In this article we will discuss about:- 1. Introduction to UNCTAD 2. Organisation and Functions of UNCTAD 3. Meetings 4. Integrated Programme for Commodities 5. Generalised System of Preferences (GSP) 6. Transfer of Technology 7. South-South Co-Operation 8. Achievements 9. Failure.
Introduction to UNCTAD:
The Bretton Woods System had the guiding principles of free trade and non-discrimination in international trade. It resulted in the emergence of institutions like the IMF and GATT. After a decade of euphoria and expectations from these institutions, the LDC’s realised that these institutions were meant primarily for advanced countries through fostering freer and expanded trade among them and to extend just temporary assistance to them to adjust their payments imbalances within the regime of fixed exchange rates.
There grew a widespread dissatisfaction and frustration among the LDC’s as they recognised that GATT was only a “rich men’s club”.
The functioning of GATT was based upon an implicit assumption that all countries started on an equal footing and would gain from free trade and reciprocal tariff concessions applied in a nondiscriminatory way. The LDC’s strongly argued that they were not starting on equal footing and they were unable to compete with developed countries in the area of trade of manufactured goods.
As the existing machinery was unable to discuss and resolve their pressing problems of under-development, persistent balance of payments deficit, technological backwardness, adverse terms of trade and grossly inadequate aid flow, there was an acute need of change —a change in the rules to incorporate policies designed for them.
What they demanded included greater access to the markets of advanced countries, liberal capital flow and discrimination and non- reciprocity in tariff negotiations. The need was, therefore, being felt to set up an independent international body to address itself and help resolve the problems of trade and development of the less developed world.
Organisation and Functions of UNCTAD:
The U.N. General Assembly declared in December 1961 that 1960’s would be the development decade. It indicated the recognition of the need for adopting measures to bridge up the trade and technological gaps between the rich and the poor countries of the world. In July 1962, the developing countries at their Cairo Conference adopted “Cairo Declaration” and called upon the United Nations to convene an international conference on trade and development.
The United Nations Economic and Social Council agreed to convene such a conference and passed a resolution to this effect on August 3, 1962. The United Nations General Assembly endorsed it in its resolution of December 8, 1962. It was on the recommendation of the United Nations Economic Council in July 1963 for convening a conference on trade and development that the United Nations Conference on Trade and Development (UNCTAD) was set up in 1963 as a permanent organ of the UN General Assembly.
It also defined the functions, activities and membership of the UNCTAD. All these developments resulted in the convening of the United Nations Conference on Trade and Development in Geneva from March to June 1964.
The UNCTAD has been set up as a permanent organ of the UN General Assembly. It has its own structure of subsidiary bodies and a full time Secretariat. It has instituted a Trade and Development Board and takes policy decisions when the conference is not in session. It is composed of 55 members, elected by the conference from among its members on the basis of equitable geographical distribution. The meeting of the Board takes place twice a year.
The Trade and Development Board is assisted in its functions by four subsidiary committees.
(i) The committee on commodities,
(ii) The committee on manufactures,
(iii) The committee on shipping; and
(iv) The committee on invisible items and financing related to trade.
The meeting of these committees generally takes place once a year but the special session of committees can be convened to deal with the matters of urgent nature. All the members of the United Nations are eligible for the membership of the UNCTAD.
The essential purpose of instituting UNCTAD was to promote accelerated development of the less developed regions of the world by dealing properly with the problem of slow expansion of exports, persistently increasing BOP deficits, burden of external debts etc. confronting the LDC’s.
The main functions of the UNCTAD are as follows:
(i) To promote international trade between the developed and under-developed countries having diverse socio-economic organisations with special emphasis upon the accelerated development of the under-developed countries.
(ii) To formulate the principles and policies concerning international trade and related problems of economic development.
(iii) To make proposals for putting the said principles and policies into effect and to adopt measures that may be relevant to this end.
(iv) To generally review and facilitate the coordination of activities of other institutions within the fold of the United Nations related to international trade and economic development.
(v) To be available as a centre for harmonious trade-related policies of governments and the regional economic groupings in pursuance of Article 7 of the Charter of the United Nations.
The UNCTAD I held in 1964 specified that action programmes and priorities of the UNCTAD would be based upon the following basic principles:
(i) Sovereign right of each member country to dispose of freely its natural resources in the interest of its development, well-being of its population and furtherance of its trade with other countries.
