|
STATEMENTS
IN THE SECOND COMMITTEE (Economic and Financial) Statement
by Mr. Kamalesh Sharma, Permanent Representative to the United Nations,
New York on October 6, 1999 Mr.
Chairman, Since
my delegation is taking the floor for the first time, may I begin by
congratulating you and your Bureau on your election. We are confident that
under your stewardship our deliberations will be focussed and productive.
I would like to associate my delegation with the statement made by Guyana,
on behalf of the G-77 and China. Overview
of the global economy Our
debate is taking place against the backdrop of major economic trends such
as globalisation and liberalisation, which have reconfigured the global
economy. In the late eighties and early nineties, globalisation appeared
to offer mankind a promise of truly historic magnitude. The promise was of
a broadening of opportunities to improve living standards and to secure a
brighter future for millions mired in poverty and under-development. This
was expected to occur as developing countries participated increasingly in
the dynamic growth of the world economy, a growth that was expected to be
the inexorable outcome of globalisation, liberalisation and rapid
technological change. However,
the global economic reality in 1999 in the aftermath of a spate of
financial crises and continuing economic exclusion of vast sections of
humanity, like Hamlet’s heaven and earth, appears to have more things
than were dreamt in the philosophies of policy makers and free market
economists. There is no denying that some pragmatic gains were recorded in
the late eighties and early nineties, particularly impressive growth rates
per capita in one eight of developing countries, unprecedented expansion
in trade and global output and expansion of capital flows which reached
US$315 billion in 1995. While globalisation thus opened many new
opportunities for those who are better equipped to take advantage,
particularly in terms of increased trade, technologies, investments,
expanding media and communications networks, events since 1996,
particularly the recurrence of financial crises and instability had not
only led to the rollback of development and prosperity, but has led many
to question the very foundations of globalisation. Indeed, the term
"financial crisis" to describe the events that began in South
East Asia more than three years ago is misleading, for it has had serious
long term and far reaching consequences, making it, as the Secretary
General of UNCTAD characterised it in a recent seminar in Columbia
University, as a crisis of development. Certainly in the aftermath of the
crises, growth in the developing world as a whole has collapsed. In 1988,
the GDP of developing countries, including China, advanced only by 1.8%.
If China is excluded, growth was only 0.8%. What is ironic is that the
crisis affected precisely those developing countries which had been held
up as showcases of globalisation. Moreover, this crisis stuck exclusively
at developing countries, ironically sparing and even benefitting
industrial economies through falling prices of commodities, capital flight
and cheap manufactured imports. Bankruptcies from the financial crisis
were only in the east. Although
the Economic and Social Survey and the Trade and Development Report
indicate that there are some signs of recovery this year, with the
containment of contagion, the upturn of commodity prices and growth rates,
which are marginally higher than last year, it is, however, too early to
be complacent or not worry about systemic issues. Indeed, as concern over
a possible global recession recedes, legitimate concern over the long-term
systemic drawbacks of globalisation are also giving away to an unjustified
sense of reassurance that the market has ridden out this temporary boom
and bust cycle. The return to stability should not be misinterpreted and
allowed to mask the underlying structural problems of globalisation that
need to be addressed if it is to be fashioned in a manner that is
responsive to the needs of the vast majority of developing countries. In
the Second Committee this year, we believe the international community has
a unique opportunity to dispassionately address the challenges of
globalisation and the trends that continue to characterise the global
economy, in their totality. Essentially, there are four areas that we need
to focus on. Trade We
need to examine far more incisively the functioning of the international
trading system. We are supportive of the benefits of the Uruguay Round,
particularly the establishment of a rule based, secure, predictable
multilateral trading system. However, it is a matter of concern that
Agreements that were painstakingly negotiated have not been implemented in
the spirit in which they were envisaged nor have the patterns of
liberalisation that have emerged from the operation of the system been
conducive to accelerating the development of developing countries. This is
clear in the difference in treatment of products and sectors of interest
to the developing countries, particularly agriculture, textiles and
movement of natural persons. The existing multilateral trading system is
less than development friendly. Health and sanitary provisions, the costs
of certification and anti-dumping measures are used against exports from
developing countries in areas where they have succeeded in penetrating
