FINAL DOCUMENT OF THE

INTER-PARLIAMENTARY CONFERENCE ON
"NORTH-SOUTH DIALOGUE FOR GLOBAL PROSPERITY"

Organized by the Inter-Parliamentary Union
Ottawa (Canada), 18-22 October 1993

NORTH-SOUTH RELATIONS IN A CHANGING CONTEXT

1. North-South relations have to be seen in the new global context resulting from the end of the great divide between East and West and its far-reaching consequences. There are also other political, economic and social changes of fundamental importance taking place in the world. Industrial countries are losing some of their economic dynamism and are confronted with serious problems of growth and unemployment, while several regions in the developing world constitute the emerging growth poles for the future. Rapid technological change is diminishing the importance of national frontiers, and transnational activities are increasing in importance. The world over, there are manifestations of grave environmental degradation, calling into question the sustainability of the growth process worldwide. All this points to the need for new development compacts, both between developed and developing countries as also between developing countries themselves, for the effective promotion of long-term sustainable growth and development.

2. While there are pockets of affluence within the developing world, and pockets of deprivation in the developed world, it is the depth, degree and spread of poverty that characterize the North-South divide. Large numbers of the world's population live in poverty. The problems of Africa are particularly acute. Poverty is a serious cause of political instability within and between countries. Eradication of absolute poverty requires the highest commitment and action from the international community. The eradication of absolute poverty is closely inter-related to the solution of problems of famine, food security, rapid population growth, high mortality and morbidity, illiteracy and environmental degradation. Together, these should constitute priority items of the development agenda.

3. The trend towards the globalization of production in many crucial sectors has led to radically new scenarios of international trade and finance and of technology and human resources transfer. Large corporate enterprises are emerging which are only nominally accredited to a home base and are really more in the nature of cosmopolitan and international institutions. International operations of these enterprises are, however, important for developing and developed countries, especially with regard to their impact on production, employment, living standards and the environment. More inter-country activities than ever before are being undertaken through intra-firm and other non-arms-length forms of trading. These relationships need to be better known to governments in the North and in the South. There is an urgent need for development of greater transparency in all economic transactions, particularly those between nations. The Conference urges that UN system agencies and others should focus on this problem to obtain a clearer understanding and transparency of transnational operations, especially the implications for developing countries in their pursuit of economic growth and social welfare.

4. Increasing differentiation has made the North and South less homogeneous groups than they were two to three decades ago. Differentiation in approaches should therefore be an important element when developing relationships between North and South. In the South are countries whose incomes are, to a great degree, comparable with some countries in the North. They have manufacturing and technological capacities, some of which are as sophisticated as those of the North. There is, therefore, a new capacity in the South which can facilitate its economic development, and more intensive forms of co-operation among countries of the region should be highly productive. The phenomenon of increasing disparities between and within groups, including income differentials and regional imbalances, should be brought into the area of North-South policy making.

5. The recent transformation in former centrally planned economies has modified the global political and economic environment for development. It is urgent to facilitate the integration of these economies into the mainstream world economy and significant benefits could accrue, over the medium term, through such a process of integration. There could be immediate problems of absorption of these economies in the trading and financial systems of market economy countries, but that these will be only of short-term duration if countries in transition can effectively transform their economic and social structures. Trading opportunities and financial and technical facilities should be provided to these economies in transition by developed countries and also by developing countries with the capacity to do so. These economies should be brought in as partners to the development dialogue of North and South.

NEW PERSPECTIVES ON DEVELOPMENT

6. There is an urgent need for new policies in the pursuit of sustainable development. Human development must be considered an integral element and crucial determinant of economic development. Economic efficiency can only be sustained by establishing democratic structures, improving social and economic justice and ensuring respect for human rights. Most importantly, gender equality is at the core of ensuring equity in the distribution of the benefits of growth. Human development demands that urgent attention be paid to investments in health and education, and to ensuring basic education and primary health care. Sustainable development requires that economic growth be pursued without endangering the natural environment. No one factor can be seen in isolation in an increasingly interdependent world and integrated approaches are therefore needed to address global and national issues. All this requires appropriate domestic policies backed by effective measures of international co-operation that facilitate human development.

