ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
EMERGING ISSUES AND DEVELOPMENTS AT THE REGIONAL LEVEL: REGIONAL ECONOMIC COOPERATION
(Item 6 (a) of the provisional agenda)
REPORT OF THE COMMITTEE FOR REGIONAL ECONOMIC COOPERATION ON ITS SEVENTH SESSION
1. The Committee for Regional Economic Cooperation endorsed the report of the Steering Group of the Committee for Regional Economic Cooperation on its tenth meeting, as contained in document E/ESCAP/REC(7)/1, and recommended that the Commission consider and adopt the report of the Committee on its seventh session.
2. The draft programme of work, 2000-2001, of subprogramme 1 on regional economic cooperation, as contained in document E/ESCAP/REC(7)/3 and Corr.1, was endorsed and recommended for adoption.
3. ESCAP, as a regional arm of the United Nations, in cooperation with other relevant organizations such as the Bretton Woods institutions, should continue to analyse and monitor the financial and economic crisis in the region and make early warning systems more effective.
4. ESCAP should continue playing an advocacy and promotional role to maintain open trade regimes and to promote the full participation of developing countries in the multilateral trading system.
5. ESCAP should study ways and means of promoting quality financial flows, especially foreign direct investment, as these are considered particularly important for the long-term solution to the crisis.
6. ESCAP should promote awareness of electronic commerce among policy makers, consumers and trade practitioners, including small and medium-sized enterprises through training, workshops and training modules such as CD-ROM, video and Web sites.
7. ESCAP should provide technical assistance for human resources development on various issues relating to electronic commerce. It should also initiate training for trainers on these issues and organize seminars on cross-certification and international cooperation of certification authorities for electronic commerce.
8. ESCAP should prepare in-depth studies on the status of the innovative and productivity enhancement capabilities of developing member countries, with a view to identifying areas for human resources development that would facilitate technological upgrading and the adoption of new technologies in the wake of the Asian economic crisis.
9. In collaboration with the Asian and Pacific Centre for Transfer of Technology (APCTT) and the Technical Consultancy Development Programme for Asia and the Pacific (TCDPAP), ESCAP should support and strengthen networking of institutions dealing with technology transfer and technology information flows. Such networking should cover both regional and local institutions and provide assistance to the private sector and entrepreneurs.
10 ESCAP should promote cooperation in order to improve the access of developing countries to information and the transfer of clean and environmentally sound technology, and to build up their capacity to adopt such technology.
11. The secretariat should accord priority to the following issues in the implementation of the work programme:
12. The Committee observed that all countries in the region, although to varying degrees, had been affected by the crisis, which had turned out to be deeper and more lasting and wide-ranging in its impact than expected.
13. The Committee held the view that, in order to facilitate and speed up economic recovery, action at the national level should be complemented by regional and international initiatives.
14. While at the national level the focus should be on macroeconomic fundamentals, at the regional and international levels there was a need to promote open trade and investment regimes, to improve financial systems and policies, and to build forecasting and surveillance capabilities.
15. The Committee welcomed the Memorandum of Understanding between ESCAP and the World Trade Organization, which would promote greater cooperation in the formulation and implementation of a regional training programme, and expressed the hope that it would provide the developing countries in the region with greater opportunities for training.
16. The Committee encouraged greater cooperation and sharing of experience in the forecasting, planning, management and development of human resources required for the transfer, adoption, utilization and generation of new technologies. Special emphasis might be placed on the provision of training for disadvantaged groups, such as women, young people and the handicapped.
17. The Committee stressed the need for the sharing of experience in the transfer of new and emerging technologies, including assessment, prioritization and selection of technologies, contract negotiation, the formulation and implementation of technology transfer policies and an appropriate institutional infrastructure.
18. The Committee recognized the importance of cooperation in assisting small and medium-scale industries in acquiring new technology through the provision of information, training of entrepreneurs and technology blending and upgrading.
19. The Committee suggested that skills development should be promoted for civil servants in the use of information technology.
