United Nations Conference on Trade and Development - Research Paper Example

 United Nations Conference on Trade and Development Introduction The United Nations Conference on Trade and Development (UNCTAD) that was initially established to maximize trade, investment and development opportunities for developing countries, has and still is today arousing strong feelings (Viotti and Kauppi, 1997) . Some refer to it as an “enfant terrible” and suggest that it should be abolished. Nevertheless some still have hopes for this specific inter-governmental organization, “a hope for rebirth”. Structured with the Secretary General as the head followed by a Deputy Secretary General and five management divisions, UNCTAD’s main constitution is basically determined by a number of commissions on trade related matters (www.mdg-trade.org). The UNCTAD came into being in 1964 thus fulfilling a long felt need for an intergovernmental organization and is the main body that coordinates efforts on international trade, investment and related development issues between the UN General Assembly and the member countries. It was the result of some concerted efforts made by developing countries to find a common forum to voice their concerns over trade. Its principal functions include the integration of individual member economies into the global economy and create conducive circumstances to help developing nations to achieve trade and investment targets. UNCTAD has a membership of 193 countries now. With a total annual budget of approximately $75 million - $50 million in regular budgetary provisions and $25 million in technical assistance funds - it has been helping the developing world and the developed world to concur on achieving Millennium Development Goals including poverty eradication through the full use of globalization related opportunities by the year 2015. According to UNCTAD Secretary-General Supachai Panitchpakd “development solidarity” depends on narrowing the present gap between the rich and the poor countries in the world. Way back in the 1980’s widely perceived as the only incumbent candidate with international scope for promoting a New International Economic Order, UNCTAD gradually slipped into playing a secondary role after the creation of the World Trade Organization (Weintraub, 2009, www.foreignaffairs.com). 1. Analysis 1.1. Trade and commodities UNCTAD’s commitment to promoting free international trade between the developed world and the developing world is expressed through its numerous programs. For example its various commissions and committees on international trade are intended to provide developing countries with the necessary technical and logistical support to strengthen their trade related capacities and tackle policy related issues effectively (Corea, 1992). The Trade and Development Commission actively encourages developing countries to take part in negotiations on international trade related matters. UNCTAD’s support also includes advice on legal matters involving competition law, environmental issues in development, trade policy and services. UNCTAD’s contribution in trade related matters to the world at large and particularly the developing world is seen in the help given in the development and diversification of the commodity sector (Osmanczyk and Mango, 2003). Commodities such as coffee, maize, corn, rice, barley, sugar, tea, cocoa, copper, nickel, iron and tin have been the target of price stabilization policies initiated at international levels. These programs and initiatives of the UNCTAD seek to introduce risk management policies concerning international commodity trade. Above all developing countries which are at the same time solely dependent on commodity trade for survival, are faced with ever increasing price fluctuations that hinder their efforts to achieve predictable balance of trade surpluses. Their current account deficits have been growing ever larger in the recent years due to these fluctuations. International commodity trade also has received a new impetus through the UNCTAD’s involvement in service secretors connected with providing logistical support to commodity trade (UNC, 2005). While many developing countries have been dependent on commodity trade, very few of them have been actively seeking to remedy the anomalies in the international commodity trading system and commodity markets with any meaningful role of intervention. Particularly this is due to a lack of logistic support and guidance (Gorman, 2001). 1.2. Investment and enterprise development UNCTAD’s Investment and Enterprise Development Division is responsible for the evaluation and analysis of international Foreign Direct Investment (FDI) related issues, trends and developments. The Division is also responsible for the assessment of FDI impact on the local economies of the recipient/host countries (Koul, 1997). While many developing countries have been identified with potential capacities and capabilities to promote net positive FDI flows, their current inefficient institutional support such as application progressing and information provision, has been a major drawback to attracting FDI into these countries. UNCTAD also helps these countries to identify relevant policy alternatives. While such FDI related policy options available to member countries are less there is however, a more issue-centric approach to identifying and addressing issues that necessarily affect policy decisions at the international and national levels (Friedeberg and UNCTAD, 1969). For instance international agreements on investment require not only the approval of respective parties but also the active encouragement of the Davison. Thus the significant role that UNCTAD plays in FDI flows into developing counties is undoubtedly great. Especially the legal issues involved in each such agreement receive the highest priority at the Division because as much as there are rights, there are some corresponding obligations cast on each party by the agreement (Braithwait and Drahos, 2000). Above all UNCTAD’s strategic support for the promotion and improvement of small and medium scale enterprises (SMEs) in developing countries in particular has been one of its most popular policies though such support hasn’t been transformed into tangible realities at the ground level in these countries. 