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Will Accra Affect Development Mandate of UNCTAD?

The development agenda of the United Nations Conference for Trade and Development has undergone modifications that are unfavourable for developing nations. Can the recent Accra Accord change this? How can UNCTAD be better enabled to address critical development issues?

COMMENTARYEconomic & Political Weekly EPW june 14, 200823The authors would like to express special gratitude to B S Chimni and Kasturi Das for their valuable comments. The authors would like to state that the views and analysis are personal. Linu Mathew Philip ( and Karthy Nair are at the Centre for Trade and Development, New Delhi.Will Accra Affect Development Mandate of UNCTAD?Linu Mathew Philip, Karthy NairThe development agenda of the United Nations Conference for Trade and Development has undergone modifications that are unfavourable for developing nations. Can the recent Accra Accord change this? How can UNCTAD be better enabled to address critical development issues?The United Nations Conference for Trade and Development (UNCTAD) over the 44 years of its existence has had two avatars. In its initial avatar, which can be said to have existed from its inception in 1964 to the late 1980s, UNCTAD was conceived as an organisation that stood for a mandate quite removed from the then mainstream line of thought. Essentially a developing country brain-child,UNCTAD was seen as an important collective tool in creating a more balanced international trading system to realise the goal of development. Its primary mandate therefore was “to promote inter-national trade, especially with a view to accelerating development”;1 “to promote principles and policies on international trade and related problems of economic development”;2 “initiate actions for the negotiations and adoption of multilateral legal instruments in the field of trade” (implying it can negotiatetoformulate soft laws as well as legally binding instruments);3 “to be available as a centre for harmonising trade and related devel-opment policies of governments and regional economic groupings”;4 and finally, “to review and facilitate the coor-dination of the activities of other institu-tions within the United Nations systemin the field of international trade and related problems of economic development”.5 In pursuit of its mandate,UNCTAD took several laudable initiatives in the past. In its very inception in 1964, it led to the cre-ation of an influential grouping of devel-oping countries, the G-77. The principle of “preferential treatment”, which is still held to be of great importance in the deve-loping and least developed nations of the world, was first included as partIV of the General Agreement on Tariffs and Trade in 1966 through anUNCTAD initiative. UNCTAD was also the first to recognise the group of least developing countries (LDCs) as early as 1971.UNCTAD would also serve as an important negotiating platform for passing several international commodities agreements aimed at stabilising the price of exports essential for developing coun-triesand also for developing multilaterally agreed upon sets of principles and rules on restrictive business practices.UNCTAD also substantively contributed to the formulation of the draft code of conduct oftransnational corporations (TNCs) and its promotion of South-South cooperation led to the global system of trade prefer-ences (GSTP) agreements. It is interesting to note that these initiatives, whether in the commodity sector or the code for the TNCs are as important today as they were in the past, given the current world economic scenario. The vision and structure of UNCTAD, however, underwent a remarkable change from the 1990s onwards. The most obvi-ous change occurred atUNCTADVII in Car-tagana in 1992 andUNCTAD VIII in Mid-rand in 1996 when the North delinked UNCTAD discussions from the Uruguay round negotiations and limited it to “con-sensus building”. Further there was a structural change in its functioning as “in the name of coherence, it is being required to conform to the mainstream views espoused by developed countries and their preferred international organisations, i e, International Monetary Fund and World Bank, on globalisation, liberalisation and development strategies.”6 The Midrand conference also restructuredUNCTAD’s intergovernmental role by changing the funding pattern and mode of functioning, curtailing the number of meetings and publications. This was the second avatar of UNCTAD. Accra DeclarationSince thenUNCTAD has lost much of its unique identity. UNCTAD as an organisa-tion has attempted to regain lost ground at the Sao Paulo conference of 2004 but nothing substantial emerged. The recently concluded Accra conference started with the different purpose of extending the benefits of globalisation under the four themes of (1) enhancing coherence in global policymaking; (2) trade and develop-ment issues; (3) enhancing the enabling environment to strengthen productive capacity; and (4) strengthening UNCTAD. The final declaration endorsed a wide
