IFCC-XI adopts measures for South-South cooperation

Havana, 24 Mar (Martin Khor) -- The Group of 77 and China adopted a set of measures to strengthen South-South cooperation to confront challenges faced by developing countries at the conclusion of a three-day meeting held here.

Among the measures adopted is the publication of an annual report on South-South cooperation; the conclusion of the third round of the GSTP (General System of Trade Preferences among developing countries) by 2006; the establishment of an intergovernmental study group to hold a workshop on a G77 Trade and Development Bank; strengthening G77 cooperation in monetary and financial areas; and initiating a study on new and dynamic sectors.

The "Recommendations on South-South cooperation" were adopted by the 11th session of the intergovernmental follow-up and coordination committee on economic cooperation among developing countries (IFCC-XI) of the G77, held in Havana on 21-23 March.

The G77 is also scheduled to hold the second South Summit in Doha in June. A meeting of experts to help prepare the Summit is expected to be held in Jamaica in May. The first South Summit was held in Havana in April 2000.

The IFCC-XI was attended by Ministers and senior officials of 77 countries and representatives of 15 international organizations. The IFCC is the main committee of the G77 that deals with South-South cooperation and meets every two or three years.

At the opening session, K.D. Knight, Minister of Foreign Affairs and Foreign Trade of Jamaica (which currently chairs the G77), said that the emerging international economic order is characterized by systemic inequities in global economic governance, external debt problems, insufficient ODA (official development assistance) and declining terms of trade.

"This makes it imperative that developing countries explore new and dynamic ways of responding to these growing disparities," he said. "South-South cooperation remains the most practical means of advancing this objective." While not a substitute for North-South dialogue, South-South cooperation is an important platform for developing countries to undertake joint programmes and projects, and overcome the social and economic instability associated with the global environment.

Later, at a high-level dialogue session, Knight said that the G77 and China needed to take a collective negotiating stance in various fora, as well as measures such as regional and South-South agreements to prevent the South from falling into financial crises. He added that the G77 secretariat needed to be strengthened.

Cuban Minister for Foreign Investment and Economic Cooperation, Marta Mordes, said that many developing countries are now saying "no to brutal neo-liberalism" where a weaker role of the state is a prerequisite for obtaining loans from international financial institutions which have given unfulfilled promises that this would lead to development. She mentioned new initiatives that are paving the way for the G77 and China on South-South cooperation, including the process for true integration of Latin America and the Carribean, and programmes involving food security, the fight against HIV/AIDS and coping with natural disasters.

Ambassador Munir Akram of Pakistan, speaking in his capacity as the President of ECOSOC, said that the global trends for developing countries are mixed. While the share of developing countries in global trade and investment is growing, most of the growth is concentrated in Asia and limited to a few countries. Globally, income disparities are widening with 1.6 billion people worse off economically than 20 years ago and 54 countries poorer now than in 1990. Worse, the net outflow of resources from developing countries in 2003 reached an all-time high of $248 billion.

Akram said strengthening South-South cooperation required a focused and action-oriented platform and for development; a systematic institutional follow-up mechanism to ensure implementation of decisions; intensifying cooperation in trade, investment and human resource development; multilayered partnership involving interaction between people, business sector and governments of the South; and a complementary North-South dialogue.

Stating that the global system lacks fairness, Akram said that the South Summit should outline a North-South partnership based on correct governance and policies at national and international levels, financial resources for developing countries through the debt, ODA, investment and trade instruments, a multilateral trading system based on clearly defined development priorities, and access to technology.

Later, speaking for Pakistan, Akram said that to bring coherence to institutions working on South issues, greater integration and reporting mechanisms were needed, with the following first steps: an overarching Coordinating Council of the G77 institutions to oversee implementation of decisions; a regular annual report on the status of South-South cooperation; establishing an eminent persons group of the South; strengthening and expanding the G77 secretariat, and reinvigorating the trade and commerce bodies in the South.

Commenting on the UN Secretary General's report for the UN Summit in September, issued on 21 March, Akram welcomed its focus on the MDGs (Millennium Development Goals) but said that it did not adequately address trade issues nor does it address other development issues such as commodities, net outflow of resources from developing countries, allocation of IMF quotas, and decision-making in the Bretton Woods institutions and the WTO.

He said that for the UN Summit in September, Pakistan favours a set of quick-win actions on trade, such as immediate agreement on the end date for agriculture export subsidies (including an early end to cotton subsidies), a commitment to early elimination of tariff peaks and escalation against exports of developing countries, a commitment not to circumvent the elimination of quotas on textiles and clothing exports of developing countries, a moratorium on the use of anti-dumping actions against low-income countries, an end to arbitrary and abusive use of sanitary and phytosanitary standards and measures to restrain exports of low-income countries, full participation of developing countries in standard setting processes and acceptance of a review of the development dimension of the TRIPS agreement.

Kenyan Minister for Planning and National Development Peter Anyang' Nyong'O, traced the history of G77 related decisions and discussions on establishing a G77 Trade and Development Bank and of Kenya's initiatives, including undertaking a feasibility study report. He urged that an intergovernmental study group be formed and to hold a workshop which could report to the South Summit for action.

Nyong'O said that with declining aid and rising debt, the effect of debt servicing on developing countries is "debilitating" and the time has come for developed countries to "cancel these debts so we can pursue the MDGs in earnest."

India's representative to the UN in New York, Ambassador Nirupam Sen, said the South's collective voice and agenda represents an advance in building a conducive international environment for development. "The 'governance' net was cast over the South through structural adjustment programmes and trade-related global agreements, which had neither the development goals nor interests of developing countries as their objective," he said.