(ii) International economic and trade relations shall be based on such principles as respect for sovereign equality of states, self-determination and non-interference in the internal affairs of the others.
(iii) No discrimination among member countries on account of differences in socio-economic system and independent pursuit of economic and other policies.
(iv) Extension of preferential concessions.
(v) Greater market access for the products of the less developed countries.
(vi) Reduction in tariff and non-tariff restrictions on trade.
(vii) Unconstrained flow of international aid.
In pursuit of its objectives and functions, there have been so far eleven meetings of the UNCTAD.
A brief resume of these UNCTAD meets has been given below:
1. UNCTAD I:
The UNCTAD I was held at Geneva from March 23 to June 16, 1964. This conference was attended by the delegates from 120 countries, 32 non-government bodies and 13 specialised agencies.
The conference laid down certain important directive principles such as economic development and social progress should be the concern of entire international community; greater market access for the products of LDC’s; extension of preferential concessions, both tariff and non-tariff, by the developed counties; unconstrained aid flow and; the international economic relations to be based upon the principle of equality and non-intervention.
The UNCTAD I could not achieve anything tangible except the exchange of ideas and projection of needs of the LDC’s. In this regard Raul Prebisch commented, “Nothing in the field of action but a considerable advance in the field of ideas”.
2. UNCTAD II:
The UNCTAD II was held at New Delhi, between February 1 to March 30, 1968. It was attended by the delegates from 121 countries. The UNCTAD II deliberated upon trends and problems in global trade and development, commodity problems and policies of different countries, aid and development finance to the developing countries, expansion and diversification of exports of manufactured and semi-manufactured goods of the developing countries, problems of developing countries related to services such as shipping etc., problems and measures for economic integration and expansion of trade among the developing countries and general review of the work and functions of the UNCTAD.
The conference did not result in concrete agreements on the most of controversial issues and developing countries felt greatly disappointed by the non-committal of developed nations on aid flow and access to their markets.
3. UNCTAD III:
The UNCTAD III was held from April 13, 1972 to May 17, 1972 at Santiago in Chile (South America). It was attended by the delegates from 99 countries. The key issues discussed at the meet included the link between Special Drawing Rights (SDR’s) and development finance, access to the markets of developed countries, price policy for primary products, special measures for the development of the least developed countries and international code of conduct for liner conferences.
The conference could achieve very modest gains including the unanimous decision to adopt special measures for the development of 25 least developed countries, decision related to assistance to land-locked countries and the decision about the code of conduct concerning shipping. On the whole, the developing countries came back from the conference in despair and frustration.
4. UNCTAD IV:
The UNCTAD IV was held at Nairobi (Kenya) from May 3 to May 31, 1976. It was attended by the representatives from 153 countries and those of specialised agencies, intergovernmental and private organisations. Some of the results that emerged from Nairobi meet included the agreement on common fund for buffer stock financing, integrated commodity programme, extension of the term of Generalised System of Preferences beyond the original envisaged term of 10 years, holding of multilateral trade negotiations at Geneva to lift or reduce trade barriers on exports from less developed countries, export credit financing, transfer of technology, assistance to land-locked countries and strengthening of UNCTAD.
The Nairobi conference although did not fully come upto the expectations of the LDC’s, yet it was not completely an exercise in futility as the earlier conferences.
5. UNCTAD V:
The UNCTAD V was held in Manila, Philippines between May 7, 1979 and June 3, 1979. It was attended by 150 delegates from the member countries and the international organisations.
The agenda of UNCTAD V included such issues as the developments in international trade of commodities, manufactures and semi manufactures monetary and financial issues of transfer of technology, shipping, issues related to the least developed countries and land-locked countries, trade relations among countries having different economic and social systems, international economic co-operation and institutional issues.
The sharp differences continued to remain on most of the core issues between the developed and the less developed countries. A consensus could be reached at the conference on the transfer of resources to developing countries, practices of transnational corporations, protectionism, strengthening of technical capacities in the developing countries, reverse transfer of technology, brain drain, commodities, industrial property system and convention on a code of conduct for shipping conferences.
The consensus resolutions related to the assistance to the least developed countries, land-locked countries and island countries were also carried. The conference, however, failed to produce any agreements on such vital issues as the monetary reforms, a proposed complementary financing facility for the stabilisation of commodity export earnings and the international debt problem.
