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Mr. Chairman,
On behalf of Pakistan delegation, let me congratulate you on your election.
May I also felicitate the other members of the bureau.
2. The General Debate in the Second Committee provides us an opportunity for a
comprehensive review of the global economic situation. My delegation appreciates
the thoughtful statement made by the Under Secretary General, Mr. Jose Antonio
Ocampo, outlining the challenges and opportunities confronted by the global
economy.
3. The global economy has been in recession since 2001. During the current year,
although there are some signs of recovery, the overall situation remain
precarious. During 2003, while the US economy witnessed some resurgence, Europe
lost momentum and Japan continued to confront a slowdown. According to UNCTAD’s
Trade and Development Report 2003, “the global economy is now facing a widening
deflationary gap created by deficit global demand”. Globally, both labour and
product markets are in surplus with too “many goods chasing too few buyers and
too many workers chasing too few jobs”.
4. In such gloomy scenario, one bright feature has been the 7% growth of the
Chinese economy. However, with the exception of few countries, like China, the
majority of the developing countries, and countries in transition, have
witnessed declining growth. The outlook for the remainder of this year and for
2004 is predicted to be positive but “unlikely to produce growth strong enough
to cut sharply into the unemployment rates”.
5. Currently, world economic prospects are highly dependent on continued demand
in the United States’. This is currently fueled by heavy deficit financing
balanced by uncertain capital inflows. It is necessary to generate a more
sustainable basis for demand growth, especially in the developing countries
where the largest potential exists for increasing consumption of goods and
services.
6. Unfortunately, despite all the rhetoric, the policy decisions and actions of
the major countries and international finance and trade institutions have failed
to respond to the need for more conscious and elaborate measures to stimulate
economic growth and demand in the developing countries. No serious measures have
been taken to provide enlarged trade access and opportunities to the developing
countries. After declining in 2001, global trade grew by less than 2 percent in
2002, which is far less than the average of nearly 7 percent of the 1990’s.
7. Similarly, net global capital flows to developing countries peaked in 2000
and have declined drastically since then. For a number of developing countries,
capital flows were negative. Since 2001, FDI has declined by around 75%,
although global FDI stocks expanded from 6.1 trillion in 2000 to 7.1 trillion in
2002. Such FDI flows remain highly concentrated. Ten developing countries
received 77 percent of total FDI flows. At the same time, portfolio investments
and commercial Bank loans to developing countries have also declined
considerably. Finally, conflicts, instability and terrorism have also
contributed to reduction in trade and investment in developing countries
reinforcing the factors contributing to the global economic slowdown.
Mr. Chairman,
8. As expected, the negative impact of the recent global economic slow down is
most severely felt by developing countries such as Pakistan. In addition,
Pakistan had to face daunting challenges in the post-9/11 period, as a frontline
state in fight against global terrorism, as well as due to political tensions
and conflicts in our region. However, despite these difficulties, we have gone
through a painful adjustment programme and pursued far reaching reforms which
have breathed new life into the Pakistan economy. Notwithstanding several
exogenous shocks, our resolve to continue with structural, macroeconomic,
institutional and governance reforms has not wavered. The results, at the
macroeconomic level, are evident in stable currency, low inflation, improved
levels of foreign exchange reserves, decline in the fiscal deficit and public
debt as a proportion of GDP, a vibrant stock market, and better than targeted
growth.
9. In order to attack poverty, we have adopted a five-pronged approach focused
on economic growth, investment in human capital, targeted interventions,
improved governance, and greater social safety nets. We have put in place our
interim PRSP, CCA/UNDAF and other development mechanisms. We are also upgrading
our transport infrastructure which will not only benefit Pakistan but can also
be utilized by our neighbor – Afghanistan – for transit trade. In order to
facilitate transit trade with Afghanistan, and our Central Asian landlocked
neighbors, we are constructing a new modern sea port at Gwadar. We are also
working on development of oil and gas pipelines from Central Asia to Pakistan.
The proposed Trans-Afghanistan pipeline from Turkmenistan though Afghanistan to
Pakistan, and finally to Gulf, is a major regional initiative. This project will
also contribute to Afghanistan’s reconstruction and stability and give it a
reliable source of income for development.