"Developing countries found their policy space, domestic and external, increasingly circumscribed. Today, in many respects, the environment is more harsh. The voice of developing countries is vital to level the playing fields."

Sen said that by 1990, commodity prices were below their 1932 level, and this has devastated Sub-Saharan Africa while sustaining high living standards of the developed world, whose export subsidies and domestic support further depressed commodity prices. From 1990 to 2002, loss of income to developing countries from the price declines equals the subsidies paid by OECD countries to their farmers and is five times their ODA.

"In Nebuchadnezzar's dream only the feet were made of iron, today, the heart of the international economy is made of iron. To transfer the assets of the poor, one does not need the medieval rack as the terms of trade and price mechanism are enough. Similarly, the negative impact of the TRIPS agreement is not just on prices of medicines and public health but also (a matter seldom discussed) on science and technology, the key to achieving MDGs and economic growth."

Sen said that a most important dimension of South-South cooperation is political and practical solidarity, and a crucial beginning was made with groups of countries that fought the battle on agriculture and Singapore issues in the WTO.

He added that UNCTAD and its secretariat is of critical importance, especially since the WTO does not deal with the commodity issue and with developing supply capacity, besides being non-transparent and non-inclusive. "For the developing countries this makes UNCTAD a vital component of the multilateral trading system. Its leadership is therefore an important question that the South has to consider carefully."

Sen added that South-South cooperation is necessary to mitigate the adverse effects of international economic policies. He provided details of how India is contributing to South-South cooperation through imports, investment, projects, trade agreements and technical assistance. "The capacities in the South have risen dramatically, the situation now is that there are hardly any goods and services required in the South that cannot be sourced from the South itself. A conscious drive is needed to step up intra-South trade, investment and technology."

Ambassador Zhang Yishan of China called for developing countries to formulate preferential policies to encourage cooperation among themselves in technology. Also, trade and investment, as well as "triangle cooperation" in which developed countries or international agencies offer funds to assist economic cooperation among developing countries.

He also outlined China's efforts in South-South cooperation, including being the fastest growing market for developing countries' exports, investments in the South, free-trade agreements with developing countries and regions and a China-Africa Cooperation Forum.

The Nigeria Minister of State for Foreign Affairs, Alhaji Abubakar Tanko, said that with the onslaught of globalization and its inequities, the South was looking for answers, and strengthening South-South cooperation is vital. However, there is a deficit in implementation of decisions. Stating that the starting point should be action and not rhetoric, he said that the present state of South-South cooperation leaves much to be desired, and progress in implementation of the Havana programme (of the first South Summit) was poor. He elaborated on two projects that Nigeria is engaged in, the South-South Healthcare delivery programme and the action committee on raw materials.

Ambassador Rezlan Jenie of Indonesia said that it was important to reinvigorate "South consciousness" so that it is part of the ethos of all developing countries, and that people strengthen their belief in the South and their mutual trust. He announced that to commemorate the 50th anniversary of the Bandung Conference of 1955 that gave birth to the Non-Aligned Movement, Indonesia would host the Asia-Africa Summit and Golden Jubilee on 18-23 April in Jakarta and Bandung.

Director of the Special Unit for South-South Cooperation, UNDP, Yiping Zhou, said there had been unprecedented progress and dynamism in South-South cooperation in recent years. He cited the NEPAD in Africa, regional integration in Latin America and Asia, and the fact that over 40% of developing countries' exports today go to other developing countries. There has also been progress in the South's role in other areas, such as in economic growth, investment and emergency relief.

Zhou said that South-South cooperation is redefining the geography of trade, finance, investment, technology transfer and development cooperation. There are however major differences among regions and countries, and the scaling up of South-South cooperation gains are hampered by three problems.

Firstly, there is need for a consolidated and manageable South-South agenda with a few well- thought-out goals, since existing South-South action plans pull the South in too many diverging directions. Second, is a need for strengthened structures and mechanisms to implement such a consolidated agenda. Third, is the need for a better financing strategy for South-South cooperation.

Managing Director of the Common Fund for Commodities, Ali Mchumo, highlighted the adverse effects of the decline in commodity prices and the domination by transnationals over the commodity value chains (with coffee-producing countries receiving only $5 billion out of the overall coffee business of $70 billion).

Mchumo called for the implementation of past international resolutions on providing more resources for commodity development, better market access for commodities within the WTO framework, engaging the international community to address the commodity price decline, and commodity diversification (and a possible fund for this). He urged developing countries to take the initiative and become committed to addressing the commodity problematique.

At the concluding session, delegates adopted two documents, the recommendations on South-South cooperation and recommendations on specific South-South projects.

The document on South-South cooperation reaffirmed previous G77 statements relating to South-South cooperation. It called for the publication of an annual report on South-South cooperation by the Special Unit for South-South Cooperation in consultation with the G77 Chairman. It invited parties involved to conclude the GSTP third round by 2006.

It established an open ended intergovernmental study group to hold a workshop in New York on the proposed G77 Trade and Development Bank in May and to report to the South Summit in Doha in June. It noted the need expressed at the G77 Chapters meeting to improve coherence of the overall policy adopted by the Ministers of Finance and Ministers of Foreign Affairs regarding monetary and financial issues and called for implementation of the first South Summit's decision on the need to strengthen cooperation in monetary and financial fields.

It also asked the G77 chairman, in collaboration with UNCTAD, to submit a study on new and dynamic sectors including services and creative industries; encouraged arrangements for South-South sectoral cooperation; and called for a South-South Forum on public and private partnership. It called for consideration for establishing a line of credit to enhance South-South trade, and greater coordination among Southern institutions.