UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
INTERVIEW WITH SUPACHAI PANITCHPAKDI
ERICA MELTZER (UNCTAD)
Tell us something about yourself,
and what drew you to working with
Economic development has been a passion for me throughout my life, and has become the central theme of my career. After completing my academic training in economic planning and development, I worked for the Bank of Thailand and later joined the government, where I was Deputy Finance Minister and then Deputy Prime Minister. In the latter capacity, I was in charge of the country’s economic and trade policy-making during some crucial years for Thailand, helping to shape regional agreements in Asia and seeing at first hand how trade can contribute to prosperity, but also how financial instability can devastate a country and undo years of progress. I was also, as you know, Director-General of the WTO from 2002 to 2005. All of these experiences brought home to me how critical sound policies are in steering a country onto a healthy development path and showed me the importance of an inclusive international trading and financial system.
UNCTAD, as the only United Nations body addressing global trade and development issues, and as a think tank for developing countries that provides innovative, “ahead-ofthe-curve” policy analysis, has always struck me as an organization with great potential for helping to advance economic development. I joined UNCTAD with the hope of using my national and international experience to enhance that potential.
What are the main challenges
involved in fulfilling UNCTAD’s original
and still-valid mandate – that
of putting trade to the service
UNCTAD’s mandate indeed continues to be very valid today, as there are still many obstacles to making trade and integration into the world economy an effective tool for development. Interestingly, if you look at the report of UNCTAD’s first Secretary-General, Dr. Raul Prebisch, to our first Ministerial Conference in 1964, many of the challenges identified then are equally formidable today, despite some significant changes in the world economy since then. For example, developing countries still face major barriers in key sectors of interest, such as agriculture and textiles.
Another such sector is that of services. Here, the supply of services through the movement of natural persons (mode four of the General Agreement on Trade in Services, or GATS) plays a particularly important role, as developing countries have a significant comparative advantage in this area. It is has been estimated, for example, that welfare gains from liberalizing the movement of workers could amount to US$ 156 billion a year if developed countries increased their quota for the entry of workers from developing countries by 3%. This is more than twice what is currently spent on development assistance. Commodity dependence is yet another tenacious challenge. Even though the current commodity price boom has allowed producers to reap windfall gains, they still need to use those gains to diversify their economies, so as to put growth on a more sustainable footing. We are also increasingly aware that the poorest countries – many of which lack supply capacities and the infrastructure required to get their goods to market – will be unable to benefit from trade liberalization unless they are first given the opportunity to build productive capacities. But UNCTAD’s mandate is not limited to trade issues alone. In the monetary and financial area, for example, we have still not found an effective mechanism for preventing and resolving financial crises, which can have a particularly adverse effect on developing countries. There is, in short, great
scope for a more multilateral approach to global finance, which UNCTAD has been advocating for quite some time.
How do you see UNCTAD fitting into
broader UN development and reform
efforts, including the creation of “One
As the focal point for the integrated treatment of trade and development and interrelated issues, UNCTAD’s work fits clearly into UN systemwide efforts to achieve the MDGs, and is focused mainly on MDG 1 (poverty reduction) and MDG 8 (the global partnership for development). Unfortunately, progress towards the MDGs is not advancing fast enough, and UN Member States have been calling for a stronger UN development pillar. As the UN SG said in addressing UNCTAD’s Trade and Development Board in March, we have to reenergize our efforts towards the MDGs – a task in which he views a stronger UNCTAD as central.
UNCTAD is also proactively adapting to UN systemwide reform efforts to strengthen our ability to “Deliver as One” at country level. As a Geneva-based organization with no country representation, UNCTAD is taking a number of measures to ensure that trade and development issues are adequately considered in the development programmes of individual countries. These measures include specific training for UN Resident Coordinators on trade and development issues and the creation of an interagency cluster on trade and productive capacities, so as to strengthen the coordination of our technical assistance activities with sister agencies. This is already beginning to show encouraging results in the eight “One UN” pilot countries. Ultimately, I am convinced that the reform will strengthen the role, impact and effectiveness of the UN overall.
UNCTAD is about to hold its 12th quadrennial
conference in Accra, Ghana,
this April, on “addressing the challenges
and opportunities of globalization
for development”. What do you
see as the main issues to be tackled
there by your member States?