20. The secretariat was requested to undertake, in cooperation with APCTT, activities aimed at promoting the transfer of environmentally sound technologies to developing countries on fair and favourable terms, as envisaged in multilateral environmental agreements. It was further suggested that APCTT and TCDPAP should cooperate in the organization of workshops and seminars on addressing process, strategy and interface issues pertaining to new and emerging technologies. In that connection, the Committee was informed that, under the APCTT work programme as adopted by its Governing Board, those activities were planned to be undertaken in close cooperation with the ESCAP secretariat and TCDPAP.
21. The Committee had before it two notes by the secretariat on the economic situation in the ESCAP region: document E/ESCAP/REC(7)/4 on trade-related issues and document E/ESCAP/REC(7)/5 and Corr.1 on recent macroeconomic developments and policy implications.
22. The Committee appreciated the keynote address by HE Mr Supachai Panichpakdi, Deputy Prime Minister and Minister of Commerce of the Government of Thailand, and the presentations by the panellists, and noted that they had been very useful in achieving a better understanding of the economic situation in individual member countries and in the region as a whole. The policy session provided a good background for delegations to define the role of ESCAP in promoting regional economic cooperation, especially in the context of the draft work programme for the biennium 2000-2001.
23. The Committee noted that, notwithstanding the economic crisis, all the positive features that had helped to build the remarkable progress that the region had made over the last 30 years still existed: high savings rates, entrepreneurial drive, open trade and investment policies, a strong work ethic and a tradition of self-reliance, generally sound and prudent macroeconomic policies pursued by governments, and the ability of governments to adapt to change. However, it was important to avoid complacency as many risks and uncertainties persisted in the regional and global economy. In the financial sector, despite lower interest rates, lending rates remained high and the credit crunch continued. The likely slowdown of global growth and trade in 1999 would have a major bearing on recovery in the affected countries and in the ESCAP region as a whole.
24. The Committee stressed that, in order to facilitate and speed up economic recovery, action at the national level should be complemented by regional and interregional initiatives. At the national level, the maintenance of sound macroeconomic fundamentals should remain a key objective, although, in the short term, some countries would have to accept some increase in the fiscal deficit as a result of the costs of financial sector restructuring and higher social expenditure. There was a need for greater caution in the liberalization of capital accounts, for stronger financial sector institutions with better supervision and regulation, greater transparency in corporate transactions, and improvements in the relevant legal frameworks.
25. ESCAP, as a regional arm of the United Nations, in cooperation with other relevant organizations such as the Bretton Woods institutions, should continue to analyse and monitor the financial and economic crisis in the region and make early warning systems more effective. A request was made that, as far as economic monitoring activities were concerned, the special needs of oil-producing and mono-product economies should be taken into account. It was felt that regional arrangements could also be instrumental in creating the "peer pressure" on partner economies and in assisting individual countries in strengthening their capacities to manage economies in an increasingly volatile economic environment and, more specifically, to deal with the problem of real exchange rates appreciation and exchange rates alignment.
26. The Committee observed that, at the international level, the most important policy objectives were to maintain the commitment to the openness of trade regimes and to strengthen the role of the international financial system, including international standards for the regulation and supervision of financial institutions. It was in that wider context of the international financial architecture that views were expressed for examining the possibility of the creation of an Asian Fund. However, the view was also expressed that, first and foremost, there was a need to improve and reform the existing international financial mechanism rather than establish a new mechanism. It was essential that any reform measures should take into account the differing levels of development.
27. The Committee noted with interest the initiatives by the Government of Japan in the following four areas: (a) economic revitalization (the Miyazawa initiative of October 1998, the joint Japan-United States of America "Asian growth and recovery initiative" and the new facility in the Asian Development Bank); (b) structural reform and human resources development (a special loan facility established in December 1998 and the joint programme of Japan and the Association of South East Asian Nations (ASEAN) for comprehensive human resource development); (c) safety nets for socially vulnerable groups, including emergency aid to Indonesia; and (d) currency stabilization, where efforts towards the internationalization of the yen were under way. The Committee also noted the utilization of such assistance by recipient countries such as the Philippines.
