Contents

Preface
Summary
I.  The Evolving External Envrionment for Development
II. Key Issues for an Agenda of the South
III. Developing and Applying the Agenda

The meeting of Foreign Ministers of the Non-Aligned Movement convening in New Delhi in April 1997 took the following decision:

"The Ministers decided to set up an ad-hoc Panel of Economists from Non-Aligned countries to assess the current international economic situation from the perspective of developing countries and to identify and analyse major issues of concern to them and to assist in developing a positive agenda of the South."

The present report is a response to this decision. It is submitted to Colombia, current Chair Country of NAM, for eventual presentation to the XIIth NAM Summit in Durban, South Africa. The report reflects the broad consensus among Panel members, though not all Panel members were able to attend the meetings.

The report seeks essentially to present a broad overview of the major issues involved with the principal aim of assisting in the launching of a process that would require continuing work by the Non-Aligned Movement in the period ahead. The report seeks in particular to highlight key elements in the evolving external environment for development and to outline in broad terms the responses called for from the countries of the South. The issues involved are wide ranging and would require further elaboration of both their analytical and technical dimensions in the context of the evolving global scene. The Panel hopes that the present report will assist the Non-Aligned Movement by laying the foundations for such a task.

For information two Annexes are also provided. Annex 1 of the Report contains submissions by individual Panel members. Annex 2 contains contributions submitted by the South Centre at the request of Panel in order to help it in its work and which the Panel decided should be appended to its report for information. The Permanent Mission of Colombia to the United Nations in Geneva, together with the South Centre, organized the Panel's second, third and fourth meetings held in Geneva. The Centre provided assistance to the Panel's Chairman.

The Panel consisted of nine members, each appointed by a country having chaired the Non-Aligned Movement. The Panel members were H.E. Mr. Saad Alfarargi (Egypt), Dr. Mohammed Bachir-Bouiadjra (Algeria), Dr. Jonathan H. Chileshe (Zambia), Dr. Gamani Corea (Sri Lanka), Mr. Abid Hussain (India), H.E. Mr. Tichaona Joseph B. Jokonya (Zimbabwe), Mr. Osvaldo Martinez (Cuba), Mr. Gabriel Misas Arango (Colombia) and Prof. Widjojo Nitisastro (Indonesia). Dr. Gamani Corea of Sri Lanka was elected by the members of the Panel to chair the Panel.

Summary

A New South Agenda: The Rationale
An Agenda of the South: Principal Issues
Science and Technology
South-South Cooperation
Developing and Applying the Agenda

A New South Agenda: The Rationale

Recent political, economic, technological and institutional changes have had a major impact on the global environment for development. In particular, the end of the cold war signified the beginning of a new era in international relations, in which the political and economic ideologies of the major market economies gained a new ascendancy. Liberalization, deregulation, privatization and monetary-fiscal discipline as policy prescriptions came to be presented as a universal panacea of benefit to the developing and developed countries alike.

There have been significant developments in the global economy under the influence of this new doctrine. However, initial high hopes in developing countries have given way to concern. Many countries have taken significant steps to deregulate, liberalize and integrate further into the world economy, but major benefits have not been realized. The development of the poorest countries has in some cases been prejudiced. Several richer developing countries, with a long history of fast growth and sound economic fundamentals, have recently experienced a severe economic setback, arising from a financial crisis generated by the instabilities associated with financial liberalization and from inappropriate policy prescriptions to deal with the crisis.

For the South, it is of major concern that the reforms which have led to a greater integration of developing countries into the world economy have not diminished the economic gap between rich and poor countries. What is more, most countries are experiencing a worsening of internal income disparities, which are generating complex domestic social and political tensions.

At the level of North-South relations, the new doctrine has had particularly far-reaching implications for developing countries. Almost exclusive emphasis on the role of unfettered markets has displaced key principles that underpinned earlier multilateral discussions and negotiations on economic issues. The role and responsibilities of the international community, the need for non-commercial international transfers and the need of developing countries for special and differential treatment no longer orient international policies and action to foster development. As a result, the concept of international development cooperation and multilateral negotiations with a North-South or development orientation have virtually ended. Instead, the international agenda is dominated by the concern of developed countries to gain greater freedom for foreign investors and for capital flows and the export of their goods and services.

The earlier agenda of the South was therefore side-lined and developing countries did not develop an agenda of their own to promote their key interests during the negotiating processes promoting liberalization and globalization. Now, in the light of experience, it is imperative that they face the task of adapting the liberalization and globalization process to their own situations and development needs so that the process strengthens their own indigenous capabilities. Equally importantly, they must also review the role they are playing in multilateral decision-making and work out approaches and actions that will enhance their cohesion and effectiveness on the international scene. Their impact in multilateral negotiations still derives from the strength of numbers. Their unity and cohesion remains, therefore, the source of their strength. A new Agenda of the South therefore needs to identify major issues around which all can rally.