UNCTAD XII is being held at an important juncture in the world economy, and can make an important contribution to addressing a number of challenges. Perhaps most significantly, the Conference follows a global economic expansion that has transformed the world economy. Growth has been more broad-based than ever, allowing many developing countries to become major players. Between 1996 and 2006, developing countries as a group increased their real incomes by 71%, compared to 30% growth in developed economies. This is a truly unprecedented, and very positive, trend for development. It has also meant that the relative weight of the developing countries in the world economy has increased dramatically; they now account for more than a third of world exports and inward flows of foreign direct investment (FDI). Trade among developing countries has quadrupled over the past decade. The South has become much more significant in international finance, acting as net lenders to the developed world and garnering a greater share of outward FDI. Nevertheless, the picture is not uniformly positive, and many of the poorest countries have not yet benefited. Much more is needed to help developing countries benefit from these changes, including expanding the scope of South-South cooperation beyond trade to encompass other aspects of economic relations. The Accra Conference will help us address how the dividend generated by the recent global growth – and by what I have called the “second generation” of globalization – can be translated into meaningful benefits for the poor in the developing world.
UNCTAD XII is also taking place at a pivotal moment in the Doha Round of multilateral trade talks. A lot more needs to be achieved if the Round is to justifiably claim its development name. I hope the Conference will provide major impetus to the negotiations. Beyond the trade arena as such, however, the world economy today is in a period of uncertainty, with credible fears of recession. The subprime mortgage crisis in the US has affected the availability of credit elsewhere, and rising energy and food prices are beginning to result in inflationary tendencies. All of this is cause for concern, as is the related risk of a protectionist backlash, particularly against key investments by sovereign wealth funds of developing countries. We count on UNCTAD XII to help identify the policies needed to avoid a global slowdown, reduce vulnerability to financial crises and find pro-development solutions to such emerging challenges as energy scarcity and climate change.
UNCTAD XII is also being held just after the midpoint to the MDG target year of 2015. Notable progress has been made towards some of those goals: the number of people in developing countries living on less than $1 a day, for example, fell to 980 million in 2004 from 1.25 billion in 1990. If current trends continue, the proportion of people living in extreme poverty will be halved in most regions. But this is not true everywhere; no single country in sub-Saharan Africa, where the Conference is being held, is on track to achieve all the goals. Again, we expect UNCTAD XII to explore how to make globalization more inclusive and use trade and investment flows to achieve the MDGs. Mr.Ban Ki-moon has consistently stressed the importance of trade and economic development in achieving poverty reduction; UNCTAD must be in the front line of this global endeavour.
UNCTAD XII will also be the first
UNCTAD conference in Africa since
1996, and the UN’s first major conference
in Ghana. In addressing
UNCTAD’s Trade and Development
Board in March, the UN SG termed
sub-Saharan Africa “the epicentre
of a development emergency”. How
will the Conference spotlight the problems
of the continent? And how can
the Conference – and UNCTAD’s work
more generally – make a difference
on the ground?
The development challenges of Africa indeed deserve our special attention. Despite the global expansion, sub-Saharan Africa as a whole continues to account for a mere 2% of world trade, and only about 0.8% of global FDI flows. The total number of poor people in this region is also only just beginning to level off. And while the commodity price boom has helped many African commodity exporters, they still need to use their windfall gains to create a more sustainable basis for growth. Similarly, net importing countries need help in coping with higher import prices for both energy and food, which risk offsetting any benefits from debt-relief initiatives. We must also find ways to promote greater flows of FDI into Africa and other marginalized regions, and to ensure that such investment is not concentrated in extractive industries but benefits the entire economy. Addressing these problems calls for a range of measures. UNCTAD is already hard at work on many of them, but our work will have to continue long after the Conference ends if it is to bear fruit. A prime example is helping Africa build crucial productive capacities; in this area we hope that discussions in Accra on the aid-for-trade initiative, and the launch there of the UN’s new trade and productive capacity “cluster», will contribute. Africa’s creative potential offers tremendous economic opportunities and will be showcased at the Conference in an exhibit of African arts and crafts, a concert and a fashion show. The continent will also be spotlighted in UNCTAD XII’s high-level segment on 21 April, entitled “Trade and development for Africa’s prosperity: action and direction”.
What do you view as the most important objectives to be achieved by this Conference overall? UNCTAD’s quadrennial conferences are United Nations ministerial conferences on trade and development issues. They serve primarily to build consensus on the state of the world economy and the crucial challenges facing policy makers in developing countries, and to help identify the policy measures needed to address them. And as I outlined earlier, I think there are many issues on which this is urgently needed. On the more immediate and practical level, the Conference will also decide the work programme for the organization over the next four years. On another, perhaps more fundamental, level, however, UNCTAD conferences can generate and incubate ideas that bear fruit over the long term, both within UNCTAD and in other forums. At UNCTAD XI, several such ideas were launched and have since taken root, including “policy space” and “assuring development gains from international trade”.
These innovations offer a legacy upon which UNCTAD XII can build, strengthening the contribution of trade to the realization of the MDGs.