contributes to increasing political commitment and support from public opinion to
domestic reforms. In this context, the Conference should stress the importance of the
participation of civil society in the establishment of a democratic political framework
and more generally in the development process. It should also acknowledge that the
development of social capital through civil society institutions is beneficial to
promoting equitable and sustainable economic growth.

UNCTAD X should stress that the integration of developing countries into the world
economy will also to a large extent depend on the success of economic and
financial reforms in establishing a stable and open macro-economic environment
oriented towards stability, more equitable income distribution, employment creation
and poverty alleviation, favourable to the development of the private sector and
conducive to domestic and foreign private investment. It should also recognise that
structural adjustment remains an essential stage for many developing countries.

Moreover, UNCTAD X should recommend the implementation of a second
generation of reforms, addressing the problems of
the administrative and
institutional capacity and of the functioning of the financial system. Such a system
has to be capable of dealing with internal and external financial crises. It should
include strict prudential regulations, improved transparency and disclosure rules. In
the short run, while supervision and regulation of the financial sector is being
improved and strengthened, capital controls may be beneficial. The reform of the
financial system should also encourage the development of sustainable microfinance
institutions.

Discussions at UNCTAD X should confirm that sound competition policies are
crucial for the development of a well-functioning market economy in developing
countries and for the protection of consumers’ interests. The liberalisation of their
markets should therefore be accompanied by the introduction of national competition

17

5.

6.

7.

8.

9.

rules adapted to the level of development of these markets. UNCTAD X should also
the importance of multilaterally agreed rules in WTO on domestic
point out
competition law as well as on procedures for international cooperation.

The legal framework should ensure that consumers’ interests are also safeguarded
through norms on consumers’ and consumers’ health protection.

UNCTAD X should emphasise the role of the private sector as an engine of
economic growth and should stress its potential contribution to enhancing developing
countries’ competitiveness and to the integration of these countries into the world
economy. Moreover, private sector and in particular its informal part, is the principal
source of job creation in the vast majority of developing countries.
UNCTAD X should also stress that the private sector is an important component of
the civil society and that its responsibilities should be recognised and assumed. This
should imply the need for a dialogue between public and private sectors aiming at
identifying their respective responsibilities, at addressing the weaknesses in the
business environment of firms as well as in the functioning of the market, and at
defining clear conditions of governance at different levels (local, national, regional
and global).

The Conference should moreover recognise that there is now a consensus on the need
to promote an integrated approach (at macro, méso and micro level) identifying the
main actors and providing them with the necessary institutional building support.
Given the heterogeneity of the countries, among and inside them, and the on-going
decentralisation process, it would be worthwhile to focus the attention on the local
dimension of private sector development. Moreover, decentralisation and regional
integration should be seen as mutually reinforcing to promote sustainable
development in the globalisation process.

Efficient public services are essential. The role of the State in providing them should
be clearly defined in the context of the dialogue with the civil society, and
particularly the private sector.

UNCTAD X should also pay attention to the specific problems of commodity-
It should underline the
dependent countries, which in most cases are LDCs.
structural difficulties related to the inelastic demand of commodities in importing
countries, to the downwards long-term trends of many commodities’ prices and to
the volatility of those prices. The Conference should also stress the effects of those
structural difficulties on export earnings of producing countries, on their economic
growth and on income distribution.

UNCTAD X should therefore recognise the need for diversification policies as an
effective strategy for breaking the dependency on commodities and stabilising export
earnings.
increasing
The Conference should also address the problems of
competitiveness through liberalisation and privatisation of the sectors, of institution
building, of investment and training, of risk management and of more equitable
income distribution in commodities sectors.

The Conference could also acknowledge the increasing concerns of both producers
and consumers countries on the purpose and functioning of present international
commodity agreements and launch a debate on the perspectives of the international
cooperation in this field.

18

10.

UNCTAD X should recognise the important role played by the Information and
trade. The
Communication Technologies in the development of international
application of these new technologies throughout all sectors of economies and
societies has created the so-called Information Society-revolution, opening new
opportunities for developing countries as well as new risks of marginalisation for the
information-poor people or countries.

The Conference should consequently stress the importance for developing countries
to implement policies aiming at addressing their constraints in terms of infrastructure
and at creating an environment able to attract sophisticated technologies in order to
become part of the information society. These policies should include the setting up
of a favourable regulatory framework, the liberalisation of the telecommunications
markets, investment in education, training, research and technology capacities and
public actions for information-poor groups.

In this context, UNCTAD X should stress the importance of “knowledge strategies”
aiming at creating the enabling environment in order to close the technological gap
and to promote a learning society and a “knowledge driven economy”.

11.

should underline

social and human
the
The Conference
development. It should make clear that the economic integration of developing
countries into the world economy, as well as the promotion of sustainable economic
growth and the rule of law, cannot be achieved without taking into account human
and social factors.

importance of

UNCTAD X should stress development strategies’ aim at greater equity in the
distribution of the benefits from economic growth. These strategies should also
ensure the protection of vulnerable groups, specifically children, and help the
poor, women and indigenous people to have access to and draw advantage from the
economic opportunities offered by globalisation and liberalisation. Adequate
resource shall also be devoted to education and health, as these interventions can
bring positive effects in raising living standards. Moreover, a healthy and skilled
labour-force is one of many prerequisites for attracting foreign investment.

