Statement by H.E.Mrs.Sarala Fernando, Ambassador/Permanent Representative of Sri Lanka, Coordinator of the Asian Group -at the 2006 Mid-Term Review, First Formal Meeting -Geneva, 8-12 May 2006

Mr. Chairman,

I am pleased to deliver this statement on behalf of the Asian Group.

At the outset we would like to thank Dr. Supachai Panitchpakdi, Secretary General of UNCTAD for his comprehensive and focussed statement. We would also like to thank the Secretariat for the stocktaking report which shows  important progress has been made in the implementation of the Sao Paulo Consensus (SPC), while noting also areas for improvement. We expect UNCTAD to fully implement over the next two years, the mandate given to it by its Member States at Sao Paulo. A renewal or a complete review of UNCTAD’s mandate can only be undertaken by the quadrennial conferences.

Mr. Chairman,

In line with the understanding reached to conduct the proceedings of this MTR in a business like manner, I would limit myself to presenting a few important issues of fundamental  importance to our group while circulating the full text. Our region also associates itself with the statement made by Ambassador Masood Khan  on behalf of G77 and China.

First, this week’s deliberation - the first formal meeting on MTR - should be seen as an opportunity to examine the Sao Paulo outcomes from the perspective of developments not only in the ongoing negotiations in the WTO, but also from UNCTAD’s contribution to the important processes ongoing in the United Nations and the development discourse, including the spring dialogue of ECOSOC with the Bretton Woods Institutions.
UNCTAD must also continue to contribute directly and meaningfully to the follow-up process to major UN conferences and summits, as well as other specific initiatives in which UNCTAD has a mandate.

We also appreciate the importance of the constructive and positive spirit within UNCTAD  cultivated over the last few months, and hope that this climate will not be adversely affected by developments elsewhere in the UN.

Second, the Mid-Term Review should be seen in the context of UNCTAD’s continuing importance as the focal point in the UN system for the integrated treatment of trade and development, and its key role in promoting systemic coherence for development, and the consequent necessity for the three pillars (consensus building, and its inter governmental machinery, research and policy analysis and technical assistance) to be reinforced, their interactions strengthened and made more effective.

Third, this meeting presents us with an opportunity to assess if mid-term course corrections are required, especially on development-focused mandates given to UNCTAD at Sao Paulo. More work, for instance, needs to be done in operationalizing the concept of policy space agreed to by all the member states at Sao Paulo. In this process, all member states will have to ensure that UNCTAD is able to continue effectively with its work programme and that the delivery of its mandates is not hampered by inadequate resources. We must all work together to find ways and means of increasing UNCTAD’s resource availability.  

Fourth, it should be noted that while our region is presently one of the most dynamic in terms of the trade, development and investment nexus, with a number of countries emerging as major locomotives for trade and economic growth in the globe today, we continue to face tremendous development challenges.  Indeed many countries have yet to fully exploit and benefit from the fruits of trade-led growth, liberalization and globalization. The majority of the world's poor are found in the region - the number of people living in extreme poverty i.e., on less that one dollar a day is estimated to be about 690 million, or 21.5 percent of developing Asia's population. 

Mr. Chairman,

Our group strongly believe that UNCTAD’s work should receive high priority on issues relating to the international trade agenda to maximize development gains to developing countries from the international trading system and the current  Doha Round of Trade Negotiations.

Furthermore, increased trade protectionist practices in developed countries have also become major impediments to developing countries in their efforts to reap benefits from on-going trade liberalization and comparative advantages.  

Paragraph 4 of the Sao Paulo Consensus acknowledges the marginalisation of the Least Developed Countries in the globalisation process. The same declaration emphasises on the need to focus on the international trade as a tool for poverty reduction. It is now critical to assist the LDCs actively and substantially participate in the multilateral trading system.

