The speech of the Minister of State in regard to this Bill was a grave disappointment to me. The Bill provided the first opportunity for a discussion on development co-operation issues in this House since the present Government took over the reins of office. I hoped that the opportunity would be used for the Government to provide a general statement of policy or general intent in the area of development co-operation. The Coalition Government adopted a very advanced view in this area and I was hoping that we would get from the Government a confirmation that that view would be continued under the present administration. Our Government adopted the UN target of .7 per cent of GNP as an ODA target but, more important, adopted a specific timetable for the attainment of that target by the end of this decade. Furthermore, in the 1982 Estimates we provided for an increase in ODA from £18 million in 1981 to £26.335 million in 1982, putting this directly on target in the achievement of that timetable.
Where do Fianna Fáil stand in this? I believe we are entitled to be suspicious of Fianna Fáil's attitude in regard to development co-operation. Our suspicions are raised by their record in the past and the fact that the provisions were not made in the past by Fianna Fáil Governments to advance in any significant way towards the attainment of the UN target.
I also notice that the Taoiseach has not so far appointed a Minister of State with special responsibility for development co-operation. That is another straw in the wind which heightens my suspicions in this area. I do not in any way cast aspersions on the excellent Minister opposite who is in charge of the Office of Public Works but it seems rather peculiar and unusual that a Minister with that portfolio should be talking in this House about development co-operation issues. I had hoped that we would have a Minister of State responsible for development co-operation to deal with this Bill or alternatively, if it is not the intention of the Taoiseach to appoint such a Minister of State, that the Minister for Foreign Affairs would grace the House with his presence and give an indication of his views. I accept that for technical reasons the Bill was originally presented to the House by the Minister for Finance since there are financial measures involved, but these financial measures relate to moneys which we will be making available towards improving the lot of developing countries. From that point of view this Bill falls into the ambit of development co-operation. I and many others who are interested in this area are particularly disappointed that the opportunity has not been taken to make a broad statement in this field. I now hope and expect that, if not in reply to this debate, then at a very early date we will have a clear statement of general policy from the administration in regard to development co-operation.
I welcome the Bill, with some reservations. In the technical sense the Bill is very acceptable to the Opposition since it was originally introduced when we were in government. My reservations are related to the background to the Bill and the possible limits to its effectiveness and the agreement establishing the Common Fund for Commodities. We must look at the background in assessing how effective this Common Fund will be. There is a very high dependence by developing countries on exports of primary commodities. This has been an accepted fact for many years and it must be considered in the context of any effort to improve the terms of world trade in favour of developing nations. We also know that commodity prices, excluding petroleum, have declined steadily in real terms and by the end of 1980 had reached the lowest level for 30 years. This may not seem to be of great importance but when one considers it in tandem with the high dependence of developing countries on the export of primary commodities, one will appreciate the devastating effect on their economies of the low level of commodity prices now as compared with 30 years ago. Taking into account all the problems from which they suffer, such as inflation, this is a very important factor. Furthermore, primary commodities have a declining share of world trade. Excluding fuels, the share of primary production in world trade has fallen from 38 per cent to 19 per cent over the past two decades. This reflects the declining position of developing countries in the context of world trade.
They have, of course, very many problems. The real difficulty is that over 90 per cent of primary commodities are exported in raw form. There are very considerable difficulties for them in regard to processing and marketing of primary commodities and the whole system disfavours developing countries. Many of them have attempted to have an added value content in their primary commodities but their efforts to process domestically have been met by marketing and industrial structures which have hindered their entering the international markets. There are a whole range of other difficulties, including a widening range of protectionist measures on the part of developed countries and limited access to finance. The financial institutions are controlled by the developed world and there is no great incentive, particularly where there is competition for funds, for finance to be made available to developing countries as opposed to what would be regarded as safe, secure concerns in the developed western world.
They also suffer from the problem of non co-operation in regard to the transfer of technology, the withholding of trade information and a whole host of other restrictive practices. The result is that producing countries in the developing world tend to receive only a very small fraction of the final consumer price for commodities. In many cases the margins at wholesale and retail level are far greater than the price received by the producer. These difficulties are compounded by other factors. There is limited control by developing countries over the export sales of their primary commodities. They encounter difficulty in gaining entry to distribution channels beyond their own borders. In many cases the transnational corporations predominate in production, marketing and distribution, providing substantial scope for transfer pricing. The developing countries have unequal access to marketing information, while there is privileged access to transnationals at every stage of the marketing process.
