The Michigan Daily-Friday, October 23, 1981-Page 9
Rich-poor arguments
are complex econonucs
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CANCUN, Mexico (AP)-Behind the
generalities of "free enterprise" and
"new world economic order" are a
complexity of economic questions
dividing leaders of 22 rich and poor'
countries, at their first of its kind sum-
mit here.
The delegations won't be talking
specifics, but rather are expected to
Weal with the keys question of whether
an international forum should be
created to come up with trade-offs that
would evolve into a realignment of the
way countries' economies are tied
together.
Here is a look at the underlying issues
and how a worldwide negotiating forum
ties in:
*Trade
"Terms of trade" involving com-
modities prices, tariffs and profit-
sharing, are probably the heart of the
North-South debate. Dozens of Third
World countries are dependent on ex-
ports of just one or two raw materials.
They complain the price they get hasn't
kept pace with the increased costs of
manufactured goods they must import.
In 1974, for example, Zambian copper
prices plunged 60 percent, forcing the
African nation to halve imports of
processed goods. Other countries
,dependent on cocoa exports have
similarly suffered. These nations
propose to stockpile such goods fort
release on the world market when
needed as a pricing mechanism.
The Third World also complains that
multinational corporations . . . ar-
tificially limit their export earnings.
Sellers of bananas to U.S. markets, for
example, say they only get 25 percent of
*earnings.
One trade area on which differences
are not so pronounced between rich and
poor is' on tariffs.
President Reagan, who arrived here
Wednesday, says, "stimulating inter-
national trade by opening up markets is
absolutely essential." Advocates of
reducing the U.S. tariffs on exports are.
hopeful they have his support.
World Finance
Developing nations want a stronger
*voice in the World Bank and Inter-
national -Monetary Fund, which they
see as U.S.-dominated. The world's
poor countries have piled up a foreign
debt totaling $439 billion-over six
times their debt a decade ago. Now,
they must contend with record-high in-
terest rates.
They want the wealthy nations to
make more money available for World
Bank lending qnd the IMF, which seeks
to regulate the'world currency system,
to make more of its currency available
as "special drawing rights" to help
reduce their foreign exchange deficits.
The "North rejects the idea as in-
flationary. Some Reagan ad-
ministration aids have criticized World
Bank development loans to socialist
countries.
Energy
Their economies strapped by the high
cost of imported crude oil, the poor
nations want the World Bank to set up
an agency with a $30 billion fund to help
pay for exploration and development of
their energy resources. The Reagan
administration says this should be left
to private enterprise.
Food
The U.N. says there are more hungry
people now than there were during the
1972-74 "food crisis," when bad weather
and high prices combined to reduce
grain supplies to the world's poor, par-
ticularly Africa.
A special North-South study com-
mission headed by former West Ger-
man Chancellor Willy Brandt recom-
mended last year that the richer coun-
tries boost foreign aid by $8 billion a
year and earmark it for agricultural
development in the Third World.
The South, contending market
mechanisms do not channel enough
food to the neediest, proposes programs
to build up grain stocks.
Foreign Aid
The Brandt commission calls on the
rich nations to increase total aid to the
less developed world to $50 billion a
year, from $26 billion now.
The Reagan administration, in a
departure from its allies, seems op-
posed to this and doesn't want to be told
which countries should get the
assistance.
Global Negotiations
Almost all of these issues have long
been debated in specialized agencies of
the United Nations and other inter-
national bodies. But since 1974, the
Third World has been trying to con-
solidate the debates into a single forum,
' preferably the UN General Assem-
bly..
Only there, they reason, can progress
be made by, for example, exchanging
concessions to northern private in-
vestment in their countries in return for
expanded aid programs.
But the Reagan administration has
resisted such a concentration of the
world's economic give-and-take inone
body, especially one where the United
States' one vote is clearly outnum-
bered.
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