6. UNCTAD VI:
The UNCTAD VI was held in Belgrade, Yugoslavia in June, 1983. It was attended by 165 delegates from the member countries and international bodies. The less developed countries raised the issue of mounting trade deficit of LDC’s vis-a-vis developed countries and called upon the latter to lower the walls of protectionism and to expand the Generalised System of Preferences.
Secondly, the less developed countries, in view of persistent fall in the prices of their export products and adverse terms of trade, pressed for the speedy creation of common fund for financing the international buffer stocks of different commodities that had been covered under the United Nations Integrated Programme for Commodities.
Thirdly, the less developed countries brought into focus the problem of mounting burden of external debts. In case of several developing countries, it had already gone beyond their repaying capacity. The LDC’s wanted the Official Development Assistance (ODA) to be raised from existing 0.3 per cent to 0.7 per cent of the GNP of developed countries as per the UN Resolution. They also wanted the facility of debt rescheduling and conversion of loans into grants in the case of the least developed countries.
The developed countries agreed to consider debt problem only on a bilateral basis. The LDC’s, on the opposite, stressed upon some multilateral arrangement in this regard. The demand was also raised that there should be structural reforms in the World Bank and IMF so that the voice of the less developed world is better heard. No significant progress could, however, be made in respect of the vital issues raised by the poor countries at this conference.
7. UNCTAD VII:
The UNCTAD VII was held at Geneva in July-August 1987. It was attended by delegates from over 150 countries and international bodies. The main issues that were discussed at the conference included debt burden of developing countries, growing trend of protectionism in international trade, improvement of economic and social conditions in the least developed countries and commodity assistance to the LDC’s.
The UNCTAD VII failed to yield any tangible results except an agreement among the developed and poor countries on the Integrated Commodity Programme (ICP) which had although been launched in 1976, yet proved to be a non-starter. UNCTAD VII at last could lead to the recognition of the necessity of such a programme. This agreement was the only achievement of this conference and was expected to pave the way for more commodity agreements. Otherwise the UNCTAD VII was quite disappointing.
8. UNCTAD VIII:
The UNCTAD VIII was held at Cartegena De Indias, Colombia from February 8, 1992 to February 25, 1992. It was attended by 170 delegates from the member countries and the international agencies.
Unlike the earlier UNCTAD meets, when the developed and under-developed countries stuck to their respective rigid and confrontationist positions, the UNCTAD VIII was characterised by a remarkable unity of action and the atmosphere was generally constructive, positive and non-confrontationist.
The Secretary General of the UNCTAD claimed that the meet had given a turning point to the history of the conference. The UNCTAD VIII gave common approaches to themes of international economic agenda of 1990’s.
The most dominant issue at the UNCTAD VIII was the restructuring and revitalization of the UNCTAD. Apart from that, conference deliberated also upon the substantive issues of resources for development, services, international trade, technology and commodities.
Revitalisation and Restructuring:
The issue of revitalising and restructuring UNCTAD dominated at this meet. It was generally recognised by the member countries, both developed and developing, that the UNCTAD needs to be revitalised through appropriate structural reforms for imparting it a greater thrust otherwise it will come to a dead end.
The members were in agreement that UNCTAD’s inter-governmental machinery and methods of work needed to be revised to ensure that all facets of its work programme were fully integrated and reviewed periodically to provide enriched substantive and technical basis for policy negotiation and decision and increase the effectiveness of this body in addressing national and international issues.
The main committee instituted by the conference agreed to suspend the existing nine committees and refurnish the work of trade and development board of the UNCTAD. The new institutional framework included the standing committees and ad-hoc committees. The standing committees were to look into the four specific areas of commodities, poverty alleviation, economic co-operation among developing countries and fostering competitive services sectors in the developing countries.
The ad-hoc committees, which had a life span of two years, were to look into financial and investment flows, non-debt creating financial flows for development, new mechanisms for expanding investment and financial flows, trade efficiency, comparative experience with privatization, enlargement of trading opportunities for developing countries and interrelationship between investment and transfer of technology.
Apart from creating the above-mentioned committees, the conference proposed to set up Trade and Development Board (TDB) to meet twice a year in regular session, and in special session as required. The Board would have an Executive Committee comprised of the permanent representatives to UNCTAD in Geneva to meet periodically. Some of the existing special committees and groups were retained also in the proposed new structure.
