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International Trade and Finance

Notes ministerial conference held at New Delhi in July 1985 decided to conclude the first round of GSTP
negotiations in May 1987, on the eve of UNCTAD VII. GSTP is a major initiative of developing countries
to expand mutual trade through grant of tariff and non-tariff concessions and other measures such as
long-term contracts under the UNCTAD.
Besides increasing trade, UNCTAD VI recommended the initiation or strengthening of a number of
cooperative measures in the fields of research and development, design and engineering among
LDCs. Harmonisation of LDCs policies, rules, regulations, laws and practices governing technology
in all its aspects, training and exchange of personnel, including cooperative exchange of skills,
establishment of preferential arrangements for the transfer and development of technology,
technological cooperation in specific areas and sectors of critical importance. The possibilities of
cooperation of technological transfer among LDCs exist for particularly the following four sectors :
capital goods, human skills, energy, and food production and processing. However, possibilities in
other sectors of their economies cannot be ruled out.
The UNCTAD V held at Manila in May-June 1979 passed a resolution relating to liner shipping.
Among other things, the resolution included provisions aimed at enhancing the position of LDCs as
both providers and users of liner shipping. It urged the LDCs to cooperate among themselves in
pooling information regionally on cargo movements and service requirements, and to ensure the
establishments or strengthening of national and regional shippers’ organisations. The Belgrade
Conference (UNCTAD VI) entrusted the UNCTAD secretariat with the task of carrying out studies
on ship and port finance, structure of the global shipping industry, policies and practices of
governments in respect of investment in and support of shipping etc.
UNCTAD VI also hinted at a simpler payments mechanism under a common clearing system. This is
another area which can provide considerable encouragement to co-operation among LDCs. Further,
the developed countries insist that the existing international institutions like the IMF and World
Bank should be strengthened financially so that they may provide larger aid to LDCs to tide over
their balance of payments and debt problems. But the LDCs call for the setting up of a new financial
institution which should exclusively cater to their special financial requirements in fields such as
joint ventures, development projects, export credit, commodity price stabilisation, and regional
payments support, and long-term investment to expand trade in food and primary products, and for
storage, processing and transport. So far no progress has been made in this direction.
UNCTAD VII also stressed the importance of economic co-operation among developing countries on
the lines of the previous conference. It was UNCTAD VIII which set up a new Standing Committee
on Economic Co-operation among developing countries to study and report on all facets of cooperation
to the TDB.
There are many factors which stand in the way of economic co-operation among the LDCs. The
economies of LDCs are highly competitive in nature. They have limited import capacity, inadequate
credit facilities, chronic foreign exchange shortage, and prejudice against the goods traded among
themselves. Consequently they prefer to trade with developed countries even though goods
manufactured by LDCs are cheaper and of high quality. However, some of the LDCs suffer from
other limitations which prevent them from entering into trade with other LDCs. These are technological
backwardness, shortage of key inputs, high cost of production, lack of competitive strength and
weak marketing structure. The various problems listed above can be overcome by mutual help and
trust among LDCs of region and working in close cooperation among themselves. UNCTAD is a
forum where they can meet, discuss and formulate plans for regional economic co-operation.
New Issues
During the late 1980s, a large number of developing countries changed their economic policies to a
market orientation, and began the process of structural adjustments involving exchange rate
alignments and outward-looking liberalisation of their economies. In the early 1990s, socialist countries
of Eastern Europe and the Soviet Union had disintegrated and adopted the market-oriented reforms.
It was against this background that UNCTAD VIII met at Cartagena in February 1992. The proceedings
at UNCTAD VIII emphasised global cooperation rather than confrontation, the need for negotiations
and promotion of knowledge-based policies.

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