markets. There is an asymmetry between the advanced state of
liberalisation of trade in goods and services which are of interest to
developed countries, and the barriers to trade in labour and professional
services and labour intensive goods typically produced by developing
countries. We have a unique opportunity, in the review process that begin
this year, to impart a substantive development dimension by focussing on
implementation of existing commitments and to fashion the trading system
in a manner that is far more development friendly. Specifically, we need
to do much more to strengthen the provisions for special and differential
treatment for developing countries. We also need to review the functioning
of Intellectual Property regimes to strike a more equitable balance
between the need to reward innovation and the need to ensure rapid and
widespread dissemination of knowledge and technology. Financial
flows The
rapid growth of capital markets and financial liberalisation was the other
key pillar of globalisation which was projected as providing an
irreversible solution to the resources constraint that developing
countries have traditionally faced. Analyses of FDI flows indicate several
lacunae, including the fact that it is concentrated in a select group of
twenty countries and has not always been channelled to the sectors which
would impact most on development activities. The volatility of short-term
capital flows and its far reaching consequences has not only added to
inequitable debt burdens but has also raised a number of moral hazard
issues, both on the bailing out of creditors, as also the responsibility
of governments to take on what is essentially private sector debt. The
experience of developing countries over the last several years, with the
globalisation of finance and capital markets, suggests that the magnitude
of such crises and contagion is rising. Once difficulties emerge, markets
do not adequately discriminate between countries with strong or weak
fundamentals. The cycles of rapid expansion of financial flows followed by
sharp reversals has led to severe damage to domestic banking systems and
the policies deployed to address this have usually led to a fall in output
and trade. It is clear that an enormous discrepancy exists between an
increasingly sophisticated and dynamic international financial world, with
rapid globalisation of financial portfolios and the lack of a proper
institutional international framework to manage it. Reform of the
international financial architecture, both per se and to promote coherence
between the international financial, monetary and trading systems, is
therefore crucial. In
many ways, we have a unique opportunity to address the challenges posed by
globalisation since our deliberations in the UN are taking place against
the backdrop of discussions of a possible new Trade Round and discussions
on reform of the international financial architecture in the Bretton Woods
Institutions. Specifically, the exercise that we began two years ago on
Financing for Development offers a comprehensive rubric within which to
discuss the diverse aspects of financing for development. Financing
for Development Among
the most crucial issues before the Second Committee this year will be the
report of the Working Group on Financing for Development. This working
group was set up in pursuance of resolutions 52/179 and 53/173. The call
for a Conference on Finance for Development has been a long standing one
by developing countries, dating to 1983. It was only at the 52nd
GA that forward momentum was achieved and it was agreed that a High-Level
Intergovernmental Event on Financing for Development would be held in
2001. Last year, at the 53rd GA, it was agreed to set up a
Working Group, which would begin some preparatory work on issues that
could be recommended for inclusion in the agenda and which began
functioning in January 1999. Its mandate was to evolve recommendations on
the form, scope and agenda for the 2001 event. Austria and India
co-chaired the Working Group. Our co-chairmanship was a reflection of the
importance India attaches to this issue. The Working Group undertook an
in-depth examination of possible issues to be included in the agenda. It
has made recommendations for an inclusive, comprehensive scope and agenda
covering the diverse inter related aspects of financing for development
from external debt, private capital flows, to trade and reform of
financial architecture. It has also made recommendations on
characteristics of the preparatory process and the final Event. In
the months ahead, in the Second Committee, we need to focus on specific
modalities of a viable preparatory process, including modalities of
participation of other stakeholders which will ensure comprehensive
treatment of the issues involved and result in a summit or conference. Above
all we need to build on the spirit of trust and partnership, as well as of
being engaged in a shared and vital enterprise to collective advantage
that has characterised our work on this issue so far. To a large extent,
the credibility of the UN in the new Millennium will rest on the viable
and durable solutions that we will find to the problems of financing for
development. Science
and Technology A
third aspect of globalisation, which is of major concern, is the so-called
technological globalisation. Fundamental and far reaching innovations in