It was specified that the UNCTAD meet would take place regularly every four years.
It was expected that the new UNCTAD would look into a lot of subjects of interest to the developing countries including market access, investment flows and services and also at the new agenda which covers structural adjustments, economic reforms and privatisation.
The UNCTAD VIII adopted a resolution for convening of a world conference on commodities to bring together producers, consumers, marketing entrepreneurs and other market actors. The conference asked the UNCTAD Secretary General to hold consultations on the questions of world conference on commodities.
The conference reaffirmed larger resource needs of the low income countries and called upon all countries to implement previous commitments to halt and reverse protectionism and further expand the market access.
Some of the member countries remained dissatisfied with the deliberations at the conference, as in their opinion, conference failed to yield any concrete results. In making assessment of the results of UNCTAD VIII, its Secretary General, Mr. Kenneth Dadzie remarked, “The results will not give complete satisfaction to everyone but all have undertaken to give full effect to the results achieved here as at national and international levels.”
9. UNCTAD IX:
The UNCTAD IX was held at Midrand in South Africa between April 27, 1996 and May 11, 1996. It was attended by the representatives of 138 member countries. It re- emphasised upon the need of a more constructive and co-operative efforts by member countries to achieve the sustainable development in the less developed countries.
This session of UNCTAD deliberated upon the following issues:
(i) In view of the creation of WTO, the conference dwelt upon the necessity of approaching development and instability from the global perspective.
(ii) The international trade should be employed as an instrument for the promotion of development.
(iii) The appropriate strategies and international support mechanism should be created for the promotion of enterprise development.
(iv) The institutional reform of UNCTAD should be pursued in such a way that there is increased transparency and accountability of this organisation.
10. UNCTAD X:
The UNCTAD X was held in February, 2000 in Bangkok, Thailand. It was attended by 146 member countries. The conference considered such issues as global approach to trade, development, investment and finance, depressed commodity prices of primary products, increasing indebtedness of the farm producers, removal of imbalances in the structure of international system, poverty alleviation and under-development in the less developed countries.
11. UNCTAD XI:
The UNCTAD XI was held in Sao Paulo, Brazil between June 14 to 17, 2004. It was attended by the representatives of 188 member countries. The Bangkok Plan of Action was reaffirmed and member countries expressed their continued support to the integrated approach towards development, trade, finance and investment.
Integrated Programme for Commodities by UNCTAD:
The most fundamental issue from the point of view of less developed countries right from the institution of UNCTAD has been one related to the trade in primary products. While the LDC’s at the UNCTAD meet have been persistently asking for greater market access for the traditional items of exports of the poor countries, the advanced countries showed little inclination to do so. They continued to adopt protectionist policies and restricted the product flow from the poor countries through both tariff and non-tariff barriers.
The processed products were subjected to stiffer restrictions than the unprocessed products. Other serious issues pertaining to the exports of primary products had been wide fluctuations in the volume of their exports, decline in their international prices and consequent continual deterioration in the terms of trade of primary goods of the developing countries relative to the manufactured goods of the developed countries.
In view of these problems, the less developed countries have been raising the demand for International Commodity Agreements since the UNCTAD II meet at New Delhi in 1968 with the objects of stabilising the prices and markets for the exports of primary products and assuring their higher export prices for improving the terms of trade. Some progress in this direction could be made at UNCTAD IV in 1976. It was resolved to institute an Integrated Programme for Commodities and to create a stabilisation fund for financing buffer stocks of some selected products.
The proposal was to negotiate commodity agreements for stabilisation of the prices of 18 products. Out of them 10 products were to be included in the initial buffer stocks scheme. As a consequence, the international commodity agreements could be concluded for cocoa (1970) and rubber (1980) alone. Even at Belgrade meet in 1983, the LDC’s insisted upon the necessity of negotiating the commodity agreements for the selected products as there was further worsening of the terms of trade compared with mid-1970. The LDC’s were required to give 20 percent additional exports to pay off the same volume of import from the developed countries.
Although the proposal had been made to create 6 billion dollar common fund for financing international buffer stocks of 10 storable commodities, yet no progress could be made in this direction. Despite pursuasion from the EC and Japan, the United States remained disinclined towards it. Even at the Belgrade meet, the LDC’s stressed upon the speedy creation of the stabilisation fund.
