UN Calls For Global Financial Reform To Improve Trade Prospects In Developing Countries

by Leroy Baker, Tax-News.com, New York

17 November 2008

The United Nations (UN) Second Committee on Economics and Business met recently to discuss solutions to the global economic crisis by improving relations and trade between countries in a global reform of governance rules relating to financial institutions, international trade systems and monetary systems.

Debapriya Bhattacharya, President of the Trade and Development Board, told the committee that there was also a need for an effective multilateral framework for exchange-rate management and an internationally coordinated macroeconomic policy response to prevent a global recession. He asked for the commitment of all countries under UN auspices to aid a global financial reform.

Trade has become a major source of development finance accounting for more than 50% of gross domestic product in many developing countries. However, the global food, fuel and financial crises threatened to reverse hard-won development gains, and had the potential to affect negatively the productive and infrastructure capacities of developing countries in particular, Bhattacharya observed.

Bhattacharya, speaking on behalf of the least developed countries, called for urgent action to avoid the unravelling consequences of the current global challenges on the socio-economic progress of the past decade. The committee called for the introduction of multilateral trading for the world’s most vulnerable countries, and called for developed countries that had not already done so to provide immediate, predictable, duty- and quota-free market access on a lasting basis to all products originating from all least developed countries.

Jamaica’s representative, speaking on behalf of the Caribbean Community (CARICOM), urged major negotiating parties to show flexibility, engage constructively and mobilize the political will to facilitate a successful conclusion while renewing their commitment to a well-functioning, rules-based, open, equitable, predictable and non-discriminatory multilateral trading system that would promote development and recognize the diversity in levels of development and sizes of economies. CARICOM remained concerned that the continuing failure to amalgamate plans would further fragment the international trading system, given the increasing proliferation of bilateral and regional trade arrangements.

In the coming four years UN Committee on Trade and Development (UNCTAD) conferences will be orientated towards achieving global growth and trade integration and investment. African countries will benefit from an intensified focus particularly into looking at overcoming barriers to their growth - held back by predominantly by extremely limited share of global foreign direct investment, productive capacity, infrastructure, agriculture, inclusive growth, and harnessing knowledge, particularly in science and technology.

According to the report, the UN is halfway to the 2015 target year for meeting the Millennium Goals, but current global economic realities - the financial, food, fuel and energy crises, as well as climate change and migration - pose challenges for the development prospects of developing countries.

The UN says that the international trading system can make an important contribution by addressing global challenges affecting real economies and human needs, although it cannot solve the problems on its own. "The multilateral trading system continues to be the cornerstone of global trade governance, but it must operate within a broader system of global economic governance - Greater coherence across different layers and systems of global economic governance is essential to its future success," the UN said.

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