7. The Conference viewed with concern that the policies urged upon most developing countries by donor agencies, both bilateral and multilateral, have in many cases aggravated their economic and social circumstances instead of leading to sustainable progress. Structural adjustment undertaken in these countries has not enabled them to embark on the process of sustainable economic development. Policies of structural adjustment in those countries have suffered from incorrect diagnoses, neglect of issues of sustainable development, under-funding and withholding of predictable resources over the longer term, and from a disregard of long-term prospects of economic growth and their impact on the poor. The Conference urged donor agencies to review and reassess these policies, and to substitute in their place more relevant approaches to sustainable development.

8. It is clear that a congenial and enabling external environment is an essential precondition for sustainable development of the South. While developing countries are responsible for ensuring that their domestic policy is development-friendly, it is the task of the international community to create an external environment which is supportive of development. Innovative mechanisms, such as the development compacts referred to in paragraph 1 and 18, need to be explored and elaborated. Equitable multilateral arrangements for trade, predictable and substantial financial flows, both official and private, and a high degree of concessionality and preference for poorer developing countries are essential ingredients of an external environment supportive of development. Above all, decision-making processes for the world economy need to be democratized by the full involvement of all countries in decisions affecting their future.

TRADE

9. By providing greater opportunities for trade, the North can offer to the South a crucially important form of assistance. In many developing countries trade has proved to be the most effective engine of economic growth, generating the resources required for eradicating poverty. Protectionist policies not only hinder North-South trade and in general act as a brake on trade expansion and on the growth of the world economy, but they also impose significant costs on the consumer, both in developed and developing countries. Protectionism is also causing serious problems to the economies of Eastern Europe which are in transition and this question needs to be tackled on an urgent basis. The developing countries also need to diminish protectionism in tandem with their evolution from the infant industry stage and keeping in mind their development priorities.

10. Trade barriers have led to major price increases even in essential goods which are bought by the average consumer. Recessionary economic conditions and growing unemployment are not congenial economic conditions in which to pursue active policies for reducing protectionism. However, past experience clearly establishes that increased protectionism creates more problems than it solves, and that dismantling of trade barriers is an essential element in overcoming recession and unemployment. The Conference urged upon the governments of developing and developed countries actively to pursue the fight against protectionism.

11. The Conference expressed its grave concern regarding increasing unemployment, and that a rise in production does not necessarily lead to a rise in employment. It has been noted in developed economies that the application of sophisticated technologies and the increasing productivity associated with such application is one of the important causes of employment lagging behind production. Therefore, the employment implications of the application of necessary sophisticated technologies in developing countries need to be addressed. The effect of trade expansion on employment creation needs also to be more clearly understood in the management of the global economy. Both developing and developed countries should urgently review their economic and social policies to ensure that job creation is given high priority since this is the best way in which the benefits of growth can be distributed to a wider population. A trading environment which facilitates job creation should be aimed for, and the Conference therefore urged governments and multilateral institutions to examine the relationship between trade and employment so that policy conclusions can be derived therefrom.

12. In the last two decades, while tariff barriers have been reduced, non-tariff barriers such as voluntary export restraints, export subsidies, domestic taxes and other trade restricting measures have increased, as have health and sanitary regulations. There is an urgent need to establish greater transparency with regard to non-tariff barriers, especially in those areas which are of concern to poorer developing countries. The Conference urged that such non-tariff barriers be removed as quickly as possible.

13. Primary commodities are of central importance to many developing countries as a source of foreign exchange earnings. International and multilateral efforts to negotiate satisfactory arrangements for trade in primary commodities have failed. The Common Fund for primary commodities has not been effective in stabilizing and improving commodity prices. International commodity agreements have been largely ineffective, apart from selective, temporary results which have been beneficial to producers. Compensatory financing arrangements of the IMF and of the Lomé Convention have been of limited value. Commodity processing in developing countries, though increasing, is handicapped by market, technology and information constraints. Over-production has also been created in several commodities through financing of commodity projects by multilateral and bilateral donor agencies. The Conference called upon the UN system and developed countries to review the international commodity situation, especially from the perspective of assuring developing country commodity producers of remunerative prices. Agricultural protectionism in developed countries not only restricts trade between North and South, but it also imposes large costs on the average consumer. While agriculture is important to developed countries, it is also vital that agricultural activities in these countries should be pursued cost-effectively and without dependence on heavy subsidies.

