75. In the context of liberalization and globalization, the primary development hallenge in the post-Uruguay Round period is to accelerate the economic growth and sustainable development of the developing countries. The integration and fuller participation of developing countries in the world economy will contribute substantially to expanding world trade, economic growth and prosperity to the benefit of all countries. This integration, both institutionally and economically, should be on the basis of the principles of equity, openness and non-discrimination. It is therefore imperative that UNCTAD IX agree on concrete policies, measures and actions to facilitate the integration of developing countries into the international trading system in a manner which will strengthen the role of international trade as an effective instrument for development in the post-Uruguay Round world.
A. Measures to facilitate the integration of developing countries into the world trading system and the impact of the Uruguay Round agreements on development
76. Through unilateral action and also within the context of the Uruguay Round Agreements, developing countries have made unprecedented efforts to open up and integrate their economies with the international economy. By assuming new and more stringent obligations in the multilateral trading system, developing countries have made a major contribution to the strengthening of the international trading system. The full implementation of the results of the Uruguay Round in letter and spirit, especially by the developed countries which have the greatest impact on world trade and the global economy, will go a long way to enhancing the participation of the developing countries in international trade.
77. The implementation of Uruguay Round Agreements will require the developing countries to assume a heavier burden of adjustment than the developed countries. It will impose significant transitional costs on the developing countries, particularly the least developed and net food-importing countries. Full account must be taken of the development needs of the developing countries and their economic vulnerability, as well as the balance of rights and obligations, in the process of integration.
1. Implementation of the results of the Uruguay Round
78. The results of the Uruguay Round will be implemented over the next ten years (from 1995) in accordance with timetables specified in the various agreements. The implementation process will require constant monitoring and assessment with regard to how the commitments in the various agreements are being implemented as well as in regard to the understanding and spirit of the agreements that no new restrictions will be imposed during the implementation period. Attention should be given to the possible use of trade remedies in a protectionist manner (e.g. safeguards, anti-dumping actions and countervailing measures) provided for within the framework of WTO rules, as well as the resort, outside WTO rules, to unilateral and extra-territorial measures.
79. At this stage of the implementation process, the following observations can be made:
2. Impact of the results
80. An assessment of the market access results of the Uruguay Round on the trade prospects of developing countries should be comprehensive and as country-specific as possible, since the situation differs across countries regarding both products of export interest and export supply capabilities.
81. Time is needed to generate sufficient statistics for the post-Uruguay Round period from which to assess what impact the results of the Round are having on developing countries' trade. However, estimates suggest that for some developing countries, particularly LDCs, low-income countries and net food-importing developing countries, the impact of the Uruguay Round results would be negative in the short-to-medium term. For example, estimates by the UNCTAD secretariat suggest that LDCs would experience a deterioration of their combined trade deficit in the medium term. It is to be noted that the Group of 7 at Halifax asked the WTO to monitor and review the impact of the Uruguay Round Agreements on the least developed countries.
82. Analysis of the Uruguay Round should focus more on identification of trading opportunities arising from the agreements and on how developing countries could take advantage of them. Attention should also be given to identifying areas in which developing countries may have difficulties in the future, especially in regard to the new rules which might reduce the scope for government policy actions to foster investment, promote exports and accelerate industrial development.
83. Concerning transitional difficulties or costs which some developing countries may face in adjusting to, and deriving benefits from, the new trading environment, these would arise from various sources such as: erosion of trade preferences from which they currently benefit; higher import prices for foodstuffs (arising from the reform process in agriculture) and for other products, especially pharmaceutical and agricultural chemicals (arising from the worldwide application of the TRIPS agreement); and higher costs arising from the obligations of WTO membership (e.g. compliance with WTO notification requirements, the TRIPs agreement, and effective participation in WTO activities). Appropriate measures should therefore be adopted to mitigate the adverse impact on these countries through a "safety net" package of measures for the affected countries, particularly the LDCs. In this connection, it should be noted that in its resolution 49/99, paragraph 15, the United Nations General Assembly has requested UNCTAD to make proposals for translating the commitments made at the Ministerial Meeting in Marrakesh regarding the least developed countries and net food-importing developing countries into concrete action.