28. The Committee further noted the trade liberalization measures, including tariff and non-tariff measures, taken by subregional organizations such as ASEAN, as well as unilateral measures by individual countries such as India and Indonesia. As regards non-tariff measures, it was considered useful to have a compilation of existing non-tariff measures in Asia.
29. The Committee observed that the adjustments in the current accounts had so far taken place mainly through import contraction, which suggested that it would be difficult for countries in the region to recover through traditional export-led policies alone. Therefore, the dynamics of domestic demand and investment in each country assumed even greater importance. The Committee stressed the importance of ESCAP studying ways and means of promoting quality financial flows, especially foreign direct investment, which were considered particularly important for a long-term solution to the crisis. In that context, the Committee noted with interest the recent decisions taken by the ASEAN Ministers regarding the comprehensive coverage of the ASEAN Investment Area and national treatment for foreign direct investment throughout the ASEAN region, which were intended to be extended eventually to other countries.
30. The Committee considered it important to promote the full participation of developing countries in the multilateral trading system, with due regard for the special provisions in the WTO agreements that took into account the constraints inherent in the trade pattern of the developing countries and reflected the peculiar structural characteristics of their economies.
31. The Committee acknowledged the large potential gains from trade between Asia and other regions, particularly the United States, the European Union countries and Latin America. Asian countries continued to be highly dependent on the developed economy markets in the United States and the European Union. The Committee was informed that European Union countries had honoured their commitments made at the second Asia-Europe meeting, ASEM2, in London in April 1998 to keep their markets open and to provide the Asian region with much-needed foreign exchange. The European Union was also assisting the process of financial sector reform in Asia through the ASEM Trust Fund and its projects in Indonesia, Malaysia, the Republic of Korea and Thailand. Another promising initiative was the setting up by the European Union of a "clearing house" of financial advisory services, known as the ASEM European Financial Expertise Network, which was available to the Asian members of the ASEM process.
32. The Committee took note of the recent developments in the economic policy of the United States and the emerging trade scenarios in Latin America, more specifically the agreement between the Andean Community and MERCOSUR to form a free trade area by 1 January 2000, and the plan by 34 nations of the American continent to form a "free trade area of the Americas" before the year 2005. The participation of three Latin American economies, Chile, Mexico and Peru, in the Asia-Pacific Economic Cooperation forum was considered important in terms of the long-term prospects for trans-Pacific trade. In that context, the Committee took note of the interregional project by ESCAP designed with a view to creating a framework for cooperation in trade and investment between Asia and Latin America.
33. The Committee had before it the report of the Steering Group on its tenth meeting, held in Bangkok from 9 to 11 September 1998 (E/ESCAP/REC(7)/1).
34. The Committee noted and endorsed the major recommendations of the Steering Group relating to trade facilitation and electronic commerce, the integration of disadvantaged economies in transition in the industrial and technological growth momentum of the region, and the impact of the Asian crisis on current trends in intraregional and interregional trade flows.
35. The Committee noted the follow-up action taken by the secretariat on some of the decisions and recommendations of the Steering Group relating to the above-mentioned issues. It also noted with interest that, under a project funded by the Government of Japan, members of the South Asian Association for Regional Cooperation would be provided with technical assistance in the area of trade facilitation, which would complement their efforts to expand trade between them.
36. The Committee requested the secretariat to provide technical assistance on human resources development on electronic commerce issues on taxation, electronic fund transfer, privacy and data protection, electronic commerce infrastructure, opportunities for small and medium-sized enterprises for electronic commerce, consumer protection, intellectual property rights, cryptography and digital signature. The secretariat should also initiate training for trainers on those issues.
37. A suggestion was made to include the issue of Y2K in the forthcoming meeting of the Steering Group.
38. The Committee had before it document E/ESCAP/REC(7)/2 and generally endorsed the views and recommendations contained in that document.
