UNCTAD - Trade and Development Board, 55th Session,

UNCLAS GENEVA 000029

SIPDIS

E.O. 12958: N/A
TAGS: UNCTAD ECON ETRD
SUBJECT: UNCTAD - Trade and Development Board, 55th Session,
September 15-26,2008, Geneva Switzerland


1. Begin Summary. The United Nations Conference on Trade and
Development (UNCTAD) held the 55th Session of its Trade and
Development Board (TDB),UNCTAD's governing body, in Geneva from
September 15-26, 2008. IO DAS Gerry Anderson represented the US
during the high-level segment of the TDB, September 15-16, which
addressed progress in achieving the Millennium Development Goals
(MDGs). The Board elected Ambassador Debapriya Bhattacharya,
Bangladesh's Ambassador in Geneva, as President for its 55th
session. During the two week period, member states concluded that
governments must focus on job creation and economic growth to
generate sufficient revenues to achieve the MDGs, and called upon
the UNCTAD Secretariat to reallocate its regular budget to provide
funding for production of the flagship LDC report. A report of the
meeting will be transmitted to the UN General Assembly in November.
End Summary.

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High-Level Segment: Trade and Productive Capacities for Achieving
Internationally Agreed Development Goals, Including Millennium
Development Goals (MDGs)
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2. UNCTAD Secretary General Supachai Panitchpakdi and five key note
speakers discussed the MDGs and development finance, in particular
aid for trade. According to Supachai, many nations are not on
target to achieve MDGs since infrastructure to support a productive
economy is lacking and Official Development Assistance (ODA) is
insufficient. Supachai opined that MDG related policies must be more
comprehensive including adaptation to climate change, food security
and short-term emergency funds for natural disasters and the
agricultural sector. Presentations given by Rwanda and the Japanese
Export Agency (JETRO) emphasized that many nations are investing in
infrastructure to support advanced telecommunications and utilities,
but their investment needs to be diversified to include tourism,
manufacturing and other productive sectors of the economy, not just
telecommunications and utilities. Speakers emphasized that the
private sector can be a partner in productive investments, and
thereby multiply the positive impact of ODA to improve productive
capacities.


3. International Organizations (IO) Deputy Assistant Secretary
Gerry Anderson served as a lead discussant for the high level
segment. He asked panelists about their views on balancing ODA
between expenditures to improve productive capacities and
expenditures on social issues. Anderson's statement highlighted
grants given by the Millennium Challenge Corporation to developing
countries that are committed to governing justly and economic
freedom, as examples of country-owned and country-led development
projects that can support balanced growth.

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Review of Progress in the Implementation of the Programme for Action
for the Least Developed Countries (LDCs) for the Decade 2001-2010.
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4. UNCTAD's LDC report advocated increased government intervention
to regulate the markets and encourage local investment or profits,
rather than capital outflows. The report praised Southeast Asia's
success in producing value-added products, diversifying its
economies and increasing domestic savings. The report questioned
the sustainability of commodity based growth in LDCs, and expressed
concern over the impact on LDCs of a potential sharp decline in
commodity prices, related to the ongoing financial crisis and
consequent economic downturn. Panelist Professor Carlos Branco from
the Institute of Social and Economic Studies in Mozambique opined
that national governments should implement policies that allow the
state to govern market prices and interest rates and thus buffer the
impact of price fluctuations on LDCs. Central banks should control
local economies/markets and encourage profit re-investments from
domestic enterprises, according to UNCTAD.


5. Branco recommended that LDCs increase south-south and trilateral
trade to develop new markets and growth models. Branco emphasized
the importance of local solutions to spur growth. He also stated
that LDCs should work to end corruption, which will give greater
legitimacy and credibility to their governments, and engender trust

in LDC governments by donor countries. In parallel to
anti-corruption efforts by LDCs, donors should provide technical
assistance to LDC so they are more capable of effectively managing
their ODA budgets. Bangladesh commented that ending corruption and
increasing ownership is not sufficient to ensure economic growth;
donor nations must coordinate their multilateral aid efforts to
reduce transaction costs and increase projects' efficiency.
Zimbabwe for G-77 opined that LDCs lack suitable local personnel to
undertake project management so must devote large amounts of ODA to
administrative fees to pay for project management by expatriates.

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Economic Development in Africa: Trade Liberalization and Export
Performance in Africa
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6. A Secretariat panel and five key note speakers introduced the
2008 Report: Economic Development in Africa: Export Performance
after Trade Liberalization. According to UNCTAD LDC office Director
Habib Ouane, whose office authored the report, liberalization of
markets within Africa has not led to economic development for many
nations because poor physical infrastructure, inadequate technology
and lack of financial credit prevent African businesses from taking
advantage of preferential trade arrangements. Although the quantity
and value of Africa's exports has increased since 1980, Africa's
share of the world exports has decreased from 6% in 1980 to 3% in
2007, meaning the rest of the world has done even better in terms of
quantity and value of exports so Africa has fallen further behind.