COMMENTARYjune 14, 2008 EPW Economic & Political Weekly24range of conclusions from equitable bene-fit sharing from globalisation to stabilising commodity prices and tackling climate change. There was a commitment to redouble efforts to combat hunger and poverty and to streamline the various processes, agencies and policies like official development assistance (ODA), financial systems and trade policies in an effort to bring in “inclusive growth” through inclu-sive globalisation. These wide policy endorsements took place amidst institu-tional reforms wherein the commissions, which work on policy dialogues with inter-governmental bodies have been consoli-dated into two commissions from the pre-vious three. Though this may not indicate anynew shift in its mandate, it may place restrictions in its role of supporting the development mandate. The Accra Accord7 talks of policy diver-sity to help individual countries attain their development priorities and objectives and concluded that the specific policies and practices should be based on detailed and rigorous diagnostic analysis. It further felt that national strategies of develop-ment should take into account the unique needs of each country. This amplifies the need for a balance between coherence and policy space. At the same time the Accord urges member developing countries to refrain from promulgating any unilateral economic, financial or trade measures not in accordance with international law and the charter of the United Nations that impedes full achievement of eco-nomic and social development. It even advocates that trade policies be fully integrated into a sound domestic policy framework. Notwithstanding these com-mitments there still exists a huge gap between policies and practices at both global and national levels. The gaps arise on account of lack of technicalcapacities and more specific diagnostic research needs. From the perspective of strength-eningUNCTAD, though the Accra declara-tion has wide policy recommendations, it does little by way of reforming certain important factors, which determine UNCTAD’smandate and support and research prioritisation.Changing Pattern of FundingUNCTAD is a donor-driven organisation and funding is crucial for its work, be it research or technical assistance. Over the years, the steady increase in the impor-tance of the trust funds8 especially in UNCTAD’s technical assistance work is quite evident from the UNCTAD report ‘Review of Technical Cooperation Activi-ties ofUNCTAD’9 which provides a detailed budgeting of UNCTAD’s technical coopera-tion activities. If one were to compare in the budget, the share of trust funds vis-à-vis the United Nations Development Pro-gramme (UNDP) and other sources of funding from the 1972 to 2006, one would see a remarkable shift. In 1972, the UNDP provided almost 90 per cent of the funds while the trust funds contributed only up to 7 per cent of these funds. The situation is quite the reverse today as the total contribution of UNDP in 2004-06 only amounts to 6 per cent of the budget while the trust funds now provide up to 89 per cent of the budget share for technical cooperation activities of UNCTAD. The impact of this shift in funding on the core competency ofUNCTAD has been perceived critically. In the initial years,UNCTAD used to attract the best talent among eco-nomists in the world, who used to come motivated by its idealism to serve the vastmajority of mankind living in the SAMEEKSHA TRUST BOOKSInclusive GrowthK N Raj on Economic DevelopmentEssays from The Economic Weekly and Economic & Political WeeklyEdited by ASHOKA MODYThe essays in the book reflect Professor K N Raj’s abiding interest in economic growth as a fundamental mechanism for lifting the poor and disadvantaged out of poverty. He has also been concerned that the political bargaining process may end up undermining growth and not provide support to those who were excluded from access to economic opportunities. These essays, many of them classics and all published in Economic Weekly and Economic & Political Weekly, are drawn together in this volume both for their commentary on the last half century of economic development and for their contemporary relevance for understanding the political economy of development in India and elsewhere.Pp viii + 338 ISBN 81-250-3045-X 2006 Rs 350Available fromOrient Longman LtdMumbai Chennai New Delhi Kolkata Bangalore Bhubaneshwar Ernakulam Guwahati Jaipur Lucknow Patna Chandigarh Hyderabad Contact:
COMMENTARYEconomic & Political Weekly EPW june 14, 200825developing world and to contribute to the shaping of a world economic order, which was just, fair and equitable. Experts com-mittedtosuch idealism have been side-lined or eased outofUNCTAD subsequent to its emergence in its new avatar.10Another important issue that can be seen to emerge from the funding pattern is that some key developing countries are contributing amounts that are much below the extent that they should ideally be contributing. As per the presently available estimates for 2006, UNCTAD had an expense of 86 million dollars of which 34 per cent came from voluntary contributions. Importantly, only 11 per cent of the volun-tary contributions originated from devel-oping countries. If one takes a look at the data available in the report,11 it becomes clear that the contribution from countries like Pakistan and Bangladesh is far more than that from India, China and Brazil put together. The Accra Accord also talks about the emergence of new global play-ers and the potential to broaden the spec-trum of multilateral cooperation. It may be underscored here that with increased contribution from these key countries, their influence in theUNCTAD’s mandate