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NIEO : implications for Australia

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No. M129

Date .18 September 1980 THE HON. ANDREW PEACOCK M.P.


Attached is the statement by the Minister for Foreign Affairs, Mr Andrew Peacock, to the House of Representatives on 18 September 1980 conveying the Government's response to the report of the Senate Standing

Committee on Foreign Affairs and Defence on the implications for Australia of proposals for a New International Economic Order.



Statement by the Minister for Foreigh Affairs, the Hon. Andrew Peacock MP, conveying the Government's response to the Report of the Senate Standing Committee on Foreign Affairs and Defence

on the Implications for Australia of proposals for a New International Economic Order.

Mr Speaker,

The last twelve months or so have seen renewed

international interest in and attention to the North/South

dialogue, of which a major element is discussion and in

some instances negotiation of various proposals by develop­

ing countries for a New International Economic Order.

The NIEO proposals emerged from the sixth Special Session

of the UN General Assembly in 1974. The eleventh Special

Session of the General Assembly, which has just concluded,

was also devoted to consideration of economic development

and North/South issues.

The record of North/So.uth negotiations over this

latest period has been, to say the least, a mixed one; the

agreement reached on 28 June 1980 on the Articles of

Agreement for the Common Fund is a positive example of

accord between developed and developing countries. This

had become a major symbol for developing countries because

of their vulnerability to fluctuations in the prices of raw

materials. x

In other areas the picture has not been too bright -

UNIDO III in New Delhi in January 1980 failed to agree on

a Group of 77 proposed Programme of Action on industrialisation

in developing countries, which was too radical and far

reaching to be acceptable to developed countries, although .

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a subsequent session of UNIDO's Industrial Development

Board did reach agreement on a number of less contentious

but important issues related to industrialisation. The

UN Conference on Science and Technology for Development

(UNOSTD) held in Vienna in August-September 1979 produced

a modest result amidst some acrimony on the part of

developing countries which had initially sought an unreal­

istic response from developed countries in this area.

Negotiations on the Code of Conduct for the Transfer of

Technology have stalled while those on a Code of Conduct

on Transnational Corporations can best be described as

inching forward.

I cannot here give a full review of the stage

reached in negotiations in all fora and on all issues

which have NIEO relevance, but the above does serve to

indicate the very mixed progress achieved to date. All

these negotiations are taking place in the context of a

global economic situation which has recently looked

increasingly uncertain - with high levels of inflation and

unemployment, rising oil prices, resultant protectionist

pressures and the failure of key countries to adopt a

sufficiently wide ranging approach in the implementation

of positive adjustment policies looming as problems in the

global economy and constraining growth prospects for

developed and developing countries. These developments

have intensified demands by some developing countries for

a restructuring of the global economy, that is for a NIEO,

and in part resulted in the proposal, which has one of the

maior issues at the Special Session, for a new round of

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'global negotiations' on trade, energy, money and finance,

development and raw materials.' Developing countries hope,

through this new round, to focus attention once again on

their demands for a NIEO and, notionally, by offering the

possibility of a global dialogue including energy matters,

to stimulate a more forthcoming response on the part of

the developed countries to the concept of restructuring the

global economy.

Preparations for the "global round" have been slow and

difficult. Developing countries have proposed that

virtually the whole range of NIEO demands including many

economically unrealistic proposals be placed on the agenda,

and have sought in essence a new legislative role for the

U.N. General Assembly. Developed countries have strongly

resisted Group of 77 demands that the "global round" take

over negotiations on matters which are the responsibility

of the specialised bodies established for that purpose

(e.g. the IMF and the IBRD). These differences prevented

the Special Session from.reaching full agreement on the

procedures for the global negotiations and the task has now

passed to the current ordinary session of the General Assembly.

Developed countries, including Australia, have stressed

the futility of new negotiations if no workable agreement

can be reached on these fundamental matters.

This brief outline of the present state of play

seems to me a necessary introduction to any comment on

the thoughtful and very timely Report of the Senate

Standing Committee on Foreign Affairs and Defence. This

report resulted from a reference by the Senate on 27 April .. . /4

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1976. The Committee heard submissions from March to

June 1979 and released the Report in February 1980.

It is clear from my introduction however that this area

is extremely fluid; a great deal has happened in the

North/South dialogue in the four years since April 1976,

and much has happened in the relatively short time since

the Committee finished hearing submissions on this matter.

This serves to underline the dynamic nature of the

negotiating process and is also a direct reflection of

one of the Report’s central observations - the increasing

interdependence between nations participating in the global


Against this background, then, the Senate

Committee has looked at general issues which run through

debates on the ΝΙΕ0 and has looked at policy on those

broader issues, without attempting to go into the detail

of negotiations.

In particular the general comments made in the

findings of the Committee are worthy of some comment. The

Committee cautions against a continuing concentration on

the specific ΝΙΕ0 proposals that Australia does not like.

It finds that there are grounds for some, part of the,

developing countries’ dissatisfaction with the present

economic system and notes that in its opinion "Australia’s

long-term interests require a more constructive approach

by the ’North’ (developed countries) to the developing

countries than has been evident in the past". In addition

the Committee finds that it is not enough for Australia

to look for positive change where possible and sensible,

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although that is important in itself. The crucial

issue is often Australia's long-term interests which may

in some respects differ from those of the short-term.