7. Arne Bigsten a panelist from the University of Gothenburg stated
that liberalization was necessary for African economic growth to
occur; liberalization weeded out bad firms that were inefficient and
which only survived because of high tariff walls. Bigsten
attributed Africa's poor economic performance to the high risk and
high cost of investment in Africa. Zimbabwe reacted negatively to
this presentation stating that Bigsten's pro-liberalization focus
and negative message about the investment environment in Africa were
contradictory to the main points of the 2008 Africa report.
Ambassador Arsne Balihuta (Uganda) focused his presentation on
African regional integration as a source of economic growth. He
recommended that small and medium-sized enterprises build upon local
markets to become large businesses participating in regional markets
and in the global value chain. Senegal supported this approach.


8. Ouane recommended that countries benefiting from high priced
commodity exports use that surplus income to finance infrastructure
to expand domestic and regional markets. Mexico, speaking on behalf
of the Group of Latin American countries (GRULAC) suggested that the
agricultural sector needs restructuring, in particular, increasing
the production potentials and research and development in the
fishing and horticultural sectors.

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Investment for Development; Transnational Corporations,
Infrastructure and Development
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9. UNCTAD SG Supachai introduced the 2008 World Investment Report
and guest speakers made presentations on Infrastructure Development
in Africa and Good Governance in Public-Private Partnerships.
Global Foreign Direct Investment (FDI)flows rose for the 4th
consecutive year by approximately 20%, with record FDI to LDCs. The
largest sources for developing nations investing outflows were Hong
Kong, China and the Russian Federation. Supachai highlighted the
importance of work by the International Monetary Fund to draft
guidelines to increase transparency and accountability for sovereign
wealth funds, which now play an important role in overall FDI.


10. Thomas Scott, a panelist from the Development Bank of Southern
Africa, encouraged transnational corporations to work in developing
countries through public-private partnerships, which allow increased
access to capital and more certainty of project outcome. Such
public-private partnerships also encourage technological innovation
and a transfer of risk from the government. Geoffrey Hamilton from
the United Nations Economic Commission for Europe (UNECE) stated
that the key challenges of public-private partnerships are: projects

may be cancelled for a variety of reasons, project administrators
may have conflicts of interest, LDCs do not attract a lot of
investment for infrastructure as returns on investments are not
assured, local markets are small and there is competition with other
regions. Public-private partnerships must be mindful of training
government staff to support growing industries and related
regulations, defining the public interest and attempting to achieve
social and environmental improvements for the nation.

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Report on UNCTAD's Assistance to the Palestinian People
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11. Under the annual Palestine agenda item mandated for inclusion
in the TDB by the General Assembly, 19 national delegates made
interventions that attributed economic hardships in Palestine to the
Israeli occupation of Palestinian territories. Zimbabwe on behalf
of the Group of 77 and China stated that Israeli taxation of
Palestine removes necessary revenue for the local economy and makes
it hard for local officials to fund policy and development projects.
Speakers opined that economic progress can be achieved within
Palestine by increasing ODA to Palestine and implementing
recommendations in the UNCTAD Report. The EU expressed support for
the UNCTAD technical assistance program. Israel made a short
statement expressing support for UNCTAD's work and a desire that
UNCTAD's technical assistance (TA) program in Palestine be treated
like other UNCTAD TA programs and not be singled out for politicized
treatment. Israel suggested that UNCTAD identify research and
innovation opportunities, emphasize the positives of private sector
investment, and investigate how Israeli technology can be utilized
through information sharing to aid capacity building in Palestine.
The US did not intervene under this agenda item since the report was
anodyne and Israel had requested that the US not bother to
intervene, since Israel hoped to shorten the discussion. While an
entire afternoon session (three hours) was allocated to the
Palestine agenda item, the discussion lasted only just over an hour,
making the Israeli approach largely successful.


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Negotiated Outcomes
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12. Only two agenda items at the fall TDB result in negotiated
outcomes, the LDC report and the Africa Report. Both negotiations
were straight forward. The Africans pushed unsuccessfully for more
aid and a statement that free markets and trade liberalization has
not lived up to expectations. The LDC group also invited more aid
and with the prompting and support of the US and EU, succeeded in
calling for a reallocation of UNCTAD's regular budget to pay for
production of the LDC flagship report. This budget reallocation was
opposed by the UNCTAD Secretariat, which has used regular budget
funds to support projects in other divisions and let the LDC and
Africa Division rely on voluntary funding. These negotiations
highlighted the weak position of the LDCs within the G-77, since
only after much cajoling by the US did the LDCs agree to speak up
and demand their publication be funded.

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Comment
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13. This was the first post Accra meeting of UNCTAD's governing
body, the TDB. Despite high hopes that the TDB would be more
interactive and less reliant on presentations by panelists; many
reports were released too late for nations to prepare interventions
so the dialogue was limited. End Comment.

TICHENOR