Open Access Research Article
THE ROLE OF UNCTAD IN ENHANCING GLOBAL TRADE
Published Paper
Article Details
THE ROLE OF UNCTAD IN ENHANCING
GLOBAL TRADE
AUTHORED BY
- M. MOHAMED ARSHAD FAREED
& T.
NIKITHA SHREE
ABSTRACT
The biennial UNCTAD World Investment Forum is the most important event of
the international investment community and stakeholders.
–Ban
ki-moon, the Secretary General of U.N.
International trade in goods and services is integral
to poverty alleviation and sustainable development. By fostering global
development through expanded trade, international trade contributes to poverty
reduction, food security, job creation, gender equality, and environmental
sustainability. However, in recent years, there have been indications of
unusual and persistent weakness in international trade. The United Nations
Conference on Trade and Development (UNCTAD) is a specialized agency of the
United Nations, established in 1964 as a permanent intergovernmental body.
UNCTAD serves as an intergovernmental platform to facilitate the integration of
developing countries into the global economy in a manner that supports their
development goals. Its mission, reaffirmed at the thirteenth quadrennial
conference in Doha in 2012, is to serve as the primary focal point within the
United Nations for trade and development issues, encompassing concerns related
to commerce, economics, technology, market access, and sustainable development.
This article aims
to analyze the role and functions of UNCTAD in emerging global trade and what
are the changes that occurred in international after the existence of UNCTAD.
This paper concludes with suggestions made in trade and development report of
2024 and also its report on India.
Keywords: International Trade, Sustainable Development, Global trade,
UNCTAD roles and functions.
INTRODUCTION:
UNCTAD, as a constituent entity of
the United Nations Secretariat, is tasked with addressing matters concerning
trade, investment, and development. Its inception dates back to 1964 when it
was established by the United Nations General Assembly. The aims of the organizations
are to: “Maximize developed countries’ trade, investment and growth
opportunities and facilitate them in their efforts to incorporate equitably
into the global economy.” [1]
The United Nations Conference on
Trade and Development (UNCTAD) established the Generalized System of Preferences (GSP) as a key initiative to
promote exports of manufactured goods from developing countries. UNCTAD argued
that preferential tariff concessions were necessary to incentivize such
exports. In response, developed countries implemented the GSP policy, allowing
duty-free or reduced-tariff imports of specific agricultural products from
developing countries. This preferential treatment grants developing country
producers a competitive advantage compared to their counterparts in developed
nations, who face standard duty rates on similar exports.
UNCTAD - A
CATALYST FOR TRADE DEVELOPMENT:
UNCTAD, a body representing 194
member states, plays a vital role in addressing developmental challenges,
particularly those related to international trade, recognized as a key driver
of economic growth. Its work can be summed up in 3 words[2]: Think
Debate and Provide. Its activities also involve research and facilitating negotiations
on product transactions, technological development of international trading
initiatives targeted at assisting developing nations in trade and capital
matters.
EMPIRICAL BACKGROUND:
The United Nations Conference on
Trade and Development (UNCTAD) emerged during the decolonization era of the
1960s. This period coincided with the United Nations' intensified focus on
implementing the 1960 Declaration on the Granting of Independence to Colonial
Countries and Peoples. Established by the UN General Assembly's Special
Committee on Decolonization, UNCTAD reflected the aspirations of newly
independent nations. They sought a global forum distinct from existing
institutions like GATT (General Agreement on Tariffs and Trade), the
International Monetary Fund (IMF), and the World Bank (WB) to address their
specific economic development challenges. The community of
77 was formed in the context of UNCTAD on 15 June 1964[3].
The Group
of 77 (G77) emerged as a coalition of developing countries united by the pursuit
of equality within the international economic and social order. Their primary
focus was on advocating for the priorities of developing nations. Initially,
the G77 enjoyed strong support from the United Nations Conference on Trade and
Development (UNCTAD). However, UNCTAD's influence within the G77 has waned over
time as the group's membership has grown increasingly diverse. The
prominent Argentinean economist Raul`Prebisch, Leader of the UN Economic
Commission for Latin America and the Caribbean, was the first Secretary-General
of the organization[4]. It now
covers highly disparate countries in terms of their growth rates, economic
system and desires. Members vary from middle-income and developing economies
like China, India and Brazil to the
least developed countries like Benin.
