UNCTAD XI, the pre-eminent global Conference on trade and development issues, takes place in Sao Paulo on 13- 18 June 2004 against a backdrop of a new trade vision for development and an emerging new trade geography.

At the core is a quiet transformation reshaping the global economic and trade landscape. The centuries old international trade geography is changing, where the South served as hinterlands of resources and captive markets for finished goods of the North.

This has the potential of not only increasing the size of the global trade pie but also improving the distribution of gains among countries and within developing nations. It is tied to a new trade vision based on a convergence of developed and developing country interests in making trade growth more dynamic, equitable and inclusive. These emerging trends will be discussed during Trade Day on 16 June 2004.

For example, the developing country share of world trade now stands at 30%, up from 20% in the mid-1980s. The share of manufactures in developing country exports grew to nearly 70 per cent of their exports or US$ 1,300 billion in 2000, up from 20 per cent or US$ 115 billion in 1980.

In 2003, for the first time, the United States imported more goods from developing countries than from developed countries. The share of its exports to developing countries increased to over 40 per cent. Developing countries are also significant markets for other major players, with nearly one-half of Japan´s exports and one-third of European Union exports (excluding intra-EU trade).

These trends do not alter the primacy of developed countries in the world economy and trade. The asymmetries between the economies of developing and developed countries are just too stark, and a meaningful symmetry between the two will need a very long time.

For example, at US$ 27,000, the average GDP per capita of developed countries in 2000 was 20 times higher than that of developing countries. Fewer than five developing countries are within $10,000 of developed country per capita income. Another feature is that the economic operators of developed and developing countries are worlds apart in terms of size, scope and outreach. In value-added terms, the large developed country transnational companies are larger than the size of the economies of most developing countries.

For example, the value-added of Exxon Mobil is larger than the size of the economies of Pakistan or Chile, and its total foreign assets are nearly equal to the total foreign assets of all top 50 developing country transnational companies taken together. The foreign sales of Daimler-Chrysler AG are 40 per cent higher than the total exports of Africa as a whole, while that of Honda Motor Corporation are greater than the total value of exports of India. These facts illustrate the extent of the catching-up problem faced by developing countries.

Although many developing countries have not been able to take part in the rising share of trade and financial flows, even the poorest nations show some improved performance giving reasons for optimism. The key challenge is to ensure that the Least Development Countries, African countries and the small economies are not left at the margins.

Key features and challenges of the new trade geography

One key feature is that trade among developing countries is an important influence on the new trade geography. It now accounts for over 10% of world trade and is growing significantly. Importantly, over 40% of developing country exports are to other developing countries, and trade among them is increasing at 11% per year.

Another feature is that the South accounts for an increasing share of global demand and some developing countries are growth nodes for both international and regional trade. They have the potential to become powerhouses of economic activity, similar to Europe, the US and later Japan during the 20th century.

The South&apo;s importance in global demand will continue to increase because of the shifting global demographic balance and technology, productivity and income growth of developing countries. China is a prime example, but others including the Republic of Korea and Singapore have also considerably narrowed the income gap with the developed countries.

A third feature is that South-South trade cannot be a substitute for North-South trade. Access and entry into Northern markets will continue to be critical for the trade success of developing countries. Regional South-South and North-South trade agreements (RTAs) can help by enlarging economic space, attracting FDI, and pooling together human, institutional, technological and other resources.

A fourth feature is the recent emergence of issue-based coalitions, including the Group of 20 and the Group of 90, in ongoing multilateral trade negotiations on the Doha Work Programme. Some countries have also formed inter-regional consultative arrangements such as the IBSA (India, Brazil and South Africa) Dialogue Forum. Such cooperation gives them more bargaining power.

A new vision of trade policy for development

This new trade geography should be supported by a new vision of trade policy in all countries to ensure that

• It is a collaborative process where both North and South work on a converging agenda, underpinned by shared responsibility and genuine partnership.
  
  
• It is an inclusive process, so that countries such as LDCs and small economies, are not left behind.
  
  
• It is a process with a human face, so that people and communities that are at a disadvantage, particularly the poor and women, can participate fully.
  
  
• It is a sustainable process that pays due attention to the needs of future generations.
  
  
• It is a trade-plus process, so that development financing, FDI, debt relief, adjustment support, technology transfer and capacity building contribute in a coherent manner.

As the UN system´s focal point for trade and development, UNCTAD is making important contributions to the new vision by facilitating discussion, and providing analysis and technical and capacity-building support. It is also helping to build, sustain and promote dialogue and confidence among different stakeholders on key trade issues and processes.

The key trends of this new trade geography deserve attention and support from the international community, governments, multilateral agencies and all stakeholders, including exporters and importers. It is important that all countries - North and South - work together to ensure that the processes transforming world trade are smooth, rapid and beneficial to all countries and peoples.

In this new trade geography, the South is coming ever closer to the centre of international economic relations. That implies a broadening and deepening of South-South and North-South interdependence.