39. The Committee felt that, in the context of the rapid changes and increasing interdependence in the economies of the world, the issue of skills development for new and emerging technologies was of high priority in evolving policies and strategies to cope with the challenges encountered by developing countries in their economic and social development, and in order to bring about economic recovery and restore the dynamism of the region. In order to facilitate that process, it was considered important to reinvigorate the recommendations made in the Jakarta Plan of Action on Human Resources Development in the ESCAP Region (resolution 274 (XLIV) of 20 April 1988) and other resolutions of the Commission regarding industrial and technological development, as well as the Action Programme for Regional Economic Cooperation in Investment-related Technology Transfer (resolution 50/9 of 13 April 1994).
40. The Committee noted that skills development for new technologies was a complex, protracted and multidimensional task whereas it was essential that developing countries should move towards more value-added skills relating to design and innovation rather than mere operational skills. The adoption and development of new technologies invariably required a large pool of multidisciplinary professionals who could combine an in-depth knowledge of technologies with an innovative approach to improving productivity and competitiveness. To that end, the importance of enhancing total factor productivity and innovation in various member States needed to be recognized as essential for the long-term sustainability of the competitive advantage of those countries.
41. The Committee recognized that the brain drain and structural imbalance in the composition of technical personnel such as scientists, engineers and technologists had assumed serious proportions in several countries of the region. It therefore stressed the desirability of and need for regional cooperation as a cost- and time-effective means for technological capability-building, which would thus lead to sustainable industrial restructuring.
42. The Committee stressed the necessity of strengthening national and regional mechanisms for technological skills development and human resources planning. In that context, it felt that an analysis of the labour market to identify policies and programmes for better utilization of skills and to ensure a dynamic equilibrium between the supply and demand of various categories of technical and managerial personnel was required for the development of diverse sectors in the economy.
43. The Committee stressed the need for greater access to technical information and expert exchanges in research and development, further South-South cooperation, including the transfer of indigenous technologies, and a smoother transfer of technology from developed to developing countries in order to enhance skills development for new technologies in member States. Developing countries should adopt a gradual approach to adopt and assimilate new technologies in order to achieve self-reliance in technology-related skills.
44. The Committee observed that effective linkages between academia, research and development institutions, and industry were a vital consideration in promoting skills development relating to new and emerging technologies and recognized that, in creating an enabling climate for innovation, it was necessary to identify and establish the various work roles critical to that process. However, it was suggested that "ideas banks" at both the national and the regional levels might give more appropriate direction and meaning to the innovation process.
45. The Committee noted with appreciation the activities of APCTT in rendering matchmaking services in the area of technology transfer but felt that various issues related to technology management needed to be further strengthened under the aegis of the Centre. In that regard, it was urged that member countries and donors enhance their contributions to the Centre so that it would be able to diversify its activities through networking with various appropriate existing mechanisms. It was also suggested that the linkage between APCTT and TCDPAP should be strengthened to synergize action on both the technology and the consultancy fronts.
46. The Committee had before it the draft programme of work, 2000-2001, of subprogramme 1 on regional economic cooperation (E/ESCAP/REC(7)/3 and Corr.1).
47. The Committee appreciated the initiative taken by the secretariat to organize an informal discussion on the proposed work programme, which had proved useful in enhancing the understanding of the programme structure and its content.
48. The Committee considered and adopted the draft programme of work, 2000-2001, which, inter alia, focused on: (a) enhancing the national capacity of developing countries to respond effectively to challenges and opportunities emerging from the global environment for trade, investment, technology flows and industrial development; (b) assisting developing countries, paying particular attention to the needs of the least developed, landlocked and island developing countries and the economies in transition, to accelerate their industrial and technological development and to promote their exports; (c) enhancing regional cooperation to promote trade efficiency and electronic commerce and to facilitate access to information technology; and (d) enhancing intraregional and inter-subregional flows of trade, investment and technology, inter alia, by strengthening networks of institutional support services, including regional information services. In particular, it noted with satisfaction the tangible benefits to countries from technical assistance activities, including advisory services in the area of trade facilitation and electronic commerce, as well as the new initiatives for remodelling the programme activities with defined objectives, expected results and performance indicators. In that regard, it commended the secretariat's efforts to propose new and continuing activities with different orientation for dealing with issues emerging from the Asian crisis.