14. A large number of developing countries have now emerged as exporters of manufactured goods, and many now export more manufactured goods than primary commodities. Non-tariff barriers are particularly significant in restricting the expansion of manufactured exports of the South. One sector in which such restrictions are strongly evident is that of textiles and clothing, which are industries in which the developing countries enjoy significant comparative advantages. The Conference recommended that these restrictions to trade should be speedily removed in the mutual interest of both developing and developed countries. Export expansion from the South should generate, in turn, export opportunities for developed countries, as countries in the South in the current stage of their development have an overwhelming demand for technologically sophisticated capital, intermediate and consumer goods and also services from developed countries.

15. Trade in services is now an important component of international trade and also of trade between the North and South. An equitable multilateral regime on trade in services should take account of the comparative advantages of various groups of countries in different areas of trade in services. Efficiently operating service industries, such as communications, telecommunications, financial services, are essential for development. Developing countries have specific advantages in the provision of labour services and in many labour-intensive service sectors, even when these sectors demand technically sophisticated services. Most developing countries are yet in the stage of building up their service sectors and, consequently, require a degree of support to develop those activities. The Conference believed that Uruguay Round agreements on services should incorporate special provisions for the poorer developing countries, so that they have an opportunity to develop their services sector.

16. The increasing number and scope of regional trading and common market arrangements is a positive factor in expanding world trade. The importance attached to the regional factor is a natural consequence of global political and economic restructuring in the aftermath of colonial relationships. New regional growth poles have also emerged subsequent to the disintegration of centrally planned economies. Enhanced regional economic co-operation will contribute to a stronger world trading system and, when outward looking, could be an important factor in strengthening multilateral trading and economic arrangements. The Conference therefore urged emerging regional bodies to operate within a framework of strengthened trading multilateralism.

17. The world trading system urgently needs to be governed by new multilateral arrangements. Trade expansion can only be ensured through equitable multilateral trading arrangements, where the interests of producers and consumers are mutually reconciled. The Conference called upon all States to conclude the Uruguay Round of Multilateral Trade Negotiations successfully by the end of 1993, and agree on the establishment of the Multilateral Trade Organization. For success to be achieved, developing countries must receive special and differential treatment It will be necessary to put together a balanced agreement, to which all participants contribute to the extent that their level of development permits and from which all will benefit.

FINANCE AND DEBT

18. Countries in the South require augmented and predictable financial flows from countries in the North and from multilateral institutions. Their requirements have not been diminished by recent changes in global political equations. The need to meet these requirements remains as before. Avenues should be pursued for both public and private transfer of resources. Indeed, given the substantially larger availability of investable surpluses in the private sector, there is a need for strengthening government backing for direct foreign investment in developing countries within the framework of long-term partnership agreements between individual developing and developed countries or groups of such countries. The Conference recommended that the concept of such development compacts and other innovative ideas be considered in detail in intergovernmental fora.

19. In recent years, several developing countries have achieved capacities to transfer financial resources to other developing countries and this trend should be encouraged. Differentiated systems and arrangements are required to meet the needs of different groups of developing countries. Most developing countries require Official Development Assistance (ODA), on highly concessional terms and preferably through grants, to finance their development activities. There are several developing countries whose financial needs could be met through a blending of concessional and non-concessional resources. Most developing countries could benefit from direct foreign investment. While bilateral and multilateral mechanisms exist to mobilise this type of resource flows, they are hampered by a shortage of resources.

20. Finding appropriate solutions to the debt problem of all developing countries is one of the most urgent tasks before the international community. Though the present debt crisis is basically over for commercial banks of developed countries, it is a serious crisis which persists and escalates for poorer developing countries, especially those in Africa, and those devastated by drought, famine and other disasters. The Conference appreciated the significant reductions in the debt burden that have been arranged for some countries through the Paris Club and urged more generous cancellation of official debt for all poorer developing countries. Such debt cancellation should include the concessional debt owed to multilateral financial institutions which should be empowered to cancel those debts through a fresh mandate from member countries. It has been proven that debt forgiveness is the surest way of relieving the severe financial burden of poorer developing countries.

21. While it was recognized that all developed countries face financial constraints in recessionary circumstances, the commitment to transfer 0.7 per cent of their GNP as ODA should be seen as an international obligation, vital to the management of the world economy. This target is also critical to the alleviation of absolute poverty and to the stimulation of sustainable patterns of development. The Conference called upon all developed countries to move towards the achievement of the agreed target of 0.7 per cent.

