The Economy
The Miracle at Geneva
By NICHOLAS DAVENPORT
IT was a miracle that some- thing tangible emerged from the three months of debate at Geneva on trade and development among the 2,000 delegates from 120 governments. Credit for it must go chiefly to the able Dr. Prebisch, the Argentinian economist, who, as secretary, did most of the drafting, but the wild men helped to make the wise men combine and exert their sobering influence. When Ghana demanded a world revolution against the West, it was the mild Mr. Shah, the Indian Trade Minister, who rallied the moderates and kept the negotiations on a reasonable line. The Russians played a subtle game, keeping in the background, but letting the poor nations feel that they were on their side and against the West, but we British did not come out so badly in our role of honest broker. Our Mr. Heath was praised for' his resolution, to which I refer later, although the Afro-Asians declared that we were pursuing, as usual, merely enlightened self-interest. That, after all, is what international trade amounts to and it is a compliment to be told that we were being realistic and not hypocrites.
The seventy-seven poor nations, which stretch on the world map across the southern hemi- sphere, managed to get the industrialised West and the Soviet bloc to agree to set up a new UN body to be called the Trade and Development Board—UNTAD. The three major groupsin this body will meet at least twice a year to see what can be done to meet 'the gap,' that is, the gap between what the poor nations earn with their exports and what they need to earn in order to reach a reasonable growth rate. This the UN put at 5 per cent per annum by'1970 in its 'development decade' campaign.
Dr. Prebisch made an impressive report on the 'gap,' pointing out the 'persistent tendency to- wards imbalance associated with the development process.' Everyone is agreed that it is much too wide. Some put it at £5,000 million and some at £7,000 million a year. The trouble is that the 'gap' tends to increase, because the rich indus- trialised nations get richer far more quickly than the poor nations dependent on primary products get less poor. Mr. Heath proposed that where a poor nation's gap increased because the prices of its primary products had fallen in the world markets through factors beyond its control, it should receive extra, financial help. This was applauded and the UNTAD committees will be seeing what can be done to implement it. There was no suppori for the wild resolution that new synthetic raw materials should be banned, but the committees were asked to consider the stabilisation of the prices of commodities which form a large part of the poor nations' exports. They were also instructed to press for the removal of tariffs by the industrialised nations against the commodities and manufactures of the poorer nations. The Afro-Asians made it clear that if no positive action to reduce the 'gap' is taken by the middle of next year they will press for an International Trading Organisation with wider powers. In the meantime, they will be a powerful trade lobby at UN headquarters.
How UNTAD will fit in with the other trade
bodies of the UN remains to be seen. The seventy-seven want it to be independent of the UN Economic and Social Council, which, they say, is 'Western-orientated.' A sub-committee has been appointed to co-ordinate the work of UNTAD with FAO and GATT, which are asked to submit reports. The President of the Con- ference said that GATT and UNTAD would develop a father-and-son relationship and no doubt this would be the ideal. But there are wild men who want to abolish GATT and re- model the rules for international commerce. The danger of the West losing control of its own trading way of life has already made the French willing to collaborate with the Americans and British. Perhaps they will now be readier to come to a settlement with the Americans over the Kennedy Round. It would be wonderful if the unity of the West were to come out of the Geneva babel.
The fact that the French have been shaken makes me think that a revolution in world trade has probably started. There was always something ludicrous in the fact that the rich nations were getting richer by taking in each other's manufactures while the poor producers of raw materials went begging—especially when the rich developed synthetic substitutes for their primary products. So when the poor seventy- seven demand that the industrialised rich should stop making simple manufactures and allow them to be made in the poorer half of the world there is an element of logic as well as of ju5tice in their request which the Western world cannot afford to ignore. We British have already ack- nowledged the truth of that argument by telling Lancashire that they must accept cheap textile manufactures from Hong Kong and India.
There is a further demand made by the seventy-seven which the West will find it difficult to deny. To lessen the 'gap' the seventy-seven argue that the West must reduce the interest burden on their debts or lower the tariffs against their goods. It was always ludicrous to expect the poor nations to pay a high rate of interest on the loans which the World Bank arranged and then make it impossible for them to remit the interest payments over the Western tariff walls. It will be interesting to see whether cheap money comes before lower tariffs.
The fact that the richer countries have re- newed their pledge to contribute at least I per cent of their gross national income to finan- cial aid and private investment over and above the interest due on loans or repayment of loans is some assurance that even if the more far- reaching of the UNTAD proposals get no farther than the drafting paper solid financial aid will actually go up. But my hunch is that we have seen at Geneva the beginning of a revolution in world trading methods—working up from pure selfishness via enlightened self-interest to pure economic reason and truth. But perhaps I am being starry-eyed.
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