Trade And Development Report
November 12, 2008

RADIO 2CBA FOCAL POINT COMMENTARY BROADCAST ON FRIDAY JANUARY 7 2000 ON RADIO 2CBA FM.

The new century begins on a sour note: the world economy is deeply divided and unstable. The rich are getting richer and the poor are becoming more numerous.

The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 to accelerate trade and economic development, particularly that of the developing countries. UNCTAD is the focal point within the UN system for the integrated treatment of development and interrelated issues in the areas of trade, finance, technology, investment and sustainable development.

UNCTAD publishes an excellent annual review called The Trade and Development Report. This takes the temperature, so to speak, on the global development situation.

The development situation is not good.

There is now only one global trading system. Developing countries have followed the example of other countries, such as Australia, of relying more on the “market”. But as Australia has found out, there is not a level international playing field. Australia has great difficulty selling some of its agricultural produce and raw materials into the western European and American markets. Third World countries have the same problems.

The United States and European Union, being the biggest players in the global economy, are able to distort the international playing field to suit their interests. They host most of the world major transnational corporations and they have the major say in the UN’s financial agencies, notably the World Bank and International Monetary Fund.

UNCTAD, though this is not its official role, is a spokesperson for the rest of the world. But it is a great pity that UNCTAD does not get the degree of media coverage that it deserves – not even in Australia, where they would be many people who agree with its annual assessments.

The UNCTAD Report warns that the sudden lowering of tariff barriers in developing countries has led to a surge in imports but not necessarily any great surge in exports. This sounds a bit like Australia’s problem!

People in developing countries like buying American and European goods. But the developing countries have difficulty selling their goods into the markets in the US and Western Europe so as to pay for all the imports. The result is – like Australia – they have a balance of payments problem.

Developing countries are trying to solve this balance of payment problem by encouraging foreign investment. But much of this investment is just “hot money” – speculative money – which is easily pulled out of the country and so leaving the country vulnerable to booms and busts (as we have seen in Asia).

UNCTAD warns that relying on foreign investment is not a safe way to build a national economy. The key to growth is market access. In other words, developing countries ought to be able to get more access to the markets in the developed world, such as the United States and Western Europe.

Therefore, the international trading system has to be reformed to restrict the flow of hot money and to ensure that developing countries get more access to the markets in the develoeped countries.