The United Nations Conference on Trade and Development
(UNCTAD)
Submitted to Professor Hiwhoa Moon by Team 8
May 17, 2006
Yonsei University
Graduate School of International Studies
I. About UNCTAD 2
(1) UNCTAD’s objectives and history 2
(2) Key functions 3
(3) Significant activities of the past 5
II. Organizational and operational structure 6
(1) Conferences 6
(2) TDB, Trade and Development Board 6
(3) Secretariat 6
(4) Committees 7
(5) Membership of UNCTAD 8
III. Priority Issues 8
(1) International Trade and Commodities 8
① Commodity information 8
② The UNCTAD Trade Commission 9
(2) Investment, Technology and Enterprise Development 9
(3) Special Program on LDCs, LLDCs and SIDS 10
(4) Development of Africa - The Office of the Special Coordinator of Africa 11
(5) Technical Cooperation 12
IV. Critical Views : The Decline of UNCTAD 13
(1) Criticisms from Western and developing nations 13
(2) Criticisms made by NGOs 15
(3) Recent criticisms 16
V. Performance Evaluation 18
VI. Recommendations for UNCTAD 20
A. Alternative views and intellectual ideas 20
B. Civil Society and UNCTAD 20
C. Revival of UNCTAD’s negotiating role 21
D. UNCTAD and UN reforms 21
D. Role of the Group 77 in reinventing UNCTAD 21
VII. Conclusion 22
I. About UNCTAD
(1) UNCTAD’s objectives and history
The United Nations Conference on Trade and Development (UNCTAD) was formed in 1964 to ‘create a forum in which the more prosperous member countries of the United Nations would come under pressure to agree to measures benefiting the less developed nations’. In other words, the formation of UNCTAD was ‘a deliberate effort to use international bureaucracy and conference diplomacy to alter current norms affecting trade and development’.[1] UNCTAD believed in implementing measures that would safeguard the developing nations from developed nations by means of state intervention and coping with restrictive trade practices. UNCTAD supported the ‘New International Order’ (NIEO) where developing nations would find solutions that would counter the problems that resulted by the establishment of the Bretton Woods System.
UNCTAD played a vital role for developing countries to challenge the imbalances of the world order by acting as a forum where the respective countries convened. The initial 77 developing countries involved in the forum made their intentions evident in the Joint Declaration of the Seventy Seven Developing Countries during the very first UNCTAD. In joint cooperation with UNCTAD, the Group of 77 facilitated the negotiating processes with the developed nations.
(2) Key functions
The functions of UNCTAD are described in paragraph 3 of the resolution 1995 (XIX). The resolution states that UNCTAD is mandated “to promote international trade, especially with a view to accelerating economic development…’
The second function of the UNCTAD was “to formulate principles and policies on international trade and related problems of economic development” (Paragraph 3 (b) of 1995 (XIX)). This clause gave UNCTAD its principle negotiating power.
Furthermore, UNCTAD was given the right “to initiate action for the negotiation and adoption of multilateral legal instruments in the field of trade.” (Paragraph 3(e) of 1995 (XIX)).
The third function of UNCTAD was to harmonize trade and related development policies of governments and regional economic groupings in pursuance of Article I of the U.N. Charter (Paragraph 3 (f) of 1995 (XIX)).
Although the General Assembly resolution does require UNCTAD to pursue technical assistance activities, article 3 ( c) of the resolution 1995 (XIX) justifies UNCTAD “to make proposals for putting the said principles and policies into effect” and thus endorses UNCTAD to make proposals in technical cooperation.
When it was first established, UNCTAD was given a major role within the UN to undertake issues dealing with trade and trade-related problems in developing countries. However, the role given to UNCTAD at its inception would soon be curtailed by the powers of the Western nations.
(3) Significant activities of the past
During its heyday, UNCTAD added a significant number of achievements to its name. For example, UNCTAD persuaded the IMF to expand its compensatory financing facility. Furthermore, realizing the importance of liquidity in the context of development, UNCTAD convinced IMF in keeping the provision of additional resources. UNCTAD persistently worked towards the increase in ODA and also played a hand in reducing external debt owed to developed nations by developing nations. Through the forums held by UNCTAD, significant international commodity agreements were reached and negotiated.[2]
By undertaking research, policy analysis and data collection for the debates of government representatives and experts, it highlighted the inequities faced by developed nations as a result of undertaking trade with the Western countries. According to a Northern commentator writing four years after the operationalization of UNCTAD, “UNCTAD has impressed the rich with the problems of the poor, has given impetus to new proposals and has stimulated other international agencies to re-examine and intensify their efforts”.