49. The Committee endorsed the conscious efforts to address the special needs of the least developed and landlocked countries, the disadvantaged economies in transition and the Pacific island countries in enhancing their institutional and human resource capacity to respond effectively to challenges and opportunities emerging from the global environment for trade, investment, technology flows and industrial development.
50. The Committee stressed the need to develop a qualitative methodology through an efficient feedback mechanism for the evaluation of the programme of work. A suggestion was made to establish a formal consultative mechanism for the prioritization of the work programme, the identification of performance indicators and evaluation.
51. The Committee acknowledged the efficacy of programme activities 1-4-205 and 1-4-206 under the Forum for the Comprehensive Development of Indo-China. It also noted with satisfaction the activities under field project 1-4-401 for capacity-building of enterprises of selected least developed countries and disadvantaged economies in transition to enhance their export competitiveness.
52. A request was made for a study to be undertaken on industrial restructuring in the light of the impact of the Asian crisis and the crisis in the Russian Federation and Central Asia. The Committee was informed that the Meeting of Ministers of Industry and Technology held at Bangkok in February 1998 and the Commission at its fifty-fourth session had mandated the secretariat to undertake an impact assessment of the implication of the East Asian economic crisis on industrial and technological development. To that end, a study had been prepared and would be deliberated upon at the regional seminar to be held at Bangkok in April 1999. The outcome of that meeting would be submitted to the Commission at its fifty-sixth session for further guidance.
53. A proposal was made for the eighth session of the Committee for Regional Economic Cooperation to be held in the first quarter of 2001 in Bangkok.
54. No other matters were discussed.
A. Opening and duration of the session
55. The Committee for Regional Economic Cooperation held its seventh session at Bangkok from 10 to 12 March 1999.
56. The Executive Secretary of ESCAP opened the session and addressed the Committee.
57. The Deputy Prime Minister and Minister of Commerce of the Government of Thailand delivered a keynote address, which was followed by a panel discussion on the economic situation in the ESCAP region.
58. The session was attended by representatives of the following members of the Commission: Australia, Azerbaijan, Bangladesh, Cambodia, China, France, India, Indonesia, Iran (Islamic Republic of), Japan, Kazakhstan, Lao People's Democratic Republic, Malaysia, Nepal, Netherlands, Pakistan, Philippines, Republic of Korea, Russian Federation, Sri Lanka, Thailand, Turkey, United Kingdom of Great Britain and Northern Ireland, United States of America, Uzbekistan and Viet Nam.
59. The representatives of the following countries attended as observers: Canada, Czech Republic, Germany, Hungary, Morocco, Peru and Romania.
60. Representatives of the following United Nations bodies, and specialized agencies and related organizations also attended: International Trade Centre UNCTAD/WTO, United Nations Development Programme, International Labour Organization and International Monetary Fund.
C. Election of officers
61. The Committee elected the following officers: Rathi Vinay Jha (India) Chairperson; Abdol Reza Ghofrani (Iran, Islamic Republic of) and Charan Plangtrakul (Thailand) Vice-chairpersons; and In May (Cambodia) Rapporteur.
D. Agenda and organization of work
62. The Committee adopted the following agenda, as contained in documents E/ESCAP/REC(7)/L.1 and E/ESCAP/REC(7)/L.2:
1. Opening of the session.
2. Election of officers.
3. Adoption of the agenda.
4. Policy session:
(a) Economic situation in the ESCAP region;
(b) Report of the Steering Group of the Committee for Regional Economic Cooperation on its tenth meeting;
(c) Skills development for the new and emerging technologies in the wake of the Asian economic crisis.
5. Legislative session: draft programme of work, 2000-2001, of subprogramme 1. Regional economic cooperation:
(a) Informal discussion;
(b) Formal consideration of the programme of work.
6. Date and venue of the eighth session of the Committee.
7. Other matters.
8. Adoption of the report.
E. Adoption of the report
63. The Committee adopted the report on its seventh session on 12 March 1999.