The UN Regional Commissions and South-South Cooperation

President Mkapa, Chairperson of the South Centre Board;
Dr. Rob Davies, Minister of Trade & Industry, South Africa,
Mr. Martin Khor, Executive Director of the South Centre,
Distinguished members of the South Centre Board,
Ladies and Gentlemen,

I am pleased to have this opportunity to share some thoughts on South-South Cooperation (SSC), a theme that is very important for ESCAP’s work.

The South Commission Report, launched in 1990, which led to the establishment of the South Centre, described developing countries as existing on the periphery of the North, and as mostly weak and powerless in the world arena. However, with the ongoing struggle for development, matters have changed over time, and the South has now emerged as an critical player on the world economic stage.

In terms of GDP growth, savings and investment rates, trade in goods and services, foreign exchange reserves, quality and size of its enterprises, as well as their global presence, manufacturing and technological capabilities, finance and banking institutions, the South is rapidly coming up and catching up with the North.

Even though there remain major disparities in the South, between regions and within regions, and developing countries face major challenges in achieving the MDGs, the development patterns of the past decades are evidence that the South is no longer one 'backward' group. Different countries and sub-regions are at vastly different 'stages of development'. Thus the complementarities within the group have increased tremendously.

These complementarities or synergies mean that Southern countries can help each other in vital areas such as trade, finance, investment, energy, environment, labour mobility, technology, designing of development strategies and sharing development experiences accumulated over the past decades for mutual benefit. Therefore, SSC has attained a new salience and viability. South-South trade and investments have been growing rapidly and have come to represent a significant proportion of global trade and investment flows. Their continuous expansion through the past decade has helped the developing world to weather the most adverse impacts of the global financial crises since 2008.

A number of initiatives and programmes of economic and technical cooperation between developing countries have been established and new ones are being designed with every passing day. These include numerous associations for regional cooperation and bilateral cooperation agreements between developing countries in different parts of the world. But these are not limited to only regional cooperation arrangements. We have important examples of inter-regional groupings like India-Brazil-South Africa (IBSA) Trilateral Commission for promoting South-South Cooperation not only between themselves but also globally. Then we have BRICS (Brazil, Russia, India, China and South Africa) and BASIC grouping to coordinate positions in the global climate change negotiations, the G20 group of developing countries in the WTO negotiations, and the G24 in international financial institutions.

I will focus my brief remarks on how best to ensure that SSC, as an emerging trend in international economic relations, contributes to more equitable, balanced, and sustainable development of developing countries and their shared prosperity.

Regarding South-South trade – while there are many arrangements for institutional promotion of mutual trade within the regions, there are fewer for promotion of inter-regional trade. In that context it is important to effectively use the Global System of Trade Preferences (GSTP) among developing countries, and to make it more comprehensive in terms of country coverage. Other initiatives in the direction of promoting interregional trade, especially for the poorest countries, include duty-free-quota-free preferences offered for products of LDCs by India and Brazil, and preferential tariffs policy for African LDCs offered by China. Hopefully other countries will follow in footsteps of these countries and offer preferential access to the products of LDCs, especially to their value added products, which could facilitate development of productive capacities in LDCs.

Developing countries have already emerged as significant sources of FDI flows, accounting for nearly a quarter of global outflows. The bulk of these outflows originating in developing countries find their way to other developing countries. The emerging country enterprises, while undertaking investments in other developing countries, could also facilitate the build-up of productive capacities and help in development of value-adding activities of their natural resources, as well as in assisting these countries to export value-added products rather than only raw materials. This would help to avoid South-South economic relations following the centre-periphery model of relations which has characterized North-South economic relations.

Accumulation of large foreign exchange reserves in developing countries also offers potential for new institutions for development financing in the developing world. An important initiative of the BRICS is the BRICS Development Bank, which would support infrastructure financing in developing countries across regions. It would be a good complement to regional development banks and infrastructure funds including those in Asia-Pacific about which I spoke yesterday.

Developing countries such as Brazil, China, India, and Turkey, among others, have already emerged as significant sources of development cooperation, with each of them spending around a billion dollars on development cooperation annually. This assistance is being spent on capacity building, infrastructure development, and economic and technical assistance in different sectors. It is important to ensure that the SSC is seen as a partnership rather than donor-recipient relationship that was used to characterize the North-South ODA. Indeed some of the emerging donors are sensitive to this and are trying to ensure that their cooperation relationships are seen as more equitable partnerships.

Most critically perhaps, developing countries need to cooperate and coordinate their positions in international economic negotiations to seek a development-friendly reform of global economic governance, whether relating to international financial architecture, or multilateral trade negotiations or global climate change negotiations. The developing world has a large and growing stake in the way the world economy is run and needs to ensure that it has the policy space for pursuing its development policy objectives. A coordinated approach is therefore critical. Over the past decade or so, developing countries have learnt to organize themselves as coalitions in different negotiations to safeguard their interests including the G20 and G33 in WTO, BASIC in climate change etc.

In conclusion, I am convinced that we have entered an era in which South-South Cooperation will play an increasingly important role. While regional economic cooperation has already become an important trend in different regions, it is time to unlock the potential of interregional cooperation. It is here that the UN’s five regional commissions are working together to facilitate interregional cooperation by bringing their respective constituencies to work together with their counterparts across other regions.

Given that the South Centre is the intergovernmental organization of developing countries, we look forward to working with the Centre in promoting interregional South-South cooperation.

I thank you.