As the Report notes, Australian policy towards

developing countries and NIEO proposals has clearly demon­

strated the necessity to go beyond a defensive reaction.

The position adopted by Australia at UNCTAD V and in subse­

quent conferences, arguing the need for policies to reduce

inflation and protectionism and encourage positive adjustment

as a means of stimulating growth in the global economy, and

thus providing greater development opportunities for

developing countries, was a case in point. So was Australia's

strong advocacy of the Common Fund as a means of facilitating

canned! ty price stabilisation. Neither of these positions

found strong or unequivocal support from other developed

countries but they demonstrated that Australia had its own

distinctive positions to put in areas of the North/South

dialogue. Both bilaterally in discussions with our neigh­

bours, including ASEAN, and in active participation in

regional and sub-regional organisations such as ESCAP, CHOGRM,

and the South Pacific Forum, Australian policy will need to

continue to take into account political relations within our

immediate region. In this context when any future review

is carried out on Australia’s policy towards the U.N.

Convention on a Code of Conduct for Liner Conferences

particular attention will be given, as recommended by the

Report, to the significance of this issue for developing


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There is, of course, a need to bear lone-term

perspectives in mind, as well as those of the short-term.

I am satisfied that the Government is mindful of this

consideration within political budgetary and other

constraints applying to the formulation of policy.

Although the Committee’s Report pointed out a hypothetical

example of this kind of problem, the Committee was not

able to cite specific instances where policy failed to

recognise that long-term objectives may differ from short­

term objectives. . .

In reviewing the Committee’s recommendations

it is pleasing to note that most of them are consistent with

existing Government policy on North/South issues. Of those

that are not, I propose commenting briefly on the Government's

response to the Report’s recommendations. .

(a) Both the Committee’s Report and the Report of the

Committee on Australia’s Relations with the Third World -

the Harries Report - contain recommendations on Official

Development Assistance (ODA) and the restructuring of Australian

industry. The Committee’s Report, while recognising that the

quality of our aid is often at least as important as its

quantity, recommends that Australia should try to increase

its overall development assistance commitment in real terms

as soon as possible. The Harries Report recommends that the

Government "consider setting a realistic target date for the

progressive achievement" of the 0.7% ODA/GNP target. When

I tabled a statement on the Harries Report on 26 March ■ ■

1980, I noted that both recommendations on these matters

had far reaching implications

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and had to be considered accordingly in the future

formulation of policies. Similarly while the Government

can endorse the general thrust of the Senate Committee's

recommendations, the constraints on fully implementing

them are well known. This is an area of action which is

being kept under close review and O n which I shall be

reporting regularly to Cabinet. 1

(b) With regard to the Report's recommendations on

greater consultations with transnational corporations

over proposed international codes having relevance to their

operations, the Government has decided to examine this

question in the context of a review of policy on multilateral

consideration of matters principally affecting TNCs. I

would envisage this review paying particular attention to

OECD consideration of matters relating to TNCs; whether

there is any scope for Australia to participate more fully

in these discussions; and the question of possible

Australian membership of the UN Commission on TNCs. In

addition I think that the review should examine the importance

of Australian participation in the ad hoc Intergovernmental

Group of Experts on Accounting Standards and Reporting.

The review will be consistent with Australia's foreign

investment policy. The Australian Government welcomes

foreign investment in Australia because of the substantial

contribution it has made and will continue to make to the

development of Australia's industries and resources.

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(c) The Committee has also recommended that a more

systematic means be established at departmental and

ministerial level to ensure decisions affecting relations

with developing countries in an NIEO context be made with

■a full knowledge of broader national interests. Ministers

have given this recommendation careful consideration. It

is relevant that in fact much greater attention has been

given to this issue, in the last two years. In addition,

the reports on responses to the Harries Report which I am

to make to Cabinet and to which I referred in ray statement

on that Report on 26 March 1980 will provide a new

institutional means of addressing this recommendation. I

shall also be writing to fellow Ministers formally advising

them of the need to address this requirement and the

Senate Committee's recommendation, in the development of

policies for which they are responsible on related .

international economic matters.

(d) Finally the Report recommends increased

stimulating public awareness of and involvement in NIEO-

type issues.

Ministers fully agree that this is an important

:recommendation and we have decided to explore individually,

what scope may exist within the resources at Our disposal

to make the public more aware of the issues involved in the

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NIEO, recognising the important contribution well-informed

and concerned public debate can make to the definition .

‘ and acceptance of policies in this area.

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In this context I should like to express my own

warm appreciation for the notable and excellent contribution

theSenate Committee's Report has in fact made to this

objective. Members of the Committee have produced a balanced

well argued and readable document which in my view merits

the widest study by public groups as well as by academic and

other specialists in this field. .

In conclusion, Mr Speaker, I welcome' this excellent

report and the contribution it seeks to make to the formulation

and understanding of Australian policy on proposals for a

NIEO, and commend it to the close attention of

Honorable Members and Senators. *