Trade and Development report - Some thoughts

Every year the United Nations Conference on Trade and Development (UNCTAD) publishes the Trade and Development Report (TDR). The list of TDRs is found here. The TDR 2012 is expected in September. An interesting debate about the role of the TDRs in the context of multilateral trade rules is found here.

"Experts marking the 30th anniversary of one of the world´s more influential economic annuals said Monday that themes long sounded in UNCTAD´s Trade and Development Report retain current prominence - particularly those citing the questionable wisdom of unbridled free markets. Other prominent themes concerned the persistence of trade imbalances, the risks of overdependence on commodities exports, the risks of premature liberalization of capital flows, the need for new mechanisms to deal with sovereign debt, and the problems posed by income inequality.

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The Trade and Development Report "is UNCTAD´s original flagship report," said Anthony Mothae Maruping, President of the organization´s Trade and Development Board, as he opened the meeting.

Rubens Ricupero, former Secretary-General of the organization, termed the Trade and Development Report "an encyclopedia of development thought" and said that over the years, as neoliberal economic reforms swept the world, the publication often was a lonely voice calling for an "active role of the State" in spurring the kind of stable economic growth that leads to rising living standards in poor countries.

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"The reasoning is that you need a State, a government, to have an idea, a plan for the economy, a design, and an economic policy strategy that makes sense, given the domestic and international constraints," explained Heiner Flassbeck, Director of UNCTAD´s Division on Globalization and Development Strategies and principal author of the last eight editions of the report. "That is the basic argument of the Trade and Development Report in recent years."

Carlos Fortin contextualised the Report in the shadow of the multiplicity of international organisations - UN, IMF, WB and WTO here.

" The Report is regarded as the main alternative in the United Nations system to the mainstream approach represented by the World Bank, the IMF, the WTO and the OECD."

Without going into the ideological positions highlighted here, the role of the State in the development paradigm of a country is undisputed. The extent and nature is generally disputed. Carlos Fortin concludes this interesting debate on the role of State supported monopolies (SOEs) with a valid point:

" What came closest to a majority opinion is that developing country governments should not forgo the option of supporting national companies, particularly for purposes of making them internationally competitive, but should only exercise it with two significant caveats:

        1.support should not be a blank cheque, but contingent on performance; 

        2.support should be consistent with international obligations and disciplines, notably those of the World Trade Organization."

The issue whether a support is consistent with a country's WTO obligations is a legal minefield of interpretations and counter factuals. Many disputes in the context of the SCM Agreement precisely deal with this point. However, the point is well taken that a country's domestic policy choice should be limited by its international obligations.