There are exchanges throughout the world dealing with primary commodities but where is the participation of developing countries in these exchanges? The exchanges have been set up and are run and controlled by the developed world and with their lack of participation the developing countries are again at a loss.
There is another factor which involves transportation. Shipping and transportation facilities are not controlled by the developing world—in fact they are almost totally controlled by the developed world—and in that situation large potential earnings for the shipment of their primary commodities are foregone. Even worse, developing countries have little flexibility in timing shipments to use the markets to the best advantage. Additionally, both tariff and non-tariff protection in many developed countries reach very high levels and this constitutes a major restraint in increasing export earnings in developing countries in respect of primary commodities.
It is important to have a look at the whole picture of trade so far as developing countries are concerned in case we might think that merely establishing a common fund for commodities is going to provide the solution to all the problems. We have to fit this Bill and the international body that is being set up at this stage in regard to commodities into the whole picture to get any real assessment of the benefit which this commodity fund will provide and to get any picture of what impact it will have in providing a solution to the trade problems of the Third World.
In considering the Bill and the agreement we are ratifying now, it is important to have regard to the steps along the line on which this agreement developed. The base line is probably the UNCTAD-IV Conference in Nairobi in 1976. As is usual in international conferences, there was fine language about the problems and vague general commitments in regard to finding a solution. If one considers the proceedings at Nairobi and the resolution adopted there, one will find that all the countries there were convinced of the need for an overall approach and an integrated programme for commodities. They agreed on a programme of global action to improve market structures in international trade and commodities of interest to developing countries. Generally the objectives laid down at that conference were such that if they had been fully achieved something very significant would have been done.
It is worth recalling some of the principal objectives. I refer to Volume 1 of the report of the UNCTAD-IV Conference in Nairobi in 1976. The first objective on which all countries were agreed was that it was necessary to do the following:
1. To achieve stable conditions in commodity trade, including avoidance of excessive price fluctuations, at a level which would:
(a) be remunerative and just to producers and equitable to consumers;
(b) take account of world inflation and changes in the world economic and monetary situations;
(c) promote equilibrium between supply and demand within expanding world commodity trade.
That was the first and principal objection but in addition to that there was a further list which concerned the improvement and sustaining of the real income of individual developing countries, the improvement of market access and reliability of supply, the improvement of market structures in the field of raw materials and commodities, the harmonisation of stocking policies, the improvement and enlargement of compensatory financing facilities for the stabilisation of export earnings of developing countries and so on. It is relevant for anyone interested in this area to read what was agreed at that international conference and to see how far we have gone in the context of this Bill and the International Common Fund for Commodities towards achieving those objectives.
I spoke about reservations but the main point I would stress is that there is a danger that we might think we have achieved a lot when what we have achieved is very little indeed. The agreement establishing the Common Fund for Commodities was adopted in June 1980. I accept that it will go a small way—but only a small way—towards overcoming the problems and meeting the objectives of UNCTAD-IV and it has to be seen in that limited context.
When figures are floated around one gets the impression of enormous funds being available, of tremendous goodwill on the part of the western world, of the emptying of pockets to meet the problems. A very sizeable figure of US $750 million has been mentioned and at first glance that appears a very substantial figure. However, we should examine the figures closely. Very often in this area figures are quoted that are never fully realised and, perhaps even worse, much of the money does not bring any direct benefit to the Third World.
Let us look at the figure of US $750 million. A sum of $400 million is for the first account but of that only $150 million is being contributed by governments in cash. Already that reduces the direct cash contribution very substantially. There is to be a further $150 million available in case of need but, again, in the past we have seen where funds were established, where calls were made but were not met. The balance of $100 million is to be in callable capital for use for fund managers as security for raising loans on the open market. Therefore, we should not get the impression that there will be a body provided with $400 million by the developed world for the first account.
The same applies in regard to the second account. Of the $350 million we find there will be $70 million from the minimum contribution together with voluntary contributions. I wonder about these contributions. The point I am making is that we should not be carried away by a figure of $750 million, thinking that money is on the table and available. It is not. It is as simple as that. It may be available in certain circumstances but the past record of many of these multilateral agencies would not provide any certainty that all the money would be available now or at any time.