An Agenda of the South: Principal Issues

The Panel's report identifies the principal issues that must make up any new agenda of the developing countries, outlining in broad terms what the objectives of the developing countries might be in respect of each of the major issues. The issues, old and new, are as follows.

The Governance of the Global Economy

In a world of growing linkages the issue of governance of the global economy and of representative mechanisms for dealing with this assumes a special importance. At present the developed country G7 or G8 groupings, and the institutions over which they exercise almost exclusive influence, have a virtual monopoly in determining policies affecting the entire globe. The South needs to give serious consideration to the development of institutional mechanisms at the highest level, representative of the interests of all countries or groups of countries, to deal with the task of global economic surveillance and management.

The Monetary and Financial Environment for Development

Developed countries have begun to distance themselves from the earlier edifice of development cooperation in the area of money and finance, and the current emphasis is on market forces and private financial flows. Any agenda of the developing countries must, however, emphasize the following:

Official financial flows

• official development assistance, both bilateral and multilateral, must remain an important means of meeting developing countries' need for external financing;
• the contribution of the multilateral financial institutions towards meeting the capital needs of developing countries must be enhanced;
• the creation of international liquidity to replace the dollar and other national currencies as internationally accepted reserves and proposals for these to be channeled to developing countries are policy propositions that deserve renewed attention;
• new revenue raising instruments, urged as a means of helping to resolve a number of environmental problems and to curb short term speculative capital movements, could also help meet the need for official capital transfers to developing countries.

External debt and other issues related to the need for finance

• means to achieve a speedy resolution of the continuing debt burden which hinders growth and development in a number of countries must be sought and effectively promoted, including efforts to improve the Heavily Indebted Poor Countries (HIPIC) initiative and its implementation;
• regional funds to provide liquidity to help contain financial crises and resume economic growth could provide financial assistance associated with locally and regionally appropriate policies.

Private capital flows

In the context of financial liberalization and the crisis affecting South East Asia and the prescriptions applied by the multilateral financial institutions, a South Agenda must give serious attention to:

• measures and mechanisms to control and moderate short term and speculative international capital flows to reduce vulnerability and instability;
• dissuading the IMF from revising its articles of agreement in order to require developing countries to move towards capital account convertibility, so as to maintain the right of developing countries exercise controls over their capital account.

The reform of the multilateral financial institutions

In view of the overwhelming influence of the Bretton Woods institutions on developing countries' policies either through structural adjustment policies or prescriptions for crisis management, a range of issues relating to the conduct of the institutions needs to be placed on an Agenda of the South. In particular, serious consideration needs to be given to establishing new policies and mechanisms in these institutions to achieve improvements in:

• the objectivity of their analysis;
• criteria for lending;
• the relevance and impact of conditionalities;
• transparency and accountability of these institutions;
• voting procedures to end the marginalization of developing countries in the policy and decision-making processes.

International Trade and Trade-related Issues

World Trade Organization (WTO) matters

In addition to trade, the WTO agenda now covers a wide range of trade-related matters, agreements on which determine or circumscribe wide areas of domestic development policy in developing countries. The experience of the Uruguay Round and its aftermath demonstrates the need for developing countries to ensure a mutually reinforcing relationship between trade liberalization and development goals. These matters must be a continuing subject for any South Agenda.

Developing countries will need to develop proposals relating to the implementation of agreements already reached, to the new issues that have subsequently emerged, or to any new negotiating round proposed for the future. In doing so the South must:

• give consideration to the pace, direction and content of liberalization, taking into account levels of development and the need to build up national capabilities;
• make concerted efforts to prevent technical, environmental, social, health and other grounds being used to introduce what in effect are measures with a protectionist intent;
• formulate and present as united a policy front as possible in negotiations on items on the WTO built-in agenda and with respect to implementation of the Uruguay Round Agreements;
• develop a common position on whether there should be a new round of WTO negotiations or whether a sectoral approach is acceptable. In any event, the South must take the initiative and place proposals of its own on the WTO negotiating agenda;
• suggest improvements in WTO procedures and mechanisms on the basis of which agreements are negotiated and implemented, so that these do not prejudice developing country interests.

There are other key issues which must form part of the South's agenda on trade and trade-related matters. These include:

• food security;
• rapid and full implementation of the Marrakesh Ministerial Decisions concerning least developed and net food-importing countries;
• special and differential treatment for developing countries; and
• competition policy.