STRUCTURE OF UNCTAD:
The
quadrennial Conference serves as the primary policy-making body, establishing
strategic directives and outlining a work program. Since its inaugural session
in Geneva in 1964, UNCTAD has convened fifteen conferences globally, with the
most recent one held virtually in Bridgetown, Barbados, in October 2021 due to
the COVID-19 pandemic.
During
inter-conference periods, the Trade and Development Board, functioning as
UNCTAD's executive arm, assumes responsibility for overseeing the
organization's ongoing activities.
The UNCTAD
Secretariat, staffed by personnel from the broader UN Secretariat, provides
critical support by conducting policy research, monitoring and implementing
decisions made by intergovernmental bodies, and facilitating technical
cooperation and information exchange among member states.
The UNCTAD publishes important reports like:
·
Trade and Development
Report
·
World Development Report
·
Information and Economy
Report
·
Commodities and Development
Report
·
Technology and Innovation
Report[5]
FUNCTIONS OF UNCTAD:
The United Nations Conference on
Trade and Development (UNCTAD) employs a multifaceted approach to fostering
development in member states: -
Convening Meetings: Organizing gatherings where government representatives engage with experts and share practical
experiences to reach collaborative solutions on trade-related issues.
Research and Policy
Analysis: Conducting research, analysing
policies, and gathering information to support discussions among government
officials and experts.
Technical Assistance: Technical
assistance is another key component of UNCTAD's work. It
provides targeted support to developing countries, particularly the least
developed and those in economic transition. This often involves collaboration
with other international organizations and donor countries
Recommendations Implementation: Proposing
and advocating for effective trade policies and regulations.
UNCTAD’s AREAS OF WORK:
The work
of UNCTAD is performed by five divisions that deal with distinct macro areas: -
1. INTERNATIONAL
TRADE AND COMMODITIES DIVISION:
The United
Nations Conference on Trade and Development (UNCTAD) aspires to promote
equitable and sustainable development through international trade. It fulfils
this mission by providing member states with research, policy guidance, and
capacity building initiatives. UNCTAD's work also facilitates the formation of
coalitions, promotes public-private partnerships, and advocates for
international agreements that enhance trade in goods and services. Furthermore,
the organization addresses critical issues related to competition law, consumer
protection, and the intersection of trade with environmental sustainability and
climate change.[6]
2. INVESTEMENT
AND ENTERPRISE DIVISION:
The
Division has established itself as a leading regional centre for addressing
sustainable business and enterprise growth concerns. Drawing on decades of
experience, the Division's staffs leverage its regional expertise to provide
over 150 countries with support in research, policy analysis,
consensus-building among governments, and technical assistance.
3.
AFRICA LEAST DEVELOPED
COUNTRIES AND SPECIAL PROGRAMMES(ALDC) DIVISION:
It seeks to
improve awareness of Africa's and the Least Developed Countries (LDCs)
development issues, as well as countries with unique geographical impediments,
namely Land Locked Developing Countries (LLDCs) and Small Island Developing
States (SIDS).
4. GLOBALIZATION
INTERDEPENDANCE AND DEVELOPMENT DIVISON:
The United
Nations Conference on Trade and Development (UNCTAD) actively participates in
the global discourse on globalization's impact on developing countries through
its "Policies for Globalization and Growth" initiative. UNCTAD also
provides technical assistance to developing nations as they integrate into the
international financial system and navigate external debt management.
5. TECHNOLOGY,
INNOVATION AND TRADE LOGISTICS DIVISION:
The DTL
focuses on strengthening economic growth and productivity in developing
nations. Its core activities encompass science, technology, and innovation
(STI), export logistics, and human capital development.
UNCTAD AND VOLUNTARY
SUSTAINABILITY:
The United Nations Conference on
Trade and Development (UNCTAD) encourages developing countries to adopt
Voluntary Sustainability Standards (VSS) as a means to access more competitive
markets. By adhering to these standards, developing economies can elevate their
products' marketability and foster economic growth. UNCTAD posits that VSS
adoption can lead to a virtuous cycle, contributing to social development,
environmental sustainability, and ultimately, progress towards the Sustainable
Development Goals (SDGs).
Voluntary Sustainability Standards
are sets of criteria that ensure products are produced with minimal
environmental impact and respect for human rights. The proliferation of VSS in
recent years reflects a growing global commitment to building a greener
economy. These standards can be established by various entities, including
independent businesses, industry associations, NGOs, or governments.