1.3. Debt and development UNCTAD’s Debt and Development Finance Branch (DDFB) is responsible for the initiation of analytical policy frameworks technical support programs in internal and external debt management (Toye and UNCTAD, 2003). Its Debt and Finance Analysis Unit is responsible for a series of tasks that include the following: Helping to create institutions for proper debt oversight and management. Helping to manage sustainability related frameworks in debt management. Helping low income counties to achieve Millennium Development Goals. Helping to establish mechanisms to develop debt renegotiating capabilities. Helping to develop policies for domestic debt management. Establishing mechanisms for debt and trade integration. Helping to negotiate with credit rating agencies. Helping with issue-based approaches to raising debt in bond markets. Helping to develop policy frameworks for raising and managing sovereign debt. While many of these functions are directly related to debt and development issues in the borrowing countries, there have been some recent developments concerning the policy and strategy in raising and managing sovereign debt (Taylor, 2003). Many policy level issues were discussed at the Fifth Inter-regional Debt Management Conference in Geneva in June 2005. 1.4. Technology and logistics UNCTAD’s Technology and Logistics Division is responsible for the creation of better and highly advanced Information and Communication Technology (ICT) systems in member countries; for the facilitation of capacity and capability enhancing frameworks and infrastructures; helping the member countries to develop information technologies and support logistics for the better management of information services; facilitating the use of e-commerce among member countries; helping to initiate logistical capacity building and enhancing programs; enabling greater use of ICT in international commerce between countries so that trade related services would receive a boost along with volume change; helping to achieve positive synergies related to transport and logistics; helping developing countries to overcome their transport and logistics related problems and finally supporting member countries in adopting multi-modal transport systems (UN, 2001). These services apart, there are a number of other logistics related support services that are primarily intended to enhance member countries’ capabilities in designing and developing ICT mechanisms and structures in international trade (www.un.org). For example ICT-enabled international trade is not only effectively carried out among member countries but also there is a far greater use of ancillary services such as warehousing and containerization of hitherto piece-meal handled cargoes. These extra services are intended to enhance the exiting logistics to integrate a broader spectrum of activities both at the international and the national levels. As such these activities not only have been of greater help to developing counties but also to the developed world that was helplessly looking for better alternatives to have good trade relations with the former (Taylor and Smith, 2007). Railways and road transport networks in the African Continent couldn’t have looked better. Right now not only countries like Tanzania are being brought under this umber all of development but also maritime security of these countries is being enhanced under UNCTAD’s programs. 1. 5. Conclusion In conclusion to this section it must be noted that UNCTAD has done a great service despite the criticism leveled against its inefficacies in almost every sphere. Notwithstanding these criticisms it must be noted with emphasis that UNCTAD’s divisions on above services and activities have been rendering a great service to the developing world despite the ever growing resource constraints faced by it (UN and UNCTAD, 2005). The lack of funds and lethargic support given by developed countries which particularly rely on the World Trade Organization (WTO) have been the bane against its progress. In the sphere of trade and commodities the UNCTAD’s activities have been basically concentrated on technical and logistical support to member countries. Trade related logistics in developing countries have received a great boost and the impact on international trade is obvious in volumes. Despite these positive changes developing countries have been complaining of very poor support from the developed world to market their products, especially commodities in the latter countries. Brazil and some other coffee producing countries in Latin America have been lately affected by the falling prices of coffee beans. Their main complaint is based on the fact that despite the UNCTAD’s efforts to streamline production and distribution so that a fair price for the commodity would be ensued in the world market, there is just lukewarm support from the developed world for such price support schemes. Even the previous price support measures initiated by the UNCTAD dismally failed due to a lack of support among the consumer community (Gosovic, 1972). UNCTAD’s Investment and Enterprise Development Division has been involved in promoting FDI flows into member countries. Particularly developing countries have received such technical support in FDI policy and strategy design and execution. Such strategic support from the UNCTAD has enabled these countries to achieve some progress in technical and logistical spheres. UNCTAD’s Debt and Development Finance Branch (DDFB) has also been actively involved in helping member governments to create financial institutions, put in place policy frameworks, establish mechanisms to sustain and effectively manage debt management programs both at the national and the international levels. Its technical and logistic support has gone a long way by enabling particularly the developing countries to identify and address diverse capabilities in debt management and renegotiations (www.encyclopedia.com). UNCTAD’s Technology and Logistics Division has been involved in promoting ICT in international trade among member countries and particularly its technical assistance programs intended to raise standards of service, delivery and transport have received critical acclaim. Though its current level of such support is limited by resource constraints some development programs initiated in Africa are of great importance. In fact logistics support has enabled these countries to develop and integrate their communication networks into the global e-commerce network with much desirable positive results. 