10. We believe that trade liberalization and peace with neighbors are central to
promote stability and sustainable development of our region. We seek a just and
peaceful solution to our dispute with India over Jammu and Kashmir. We hope that
our collective efforts would help realize the cherished objectives of peace and
development to our part of the world.
Mr. Chairman,
11. Without growth in the international economy, development is impossible.
Stimulating growth, particularly in the developed world is, therefore,
essential. According to UNCTAD if decisive actions are not taken to start a
global recovery and reverse the rapid rise in unemployment, there is a real
threat that the existing discontentment with globalization among the majority of
the world peoples may further deepen, “triggering a political back-lash and loss
of faith in markets and openness”. The communiqué of the International Monetary
and Financial Committee of the IMF, issued after its recent meeting at Dubai,
has underscored the “importance of close international cooperation and
determined action to foster a strong, sustainable, and broad-based economic
recovery”.
12. In the present context, growth will require a loosening of the tight
monetary policies in Europe and Japan, while assuring the sustainability of
growth revival in the U.S. economy. The prospects in the Europe and Japan
confront the pre-occupation with revival of inflationary trends and self-imposed
disciplines, especially in the Euro-Zone. On the other hand, US recovery is
clouded by the rising budgetary deficits arising from tax cuts, heavier
subsidies for steel and agriculture and the conflicts in Iraq and the Middle
East.
13. The most promising prospects for growth stimulation for the present, appear
to be in China and South-East Asia, where trade access is being enlarged through
free trade agreements and investment flows. This center of growth needs to be
expanded further to encompass other regions of the world where there is
considerable intent potential either in the form of unexploited natural or human
resources.
14. There is such considerable scope for economic growth in the regions of South
Asia, Central Asia and West Asia. This can be stimulated through larger
financial and investment flows, infrastructure development, capacity building
and larger trade access for and integration among these countries. Construction
of communications and trade and transit infrastructure between the regions –
South Asia, Central Asia and West Asia and China – can be the foundation for a
new Asia and global economic miracle.
15. For the stimulation of economic growth in these and other regions of the
world, a number of global policy actions are essential.
· First, a political commitment is essential to achieve the agreed ODA target of
0.7% of developed country GNP;
· Second, a much more ambitious effort at debt write-off and debt restructuring,
which should cover not only the HIPC countries but also include the low-income
countries with a high growth and demand potential;
· Third, conscious policy action at capacity-building for production and trade
growth in the developing countries;
· Fourth, bold political action to create innovative ways of financing
development on concessional terms including (a) the establishment of a SDR-development
link, a proposal which should be re-visited; (b) the creation of a new SDRs to
increase availability of liquidity; (c) the revised compensatory financing
facility under the IMF to adjust for declines in terms of trade; (d) the
creation of a nominal tax on financial and trade transactions; (e) consideration
of some form of the Tobin Tax. Practical experiment with such innovative ideas
of generating development finance must not be excluded from policy options by
ideological opposition.
Mr. Chairman,
16. Together with larger financial and investment inflows into the developing
countries, a more deliberate effort is also required to restore trade and
exports as the engine of growth in the developing countries. Trade expansion was
primarily responsible for the GDP growth in several developed and especially
developing countries during the last few decades. Trade can also serve to boost
growth and development in other developing countries. But, this can only happen
if there is a genuine endeavour to enable the developing countries to utilize
trade for growth, rather than enforcing a globalization which further
marginalizes those countries and locks them into patterns of dependency and
underdevelopment.
17. The rhetoric about free markets, trade liberalization and the Doha
Development Round, must be translated into reality. The collapse of the trade
talks at Cancun should serve as a wake up call for those who believe that the
developing countries can be appeased to accept persisting trade inequity by the
resort to slogans and symbolism.
18. A lot has been said about the Cancun collapse. In its report TD/B/50/8,
UNCTAD has listed the reasons for the failure: the complexity and diversity of
Doha Work Programme; imbalances between the packages tabled and the expectations
of the members; attempts at ignoring the core interests of developing countries
and pushing for a decision on the agendas of developed countries The President
of the World Bank, Mr. James Wolfensohn, believes that the determination of the
developing countries to push for a new equilibrium – a balance between the rich
and the powerful, and the poor and numerous-was the main cause of the debacle.