Increasingly, VSS are designed to balance the interests of diverse
stakeholders, encompassing producers, consumers, and environmental groups.
While some VSS apply directly to consumer goods, many function within
business-to-business interactions. UNCTAD emphasizes the potential of VSS
implemented in developed countries to generate significant environmental,
economic, and social benefits.
Voluntary Sustainability Standards
(VSS) encompass a broad spectrum of considerations. It focuses on
1.
Economic sectors such as
forestry, livestock, mining or fisheries.
2.
Concentrate on
environmental factors such as the conservation of water supplies and
biodiversity or the reduction of greenhouse gas emissions.
3.
Promote social security and
the interests of employees.
4.
Home in on specific parts
of production process.
However, complying with these standards can be a significant
hurdle for smallholder farms and small businesses. The perceived complexity and
cost of implementation, coupled with a lack of awareness, can hinder their
adoption.
It also seeks to,
1.
Enhancing Green Export Capacity: UNCTAD works with developing countries to improve their
capacity to export sustainably produced goods
2.
Fostering Stakeholder Communication: The organization strives to establish a platform for
improved communication and collaboration among stakeholders involved in VSS
3.
Knowledge Sharing and Capacity Building: UNCTAD equips countries with a
deeper understanding of VSS, empowering them to leverage these standards
effectively
To achieve these goals, UNCTAD
maintains a comprehensive global database of regulatory initiatives related to
environmental protection and public health. This database includes details on
non-tariff measures (NTMs) such as Sanitary and Phytosanitary (SPS) measures
and Technical Barriers to Trade (TBT). It's important to note that VSS can
evolve into mandatory regulations when incorporated into national legislation.
CHANGES IN PATTERNS OF
INTERNATIONAL TRADE AFTER UNCTAD:
A.
TRADE VALUE:
The world has witnessed a
significant shift in international trade patterns in recent decades. Following
a period of robust growth fuelled by technological advancements, trade
liberalization, and economic expansion, particularly in emerging economies,
global trade has experienced a downturn since the 2008-2009 financial crisis.
This decline reflects a potential transformation in the mechanisms driving
international integration. The global trade-to-GDP ratio, an indicator of
economic interdependence, stagnated between 2011 and 2014 before dropping in
2015. While a rebound occurred in 2017, the emergence of the COVID-19 pandemic
in 2020 ushered in a period of renewed instability. The initial plunge in
global trade during 2020 surpassed even the 2008/2009 crisis. However, a swift
reversal followed in 2021 due to rising global demand and surging commodity
prices. This upward trend continued in 2022, reaching record highs, before
tapering off in the latter half of the year as geopolitical tensions and
economic uncertainties intensified. By 2023, global trade had entered a new
phase characterized by a significant decline compared to the 2022 peak
In value terms, global trade in goods
and services rebounded to about US$ 28 trillion in 2021 from the lows of the
COVID-19 pandemic and further grew to about US$ 32 trillion in 2022. The value
of international trade is expected to moderately decline to around US$ 31
trillion in 2023, driven by lower global demand, particularly for goods.[7]
B.
DEVELOPING COUNTRIES:
The impressive growth trajectory of global trade observed in
the 1990s and 2000s, following the challenging "lost decade" of the
1980s, was largely attributed to the gradual integration of developing
countries into the global economic system. During this period (1990-2008),
developing country exports witnessed an average annual growth rate of nearly
11%. Consequently, they captured a progressively larger share of global trade
throughout most of the 1990s and 2000s. The value share of developing countries
in global merchandise trade increased from less than 30% in 1990 to nearly 50%
in 2015. Developing
countries today account for around one-third of world trade in services, down
from fewer than 20% in 1990. Nevertheless,
since 2012, both in terms of products and services, the catch-up cycle of
developed countries about export development has effectively stalled. Since
then, emerging countries' trading practices have adopted a parallel trend to
developed countries.[8]
C.
LEAST DEVELOPED COUNTRIES:
Foreign
trading imbalance has major consequences for the incorporation of developing
countries into the world economy. Although the share of LDCs in global exports
of merchandise rose steadily before 2008, it hit a plateau of about 1.2 percent
in the years that followed. However, the weak integration of LDCs into the
global economy is not only due to their comparatively small economies, as
well as to the fact that LDCs generally trade well below the size of their
economy. This decreased involvement illustrates the production challenges
encountered by LDCs as they diversify outside of raw materials and the high
exchange costs that their manufacturing products have to tackle to stay
successful in the global market given low labour costs. In the context of
services, which constitute an increasing share of these countries' GDP but are
significantly underrepresented in their exports, the problem is much greater.