The Conference should invite governments to give explicit priority in their
development policies to the reduction of poverty and, in the long term, to its
elimination. To this end, governments should aim at achieving coherence between
their social and economic policies and develop their capacities for integrating
poverty reduction objectives into these policies.

In this context, UNCTAD X should underline the importance of basic social rights
for sustainable development. Developing countries’ governments should ensure that
reforms promoting and supporting exports do not compromise the implementation,
and monitoring of the application of legislation conforming with internationally
agreed core labour rights.

Moreover, the Conference, should ask donors and the international community to
ensure that poverty reduction is a central aim of their development cooperation
policies and that trade and development policies mutually reinforce each other,
thereby helping to combat poverty.

19

12.

13.

The responsibility for implementing political and economic reforms rests primarily
with the countries concerned. However, the Conference should stress the need for
constructive support to reforms in developing countries by donors and, in general,
by the international community. Political dialogue, development cooperation and
economic and trade relations are essential and interrelated components of such
support to developing countries by the donors community. In this context, the role of
UNCTAD in assisting developing countries in the reform process should be
congratulated.

UNCTAD X should also recognise that domestic reforms cannot be imposed from
outside. They will not be carried out unless they are adopted by the countries
themselves, adapted to the specific circumstances of each country and subject to the
internal consensus of the entire society, according to the principle of ownership.
Civil society, as a beneficiary as well as a channel for development aid, will
contribute to the process of adaptation of the content of development cooperation to
local conditions and support the establishment of the internal consensus on reforms.

Participation of developing countries in the multilateral trading system:
the Millennium Round, Trade Preferences and Regional Integration
Trade and environment issues

14.

UNCTAD X should reaffirm that the progressive integration of developing countries
into the multilateral trading system is essential for their development.

their domestic reforms and on the improvement

The Conference should also stress that such integration will depend to a large extent
on the success of
in the
competitiveness of their economies. These reforms should enjoy the support of the
international community through increased and better-focused and coordinated
technical assistance, as part of an overall effort
to greater policy coherence.
The Conference should also emphasise the need to ensure policy coherence between
in order to increase the
development cooperation policies and trade policies,
beneficial impact on both economic growth and poverty reduction.

At the same time, the Conference should recognise the need for the multilateral
trading system to support sustainable development and to take into account
appropriately the specific economic and social capacities and constraints of
developing countries, in particular LDCs, while stressing firmly the common goal of
trade liberalisation.

The active participation of developing countries in the WTO, and in particular in the
forthcoming round of negotiations is important for the defence of their interests.
The agenda for the new round should devote particular attention to the links between
trade and development,
in
participating actively. UNCTAD will be an important forum for discussion and
consensus building in the pre and post-negotiations phases.

in order to increase developing countries’ interest

While preserving the integrity of the multilateral trading system and the common
goal of trade liberalisation, Special and Differential Treatment is a useful tool to
take account of different conditions and needs of developing countries, in particular
LDCs, as well as their administrative and institutional constraints, provided it
encourages them to expose gradually their economies to foreign competition.

20

15.

Developing countries, in particular the least developed among them, should continue
to enjoy preferential access to industrialised countries' markets, as trade preferences
constitute, along with other development strategies, a major factor in facilitating the
integration of developing countries into the global economy. The adoption of
positive incentives under GSP linked to sustainable development policies and
multilateral norms should be promoted.

UNCTAD X should also reiterate the principle of tariff free treatment for essentially
all products originating from LDCs, to be implemented by 2003, as is already
provided by the European Union.

16.

UNCTAD X should reaffirm that regional
integration among developing
countries carried out in compliance with WTO rules is an appropriate step on the
way to the integration of developing countries into the multilateral trading system.

Regional integration will indeed encourage stronger growth and an increase in trade,
as it enables economies of scale to be exploited, allows for diversification of the
national economies, for specialisation at a regional level and for better allocation of
resources, ensuring more effective competition across borders within regional
markets. Regional integration thus helps developing countries to build up their
international competitiveness and to adjust
themselves more easily to the new
international context. Moreover enlarged regional markets are more attractive for
foreign investors.

The Conference should also point out that regional integration processes enhance the
credibility and implementation of institutional and macroeconomic reforms. They
provide an opportunity to define better uniform rules in trade-related matters such as
competition, FDI or IPR, thus improving the investment climate. They facilitate the
development of regional infrastructures necessary for economic development, such
as transport or telecommunications networks and, depending on the nature of
economic integration, enable coordination and fairly close convergence of
macroeconomic policies, improving therefore regional economic stability. Moreover,
trade negotiations at regional level may greatly contribute to an adequate preparation
and consensus building at regional level for simultaneous or future multilateral
facilitating therefore the effective participation of
negotiations in the WTO,
developing countries to the multilateral trading system.

