Section 15. North-South problem
North-South problem and the third UNCTAD
The North-South problem is a general term signifying various problems relating to the economic and social development of the developing countries, particularly the problems of trade and aid.
The year 1972 is the fourth year since the second U.N. Conference on Trade and Development (UNCTAD) was held in New Delhi, and the third UNCTAD is scheduled to be held for about five weeks from April 13, 1972, in Santiago, the capital of Chile, at the invitation of the Chilean Government. Tentative items on the agenda, which will receive emphasis, include such new problems for UNCTAD as international finance, the problem of the developing countries that have made a late start, export promotion, economic cooperation between the developing countries, transfer of technology, and environment versus development, in addition to primary products, finished products, semi-finished products, development loans, maritime transportation and other subjects of the North-South problem which have traditionally been discussed as key issues.
Since its first meeting in 1964, UNCTAD, as a main forum to discuss the North-South problem, has discussed problems of trade and development and has made such achievements as setting as a target for aid a total flow of capital equivalent to one per cent of GNP, the general preferential duties and the international commodity agreement on sugar. That the tentative items on the agenda of the third UNCTAD cover such a wide range shows that the focus of problems for UNCTAD has become diffused and that it has become difficult to achieve concrete results. It can also be evaluated on the other hand that, as a result of the discussions at the first and second UNCTAD, the participants are now able to discuss their problems in more concrete terms and in a realistic manner, and there has been created to some extent an atmosphere in which the participants try to avoid
abstract arguments which tend to cause confrontations between the North and the South. In this context, it is expected that the 141 member countries from all over the world will present problems and suggest means of settlement of the North-South problem to the UNCTAD in Chile and engage in businesslike discussions for the development of the developing countries.
1. Lima Conference and assertions of the developing nations
The group of 77 nations which constitute most of the developing countries participating in UNCTAD held a ministerial conference in Lima, Peru, from October 28 to November 8, 1971, for the purpose of coordinating the stand to be taken by the developing countries at the third UNCTAD and to reconfirm their unity. The "Lima Charter" which was adopted at this conference lists at the outset a 10-point" basic principle," including demands for a more fair system for the international division of labor and for the industrial adjustment of the advanced countries. The main part of the charter lies in its second section which outlines the "action program" relating to future basic policy along the lines of the provisional agenda of the third UNCTAD. The strong expectations of the developing nations towards the third UNCTAD appear everywhere throughout this Charter. And strongly painted in the background is the sense of crisis of the South with respect to the ever-growing North-South economic gap, abetted particularly by the uncertainty over the recent international currency crisis. For instance, the Charter, in its first part, analyses the recent international economic situation and makes the following points: (a) whereas, in the 1960s, the per capita national income of the advanced nations had increased by more than $650, that of the developing nations had increased by only $40; (b) the developing countries' share of total world export volume was 21.3 per cent in 1960 but had dropped to 17.6 per cent in1970; (c) the accumulation of external debts of the developing nations is increasing by a large amount and had reached about $60,000 million at the end of 1969; (d) the technological gap between the advanced and the developing nations is gradually widening; (e) there are strong apprehensions that the trade and development aspects of the nations of the South will be unfavorably affected by the current international currency crisis and by the emergence of protectionism among the advanced nations; (f) with respect to the flow of capital from the advanced nations to the developing nations, the ratio of official development assistance, which should be called true aid, to GNP is declining. In other words, the keynote of the Lima Charter is dissatisfaction with respect to the fact that, at a time when the basic economic gap between the South and the North is widening, there exists evidence of a decline in the enthusiasm for international development cooperation on the one hand while the changing of the international economic structure is being conducted beyond the reach of the countries of the South on the other hand.
2. Attitude of the advanced nations
On their part, the advanced countries of the West, to whom the demands of the developing nations are directed, have been coordinating their stand toward the third UNCTAD mainly in the OECD. The advanced nations have the common awareness that they should make as constructive an approach as possible in order to avoid creating factors for international insecurity which could result from a failure of the third UNCTAD, leading to an aggravation of the present dissatisfaction of the developing nations and an intensification of the North-South confrontation. However, they are experiencing difficulty finding one particular item which could be a special focus at the third UNCTAD, such as setting the target of the aid volume at one per cent of the national income as at the first UNCTAD or agreement on general preferential tariffs as at the second UNCTAD. In addition, the unrest of the international economy which began last summer with the international currency crisis still continues, and the attention of all the advanced nations is inclined to be riveted on the rebuilding of their own national economies or on the problem of making adjustments among the nations themselves. As can be seen from the 10 per cent reduction in U.S. foreign aid, the enthusiasm for international cooperation for the purpose of development tends to be sluggish. The United States, which had been the leader of the world economy has itself given top priority to rebuilding its domestic economy under the new economic policy of President Nixon. The situation is such that the EC, which is on the point of being joined by Britain, is also busily occupied in adjusting the organization of the community. Moreover, the fact that agreement on a wide area relating to development and trade had already been reached under the "International Development Strategy for the Second United Nations Development Decade" at the 25th General Assembly of the United Nations two years ago also is one reason which is causing the advanced nations to be passive about undertaking new burdens. At present, it is expected that some form of positive result will ensue in relation to the drafting of an international agreement on cocoa which is one of the importance export products of the developing countries. In another instance, it is hoped that some concrete results will be obtained in drafting special measures regarding the latecomers among the developing nations.
3. Japan's attitude
In the event the tint of confrontation over the North-South problem should become deeper as a result of the third UNCTAD, it is judged that Japan will have more to lose than the United States or the EC on the basis of any of the following considerations-the degree of Japan's trade dependence on the developing countries, its position as the world's largest importer of resources, the status of the country as a member of Asia together with the People's Republic of China (the People's Republic of China will participate in UNCTAD for the first time at the coming conference), and the necessity of making private investments in future in the developing countries. Consequently, Japan intends to pursue its activities on the basis of its recognition that the third UNCTAD will plot the expansion of trade and economic development of the developing countries, and in turn secure the peace and prosperity of the world. Japan intends to approach the UNCITAD conference with the attitude of cooperating in the field of development aid and trade which are consonant with its long-term interests, and participate positively in international development cooperation for the settlement of the North-South problem through a wide-ranging dialogue between the developing and advanced nations for the purpose of improving Japan's international image on the basis of the background of the enormously increased influence and responsibility of Japan vis-a-vis the world economy and of its economic dependence on the sound development of the developing countries. In concrete terms, Japan's attitude is to take the initiative and to strengthen international cooperation in such fields as setting a target for official development aid, untying aid, improving the general preferential tariff system, aid for industrial adjustment, and special measures for the latecomers among the developing nations.