Economic and Social Council at its Substantive Session of 2000
New York, 25 July, 2000
Statement by Ms. Danuta Hübner,
Executive Secretary of the United Nations Economic Commission for Europe,
1. The outlook for the ECE region as a whole is now better than at any time in the past decade. This is true both of the western market economies and of most of the transition economies of Central and Eastern Europe and the CIS. In Western Europe the strong upward momentum that was under way in the latter half of last year has been maintained this year. This is confirmed by the GDP data for the first quarter and by business surveys for the second. We now expect the increase in GDP to average some 3.5 per cent this year which is about a quarter of a percentage point more than we expected in the spring when we published the latest Economic Survey of Europe. This would be the highest average rate of growth since 1988. We expect the strong rate of expansion to continue next year as well, although it might slow down to some 3 per cent partly as a result of some tightening of monetary policy. Exports have been the principal source of growth so far but as in previous upswings a virtuous circle now seems to be appearing in which stronger foreign demand spills over to domestic demand via increases in domestic output and incomes, which in turn increase demand for goods and services produced abroad. A similar process is emerging in the transition economies where both external and domestic factors are behind an unexpectedly strong recovery of output in the first half of 2000. Strong import demand from Western Europe has boosted transition economy exports and commodity exporters, especially in the CIS, have benefited from rising commodity prices. Where progress in systemic transformation and institution building is well advanced, notably in central Europe, such "virtuous circle" effects should be particularly noticeable. But in many cases, however, the current high rates of growth simply reflect a recovery from a very low base. Nevertheless short-term forecasts have been steadily revised upwards since we wrote our last Survey and we now expect GDP growth in the ECE transition economies as a whole to average some 4.7 per cent this year, which is some 1.5 percentage points more than expected in April. The largest revision to the forecast is for Russia where the authorities are now forecasting GDP growth of 5 per cent this year.
This generally positive outlook, however, is subject to a number of risks. One is that, although many observers see the rate of economic expansion in the United States beginning to slow down, its rate of expansion is still very rapid with output growth continuing to run ahead of capacity by a large margin. The United States is currently running a large current account deficit and, if foreign investors suddenly reduce their willingness to hold dollar financial assets, a marked depreciation of the dollar could lead to a more severe tightening of US monetary policy than presently envisaged and, in turn, a marked appreciation of the Euro with negative effects on Europe and the rest of the world. Other sources of concern are the high levels of share prices, still significantly over-valued, and uncertainties over the price of oil. Any upset to the outlook for Western Europe would, of course, have a negative effect on the outlook for the transition economies, many of which still remain relatively vulnerable to external disturbances and shocks. Although the outlook in general is increasingly favourable, inter-country differences, especially among the transition economies, are still considerable and for some, e.g. Belarus, the Republic of Moldova, Ukraine and some of the economies of southeast Europe, their situation remains precarious.
2. This year ECE Spring Seminar was devoted to the assessment of ten years of transition. It focussed on structural change, macroeconomic policies and social dimension of transition. During the first day of this year’s annual session of the Commission, ECE took up for its in-depth discussion the issue of the economic regeneration of southeast Europe. The debate focussed on the transition process and the international financial and technical assistance required, as well as the role of regional cooperation, in support of that process. The persisting political instability, the unsolved questions of sovereignty, national borders, lack of state power and weakness of institutions hindered economic recovery. Governments in southeast Europe were overtaxed with the double burden of reconstruction and transition to a market economy. The view was shared that sustained support was required and that regional cooperation could play a role in addressing security concerns, liberalization of trade and policy coordination. The meeting concurred that the main key to a solution to the problems of the region was the attainment of sustainable growth and that promotion of entrepreneurship, especially with regard to SMEs, was important.
3. The ECE has continued its work in the development of normative instruments, thereby fostering regional cooperation, facilitating economic integration and promoting policy convergence. Efforts have been undertaken to strengthen cross-sectoral approach in the area of norms and standards setting, with the involvement of partner institutions.
In the field of environment, a Ministerial meeting under the ECE Convention on Long-range Transboundary Air Pollution (Gothenburg, November 1999) adopted a Protocol to Abate Acidification, Eutrophication and Ground-level Ozone to the Convention. The ECE Convention on Transboundary Effects on Industrial Accidents entered into force in April 2000. The ECE Committee on Environmental Policy decided in September 1999 to initiate preparation for a new legal instrument on Strategic Environmental Assessment. The Ministerial Conference on Health and Environment (London, June 1999) adopted a Protocol on water and health to the ECE Convention on Transboundary Watercourses and International Lakes. The work on the Protocol is serviced jointly by the ECE and WHO/Euro secretariats.