II. Organizational and operational structure
(1) Conferences
The highest decision-making body of UNCTAD is the quadrennial conference, at which member States make assessments of current trade and development issues, discuss policy options and formulate global policy responses. The conference also sets the organization’s mandate and work priorities. The conference is a subsidiary organ of the United Nations General Assembly. The conferences serve an important political function: they allow intergovernmental consensus building regarding the state of the world economy and development policies, and they play a key role in identifying the role of the United Nations and UNCTAD in addressing economic development problems.
(2) TDB, Trade and Development Board
In-between the quadrennial Conferences, the Trade and Development Board oversees the activities of the organization. It meets in Geneva in a regular session and up to three times a year in executive sessions to deal with urgent policy issues, as well as management and institutional matters.
(3) Secretariat
The UNCTAD secretariat provides substantive and technical services to the intergovernmental bodies of UNCTAD in their discussions and deliberations. Since its inception in 1964, the secretariat has thus serviced 11 sessions of the United Nations Conference on Trade and Development, meeting every four years, with the eleventh having taken place in São Paulo, Brazil in June 2004. It has also fully serviced three United Nations Conferences on the Least Developed Countries, meeting every 10 years with the third Conference having taken place in Brussels, Belgium, in May 2001.
The secretariat undertakes research, policy analysis and data collection to provide substantive inputs for the discussions of the experts and government representatives in these intergovernmental bodies.
It also provides a series of technical assistance programs and projects in support of developing countries, paying particular attention to the special handicaps of the least developed countries. The Secretary-General of UNCTAD is Dr. Supachai Panitchpakdi (Thailand). The Secretariat is composed of about 400 staff members with an annual regular budget of approximately $50 million and $25 million of extrabudgetary technical assistance funds.
(4) Committees
- Commission on Trade in Goods and Service and Commodities
- Commission on Investment, Technology, and related Financial issues
- Commission on Enterprise, Business Facilitation and Development
(5) Membership of UNCTAD
From its initial Group of 77, UNCTAD has grown into an organization with 192 member countries where each group is divided into three different groups. Group A has Asia, Africa, and Group B has OECD member countries, Group C has Latin America, and Group D has Russia, China, Israel etc.[3]
III. Priority Issues
(1) International Trade and Commodities
The UNCTAD has a special program on International Trade. The goal of this program is to promote the development of developing countries through international trade; provide support for their participation in international trade negotiations; strengthen service-sector capacities in developing countries; promote the integration of trade, environment and development; analyze issues related to competition law, policy and development; and seek to enhance the contribution of the commodity sector to development through diversification and risk management. There are some highlights.
① Commodity information
The UNCTAD recognizes that Commodity trade is vitally important to developing countries. Out of 141 developing countries, 95 are more than 50% dependent on commodity exports. In sub-Saharan Africa the figure is 80%. Since in 1964, UNCTAD has dealt with commodity issues, and it has long been regarded as a leader in the field. To respond to the need for transparent and exhaustive information on primary goods, it has recently developed a number of e-products that give producers an edge in the commodity sector and help governments formulate appropriate policies.[4]
② The UNCTAD Trade Commission
The Trade Commission is an intergovernmental forum that meets once a year and provides guidance for the work of UNCTAD in the area of international trade in goods, services and commodities. It devotes itself to a strategic overview of:
• commodities and development;
• market access, market entry and competitiveness, including non-tariff barriers and anti-competitive practices;
• trade in services and development implications; and
• trade, environment and development.
The 10th session of the Commission on Trade in Goods and Services was held in Geneva on February this year.