A multilateral investment agreement

The advanced industrial countries' quest to establish a multilateral regime to liberalize foreign investment and establish standard rules of treatment has far-reaching implications for developing countries and ought therefore to figure in any new South Agenda. In considering whether it is in their interests to participate in possible negotiations, developing countries need to define a set of principles for a policy framework which correspond to developing country interests in this matter.

Other trade-related issues

• Commodities

The importance of commodity trade in the exports of developing countries taken as a whole has declined. Nevertheless, the weakness of commodity prices and hence their terms of trade in recent times has severely affected many developing countries, many of them the poorest. The commodity issue must therefore remain an important element in any new Agenda of the South. In particular, the rationale underlying the dismantling of the framework of international commodity agreements must be contested, and consideration should be given to undertaking schemes of supply management among the producing countries themselves.

• Regional and other trading arrangements applicable only to selected countries

The growth of preferential trading arrangements, including mega-blocs, which embrace both developed and developing countries, raises a number of important issues for developing countries. Two such issues are the discriminatory treatment of developing countries that do not belong to these groups and the erosion of generalized preferences. Such issues relating to the evolution of the international trading system must be part of an Agenda of the South.

Science and Technology

The widening science and technology gap between developed and developing countries is of central concern since technological transformation lies at the core of the development process. Capacities in science and technology determine a country's ability to compete successfully in the increasingly integrated world economy. Moreover, science and technology issues are a crucially important aspect of an ever wider range of issues dealt with in international fora, including the WTO. Developing countries therefore need to place science and technology firmly on their agenda. In particular, a South agenda pertaining to science and technology needs to establish organizational arrangements within the South in order to develop proposals regarding:

• effective international institutional arrangements to deal with science and technology as an area of international cooperation;

• inputs into an agenda of international cooperation and for South-South cooperation on matters of science and technology, including harnessing S&T to resolve key problems on the global development agenda relating to poverty, food security, health and environmental matters;
• an assessment of the respective roles of the public and private interest in influencing the direction of scientific and technological initiatives and knowledge, and an examination of the possibilities of treating scientific and technological knowledge as a common heritage of humankind;
• seeking new means to achieve a wider and more equitable spread of scientific knowledge and technologies.

In this context and more specifically, the South needs to place on the international agenda a well formulated proposal for an in-depth review and adaptation of the Uruguay Round Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) in order to evolve an intellectual property rights regime which responds to the need for development in the South.

Environment and Development

The issue of environment has relatively recently become a subject for discussion and negotiation in the international arena. Two particularly important concerns must be addressed by a new Agenda of the South.

• Developing countries must continue to urge the full implementation of the Agenda 21 package of agreements and measures related to the issue of environment and sustainable development.
• The aim of ensuring sufficient "environmental space" to accommodate the development process in countries of the South must be a central concern of the South and must sustain the positions it develops in relation to a range of environmental discussions and negotiations in international fora.

Reform of the United Nations

The changes in the global political scene have brought into focus the issue of the role and reform of the United Nations system, in particular in relation to the management of the global economy. The South's Agenda must include the bolstering of the UN's role in placing the development problem in a global perspective, the strengthening of the UN's contribution in the development field and resisting any retrogression in this area.

Social and Other Issues

In recent years, considerable international attention has been given to social and related aspects of development in contrast to that devoted to "hard core" international economic issues affecting development. But the former cannot be a substitute for addressing the key economic issues. As part of its agenda, the South must try to rectify this situation and continue to encourage initiatives in the United Nations intended to bring about a mutually reinforcing relationship between these two dimensions.

South-South Cooperation

South-South cooperation has long been an important part of the overall agenda of the countries of the South on development issues and in the context of negotiations with the developed countries. Recent years have witnessed a weakening of the cohesiveness and preparedness of developing countries in multilateral fora. New developments in the South and in the international economy suggest that the need for exchanges and cooperation between developing countries to discuss and develop multilateral questions is even more imperative. How to deal with this matter is therefore a matter of central importance for a South Agenda.

Developing and Applying the Agenda

A more comprehensive analysis of each of the above subjects will need to be undertaken by the developing countries as a follow-up to the present report. In view of ongoing or imminent discussions in international fora on many of the issues suggested as items for a South Agenda, it is a matter of considerable urgency that joint approaches and policies be formulated However, if an Agenda of the South is to be formulated and applied effectively, it is vital that developing countries address immediately the question of how the work required for such a task could be organized. A number of possible actions in this respect are put forward in the final section of the Panel's report. It is hoped that the forthcoming Summit of the Non-Aligned Movement to be convened in South Africa will launch the actions that would achieve this aim.