The UN and Global Political Economy: Trade, Finance, and Development

8. The Birth of UNCTAD

184 The UN and Global Political Economy 184 8 The Birth of UNCTAD • The Politics of International Trade Policy • The Developing Countries Unite at Cairo • Prebisch Prepares the Ground • The U.S. Approach to UNCTAD • Towards a New Trade Policy for Development • The Conference and Its Achievements • Prebisch and the Politics of Economic Ideas The Politics of International Trade Policy Many contemporaries perceived the birth of UNCTAD as a historical turning point.At the close of its first conference in , the seventy-seven developing countries represented declared that it marked “the beginning of a new era in the evolution of international co-operation in the field of trade and development .”1 Raúl Prebisch told the ECOSOC meeting of July : “[T]he world now has a foundation to support the new policy of international cooperation,a foundation which is essential to achieve the objective ...of accelerating the rate of growth of the developing countries.”2 Diego Cordovez, a member of the UN Secretariat, argued in  that the conference had “exploded the myth that all countries are economically equal and thus established the principle that a code of rules of international trade should reflect the existence of basic differences of economic and social organization, economic development and bargaining power.”3 Thus,ideas that previously had had an effective institutional voice only through a UN regional body, ECLA, were now projected onto the global stage. Moreover, Prebisch himself had made the transition from regional to global stature,movingfromECLAtobecomesecretary-generalof theconference,which later became a permanent new body. This did not come about because the economic worldview of the Western powers had changed substantially since the s. The majority of these pow- The Birth of UNCTAD 185 ers, and most important the United States, saw the new initiative as unrealistic and utopian and were still wedded to GATT as the sole instrument of international trade cooperation. Therefore, one has to ask how it was that the OECD countries were unable to prevent the creation of this new organization , which had such radical aspirations and which was potentially destabilizing of some Western economic interests. By the early s, misgivings about the international trade system were welling up in a series of international reports and recommendations for change. The Soviet Union took a hand in this. In , the Soviet Union called for a world meeting of trade experts; in , for the ratification of the Havana Charter; and in , for a conference on international trade, all unsuccessfully .4 Then the Treaty of Rome was signed and the European Economic Community (EEC) of France,West Germany,Italy,and the Benelux countries came into being at the start of . Many developing countries, especially in Latin America, feared that as a result they would lose their traditional European markets for their exports as a result of the trade diversion effects of the new customs union. The USSR tried to play on the fears of the developing countries and at the same time to divert them from their Western orbit. At a UN General Assembly meeting in , a Soviet spokesman denounced “closed Western economic groupings” as inimical to international economic cooperation .5 On  May , Khrushchev coupled another denunciation of the Common Market with a renewed call for an international trade conference. He claimed that the “subordination of the young sovereign states of Africa to the Common Market would signify their consent to reconciling themselves to the role of agrarian and metropolitan raw-material appendages of former metropolitan countries.”6 This rhetorical challenge was made in the context of the consideration that dominated the international trade arena of the early s; namely, the expected enlargement of the EEC to incorporate the United Kingdom. Everyone believed that this event was imminent, and few, if any, at that time suspected that de Gaulle’s veto would delay British entry by another decade. The expected expansion of the EEC raised a number of problems that exercised the minds of trade ministers in both developed and developing countries . For developed countries outside the Common Market, such as the U.S., the lowering of internal tariffs made an equivalent lowering of external tariffs urgent in order to avoid the diversion of trade away from their exports and toward the exports of other Common Market members. This was a major motivation behind the decision to launch what later became the Kennedy Round of tariff-reduction negotiations in GATT, but it was also a common interest with Latin America that informed the Alliance for Progress. [3.131.110...