Legal Issues in the Third World’s Economic Development

LEGAL ISSUES IN THE THIRD WORLD’S ECONOMIC DEVELOPMENT*

In 1974 a heterogeneous group of countries, commonly referred to as the developing nations, incorporated their proposals for a “New International Economic Order”¹ into a United Nations General Assembly Resolution entitled The Charter of Economic Rights and Duties of States (the Charter).² The developing nations hoped to give legal form³ to the economic aspirations that they had articulated during the previous decade through the United Nations Conference on Trade and Development (UNCTAD).⁴ Many of these aspirations related to a redistribution of global resources through increased foreign aid, more extensive technology transfer, and higher export prices for primary products. The most controversial aspect of the Charter, however, was its rejection of the principle that compensation for expropriation of foreign-owned property be determined according to international legal norms by neutral international tribunals.⁵

The 1981 “North-South” summit conference in Cancún, Mexico, revived interest in the Third World’s economic development. Therefore, it may be particularly appropriate at this time to examine the course of negotiations among developed and developing nations that led to adoption of the Charter.⁶

A. An Historical Perspective on International Economic Cooperation

The Charter was heir to more than fifty years of experimentation in international economic and social cooperation programs from the First World War to the present, and notes their changing emphasis to reflect the increased bargaining power of the developing nations. For example, the International Monetary Fund’s scope of operations has expanded to accommodate the developing nations’ special needs for assistance in meeting balance of payments disequilibria.⁷ The work of other United Nations specialized agencies, in particular the International Labor Organization’s efforts to set labor standards, is mentioned to illustrate the way in which sovereign states have been subjected to the moral suasion of international economic organizations.⁸ Finally, the multilateral trade initiatives of Western European nations toward their former colonies,⁹ such as non-reciprocal tariff concessions and the STABEX system to finance export shortfalls,¹⁰ are contrasted with the United Nations programs.¹¹

B. Trade, Foreign Assistance and Technology Transfer

The Charter proposes a modification of the conditions of international trade to take into account the developing nations’ heavy reliance on exports of primary commodities as a source of capital.¹² Although the Charter recognizes the role of free trade,¹³ it also calls for restrictive trade measures,¹⁴ including commodity producers associations¹⁵ and commodity agreements.¹⁶ The Charter urges the adjustment of prices of developing nations’ exports in line with the prices of their imports¹⁷ to remedy the asserted deterioration of the “terms of trade” between developed and developing nations.¹⁸ The developing nations are concerned with the perceived increased cost of their imports in terms of their exported commodities.¹⁹