22. ODA should be directed primarily to the poorer developing countries and projects and programmes which are financed through ODA should be targeted on the poorest groups. The Conference recommended that ODA resources should be increasingly allocated for human development and to the improvement of health and education and to conserving the environment. It is critical to efficiency of resource use that governments of recipient countries create appropriate institutional frameworks for assistance to be channeled to the poor. In view of the central role of women in promoting sustainable development in many countries, a significant portion of ODA should be allocated to programmes and projects which directly benefit women.

23. The Conference called upon developed donor countries to strengthen their commitment to disbursing increasing shares of their ODA through multilateral channels. In this regard, it viewed with concern the stagnation of multilateral aid and sometimes even its diminution. The Conference urged donor countries to maintain and increase their commitments to UN system agencies and to the World Bank's International Development Association (IDA) and to the concessional lending arms of regional banks. It expressed concern that multilateral funds have not been used in cost-efficient ways, and though considering that multilateral channels are to be preferred, the Conference recommended that resources should be especially concentrated on those agencies which are most effective in terms of development impact.

24. Expenditures incurred on peacekeeping and on humanitarian relief, either through the UN system or bilaterally, are increasing, notably because of mounting instability in many regions. However, the Conference recommended that these expenditures should not be at the expense of resources allocated to development. In particular, it suggested that resources allocated for peacekeeping purposes be defined separately from ODA.

25. The Conference called upon developed and developing country governments and multilateral organizations to explore all feasible avenues of increasing resource transfers to the South and specifically urged using mechanisms which do not impose significant budgetary burdens on donor countries. Proposals made by many countries, both developing and developed, and by the IMF to issue new Special Drawing Rights (SDRs) should therefore be carefully studied, as such SDR issues would not claim resources of donor governments and could contribute to demand expansion at a time of recession. The IMF and member governments could also utilise the existing gold stock of the IMF, valued conservatively at around US$ 40 billion, as a revolving fund for development purposes.

26. Most developing countries can efficiently absorb a greater amount of non-concessional financing made available through multilateral financing institutions. These institutions have the capacity and expertise to generate and mobilise financial resources from international capital markets cost-effectively for investment in developing countries. There is yet greater scope to expand non-concessional multilateral lending. The Conference urged that this aspect of development financing be examined in depth to strengthen and expand current arrangements.

27. Direct foreign investment has been an important source of financing of development in the South. Private investment of this kind does not create any debt burden. However, only a limited number of countries have benefited from the flow of direct foreign investment, which is determined exclusively by the prospects of profitability of such investments. The Conference urged developed countries and relevant multilateral institutions such as the World Bank, IMF, UNCTAD and UNIDO, to examine ways and means of stimulating flows of direct foreign investment and transfer of technology to those countries which are lagging behind in receipt of investments and technology. An encouraging feature is the growth of foreign investment from developing countries, and this trend needs to be further stimulated. Current projects in technical co-operation of multilateral agencies, which are directed towards attracting direct foreign investment, might not be adequate to the task and should therefore be reviewed to make them more relevant to developing countries according to their individual circumstances.

GLOBAL GOVERNANCE

28. The last major attempt to create a new global multilateral system was in the 1940s when the UN system and Bretton Woods agencies were established and a new International Trade Organization (ITO) was proposed in the Havana Charter. Since that time, multilateral arrangements and institutions have been established from time to time to address various areas of international concern, as and when they arose. There is now a patchwork of multilateral institutions, some effective, others less so, and many of them undertaking overlapping tasks. The current multilateral system demands improvement, reform, consistency and convergence. The Conference called upon governments of both North and South and the multilateral institutions to undertake a comprehensive and wide-ranging review of current multilateral practices, and identify areas for reform and improvement, in the context of an interdependent world economic system. There is an urgent need to stimulate alternative ways of analysis and of prescription to development problems, and international organizations should be encouraged to take appropriate initiatives in this regard.

29. The Conference considered that, in reforming and improving multilateral systems and arrangements, the primary aim should be to ensure social and economic justice, fairness, equity and transparency in multilateral governance, and the application of democratic principles in decision-making processes. Multilateral institutions, to be efficient, effective and transparent, should be equipped with the required power and authority and with agreed systems of dispute settlement. It is not essential that multilateral institutions should always be UN agencies. Multilateralism can thrive within and outside the UN system.

