[South Bulletin 62 Article]

Statement by H.E. Mr. Roberto Azevedo, Ambassador of Brazil to the WTO at the General debate of UNCTAD XIII in Doha on 22 April 2012.

UNCTAD came into being almost fifty years ago with a clear mission: to assist the developing world in the quest for economic growth and social advancement. From the start, in 1964, the mandate assigned to UNCTAD was clearly conceived within a North-South context, in contrast with the East-West political divide that then framed international relations. The original mandate had nothing to do with confrontation. Quite the opposite, it was firmly grounded on a commitment to unite and cooperate in the push for development where it was most needed.

It has been a long road since then, and UNCTAD has played a pivotal role trying to find a development oriented functional relationship between classic economic theory and the economics of the real world. Pure economic science has trade liberalisation as one of its basic tenets. Freer trade should provide for better allocation of resources and optimal distribution of production across borders in a win-win relationship among trading partners. Domestic politics and the real world seem to be unconvinced about the merits of full trade liberalisation as a stand-alone principle.

The advanced economies themselves maintain high levels of protection for their less efficient sectors - and agriculture is an outstanding example - imposing insurmountable tariffs, strict quota limitations and non-tariff barriers of all sorts. Complementing these border measures, export incentives and hefty domestic subsidies further distort and depress world prices, effectively excluding from markets all but the most competitive producers of the developing world. Also relevant is the fact that multilateral trade rules were negotiated in a way that safeguards the policy space of the developed economies where they are less competitive.

Although agriculture perfectly illustrates this scenario, these distortions also show up in the industrial and services sector. More recently, in light of the global economic downturn, the developed world sanctioned an impressive array of buy local incentives and poured massive sums in governmental support into key businesses, such as the automotive industry. While the argument was that these moneys were essential to keep the domestic and global economy from collapsing, it is also evident that these official interventions left the developing world facing additional hurdles in the fight against unemployment.

Any reasonable observer would attest that a deep and sudden opening of the domestic market would mean death to whole segments of the productive matrix in developing and least developed economies, requiring a long, costly, painful and uncertain restructuring effort. Unless well managed, hasty trade liberalization in the developing world would likely perpetuate a rudimentary and non-sustainable manufacturing model, mostly focused on commodity exports, exploitation of natural resources, low value-added assembly lines, and production based on cheap labour. To change this paradigm, developing countries need a more customised approach, with some of the policy space that the advanced economies kept and used extensively during their industrialisation. UNCTAD has always played a critical part in finding a balanced and healthy path for the full integration of the developing countries in the global economy.

The world economy has recently experienced very dramatic events and transformations, which changed significantly the way that North and South see and respond to each other. These changes demand an even more substantive and active contribution by UNCATD in terms of empirical and pragmatic studies. We are in the process of diagnosing and prescribing medicines to a very vulnerable and novel global economy.

The world is still marred by a crisis caused by the North, due to the severe disconnection between the real economy, on the one hand, and the unregulated financial markets, on the other. A full recovery of economic activity is nowhere in sight. Avoidance of a full-blown global recession has been possible thanks to the remarkable vitality of the developing markets, which are now being asked to shoulder a disproportionate share of the burden to rectify a situation they did not provoke.

Meanwhile, the leading economies are reluctant to do their part. Subsidies and budget expenditures remain excessively high, financial markets are still largely unregulated, and expansionist policies warp international capital flows, causing acute asymmetries in currency markets and terms of trade.

The deeper integration of some developing economies into the world markets bring about new forms of economic and financial interaction. The "globalised" economy witnesses the emergence of the so-called global value chains, a manifestation that requires attention and proper examination. While the North - and North oriented institutions - portray the global value chains as a reason for further and immediate trade liberalisation in industrial goods and services, they fail to address fundamental aspects of this phenomenon that are critical from a developmental perspective.

Allow me to illustrate. Despite being a central component of growth strategies in the vast majority of the developing world, agriculture finds no space in this new narrative for global trade. Equally absent is an assessment of the value truly added by the developing world in these global productive chains. No attempt is made to account for the vast majority of sectors and countries who do not integrate this global productive architecture. More importantly, we do not find reassurances that in this model of economic integration developing countries would not simply serve as a convenient, temporary and expendable source of cheap labour.

These complexities and peculiarities that markedly differentiate economic and social conditions in the North and South are present in a number of other issues, some of them relatively new, like environmental sustainability, the relationship between health and intellectual property rights, integration of financial markets, among others. In all these areas there is one inescapable truth: we will not find a "single template" that works for all economies.

Part of the current disarray in international economic governance can surely be attributed to the failure of the international community in anticipating the dimension of the present crisis, in understanding its nature and ramifications, and in formulating adequate policy responses to it. This will never be achieved with a one-dimensional approach, however convenient this may be to some. The perspectives of developing economies have to be recognised and UNCTAD has a privileged vantage point in this regard.

The track record of UNCTAD in policy analysis is on a par with that of any other organization and is actually unmatched when an integrated and multidimensional approach is required. UNCTAD's studies and reports contrast sharply with those of other institutions, as they are both independent and free from the shackles of orthodoxy. This should not be taken as a nuisance; this should be welcomed.

Any of the existing international institutions or any combination of them will never be able to replace UNCTAD in addressing the magnitude and complexity of the development equation. Moreover, both North and South have a stake in the development of the poorest economies, with implications we repeatedly refuse to acknowledge. Absence of economic and social growth is often mistaken for failure of the political system, thereby discrediting public institutions and the merits of representative democracy. Stagnation and lack of opportunities are the breeding grounds for political instability and intolerance, threatening democracy itself.

This is a time for partnership instead of imposition; dialogue instead of lectures; and creativity instead of orthodoxy. UNCTAD needs, and we must grant it, a clear mandate that allows for independence and flexibility in its efforts to develop concepts and strategies for the development of a solid framework for North-South relations in this new world.