When looking up these figures I came across an old hobby horse of mine concerning the contributions made by the countries known as Group D. It cannot be stated often enough that while we try to arouse support and sympathy for the developing world in this country, we have at all times to put it in perspective, and in particular in the perspective of what is coming from the eastern block countries. According to Keesings Archives, 19 October 1979, I noticed that as usual the major contribution of 68 per cent comes from Group B, the developed countries, 10 per cent from the Group of 77 and 17 per cent from Group D the eastern bloc countries. Again I question the amount of money being made available by the Communist world for any multilateral fund to help the developing world. We hear their avowals of fraternal support and sympathy but when it comes to producing hard cash it has to be said they are always in the background. This cannot be forgotten and they should always be reminded that the level of their contribution does not in any way equate their rhetoric to their support in the Third World.
The best way we have of making that point is by showing that we are doing our bit, that we are doing our best. In that situation we would have a moral position from which we could exert pressure not alone on other countries of the western world but on the eastern bloc. This is a point worth noting. We should continue to press in every way we can in the times ahead because these countries in the Communist world will have to be made stand up to their international obligations in a way they have never done before. It is up to us to continue to exert pressure to ensure they do so and the best pressure we can exert is the moral pressure of being above reproach in that regard.
There is an aspect to this common fund which causes me some concern. Another of my hobby horses is the bureaucracy of multilateral aid organisations. Here we have a common fund to be managed through a governing council and an executive board. We have a new major multilateral organisation. Each member state will appoint one governor to the council. This means we will have an enormous top-heavy council, meeting God knows how often, but presumably not having an executive function. This is a big international body and one is entitled to wonder at the cost and expense of the management and control of such a body. The council will elect 28 executive directors to sit on the board and will appoint a managing director. In addition a consultative committee will be appointed to advise on projects suitable for financial aid from second account. I cannot say if that is the best structure, but over the years of negotiation, since Nairobi 1976, this was one of the factors in regard to the power of control in the situation. Ultimately, from the point of view of structures and voting rights, normally negotiation results in the achievement of a delicate balance between the Group of 77, the western world and the eastern bloc.
As a small country with an interest in developing co-operation we should be aware not only of the dangers of these big international organisations, of another layer of international bureaucracy, but of the amounts of money we are supposed to be providing, hopefully, to give direct benefit to the Third World but which is wasted on international bureaucracy. I worry that a fair amount of the funds which will be provided for this common fund will be wasted on administration.
The last FAO report — one that shocked me — stated that over 60 per cent of the funds were spent on administration. Such a figure does not call in question the merits of attaining the objectives of an organisation like FAO, but it calls in question the will of the member bodies to reduce this waste and to get rid of a large amount of those layers of bureaucracy so that the funds being contributed will go towards directly benefitting the Third World. This will have to be borne in mind by us in the years ahead. So far our subscriptions to international bodies have been so small that we have not had any right to question the structures. Now with a developing policy in this area, and hopefully with greater funding in the years ahead, this is an aspect which will have to be looked at very carefully.
We talk about our problems in finding savings in our own structures — there is the problem which exercises the mind of the Minister and his colleagues in his Department — but we must have the same approach in regard to these international organisations and, as a small country, we must continue to press that point. We must put an emphasis on the cost-effectiveness of the multilateral organisations generally. To some degree we have a weapon in our own hands. If we are not satisfied with the cost-effectiveness of these multinational organisations we can ensure that the small amount we contribute is either not contributed or not increased. I know there are mandatory contributions which have to be made but, in the area of voluntary contributions to these multilateral bodies, we have the weapon that the small amount of money we contribute is under our own control.
Secondly, we have a developing bilateral aid programme ourselves which is far more cost-effective than much of the work of multilateral agencies. We can tend to provide increases in the bilateral areas rather that the multilateral area. These are all policy options which will be available to the Government in the years ahead. These are matters which must be considered and on which policies must be agreed very quickly as a matter of priority.
From the Opposition benches we welcome this Bill. It will go a small way towards providing help for the Third World by making funds available for the provision of butter stocks and so on. In joining in the setting up of this organisation, let us not believe that we have in any way solved the trade and economic problems of the Third World. We should see it in the context of being a small move. Now that we have joined in this small move, we should commit ourselves to joining with others in providing bilaterally and multilaterally in the years ahead better steps towards a solution of the problems of the developing world.
