Newsroom

Text of Remarks given by Kemal Derviş, Administrator of the United Nations Development Programme and Chair of the United Nations Development Group On the Occasion of the Aid for Trade Global Review

World Trade Organization, Geneva

I am really very pleased to be here with my colleagues and friends, with the major international development agencies, and also the heads of the regional development banks. Just two points on globalization to begin with.

It is true that globalization provides opportunities that are quite large. We have had fast growth in which hundreds of millions of people have been lifted out of poverty. But it is also true that globalization has brought inequalities. One figure that sums this is up is that in the year 1820, the ratio of the wealthiest countries to the poorest – the ten richest compared to the ten poorest in terms of per capita income - was three. So the ten richest countries were three times richer than the ten poorest. Now this ratio is fifty; so it has gone from three to fifty during the era of globalization which shows us that a lot remains to be done to make globalization much more inclusive and fair, and that is the goal of all of us.

It is clear that international trade can provide a great channel of progress for developing countries in this process of making globalization fair. We need to look at trade not just as a set of arrangements where each country pursues mercantilist interests, but to look at the international system of trade as a global public good. A system of international trade that is based on rules that are fair, that give opportunities to the poorest, and that is based on the rule of law within the framework of the WTO. I think it is important to consider this as a global public good. In terms of moving ahead and in achieving the objectives of the Doha round, I think it will only be possible if all the member states approach it also from that point of view. Of course national interests are crucial, and of course each country will look at its own interests and evaluate the steps it has to take in those terms, but I think there is something bigger and more important in this whole thing that one has to remember: that a system of trade that is fair and equitable and that gives these opportunities to all, will profit, as a system, to all.

As Dominique Strauss-Khan [IMF Managing Director] is here today, I would also like to make a comparison with the international financial system. In fact, I remember meeting Angel Gurría [Secretary-General of the OECD] for the first time in the aftermath of the big debt crisis of the 1980s when Mexico was struggling with a huge foreign debt, and indeed many developing countries were struggling with the consequences of the huge swing in interest rates that had taken place between the late 1970s and the early 1980s. Real interest rates moved from being negative - after the first big oil price increases in the 1970s during the oil money recycling phase – to being very highly positive in a matter of just a few years. And what happened of course was that developing countries that had over-borrowed in a not sufficiently prudent way got caught. The results were devastating for growth in the world economy; devastating in particular for Latin America, and for my own country, Turkey, which went through a major financial crisis at that time.

One point to remember is that the international monetary system was not functioning properly as a system. First, the oil-price shock and the recycling of petrodollars fuelled inflation. Then what happened in the US which tried to bring inflation down by raising dollar interest rates to unprecedented levels had a devastating impact on the developing world. Macro and monetary policies were implemented in an uncoordinated fashion, not taking into account interdependence and systemic risk. Here is the analogy to trade, that a fair international system where the International Monetary Fund plays a crucial, leading role as an adviser, as a regulator, as an organization that brings everyone together, is essential for developing countries. In the same way, a fair and equitable trading system, where the World Trade Organization provides the framework and provides the conceptual rules where we all work together, is a global public good which is of high value, particularly to the poorest and most vulnerable countries because if something goes wrong in the international system the rich suffer, but the poor suffer a lot more.

It is within this framework that at the United Nations, and at the United Nations Development Programme, we approach the aid-for-trade topic and trade challenges. We want to be a full partner and support the movement towards a system of fair and equitable trade where developing countries, and particularly least developed countries, get the chance to benefit from the global system. What the United Nations can contribute is a network of country offices that is headed by UNDP on behalf of the whole family, in 135 developing countries. The UN is present at the grassroots. It is partnering with all donors, but particularly with the World Bank in the poverty reduction strategy process, and I think what is very important here is that the development of the capacity for countries to trade, the development of the capacity to export should be included and integrated much more deeply into national development strategies and poverty reduction strategies. So I think this is the first role that particularly UNDP can play in partnership with all, but particularly with the World Bank in support of not having trade just as an appendix, or something that is an add-on to a national strategy, but having trade at the centre of the development strategy, and at the centre of the national capacity building effort.

Here, the Integrated Framework for Trade-Related Technical Assistance to least-developed countries is important. I am glad we are making progress on this; I think it needs to be strengthened because it does provide the instruments for least development countries to strengthen their trade and exporting capacity. But I should also stress that the United Nations family is a diverse family with many members, many organizations working on development, and as Chair of the United Nations Development Group, we work with others to bring the various different perspectives to bear. And I am just going to give you three examples of this.

The first, a very important example of course, is our cooperation with the ILO. There can be no development and no poverty reduction without decent jobs, a message that Juan Somavía has been bringing to the world for several years. So when we mention development, when we mention poverty reduction, we must focus on productive employment, we therefore work together with the ILO, and would like to give our full support to the ILO in the area of decent work agenda and making trade an instrument for creating decent jobs.

A second very important area is of course health. Another major Geneva-based UN organization is here taking the lead, the WHO. On health, sanitation standards, the whole infrastructure that goes with strengthening health systems as an integral part of development in setting compatible health standards in trade and development on all theses requirements, we are also working closely with the WHO.

Let me mention a third area which is going to be of increasing importance and which we cannot neglect, and that is the environment and issues relating to global warming. It is crucial that these issues are also integrated into development strategies. The environment could become a serious constraint on growth in many of developing countries. As you know, climate change, which is now beginning to be recognised as one of the challenges for this century, is a challenge for all, but it is of course primarily and most immediately a challenge for the least developed countries in the lower latitudes which will face the impact of global warming not within centuries, but within decades. Therefore it is very important that development strategies and trade capacity building factors in the environmental aspects and provides the international community with a framework in which protecting the environment, fighting global warming, adapting to global warming, and trade development are compatible. Here too, the United Nations agencies are working together. UNDP is working particularly closely with the UN Environment Programme and with others, including of course with the Secretariat of the UNFCCC which provides the framework for the intergovernmental negotiations on the environment.

So in all of these areas, what we hope to do, with UNDP playing the coordinating and catalytic role, is to build the bridges between these various dimensions to make sure that the aid-for-trade agenda, and indeed the trade development agenda, is part of an overall development agenda that is fair, that reaches out to those in the greatest difficulties and is part of the global fight against poverty.

Thank you.