30. Within the framework of principles set out above, the Conference urged member governments to strengthen the economic institutions of the UN system, through enabling greater coordination and integration of development activities of individual UN agencies. Effective UN development interventions require that UN agencies operate within a broad framework of agreed principles, without intervening in isolation to deal with difficult issues. Reform of UN agencies and their coordination should apply to all agencies of the system, including specialized agencies which remain outside the decision-making processes of the UN General Assembly.

31. The UN system should address the issue of devolving powers to regional offices, to take account of the new dimensions of economic and political regionalism. Devolution of powers to the regions would enable the UN system to react more efficiently to problems of developing countries. The central institutions of the UN should effectively involve the UN regional commissions directly in the development and design of their programmes and in their implementation. The Conference urged UN system agencies and member governments to explore the feasibility of enlarging the powers and the mandates of UN regional commissions and thereby avoiding duplication of activities by individual agencies of the UN system.

32. The Conference observed that parliamentarians have a unique contribution to make in shaping the institutions and policies for a more interdependent world. These institutions need to be made accountable and governed in accordance with democratic principles. Parliamentary institutions should be more involved in the governance of these institutions. The new emerging global system should not be the preserve of the many technocracies that are proliferating in a technologically complex world. In this context, the forthcoming world conferences - the United Nations Conference on Population and Development (Cairo, 5-13 September 1994), the World Summit for Social Development (Copenhagen, 11-12 March 1995), the IVth World Conference on Women (Beijing, 4-15 September 1995) - have an important contribution in establishing global mandates. The Conference called upon national and international policy-makers to be alert to the needs and demands of people everywhere when shaping the new systems of global governance.

FOLLOW-UP AND INITIATIVES BY PARLIAMENTS AND
THE INTER-PARLIAMENTARY UNION

33. The Conference observed that its recommendations are broadly divided into two parts. There are those to be studied and implemented by governments of developing and developed countries. These include changes in the domestic and external policies as practised by governments and which have a crucial bearing on the development process. Changes will be required in development policies of donor countries and in the practices they adopt in channeling development aid. More resources are required to be channeled for human development. These countries will also be required to liberalize their trade policies to enable access to their markets for developing country products. Developing countries are required to put in place a facilitating framework which enables individual human initiatives and systems of economic incentives which are equally significant for efficiency in the development process.

34. The Conference in its second set of recommendations focused on the reform of multilateral regimes and institutions. In an increasingly interdependent world, the role of multilateral institutions was seen as crucial to the development process. Multilateral institutions both within and outside the UN system therefore require significant reform to ensure that development resources are efficiently utilized. Especially in the trade field, new multilateral arrangements are required to enable a favourable trading environment for all countries.

35. The Conference felt strongly that these recommendations should be resolutely followed up so that they might be effectively implemented. It also felt that the fruitful reflection and dialogue which took place in Ottawa should be pursued by the Union at all suitable levels, taking advantage of the multidimensional nature of development issues.

36. With this in view and as an immediate step, the Conference called on the participating National Groups and the other members of the Union to:

(i) See to it that the Final Document is given proper attention by their respective parliaments; and

(ii) Give the greatest publicity to these recommendations in their countries, notably by disseminating them to the media, social and special interest groups and relevant non-governmental organizations.

37. The Conference also requested the Secretary General to transmit the Final Document to the relevant international institutions, asking them to give special attention to the conclusions and recommendations.

38. It recommended that the Inter-Parliamentary Council endorse the Final Document at its next session and envisage further steps by which National Groups could ensure that the conclusions and recommendations of the Conference be duly taken into account in the national activities and policy of their countries.

39. The Conference understood that the IPU Support Committee to the North-South Dialogue would continue to lead the way for action by the Union and its members, and recommended that the Inter-Parliamentary Council ensure that the IPU look at all possible ways to contribute towards promoting development.

40. The Conference fully recognized the diversity of the components of development and of the elements required for its achievement. It noted that four major international events scheduled to take place in the next two years would be essential to bringing about progress in all aspects of development world-wide: the Conference on Population and Development in Cairo, the World Summit for Social Development in Copenhagen, the Conference on Women in Beijing, and the 50th anniversary of the United Nations in 1995.

41. The Conference therefore welcomed the IPU's plans to ensure that the world-wide inter-parliamentary community makes a fitting contribution to these events and strongly recommended that the Inter-Parliamentary Council do everything possible to make that effort more meaningful still.