information, communication and bio-technologies are radically improving
productivity, lowering costs and creating dramatically new ways of doing
previously unimagined things. The fusion of computing and communication
technologies as exemplified in the Internet has diluted the traditional
constraints of costs, time and distance, launching an era of global
information networking. In biotechnologies, the ability to move genetic
material across species types has broken the bounds of nature, creating
new organisms with enormous but unknown potential. It is clear that these
far reaching technologies are reshaping globalisation and that the key
economic growth and prosperity in the next millennium will be based on
access to and the ability to harness these developments. The choice,
therefore, is clear, but the real question is whether the developing
countries have the choices that these technologies throw up in any real or
meaningful manner. The Human Development Report 1999 starkly points out
that as we enter the next millennium, a quarter of the UN=s membership do
not have even basic tele-density of one telephone per hundred people. We
cannot be complacent and assume that the market place will address these
problems. The market will only make global citizens of those who can
afford it. In
our work in the Second Committee we need therefore to tackle on a priority
basis both restrictions on access to technology on grounds of dual use and
the more general questions of access to technology on concessional and
reasonable terms and innovativeness in approach in creating and realising
technology as a force for global public good. We also need to focus on and
address the need for a framework that will facilitate the establishment of
the necessary telecommunications infrastructure in developing countries
that will enable them to be part of this technological revolution. We will
also take up the need to provide intellectual protection for biodiversity
and traditional indigenous knowledge in a matter comparable to that being
offered by WIPO (World Intellectual Property Organization), TRIPS and UPOV
(Union for Protection of Plant Varieties). We have spoken separately on
this general theme in this Committee. Globalisation Last
year at the 53rd GA for the first time, a resolution was
adopted on globalisation and interdependence and as a result of a specific
item on this major issue has been inscribed for consideration in the
Second Committee. We hope that this will initiate a continuing debate and
assessment in the UN on the various macro economic aspects of
globalisation, particularly its impact on developing countries. Our
priority should be to carry forward this debate while seeking to define
operational modalities to effectively assess the challenges and drawbacks
of globalisation for developing countries and to evolve pragmatic measures
whereby the inputs of the GA could be taken into account in the relevant
specialised fora which deal substantively with macro economic aspects of
globalisation. Environment India
also attaches the greatest importance to environmental concerns. Seven
years after the UN Conference on Environment and Development, while there
has been considerable progress at national levels in seeking to promote
sustainable development, we are disappointed that the international
commitments, particularly on financial resources to meet the incremental
costs involved, as also to facilitate access to the environmentally sound
technologies at reasonable costs, which was integral to the compact on
sustainable development and environment, has not been honoured. Much more
needs to be done if a truly global compact to address environmental
concerns is to be implemented. We are also disappointed that commitments
by developed countries to redress the consequences of their historical
industrialisation and technological choices by altering unsustainable
consumption and production patterns, as also by cutting back on emissions
through domestic action, remains a chimera. It is ironic that, while
environment concerns are being pushed in areas where developing countries
have competitive advantages, when the commercial concerns of
pharmaceutical and bio-technology based agricultural industries in the
developed countries are affected, profits triumphs over the environment.
We saw this in sharp relief at the last round of discussions at the
Bio-safety Protocol when legitimate concerns on the long-term implications
of genetically modified organisms, both on bio-diversity and human health,
were brushed aside. We are also gravely concerned that at a time when a
high premium is placed on protection for industrial innovation through IPR
regimes, the same protection is not afforded to traditional and indigenous
knowledge, as also biodiversity in developing countries. The Human
Development Report this year has estimated that bio-piracy has defrauded
developing countries of financial resources to the tune of $300 million in
unpaid royalties for farmers= crop seeds, and more than $5 billion in
unpaid royalties for medicinal plants. It is our hope that in our
deliberations on this issue in the Second Committee, we will address these
concerns in addition to taking stock of progress in implementing the
various Environmental Conventions and in beginning our preparations for
the Rio plus ten process. Mr.Chairman, |