RI presses UNCTAD for special treatment

RI presses UNCTAD for special treatment

JOHANNESBURG (Reuter): Developing countries are pressing hard on the United Nations to promote fairer commodity prices and help more with risk management.

"It is urgent to reactivate international co-operation on commodities," Indonesia's Minister of Mines and Energy Ida Bagus Sudjana told the ninth UN Conference on Trade and Development (UNCTAD) meeting here yesterday.

"Special treatment should be accorded to the least developed countries in general," Sudjana said.

Similar interventions came from Kenya, among others. But UNCTAD officials say they are pushing on an open door as Secretary General Rubens Ricupero, a former finance minister of Brazil, already considers commodities a priority.

An UNCTAD report noted that eight out of 10 developing countries draw over 70 percent of their total merchandise export revenue from commodities. In Africa most countries depend on one or two commodities for over 90 percent of revenue and 75 percent of the working labor force is employed in the sector.

Producing nations have attempted in the past to shore up commodity prices with OPEC-style production quotas and/or funds to create buffer stocks. They have not been a great success.

Ivory Coast's Commerce Minister Ferdinand Angora warned that many African countries risked being marginalized from world trade because they depended on a single commodity and attempts by UNCTAD to stabilize prices had been unsuccessful.

"New forms of international co-operation are required to promote the industrialization of developing countries, to assist capacity building to bring them into line with developed countries," he said.

UNCTAD is now trying to promote exchange of information and voluntary co-operation among producers to help bring supply and demand into better balance.

It has also set up a technical program to help developing countries hedge commodity risk through swaps, options and commodity-linked bonds, and it offers limited financial assistance to diversify out of the commodity sector.

Far from being an admission of defeat, diversification away from commodities might be the smartest move for many producers.

An UNCTAD report says that over the last decade primary commodities have become less important in terms of their share of total world exports, and the share of world commodity markets by developing countries has been eroded.

The decline is unlikely to be reversed, it says, because of changes in what the world wants to produce, technological advances which have yielded commodity substitutes and over-supply as technology boosts production.

Those countries still managing to produce have faced an array of problems, including adverse pricing and marketing policies, shortages of capital and foreign exchange for investment, natural disasters and poor security.

Ricupero, in a briefing before the meeting, indicated he hoped it would come up with a precise timetable to reduce tariff escalation on processed primary commodities. The elimination or reduction of non-tariff barriers to market access was also vital.

In February he announced UNCTAD was considering co-operating on projects with the Common Fund for Commodities, a loose grouping of some 103 countries involved in the sector.

Managing Director Rolf Boehnke told the conference the Fund will hold a workshop in Abidjan next month to broadcast the fund's activities in creating new end-users, promoting productivity and controlling pests.

Ghana's deputy minister for trade and industry Dan Abodakpi said despite his country's best efforts, it was struggling with problems like technology transfer. "The international community must support the Common Fund for Commodities and provide it with adequate resources," he said.