But there was no success in this direction. It was only at the UNCTAD VII that the agreement could be reached on the Integrated Commodities Programme (ICP) between the developed and the less developed countries. But the stabilisation of exports and international prices of primacy produces still remains a far cry.
Generalised System of Preferences (GSP) by UNCTAD :
The stability of prices of primary products is necessary from the viewpoint of the LDC’s but it is not sufficient. In order to enlarge their export earnings, to promote their industrialisation and to step up their growth rates, these countries urged upon the developed countries to give tariff preferences on their manufactured and semi manufactured products.
The Group of 77 less developed countries (G-77) first of all broached this issue and brought it before the UNCTAD-I in 1964. The proposal for the Generalised System of Preferences (GSP) was based on the principle that the less developed countries needed the preferential tariff treatment without reciprocity on their part rather than the most-favoured nation (MFN) tariff cuts.
Although MFN tariff cuts did not discriminate between the same products exported from different sources, the exports of manufactured industrial goods from the LDC’s faced, on average, higher tariff than those exported by the advanced countries. It is on account of the fact that the LDC’s do not have the capacity to follow the principle of reciprocity in tariff cuts. In addition, the GSP was intended to counter the disadvantage faced by them due to regional economic groupings like the EC.
The negotiations on GSP system continued over 1964- 71 period. At the UNCTAD II held at New Delhi in 1968, the member countries unanimously agreed for the early establishment of a mutually acceptable system of generalised, non-reciprocal and nondiscriminatory preferences.
A waiver to MFN clause was approved by the GATT in June 1971. It allowed the developed countries to accord more favourable tariff treatment to commodities imported from the developing countries for a period of 10 years. The first scheme related to GSP was implemented by the EC in 1971. It was followed by Japan, Australia, New Zealand and Canada between 1972 and 1974. The United States’ scheme did not come into operation until January, 1976.
The effectiveness of any GSP scheme is determined by a host of factors such as the extent of tariff cuts, product coverage, escape clauses, and rules of origin and beneficiary countries.
(i) Extent of Tariff Cut:
Under the GSP, a large number of manufactured and semi-manufactured goods from the LDC’s receive preferential treatment. These products either enjoy tariff reduction or exemption. There are low preferential margins in case of raw materials and semi manufactured goods. In case of manufactured products, the preferential margins are relatively high. The preferential margins vary from 4 per cent to 50 percent compared with the duty structure under MFN.
(ii) Product Coverage:
The products which are covered by the GSP differ from country to country. The efforts continued during 1970’s to expand the product coverage under this system. A 1983 study published by the Organisation for Economic Co-operation and Development showed that the product coverage under the GSP was upto 56.4 per cent in agricultural sector and 90.3 per cent in the industrial sector.
(iii) Escape Clauses:
The different GSP schemes include escape clauses under which the developed countries can reduce the quantities imported or withdraw tariff concessions under certain circumstances. The preferences can be withdrawn, if a given beneficiary of preferences exports the products above a specified limit. The concessions may also be withdrawn by the concession-giving country, if the national interests of the importing country get damaged through preferential imports.
(iv) Rules of Origin:
A necessary qualification for availing of the GSP benefits by the LDC’s is that the commodities should be either wholly or substantially produced within the country of origin. In this connection, the different GSP schemes have different conceptions related to the country of origin and to the extent upto which the goods should be of indigenous origin.
The GSP schemes generally have a value-added criterion such as 35 per cent to 50 per cent of value added should be within the exporting beneficiary country. If the imported components in the exported commodities are substantially obtained from the preference-giving country, the preference may become invalid and may be withdrawn.
(v) Beneficiary Countries:
The different GSP schemes have specified the countries to be benefitted by the preferences. Generally all the LDC’s are covered but certain conditions have been specified. For instance, in the United States GSP scheme, the OPEC countries are excluded. Similarly, the countries which are not the members of IMF or WTO are rendered ineligible for preferential treatment.
A country having economic or financial disputes with the preference-giving country also renders itself ineligible for preferences. In the same way, the countries which grant reverse preference to some other countries are also excluded from the GSP schemes.
Originally, the GSP schemes were enforced for a period of 10 years starting from 1971. A review of the GSP was made by UNCTAD in 1980. As it was found that the objectives had not been fully realized, the decision was made to extend the system further. Accordingly the GSP was extended in 1981 for another term of 10 years.