3. Other issues which have trade implications
84. Attempts to overload the international trade agenda with issues such as environment, labour standards, etc., are compounding the difficulties developing countries face in implementing the various provisions of the Uruguay Round Agreements. It is unacceptable that conditionalities regarding labour standards and environment (e.g. eco-labelling) are being unilaterally imposed in various ways before multilateral agreement is reached on their trade linkage. There should be extensive debate on new issues and efforts should be made to build consensus in appropriate forums.
85. The volatility of the international financial system, commodity market instability, external debt, regionalism and the need for structural adjustments in developed countries are issues having trade implications of major concern to developing countries.
4. Recommendations
86. Developed countries should ensure that: (i) their trade liberalization commitments in the Uruguay Round are fully implemented to allow developing countries to derive anticipated benefits from improved trading opportunities; (ii) their trade policies and practices do not hinder developing countries' exports by measures taken outside the scope of the WTO Agreements; (iii) restraint be exercised in applying various trade remedy instruments such as safeguards, anti-dumping and countervailing measures against products of developing countries; and (iv) further trade liberalization is pursued, especially in sectors of export interest to developing countries.
87. In the implementation of commitments under the Uruguay Round Agreements on agriculture, textiles and clothing, and services, the developed countries should, as far as possible, provide more favourable treatment for exports and services from developing countries. In particular, customs regulations and administrative procedures adopted to implement market access commitments in the agricultural sector should not impose new regulatory burdens and restrictions on imports from developing countries. For products subject to agricultural tariff quotas, the allocation of quota licences should be such as to enable developing-country suppliers to increase their market share. To ensure the full implementation of the Agreement on Textiles and Clothing, major importing countries should not delay the integration of so-called "sensitive" items until the last integration stage. Delaying such integration would only make the process of adjustment in developed countries more painful in the subsequent stages. These countries should undertake to minimize their resort to the transitional safeguards, especially against small suppliers and LDCs. Developed countries should faithfully implement the General Agreement on Trade in Services (GATS) in letter and spirit, particularly Article IV, Article XIX and the Annex on Telecommunications which aim at facilitating the development of the domestic services capacity of developing countries and their increased participation in world services trade.
88. Developed countries should adopt positive structural adjustment policies which would facilitate trade liberalization and avoid protectionism. To that effect, their policies should encourage structural adjustment by their enterprises; take account of new supply capacities in developing countries; and refrain from protecting their industrial and agricultural production, and services sectors, against foreign competition resulting from shifts in patterns of comparative advantage.
89. Developing countries seeking accession to the WTO and which are in the early stages of their integration into the international trading system should be given every opportunity to achieve accession on balanced terms which are consistent with their trade, financial and development needs. In particular, the WTO members should refrain from placing excessive demands on these countries which are onerous and could retard their development, or are not covered by the provisions of the WTO agreements.
90. In view of the difficulty developing countries, particularly the LDCs, may face in adjusting their economies to shifts in market opportunities (including relative price changes) and to increased competition arising from the Round, international adjustment assistance will be needed, including: trade adjustment assistance (for export capacity-building, enhancement of competitiveness, product diversification, export market diversification, and temporary relief from higher import prices for basic foodstuffs and pharmaceuticals); balance-of-payments adjustment assistance (for coping with deterioration in the trade and services balance); technical and human resource development assistance (for capacity-building in trade policy formulation, trade sector management and effective participation in WTO activities).
91. The special provisions for LDCs contained in the Final Act of the Uruguay Round (i.e. in the various agreements, decisions and declarations signed at Marrakesh), as well as those pertaining to net food-importing developing countries, should be implemented as a matter of priority.
