The Underdeveloped Get Together

Next month in Geneva, a unique confrontation will begin between the prosperous and the poor nations of the world. For twelve weeks, 1,500 finance ministers, foreign ministers, economists and assorted experts from 122 nations will face each other in the first United Nations Conference on Trade and Development. At U.N. headquarters in Manhattan last week, 300 advance men debated the scope of the meeting and decided upon its agenda. Plainly, the underdeveloped nations, which will be well in the majority in Geneva, aim at nothing less than rewriting the rules of world trade to give themselves a much better deal.

Getting Poorer. The conference's moving force and secretary-general is Argentina's German-descended Dr. Raul Prebisch, 62, who recently jetted to more than 20 capitals, from Canberra to Moscow, to win support for the conference from governments and business leaders. Last week, in a 165-page report, he outlined the problems and proposals that the Geneva conference will tackle.

Prebisch is worried most by the growing "trade gap" between what is bought and sold by the poorer nations --in Latin America, Asia, Africa. From 1950 to 1960 their share of world trade declined from 30% to 20%, and their imports expanded much faster than their exports. On top of that, a world commodity glut held down prices of their exports--mostly food, fuel and fibers--while prices rose for the increasingly complex machines that they import. Because of the switch to synthetic goods and new efficiencies in manufacturing, the industrial nations are buying relatively less natural rubber, textiles and metals. The commodity-producing countries are trying to industrialize, but production costs in their inefficient plants are steep, and many of the industrial nations have raised high tariffs and import quotas against them. If all this continues, predicts Prebisch, the trade gap will widen to $20 billion a year by 1970 and force the underdeveloped countries to slash their imports.

Though these nations are bickering a bit among themselves, 75 of them have banded together to push joint proposals onto the Geneva agenda. Cheered by the success of the price-regulating International Coffee Agreement that was created by the U.N. in 1962, they now want the U.N. members to sign another pact putting floors under most other fluctuating commodity prices. They also aim to pressure the Communist countries, which now take scarcely 5% of their exports, to buy more. And they want the industrial powers not only to lower their barriers against imports of manufactured goods from the backward nations, but also to give them preferential tariff treatment and to subsidize their state-planned programs for industrialization--without getting anything in return.

Flexible & Unorthodox. Many of these ideas stem from Prebisch, whose critics call him a statist--although he refuses to be typed. "Save the world from economists," he says. "Experts cannot run the world." But Prebisch has spent 30 years trying to change a good part of the world through his flexibly unorthodox theories. In his early days, Prebisch fastened on to the conservative doctrines of the classical economists.

But when he entered international finance as the founder of Argentina's Central Bank, he decided that classical concepts were designed for the industrial nations and had little relation to the problems of developing areas. He began to preach a personal brand of economics he calls the "seemingly contradictory thesis of private initiative plus dynamic government planning."

As head of the U.N.'s Economic Commission for Latin America from 1950 to 1963, Prebisch urged governments to take idle lands away from the rich, distribute them to the poor, modestly compensate the original owners with long-term bonds, force higher taxes on the high-living upper classes and use the money to build roads and power plants that would speed industrialization. Proposing and prodding from his U.N. post, he was the intellectual father of the thriving little Central American common market and the still-struggling Latin American Free Trade Area, also served as the U.S.'s chief foreign adviser to the Alliance for Progress. Today he believes that the underdeveloped countries will be prey to totalitarian demagogues unless the democratic governments aid them through trade.

Discrimination in Reverse. Most Western governments are tolerant of Prebisch's ideas, but they are nervous about their too-rapid application, and about their effects at the forthcoming Geneva conference. Britain is against moves to upset its system of Commonwealth tariff preferences, and the Common Market countries are reluctant to lower their external trade bars. The U.S. is eager enough to make reciprocal tariff reductions in the separate Kennedy round of talks, which will overlap the Geneva trade meeting and will bring many of the same countries together in the same building. But it opposes tariff cuts without reciprocity from the underdeveloped countries as a form of "discrimination in reverse."

Washington also frowns on schemes to fix world prices and believes that the U.S., as a big consumer of commodities, would have to foot much of the in creased cost. Finally, there is the question of whether it is wise to grant greater subsidies to countries run by inept and sometimes corrupt bureaucracies; certainly underdeveloped governments could do much to help themselves by showing more responsibility, more sympathy for free enterprise and more respect for foreign investment.

Despite such reservations, the U.S. attaches enough importance to the Geneva meeting to dispatch Under Secretary of State George Ball as head of its delegation. Though the conference will probably accomplish less than its ambitious sponsors hope, it has already achieved something. The underdeveloped nations have formed a bloc, hoping to use the unwieldy U.N. as a weapon to transform the pattern of world trade. Having seized the initiative, they have put the affluent countries on notice that they expect something to be done soon to narrow the trade gap.

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