The export-to-GDP rates of LDCs are about 25 percent on
average, significantly below the level of about 35 percent for developed
countries. More specifically, since 2011, the LDC export-to-GDP ratios have
been on a strong downward slope, indicating that many LDCs tend to fail to
survive in the global economy. These developments have clear consequences for
the 2030 Global Growth Plan, the Sustainable Development Targets and the
2011–2020 Decade Intervention System for the Least Developed Countries.[9]
UNCTAD’s
REPORT ON TRADE AND DEVELOPMENT 2024:
The report suggests structural
reforms and coordinated global actions, advocating for a comprehensive
strategy. This strategy encompasses both supply-side policies aimed at
enhancing investment and demand-side measures to elevate employment and income
levels.
UNCTAD
latest projections point to global growth of 2.6 percent in 2024, slightly
slower than in 2023. This makes 2024 the third consecutive year in which the
global economy will grow at a slower pace than before the pandemic, when the
average rate for 2015–2019 was 3.2 percent.[10]
UNCTAD REPORT ON INDIA:
India experienced a 6.7 percent
economic growth in 2023, with projections indicating a slightly lower expansion
of 6.5 percent in 2024. The growth in 2023 was propelled by significant public
investment and the resilience of the services sector, benefiting from strong
domestic demand for consumer services and steady external demand for the
country's business services exports. It is expected that the Reserve Bank of
India will maintain interest rates at their current levels in the short run.
Any limitations in public consumption spending are expected to be
counterbalanced by robust public investment expenditures.
It is also reported that “In the
outlook, an increasing trend of multinationals extending their manufacturing
processes into India to diversify their supply chains will also have a positive
impact on Indian exports, while moderating commodity prices will be beneficial
to the country’s import bill,”[11]
CONCLUSION AND SUGGESTIONS:
Developing countries and countries
with economies in flux will continue to address major threats in the area
of trade and development over the following years, particularly those
resulting from existing and new issues. Moreover, they will continue to need legislative
guidance, and will continue to require assistance for capacity development.
As the focal point of the United
Nations in this field, and as an organ of the General Assembly,
UNCTAD has to play a leading role in resolving these challenges. Around the
same period, the General Assembly will insure that UNCTAD is protected from the
unnecessary "mandate of creeping”[12]. Trade
policies should be structured in such a way that exchange not only brings
economic prosperity but also equitable and sustainable development. Because
trade cannot address all development problems alone, it should be strongly
synchronized with other foreign programs, such as those on labour, health and
the environment initiated by the Foreign Labour Organisation, the World Health
Organisation and the United Nations Environment Programme, respectively; and
those of other international organisations and the United Nations agencies.
REFERENCES:
REPORTS AND ARTICLES:
1. Barbara
BARONE, The United Nations and the EU Trade Policy: the case of UNCTAD,
(Jan. 26, 2016).
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3. Report:
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4. UNCTAD
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trends from a development perspective”, sixty-fourth session, Geneva 11- 22
September 2017, ITEM 7 of provisional agenda TD/B/64/5.
5. Trade and
Development Report UNCTAD/GDS/INF/2024/1.
6. Report of
the secretary general of UNCTAD to UNCTAD XII “Globalization for Development:
Opportunities and Challenges TD/413.
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[1]About UN Trade and Development
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https://unctad.org/about.(last visited 16th April, 2024).
[2]Suraj Chowrasia, ShikhaKaramchandani, Unctad,
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[3]Barbara BARONE, The United
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(2016) 570461_EN.pdf.
[5]UNCTAD - United Nations Conference
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[6]Jagran Josh, United Nations
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[7]Key
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(last visited on April 19,2024)
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[9]ibid
[10]Trade and Development Update (April
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(last visited April 16, 2024)
[11]ibid
[12] Report of the secretary general of
UNCTAD to UNCTAD XII “Globalization for Development: Opportunities and
Challenges.
Article Information
THE ROLE OF UNCTAD IN ENHANCING GLOBAL TRADE
Authors: M. MOHAMED ARSHAD FAREED, T. NIKITHA SHREE
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/06/17
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
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