92. Pursuit of the built-in future work programme contained in the various Uruguay Round Agreements must take fully into account the interests of developing countries. In the area of services, the objective should be to achieve substantial liberalization in sectors and in modes of supply of export interest to developing countries, including the movement of natural persons. In agriculture, new negotiations to be launched in 1999 should focus on further reductions in export and domestic subsidies on a product-specific basis, and on reducing high tariffs on agricultural products, particularly those involved in the tariffication process, to levels at which they are no longer prohibitive. The continuation of any form of protection not only leads to distortions in international trade in agriculture, thereby depriving several countries of trading opportunities, but are also not environmentally justified, with the net result of penalizing efficient producers of agricultural products.
93. Further efforts will also be required in the area of tariffs, especially with respect to products of export interest to developing countries. Despite the general reduction of MFN tariffs on industrial goods, the problem of high MFN tariffs still remains in some sectors such as textiles and clothing, travel goods, leather products and petrochemical products, which in general are not covered by preferential schemes. Moreover, no tariff reduction was offered in the Uruguay Round on 22 per cent of the dutiable imports of the developed countries, which include products of major export interest to developing countries. Additionally, tariff escalation which has an inhibiting effect on the development of processing industries in developing countries remains substantial and prevalent in most product groups of export interest to developing countries such as tropical products and natural resource-based products. There is no agenda in WTO for immediate future negotiations with regard to tariffs. However, further liberalization could be achieved through improvements in GSP schemes or other preferences in terms of expanded product coverage and deeper cuts in preferential tariffs. This could provide additional access to developing countries, particularly the least developed countries, for which tariff margins in their favour were eroded in the Uruguay Round.
94. UNCTAD should monitor closely the implementation of the Uruguay Round Agreements with a view to providing policy-oriented recommendations from a development perspective. This should include: (i) identification and assessment of the new trading opportunities arising from the implementation of the relevant Agreements affecting trade in goods and services to assist developing countries to take full advantage of them; (ii) analysis of national implementing legislations and subsequent trade policies and practices in the major trading countries and the impact on the trading opportunities of developing countries; and (iii) analysis of the problems of implementation in the developing countries, taking into account the relevant provisions of WTO agreements regarding differential and more favourable treatment.
95. UNCTAD should continue to analyze the implications of the new multilateral rules and disciplines embodied in the Uruguay Round Agreements for the scope of government policy action in developing countries. Taking into account the special provisions pertaining to developing countries contained in the various Uruguay Round agreements, this analysis should help to identify effective national measures, incentives and policies to foster export-oriented growth and industrial development that are consistent with the new multilateral rules. Also, the analysis should identify how developing countries could best utilize the various transitional periods available to them to adjust their policies and strategies - and how they could be assisted - in order to be able to comply, at the end of the relevant implementation periods, with their multilateral obligations.
96. UNCTAD should undertake an assessment of trade in services in overall terms and on a sectoral basis with a view to identifying trading opportunities for developing countries which would arise from the implementation of the GATS. Taking into account the special provisions in the GATS pertaining to developing countries, the assessment should also identify appropriate measures, at the national and international levels, to assist developing countries to take full advantage of those opportunities, including measures to strengthen their domestic services capacity and to expand their services trade.
97. The ability of developing countries to participate effectively, exercise their rights, and meet their obligations in the WTO will be an important determinant of their further integration into the international trading system. The international community should extend appropriate technical cooperation to countries, both WTO members and non-members, which would otherwise not be able to participate effectively in the international trading system. Without duplication with WTO, UNCTAD should strengthen and refocus its technical cooperation programmes to raise substantially the institutional capacities of weaker trading partners to participate effectively in the international trading system and derive benefits therefrom. In this connection, UNCTAD's technical assistance should focus on, inter alia:
B. Initiatives to strengthen the role of trade as an instrument of development
in the post-Uruguay Round
1. Measures to assist developing countries to benefit fully from trading opportunities
arising from the Round
98. WTO members, particularly the developed countries, should implement fully and in an accelerated manner their market access-related commitments undertaken in the Uruguay Round, particularly with respect to products and services of export interest to developing countries. This includes commitments on tariff reductions in all sectors, the phase-out of non-tariff measures in textiles and clothing and other industrial sectors, and reduction of subsidies affecting agricultural products. In this connection, ways and means should be considered to provide greater market access for those products of particular export interest to developing countries which are produced through labour-intensive methods and by the small and medium scale sector for increasing employment and income generation, and for poverty alleviation. Measures should also be adopted to facilitate the export by developing countries of labour- intensive services, including through effective access to distribution channels and information networks.