and processes can be enhanced. If these countries were to take up larger funding commitments, it is likely thatUNCTAD would be in a better position to promote the development mandate that the devel-oping countries espouse.Policy SuggestionsIn the current framework, when the Accra declaration tries to weave a broader agenda in its effort to reap the dividends of glo-balisation, developing countries have to build their productive capacities, ensure access to basic services and strengthen their legal and regulatory framework and institutions. UNCTAD is of vital importance to these countries for this work. There is a need to address the critical aspects of funding inUNCTAD’s research prioritisa-tion, role and mandate in the days to come so as to enableUNCTAD to address many of the critical development issues through policy dialogue and consensus.Funding Structure of UNCTAD: As long as UNCTAD’s structure remains donor-driven, developing countries need to make significantly larger contributions by way of funds for UNCTAD’s working. Developing countries like India, Brazil, South Africa and China must take the lead in this effort as they are likely to be able to steer UNCTAD’s agenda more significantly. A long-term solution would be to disassoci-ate the linkage between the donors and the manner in which the fund is utilised. There is a need for long-term technical coopera-tion partnerships with multiple long-term stakeholders and donors, which would ensure that UNCTAD’s technical coopera-tion would not be short-lived and inade-quate.UNCTAD needs to involve itself more in the funding of the work it undertakes. Research and Analysis: From the very beginningUNCTAD has always pursued a pioneering role in research and analysis providing solid evidence for development. However, the research and analysis that UNCTAD is currently undertaking is gener-alised and broad. Its research is usually classified under such categories as “deve-loping” “developed” “landlocked develop-ing” “small Island developing” or regional grouping, such as “sub-Saharan” “West Africa”, etc. Though its reports such as the Trade Development Report, World Investment Report and databases such asDevelopment and Globalisation: Facts and Figures, Handbook of Statistics, Trade Analysis and Information Systemare useful, they are not easily applicable in case of specific countries and this is critical for trade policy integration into national develop-ment strategies. Focusing more on country-specific studies can usher more specific development dividends and policy advocacy.For specified and focused research and analysis to occur, there needs to be a greater “analytical independence of the UNCTAD secretariat”, as noted in the provisional agenda on “Strengthening unctad: Enhancing Its Impact and Insti-tutional Effectiveness”.12 TheUNCTAD sec-retariat would require greater independ-ence to undertake diagnostic research in a more balanced framework, which incor-porates policy impacts of various trade agreements on a particular country.Coherence versus Policy Space:In the context of the declaration, there again seems to be an overemphasis on coherence with international agreements and policies, which in many ways is limit-ing the policy space of the developing countries. As emphasised in the Accord, the need for policy diversity will go a long way in sustaining economic growth and human development. There is criticism thatUNCTAD’s current orientation is fore-closing the alternate thinking and align-ing more with the Bretton Woods institu-tions and World Trade Organisation in the name of “coherence building”. But coherence building has become a top-down approach by which the dominant ideas and policies of the developed coun-tries are forced upon the developing countries andLDCs with the empty prom-ise of the benefits, which are unlikely to accrue. In this process UNCTAD seems to be losing its distinct vision and there is a strong need to re-emphasise its develop-ment image. The philosophy of coherence with inter-national agreements should not limit the national development prerogatives. UNCTAD’s distinct identity should not be lost in its effort to align with the “one United Nations” concept and it should retainits critical observer role on international organisations and agreements.Notes 1 Para 3 of 1995(XIX) resolution of UN General Assembly in terms of Resolution of December 30, 1964.2 Para 3(b) of the 1995 (XIX) resolution of UN General Assembly in terms of Resolution of December 30, 1964.3 Para 3(e) of the 1995 (XIX) resolution of UN General Assembly in terms of Resolution of December 30, 1964.4 Para 3(f) of the 1995 (XIX) resolution of UN General Assembly in terms of Resolution of December 30,1964. 5 Para 3(d) of the 1995 (XIX) resolution of UN General Assembly in terms of Resolution of December 30,1964. 6 ‘Reinventing UNCTAD’ South Centre, February 20, 2006 available at (visited on March 23, 2008).7 UNCTAD Draft Accord TD/L.414, available at (visited on April 27, 2008). 8 Trust funds are provided on a voluntary basis by individual governments, multilateral donors, NGOs, the enterprise sector and other Foundations. 9 TD/B/WP/195/Add.2 July 11, 2007.10 ‘Reinventing UNCTAD’ South Centre, February 20, 2006. (visited on March 23, 2008).11 Review of Technical Cooperation Activities of UNCTAD TD/B/WP/195/Add.2 July 11, 2007. 12

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