The system of Generalised Preferences suffers from certain limitations:
(i) Off- Setting Effect of OPEC Policies:
It must be admitted that the GSP resulted in substantial expansion of trade between 1971 and 1980. There was some setback in the exports of LDC’s in the 1980-82 and 1983-84 on account of global recession. After 1985, there had been recovery in export prices of manufactured goods. The policies pursued by the Organisation of Petroleum Exporting Countries (OPEC) have, however, created a serious off-setting effect since the mid 1970’s.
They have been charging excessively high oil prices even from the LDC’s. Such policies have greatly worsened their balance of payments deficit and increased considerably the burden of external debts apart from intensifying the inflationary pressures and obstructing their process of development.
(ii) Limited Coverage:
A serious limitation of GSP schemes is that they do not provide coverage to all the exportable goods of the LDC’s. One of the principal exports of several LDC’s has been the textiles and clothing. The United States and Japan have excluded outright these products from the GSP. The EC, on the other hand, offers only preferential treatment to countries that abide by ‘voluntary export restraints’. There are also limits on the value of imports that can receive GSP tariff treatment.
(iii) Less Benefit Relative to MFN Tariff Cuts:
The limits placed by the advanced countries on the eligibility of the products for GSP treatment have clearly restricted its benefits. Many writers hold the view that the LDC’s are likely to gain more from the MFN tariff cuts than they would lose from the simultaneous erosion of their GSP preferential tariff margins, Unless there is relaxation in the area of agricultural and fishery products, processed agricultural goods and resource-based traditional manufactures, the GSP is not likely to have desired beneficial effects on the exports of less developed countries.
(iv) Benefits to More Advanced Developing Countries:
The GSP schemes have rendered benefits mainly to the more advanced among the developing countries. The study made by Baldwin and Murray showed that more than three quarters of the trade of the LDC’s involved only eleven more advanced developing countries. The position remained generally unchanged even in the subsequent period because the products covered by the GSP are largely produced by these few countries.
(v) Opposition by Advanced Countries:
Although the leading advanced countries have carried the GSP now for more than two decades, yet there is sustained opposition and resentment against the system of preferences. Even a prominent economist like Martin Bronfenbrenner has commented on the GSP in very harsh words.
According to him, “UNCTAD or GSP preferences or similar conferences are anti-capitalist and anti-market. They demand impractically text book Utopia. Members of the ‘Group of 77’ enter into cartel arrangements of OPEC variety and yet demand concessions from the developed countries. There is conspiracy to rob the rich at the UNCTAD conferences.”
In this regard it must be stated that the advanced countries themselves never followed the rules of market system. They prescribed and preached others to follow the free trade and market system but themselves created high tariff and non-tariff walls and entered into cartel and custom-union arrangements. They want free access to the markets of the LDC’s without permitting the corresponding facilities to the latter.
(vi) Graduation from the GSP:
The USA has been following a policy of ‘graduating’ the beneficiaries from the GSP scheme. The preferences are withdrawn if the USA thinks that a less developed country is no longer less developed. For it, the reliance is placed upon the faulty criterion of the GNP rather than the per capita income USA and other advanced countries remove a number of commodities arbitrarily from the preference list.
There should be certain norms on all these matters enforceable by the UNCTAD, if the GSP schemes are to become instruments for the expansion of international trade and acceleration of growth process.
The GSP can achieve its objectives in a satisfactory manner only if necessary modifications are made in the areas of product coverage, reduction of tariffs, rules of origin and removal of quota restrictions.
Transfer of Technology by UNCTAD:
It is an irrefutable fact that the sustained growth of a country, whether developed or under-developed, is contingent upon its technological development. Unless a country acquires the capability to absorb, adopt and apply the new production techniques, the self-sustained growth eludes it. It was at the UNCTAD IV held at Nairobi in 1976 that the emphasis was placed upon the necessity of strengthening of technological capabilities of the LDC’s through training programmes, setting up of local and regional centres for the transfer of technology and creation of better research facilities within the LDC’s.
The conference provided for a group of experts for framing a code of conduct for the transfer of technology. The conference also called upon the advanced countries to revise the international patents system. The UNCTAD V at its meet in Manila in May 1979 passed a consensus resolution on transfer of technology to the LDC’s, strengthening of their technological capacities, reverse transfer of technology and brain drain.
The issue of technological transfer was re-emphasised at UNCTAD VI held at Belgrade in June 1983. The UNCTAD took note of the fact that the technological gap between the developed and less developed nations was getting more and more widened. The quick technological transformation of the LDC’s requires the reduction in external technological dependence and strengthening of their autonomous, indigenous technical development.
The strategy for technical transformation, as outlined by the UNCTAD Secretariat in a study paper and presented at the Belgrade conference, stressed upon processing of primary products, diversification of products and creation of indigenous research and training centres to create capacities in the LDC’s to produce the required capital goods and to generate advanced technical skills. The UNCTAD VIII at-its meet in Colombia in February 1992 stressed upon interrelationship between investment and technical transfer and instituted an ad hoc working group to deal with this matter.
There is little doubt about the need of technology transfer for industrialisation and economic self-reliance but the insistence of the advanced countries on the protection of their intellectual property right and consequent rise in the cost of technological transfer is likely to act as a major barrier to the growth of indigenous research and technological development in the poor countries. The UNCTAD should address itself to this problem with greater earnestness to ensure a free access of the LDC’s to the sources of technical know-how and to cut down barriers to the transfer of technology.
South-South Co-Operation of UNCTAD:
A notable achievement of the UNCTAD concerns the South-South Co-operation or international economic and technological cooperation among the LDC’s. This concept was brought into focus at the UNCTAD II held at New Delhi in 1968. In the subsequent UNCTAD meets, they continued to look at the developed countries with fruitless high expectations and the matter of economic co-operation among the LDC’s remained in the background.
In 1983, Belgrade meet of UNCTAD stressed again upon increase in economic co-operation among the developing countries through widening the scope of preferential trading arrangement, coordinating their industrial development programmes, creation of infra-structural facilities and evolution of simpler payment mechanism under some sort of common clearing system.
In this direction G-77 ministerial meeting held in October 1982 at New York had earlier decided to launch the Global System of Tariff Preferences (GSTP). For laying down the ground rules and procedures for GSTP negotiations, the UNCTAD instituted two meetings. The process of negotiations continues but this must be recognised that GSTP was a major initiative for the promotion of South- South trade through the grant of tariff and non- tariff concessions and other appropriate policy measures.
For encouraging South-South co-operation, another initiative taken by UNCTAD had been about the liner shipping. A resolution passed at the UNCTAD V held at Manila in 1979 provided for enhancing the position of the LDC’s as both the purveyors and users of liner shipping. The resolution called upon the LDC’s for co-operation among them in pooling information regionally on cargo movements and service requirements.
It also underlined the need for setting up or strengthening of national and regional shipper’s organisations. The Belgrade meet of UNCTAD VI held in 1983 entrusted the UNCTAD Secretariat with the task of carrying out studies on ship and port finance, structure of global shipping industry and governmental policies and practices concerning investment in and support of shipping.
Another area of co-operation stressed by UNCTAD VI was the evolution of simpler payments mechanism under a common clearing system.
The LDC’s opined that the existing payments arrangements under the IMF and World Bank were deficient and there was need for a new international financial institution to cater exclusively to special financial requirements of the developing countries in areas like export credit, commodity price stabilisation, regional support payments, joint ventures, development projects, long term investment to enlarge trade in food and primary products and for facilitating storage, processing and transportation of products.
The developed countries were not at all agreeable to the creation of another financial institution to water down the role of IMF and World Bank. Consequently, no headway has so far been made in this direction.
Although South-South economic and technological co-operation is definitely desirable and UNCTAD has made much contribution in promoting this objective, yet there are serious impediments to it including competitive nature of their economies, limited capacity to import, chronic shortage of foreign exchange resources, excessive dependence on developed countries, mounting debt burden, shortage of long term capital, shortage of other key inputs, technological backwardness, inferior quality of products, lack of competitive capacity, under-developed marketing organisation and strong preference for the import of goods from advanced countries rather than the developing countries.
These problems anyway are not insurmountable. These can be overcome through greater economic and technical co-operation among the LDC’s. The relatively more developed among the LDC’s including China, India, Singapore, Hong Kong, Taiwan, South Korea, Egypt, South Africa, Brazil and Argentina can play a key role as the catalysts of South-South co-operation.