99. Measures to promote capacity-building in developing countries are essential to enhance the ability of developing countries to benefit fully from trading opportunities arising from the Round. Capacity-building measures should focus on: strengthening capabilities to identify and respond to new trading opportunities, including export promotion; enhancement of domestic services capacity, including the development of telecommunications infrastructure and access to information technology; and expansion of trade efficiency, particularly institutional capacity and trade management procedures. The following measures are recommended:
2. Measures concerning commodities
100. The central objectives of international commodity policy have been broadly to achieve stable conditions in international commodity trade at price levels that are remunerative to producers and equitable to consumers; to improve productivity and increase commodity export earnings, in particular those of developing countries; to maximize overall efficiency in the use of resources through, among other means, halting and reversing protectionism and removing distortions to trade; and to enhance the ability of developing countries to manage commodity dependence and to diversify their productive capacity and exports. UNCTAD IX should agree on concrete measures to further the achievement of these goals. The development of commodity exchanges in developing countries can help strengthen efficiency in commodity trade as well as improve the participation of their enterprises in commodity trade.
101. In order to help achieve a better balance in commodity markets between supply and demand, particularly for commodities in recurrent excess supply, ways and means should be found to facilitate an exchange of information and voluntary cooperation among producers on a regular basis. Information on national production plans, as well on the policies of international financial institutions regarding commodity production, would help to improve transparency and the forecast of market developments for particular commodities. In this connection, consideration should be given to the need for a mechanism in UNCTAD to facilitate the exchange of such information. Such a mechanism, which would function as an "early warning" system, would serve as an international focal point for the monitoring, exchange of information and assessment of developments in the supply and demand of commodities as a means of fostering a better balance between supply and demand in commodity trade.
102. As a matter of priority, financing mechanisms to deal with the instability and risks faced by commodity export-dependent developing countries should also be strengthened. In particular, there should be a reduction of conditionality of the IMF's Compensatory and Contingency Financing Facility (CCFF) and a significant expansion of the resources of bilateral compensatory schemes such as the European Union's STABEX. Consideration should also be given to examining within UNCTAD, with the help of experts, the need for a facility to enhance the availability of securitized commodity finance (use of warehouse receipts).
103. To promote commodity diversification, both horizontally and vertically, there should be a binding commitment: to reduce tariff escalation on processed primary commodities and to eliminate or reduce non-tariff barriers to market access for processed commodities; to enhance access to finance for diversification of commodity export-dependent developing countries, particularly those in Africa, through either existing instruments or the establishment of a new instrument; to assist developing countries in their efforts to diversify from cultivating illicit narcotic crops; and, to increase technical cooperation, through ITC and other relevant organizations, to develop products likely to enhance the export diversification of developing economies. In this connection, UNCTAD should continue to identify the main bottlenecks to increasing exports by developing countries of non-traditional natural products; and the most important gaps in human and technological capacities which impede the export diversification of low-income countries. UNCTAD as well as donor countries are invited to establish programmes of technical assistance to address these problems.
104. Donors are invited, in accordance with General Assembly resolution 49/142, to give particular attention and support to the commodity diversification efforts of African countries. States which participate in the African Fund for Development of the African Development Bank are invited to consider making, as soon as possible, adequate initial contributions to the Fund so as to make it operational. Multilateral institutions are also invited to give high priority to providing technical and financial assistance to African countries for commodity diversification, particularly for the preparatory stages of related projects and programmes.