Regional
conflicts.

integration is also an effective means of ensuring the prevention of

17.

North-South regional trading arrangements are also a complementary step
towards a full participation of developing countries in the world economy. In order to
cope with the specific circumstances of the developing partners, negotiations
of North-South integration agreements shall take account of the flexibility permitted,
while remaining in conformity with WTO rules. These integration agreements should
be accompanied by measures to support the transition towards more openness, so as
to prevent an unbalanced distribution of the adjustment costs and the efficiency gains
brought about by reciprocal trade liberalisation.

18.

UNCTAD X should underline that the objectives of increasing liberalisation of trade
and of environmental protection should be mutually reinforcing so as to contribute
to sustainable development. Multilateral negotiations and agreements on trade and

21

environment
the Rio Conference.

should

be

in accordance with the

principles

approved

at

External resources for development: Aid and Foreign Direct Investment
The debt problem

19.

While recognising the importance of development aid for developing countries and
especially for LDCs, UNCTAD X could express concern for the reduction in ODA
flows in recent years.

Donors could therefore be invited to continue and reinforce their efforts in terms
of ODA and to aim at the fulfilment of the target of 0.7 % of GNP agreed at
international level. It is crucial to ensure that development aid contributes to the
improvement of domestic policies in beneficiary countries and to the strengthening
of their institutions.

This can be done by systematically linking development aid to sustainable and
equitable development criteria such as the DAC general indicators of sustainable
development,
fixing goals on economic well being, social development and
environmental sustainability. The targets established by these indicators confirm that
the emphasis of development cooperation must be not only on macroeconomic and
structural requirements but also on reforms aiming at social and economic equity and
on meeting environmental needs.

the same time,

At
ownership of development programs by the beneficiary countries.

the international community should strive to reinforce the

20.

The attraction of foreign direct investment inflows (FDI) has become crucial for
many developing countries in their efforts to achieve sustainable development. FDI
is indeed an important source not only of capital but also of managerial skills,
technologies and know-how. It stimulates trade and competition and facilitates
access to exports markets. FDI furthermore could represent a strategic key to help
the strengthening and growth of local industrial clusters.

UNCTAD X should therefore underline the importance of foreign direct investment
in the sustainable development process. Stressing the unequal distribution of FDI
flows, the Conference should insist on the need for increased and better-focused
development aid aiming at
in the
implementation of the appropriate policies and legislation creating the conditions to
attract foreign investment.

supporting developing countries efforts

the usefulness of multilaterally agreed a
UNCTAD X should also point out
multilaterally agreed framework of rules on Foreign Direct Investment, based on the
WTO principles of non-discrimination, with the objective of securing a stable,
transparent and predictable climate for investment flows worldwide.

21.

Debt burden, especially for heavily indebted poor countries, can be a drag on
growth as it discourages foreign investment and as its service absorbs a too important
share of fiscal resources.
It is too often an obstacle to investment in social and
long-term
environmental
development. UNCTAD X could recognise the gravity of this problem and underline
initiatives for debt cancellation should always be accompanied by the
that

sectors being therefore detrimental

to sustainable

22

22.

23.

24.

implementation of reforms ensuring that the resources thereby made available are
actually used towards poverty reduction and health and education. UNCTAD X
could express appreciation for the efforts made by donors within the framework of
the HIPC initiative, which aims at making debt burden sustainable for countries
pursuing adequate structural adjustment process. The Conference could also stress
the fact that a more generous approach should ensure that any change is not made to
the detriment of traditional development actions.

Strengthening the architecture of the international financial system

In order to minimise the risks of global integration of financial markets, UNCTAD X
should stress that capital markets in developing countries ought to be liberalised in a
careful and balanced way, and that particular attention has to be paid to the
establishment and implementation of prudential norms, rules and regulations to help
maintain stability and to avoid, as much as possible, the emergence of crises, both on
Increased technical assistance is
the national and on the international
necessary to support developing and emerging economies to strengthen their
financial system in order to meet international standards.

level.

International financial institutions, such as the IMF, the World Bank and the BIS
need to take further into account the lessons from the Asian financial crises. They
need to continue to adapt their role and functions to an increasingly integrated
international
Priorities are to improve transparency and
surveillance, to better evaluate and assess financial risks and to find ways for an
appropriate involvement of the private sector in crisis prevention and resolution.

financial

system.

Promotion of multilateral norms for sustainable development

UNCTAD X should express support for the establishment of multilateral norms in
six main areas, the first of which is FDI, with the purpose of securing a stable and
predictable climate for long term investment worldwide. Secondly, there is a need to
simplify and harmonise trade procedures. The third area relates to environmental
issues,
in addressing the mutual supportiveness of trade and environment and
horizontal issues like the MEAs. Other two areas are fiscal norms and international
competition policy, crucial in order to establish a level playing field for companies,
while ensuring that fiscal competition between states, and anticompetitive practices
do not interfere with the efforts to secure sustainable development. Finally, agreed
social norms need to be made effective, in particular those relating to the recognition
of a minimum set of labour rights.

23