Mon, Feb 24, 2014 - Page 8 News List

It is time for Taiwan to begin giving back

By Tu Jenn-hwa 杜震華

In the early 1960s, colonies around the world started gaining independence. They were in dire need of a recipe for growth and development. Between April and June 1964, the UN held its first conference on trade and development in Geneva, Switzerland, and later the same year it established the UN Conference on Trade and Development (UNCTAD) to promote fair trade as a way for Third World countries to create economic development.

UNCTAD’s first secretary-general was Raul Prebisch, an Argentine academic and theoretician in the field of economic development. He later became executive secretary of the UN Economic Commission for Latin America and the Caribbean. In his research, he discovered that the economic development of Latin American states and modernization theory were incompatible, that the more a peripheral country trades with a core country, the less able it is to develop.

This “unfair trade condition” is a result of the long-term economic and political behavior of developed countries. This behavior has caused imbalances in international trade prices that would not occur in free trade.

UNCTAD’s most important responsibility has therefore been to use the UN’s influence to adjust international price distortions to allow new economies to grow and develop.

This should be pursued, but mainstream circles in trade and development studies do not agree, turning the issue into a longstanding academic dispute. Because decisions in the IMF and World Bank are made based on the varying contributions by their member countries — differing from the UN’s general “one vote per country” process — IMF and World Bank decisions are controlled by advanced countries, led by the US. The WTO has pulled out all the stops in its push for trade liberalization.

It was to address these shortcomings that Third World countries created UNCTAD.

Since 1964, UNCTAD has held a conference every four years. The quadrennial conference draws the focus of observers from all corners of society because decisions with far-reaching consequences are made. Some of its more important decisions have been the demand that IMF member countries import large volumes of goods; calling for the construction of the Generalized System of Preferences (GSP) — a formal set of WTO rules; launching international commodities agreements aimed at stabilizing the prices of export products, and demanding that advanced countries set aside at least 0.7 percent of their GDP for foreign aid.

Through the US, Taiwan has been the biggest beneficiary of the GSP system and it only seems appropriate that we should give back to the international community. However, to this day Taiwan has not set up a GSP system for any of the least developed countries.

Even if we ignore the 0.7 percent requirement and instead look at 0.2 percent — the average foreign aid as a percentage of GDP of the 22 member countries in the Organisation of Economic Co-operation and Development’s Development Assistance Committee — Taiwan should be giving NT$29.2 billion (US$962.1 million) in foreign aid based on its GDP of NT$14.6 trillion in 2012. However, the total value of the funds available to the International Cooperation and Development Fund, the organization in charge of the nation’s foreign aid, is just NT$15.8 billion.

As UNCTAD marks its 50th anniversary, it is perhaps time that Taiwan started considering its international role.

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