(2) Investment, Technology and Enterprise Development
Through its programs of Investment, Technology and Enterprise Development, UNCTAD analyses trends in foreign direct investment and their impact on development; helps countries to promote international investment and understand the issues involved in international investment agreements; devises strategies for the development of small and medium-sized enterprises; identifies policy options and implements capacity-building programs to encourage the use of new technologies. In terms of FDI, the UNCTAD compiles data on FDI; provides advisory services and training on international investment issues; helps developing countries improve policies and institutions that deal with FDI; and help these countries participate in international negotiations on investment. Through these activities,it can increase understanding of issues related to FDI and enhances its benefits for developing countries, particularly the least developed countries (LDCs).
(3) Special Program on LDCs, LLDCs and SIDS
The UN categorizes the Least Developed Countries (LDCs), Land-locked Developing Countries (LLDCs) and Small Island Developing States (SIDS) who need special attention from the international community. UNCTAD's Special Program helps these countries to derive the greatest possible benefits from this recognition, in particular, to make the most effective use of the special international support measures that are extended to them with a view to reducing their marginalization from the global economy. Action under the Special Program principally involves: 1) substantive support to LDCs, LLDCs and SIDS in their efforts to develop views or positions of common interest in the context of relevant international events; 2) research and analysis on relevant policy-related issues; and 3) technical cooperation, particularly through the Integrated Framework for Trade-related Technical Assistance to LDCs.[5] The 2005 Statistical Profiles of the Least Developed Countries was published by the UNCTAD. It provides selected socio-economic data on LDCs as well as key indicators used in the formulation of the Human Assets Index (HAI) and Economic Vulnerability Index (EVI).
(4) Development of Africa - The Office of the Special Coordinator of Africa
Special attention is given to the development problems of African countries and to the New Partnership for Africa´s Development (NEPAD). The UNCTAD has especially analyzed the issue of African development and attempted to increase understanding of the economic development problems of Africa and promoted action required at the national, regional and international levels for acceleration of African development, as well as African countries’ fuller participation in and positive integration into the world economy. At the same time, the UNCTAD is aware of the need of shifting major policies both at the national and international levels, to help boost growth and development in Africa. This is also one of the Millennium Development Goal which is reducing poverty by half by the year 2015. The UNCTAD has the Office of the Special Coordinator of Africa (OSCA). It cooperates and works with regional and international organizations. It also participates in meetings and conferences of, and provides contributions to, the New Partnership for Africa´s development (NEPAD), in particular the cluster on agriculture, market access and diversification, and the annual Regional Consultations of the UN Agencies Working in Africa.
(5) Technical Cooperation
Technical cooperation is the most important part that the UNCTAD has focused on. The UNCTAD has made efforts to make UNCTAD´s assistance more effective. In October 2003, the Trade and Development Board adopted the technical cooperation strategy (decision 478(L)) which is based on several consultations with member States and on the application to UNCTAD assistance of the “capacity development” concept being used in the UN system. The aims of this strategy are to enhance the endogenous capacity of beneficiary countries to face challenges and benefit from opportunities and to set and implement their own development strategies as well as to emphasize the development of human, institutional, productive and export capacities of beneficiary countries. In this matter, the Sao Paulo Consensus played an pivotal role in that it sets thematic priorities that orient the content and determine the scope of UNCTAD´s assistance. The Sao Paulo Consensus adopted at UNCTAD XI reiterated the importance of UNCTAD technical cooperation as one of the three functions of UNCTAD. This implies that the research work of the secretariat, consensus building, and technical cooperation constitute a virtuous circle of mutually supportive and coordinated functions (SPC, para. 3).
IV. Critical Views : The Decline of UNCTAD
(1) Criticisms from Western and developing nations
Under the leadership of UNCTAD’s first head, Raul Prebisch (1964 – 9), the organization’s aim was to deal with issues that hindered the development process of the developing nations. UNCTAD acted as the voice of developing nations when defending their positions from the developed nations. Promoting the ideological mix of global Keynesianism and dependency theory, the organization urged market intervention to promote development, while calling attention to the external and structural constraints on development.[6]
The prevailing view of the 1980s advocating the liberalization of trade and the market economy was well represented by President Ronald Reagan and Margaret Thatcher. Thatcher noted that ‘the intractable problems of Third World poverty, hunger and debt would not be solved by misdirected international intervention, but rather by liberating enterprise, promoting trade and defeating socialism in all its forms’.[7] Likewise, the Western nations held conflicting views towards UNCTAD and attempted to relegate UNCTAD’s position as a negotiator for the developing nations.