Most civil society organizations believe that the lack of democracy and
transparency in WTO decision making was the main reason for the failure. All of
these explanations may be true.
19. The fact remains that the seeds of the Cancun failure were sown at Doha,
when the Ministers agreed on an unbalanced Work Programme. The trend matured in
Geneva, where the major trading countries refused to offer even the promised
concessions on development related issues. Then came the bitter harvest of
Cancun, where a Declaration was presented that, while reflecting most of the
concerns of the developed countries, ignored the major concerns of the
developing countries. Neither the substance nor the process of the Doha Round
talks was a departure from the “culture” of the WTO, a culture of brutal
one-sided negotiations driven solely by mercantilist self-interest, without a
care for the future of the multilateral trading system, nor for the vision of
eradicating poverty and promoting development throughout the world.
20. The Doha Round can be retrieved. It can be transformed into a genuine
Development Round. But an urgent and bold exercise of political will is required
on the part of the major trading partners.
21. To revive the Doha Development Round, there should first be a general
agreement on some important new premises for its successful conclusion.
One, there should be an early effort to precisely identify the objectives which
will serve to make the negotiations into a Development Round. These must
include:
- a commitment not to circumvent development goals;
- complete and irrevocable phase-out of all textile quotas by end of 2004 in
accordance with the ATC;
- resolution of the outstanding implementation issues;
- elimination or substantial reduction of tariff peaks and tariff escalation;
- operationalization of S&D provisions in existing WTO agreements and the full
reflection of S&D in new agreements;
- progress on market access in the Movement of Natural Persons. (Mode 4) in the
services sector;
- review and some reflection of the development dimension in the TRIPS and TRIMS
agreements;
- development-oriented discipline on anti-dumping actions;
- promotion of specific development goals in the areas of trade and debt/finance
and trade and transfer of technology, through the two WTO Working Groups.
Two, a commitment should be made by the developed countries not to seek
reciprocity in new trade liberalization from the low-income developing
countries, at least for an extended period;
Three, a consensus should be evolved on a more transparent and democratic
decision-making process in the WTO. Chairpersons of negotiating bodies should be
selected more openly in full consultation with developing countries; draft
decisions should emanate from delegations, not Chairpersons, and should be
openly negotiated without recourse to “green room” procedures; the WTO
Secretariat should effectively promote the development-oriented objectives of
the Round and should seek inputs for its analysis and recommendations from other
organizations, especially UNCTAD.
22. Finally, faith in a Development Round among the developing countries can be
revived by a commitment from the major trading partners to an early harvest of
development-friendly decisions, perhaps at the December meeting of Senior
Officials. This early harvest decisions should include:
- One, a moratorium on anti-dumping and other safeguard actions against
the low-income developing countries, especially on products whose exports
constitutes a major proportion of their exports;
- Two, extension of duty-free and quota free access to the least
developed countries and, similarly, to disadvantaged low-income countries,
ensuring against exclusion of dynamic sectors, such as textiles;
- Three, the operationalization of S&D provisions, especially in such
agreements as Anti-dumping, TRIMS and TRIPS;
- Four, a moratorium on dispute settlement actions against low-income
developing countries under the TRIPS and TRIMS agreements;
- Five, agreement for a significant reduction, if not elimination, of
cotton subsidies, and compensation to affected low-income cotton producing
countries for losses incurred in terms of trade and export earnings;
- Six, a visible commitment to capacity building in the developing
countries through the establishment of a capacity-building fund of at least $100
million with the joint participation of the WTO, UNDP, the World Bank and UNCTAD.
23. Such a strategy for financial transfers and trade negotiations is the best
route to the revival of global economic growth and development and the
realization of a Millennium Development Goals of halving poverty, ensuring
primary education for all, reducing maternal mortality and under five child
mortality by 2/3rd, halting and reversing the spread of HIV/AIDS by 2015 and
achieving a significant improvement in the lives of at least 100 million slum
dwellers, and above all, forging an international partnership for development
and poverty eradication. We hope that the proposed High Level review on the
implementation of the MDGs to be held in 2005 will provide us an opportunity to
register more tangible progress towards the Millennium Development Goals. We can
succeed in achieving these ambitious but imperative goals. What is needed is a
genuine political commitment by all our countries.
I thank you, Mr. Chairman.