105. The activities of the Common Fund for Commodities should be reexamined and the bottlenecks and difficulties which have caused inertia in its activities and in the fulfilment of its mandate should be identified, with a view to adopting appropriate measures to reform the Common Fund. Since buffer stocking as an instrument to improve commodity market performance is not operational, the mandate of the Common Fund should be suitably amended to increase its ability to finance commodity-sector development programmes, including harmonized diversification programmes, as well as to provide securitized commodity finance.
3. Proposals for translating into concrete action the commitments made at the
Ministerial Meeting in Marrakesh
(a) Least developed countries
106. The Marrakesh Declaration, Ministerial decisions and other special provisions for LDCs contained in the various Uruguay Round Agreements should be carefully analyzed with a view to identifying appropriate measures to translate the commitments made in favour of LDCs into concrete action. Concrete actions in the areas of trade, finance and technical cooperation could include the following:
107. UNCTAD should follow closely the implementation of the Uruguay Round commitments in favour of LDCs, analyze the impact of the Uruguay Round results on individual LDCs and make proposals on ways and means to put into effect the commitments in favour of LDCs. UNCTAD should also provide technical assistance to LDCs for strengthening their negotiating capacity and ability to implement, and derive benefit from, the results of the Uruguay Round.
(b) Net food-importing developing countries
108. It is widely recognized that the implementation of the Uruguay Round Agreement on Agriculture will have adverse consequences for the net food-importing developing countries. Even in the initial stage of implementation of the Agreement, these countries have started to face problems as a consequence of new market expectations and also because of the changes introduced in the food sales policies of some developed countries. It is therefore urgent to make operational the Marrakesh decision concerning net food-importing developing countries (NFICs). The following issues need to be clarified quickly: definition of beneficiaries and nature of assistance (food aid, financial assistance, export credits, technical assistance); adequacy of existing facilities and terms of access to them; variables to be monitored (e.g. food import price levels); trigger mechanism for assistance (e.g. adequacy of food supplies, changes in import price levels). UNCTAD should follow closely the implementation of the decision on NFICs with a view to analyzing the impact on individual NFICs and making proposals for operationalizing the decision on NFICs. UNCTAD should also assist NFICs in developing strategies to deal with the adverse effect on them of the reform process in agriculture.
4. Trade adjustment facility
109. To assist all developing countries facing serious transitional difficulties of adjustment due to the impact of the Uruguay Round on their economies, consideration should be given to the need for a new facility of some kind, focused on the economic adjustment effects of the Uruguay Round, without the conditionality of the Bretton Woods institutions, and along the lines of the IMF's oil facility. Such a new facility could have two windows: one for short-term balance-of-payment support (à la IMF), and the other to finance investment needs for medium to longer-term structural change (à la World Bank). UNCTAD should study the need for, and make recommendations concerning, such a facility.
5. Proposals on the evolution of the generalized system of preferences
110. The Uruguay Round Agreements have brought about important changes, including the erosion of preferences, that should be taken into account in major revisions of GSP schemes. In this connection:
6. Measures concerning trade-related and other issues which have trade implications
(a) Interrelationship between trade and competition policies
111. While governmental restraints on trade have been substantially reduced in recent years, through actions taken both unilaterally and in the context of Uruguay Round multilateral agreements, little has been done to address private barriers to trade at the international level. In order to ensure that trade concessions and obligations are not nullified by private anti-competitive practices, the multilateral trading system needs to be strengthened with binding multilateral rules to address restraints on trade by private firms. Such rules could be developed from the common ground of competition principles which are embodied in national competition laws, bilateral and plurilateral trade agreements and the Set of Multilaterally Agreed Equitable Principles and Rules on the Control of Restrictive Business Practices. UNCTAD IX should agree on practical steps and on appropriate institutional mechanisms to promote international consensus on binding competition principles.