It is clear from the above account that UNCTAD, apart from providing a forum for discussing the problem faced by the international community in the fields of trade and development, had delineated the direction along which the developed and less developed countries are required to move for the creation of a more pragmatic and forward looking new international economic order.
Achievements of UNCTAD:
Since its establishment in 1964, UNCTAD meetings were held in several member countries in pursuit of the objectives of this organisation.
There has been considerable advance made in various directions:
(i) The UNCTAD meets contributed in evolving integrated programme for commodities for the stabilisation of prices of primary products.
(ii) The deliberations at UNCTAD meets resulted in the schemes of Generalised System of Preferences (GSP) adopted by EC, Japan, Canada, Australia and United States to benefit the LDC’s.
(iii) The UNCTAD could bring into existence the international buffer stock agreements for supporting and stabilising the prices of primary products.
(iv) As a result of UNCTAD discussions, the bilateral and multilateral price compensation agreements, quota agreements and contract agreements were brought into operation.
(v) The compensatory finance schemes could be evolved by the IMF and EC on account of various UNCTAD meets.
(vi) UNCTAD emphasised consistently upon the developed countries for raising the level of development assistance upto 0.7 percent of their GNP.
(vii) The different meets stressed upon transfer of technology to LDC’s strengthening of their technological capacities and creation of interrelationship between investment and technological transfer.
Failure of UNCTAD:
The launching of the United Nations Conference on Trade and Development (UNCTAD) in early 1960’s rightly aroused high hopes and aspirations among the LDC’s. They assumed that this organisation would perhaps open up the gates of heaven for them. The functioning, rather nonfunctioning of UNCTAD, resulted in deep disillusionment and frustration among them.
The member countries of the UNCTAD, after regular intervals, go through some ritualistic movements and exercises which turn out to be futile. This forum has been frequently used both by the developed and LDC’s for polemics and accusations rather than promoting fruitful cooperation and co-partnership among the two groups of countries.
The continued stiff and unaccommodating attitude of the advanced countries and increasing economic difficulties of the LDC’s have created so deep-rooted suspicions among the developed and the LDC’s that there is little scope for any worthwhile progress in the direction of establishing a new international economic order.
The UNCTAD had placed before itself some objectives which have generally eluded it so far.
A brief account of non-fulfillment of these objectives is given below:
(i) Even after UNCTAD VIII, there has been no success in even convening the world commodity conference. It is still in the process of negotiations.
(ii) Although integrated commodity agreement has been reached, yet it covers a limited number of products. There have been still several impediments in the access of primary products to the protected markets of advanced countries. There is frequent use of non-tariff trade barriers. The terms of trade continue to deteriorate for the LDC’s. Little success has been achieved in the stabilisation of prices of primary products.
(iii) By mid-1970’s, the leading industrial countries offered GSP scheme to allow greater access to the manufactured products of the poor countries. But the limited product coverage, escape clauses, regulations concerning the country of origin and graduation criterion rendered very little benefit to the developing countries with the exception of slightly more benefits for relatively more industrially developed among the developing countries.
(iv) The crucial demand of the LDC’s concerning larger aid flow has not borne so far desired results. Initially UNCTAD called for the aid flow to the extent of 1 percent of the GNP of advanced countries. Subsequently the target was scaled down to 0.7 per cent of their GNP. The advanced countries have stubbornly opposed the specification of any target in this respect.
(v) In view of persistent demands of the LDC’s related to increasing burden of external debt, the advanced countries have agreed only to deal with this matter bilaterally with the concerned countries. They have refused to accept any multilateral debt settlement arrangement.
(vi) In the field of transfer of technology, the desired success has not been achieved.
The fact of the whole matter is that WTO has wrested the initiative related to trade and tariffs from this body. Similarly initiatives concerning international payments and their adjustments have been wrested by the IMF and about development by the IBRD. In such circumstances, the UNCTAD has been reduced only to political circus indulging in talking too much without realising tangible economic results.
It is no surprise that UNCTAD has been nick-named in certain quarters as “Until Next Conference Talk and Delay” or “Under No Circumstances Take Any Decision”. Even after its contemplated restructuring decided at the UNCTAD VIII in February 1992, this organisation is not likely to become an effective instrument for economic transformation of the poor countries, unless there is a basic change in the attitude of the developed and LDC’s towards each other and confrontation gives way to co-operation and co-partnership.