In the field of transport, the following agreements have been amended: the European Agreement on Main International Traffic Arteries (AGR), of 15 November 1975; the European Agreeement on Important International Combined Transport Lines and Related Installations (AGTC), of 1 February 1991; the Agreement on the Construction of Vehicles, of 20 March 1958; the European Agreement concerning the International Carriage of Dangerous Goods by Road (ADR), of 30 September 1957; the Customs Convention on the International Transport of Goods under cover of TIR Carnets (TIR Convention), of 15 January 1959. In July 1999, the European Agreement on Main Inland Waterways of International Importance (AGN) entered into force. The Inland Transport Committee decided at its 62nd session to establish a multidisciplinary group of experts on safety in tunnels.
In the field of statistics, cooperation has continued with the IMF, Eurostat, the OECD, and other organisations, for setting standards (e.g. in censuses, national accounts, price indices, etc.) and coordinating statistical activities in the framework of the Conference of European Statisticians. This work has taken on a new momentum due to the growing political importance of monitoring, benchmarking towards best practises, and using indicators, particularly in the field of gender and social development.
We have also continued to invest on data collection and databases, in order to make good quality data available throughout the UN system and to member countries. Particular efforts have been placed in bridging the gap between economic, social and environmental statistics, as part of the ECE strategy to contribute to bridge the gap between economic growth and social concerns.
Other norms and standards have been developed in the fields of trade facilitation and energy. In its capacity as the international focal point for trade facilitation standards and recommendations, UN/ECE, through the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT), has continued to strengthen its work. Its annual session made important progress on several trade facilitation recommendations.
The Centre also approved a new Recommendation No. 31 - Electronic commerce Agreement that provides the first legal framework for Internet commerce. The recommendation can be applied to all electronic media, be it Internet, e-mail, faxes, telexes and tries to create an environment which allows electronic commerce to have a degree of safety in those areas where there are no clear guidelines to be applied.
Many experts from governments and industry met during the year, in the framework of the six UN/CEFACT working groups, to develop common procedures for facilitating business and elaborating standard languages and rules for electronic business. The Centre progressed its initiative on ebXML for electronic business on Internet and the world wide web for small and medium-sized enterprises.
The MoU in the field of electronic business between UN/ECE and the international standard setting organizations was strengthened by ITU signing the MoU. The Centre continued its long-standing cooperation with UNCTAD Trade Facilitation. As the participation of all regional commissions is of particular importance for the continued relevance of UN/CEFACT's work, it has been agreed that each commission would appoint a special representative to UN/CEFACT.
ECE is committed to put more emphasis on facilitating the implementation of the already adopted standards. Over the past year, it has pursued its technical assistance activities aimed at supporting the effective implementation of the ECE norms and standards in countries with transition economies, as well as technical activities which contribute to facilitating the legislative changes required in the countries applying for EU membership.
4. A large part of ECE operational activities was concentrated in two regions which lag behind in terms of economic development and transition process, namely in southeast Europe and Central Asia.
The ECE technical assistance has been provided mostly within the framework of regional and subregional groupings, initiatives and programmes, namely the Stability Pact, the Southeast European Cooperative Initiative (SECI), the Central European Initiative (CEI), the Black Sea Economic Cooperation (BSEC) and the Special Programme for the Economies of Central Asia (SPECA).
For countries of southeast Europe in particular, ECE has provided technical expertise and other support to projects in the specific fields of: a) border crossing facilitation; b) development of transport infrastructure; c) interconnection of electric power systems; d) energy efficiency; e) natural gas network systems and international pipeline interconnections; f) environmental protection for the Adriatic-Ionian Region; g) promotion of public-private partnerships; h) promotion of real estate investment. These activities are carried on through ECE/SECI project groups and groups established under the Stability Pact. The ECE has presented a number of projects for southeast Europe to its Working Table II, most of which are being implemented in the framework of ECE/SECI. Together with the World Bank, IMF and WTO, ECE has provided support to a new working group on trade and transport facilitation (TTFSE) established within the framework of the Stability Pact Working Table II.
Within the framework of the United Nations Special Programme for the Economies of Central Asia (SPECA), established by the Tashkent declaration of March 1998, ECE and ESCAP continued its collaborative efforts to assist the participating states (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) to design and implement development projects in areas of common interest. Three SPECA working groups have become fully operational: on transport and border crossing, on rational and efficient use of energy and water and on international economic conference on development strategy of Tajikistan in the regional context of Central Asia. In December 1999, the UN General Assembly approved $1,75 million worth of funding from the UN Development Account for the joint ECE/ESCAP project on rational and efficient use of energy and water resources in Central Asia. In this area ECE cooperates closely with OSCE.
5. Last year has been a year of further progress in integrating the cross-sectoral concerns into the activities of ECE principal subsidiary bodies, with particularly important breakthrough in transport and environment.
ECE has carried out a number of activities based on a multi-stakeholder approach, in particular with the NGO community and the private sector. It has also significantly strengthened its relationship with the European Commission, the Organization for Security and Cooperation in Europe and the Council of Europe.