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ECONOMY: “G20 Meeting Should Address Plight of Poorest States”

Isolda Agazzi

GENEVA, May 31 2010 (IPS) - The Group of 20 should show its concern about those that the global economic crisis “is leaving behind” by putting the plight of least developed countries on the agenda at its meeting later this month.

Dr Supachai Panitchpakdi, secretary general of the United Nations Conference on Trade and Development (UNCTAD), made this call in anticipation of the Group of 20’s (G20) next meeting taking place in Toronto, Canada, on Jun 26-27.

Even though UNCTAD is not part of the deliberations, it will present a report on trade and investment at the meeting.

The global crisis has caused least developed countries (LDCs), of which most are in Africa, to drop back from the UN’s millennium development goals (MDGs), Panitchpakdi said at a meeting with journalists in Geneva, Switzerland, on Friday May 28.

“I will tell EU members that they should consider discussing the LDCs as an agenda item,” Panitchpakdi stated. “The LDCs will not be able to recover from the crisis because of the fluctuations in commodity prices. China has been stocking commodities and prices have gone up.

“But now prices may go down again and LDCs will not be able to depend on commodities export only.”

Panitchpakdi believes that the globe is on the path to recovery but that this will not happen evenly between either geographical areas or economic sectors. Poorer countries are carrying the brunt of the crisis; the financial sector is faring better than other sectors.

Real recovery will be substantiated with growth numbers and trade volumes, which, except for Asia, are not at the same level as 2007.

As for the World Trade Organisation’s Doha Development Round, times may be difficult “but governments will be drawn back to the negotiating table because they will not resolve the issue of economic recovery without growth in trade”, Panitchpakdi declared.

“We have to watch carefully what LDCs and emerging countries are saying. Expectations from the latter will have to be carefully calibrated. India, for example, does indeed have a high level of economic growth but it still suffers from various humanitarian problems, such as poverty, indebtedness and the difficult plight of farmers.”

Ministers from LDCs have asked for an “early harvest” in the Doha Round. This includes developed countries ending their export subsidies by 2013; the implementation of duty-free and quota-free access for LDCs; and resolving the issue of cotton subsidies that are undermining cotton-growers in Africa.

“LDCs are not meant to contribute to the Doha Round but they will be given something in cotton; duty-free and quota-free market access; special and differential treatment; and trade facilitation,” Panitchpakdi predicted.

Special and differential treatment refers to LDCs receiving reprieve with regards certain WTO requirements; trade facilitation refers to technical assistance and capacity building to facilitate trade.

Panitchpakdi acknowledged that will be difficult for any early harvest to be agreed upon, but “WTO members should give some thought to the building of trust. UNCTAD is not taking side in the negotiations. But in developmental terms we are in support of the LDC position. They would be well served by the early harvest they are asking for.”

LDCs are currently experiencing three percent growth on average. However, this is not enough to keep pace with population growth and therefore, in terms of per capita income, they are falling back from achieving the MDGs. In 2008, before the crisis, they had come closer to reaching the goals.

“The MDGs are one of the best development policies the UN has come up with until now,” Panitchpakdi said. But he criticised the MDGs for being based on the 1980s-1990s belief in the Washington Consensus that markets “will sort everything out”.

MDGs were meant to take care of the externalities of neo-liberal policies, namely social issues. “Right after the MDGs agreement, the allocation of ODA (official development assistance) was shifted from economic activities and productive investment to social areas.

“Again, this was not wrong but what is wrong is that the strong shift in ODA away from economic activities means there is no balance,” Panitchpakdi added.

In Africa, youth unemployment is at 50-60 percent. It is worth noting that countries in Asia that have achieved the MDGs have invested not only in social areas but in production too, Panitchpakdi added.