2. UNCTAD and the rest of the global institutions Against this backdrop it’s relevant to focus on its current phase of evolution and operations. In the global context for many critics the UNCTAD is just a mere UN organ that’s neither operationally efficient nor contextually relevant. Indeed there is a vocal group of supporters as well. They feel that its relevance lies in rejuvenating the inter-governmental and inter-organizational trade relations which have been pushed into a secondary place of importance after the World Trade Organization (WTO) became the number one institution for the governance and supervision of global trade relations (UNCTAD and CNUCED, 2007). However with ever increasing criticism of its current low level performance in the international scene, the organization is looked at with skepticism. Its critics are many while supporters are growing thinner in number every day. The growing popularity of was once cited as the reason for the dismal performance of UNCTAD. But nevertheless now WTO has also been experiencing a downturn in its activities. Some of the functions that the UNCTAD were (and are) entrusted with have effectively been handed over to WTO and the latter has been a vocal supporter of globalization and free trade. UNCTAD’s stance vis-à-vis the developing countries, is well known. IT actually supports their trade related concerns at the international level. WTO on the other hand has been seeking to accord them only what their negotiating strength can command at rounds of trade talks. WTO has far reaching impact on member countries by way of arbitration powers and dispute settlement mechanisms. On the other hand UNCTAD doesn’t have such powers or functions. In the absence of such powers and functions UNCTAD lacks back up support to continue with its strategic policy imperatives. Though these two institutions have the same roots in origin’ i.e. global free trade, they diverge too much in their operational strategies. WTO has been transformed into a really powerful UN organ with the active support of the industrialized countries while the support for UNCTAD particularly among these countries has been waning. United Nations Development Program (UNDP) too has been performing some overlapping functions with UNCTAD. For example the UNDP is responsible for initiating such programs as economic and infrastructure development in UN member counties. While some of these programs have identical characteristics and outcomes, both the UNDP and the UNCTAD perform their tasks as if they were distinct and independent. In fact UNDP has been much more active in promoting economic development among member counties. Its mandate is clear and well presented. It functions as the UN global network of development and its main function is about crisis management. On the other hand UNCTAD is a conference that seeks to articulate policy rather than implement it (Vaidya, 2005). Next the two most important Bretton Woods institutions – the World Bank and the International Monetary Fund (IMF) – have their own functions some of which actually overlap what UNCTAD does. The World Bank’s original name was the International Bank for Reconstruction and Development. It was originally entrusted with the task of rebuilding the devastated global economy after the WW II. The WB still performs such tasks as funding sanitary and drinking water projects in developing countries. The IMF though was originally created for setting the international financial system in proper order, its current functions are much more varied and development oriented. Thus even some of the IMF’s functions overlap that of UNCTAD’s. Basically the IMF is intended to carry out funding of programs that have been approved by governments and national and international development organizations. However some of its current functions are focused on helping developing countries to initiate economic restructuring programs. Countries that are faced with persistent current account deficits in their balance of payments are entitled to receive support from the IMF to restructure their economies. UNCTAD is much less equipped to do so. Conclusion Probably what the most vocal critics of UNCTAD say is true that the organization as a mere conference has outlived its usefulness. In the first place its mandate has been diluted by the creation of many other UN organizations. The UNDP, the WB, the IMF and above the WTO have effectively taken away some of powers and functions. Despite this erosion in its mandatory powers and functions still the UNCTAD has shown that its existence is becoming ever more relevant due to the fact that developing countries have been known to rely more on its support despite the existence of other organizations (Michalak, 1983). Secondly UNCTAD has been criticized for its growing size in operations that overlap some of the powers and functions of other UN organizations. For example WTO is effectively capable of executing trade related development initiatives at both the national and the international levels. However, UNCTAD has been involved in such functions without much being able to shift the gear qualitatively. This criticism cannot be denied though in fact there is still a fairer chance for its success in such circumstances given the diversity of regions. In Africa its recent successes account for this (Dijkzeul and Beigbeder, 2003). Finally, UNCTAD hasn’t outlived its usefulness yet because unlike other UN organizations mentioned above, UNCTAD has still the advantage in giving technical and logistic support to the developing world. Developing countries depend on UNCTAD for a variety of support services and programs including those related commodities. IMF and WB might not perform better in their economic restructuring programs without the help of the UNCTAD. Reforms are necessary but scrapping might not be so urgent. REFERENCES 1. “After the U.N. Trade Conference: Lessons and Portents”. Foreign Affairs. Sidney Weintraub. 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