The Asian experience has shown that international trade in its various facets has the potential to deliver considerable trade and development dividends. However this potential can only be realized if there is a conducive international environment for development including ensuring that the multilateral trading system provides for a balance between the benefits of trade liberalization and the need to ensure that developing countries can meaningfully participate in global trade including trade negotiations.  Such potential can be realized if the enabling conditions at the international level and at national level exist. These include, among others, the complement of market access, market entry, and supply capacity and competitiveness. UNCTAD's work  on this trinity of issues (market access, market entry and supply capacities) and on all facets of international trade in the last two years has contributed to strengthening our understanding of key conditions for enhancing developing countries' participation in international trade and helped to strengthened our policy, human and institutional capacities to become effective players in global trade.

Particularly useful have been UNCTAD's work on new and dynamic sectors, commodity institutions like commodity exchanges, commodity information, environmental requirements and market access, environmental goods and services, trade negotiations, WTO, dispute settlement, trade statistics and databases (like TRAINS), simulations and modeling, South-South trade including through the GSTP, competition legislation, trade negotiations, and the post-ATC trading environment.

The annual TDB review on post Doha negotiations and technical assistance by UNCTAD has helped us to examine different policy options, their development implications and build our negotiating capacities on agriculture, NAMA, services and special and differential treatment. This has enabled our capitals to then consult with stakeholders and take informed policy decisions and our own negotiating interests. We count on continued and strengthened support from UNCTAD.

We also wish to underline the importance of UNCTAD's work on services trade and development, and services assessment.
Intergovernmental deliberations based on secretariat analysis and documentation at the Trade commission and expert meetings have had direct impact on building our services policy framework and strategies to ensure competitive services supply.  Of particular relevance to the Asia region have been the work on mode 4, professional services, distribution, insurance, and IT-enabled services.

Market access is not the whole development story.  Supply-side capacity constraints should be effectively addressed to build competitiveness of the developing countries exports to be benefited from global market reforms.  In this context we fully endorse the recent Aid For Trade (AFT) initiative and believe that UNCTAD’s expertise should be fully utilized.

With the launching of the WTO Negotiation on Trade Facilitation UNCTAD’s useful contribution in this area should continue, to ensure that developmental aspects are fully incorporated in the final outcome.

We emphasize the need for UNCTAD's continued support for South-South initiatives. UNCTAD's important work in supporting the outcomes of the Second South Summit, of the G-77 and China,  the Doha high level trade and investment forum, the evolving Asian-African New Strategic Partnership are some important examples. Of course, central to this effort will be the successful conclusion of the 3rd round of GSTP negotiations. 

Finally, national level activities by UNCTAD, combined with regional and sub-regional activities, have been effective in broadening and deepening the impact of awareness building, institution building and human resources development. Thus we welcome and pledge our strong support for enhancing UNCTAD’s work at the country level while stressing that these activities must be in the context of operationalizing UNCTAD’s policy analysis and consensus-building work.

Mr. Chairman, in closing allow me to comment on  a few other issues interest to our region; today many developing countries, especially in Asia, are under increasing pressure to employ more flexible exchange-rate policies, to allow their currencies to appreciate. But the concerns of these countries on floating their currencies in the background of sharply fluctuating expectations on international financial  markets, must be taken seriously, grounded in part on our still  vivid memories of the Asian financial crisis of the late 1990s.  We note, for example, that diminished policy space for macroeconomic policy, particularly the pressures constraints against taking appropriate counter-cyclical fiscal and monetary policies, played an important role in precipitating and aggravating the crisis.  We therefore view as particularly important strengthening UNCTAD’s ability to fulfill its mandate under Sao Paulo in this important policy area.

n the area of debt and development finance, a number of important developments have recently taken place. The decision of the G-8 and subsequently of the World Bank and IMF with respect to multilateral debt relief for HIPCs are important contributions in favour of the poorest countries. There are concerns that some LDCs have been excluded from debt relief on political grounds.  Most importantly, the question of extending debt relief to highly indebted non-HIPC countries remains unfinished business; long-term debt sustainability remains a key challenge for many low- and middle-income countries in our region to enable   faster economic growth and achievement of the MDGs. We therefore look forward to UNCTAD continuing its innovative work in this policy area by examining, for example, innovating mechanisms such as debt for MDG swaps.

I thank you Mr. Chairman.

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