(b) Trade and environment
112. The priority environmental concerns of developing countries are related to poverty alleviation, provision of social infrastructures and preservation of their natural resource base. The need to comply with externally imposed environmental concerns will divert resources from the immediate development needs of developing countries and slow down their development process. In addition, environmental measures are proliferating in major trading countries in sectors (e.g. textiles, footwear, consumer electronics and furniture) where comparative advantage has shifted from developed to developing countries and where tariff and non-tariff barriers have been reduced. These two aspects will have an adverse impact on the trade and development prospects of developing countries. Environmental concerns should not be used as a disguised form of protectionism. Environmental problems with a cross-border effect should be addressed through the framework of multilateral environmental agreements (MEAs), should be based on the principles of necessity, effectiveness, non-discrimination, transparency and least trade distortion, and should take into account the special development needs of developing countries. In the case of products which are primarily imported from developing countries, environmental policies such as eco-labelling should be more transparent and producing countries should be involved in the formulation of the eco-criteria.
113. In view of the costs of compliance with environmental standards, which are relatively more onerous for developing than for developed countries, and considering that the developing countries' contribution to global environmental problems has been lower than that of the developed countries, special efforts, in keeping with Agenda 21 (chapter 2, parts A and B) and Principle 7 of the Rio Declaration, should be made to include positive measures in MEAs. Positive measures, rather than trade restrictive measures, should include incentives which encourage trade and the use of environmentally friendly alternatives, as well as facilitating mechanisms related to the transfer of technology, including the relaxation of intellectual property rights in some cases and finance. Such measures should support the efforts of developing countries to move towards higher environmental standards and should assist them to meet internationally agreed targets in the context of MEAs.
114. UNCTAD should continue its work on trade and environment including efforts to build international consensus on principles and modalities regarding the interface between trade, environment and development, and to provide developing countries with assistance in negotiating more balanced agreements in this field. Keeping in mind that development objectives must go hand in hand with environment objectives, UNCTAD should also assist in identifying positive measures, including facilitating mechanisms related to the transfer of technology and finance (including foreign investment), to support the efforts of developing countries to adjust to higher environmental standards and to meet internationally agreed environmental targets.
(c) Efficient management of natural resources
115. To promote the efficient management of natural resources, action is required to establish a multilateral cooperative approach to deal with externalities that compromise the sustainability of natural resources; to encourage the recycling of resource-based products; and to improve the competitiveness and promote the use of natural products with environmental advantages. In this connection, consideration should be given to the establishment of a voluntary trust fund to encourage the production and trade of environmentally advantageous natural products. New and additional sources of funding, as well as increase in the flexibility of conditions of access, are needed to strengthen the Global Environmental Fund (GEF), and consideration should be given to the inclusion of environmental situations not currently covered. UNCTAD should continue to analyze both economic and environmental issues that arise at the national and international level, concerning the management of natural resources.
7. Promoting complementarity between UNCTAD and WTO with a view to addressing the trade-related concerns of developing countries
116. UNCTAD is the universal forum of the United Nations for dealing, in an integrated manner, with development and interrelated issues in the areas of trade, finance, technology, investment, services and sustainable development. According to the Agreement Establishing the World Trade Organization, the main functions of WTO are to facilitate the implementation, administration and operation of the multilateral trade agreements negotiated in the Uruguay Round; to administer the system for the settlement of disputes that might arise in connection with the disciplines introduced by those agreements; and to provide a forum for negotiations of further multilateral rules and disciplines in trade-related areas as may be agreed by WTO members. The coming into being of the WTO does not diminish the need for, or role of, UNCTAD.
117. The United Nations proper, and UNCTAD as its designated focal point, has its own competence in the field of trade and development. UNCTAD should provide the mainstay of debates on issues before they become the subject of contractual negotiations in WTO. In this connection, it should be noted that, in accordance with General Assembly resolution 1995(XIX), the eighth session of UNCTAD held in Cartagena in 1992 agreed that, in general, where other institutions are vested with powers of decision or rule-making, UNCTAD should aim at providing constructive approaches, as well as viewpoints, and at generating political impulses on matters within its purview, to be considered by those institutions in accordance with their decision-making powers. These general principles establish a basis for complementarity between UNCTAD and WTO in the field of international trade.
118. UNCTAD can complement WTO in many ways including:
119. Conversely, WTO can complement UNCTAD in many ways, including by referring to UNCTAD the following activities: