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.